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Public Storage
®
2013
Annual
Report

Table of contents

  • Page 1
    ® Public Storage 2 0 1 3 Annual Report

  • Page 2
    ... Colorado Connecticut Delaware Florida Georgia Hawaii Illinois Indiana Kansas Kentucky Louisiana Maryland Massachusetts Michigan Minnesota Mississippi Missouri Nebraska Nevada New Hampshire New Jersey New York North Carolina Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina 22 40 417...

  • Page 3
    ... For the year ended December 31, 2013 2012 2011 2010 2009 (Amounts in thousands, except per share data) Operating Revenue Operating Expenses: Cost of operations Depreciation and amortization General and administrative Asset impairment charges Operating income Interest and other income Interest...

  • Page 4
    ... and modest pricing power. The absence of new supply enhanced our ability to reduce marketing costs and promotional discounts as well as increase the prices to new customers. We operated at record high occupancies in 2013. Exceptional revenue management skills and solid operational execution at the...

  • Page 5
    ... depreciation reserves) $ $ $ $ 2013 110 15 125 61 1,709 $ $ $ $ 2012 114 14 128 61 1,643 $ $ $ $ 2011 113 12 125 61 1,596 Commercial Properties Our commercial properties, primarily our investment in PS Business Parks (PSB), showed continued improvement, with positive Same Park net operating...

  • Page 6
    ... During 2013, we acquired 121 self-storage properties for approximately $1.2 billion, our largest expansion since the 2006 Shurgard merger. The properties are in the major markets of California, Colorado, Florida, Georgia, North Carolina, Massachusetts, South Carolina, Texas and Virginia, enhancing...

  • Page 7
    ... to maintain high occupancies at rates that continually increase over time. A property in Reno will constantly face new competition and an extremely price-sensitive customer. Both can be good or bad investments, depending on the price paid, i.e., you can over pay for Manhattan (think Harry Macklowe...

  • Page 8
    ... Areas (MSA) Rank MSA PSA's Percentage Estimated Annual Current Change Population Growth Market Share from 2012 2013-2018 1 New York 2 Los Angeles 3 Chicago 4 Dallas-Fort Worth 5 Houston 6 Philadelphia 7 Washington DC 8 Miami-West Palm Beach 9 Atlanta 10 Boston 10.3% 21.8% 16.8% 11.0% 11.7% 12...

  • Page 9
    ...12/31/13 Public Storage S&P 500 Index...Real Estate Investment Trusts Equity Index ("NAREIT Equity Index") for the same period (total shareholder return equals price appreciation plus dividends). The stock price performance graph assumes that the value of the investment in the Company's Common Shares...

  • Page 10
    .... NOI represents revenues less cost of operations (before depreciation) earned directly at the real estate locations we have an interest in. We believe that Free Cash Flow is an important supplemental measure of REIT performance and liquidity and that NOI helps investors to understand the cash...

  • Page 11
    ...-33519 PUBLIC STORAGE (Exact name of Registrant as specified in its charter) Maryland ( State or other jurisdiction of incorporation or organization) 95-3551121 (I.R.S. Employer Identification Number) 701 Western Avenue, Glendale, California 91201-2349 (Address of principal executive offices) (Zip...

  • Page 12
    ... and non-voting common shares held by non-affiliates of the Registrant as of June 30, 2013: Common Shares, $0.10 Par Value - $22,171,992,000 (computed on the basis of $153.33 per share which was the reported closing sale price of the Company's Common Shares on the New York Stock Exchange on June 30...

  • Page 13
    ...,120,701 outstanding Common Shares, $.10 par value. DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive proxy statement to be filed in connection with the Annual Meeting of Shareholders to be held in 2014 are incorporated by reference into Part III of this Annual Report on Form 10-K to...

  • Page 14
    ... x general risks associated with the ownership and operation of real estate, including changes in demand, risks related to development of self-storage facilities, potential liability for environmental contamination, natural disasters and adverse changes in laws and regulations governing property tax...

  • Page 15
    ... in the United Kingdom. We believe Shurgard Europe is the largest owner and operator of self-storage facilities in Western Europe. (iii) Commercial: We have a 42% equity interest in PS Business Parks, Inc. ("PSB"), a publicly held REIT which owns and operates 29.7 million net rentable square feet of...

  • Page 16
    ... filed with or furnished to the SEC. Competition We believe that storage customers generally store their goods within a five mile radius of their home or business. Most of our facilities compete with other nearby self-storage facilities that use the same marketing channels and offer the same service...

  • Page 17
    ... our website and to our call center agents, and can inform the customer of storage alternatives at that site or our other nearby storage facilities. Property managers are extensively trained to maximize the conversion of such "walk in" shoppers into customers. Economies of scale: We are the largest...

  • Page 18
    .... PSB is a stand-alone public company traded on the New York Stock Exchange. During the year ended December 31, 2013, we increased our investment in PSB by acquiring 1,356,748 shares of PSB common stock in open-market transactions and directly from PSB, for an aggregate cost of $105.0 million. Over...

  • Page 19
    ... fourth quarter of 2013. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" for more information. Borrowing through mortgage loans or senior debt: Even though preferred securities have a higher coupon rate than long...

  • Page 20
    ... limited partnerships that own an aggregate of 14 self-storage facilities. These entities are referred to collectively as the "Unconsolidated Real Estate Entities." PSB, which files financial statements with the SEC, and Shurgard Europe, have debt and other obligations that we do not consolidate...

  • Page 21
    ... summer months than in the winter months. We believe that these fluctuations result in part from increased moving activity during the summer months. Insurance We have historically carried customary property, earthquake, general liability, employee medical insurance and workers compensation coverage...

  • Page 22
    ... 31, 2013. Competition in the local market areas in which many of our properties are located is significant and has affected our occupancy levels, rental rates and operating expenses. If development of self-storage facilities by other operators were to increase, due to increases in availability...

  • Page 23
    ... publicly available information regarding the site and other nearby properties. We are also subject to potential liability relating to moisture infiltration, which can result in mold or other damage to our or our customers' property, as well as potential health concerns. When we receive a complaint...

  • Page 24
    ... due to a constrained credit market, negative operating trends or other reasons, our equity investment in Shurgard Europe could be negatively impacted. x x x x The Hughes Family could control us and take actions adverse to other shareholders. At December 31, 2013, B. Wayne Hughes, our former...

  • Page 25
    ... or control share acquisition with Public Storage. Currently, the Board has opted not to subject the Company to these provisions of Maryland law, but it could choose to do so in the future without shareholder approval. To protect against the loss of our REIT status due to concentration of ownership...

  • Page 26
    ... of the "Public Storage" name in Canada with the Hughes Family, unless we are able to terminate the license agreement. Through our subsidiaries, we reinsure risks relating to loss of goods stored by customers in the Canadian Self-Storage Facilities. During the years ended December 31, 2013, 2012 and...

  • Page 27
    ... marketability of our real estate facilities. Our tenant insurance business is subject to governmental regulation which could reduce our profitability or limit our growth. We hold Limited Lines Self-Service Storage Insurance Agent licenses from a number of individual state Departments of Insurance...

  • Page 28
    ... and 188 storage facilities located in seven Western European nations: At December 31, 2013 Number of Storage Facilities (a) U.S.: California: Southern ...Northern ...Texas ...Florida ...Illinois ...Georgia ...Washington ...North Carolina ...Virginia ...New York ...Colorado ...New Jersey ...Maryland...

  • Page 29
    ...basis during business hours. On-site operation is the responsibility of property managers who are supervised by district managers. Some self-storage facilities also include rentable uncovered parking areas for vehicle storage. Space is rented on a month-to-month basis and rental rates vary according...

  • Page 30
    ..., our U.S. self-storage facilities have generally shown a high degree of stability in generating cash flows. Description of Commercial Properties: We have an interest in PSB, which, as of December 31, 2013, owns and operates approximately 29.7 million net rentable square feet of commercial space in...

  • Page 31
    ...Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities a. Market Information of the Registrant's Common Equity: Our Common Shares (NYSE: PSA) have been listed on the New York Stock Exchange since October 19, 1984. The following table sets forth the high and low sales prices of...

  • Page 32
    ... outstanding for any period in the years ended December 31, 2013 and 2012. d. Common Share Repurchases Our Board of Trustees has authorized management to repurchase up to 35,000,000 of our common shares on the open market or in privately negotiated transactions. From the inception of the repurchase...

  • Page 33
    ...Selected Financial Data For the year ended December 31, 2012 2011 2010 1,842,504 $ 1,735,888 $ 2013 Revenues Expenses: Cost of operations Depreciation and amortization General and administrative Asset impairment charges Operating income Interest and other income Interest expense Equity in earnings...

  • Page 34
    .... Income Tax Expense: 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 on our REIT taxable income (generally, net rents and gains from real property, dividends, and interest) that is fully...

  • Page 35
    ...equity investments in Shurgard Europ e and PS Business Parks, Inc. ("PSB"). During the year ended December 31, 2013, we increased our ownership interest in PSB by acquiring 1,356,748 shares of PSB common stock in open-market transactions and directly from PSB, for an aggregate cost of $105.0 million...

  • Page 36
    ... capacity of our credit facility, or entering into joint venture arrangements to acquire or develop facilities. See Liquidity and Capital Resources for further information regarding our 2014 capital requirements. Results of Operations Operating results for 2013 as compared to 2012 For the year...

  • Page 37
    ... among REITs. The following table reconciles FFO per share to Core FFO per share: Year Ended December 31, 2013 FFO per share $ Eliminate the per share impact of items excluded from Core FFO: Foreign currency exchange (gain) loss Application of EITF D-42 Other items Core FFO per share $ 7.53 $ 2012...

  • Page 38
    ...further information regarding this non-GAAP measure. Net income from our Self-Storage operations has increased 11.2% in 2013 as compared to 2012 and 13.8% in 2012 as compared to 2011. These increases are due to improvements in our Same Store Facilities, as well as the acquisitions of new facilities...

  • Page 39
    ...Rental income Late charges and administrative fees Total revenues (a) $ 1,619,533 $ 1,536,517 83,761 80,281 1,703,294 1,616,798 5.4% $ 1,536,517 $ 1,465,038 4.3% 80,281 79,505 5.3% 1,616,798 1,544,543 4.9% 1.0% 4.7% Cost of operations: Property taxes 160,027 152,191 On-site property manager payroll...

  • Page 40
    ...the applicable contractual monthly rent charged to our customers, excluding the impact of promotional discounts, late charges, and administrative fees. Analysis of Same Store Revenue Revenues generated by our Same Store Facilities increased by 5.3% in 2013 as compared to 2012 due to a 1.5% increase...

  • Page 41
    ... property manager payroll expense to increase modestly in 2014 due to higher health care costs. Supervisory payroll expense, which represents compensation paid to the management personnel who directly and indirectly supervise the on-site property managers, increased 1.4% in 2013 as compared to 2012...

  • Page 42
    ... 2014. Other direct property costs include administrative expenses incurred at the self-storage facilities, such as property insurance, business license costs, bank charges related to processing the properties' cas h receipts, credit card fees, and the cost of operating each property's rental office...

  • Page 43
    ..., except for per square foot amount) $ $ $ 420,146 399,725 381,301 $ $ $ 441,011 418,085 399,864 $ $ $ 432,533 410,489 391,305 $ $ $ Entire Year $ $ $ 409,604 388,499 372,073 1,703,294 1,616,798 1,544,543 Total cost of operations: 2013 $ 2012 $ 2011 $ Property taxes: 2013 2012 2011 131,358 134...

  • Page 44
    ...) 505,330 481,807 Total revenues $ 1,703,294 $ 1,616,798 Net operating income: Los Angeles San Francisco New York Chicago Washington DC Seattle-Tacoma Miami Dallas-Ft. Worth Houston Atlanta Philadelphia Denver Minneapolis-St. Paul Portland Orlando-Daytona All other markets Total net operating income...

  • Page 45
    ... Facilities Operating Trends by Market (Continued) Year Ended December 31, 2013 2012 Change Weighted average square foot occupancy: Los Angeles San Francisco New York Chicago Washington DC Seattle-Tacoma Miami Dallas-Ft. Worth Houston Atlanta Philadelphia Denver Minneapolis-St. Paul Portland Orlando...

  • Page 46
    ... Store Facilities Operating Trends by Market (Continued) Year Ended December 31, 2013 2012 Change REVPAF: Los Angeles San Francisco New York Chicago Washington DC Seattle-Tacoma Miami Dallas-Ft. Worth Houston Atlanta Philadelphia Denver Minneapolis-St. Paul Portland Orlando-Daytona All other markets...

  • Page 47
    ...Rental income: 2013 third party acquisitions 2012 third party acquisitions Other facilities Total rental income Cost of operations before depreciation and amortization expense: 2013 third party acquisitions 2012... Annual contract rent per occupied square foot: 2013 third party acquisitions $ 2012 ...

  • Page 48
    ...cash. During 2011, we acquired eleven operating self-storage facilities from third parties (896,000 net rentable square feet) for an aggregate cost of $80.4 million. For 2013, the weighted average annualized yield for the facilities acquired in 2011 and 2012 (excluding the facility that was acquired...

  • Page 49
    ... at the same price per share. At December 31, 2013, PSB owned and operated 29.7 million rentable square feet of commercial space located in eight states. PSB also manages commercial space that we own pursuant to property management agreements. Equity in earnings from PSB increased to $23.2 million...

  • Page 50
    ... financial statements, we disclose Shurgard Europe's consolidated operating results for the years ended December 31, 2013, 2012 and 2011. Shurgard Europe's consolidated operating results include 24 additional facilities that are not Same Store Facilities, and are based upon historical exchange rates...

  • Page 51
    ..., in evaluating Shurgard Europe's operating results. (c) Square foot occupancies represent weighted average occupancy levels over the entire period. (d) Realized annual rent per occupied square foot is computed by dividing annualized rental income, before late charges and administrative fees, by the...

  • Page 52
    ...of policies against losses to goods stored by customers in our self-storage facilities in the U.S., (ii) merchandise sales, (iii) commercial property operations and (iv) management of 42 facilities owned by third parties and the Unconsolidated Real Estate Entities. Commercial property operations are...

  • Page 53
    ...in 2013 are reflected for a full year and Non-Same Store facilities continue to add customers. We expect stable participation rates and flat premium rates in 2014. Commercial operations: We also own and operate commercial facilities, primarily the leasing of small retail storefronts and office space...

  • Page 54
    ...equity in earnings on our income statement. Aggregate interest income and trademark license fees received from Shurgard Europe was $20.6 million, $20.0 million and $26.7 million for 2013, 2012 and 2011, respectively. The loan receivable from Shurgard Europe (the "Shareholder Loan") is denominated in...

  • Page 55
    ... to general corporate legal matters and risk management, and varies based upon the level of litigation. Public company costs represent the incremental costs of operating as a publicly-traded company, such as internal and external investor relations expenses, stock listing and transfer agent fees...

  • Page 56
    ... period-to-period and market-to-market property operating results. In addition, we believe the investment community utilizes NOI in determining operating performance and real estate values, and does not consider depreciation expense because it is based upon historical cost. NOI is not a substitute...

  • Page 57
    ...,315) Self-storage net income: Same Store Facilities Non Same Store Facilities Total net income from self-storage Ancillary operating revenue Ancillary cost of operations Commercial depreciation and amortization General and administrative expenses Asset impairment charges Operating income 919,046...

  • Page 58
    ... we raised in the first quarter of 2013. The market coupon rate on our preferred securities is influenced by long-term interest rates. Due to poor capital market conditions for the issuance of either preferred or common securities, during the last three months of 2013, we borrowed approximately $750...

  • Page 59
    ... in good operating condition and maintain their visual appeal to the customer, which totaled $71.3 million in 2013. Capital expenditures do not include costs relating to the development of new facilities or the expansion of net rentable square footage of existing facilities. During 2014, we...

  • Page 60
    ... of our preferred securities are redeemable at the option of the holders. Repurchases of Company's Common Shares: Our Board of Trustees has authorized management to repurchase up to 35,000,000 of our common shares on the open market or in privately negotiated transactions. During 2013, we did not...

  • Page 61
    ..., which were repaid on January 8, 2014. See Note 6 to our December 31, 2013 financial statements for additional information on our line of credit. (4) We lease land, equipment and office space under various operating leases. Certain leases are cancelable; however, significant penalties would be...

  • Page 62
    ... below summarizes the annual maturities of our fixed rate debt which had a weighted average fixed rate of 4.8% at December 31, 2013. See Note 6 to our December 31, 2013 financial statements for further information regarding our fixed rate debt (dollar amounts in thousands). 2014 Fixed rate debt $ 26...

  • Page 63
    ..., our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2013, at a reasonable assurance level. Management's Report on Internal Control Over Financial Reporting Our management is responsible for establishing...

  • Page 64
    ... internal control over financial reporting as of December 31, 2013, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Public Storage as of December 31, 2013 and 2012...

  • Page 65
    ... Chief Executive Officer and a member of the Board of Public Storage since November 2002. Mr. Havner has been Chairman of the Board of Public Storage's affiliate, PS Business Parks, Inc. (PSB), since March 1998. Within the last five years, Mr. Havner served on the boards of Union BanCal Corporation...

  • Page 66
    ... to the material appearing in the Proxy Statement under the captions "Stock Ownership of Certain Beneficial Owners and Management." The following table sets forth information as of December 31, 2013 on the Company's equity compensation plans: Number of securities to be issued upon exercise of...

  • Page 67
    ... financial statements schedules listed in the accompanying Index to Financial Statements and Schedules are filed as part of this report. 3. Exhibits See Index to Exhibits contained herein. b. Exhibits: See Index to Exhibits contained herein. c. Financial Statement Schedules Not applicable. 57

  • Page 68
    ... of Trust of Public Storage, a Maryland real estate investment trust. Filed with the Registrant's Annual Report on Form 10 -K for the year ended December 31, 2009 and incorporated by reference herein. Bylaws of Public Storage, a Maryland real estate investment trust. Filed with the Registrant...

  • Page 69
    ... Association. Filed with the Registrant's Current Report on Form 8-K on July 18, 2013 and incorporated herein by reference. Shurgard Storage Centers, Inc. 2004 Long Term Incentive Compensation Plan. Filed as Appendix A of Definitive Proxy Statement dated June 7, 2004 filed by Shurgard (SEC File No...

  • Page 70
    ..., by and among Public Storage, Wells Fargo Securities, LLC as Lead Arranger and Wells Fargo National Bank N.A. as Administrative Agent, dated as of December 2, 2013. Filed as Exhibit 10.1 to Registrant's Current Report on Form 8-K and incorporated herein by reference. Statement Re: Computation of...

  • Page 71
    PUBLIC STORAGE INDEX TO FINANCIAL STATEMENTS (Item 15 (a)) Page References Report of Independent Registered Public Accounting Firm ...Balance sheets as of December 31, 2013 and 2012 ...For the years ended December 31, 2013, 2012 and 2011: Statements of income ...Statements of comprehensive income ...

  • Page 72
    ... in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Public Storage's internal control over...

  • Page 73
    PUBLIC STORAGE BALANCE SHEETS (Amounts in thousands, except share data) December 31, 2013 ASSETS Cash and cash equivalents Real estate facilities, at cost: Land Buildings Accumulated depreciation Construction in process $ 19,169 3,321,236 8,965,020 12,286,256 (4,098,814) 8,187,442 52,336 8,239,778 ...

  • Page 74
    ... 31, 2012 2011 2013 Revenues: Self-storage facilities Ancillary operations $ 1,849,883 131,863 1,981,746 $ 1,718,865 123,639 1,842,504 $ 1,621,799 114,089 1,735,888 Expenses: Self-storage cost of operations Ancillary cost of operations Depreciation and amortization General and administrative...

  • Page 75
    PUBLIC STORAGE STATEMENTS OF COMPREHENSIVE INCOME (Amounts in thousands) 2013 For the Years Ended December 31, 2012 2011 Net income Other comprehensive income (loss): Aggregate foreign currency exchange gain Adjust for foreign currency exchange (gain) loss included in net income Other ...

  • Page 76
    PUBLIC STORAGE STATEMENTS OF EQUITY (Amounts in thousands, except share and per share amounts) Cumulative Preferred Shares Common Shares Paid-in Capital Accumulated Deficit Noncontrolling Interests Accumulated Other Comprehensive Loss Total Public Storage Shareholders' Equity Total Equity $ 16...

  • Page 77
    ... shares and restricted share units ($4.40 per share) Other comprehensive income (Note 2) Balances at December 31, 2012 Issuance of 29,000,000 preferred shares (Note 8) 725,000 Issuance of common shares in connection with sharebased compensation (388,005 shares) (Note 10) Share-based compensation...

  • Page 78
    ... real estate entities Maturities of marketable securities Other Net cash used in investing activities Cash flows from financing activities: (Repayments) borrowings on bank credit facility, net Borrowings on term loan Repayments on notes payable Issuance of common shares Issuance of preferred shares...

  • Page 79
    PUBLIC STORAGE STATEMENTS OF CASH FLOWS (Amounts in thousands) For the Years Ended December 31, 2012 2011 2013 Supplemental schedule of non-cash investing and financing activities: Foreign currency translation adjustment: Real estate facilities, net of accumulated depreciation Investments in ...

  • Page 80
    ...feet of commercial space located in 11 states in the U.S. primarily owned and operated by PS Business Parks, Inc. ("PSB") under the "PS Business Parks" name. At December 31, 2013, we have an approximate 42% common equity interest in PSB. Disclosures of the number and square footage of properties, as...

  • Page 81
    ... 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...

  • Page 82
    ... inputs such as market prices of land, market capitalization rates and earnings multiples for real estate facilities, projected levels of earnings, costs of construction, functional depreciation, and market interest rates for debt securities with a similar time to maturity and credit quality, which...

  • Page 83
    PUBLIC STORAGE NOTES TO FINANCIAL STATEMENTS December 31, 2013 At December 31, 2013, due primarily to our investment in and loan receivable from Shurgard Europe, our operating results and financial position are affected by fluctuations in currency exchange rates between the Euro, and to a lesser ...

  • Page 84
    .... Revenue and Expense Recognition Rental income, which is generally earned pursuant to month-to-month leases for storage space, as well as late charges and administrative fees, are recognized as earned. Promotional discounts reduce rental income over the promotional period. Ancillary revenues and...

  • Page 85
    PUBLIC STORAGE NOTES TO FINANCIAL STATEMENTS December 31, 2013 Discontinued Operations Discontinued operations represent the net income of those facilities that have been disposed of as of during the three years ended December 31, 2013, or which we plan to dispose of within a year. In addition, ...

  • Page 86
    PUBLIC STORAGE NOTES TO FINANCIAL STATEMENTS December 31, 2013 3. Real Estate Facilities Activity in real estate facilities during 2013, 2012 and 2011 is as follows: 2013 Operating facilities, at cost: Beginning balance $ Capital expenditures to maintain real estate facilities Acquisitions ...

  • Page 87
    ... and $0.2 million was included in gain on real estate sales and debt retirement in our statement of income for the year ended December 31, 2012. During 2011, we acquired eleven operating self-storage facilities from third parties (896,000 net rentable square feet) and the leasehold interest in the...

  • Page 88
    ...in PSB PSB is a REIT traded on the New York Stock Exchange. We have an approximate 42% common equity interest in PSB as of December 31, 2013, comprised of our ownership of 7,158,354 shares of PSB's common stock and 7,305,355 limited partnership units in an operating partnership controlled by PSB (41...

  • Page 89
    ... STORAGE NOTES TO FINANCIAL STATEMENTS December 31, 2013 2013 For the year ended December 31, Total revenue Costs of operations Depreciation and amortization General and administrative Other items Net income Net income allocated to preferred unitholders, preferred shareholders and restricted stock...

  • Page 90
    ... Self-storage and ancillary cost of operations Depreciation and amortization General and administrative Interest expense on third party debt Trademark license fee payable to Public Storage Interest expense on debt due to Public Storage Lease termination charge, gain on sale of real estate and...

  • Page 91
    PUBLIC STORAGE NOTES TO FINANCIAL STATEMENTS December 31, 2013 Other Investments At December 31, 2013, the "Other Investments" include an average common equity ownership of approximately 26% in various limited partnerships that collectively own 14 self-storage facilities. During 2012 and 2011, we ...

  • Page 92
    ...% pro rata share of Shurgard Europe's cost to acquire the interests. 6. Credit Facility, Term Loan and Notes Payable We have a $300 million revolving line of credit (the "Credit Facility") that expires on March 21, 2017. Amounts drawn on the Credit Facility bear annual interest at rates ranging from...

  • Page 93
    PUBLIC STORAGE NOTES TO FINANCIAL STATEMENTS December 31, 2013 On October 1, 2013, we borrowed $100.0 million from PSB under a term loan which was repaid in full on October 18, 2013. The loan bore interest at 1.388%. The carrying amounts of our notes payable at December 31, 2013 and 2012 consist of...

  • Page 94
    PUBLIC STORAGE NOTES TO FINANCIAL STATEMENTS December 31, 2013 Cash paid for interest totaled $10.4 million, $21.7 million and $27.6 million for 2013, 2012 and 2011, respectively. Interest capitalized as real estate totaled $2.9 million, $0.4 million and $0.4 million in 2013, 2012 and 2011, ...

  • Page 95
    PUBLIC STORAGE NOTES TO FINANCIAL STATEMENTS December 31, 2013 8. Shareholders' Equity Preferred Shares At December 31, 2013 and 2012, we had the following series of Cumulative Preferred Shares ("Preferred Shares") outstanding: At December 31, 2013 Series Earliest Redemption Date Dividend Rate ...

  • Page 96
    PUBLIC STORAGE NOTES TO FINANCIAL STATEMENTS December 31, 2013 In 2012, we redeemed our Series A, Series C, Series D, Series E, Series F, Series L, Series M, Series N, Series W, Series X, Series Y and Series Z Preferred Shares, at par. The aggregate redemption amount, before payment of accrued ...

  • Page 97
    ... acquire the stock or assets of the corporation that manages the 54 self-storage facilities in Canada, if the Hughes Family or the corporation agrees to sell them. We reinsure risks relating to loss of goods stored by customers in these facilities. During the years ended December 31, 2013, 2012 and...

  • Page 98
    ... amounted to approximately $117.4 million. Additional information with respect to stock options during 2013, 2012 and 2011 is as follows: 2013 Weighted Average Exercise Price per Share 76.14 153.89 71.06 55.25 85.49 76.29 2012 Weighted Average Exercise Price per Share 74.30 144.97 68.26 55.54 76.14...

  • Page 99
    PUBLIC STORAGE NOTES TO FINANCIAL STATEMENTS December 31, 2013 2013 Stock option expense for the year (in 000's) 2012 2011 $ 3,468 $ 3,036 $ 3,445 Aggregate exercise date intrinsic value of options exercised during the year (in 000's) $ Average assumptions used in valuing options with the ...

  • Page 100
    PUBLIC STORAGE NOTES TO FINANCIAL STATEMENTS December 31, 2013 2013 Number of Grant Date Restricted Aggregate Share Units Fair Value Restricted share units outstanding January 1, Granted Vested Forfeited Restricted share units outstanding December 31, 642,647 $ 197,675 (154,535) (49,458) 636,329 $ ...

  • Page 101
    ... Segment The European Self-Storage segment comprises our interest in Shurgard Europe, which has a separate management team reporting directly to our CODM and our joint venture partner. The European Self-Storage segment includes our equity share of Shurgard Europe's operations, the interest and other...

  • Page 102
    ... Total $ 1,849,883 1,849,883 1,849,883 131,863 1,981,746 Expenses: Self-storage cost of operations Ancillary cost of operations Depreciation and amortization General and administrative 524,086 384,623 908,709 941,174 1,686 168 943,028 20,556 32,694 17,082 70,332 5,228 2,779 8,007 6,503...

  • Page 103
    ... Total $ 1,718,865 1,718,865 1,718,865 123,639 1,842,504 Expenses: Self-storage cost of operations Ancillary cost of operations Depreciation and amortization General and administrative 517,641 354,971 872,612 846,253 1,725 1,456 849,434 12,874 862,308 19,966 33,223 8,876 62,065 62,065...

  • Page 104
    ... Total $ 1,621,799 1,621,799 1,621,799 114,089 1,735,888 Expenses: Self-storage cost of operations Ancillary cost of operations Depreciation and amortization General and administrative Asset impairment charges 523,113 355,315 297 878,725 743,074 1,771 8,953 753,798 3,696 757,494 28,190...

  • Page 105
    ...$1.7 billion. 14. Supplementary Quarterly Financial Data (unaudited) March 31, 2013 Three Months Ended June 30, September 30, 2013 2013 (Amounts in thousands, except per share data) Self-storage and ancillary revenues Self-storage and ancillary cost of operations Depreciation and amortization Income...

  • Page 106
    ...are under contract to acquire (subject to customary closing conditions) one self-storage facility in Austin, Texas), consisting of approximately 86,000 in net rentable square feet, at a total cost of $10.8 million in cash. On January 28, 2014, our joint venture partner in Shurgard Europe acquired 51...

  • Page 107
    PUBLIC STORAGE EXHIBIT 12 - STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 2013 2012 Year Ended December 31, 2011 2010 2009 Income from continuing operations...322 30,634 Cumulative preferred share cash dividends Preferred partnership unit cash distributions Allocations pursuant ...

  • Page 108
    ...Storage Centers, Inc. 2000 Long Term Incentive Plan, Shurgard Storage Centers, Inc. 1995 Long Term Incentive Compensation Plan; (4) of our reports dated February 25, 2014, with respect to the consolidated financial statements and schedule of Public Storage and the effectiveness of internal control...

  • Page 109
    ... or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ Ronald L. Havner, Jr. Name: Ronald L. Havner, Jr. Title: Chairman, Chief Executive Officer & President Date: February 25, 2014 Exhibit 31.1

  • Page 110
    ... and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ John Reyes Name: John Reyes Title: Chief Financial Officer Date: February 25, 2014...

  • Page 111
    ... In connection with the Annual Report on Form 10-K of Public Storage (the "Company") for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Ronald L. Havner, Jr., as Chairman, Chief Executive Officer and President of the...

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  • Page 115
    ....com/investor Shareholder online inquiries: www-us.computershare.com/investor/contact Independent Registered Public Accounting Firm PS Insurance Capri L. Haga President Ernst & Young LLP Los Angeles, CA Shurgard Self Storage S.C.A. (Europe) Marc Oursin Chief Executive Officer Annual Meeting of...

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    ® Public Storage 701 Western Avenue, Glendale, California 91201-2349 ฀ ฀฀ ฀฀ (SKU 002CSN34F8)