Public Storage 2012 Annual Report Download - page 89

PUBLIC STORAGE
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
F-10
Collectively, at December 31, 2012, the Company and the Subsidiaries own 2,064 self-storage
facilities in the U.S., one self-storage facility in London, England and six commercial facilities in the U.S. At
December 31, 2012, the Unconsolidated Real Estate Entities are comprised of PSB, Shurgard Europe, as well as
limited partnerships that own an aggregate of 14 self-storage facilities in the U.S. with 0.8 million net rentable
square feet (these limited partnerships, for the periods in which the reference applies, are referred to as the
“Other Investments”).
Use of Estimates
The financial statements and accompanying notes reflect our estimates and assumptions. Actual
results could differ from those estimates.
Income Taxes
We have elected to be treated as a real estate investment trust (“REIT”), as defined in the Internal
Revenue Code. As a REIT, we do not incur federal income tax if we distribute 100% of our REIT taxable
income (generally, net rents and gains from real property, dividends, and interest) each year, and if we meet
certain organizational and operational rules. We believe we will meet these REIT requirements in 2012, and
that we have met them for all other periods presented herein. Accordingly, we have recorded no federal income
tax expense related to our REIT taxable income.
Our merchandise and tenant reinsurance operations are subject to corporate income tax, and such taxes
are included in ancillary cost of operations. We also incur income and other taxes in certain states, which are
included in general and administrative expense.
We recognize tax benefits of uncertain income tax positions that are subject to audit only if we believe
it is more likely than not that the position would be sustained (including the impact of appeals, as applicable),
assuming the relevant taxing authorities had full knowledge of the relevant facts and circumstances of our
positions. As of December 31, 2012, we had no tax benefits that were not recognized.
Real Estate Facilities
Real estate facilities are recorded at cost. We capitalize all costs incurred to develop, construct,
renovate and improve properties, including interest and property taxes incurred during the construction period.
We expense internal and external transaction costs associated with acquisitions or dispositions of real estate, as
well as repairs and maintenance costs, as incurred. We depreciate buildings and improvements on a straight-
line basis over estimated useful lives ranging generally between 5 to 25 years.
We allocate the net acquisition cost of acquired operating self-storage facilities (consisting of the cash
paid to third parties for their interests, the fair value of our existing investment, and the fair value of any
liabilities assumed) to the underlying land, buildings, identified intangible assets, and remaining noncontrolling
interests based upon their respective individual estimated fair values. Any difference between the net
acquisition cost and the estimated fair value of the net tangible and intangible assets acquired is recorded as
goodwill.
Other Assets
Other assets primarily consist of prepaid expenses, accounts receivable, land held for sale and
restricted cash. During the years ended December 31, 2011 and 2010, we recorded asset impairment charges
with respect to other assets totaling $1.9 million and $1.0 million, respectively.