Public Storage 2012 Annual Report Download - page 56

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In 2010, 2011, and 2012, we acquired an aggregate of 77 facilities from third parties. The following table
sets forth selected information with respect to these acquired properties:
For the Year Ended
December 31, 2012
Number of
Properties
Acquisition
Cost
Average
Occupancy
Capitalization
Rate (a)
(Dollar amounts in thousands)
Properties acquired from third parties
during:
Last three months of 2012 ......................
.
10 $ 81,400 (b) (b)
First nine months of 2012.......................
.
14 144,100 78% 5.3%
2011 .......................................................
.
11 80,400 83% 8.4%
2010 .......................................................
.
42 239,600 89% 10.2%
77 $ 545,500
(a) Weighted average capitalization rate represents the net operating income earned in 2012 divided by the acquisition
cost. With respect to properties acquired in the first nine months of 2012, the capitalization rate is based upon
annualizing the net operating income for the period we owned the properties.
(b) Capitalization rate and average occupancy for these properties is not meaningful due to our limited ownership
period.
In 2012 and 2011, we commenced consolidating three and two facilities, respectively that were owned by
entities that we had previously accounted for on the equity method of accounting. See Note 3 to our December 31,
2012 financial statements for further information.
At December 31, 2012, we had a development pipeline of projects to expand existing self-storage facilities
and develop new self-storage facilities, which will add approximately 1.3 million net rentable square feet of self-
storage space. The aggregate cost of these projects is estimated at $169 million, of which $36 million had been
incurred at December 31, 2012, and the remaining costs will be incurred principally in 2013. Some of these projects
are subject to significant contingencies such as entitlement approval. We expect to continue to seek additional
development projects and have hired additional personnel; however, due to the difficulty in finding projects that
meet our risk-adjusted yield expectations, as well as the difficulty in obtaining building permits for self-storage
activities in certain municipalities, it is uncertain as to how much additional development we will undertake in the
future.
We believe that our management and operating infrastructure will result in newly acquired facilities
stabilizing at a higher level of net operating income than was achieved by the previous owners. However, it can take
24 or more months for these newly acquired facilities to reach stabilization, and the ultimate levels of rent to be
achieved can be affected by changes in general economic conditions. As a result, there can be no assurance that our
expectations with respect to these facilities will be achieved. However, we expect the Non Same Store Facilities to
continue to provide earnings growth during 2013 as these facilities approach stabilized occupancy levels, and the
earnings of the 2012 acquisitions are reflected in our operations for a longer period in 2013 as compared to 2012.
Equity in earnings of unconsolidated real estate entities
At December 31, 2012, we have equity investments in PSB, Shurgard Europe and various limited
partnerships. We account for such investments using the equity method.
Equity in earnings of unconsolidated real estate entities for 2012, 2011 and 2010 consists of our pro-rata
share of the net income of these unconsolidated real estate entities for each period. The following table sets forth the
significant components of equity in earnings of unconsolidated real estate entities.