Public Storage 2014 Annual Report Download - page 40

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26
acquisitions, and approximately $18 million in maturities on notes payable. In addition, we expect that our
capital commitments will continue to grow during 2015 as we continue to seek additional development and
acquisition opportunities.
See Liquidity and Capital Resources for further information regarding our capital requirements
and anticipated sources of capital to fund such requirements.
Results of Operations
Operating results for 2014 as compared to 2013
For the year ended December 31, 2014, net income allocable to our common shareholders was
$908.2 million or $5.25 per diluted common share, compared to $844.7 million or $4.89 per diluted
common share for the same period in 2013, representing an increase of $63.5 million or $0.36 per diluted
common share. This increase is due primarily to (i) a $157.2 million increase in self-storage net operating
income and (ii) our $36.5 million equity share of PSB’s gain on sale of real estate included in our equity in
earnings of real estate entities, offset partially by (iii) a $49.7 million increase in depreciation and
amortization expense associated with acquired facilities, (iv) a $24.1 million reduction associated with
foreign currency exchange gains and losses, (v) an $28.3 million increase in earnings allocated to preferred
shareholders due to the issuance of additional preferred shares, and (vi) a $17.7 million decrease in interest
and other income due primarily to the disposition of 51% of our loan receivable from Shurgard Europe.
Operating results for 2013 as compared to 2012
For the year ended December 31, 2013, net income allocable to our common shareholders was
$844.7 million or $4.89 per diluted common share, compared to $669.7 million or $3.90 per diluted
common share for the same period in 2012, representing an increase of $175.0 million or $0.99 per diluted
common share. This increase is due primarily to (i) a $124.6 million increase in self-storage net operating
income, (ii) a $68.9 million reduction in income allocated to preferred shareholders due to redemptions,
including our equity share of PSB, (iii) an $8.2 million increase from foreign currency exchange gains,
offset partially by (iv) a $29.6 million increase in depreciation and amortization associated with acquired
real estate facilities.
Funds from Operations and Core Funds from Operations
Funds from Operations (“FFO”) and FFO per share are non-GAAP (generally accepted accounting
principles) measures defined by the National Association of Real Estate Investment Trusts and are
considered helpful measures of REIT performance by REITs and many REIT analysts. FFO represents net
income before real estate depreciation, gains and losses, and impairment charges, which are excluded
because they are based upon historical real estate costs and assume that building values diminish ratable
over time, while we believe that real estate values fluctuate due to market conditions. FFO and FFO per
share are not a substitute for net income or earnings per share. FFO is not a substitute for GAAP net cash
flow in evaluating our liquidity or ability to pay dividends, because it excludes financing activities
presented on our statements of cash flows. In addition, other REITs may compute these measures
differently, so comparisons among REITs may not be helpful.
For the year ended December 31, 2014, FFO was $7.98 per diluted common share, as compared to
$7.53 for the same period in 2013, representing an increase of 6.0%, or $0.45 per diluted common share.
For the year ended December 31, 2013, FFO was $7.53 per diluted common share, as compared to
$6.31 for the same period in 2012, representing an increase of 19.3%, or $1.22 per diluted common share.
The following tables reconcile diluted earnings per share to FFO per share, and sets forth the
computation of FFO per share: