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Press release from Business Wire

Public Storage Reports Results for the Second Quarter Ended June 30, 2012

Thursday, August 02, 2012

Public Storage Reports Results for the Second Quarter Ended June 30, 201217:08 EDT Thursday, August 02, 2012 GLENDALE, Calif. (Business Wire) -- Public Storage (NYSE:PSA) announced today operating results for the second quarter ended June 30, 2012. Operating Results for the Three Months Ended June 30, 2012 For the three months ended June 30, 2012, net income allocable to our common shareholders was $132.3 million compared to $131.5 million for the same period in 2011. Diluted earnings per common share was flat at $0.77 for each period, as improved property operations and reduced income allocations to our preferred shareholders were offset by a $34.2 million reduction in income caused by foreign currency exchange gains and losses incurred in translating the value of our Euro-denominated loan receivable from Shurgard Europe into a U.S. Dollar equivalent. Revenues for the Same Store Facilities (see table below) increased 5.1% or $19.2 million in the quarter ended June 30, 2012 as compared to the same period in 2011, primarily due to higher realized annual rent per occupied square foot. Cost of operations for the Same Store Facilities declined by 1.4% or $1.7 million in the quarter ended June 30, 2012 as compared to the same period in 2011. Net operating income for our Same Store Facilities increased 8.3% or $20.9 million in the quarter ended June 30, 2012 as compared to the same period in 2011. Net operating income for our non-Same Store facilities increased $4.9 million in the quarter ended June 30, 2012 as compared to the same period in 2011. Operating Results for the Six Months Ended June 30, 2012 For the six months ended June 30, 2012, net income allocable to our common shareholders was $257.7 million or $1.50 per diluted common share, compared to $279.6 million or $1.64 per diluted common share for the same period in 2011, representing a decrease of $21.9 million or $0.14 per diluted common share. This decrease is due to (i) a $53.2 million reduction in income caused by foreign currency exchange gains and losses incurred in translating the value of our Euro-denominated loan receivable from Shurgard Europe into a U.S. Dollar equivalent, (ii) a $31.0 million reduction in income allocated to common shareholders, in connection with applying EITF D-42 to preferred equity redemptions, offset partially by (iii) improved property operations and (iv) reduced income allocations to our preferred shareholders based upon distributions paid. Revenues for the Same Store Facilities (see table below) increased 4.9% or $36.6 million in the six months ended June 30, 2012 as compared to the same period in 2011, primarily due to higher realized annual rent per occupied square foot. Cost of operations for the Same Store Facilities increased by 0.3% or $0.7 million in the six months ended June 30, 2012 as compared to the same period in 2011. Net operating income for our Same Store Facilities increased 7.3% or $35.9 million in the six months ended June 30, 2012 as compared to the same period in 2011. Net operating income for our non-Same Store facilities increased $8.9 million in the six months ended June 30, 2012 as compared to the same period in 2011. Funds from Operations For the three months ended June 30, 2012, funds from operations (“FFO”) was $1.38 per diluted common share as compared to $1.39 for the same period in 2011, representing a decrease of $0.01. For the three months ended June 30, 2012, FFO was impacted by a foreign currency exchange loss of $23.7 million (compared to a $10.5 million gain for the same period in 2011) and a $16.8 million charge in applying EITF D-42 due to redemptions of preferred securities (compared to a $15.9 million charge for the same period in 2011). For the six months ended June 30, 2012, FFO was $2.73 per diluted common share as compared to $2.88 for the same period in 2011, representing a decrease of $0.15. For the six months ended June 30, 2012, FFO was impacted by a foreign currency exchange loss of $11.5 million (compared to a $41.7 million gain for the same period in 2011) and a $43.9 million charge in applying EITF D-42 due to redemptions of preferred securities (compared to a $12.9 million charge for the same period in 2011). Our FFO per share for the three and six months ended June 30, 2011 was also reduced $0.01 in each period as a result of costs associated with the acquisition of real estate facilities. The following table provides a summary of the per-share impact of the items noted above (unaudited):             Three Months Ended June 30, Six Months Ended June 30, 2012       2011       PercentageChange 2012       2011       PercentageChange   FFO per diluted common share prior to adjustments for the following items $ 1.62 $ 1.43 13.3 % $ 3.06 $ 2.71 12.9 %   Foreign currency exchange (loss) gain (0.14 ) 0.06 (0.07 ) 0.25 Application of EITF D-42 (0.10 ) (0.09 ) (0.26 ) (0.07 ) Other items, net   -     (0.01 )   -     (0.01 )   FFO per diluted common share, as reported $ 1.38   $ 1.39   (0.7 )% $ 2.73   $ 2.88   (5.2 )%   FFO is a term defined by the National Association of Real Estate Investment Trusts. It is generally defined as net income before depreciation with respect to real estate assets and gains and losses on real estate assets. FFO is presented because management and many analysts consider FFO to be one measure of the performance of real estate companies. In addition, we believe that FFO is helpful to investors as an additional measure of the performance of a real estate investment trust (“REIT”), because net income includes the impact of depreciation, which assumes that the value of real estate diminishes predictably over time, while we believe that the value of real estate fluctuates due to market conditions and in response to inflation. FFO computations do not consider scheduled principal payments on debt, capital improvements, distributions and other obligations of the Company. FFO is not a substitute for our cash flow or net income as a measure of our liquidity or operating performance or our ability to pay dividends. Other REITs may not compute FFO in the same manner; accordingly, FFO may not be comparable among REITs. See the attached reconciliation of net income to FFO. Property Operations – Same Store Facilities The Same Store Facilities represent those facilities that have been owned and operated on a stabilized basis since January 1, 2010 and therefore provide meaningful comparisons for 2011 and 2012. The following table summarizes the historical operating results of these 1,941 facilities (122.5 million net rentable square feet) that represent approximately 94% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at June 30, 2012.             Selected Operating Data for the Same StoreFacilities (1,941 Facilities) (unaudited): Three Months Ended June 30, Six Months Ended June 30, 2012       2011       PercentageChange 2012       2011       PercentageChange (Dollar amounts in thousands, except for weighted average data) Revenues: Rental income $ 374,959 $ 356,345 5.2 % $ 739,087 $ 704,099 5.0 % Late charges and administrative fees collected   19,741     19,198   2.8 %   39,541     37,941   4.2 % Total revenues (a)   394,700     375,543   5.1 %   778,628     742,040   4.9 %   Cost of operations: Property taxes 41,925 40,264 4.1 % 84,983 81,646 4.1 % On-site property manager payroll 24,351 25,419 (4.2 )% 50,279 51,192 (1.8 )% Repairs and maintenance 10,585 10,993 (3.7 )% 22,610 21,758 3.9 % Utilities 8,275 8,573 (3.5 )% 17,699 18,674 (5.2 )% Media advertising 1,891 3,360 (43.7 )% 5,036 7,406 (32.0 )% Other advertising and selling expense 8,665 8,955 (3.2 )% 16,025 16,773 (4.5 )% Other direct property costs (b) 8,669 9,155 (5.3 )% 17,753 18,298 (3.0 )% Supervisory payroll (c) 8,505 8,046 5.7 % 17,439 16,406 6.3 % Allocated overhead (d)   8,177     8,011   2.1 %   19,901     18,918   5.2 % Total cost of operations (a)   121,043     122,776   (1.4 )%   251,725     251,071   0.3 %   Net operating income (e) $ 273,657   $ 252,767   8.3 % $ 526,903   $ 490,969   7.3 %   Gross margin 69.3 % 67.3 % 3.0 % 67.7 % 66.2 % 2.3 % Weighted average for the period: Square foot occupancy (f) 92.6 % 92.3 % 0.3 % 91.4 % 91.1 % 0.3 % Realized annual rent per occupied square foot (g) (h) $ 13.23 $ 12.61 4.9 % $ 13.21 $ 12.62 4.7 % REVPAF (h) (i) $ 12.25 $ 11.64 5.2 % $ 12.07 $ 11.50 5.0 %   Weighted average at June 30: Square foot occupancy 93.1 % 93.1 % - In place annual rent per occupied square foot (j) $ 14.28 $ 13.78 3.6 % Total net rentable square feet (in thousands) 122,464 122,464 -         (a)     Revenues and cost of operations do not include ancillary revenues and expenses generated at the facilities with respect to tenant reinsurance and retail sales.   (b) Other direct property costs include administrative expenses that are solely attributable to the self-storage facilities, such as property insurance, office expenses incurred at the property and by supervisory personnel, telephone and data communication lines at the properties, business license costs and bank charges related to handling the properties' cash deposits.   (c) Supervisory payroll expense represents compensation paid to the management personnel who directly and indirectly supervise the on-site property managers.   (d) Allocated overhead represents administrative expenses for shared general corporate functions, which are allocated to self-storage property operations to the extent their efforts are devoted to self-storage operations. Such functions include data processing, human resources, operational accounting and finance, information technology, marketing and costs of senior executives (other than the Chief Executive Officer and Chief Financial Officer, whose compensation is allocated to general and administrative expense).   (e) Net operating income or “NOI” is a non-GAAP (generally accepted accounting principles) financial measure that excludes the impact of depreciation expense. Although depreciation is an operating expense, we believe that NOI is a meaningful measure of operating performance, because we utilize NOI in making decisions with respect to capital allocations, in determining current property values, segment performance and comparing period-to-period and market-to-market property operating results. NOI is not a substitute for net operating income after depreciation in evaluating our operating results. See attached reconciliation of Same Store NOI to our net income.   (f) Square foot occupancies represent weighted average occupancy levels over the entire period.   (g) Realized annual rent per occupied square foot is computed by annualizing the result of dividing rental income by the weighted average occupied square footage for the period. Realized annual rent per occupied square foot takes into consideration promotional discounts, which reduce rental income from the contractual amounts due.   (h) Late charges and administrative fees are excluded from the computation of realized annual rent per occupied square foot and REVPAF because exclusion of these amounts provides a better measure of our ongoing level of revenue.   (i) Annualized rental income per available square foot (“REVPAF”) represents annualized rental income which excludes late charges and administrative fees divided by total available net rentable square feet. REVPAF takes into consideration promotional discounts that reduce rental income from the contractual amounts due.   (j) In place annual rent per occupied square foot represents annualized contractual rents per occupied square foot without reductions for promotional discounts and excludes late charges and administrative fees.   The following table summarizes selected quarterly financial data with respect to the Same Store Facilities (unaudited):               Three Months Ended March 31       June 30       September 30       December 31 Full Year Total revenues (in 000's): 2012 $ 383,928 $ 394,700 2011 $ 366,497 $ 375,543 $ 393,819 $ 386,196 $ 1,522,055   Total cost of operations (in 000's): 2012 $ 130,682 $ 121,043 2011 $ 128,295 $ 122,776 $ 121,338 $ 104,632 $ 477,041   Property taxes (in 000's): 2012 $ 43,058 $ 41,925 2011 $ 41,382 $ 40,264 $ 39,550 $ 26,063 $ 147,259   Repairs and maintenance (in 000's): 2012 $ 12,025 $ 10,585 2011 $ 10,765 $ 10,993 $ 10,960 $ 12,519 $ 45,237   Media advertising (in 000's): 2012 $ 3,145 $ 1,891 2011 $ 4,046 $ 3,360 $ 2,144 $ 992 $ 10,542   REVPAF: 2012 $ 11.89 $ 12.25 2011 $ 11.36 $ 11.64 $ 12.16 $ 11.96 $ 11.78   Weighted average realized annual rent per occupied square foot for the period: 2012 $ 13.17 $ 13.23 2011 $ 12.65 $ 12.61 $ 13.19 $ 13.26 $ 12.92   Weighted average square foot occupancy levels for the period: 2012 90.3 % 92.6 % 2011 89.8 % 92.3 % 92.2 % 90.2 % 91.2 %   Investing Activities During the three months ended June 30, 2012, we acquired four self-storage properties (316,000 net rentable square feet), located in California (two), Florida and New York, for approximately $46 million in cash. On July 19, 2012, we acquired one self-storage facility (61,000 net rentable square feet) located in California, for approximately $6 million in cash. As of August 2, 2012, we were under contract, subject to contingencies, to acquire two properties for approximately $31 million. Capital Activities In the three months ended June 30, 2012, we issued $287.5 million of our 5.625% Series U Preferred Shares and we called $416 million of our preferred shares for redemption. Each of the series listed below was classified as a liability on our June 30, 2012 balance sheet, and we recognized the associated EITF D-42 charges during the three months ended June 30, 2012. Following are the respective series, redemption amount (prior to accrued dividends) and redemption date: 7.00% Series N Preferred Shares, $172.5 million, July 2, 2012 6.60% Series C Preferred Shares, $110.6 million, July 12, 2012 6.50% Series W Preferred Shares, $132.5 million, August 6, 2012 Distributions Declared On August 2, 2012, our Board of Trustees declared a regular common quarterly dividend of $1.10 per common share. The Board also declared dividends with respect to our various series of preferred shares. All the dividends are payable on September 27, 2012 to shareholders of record as of September 12, 2012. Second Quarter Conference Call A conference call is scheduled for August 3, 2012 at 10:00 a.m. (PDT) to discuss the second quarter ended June 30, 2012 earnings results. The domestic dial-in number is (866) 406-5408 and the international dial-in number is (973) 582-2770 (conference ID number for either domestic or international is 98799743). A simultaneous audio web cast may be accessed by using the link at www.publicstorage.com under “Company Info, Investor Relations, Upcoming Events.” A replay of the conference call may be accessed through August 18, 2012 by calling (800) 585-8367 (domestic) or (404) 537-3406 (international) or by using the link at www.publicstorage.com under “Company Info, Investor Relations, Webcasts.” All forms of replay utilize conference ID number 98799743. About Public Storage Public Storage, a member of the S&P 500 and FT Global 500, is a REIT that primarily acquires, develops, owns and operates self-storage facilities. The Company's headquarters are located in Glendale, California. At June 30, 2012, the Company had interests in 2,068 self-storage facilities located in 38 states with approximately 132 million net rentable square feet in the United States and 189 storage facilities located in seven Western European nations with approximately ten million net rentable square feet operated under the “Shurgard” brand. The Company also owns a 42% common equity interest in PS Business Parks, Inc. (NYSE:PSB) which owned and operated approximately 27.2 million rentable square feet of commercial space, primarily flex, multitenant office and industrial space, at June 30, 2012. Additional information about Public Storage is available on our website, www.publicstorage.com. Forward-Looking Statements All statements in this press release, other than statements of historical fact, are forward-looking statements which may be identified by the use of the words “expects,” “believes,” “anticipates,” “should,” “estimates” and similar expressions. These forward-looking statements involve known and unknown risks and uncertainties, which may cause Public Storage's actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance are described from time to time in Public Storage's filings with the Securities and Exchange Commission, including in Item 1A, “Risk Factors” in Public Storage's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, Form 10-Q for the period ended June 30, 2012 expected to be filed on or before August 9, 2012, our other Quarterly Reports on Form 10-Q and current reports on Form 8-K. These risks include, but are not limited to, the following: general risks associated with the ownership and operation of real estate, including changes in demand for our storage facilities, potential liability for environmental contamination, adverse changes in tax, real estate and zoning laws and regulations and the impact of natural disasters; risks associated with downturns in the national and local economies in the markets in which we operate; the impact of competition from new and existing storage and commercial facilities and other storage alternatives; difficulties in our ability to successfully evaluate, finance, integrate into our existing operations and manage acquired and developed properties; risks related to our participation in joint ventures; risks associated with international operations including, but not limited to, unfavorable foreign currency rate fluctuations that could adversely affect our earnings and cash flows; the impact of the regulatory environment as well as national, state and local laws and regulations including, without limitation, those governing REITs; risks associated with a possible failure by us to qualify as a REIT under the Internal Revenue Code of 1986, as amended; disruptions or shutdowns of our automated processes and systems; difficulties in raising capital at a reasonable cost; delays in the development process; and economic uncertainty due to the impact of war or terrorism. Public Storage disclaims any obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, new estimates, or other factors, events or circumstances after the date of this press release, except where expressly required by law.             PUBLIC STORAGESELECTED INCOME STATEMENT DATA (Unaudited)   Three Months EndedJune 30, Six Months EndedJune 30, 2012       2011 2012       2011 (Amounts in thousands, except for per share data) Revenues: Self-storage rental income $ 420,466 $ 394,953 $ 827,855 $ 779,671 Ancillary operations 31,733 28,891 61,009 55,806 Interest and other income   5,540     10,575     11,195     18,343     457,739     434,419     900,059     853,820   Expenses: Cost of operations: Self-storage facilities 129,355 129,632 268,227 264,874 Ancillary operations 9,781 9,597 19,299 18,511 Depreciation and amortization 88,533 89,098 175,415 177,544 General and administrative 12,414 12,593 28,819 26,828 Interest expense   5,067     5,933     10,401     12,917     245,150     246,853     502,161     500,674   Income from continuing operations before equity in earnings of unconsolidated real estate entities, foreign currency exchange (loss) gain and gain (loss) on disposition of real estate investments 212,589 187,566 397,898 353,146 Equity in earnings of unconsolidated real estate entities (a) 8,596 12,770 17,711 26,486 Foreign currency exchange (loss) gain (23,657 ) 10,496 (11,500 ) 41,748 Gain (loss) on disposition of real estate investments   1,263     (70 )   1,263     128   Income from continuing operations 198,791 210,762 405,372 421,508 Discontinued operations   140     179     281     1   Net income 198,931 210,941 405,653 421,509 Net income allocable to noncontrolling equity interests   (788 )   (4,497 )   (1,658 )   (8,957 ) Net income allocable to Public Storage shareholders $ 198,143   $ 206,444   $ 403,995   $ 412,552   Allocation of net income to Public Storage shareholders: Preferred shareholders, based on distributions paid $ 51,910 $ 58,639 $ 107,005 $ 116,256 Preferred shareholders, based on redemptions 13,427 15,899 38,327 15,899 Restricted share units 463 391 977 823 Common shareholders   132,343     131,515     257,686     279,574   $ 198,143   $ 206,444   $ 403,995   $ 412,552   Per common share: Net income per share – Basic $ 0.78   $ 0.78   $ 1.51   $ 1.65   Net income per share – Diluted $ 0.77   $ 0.77   $ 1.50   $ 1.64   Weighted average common shares – Basic   170,496     169,492     170,402     169,404   Weighted average common shares – Diluted   171,560     170,401     171,487     170,392     (a)     Due to the application of EITF D-42 to PSB's preferred equity redemptions, equity in earnings of unconsolidated real estate entities has been reduced by $3.4 million and $5.6 million for the three and six months ended June 30, 2012, respectively, compared to an increase of $3.0 million in the six months ended June 30, 2011.       PUBLIC STORAGESELECTED BALANCE SHEET DATA         June 30, 2012 (unaudited)                 December 31, 2011 (Amounts in thousands, except shareand per share data) ASSETS Cash and cash equivalents $ 438,475 $ 139,008 Operating real estate facilities: Land and buildings, at cost 10,912,029 10,777,576 Accumulated depreciation   (3,568,254 )   (3,398,379 ) 7,343,775 7,379,197   Investment in unconsolidated real estate entities 703,458 714,627 Goodwill and other intangible assets, net 212,419 209,833 Loan receivable from unconsolidated real estate entity 391,146 402,693 Other assets   89,674     87,204   Total assets $ 9,178,947   $ 8,932,562     LIABILITIES AND EQUITY Notes payable $ 368,728 $ 398,314 Preferred shares called for redemption 415,625 - Accrued and other liabilities   226,825     210,966   Total liabilities 1,011,178 609,280   Redeemable noncontrolling interests in subsidiaries - 12,355   Equity: Public Storage shareholders' equity: Cumulative Preferred Shares of beneficial interest, $0.01 par value, 100,000,000 shares authorized, 122,893 shares issued (in series) and outstanding (475,000 at December 31, 2011), at liquidation preference 3,072,325 3,111,271 Common Shares of beneficial interest, $0.10 par value, 650,000,000 shares authorized, 170,543,534 shares issued and outstanding (170,238,805 at December 31, 2011) 17,054 17,024 Paid-in capital 5,414,682 5,442,506 Accumulated deficit (339,020 ) (259,578 ) Accumulated other comprehensive loss   (27,433 )   (23,014 ) Total Public Storage shareholders' equity 8,137,608 8,288,209 Equity of permanent noncontrolling interests in subsidiaries   30,161     22,718   Total equity   8,167,769     8,310,927   Total liabilities and equity $ 9,178,947   $ 8,932,562       Shurgard Europe Same Store Selected Operating Data The Shurgard Europe Same Store Pool represents the 163 facilities (8.7 million net rentable square feet) that have been wholly-owned and operated by Shurgard Europe on a stabilized basis since January 1, 2010 and therefore provide meaningful comparisons for 2011 and 2012. We account for our investment in Shurgard Europe under the equity method of accounting; accordingly, our pro-rata share of the operating results for these facilities is included in “equity in earnings of unconsolidated real estate entities” on our income statement.             Selected Operating Data for the Shurgard EuropeSame Store Pool (163 facilities) (unaudited): Three Months Ended June 30, Six Months Ended June 30, 2012       2011       PercentageChange 2012       2011       PercentageChange (Dollar amounts in thousands, except weighted average data,utilizing constant exchange rates (a))   Revenues (including late charges and administrative fees) $ 47,031 $ 46,834 0.4 % $ 94,464 $ 94,277 0.2 %   Cost of operations (excluding depreciation and amortization expenses)   20,209     20,578   (1.8 )%   40,942     41,473   (1.3 )%   Net operating income $ 26,822   $ 26,256   2.2 % $ 53,522   $ 52,804   1.4 %   Gross margin 57.0 % 56.1 % 1.6 % 56.7 % 56.0 % 1.3 % Weighted average for the period: Square foot occupancy (b) 83.4 % 85.3 % (2.2 )% 83.6 % 85.0 % (1.6 )% Realized annual rent per occupied square foot (c) (d) $ 25.52 $ 24.84 2.7 % $ 25.59 $ 25.09 2.0 % REVPAF (d) (e) $ 21.29 $ 21.19 0.5 % $ 21.40 $ 21.32 0.4 %   Weighted average at June 30: Square foot occupancy 83.8 % 86.1 % (2.7 )% In place annual rent per occupied square foot (f) $ 27.93 $ 27.09 3.1 % Total net rentable square feet (in thousands) 8,677 8,677 -   Average Euro to U.S. Dollar exchange rates: (a) Constant exchange rates used herein 1.284 1.284 - 1.297 1.297 - Actual historical exchange rates 1.284 1.438 (10.7 )% 1.297 1.402 (7.5 )%         (a)     In order to isolate changes in the underlying operations from the impact of exchange rates, the amounts in this table are presented on a constant exchange rate basis. The amounts for the three and six months ended June 30, 2011 have been restated using the actual exchange rates for the three and six months ended June 30, 2012.   (b) Square foot occupancies represent weighted average occupancy levels over the entire period.   (c) Realized annual rent per occupied square foot is computed by annualizing the result of dividing rental income by the weighted average occupied square footage for the period. Realized annual rent per occupied square foot takes into consideration promotional discounts, which reduce rental income from the contractual amounts due.   (d) Late charges and administrative fees are excluded from the computation of realized annual rent per occupied square foot and REVPAF because exclusion of these amounts provides a better measure of our ongoing level of revenue.   (e) REVPAF represents annualized rental income which excludes late charges and administrative fees divided by total available net rentable square feet. REVPAF takes into consideration promotional discounts that reduce rental income from the contractual amounts due.   (f) In place annual rent per occupied square foot represents annualized contractual rents per occupied square foot without reductions for promotional discounts and excludes late charges and administrative fees.                 PUBLIC STORAGESELECTED FINANCIAL DATAComputation of Funds from Operations and Funds Available for Distribution (Unaudited)   Three Months EndedJune 30, Six Months EndedJune 30, 2012       2011 2012       2011 (Amounts in thousands, except per share data) Computation of FFO allocable to Common Shares: Net Income $ 198,931 $ 210,941 $ 405,653 $ 421,509 Add back – depreciation and amortization, including discontinued operations 88,588 89,186 175,526 177,739 Add back – depreciation from unconsolidated real estate investments 18,823 17,638 38,564 34,426 Eliminate – (gain) loss on sale of real estate investments, including discontinued operations   (1,263 )   70     (1,263 )   125   FFO allocable to our equity holders 305,079 317,835 618,480 633,799 Less allocation to noncontrolling equity interests in subsidiaries   (1,502 )   (4,983 )   (3,220 )   (9,912 ) FFO allocable to Public Storage shareholders 303,577 312,852 615,260 623,887 Less allocations of FFO to: Preferred shareholders, based on distributions paid (51,910 ) (58,639 ) (107,005 ) (116,256 ) Preferred shareholders, based on redemptions (13,427 ) (15,899 ) (38,327 ) (15,899 ) Restricted share unitholders   (869 )   (691 )   (1,792 )   (1,419 ) FFO allocable to Common Shares $ 237,371   $ 237,623   $ 468,136   $ 490,313     Diluted weighted average common shares outstanding   171,560     170,401     171,487     170,392   FFO per diluted common share $ 1.38   $ 1.39   $ 2.73   $ 2.88     Computation of Funds Available for Distribution (“FAD”): FFO allocable to Common Shares $ 237,371 $ 237,623 $ 468,136 $ 490,313 Eliminate effect of non-cash items on FFO: Share-based compensation expense 5,978 6,751 11,283 11,821 Foreign currency exchange loss (gain) 23,657 (10,496 ) 11,500 (41,748 ) Application of EITF D-42 16,830 15,899 43,915 12,882 Less: Capital improvements to real estate facilities   (26,020 )   (32,418 )   (40,298 )   (44,292 )   FAD (a) $ 257,816   $ 217,359   $ 494,536   $ 428,976     Distribution to common shareholders $ 187,589   $ 161,029   $ 374,996   $ 296,536     Distribution payout ratio (b)   72.8 %   74.1 %   75.8 %   69.1 %   Distributions per Common Share $ 1.10   $ 0.95   $ 2.20   $ 1.75           (a)     Funds available for distribution (“FAD”) is presented because many analysts consider it to be a measure of the performance and liquidity of real estate companies and because we believe that FAD is helpful to investors as an additional measure of the performance of a REIT. FAD is not a substitute for our cash flow or net income as a measure of our liquidity, operating performance, or our ability to pay dividends. FAD does not take into consideration required principal payments on debt. Other REITs may not compute FAD in the same manner; accordingly, FAD may not be comparable among REITs.   (b) The distribution payout ratio is computed by dividing the distribution paid by FAD.                 PUBLIC STORAGESELECTED FINANCIAL DATAReconciliation of Same Store Data and Net Operating Income toConsolidated Data of the Company (Unaudited)   Three Months EndedJune 30, Six Months EndedJune 30, 2012       2011 2012       2011 (Amounts in thousands) Revenues for: Same Store Facilities $ 394,700 $ 375,543 $ 778,628 $ 742,040 Non Same Store Facilities (a)   25,766     19,410     49,227     37,631     Self-storage revenues   420,466     394,953     827,855     779,671     Self-storage cost of operations for: Same Store Facilities 121,043 122,776 251,725 251,071 Non Same Store Facilities (a)   8,312     6,856     16,502     13,803     Self-storage cost of operations   129,355     129,632     268,227     264,874   Net operating income for: Same Store Facilities 273,657 252,767 526,903 490,969 Non Same Store Facilities (a)   17,454     12,554     32,725     23,828     Self-storage net operating income 291,111 265,321 559,628 514,797 Ancillary revenues 31,733 28,891 61,009 55,806 Interest and other income 5,540 10,575 11,195 18,343 Ancillary cost of operations (9,781 ) (9,597 ) (19,299 ) (18,511 ) Depreciation and amortization (88,533 ) (89,098 ) (175,415 ) (177,544 ) General and administrative expense (12,414 ) (12,593 ) (28,819 ) (26,828 ) Interest expense (5,067 ) (5,933 ) (10,401 ) (12,917 ) Equity in earnings of unconsolidated real estate entities 8,596 12,770 17,711 26,486 Foreign currency exchange (loss) gain (23,657 ) 10,496 (11,500 ) 41,748 Gain (loss) on disposition of real estate investments 1,263 (70 ) 1,263 128 Discontinued operations   140     179     281     1   Net income $ 198,931   $ 210,941   $ 405,653   $ 421,509           (a)     We consolidate the operating results of 112 additional self-storage facilities that are not Same Store Facilities. Since January 1, 2012, we have acquired ten self-storage facilities from third parties, and on June 1, 2012, we commenced consolidating three self-storage facilities that we previously accounted for on the equity method. Included in the table above for the three and six months ended June 30, 2012, are revenues totaling $1,473,000 and $1,611,000, respectively, and cost of operations totaling $686,000 and $735,000, respectively, for these 13 facilities. Public StorageClemente Teng(818) 244-8080, Ext. 1141