Public Storage 2014 Annual Report Download - page 9

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6
A breakdown of operating results follows:
Net Operating Income
(Amounts in millions)
2014 2013 2012
Same Store $ 120 $ 117 $ 121
Acquired/developed properties 9 8 8
Total $ 129 $ 125 $ 129
Public Storage’s share $ 63 $ 61 $ 63
Total assets (before depreciation reserves) $ 1,603 $ 1,709 $ 1,643
Since 2008, most of the operating cash flow at Shurgard Europe has been used to pay down debt. In 2014,
Shurgard Europe had reduced its leverage to a level enabling it to obtain very favorable financing, seven to twelve
year term at a blended rate of 3%, which repaid most of the loan from Public Storage and provided capital to
again grow.
Shurgard Europe’s portfolio had not increased much over the past six years. But in 2014 it resumed expansion,
acquiring five properties in Germany and beginning development of three properties in London.
In 2015 we anticipate Marc and Jean Kreusch, Shurgard Europe’s very capable CFO, will grow the company
in three ways: improving occupancies and revenues at the same store properties; developing and acquiring new
properties; and expanding its capital base, either with an IPO or a debt financing. I am very excited about our
prospects in Europe.
Commercial Properties
Our commercial properties, primarily our investment in PSB, performed well in 2014 as the improving economy
led to greater demand and better pricing for commercial space, which we expect will accelerate in 2015. Low
interest rates and numerous third-party purchasers posed challenges to PSB’s acquisition program. Joe Russell,
PSB’s CEO, and his team took advantage of these conditions and exited the Portland, Oregon and Phoenix,
Arizona markets. Given the environment, PSB was not able to deploy all of the sales proceeds and a portion of
the gain was distributed to shareholders. Our share was $40 million.
A breakdown of operating results follows:
Net Operating Income
(Amounts in millions)
2014 2013 2012
PSB’s Same Park operations $ 226 $ 222 $ 217
PSB’s acquired/developed properties 26 19 15
Public Storage’s owned commercial properties 10 9 9
Total $ 262 $ 250 $ 241
Public Storage’s share $ 117 $ 110 $ 105
Total assets (before depreciation reserves) $ 3,133 $ 3,284 $ 3,131
The improving economy should enhance PSB’s ability to drive rental rates and reduce capital (tenant improvements
and broker commissions) required to re-lease properties in 2015.