Public Storage
Annual Report 2007

Plain-text annual report

PUBLIC STORAGE 2 0 0 7 A N N U A L R E P O R T WA 91 OR 39 CO 60 NV 22 UT 7 AZ 37 CA 372 HI 8 NE 1 KS 22 OK 8 TX 235 MN 44 WI 16 MI 43 IL 123 IN 31 OH 30 KY 7 TN 33 AL 22 MS 1 MO 38 LA 9 NH 2 NY 62 MA RI CT 19 2 14 NJ DE MD 56 5 55 PA 28 VA 78 NC 69 SC 40 GA 92 FL 191 SWEDEN 26 DENMARK 10 UNITED KINGDOM 20 NETHERLANDS 33 BELGIUM 21 GERMANY 11 FRANCE 53 P RO PE RT I E S (as of December 31, 2007) Location Number of Properties(1) Net Rentable Square Feet Location Number of Properties(1) Net Rentable Square Feet UNITED STATES Alabama Arizona California Colorado Connecticut Delaware Florida Georgia Hawaii Illinois Indiana Kansas Kentucky Louisiana Maryland Massachusetts Michigan Minnesota Mississippi Missouri Nebraska Nevada New Hampshire New Jersey New York North Carolina 22 37 372 60 14 5 191 92 8 123 31 22 7 9 55 19 43 44 1 38 1 22 2 56 62 69 890,000 2,259,000 23,764,000 3,810,000 869,000 288,000 12,470,000 5,964,000 555,000 7,800,000 1,880,000 1,310,000 330,000 608,000 3,185,000 1,179,000 2,755,000 2,990,000 63,000 2,144,000 46,000 1,404,000 132,000 3,524,000 3,967,000 4,775,000 UNITED STATES (cont.) Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina Tennessee Texas Utah Virginia Washington Wisconsin 30 8 39 28 2 40 33 235 7 78 91 16 1,860,000 428,000 2,006,000 1,867,000 64,000 2,155,000 1,883,000 15,375,000 440,000 4,407,000 5,998,000 1,030,000 Totals 2,012 126,474,000 EUROPE Belgium Denmark France Germany Netherlands Sweden United Kingdom Totals Grand Totals 21 10 53 11 33 26 20 174 2,186 1,219,000 502,000 2,776,000 550,000 1,749,000 1,372,000 947,000 9,115,000 135,589,000 (1) Storage and properties combining self-storage and commercial space. SELECTED FINANCIAL HIGHLIGHTS For the year ended December 31, 2007 1 2006 1 2005 2004 2003 (Amounts in thousands, except per share data) Revenues: Rental income and ancillary operations Interest and other income Total revenues 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 on disposition of real estate investments, casualty loss, foreign currency exchange gain, income from derivatives and minority interest in income Equity in earnings of real estate entities Gain on disposition of real estate investments and casualty gain or loss, net Foreign currency exchange gain and income from derivatives, net Minority interest in income Income from continuing operations Cumulative effect of change in accounting principle Discontinued operations Net income Net income allocable to common shareholders Per Common Share: Distributions Net income - basic Net income - diluted Weighted average common shares - basic Weighted average common shares - diluted $ $ $ $ $ $ 1,804,954 $ 1,349,212 $ 1,043,391 $ 952,766 $ 890,350 2,537 892,887 31,799 1,381,011 16,447 1,059,838 11,417 1,816,371 5,391 958,157 659,865 622,410 59,749 63,671 1,405,695 498,438 437,568 84,661 33,062 1,053,729 378,258 196,153 21,115 8,216 603,742 361,944 182,890 18,813 760 564,407 340,871 183,863 17,127 1,121 542,982 410,676 12,738 327,282 11,895 456,096 24,883 393,750 22,564 349,905 24,966 5,212 2,177 1,182 67 1,007 58,444 (29,543) 457,527 4,262 (31,883) 313,733 — (32,651) 449,510 — (49,913) 366,468 — (43,703) 332,175 — 8 457,535 $ 578 (285) — 4,478 314,026 $ 456,393 $ 366,213 $ 336,653 — 6,883 — (255) 199,354 $ 46,891 $ 254,395 $ 178,063 $ 161,836 2.00 $ 1.18 $ 1.17 $ 2.00 $ 0.33 $ 0.33 $ 1.90 $ 1.98 $ 1.97 $ 1.80 $ 1.39 $ 1.38 $ 169,342 170,147 142,760 143,715 128,159 128,819 127,836 128,681 1.80 1.29 1.28 125,181 126,517 Balance Sheet Data: $10,643,102 $ 11,198,473 $ 5,552,486 $ 5,204,790 $ 4,968,069 Total assets $ 1,069,928 $ 1,848,542 $ 149,647 $ 145,614 $ 76,030 Total debt 181,030 $ Minority interest (other partnership interests) 28,970 $ 118,903 $ 141,137 $ 325,000 $ 225,000 $ 310,000 $ 285,000 Minority interest (preferred partnership interests) $ $ 8,763,129 $ 8,208,045 $ 4,817,009 $ 4,429,967 $ 4,219,799 Shareholders’ equity 181,688 $ 325,000 $ Cash Flow Information: Net cash provided by operating activities Net cash used in investing activities Net cash used in financing activities $ 1,013,204 $ $ (247,475) $ $ (1,061,457) $ 775,400 $ 673,871 $ 595,315 $ 547,918 (495,890) $ (453,146) $ (157,638) $ (205,133) (228,095) $ (102,969) $ (276,255) $ (241,076) (1) The significant increase in our revenues, cost of operations, depreciation and amortization, and interest expense in 2006 and 2007, and the significant increase in total assets, total debt and shareholders’ equity in 2006, is due to our acquisition of Shurgard Storage Centers in August 2006. See Note 3 to our consolidated financial statements for the year ended December 31, 2007 for further information. TO OUR SHAREHOLDERS O ur progress in 2007 was substantial as we realized many of the benefits from the 2006 Shurgard acquisition and continued to grow our business. Net income per share increased from $0.33 to $1.17 and funds from operations (FFO) 1 per share increased from $3.57 to $4.97. Most important, our intrinsic 2 or franchise value per share improved substantially. We measure our progress per share, since changes in absolute size mean little unless translated into additional value per share. Our growth this year was achieved even though we reduced our financial leverage. Equally as important, we are very well positioned going into 2008 to take advantage of opportunities that may come our way from the turbulent credit markets. Businesses Our principal business is owning and operating self-storage or mini-warehouse properties, both in the United States (U.S.) and seven Western European countries. Self-storage properties primarily serve consumers, offering month-to-month storage units ranging in size from 2'x 2' to 30'x 30'. In the U.S., our properties are operated under the “Public Storage” name and in Europe, under the “Shurgard” brand. We own 126 million net rentable square feet in the U.S. and about 9 million net rentable square feet in Europe. We also have meaningful investments in commercial properties, primarily business parks, which consist mostly of “flex” space, or a combination of office and industrial space. These properties are operated under the “PS Business Parks” name. Through our equity investment in PS Business Parks, a separately listed public company (AMEX:PSB), and our direct ownership of properties, we have interests in approximately 21 million rentable square feet, concentrated primarily in eight states. 1. See accompanying schedule “Computation of Funds from Operations” for a definition. 2. See Public Storage, Inc. 2006 Annual Report letter to shareholders for a discussion of “intrinsic value.” Our ancillary operations consist of businesses that contribute to or are incidental to our self-storage business. These include the rental of trucks, the sale of locks, boxes and packing materials and the re-insurance of customers’ stored goods. Our properties are located in or near major metropolitan centers and serve customers within a three-to-five mile radius. All operations are conducted on a localized basis and are adapted to particular market customs, competition and customer preferences. Customers are identified and targeted through a variety of marketing programs, including property signage and banners, the Internet, television, on-site sales functions, and for commercial properties, through local brokers. We have over one million customers and generally must attract over one million new or repeat customers each year due to customer turnover. Summary of Financial Results In 2007, total revenues grew by 32% to $1.8 billion, benefiting from a full year of operating the acquired Shurgard domestic and European facilities compared to four months in 2006. Net income to common shareholders rose by $152 million to $199 million. These results were driven by the organic growth in our legacy Same Store properties and improvements in our newly developed, recently expanded and acquired self-storage facilities, as well as from the acquired Shurgard facilities. Our funds from operations per share improved in 2007 by 39% to $4.97 from $3.57 in 2006. Excluding items associated with foreign currency gains, Shurgard acquisition integration costs and other non-cash charges, the per share amounts increased by 13% to $4.73 in 2007 from $4.17 in 2006 from our core operations. These comparisons are reflected in the following table. Funds From Operations (FFO) Year ended December 31, 2007 2006 FFO per common share prior to adjustments for the following items Foreign currency exchange and derivative gains Shurgard acquisition integration costs Termination of contract and development projects EITF Topic D-42 charges Other FFO per common share, as reported $ 4.73 0.34 (0.03) (0.01) — (0.06) $ 4.97 $ 4.17 0.03 (0.30) (0.09) (0.23) (0.01) $ 3.57 Stepping back and looking at what contributed to our growth, you will note that the sources of growth in our operating earnings have changed since the Shurgard acquisition. Net income before depreciation, minority interest, preferred dividends, interest income, G&A and other items, or what we would consider operating earnings, was $1.2 billion for 2007. This is broken down as follows. Operating Earnings(1)(2) Dollar amounts in millions U.S. self-storage operations European self-storage operations Commercial properties Ancillary operations Operating earnings 2007 $ 980 102 63 55 2006 $ 782 29 56 34 Change $ 198 73 7 21 $1,200 $ 901 $ 299 (1) Operating earnings excludes the impact of other items which reduced net income approximately $743 million and $587 million in 2007 and 2006, respectively, in reconciling from operating earnings to our net income. Such items are comprised of interest income, depreciation and amortization expense, general and administrative expense, interest expense, equity in earnings of real estate entities (except for our pro rata share of PS Business Parks’ net income, which is included in operating earnings), casualty gains and losses, gains on disposition, foreign currency gains, derivative income or expense, minority interest in income, cumulative effect adjustments and discontinued operations. (2) Shurgard acquisition completed August 2006. Self-Storage Operations When evaluating our self-storage operations, we bifurcate our properties into two groups– “Same Stores” and other properties. The Same Store operations consist of those properties operated by the Company (or by Shurgard) for the last three years that have achieved a stabilized occupancy level. Properties that are either under redevelopment, recently acquired or developed are in “other properties.” We consider the measurement of Same Store operations as a key barometer of both the fundamental strength of our business and the efficacy of our personnel and operating strategies. We use certain metrics to evaluate our performance, the most important being revenue per available square foot, or “REVPAF,” and gross profit margin. REVPAF measures how much revenue is generated per foot we have to sell. We manage growth in REVPAF, balancing increased pricing with higher customer volumes (occupancy). Also impacting REVPAF are product quality, customer sales and service and local competition. Gross profit margin reflects how capable we are at generating more revenue while controlling expenses. As you can see in the table, both REVPAF and gross profit margin increased across all portfolios last year, resulting in higher net operating income. REVPAF (1) (per sq. ft.) 2007 2006 Change Public Storage–U.S. Same Store $ 11.37 $ 11.13 $ 0.24 Shurgard–U.S. Same Store Shurgard–Europe Same Store 11.91 24.03 11.36 21.99 0.55 2.04 Other properties–U.S. and Europe $ 11.86 $ 10.98 $ 0.88 (1) Shurgard data for 2006 represents the historical data operated under Shurgard (January 1, 2006 through August 22, 2006) along with the period operated under Public Storage (August 23, 2006 through December 31, 2006). Amounts with respect to Europe are on a constant exchange rate basis using the 2007 exchange ratio. Gross Profit Margin (1)(2) Public Storage–U.S. Same Store Shurgard–U.S. Same Store Shurgard–Europe Same Store Other properties–U.S. and Europe 2007 67.4% 67.3% 59.9% 59.0% 2006 Change 66.9% 62.5% 53.2% 54.0% 0.5% 4.8% 6.7% 5.0% (1) Shurgard data for 2006 represents the historical data operated under Shurgard (January 1, 2006 through August 22, 2006) along with the period operated under Public Storage (August 23, 2006 through December 31, 2006). Amounts with respect to Europe are on a constant exchange rate basis using the 2007 exchange ratio. (2) Net operating income (before depreciation) divided by total revenues. Net Operating Income(1)(2) (Before depreciation) Dollar amounts in millions Public Storage–U.S. Same Store Shurgard–U.S. Same Store Shurgard–Europe Same Store Other properties–U.S. and Europe 2007 $ 624 180 77 201 2006 $ 607 160 62 124 Change $ 17 20 15 77 Net operating income $1,082 $ 953 $129 (1) Shurgard data for 2006 represents the historical data operated under Shurgard (January 1, 2006 through August 22, 2006) along with the period operated under Public Storage (August 23, 2006 through December 31, 2006). Amounts with respect to Europe are on a constant exchange rate basis using the 2007 exchange ratio. (2) Net operating income is prior to depreciation expense. Management evaluates net cash flows which excludes depreciation. Overall, the domestic portfolio performed reasonably well in 2007, as we achieved higher REVPAF through increased occupancies and rental rates, offset in part by higher promotional discounting. Most expenses were down in the U.S. as we realized the operating synergies associated with the Shurgard acquisition, offset in part by higher advertising expenses required to drive customer volume. The acquired Shurgard properties benefited from our pricing and promotional strategies as well as bringing the expense structure in line with the Public Storage operating model. Our recently acquired, developed and redeveloped properties continue to lease-up generating higher revenues. In Europe, our operating team was able to take the “best practices” from the U.S. and adapt them to local market conditions. The results were exceptional. Net Operating Income by Category Dollar amounts in millions Public Storage–U.S. Same Store Shurgard–U.S. Same Store Shurgard–Europe Same Store Other properties–U.S. and Europe Net operating income Depreciation and amortization expense 2007 $ 624 180 77 201 1,082 (619) 2006 $ 607 59 24 121 811 (434) 2005 $ 574 — — 57 631 (191) Total earnings from self-storage $ 463 $ 377 $ 440 Maintenance capital expenditures (65) (66) (26) Operating cash flow $ 1,017 $ 745 $ 605 Commercial Properties Our investment in commercial properties consists of our 45% equity ownership of PS Business Parks (PSB) and our wholly-owned properties which are generally contiguous to our self-storage properties. PSB owns and operates about 20 million square feet. We effectively own ten million square feet of commercial space. The Same Store performance metrics used for self-storage are applicable to commercial properties. Operating performance for the commercial properties was as follows. Same Store Key Operating Metrics(1) REVPAF Gross profit margin 2007 2006 Change $13.18 68.4% $12.74 68.3% $ 0.44 0.1% (1) Reflects pro rata share of PS Business Parks and wholly-owned Public Storage properties. Net Operating Income (Before depreciation) Dollar amounts in millions PS Business Parks (1) Public Storage Net operating income 2007 $ 54 9 $ 63 2006 $ 48 8 $56 Change $ 6 1 $ 7 (1) Reflects Public Storage’s pro rata share of PS Business Parks’ funds from operations. Growth Potential in Europe The European market presents us with excellent growth opportunities. If the European market were to build self-storage facilities on the same population density as in the U.S., we could see a need for approximately 34,000 facilities in Western Europe. With less than 1,500 self-storage facilities currently operating in Western Europe, there is enormous potential. In the city of Paris alone, where there are approximately 60 facilities, the population base could support 1,200 facilities. The key for us to take advantage of this opportunity is to access the appropriate capital. We believe a public entity with a European-based capital structure is the best and most efficient long-term structure to realize this potential. We started down this path in the first half of 2007 with a public offering to sell 51% of Shurgard Europe, but terminated the public offering due to adverse capital market conditions. Fortunately, institutional investor interest in partnering with us in Europe is strong, and we are working on a transaction that would accomplish most of the objectives of the public offering. Our plan is to retain a significant equity interest in Shurgard Europe and participate in this huge growth opportunity. Financial Policies Owning real estate is a capital intensive business. When conducted within the structure of a Real Estate Investment Trust (REIT), it is even more capital intensive, as there is little ability to retain earnings. There are four ways to finance the Company’s growth: debt, preferred stock, common equity and retained earnings. Most REITs utilize 40% to 50% debt in their capital structures and retain a de minimus amount of earnings. The average amount of retained cash after recurring maintenance capital is about 7% 3 of free cash flow. In 2007, we retained 53%. Accordingly, for most REITs, acquiring additional real estate necessitates the need for additional leverage and issuance of additional common equity (which dilutes current owners’ interest). We have chosen a different path, using preferred stock and retained earnings (net operating cash flow). Preferred stock is similar to debt for us, except that it is perpetual (never has to be repaid, unlike debt), can be redeemed after five years if we choose (if the coupon rate is better) and has no financial covenants (unlike debt, which has many). So we get the benefits of leverage without the attendant risks associated with debt. We have worked hard to maximize retained earnings through careful tax planning and structuring transactions to maximize tax depreciation. The Shurgard acquisition was particularly advantageous, as it was a taxable acquisition and produced over $4 billion of depreciable assets plus it allowed us to retain an existing net operating loss carryforward of over $350 million in Europe. 3. “Real Estate Securities Monthly,” Green Street Advisors, February 1, 2008, p. 16. As a result, our earnings have been able to grow substantially without the need to increase our common share dividend (REITs must distribute their taxable income to avoid paying a corporate or entity level tax). In 2008, we expect to retain over $400 million of net operating cash flow in the Company (after required maintenance capital expenditures and our required distribution requirements) which can be “leveraged” with preferred stock to provide “growth” capital. Over the last ten years, we have generally issued common equity only in connection with acquisitions and have aggressively repurchased shares when we believed it was more value enhancing to our shareholders than acquiring additional properties. In 2008, we have already used over $100 million of retained cash to repurchase common shares. Conclusion We are in a great business. Demand for our product is not directly dictated by the general economy but by recurring lifestyle changes–marriages, divorces, births, deaths and business expansions and contractions. We are geographically diversified with over 2,000 U.S. facilities across 38 states and nearly 200 facilities in Western Europe, with over one million customers. The stability and predictability of our business is reflected in our 15- year history of consistent Same Store growth. Over this period, Same Store NOI has increased an average of 5.3% per year. In summary, we have successfully integrated the Shurgard operations we acquired in 2006, achieved stabilized occupancies across all portfolios and realized many of the anticipated cost reductions from the acquisition. Going into 2008, we are in a solid financial position and poised for opportunities. Ronald L. Havner, Jr. President and Chief Executive Officer February 29, 2008 CUMULATIVE TOTAL RETURN Public Storage, S&P 500 Index and NAREIT Equity Index December 31, 2002 - December 31, 2007 $400 $350 $300 $250 $200 $150 $100 $50 $0 Public Storage S&P 500 Index NAREIT Equity Index 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 Public Storage S&P 500 Index $100.00 $141.12 $187.96 $235.21 $346.72 $267.66 $100.00 $128.68 $142.69 $149.70 $173.34 $182.86 NAREIT Equity Index $100.00 $137.13 $180.44 $202.38 $273.34 $230.45 The graph set forth above compares the yearly change in the Company’s cumulative total shareholder return on its Common Stock for the five-year period ended December 31, 2007 to the cumulative total return of the Standard & Poor’s 500 Stock Index (“S&P 500 Index”) and the National Association of Real Estate Investment Trusts Equity Index (“NAREIT Equity Index”) for the same period (total shareholder return equals price appreciation plus dividends). The stock price performance graph assumes that the value of the investment in the Company’s Common Stock and each index was $100 on December 31, 2002 and that all dividends were reinvested. The stock price performance shown in the graph is not necessarily indicative of future price performance. Computation of Funds from Operations (unaudited) Funds from operations (“FFO”) is a term defined by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO is a supplemental non-GAAP financial disclosure, and 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 REITs may not compute FFO in the same manner; accordingly, FFO may not be comparable among REITs. (Amounts in thousands, except per share amounts) Net income: Depreciation and amortization Depreciation and amortization included in discontinued operations Less - depreciation with respect to non-real estate assets Depreciation from unconsolidated real estate investments Gain on sale of real estate assets Less - our share of gain on sale of real estate included in equity of earnings of real estate entities Minority interest share of income Net cash provided by operating activities FFO to minority interest - common FFO to minority interest - preferred Funds from operations Less: allocations to preferred and equity shareholders: Senior Preferred Equity Shares, Series A For the year ended December 31, 2007 2006 2005 $ 457,535 622,410 $314,026 437,568 $456,393 196,153 484 (406) 45,307 (6,883) — 29,543 1,147,990 (21,989) (21,612) 650 (225) 38,890 (4,547) (1,047) 31,883 817,198 (17,312) (19,055) 332 (1,789) 35,425 (8,279) (7,858) 32,651 703,028 (18,782) (17,021) 1,104,389 780,831 667,225 (236,757) (21,424) (245,711) (21,424) (180,555) (21,443) FFO allocable to our common shareholders $ 846,208 $513,696 $465,227 Weighted average shares outstanding: Common shares Stock-based compensation dilution 169,342 805 142,760 955 128,159 660 Weighted average common shares for purposes of computing fully-diluted FFO per common share 170,147 143,715 128,819 FFO per common share $ 4.97 $ 3.57 $ 3.61 CO R P O R AT E D ATA (as of February 29, 2008) Directors B. Wayne Hughes (1980) Chairman of the Board Ronald L. Havner, Jr. (2002) Vice-Chairman of the Board, Chief Executive Officer and President Harvey Lenkin (1991) Retired President and Chief Operating Officer Dann V. Angeloff (1980) President of The Angeloff Company William C. Baker (1991) Principal, Baker & Associates John T. Evans (2003) Partner, Osler, Hoskin & Harcourt LLP Uri P. Harkham (1993) President and Chief Executive Officer Harkham Industries B. Wayne Hughes, Jr. (1998) Vice President of American Commercial Equities, LLC Gary E. Pruitt (2006) Chief Executive Officer of Univar N.V. Daniel C. Staton (1999) Chairman of Staton Capital ( ) = date director was elected to the Board Executive Officers Ronald L. Havner, Jr. Vice-Chairman of the Board, Chief Executive Officer and President 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 Candace N. Krol Senior Vice President, Human Resources Corporate Officers Self-Storage Operations Drew J. Adams Vice President and Director of Taxes Todd Andrews Vice President and Controller Mark B. Bilfield Senior Vice President—Marketing John E. Graul President Kim DeRuyter Senior Vice President and Divisional Manager Brian J. Devlin Senior Vice President and Divisional Manager Capri L. Haga Senior Vice President—Risk Management Harvey A. Grindeland Senior Vice President and Divisional Manager Stephanie G. Heim Vice President, Corporate Counsel and Secretary Ken A. Kederian Vice President of Internal Audit A. Ammar Kharouf Vice President and Litigation Counsel Brent C. Peterson Senior Vice President and Chief Information Officer A. Timothy Scott Vice President and Tax Counsel Clemente Teng Vice President of Investor Services Real Estate Group David F. Doll President David W. Marzocchi Senior Vice President—Development and Construction Michael K. McGowan Senior Vice President—Acquisitions and Development James F. Fitzpatrick Senior Vice President—Entitlements Kenneth H. Morrison Senior Vice President and Divisional Manager Peter G. Panos Senior Vice President and Divisional Manager David D. Young Senior Vice President and Divisional Manager Alan Grossman Senior Vice President and Chief Financial Officer Ancillary Businesses Thomas Miller President—PS Orangeco Obren B. Gerich President—PS Insurance Shurgard Self Storage S.C.A. (Europe) Steven De Tollenaere Chief Executive Officer John M. Sambuco Chief Operating Officer Frank J.E. Boot Vice President—Marketing A. Stefan Nilsson Senior Vice President—Development Jean L.H. Kreusch Chief Financial Officer Kris S.A. Van Mieghem General Counsel David L. Coupez Chief Information Officer Veronique A.I. Burguet Vice President—Human Resources Professional Services Certifications Stock Exchange Listing Additional Information Sources Transfer Agent Computershare Trust Company, N.A. P.O. Box 43078 Providence, RI 02940-3078 (781) 575-3120 www.computershare.com Independent Registered Public Accounting Firm Ernst & Young LLP Los Angeles, California The most recent certifications by our Chief Executive Officer 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 certifica- tion to the New York Stock Exchange was submitted on April 5, 2007. The Company’s Common Shares trade under ticker symbol PSA on the New York Stock Exchange. The Company’s website, www.publicstorage.com, contains financial information of interest to shareholders, brokers, etc. Public Storage is a member and active supporter of the National Association of Real Estate Investment Trusts. PUBLIC STORAGE 701 Western Avenue, Glendale, California 91201-2349 (818) 244-8080 (cid:129) www.publicstorage.com (SKU 002CS-61164) 

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