Public Storage
Annual Report 2004

Plain-text annual report

PSI PubStor Covers_rrd_revN1 3/30/05 3:39 PM Page 1 2 0 0 4 A n n u a l R e p o r t P u b l i c S t o r a g e , I n c . A n n u a l R e p o r t 2 0 0 4 P u b l i c S t o r a g e , I n c . 701 Western Avenue, Glendale, California 91201-2349 • (818) 244-8080 • www.publicstorage.com P u b l i c S t o r a g e , I n c . (513-AR-05) PSI PubStor Covers_rrd 3/31/05 5:51 PM Page 2 P r o p e r t i e s (as of December 31, 2004) Location Alabama Arizona California Colorado Connecticut Delaware Florida Georgia Hawaii Illinois Indiana Kansas Kentucky Louisiana Maryland Massachusetts Michigan Minnesota Missouri Number of Properties(1) Net Rentable Square Feet Location Number of Properties(1) Net Rentable Square Feet 22 15 311 50 13 4 149 64 6 96 18 22 6 11 43 18 15 26 38 895,000 1,003,000 19,278,000 3,189,000 710,000 230,000 9,052,000 3,776,000 322,000 5,888,000 1,050,000 1,316,000 331,000 852,000 2,458,000 1,132,000 836,000 1,635,000 2,172,000 Nebraska Nevada New Hampshire New Jersey New York North Carolina Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina Tennessee Texas Utah Virginia Washington Wisconsin 1 22 2 44 39 24 30 8 25 20 2 24 23 169 7 39 43 15 46,000 1,409,000 131,000 2,583,000 2,335,000 1,266,000 1,863,000 429,000 1,171,000 1,360,000 64,000 1,082,000 1,311,000 11,438,000 398,000 2,388,000 2,747,000 1,071,000 (1) Storage and properties combining self-storage and commercial space. Totals 1,464 89,217,000 C o r p o r a t e D a t a (as of March 15, 2005) Directors B. Wayne Hughes (1980) Chairman of the Board Ronald L. Havner, Jr. (2002) Vice-Chairman of the Board and Chief Executive Officer Harvey Lenkin (1991) President and Chief Operating Officer Robert J. Abernethy (1980) President of American Standard Development Company and Self-Storage Management Company Dann V. Angeloff (1980) President of The Angeloff Company William C. Baker (1991) Chairman and Chief Executive Officer of Callaway Golf Company John T. Evans (2003) Partner, Osler, Hoskin & Harcourt LLP Uri P. Harkham (1993) President and Chief Executive Officer of the Jonathan Martin Fashion Group B. Wayne Hughes, Jr. (1998) President of Sweet Blessings, LLC and Vice President of American Commercial Equities, LLC Daniel C. Staton (1999) President of Walnut Capital Partners ( ) = date director was elected to the Board Executive Officers Self-Storage Operations Ronald L. Havner, Jr. Vice-Chairman of the Board and Chief Executive Officer Harvey Lenkin President and Chief Operating Officer John Reyes Senior Vice President and Chief Financial Officer John E. Graul Senior Vice President John S. Baumann Senior Vice President and Chief Legal Officer David F. Doll Senior Vice President Corporate Officers Drew J. Adams Vice President and Director of Taxes Todd Andrews Vice President and Controller Nargis Choudhry Vice President and Real Estate Counsel Obren B. Gerich Vice President David Goldberg Vice President, Senior Counsel and Secretary Stephanie G. Heim Vice President and Corporate Counsel J. Alan Herd Vice President and Director of Human Resources Brent C. Peterson Vice President and Chief Information Officer A. Timothy Scott Vice President and Tax Counsel John E. Graul President Harvey A. Grindeland Senior Vice President and Divisional Manager Peter G. Panos Senior Vice President and Divisional Manager John M. Sambuco Senior Vice President and Divisional Manager David D. Young Senior Vice President and Divisional Manager Noel J. Evans Senior Vice President—Marketing Alan Grossman Senior Vice President and Chief Financial Officer Randy L. Crossley National Facilities Director Ancillary Businesses Thomas Miller President—PS Orangeco Obren B. Gerich President—PS Insurance Real Estate Division David F. Doll President Michael F. Roach Senior Vice President—Development and Construction Michael K. McGowan Senior Vice President—Acquisitions James F. Fitzpatrick Senior Vice President—Entitlements Louis Klichan Senior Vice President and Controller Professional Services Certifications Stock Exchange Listing Additional Information Sources Transfer Agent EquiServe Trust Company, N.A. P.O. Box 43010 Providence, RI 02940-3010 (781) 575-3120 www.equiserve.com Independent Auditors Ernst & Young LLP Los Angeles, California The most recent certifications by our Chief Executive Officer, President and Chief Operating Officer and Senior Vice President and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed as exhibits to our Form 10-K. Our Chief Executive Officer's most recent annual certification to the New York Stock Exchange was sub- mitted on May 19, 2004. The Company’s common stock trades under ticker symbol PSA on the New York Stock Exchange and Pacific Exchange. PSA The Company’s website, www.publicstorage.com, contains financial information of interest to share- holders, brokers, etc. Public Storage, Inc. is a member and active sup- porter of the National Association of Real Estate Investment Trusts. PSI Letter doc_rrd_RD2 3/30/05 10:56 PM Page 1 Selected Financial Highlights Revenues: Rental income and tenant reinsurance premiums Interest and other income Expenses: Cost of operations Depreciation and amortization General and administrative Interest expense Income from continuing operations before equity in earnings of real estate entities, gain (loss) on disposition of real estate investments and casualty loss and minority interest in income Equity in earnings of real estate entities Gain (loss) on disposition of real estate investments and casualty loss Minority interest in income (3) Income from continuing operations Discontinued operations (2) Net income Per Common Share: Distributions Net income - basic Net income - diluted Weighted average common shares - basic Weighted average common shares - diluted Balance Sheet Data: Total assets Total debt Minority interest (other partnership interests) Minority interest (preferred partnership interests) Shareholders’ equity Other Data: Net cash provided by operating activities Net cash used in investing activities Net cash used in financing activities For the year ended December 31, 2004(1) 2003(1) 2002(1) 2001(1) 2000(1) (Amounts in thousands, except per share data) $ 917,811 $ 856,040 $ 815,052 $ 755,020 $ 687,394 18,836 706,230 14,225 769,245 8,628 864,668 10,165 927,976 8,661 823,713 330,531 183,148 18,813 760 533,252 311,414 184,145 17,127 1,121 513,807 281,497 175,834 15,619 3,809 476,759 252,068 164,025 21,038 3,227 440,358 237,955 146,996 21,306 3,293 409,550 394,724 22,564 350,861 24,966 346,954 29,888 328,887 38,542 296,680 39,319 67 (49,913) 367,442 (1,229) 576 (38,356) 298,219 (1,131) $ 366,213 $ 336,653 $ 318,738 $ 324,208 $ 297,088 1,007 (43,703) 333,131 3,522 (2,541) (44,087) 330,214 (11,476) 4,091 (46,015) 325,505 (1,297) $ $ $ 1.80 $ 1.39 $ 1.38 $ 1.80 $ 1.29 $ 1.28 $ 1.80 $ 1.15 $ 1.14 $ 1.69 $ 1.41 $ 1.39 $ 127,836 128,681 125,181 126,517 123,005 124,571 122,310 123,577 1.48 1.41 1.41 131,566 131,657 $5,204,790 $ 4,968,069 $ 4,843,662 $ 4,625,879 $4,513,941 76,030 $ 115,867 $ 168,552 $ 156,003 $ 145,614 $ $ 118,903 $ 141,137 $ 154,499 $ 169,601 $ 167,918 $ 310,000 $ 285,000 $ 285,000 $ 285,000 $ 365,000 $4,429,967 $ 4,219,799 $ 4,158,969 $ 3,909,583 $3,724,117 $ 647,443 $ 608,624 $ 591,283 $ 538,534 $ 525,775 $ (188,417) $ (242,370) $ (325,786) $ (306,058) $ (465,464) $ (297,604) $ (264,545) $ (211,720) $ (272,596) $ (25,969) (1) During 2004, 2003, 2002, 2001 and 2000, we completed several significant asset acquisitions, business combinations and equity transactions. See Notes 3, 6, 10 and 11 to our consolidated financial statements. (2) During the years ended December 31, 2002, 2003 and 2004, we adopted and modified a business plan that included the closure or consolidation of certain non-strategic containerized storage facilities. We sold two commercial properties - one in 2002, the other in 2004. During 2003, we sold five self-storage facilities. The historical operations of these facilities are classified as discontinued operations, with the rental income, cost of operations, depreciation expense and gain or loss on disposition of these facilities for current and prior periods included in the line item “Discontinued Operations” on the consolidated income statement. (3) During 2004, holders of $200,000,000 of our Series N preferred partnership units agreed to a restructuring which included reducing their distribution rate from 9.5% to 6.4% in exchange for a special distribution of $8,000,000. This special distribution, combined with $2,063,000 in costs incurred at the time the units were originally issued that were charged against income in accordance with the Securities and Exchange Commission’s clarification of EITF Topic D-42, are included in minority interest in income. PSI Letter doc_rrd_RD2 3/30/05 10:58 PM Page 2 To Our Shareholders We had a pretty good year. Funds from operations per share increased 4.3 percent in 2004 to $2.93 from $2.81 in 2003. See the Computation of Funds from Operations table for a reconciliation of net income to funds from operations. Several of the initiatives we started in 2002 are coming to fruition. In addition, we expanded our franchise and positioned ourselves for meaningful growth in 2005. Let’s look at what we did in 2004 and its implications for 2005. Self-Storage Business Our self-storage business generated the bulk of our earnings and cash flow growth in 2004. This came from three main areas: our “consistent group” of properties, the lease-up of our development properties and the acquisition of mostly mature facilities from third parties. The contribution to earnings for each is as follows: (Dollar amounts in thousands) 2003 2004 Change Consistent group properties $ 453,867 $ 475,804 Development properties Expansion properties Acquisition properties 18,575 15,017 30,220 32,278 18,053 36,407 Total net operating income before depreciation 517,679 562,542 4.8% 73.8% 20.2% 20.5% 8.7% Depreciation expense (176,929) (176,488) (0.2%) Total earnings for self-storage $ 340,750 $ 386,054 13.3% Consistent Group Properties Our consistent group properties, which constitute approximately 80 percent of the aggregate net rentable square feet of our total portfolio, generated net operating income (before depreciation) growth of 4.8 percent. This was due to a 4.9 percent growth in revenues combined with a 4.9 percent increase in expenses. The expense increase was more modest than we anticipated and the revenue growth greater, a wonderful combination. We were able to drive average occupancies to 91 percent in 2004, up almost 2 percent from 2003 and 7 percent from 2002. This, combined with higher average rental rates, led us to a PSI Letter doc_rrd 3/29/05 2:45 AM Page 3 very acceptable 4.9 percent revenue growth. We are hopeful of modest revenue growth going into 2005, but it won’t come from occupancy growth. Rental rates and customer management, including use of promotional discounts and media, will need to produce 2005 revenue growth. With respect to expenses, 2004’s increase of 4.9 percent was far more moderate than 2003’s at 10.5 percent. Our 2004 expense increase was driven primarily by property taxes, payroll and repairs and maintenance. Going into 2005, we expect about the same level of overall expense increase, somewhere between 4 percent to 5 percent. Two bright spots on the expense front are the telephone reservation center, where we saw a 25 percent decrease in the fourth quarter and a 2 percent decline for the year. We expect a 10 percent plus decline in 2005, as a result of our initiative, now substantially completed, to eliminate the sale of both trucks and Pick-Up and Delivery service out of the national phone center. The other area is insurance cost which declined 10 percent in the fourth quarter and was up only 1.6 percent for the year. We expect a “softer” renewal market and improved cost controls to reduce our property insurance costs by at least 5 percent in 2005. We expect advertising and media costs to remain volatile, as we adapt to competitive conditions, which leads us to one of our few disappointments in 2004. Despite an increase in excess of a million dollars in promotional spending, our gross customer move-in volume was down 5 percent, to 586,000 compared to 617,000 last year. Our media costs in addition to our promotional discounts per move-in are exceeding $50. It is clear we have some work to do in this area. We hope to report more positive news regarding the efficacy of our media programs as 2005 unfolds. In this regard, in mid-February, we kicked off a new coordinated advertising campaign designed to enhance our rental activity and generate increases in brand preference. Our campaign slogan, “Your stuff will be happy here,” is designed to focus the consumer on Public Storage versus generic self-storage product awareness. We expect positive customer traffic and greater brand awareness to validate this new program. In 2005 and 2006, we expect an increase in repairs and maintenance expense as well as capitalized (long life) expenditures. We have reorganized our facilities maintenance function, expanded staffing and are completing a physical assessment of our real estate assets. We want all of our properties in rent-ready condition at all times. PSI Letter doc_rrd 3/29/05 2:45 AM Page 4 In 2005, we will undertake new initiatives to improve and standardize how we hire, manage, train and retain our personnel. These efforts, along with others already in place, are designed to further reduce field personnel and supervisory staff turnover, increase productivity and improve customer service. The action words in our organization with respect to people are standardization, enhanced training and increased accountability. In the near term, we expect an above inflation rate increase in personnel costs. Development Properties Our development properties continued their lease-up. Returns on our invested capital are still relatively modest, but improved to 5.5 percent. We anticipate our development property yields and income will improve for the next couple of years as we increase rates and continue to drive occupancies. We are hopeful of expanded growth in this area in future years. (Dollar amounts in thousands) 2002 2003 2004 NOI (before depreciation)* $ 9,120 $ 18,575 $ 32,278 Invested capital $ 396,010 $ 509,414 $ 584,599 Yield 2.3% 3.6% 5.5% * This non-GAAP number is used by us, and we believe it is used by many investors, to better understand our underlying operational results and trends. Net operating income before depreciation is reconciled to GAAP for 2003 and 2004 in the table on page 1 of this letter. Total earnings from self-storage in 2002 was $340,344, including net operating income from self-storage properties other than development properties of $502,111 and depreciation of $170,887. Longer term, we hope to start expanding our development pipeline. The challenges are great and the competition is fierce. Expansion Properties and Pick-Up and Delivery Conversions We have 20 former Pick-Up and Delivery (PUD) locations being converted to self-storage. These are great locations where we already own the land and building and for marginal PSI Letter doc_rrd_RD2 3/30/05 11:00 PM Page 5 costs of about $35 per foot we can add self-storage space. Many of these are contiguous to existing self-storage properties, so we are reasonably confident of demand. Our opportunity here is about 1.4 million net rentable square feet which we hope to build out in 2005 and 2006. Last year we also initiated what we call a repackaging program. This applies primarily to our older facilities that have strong consumer demand, but lack a “retail” facade. We also can expand the density of the properties, increasing the rentable square footage without any additional land costs. Some of these repackagings will be done just to maintain our competitive position in the marketplace. However, we expect most will generate attractive returns in excess of 10 percent on the marginal capital invested to enhance the property. In 2004, we spent $13 million on these activities and expect this to be a growing area of capital investment going forward. Acquisition Properties Our acquisition properties were truly the bright spot of our capital deployment activities in 2004. We acquired more properties, in better markets and of better quality, than anyone in the industry last year. We invested approximately $270 million in 47 properties, more volume than the last several years. Our high quality acquisitions give us a highly visible market presence in several markets where we had modest to nascent presence before. We acquired most of these properties at prices close to or modestly above what it would cost to build. We expect our return on these investments to appreciate over the next couple of years. Overall, the self-storage business generated very positive growth in 2004. New supply was modest, at 1 to 2 percent of the industry, less than underlying demand growth. We do not expect a dramatic increase in supply, despite abundant capital for real estate investments. The risks of building and prolonged fill-up rates have increased developer uncertainty—despite record low interest rates. Pick-Up and Delivery We contracted our containerized storage business further in 2004, narrowing its scope to 12 facilities in six markets. We think we have the markets and management team focused, with the right potential customers and the correct operating strategy. We don’t expect immediate PSI Letter doc_rrd 3/29/05 2:45 AM Page 6 results, as 2005 will be a transition year to a stabilized business model that can produce acceptable returns on invested capital on a consistent basis. We believe in the business and believe it can be an attractive investment long term. We expect profitability at the operating unit level in 2005—but we will be investing all of it in expanded yellow pages and media programs. Over the last two years, we have closed over 30 facilities and extracted over $10 million of capital from this business. We have narrowed our focus and 2005 will see us concentrate on marketing and execution. Investment in PS Business Parks Our investment in PS Business Parks (PSB) produced modest results in 2004. That is the “rear view mirror.” Unlike self-storage, PSB’s business is much more volatile and susceptible to economic cycles. The last three years have been the “down cycle” as customer demand evaporated and landlords were left fighting for modestly viable customers. Generous concessions, especially in the form of tenant improvements, have lead to dramatically reduced returns on invested capital. For PSB, the pain has been much less than most. A good product, minimal “dot com” and “telcom” tenants and very capable operating personnel helped manage the storm. In 2005, PSB needs to adapt to a dramatically improved economic environment and we expect to significantly reduce our capital commitment to customer space. Similar to the self- storage business, PSB faces an extremely competitive environment to acquire additional properties. As Warren Buffet says, “When money is cheap - assets are dear,” and money is cheap right now. PSB refinanced several preferred stock issues this year, lowering its “permanent” funding costs to below 8 percent. PSB may have additional opportunities in the coming years to refinance about $100 million of these preferred equities. PSB should produce modest earnings improvement but dramatically improved “value creation” going forward. The winds are shifting in its favor and PSB’s shorter than average lease duration should enable it to take advantage of improving market fundamentals sooner than most. PSI Letter doc_rrd 3/29/05 2:45 AM Page 7 Financing During the first quarter of 2005, we completed the major planned refinancing of our high coupon preferreds, which we started last year about this time. Upon completion, our $2.4 billion of outstanding preferred equities will have a blended cost of about 7 percent. We will see the benefits of this program in 2005, which will be partially offset by some possible pre- funding for potential 2006 redemptions. In 2006, we have an opportunity to redeem three large preferred stock issues totaling approximately $825 million at a blended rate of 8.1 percent, assuming a favorable rate environment. With respect to our financial reporting, internal controls and Sarbanes-Oxley, we are happy to report that our financial team, lead by John Reyes, did an absolutely superb job. We hired no consultants or special advisors. Existing personnel under the direction of Todd Andrews, our exceptional Controller, performed all compliance work and testing and we received a “clean opinion” from our auditors. Conclusion During 2004, two long-time competitors went “public” via IPO’s. The self-storage industry is gaining broader investor acceptance along with the Real Estate Investment Trust (REIT) industry. This is positive for our owners and management. Good competition will hopefully better enable us to generate growing returns on invested capital. In 2005, we will continue to differentiate ourselves from the competition and continue our focus on People, Product and Pricing, with the objective of long-term, sustained growth in earnings and cash flow per share. With our focus on the three P's, we believe we are well positioned to maintain our leadership role in the self-storage industry. Ronald L. Havner, Jr. Vice-Chairman and Chief Executive Officer Harvey Lenkin President and Chief Operating Officer March 22, 2005 PSI Letter doc_rrd 3/29/05 2:45 AM Page 8 Computation of Funds from Operations (unaudited) Funds from operations (“FFO”) is a term defined by the National Association of Real Estate Investment Trusts (“NAREIT”). It is generally defined as net income before depreciation 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 and because we believe that FFO is helpful to investors as an additional measure of the performance of a REIT. FFO computations do not consider scheduled principal payments on debt, capital improvements, distribution 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 REIT’s may not compute FFO in the same manner; accordingly, FFO may not be comparable among REIT’s. (Amounts in thousands, except per share amounts) Net income Depreciation and amortization Depreciation/amortization included in discontinued operations Less - depreciation with respect to non-real estate assets (Gain) loss on sale of real estate assets Less - our share of PSB’s gain on sale of real estate Depreciation from unconsolidated real estate investments Minority interest in income Net cash provided by operating activities FFO to minority interests - common FFO to minority interests - preferred Funds from operations Less: allocations to preferred and equity stock shareholders Senior Preferred Equity Stock, Series A Funds from operations to Common and Class B For the year ended December 31, 2004 2003 2002 $ 366,213 $ 336,653 $ 318,738 175,834 184,145 183,148 1,197 (4,252) (2,288) (6,715) 33,720 49,913 3,858 (6,206) (6,128) (2,786) 27,753 43,703 5,814 (6,053) 2,541 (4,133) 27,078 44,087 620,936 (23,473) (32,486) 580,992 (23,125) (26,906) 563,906 (25,268) (26,906) 564,977 530,961 511,732 (166,649) (21,501) (153,316) (21,501) (155,814) (21,501) Common Stock Weighted average shares Regular common shares Class B Common Stock Stock option dilution $ 376,827 $ 356,144 $ 334,417 127,836 — 845 125,181 — 1,336 116,075 7,000 1,566 Weighted average common shares for purpose of computing fully-diluted FFO per common share 128,681 126,517 124,641 FFO per common share $ 2.93 $ 2.81 $ 2.68 PSI PubStor Covers_rrd 3/31/05 5:51 PM Page 2 P r o p e r t i e s (as of December 31, 2004) Location Alabama Arizona California Colorado Connecticut Delaware Florida Georgia Hawaii Illinois Indiana Kansas Kentucky Louisiana Maryland Massachusetts Michigan Minnesota Missouri Number of Properties(1) Net Rentable Square Feet Location Number of Properties(1) Net Rentable Square Feet 22 15 311 50 13 4 149 64 6 96 18 22 6 11 43 18 15 26 38 895,000 1,003,000 19,278,000 3,189,000 710,000 230,000 9,052,000 3,776,000 322,000 5,888,000 1,050,000 1,316,000 331,000 852,000 2,458,000 1,132,000 836,000 1,635,000 2,172,000 Nebraska Nevada New Hampshire New Jersey New York North Carolina Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina Tennessee Texas Utah Virginia Washington Wisconsin 1 22 2 44 39 24 30 8 25 20 2 24 23 169 7 39 43 15 46,000 1,409,000 131,000 2,583,000 2,335,000 1,266,000 1,863,000 429,000 1,171,000 1,360,000 64,000 1,082,000 1,311,000 11,438,000 398,000 2,388,000 2,747,000 1,071,000 (1) Storage and properties combining self-storage and commercial space. Totals 1,464 89,217,000 C o r p o r a t e D a t a (as of March 15, 2005) Directors B. Wayne Hughes (1980) Chairman of the Board Ronald L. Havner, Jr. (2002) Vice-Chairman of the Board and Chief Executive Officer Harvey Lenkin (1991) President and Chief Operating Officer Robert J. Abernethy (1980) President of American Standard Development Company and Self-Storage Management Company Dann V. Angeloff (1980) President of The Angeloff Company William C. Baker (1991) Chairman and Chief Executive Officer of Callaway Golf Company John T. Evans (2003) Partner, Osler, Hoskin & Harcourt LLP Uri P. Harkham (1993) President and Chief Executive Officer of the Jonathan Martin Fashion Group B. Wayne Hughes, Jr. (1998) President of Sweet Blessings, LLC and Vice President of American Commercial Equities, LLC Daniel C. Staton (1999) President of Walnut Capital Partners ( ) = date director was elected to the Board Executive Officers Self-Storage Operations Ronald L. Havner, Jr. Vice-Chairman of the Board and Chief Executive Officer Harvey Lenkin President and Chief Operating Officer John Reyes Senior Vice President and Chief Financial Officer John E. Graul Senior Vice President John S. Baumann Senior Vice President and Chief Legal Officer David F. Doll Senior Vice President Corporate Officers Drew J. Adams Vice President and Director of Taxes Todd Andrews Vice President and Controller Nargis Choudhry Vice President and Real Estate Counsel Obren B. Gerich Vice President David Goldberg Vice President, Senior Counsel and Secretary Stephanie G. Heim Vice President and Corporate Counsel J. Alan Herd Vice President and Director of Human Resources Brent C. Peterson Vice President and Chief Information Officer A. Timothy Scott Vice President and Tax Counsel John E. Graul President Harvey A. Grindeland Senior Vice President and Divisional Manager Peter G. Panos Senior Vice President and Divisional Manager John M. Sambuco Senior Vice President and Divisional Manager David D. Young Senior Vice President and Divisional Manager Noel J. Evans Senior Vice President—Marketing Alan Grossman Senior Vice President and Chief Financial Officer Randy L. Crossley National Facilities Director Ancillary Businesses Thomas Miller President—PS Orangeco Obren B. Gerich President—PS Insurance Real Estate Division David F. Doll President Michael F. Roach Senior Vice President—Development and Construction Michael K. McGowan Senior Vice President—Acquisitions James F. Fitzpatrick Senior Vice President—Entitlements Louis Klichan Senior Vice President and Controller Professional Services Certifications Stock Exchange Listing Additional Information Sources Transfer Agent EquiServe Trust Company, N.A. P.O. Box 43010 Providence, RI 02940-3010 (781) 575-3120 www.equiserve.com Independent Auditors Ernst & Young LLP Los Angeles, California The most recent certifications by our Chief Executive Officer, President and Chief Operating Officer and Senior Vice President and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed as exhibits to our Form 10-K. Our Chief Executive Officer's most recent annual certification to the New York Stock Exchange was sub- mitted on May 19, 2004. The Company’s common stock trades under ticker symbol PSA on the New York Stock Exchange and Pacific Exchange. PSA The Company’s website, www.publicstorage.com, contains financial information of interest to share- holders, brokers, etc. Public Storage, Inc. is a member and active sup- porter of the National Association of Real Estate Investment Trusts. PSI PubStor Covers_rrd_revN1 3/30/05 3:39 PM Page 1 2 0 0 4 A n n u a l R e p o r t P u b l i c S t o r a g e , I n c . A n n u a l R e p o r t 2 0 0 4 P u b l i c S t o r a g e , I n c . 701 Western Avenue, Glendale, California 91201-2349 • (818) 244-8080 • www.publicstorage.com P u b l i c S t o r a g e , I n c . (513-AR-05) 

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