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41
incurred in connection with Shurgard Europe’s refinancing activities completed in July 2014, costs
associated with the facilities acquired in 2014, and a contingent loss incurred in 2014, offset partially by
improved property operations. Equity in earnings from Shurgard Europe decreased to $32.7 million for
2013 from $33.2 million for the same period in 2012. For purposes of recording our equity in earnings
from Shurgard Europe, the Euro was translated into U.S. Dollars based upon average exchange rates of
1.329 for 2014, 1.328 for 2013 and 1.285 for 2012.
At least in the short-term, our future earnings from Shurgard Europe will be affected primarily by
the operating results of its existing facilities, as well as the exchange rate between the U.S. Dollar and
currencies in the countries Shurgard Europe conducts its business, principally the Euro.
During the fourth quarter of 2014 and the early part of 2015, the value of the U.S. Dollar has
increased substantially relative to the Euro. At February 20, 2015, the exchange rate was 1.14 U.S. Dollars
per Euro. If the exchange rate remained constant throughout 2015 at the rate of 1.14 U.S. Dollars per Euro,
our equity in earnings would decrease approximately 14% ($4.7 million) in 2015, all other things being
equal.
Shurgard Europe’s Same Store Facilities: The Shurgard Europe’s Same Store facilities
represents the 174 facilities (9.2 million net rentable square feet, representing 89% of the aggregate net
rentable square feet of Shurgard Europe’s self-storage portfolio) that have been consolidated and operated
by Shurgard Europe on a stabilized basis since January 1, 2012 and therefore provide meaningful
comparisons for 2012, 2013 and 2014. We evaluate the performance of these facilities because Shurgard
Europe’s ability to effectively manage stabilized facilities represents an important measure of its ability to
grow its earnings over the long-term.
The following table reflects 100% of the operating results of those 174 facilities. For comparison
purposes, the 2013 and 2012 results are presented in U.S. Dollars using the same historical exchange rate
for 2014. However, only our pro rata share of the operating results for these facilities, based upon the
actual exchange rates for each period, is included in “equity in earnings of unconsolidated real estate
entities” on our statements of income.
In Note 4 to our December 31, 2014 financial statements, we disclose Shurgard Europe’s
consolidated operating results for the years ended December 31, 2014, 2013 and 2012. Shurgard Europe’s
consolidated operating results include 18 additional facilities that are not Same Store Facilities, and are
based upon historical exchange rates rather than constant exchange rates for each of the respective periods.