SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended December 31, 2003 or
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[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to .
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Commission File Number: 1-8389
PUBLIC STORAGE, INC.
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(Exact name of Registrant as specified in its charter)
California 95-3551121
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
701 Western Avenue, Glendale, California 91201-2349
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080.
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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9.500% Cumulative Preferred Stock, Series D, $.01 par value..................... New York Stock Exchange
10.000% Cumulative Preferred Stock, Series E, $.01 par value.................... New York Stock Exchange
9.750% Cumulative Preferred Stock, Series F, $.01 par value..................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 8.750% Cumulative
Preferred Stock, Series M, $.01 par value.................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 8.600% Cumulative
Preferred Stock, Series Q, $.01 par value.................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 8.000% Cumulative
Preferred Stock, Series R, $.01 par value.................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 7.875% Cumulative
Preferred Stock, Series S, $.01 par value.................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 7.625% Cumulative
Preferred Stock, Series T, $.01 par value.................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 7.625% Cumulative
Preferred Stock, Series U, $.01 par value.................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 7.500% Cumulative
Preferred Stock, Series V $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.500% Cumulative
Preferred Stock, Series W $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.450% Cumulative
Preferred Stock, Series X $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.250% Cumulative
Preferred Stock, Series Z $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series A,
$.01 par value............................................................. New York Stock Exchange
Common Stock, $.10 par value.................................................... New York Stock Exchange,
Pacific Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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(Title of class)
- ----------------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[ X ] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) Yes [ X ] No [ ]
The aggregate market value of the voting and non-voting common stock held by
non-affiliates of the Registrant as of June 30, 2003:
Common Stock, $0.10 Par Value - $2,616,897,000 (computed on the basis of $33.87
per share which was the reported closing sale price of the Company's Common
Stock on the New York Stock Exchange on June 30, 2003).
Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series
A, $.01 Par Value - $211,681,000 (computed on the basis of $28.40 per share
which was the reported closing sale price of the Depositary Shares each
Representing 1/1,000 of a Share of Equity Stock, Series A on the New York Stock
Exchange on June 30, 2003).
The number of shares outstanding of the registrant's classes of common stock as
of March 5, 2004:
Common Stock, $.10 Par Value - 127,898,544 shares
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Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series
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A, $.01 Par Value - 8,776,102 depositary shares (representing 8,776.102 shares
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of Equity Stock, Series A)
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Equity Stock, Series AA, $.01 Par Value - 225,000 shares
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Equity Stock, Series AAA, $.01 Par Value - 4,289,544 shares
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement to be filed in connection with the
annual shareholders' meeting to be held in 2004 are incorporated by reference
into Part III.
2
PART I
ITEM 1. Business
Forward Looking Statements
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When used within this document, the words "expects," "believes,"
"anticipates," "should," "estimates," and similar expressions are intended to
identify "forward-looking statements" within the meaning of that term in Section
27A of the Securities Exchange Act of 1933, as amended, and in Section 21F of
the Securities Exchange Act of 1934, as amended. Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors, which may
cause the actual results and performance of the Company to be materially
different from those expressed or implied in the forward looking statements.
Such factors are described in Item 1A, "Risk Factors" and include changes in
general economic conditions and in the markets in which the Company operates and
the impact of competition from new and existing storage and commercial
facilities and other storage alternatives, which could impact rents and
occupancy levels at the Company's facilities; difficulties in the Company's
ability to evaluate, finance and integrate acquired and developed properties
into the Company's existing operations and to fill up those properties, which
could adversely affect the Company's profitability; the impact of the regulatory
environment as well as national, state, and local laws and regulations
including, without limitation, those governing Real Estate Investment Trusts,
which could increase the Company's expense and reduce the Company's cash
available for distribution; consumers' failure to accept the containerized
storage concept which would reduce the Company's profitability; difficulties in
raising capital at reasonable rates, which would impede the Company's ability to
grow; delays in the development process, which could adversely affect the
Company's profitability; and economic uncertainty due to the impact of war or
terrorism could adversely affect our business plan. We disclaim any obligation
to publicly release the results of any revisions to these forward-looking
statements reflecting new estimates, events or circumstances after the date of
this report.
General
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Public Storage, Inc. (the "Company") is an equity real estate
investment trust ("REIT") organized as a corporation under the laws of
California on July 10, 1980. We are a fully integrated, self-administered and
self-managed real estate investment trust ("REIT") that acquires, develops, owns
and operates storage facilities. We are the largest owner and operator of
storage space in the United States with direct and indirect equity investments
in 1,410 storage facilities containing approximately 85.2 million square feet of
net rentable space at December 31, 2003. Our common stock is traded on the New
York Stock Exchange under the symbol "PSA". We also have a 44% ownership
interest in PS Business Parks, Inc., which, as of December 31, 2003, owned and
operated commercial properties containing approximately 18.3 million net
rentable square feet of space. PS Business Parks, Inc. is a public REIT whose
common stock trades on the American Stock Exchange under the symbol "PSB."
We have elected to be taxed as a REIT under the Internal Revenue Code
of 1986, as amended. To the extent that the Company continues to qualify as a
REIT, it will not be subject to tax, with certain limited exceptions, on the
taxable income that is distributed to our shareholders.
The Company has reported annually to the Securities and Exchange
Commission ("SEC") on Form 10-K, which includes financial statements certified
by independent public accountants. The Company has also reported quarterly to
the Securities and Exchange Commission on Form 10-Q, and includes unaudited
financial statements with such filings. The Company expects to continue such
reporting.
The Company's website is www.publicstorage.com, and the Company makes
available free of charge on its website its reports on Forms 10-K, 10-Q, and
8-K, and all amendments to those reports as soon as reasonably practicable after
the reports and amendments are electronically filed with or furnished to the
SEC.
3
Management
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Ronald L. Havner, Jr. (46) was appointed as a director, vice chairman,
and chief executive officer of the Company on November 7, 2002. Mr. Havner has
been employed by Public Storage or its affiliates in various financial and
operational capacities since 1986 and served as senior vice president and chief
financial officer of the Company from November 1991 until December 1996 when he
became chairman, president, and chief executive officer of PS Business Parks,
Inc., ("PSB") an affiliate of the Company. Mr. Havner continues as chairman of
PSB.
B. Wayne Hughes (70) is chairman of the board of directors, a position
he has held since 1991. Mr. Hughes plans to remain active in the Company's
business, focusing primarily on strategic and marketing initiatives. Mr. Hughes
established the Public Storage Organization in 1972 and has managed the Company
through several market cycles. Our executive management team and their years of
experience with the Company are as follows: Harvey Lenkin (67), President and
Chief Operating Officer, 26 years; John Reyes (43), Senior Vice President -
Chief Financial Officer, 13 years; and John S. Baumann (43), Senior Vice
President - Chief Legal Officer, who joined the Company in June 2003.
Our senior management has a significant ownership position in the
Company with executive officers, directors and their families owning
approximately 46.7 million shares or 37% of the common stock as of March 11,
2004.
Investment Objective
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Our primary objective is to increase the value of each share through
internal growth (by increasing funds from operations and cash available for
distribution) and acquisitions of additional real estate investments and
development of real estate facilities. We believe that our access to capital,
geographic diversification and operating efficiencies resulting from our size
will enhance our ability to achieve this objective.
Competition
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Competition in the market areas in which we operate is significant and
affects the occupancy levels, rental rates and operating expenses of certain of
our facilities. The continued development of new storage facilities has
intensified the competition among storage operators in many market areas in
which we operate.
In seeking investments, we compete with a wide variety of institutions
and other investors. An increase in the amount of funds available for real
estate investments may increase competition for ownership interests in
facilities and may reduce yields.
We believe that the significant operating and financial experience of
our executive officers and directors, combined with the Company's capital
structure, national investment scope, geographic diversity, economies of scale
and the "Public Storage" name, should enable us to compete effectively with
other entities.
In recent years consolidation has occurred in the fragmented storage
industry. In addition to the Company, there are two other publicly traded REITs
and numerous private regional and local operators operating in the self-storage
industry. We believe that we are well positioned to capitalize on this
consolidation trend due to our demonstrated access to capital and national
presence.
4
Business Attributes
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We believe that the Company possesses several primary business
attributes that permit us to compete effectively:
Comprehensive distribution system and national telephone reservation
system: Our facilities are part of a comprehensive distribution system
encompassing standardized procedures, integrated reporting and information
networks and centralized marketing. This distribution system is designed to
maximize revenue through pricing and occupancy.
A significant component of our distribution system is our national
telephone reservation center, which provides added customer service and helps to
maximize utilization of available self-storage space. Customers calling either
the toll-free telephone referral system, (800) 44-STORE, or a storage facility,
are directed to the national reservation system. A representative discusses with
the customer space requirements, price and location preferences and also informs
the customer of other products and services provided by the Company and its
subsidiaries. We believe that the national telephone reservation system enhances
our ability to market storage space.
Containerized storage option: Historically, we offered storage spaces
for rent through our traditional self-storage facilities whereby customers would
transport their goods to the facility and rent a space to store their goods. In
late 1996, we organized Public Storage Pickup and Delivery, Inc. as a separate
corporation and a related partnership (the corporation and partnership are
collectively referred to as "PSPUD") to operate storage facilities that rent
portable storage containers to customers for storage in central facilities.
Management adopted a business plan in 2002 that included the closure of
22 non-strategic containerized storage facilities of the 55 facilities opened at
December 31, 2001. During 2003, an additional nine facilities were identified as
non-strategic and scheduled for closure. As of December 31, 2003, six of the 31
facilities scheduled for closure were still in operation - however, these
facilities are in the process of closing which may take until the end of the
second quarter of 2004 to close.
The concept of PSPUD is to provide an alternative to a traditional
self-storage facility. PSPUD delivers a storage container(s) to the customer's
location where the customer, at his convenience, packs his goods into the
storage container. PSPUD will subsequently return to the customer's location to
retrieve the storage container(s) for storage in a central facility. At December
31, 2003, PSPUD had 24 facilities (excluding certain facilities that are in the
process of being closed) in operation in 11 states.
Retail operations: The Company has historically sold retail items
associated with the storage business and rented trucks at its storage
facilities. In order to supplement and strengthen the existing self-storage
business by further meeting the needs of storage customers, the Company has
expanded its retail activities over the last five years.
In addition, full-service retail stores have been retrofitted to some
existing storage facility rental offices or "built-in" as part of the
development of new storage facilities, both in high traffic, high visibility
locations. The strategic objective of these retail stores is to provide a retail
environment to (i) rent spaces for the attached storage facility, (ii) rent
spaces for the other Public Storage facilities in adjacent neighborhoods, (iii)
sell locks, boxes and packing materials and (iv) rent trucks and other moving
equipment.
Tenant insurance program: On December 31, 2001, the Company purchased
all of the capital stock of PS Insurance Company, Ltd., from Mr. Hughes and
members of his family. This insurance company reinsures policies issued to our
tenants against lost or damaged goods stored by tenants in the Company's storage
facilities. This subsidiary receives the premiums and bears the risks associated
with the re-insurance. The Company believes that this insurance operation will
continue to further supplement and strengthen the existing self-storage business
and provide an additional source of earnings for the Company.
5
Economies of scale: We are the largest provider of storage space in the
industry. As of December 31, 2003, we operated 1,410 storage facilities in which
we had an interest and managed 29 storage facilities for third parties. These
facilities are in markets within 37 states. At December 31, 2003, we had over
714,000 spaces rented. The size and scope of the operations have enabled us to
achieve a high level of profit margins and low level of administrative costs
relative to revenues.
Brand name recognition: Our operations are conducted under the "Public
Storage" brand name, which we believe is the most recognized and established
name in the self-storage industry. Our storage operations are conducted in 37
states, giving us national recognition and prominence. We focus our operations
within those states in the major metropolitan markets. This concentration
establishes us as one of the largest providers of storage space in each market
that we operate in and enables us to use a variety of promotional activities,
such as television advertising as well as targeted discounting and referrals
which are generally not economically viable for most of our competitors.
Growth and Investment Strategies
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Our growth strategies consist of: (i) improving the operating
performance of our stabilized existing traditional self-storage properties, (ii)
acquiring additional interests in entities that own properties operated by the
Company, (iii) acquiring interests in properties that are owned or operated by
others, (iv) developing properties in selected markets, (v) improving the
operating performance of the containerized storage operations and repurpose real
estate previously used for the containerized storage operations, and (vi)
participating in the growth of commercial facilities owned primarily by PS
Business Parks, Inc. These strategies are described as follows:
Improve the operating performance of existing properties: We seek to
increase the net cash flow generated by our existing stabilized traditional
self-storage properties by a) regularly evaluating our call volume, reservation
activity, and move-in/move-out rates for each of our markets relative to our
marketing activities, b) evaluating market supply and demand factors and, based
upon these analyses, adjusting our marketing activities and rental rates, c)
attempting to maximize revenues through evaluating the appropriate balance
between occupancy and rental rates, and d) controlling expense levels. We
believe that our property management personnel and systems, combined with the
national telephone reservation system, will continue to enhance our ability to
meet these goals.
Acquire properties operated and partially owned by the Company: In
addition to our wholly owned storage facilities, we operate storage facilities
on behalf of other entities in which we have partial equity interests. From time
to time, interests in these storage facilities are available for purchase,
providing us with a source of additional acquisition opportunities. We believe
these properties include some of the better-located and better-constructed
storage facilities in the industry. Because we manage these properties, we have
reliable operating information prior to acquisition, and these properties are
easily integrated into our portfolio. The amount of such potential acquisition
opportunities has decreased over the last several years as we have continued to
acquire such interests. Such potential remaining acquisition opportunities
include the remaining equity interests that we do not own in the entities
described as "Other Investments" in Note 6 to the Company's consolidated
financial statements for the year ended December 31, 2003, as well as the "Other
Partnership Interests" in Note 9 to the Company's consolidated financial
statements for the year ended December 31, 2003.
Acquire properties owned or operated by others: We believe our presence
in and knowledge of substantially all of the major markets in the United States
enhances our ability to identify attractive acquisition opportunities and
capitalize on the overall fragmentation in the storage industry. We maintain
local market information on rates, occupancy and competition in each of the
markets in which we operate.
Develop properties in selected markets: Since 1995, the Company and its
joint venture partnerships (described below in "Financing of the Company's
Growth Strategies") have opened a total of 133 facilities, including 24
facilities in 1999, 27 facilities in 2000, 22 facilities in 2001, 16 facilities
in 2002 and 14 facilities in 2003. As of December 31, 2003, the Company has a
development "pipeline" of 38 self-storage facilities and expansions to existing
storage facilities with an aggregate estimated cost of approximately $156.3
million.
6
Development of these facilities is subject to significant contingencies such as
obtaining appropriate governmental agency approvals. The Company continues to
seek attractive sites for development of additional storage facilities and
evaluates existing sites for expansion or enhancement opportunities.
Improve the operating performance of containerized storage operations
and repurpose real estate space previously used by the containerized storage
operations: During 2002 and 2003, management closed certain non-strategic
containerized storage facilities (the "Closed Facilities"), with the number of
PSPUD's facilities decreasing from 55 at December 31, 2001 to 24 at December 31,
2003.
Certain of the Closed Facilities were operated in real estate
facilities owned by the Company. Through December 31, 2003, the Company had
converted 208,000 net rentable square feet of industrial space previously used
by the Closed Facilities into self-storage space, and was in the process of
converting another 779,000 net rentable square feet of such space.
As with the traditional self-storage facilities, PSPUD believes that
the containerized storage business experiences seasonal fluctuations in
occupancy levels with occupancies generally higher in the summer months than in
winter months. There can be no assurance as to the level of PSPUD's expansion,
level of gross rentals, level of move-outs or profitability. Management
continues to evaluate the optimum level of containerized facility operations in
each market in which it operates.
Participate in the growth of commercial facilities owned primarily by
PS Business Parks, Inc.: On January 2, 1997, we reorganized our commercial
property operations into a separate private REIT. The private REIT contributed
its assets to a newly created operating partnership (the "Operating
Partnership") in exchange for a general partnership interest and limited
partnership interests. During 1997, the Company and certain partnerships in
which the Company has a controlling interest contributed substantially all of
their commercial properties to the Operating Partnership in exchange for limited
partnership interests or to the private REIT in exchange for common stock. On
March 17, 1998, the private REIT merged into Public Storage Properties XI, Inc.,
a publicly traded REIT and an affiliate of the Company and the name of the
surviving corporation was changed to PS Business Parks, Inc. (the REIT and the
related Operating Partnership are hereinafter referred to collectively as
"PSB").
The Company has a 44% common equity interest in PSB as of December 31,
2003, comprised of 5,418,273 shares of common stock and 7,305,355 limited
partnership units in the Operating Partnership. The limited partnership units
are convertible at our option, subject to certain conditions, on a one-for-one
basis into PSB common stock.
At December 31, 2003, PSB owned and operated approximately 18.3 million
net rentable square feet of commercial space located in eight states.
In addition to our investment in PSB, we have direct interests in three
commercial facilities with an aggregate of 204,000 net rentable square feet. In
addition, certain of the Company's self-storage facilities rent a total of
1,187,000 net rentable square feet of commercial space at the same location.
This commercial space is managed by PSB pursuant to management agreements.
Policies with respect to investing activities: Following are the
Company's policies with respect to certain other investing strategies, each of
which may be entered into without a vote of shareholders:
o Making loans to other entities: The Company has made loans in
connection with the sale of properties, has made short-term loans
to PS Business Parks, Inc. in the last three years and may make
loans to third parties as part of its investment objectives.
However, the Company does not expect such items to be a
significant part of its investing activities.
o Investing in the securities of other issuers for the purpose of
exercising control: There have been two instances in the past four
years where the Company has invested in the securities of another
publicly-held REIT, one which resulted in control of that REIT
(the merger with Storage Trust in 1999), and one that did not. The
Company may engage in these activities in the future as a
component of its real estate acquisition strategy. The Company
also owns partnership interests in various consolidated and
unconsolidated partnerships. See "Investments in Real Estate and
Real Estate Entities."
7
o Underwriting securities of other issuers: The Company has not
engaged in this activity in the last three years, and does not
intend to in the future.
o Short-term investing: The Company has not engaged in investments
in real estate or real estate entities on a short-term basis in
the last three years with the exception of the aforementioned
investments in the securities of other REITs. Instead,
historically, the Company has acquired real estate assets and held
them for an extended period of time. The Company does not
anticipate any such short-term investments.
o Repurchasing or reacquiring the Company's shares or other
securities: The Board of Directors has authorized the repurchase
from time to time of up to 25,000,000 shares of the Company's
common stock on the open market or in privately negotiated
transactions. Cumulatively through March 10, 2004, we repurchased
a total of 21,672,020 shares of common stock at an aggregate cost
of approximately $541,863,000. Cumulatively through March 10,
2004, we have called for redemption or repurchased $954.5 million
of our senior preferred stock and $80.0 million of our preferred
partnership units for cash, representing a refinancing of these
securities into lower-coupon preferred securities. Any future
repurchases of the Company's common stock will depend primarily
upon the attractiveness of repurchases compared to our other
investment alternatives. Future redemptions or repurchases of the
Company's preferred securities, which will become available for
redemption or repurchase on their respective call dates, will be
dependent upon the spread between market rates and the coupon
rates of these securities.
Financing of the Company's Growth Strategies
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Overview of Financing Strategy: Over the past three years we have
funded substantially all of our acquisitions with permanent capital (retained
cash flow as well as common and preferred securities). We have elected to use
preferred securities as a form of leverage despite the fact that the dividend
rates of our preferred securities exceed the prevailing market interest rates
on conventional debt, because of certain benefits described in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources." Our present intent is to continue
to finance substantially all our growth with permanent capital.
Borrowings: We have in the past used our $200 million line of credit
described below under "Borrowings" as temporary "bridge" financing, and repaid
those amounts with permanent capital. In the last four years, the only
additional long-term debt we have incurred has been assumed in connection with
property acquisitions, most notably the merger with Storage Trust in 1999
wherein we assumed $100 million in senior unsecured notes. While it is not our
present intention to issue debt as a long-term financing strategy, we have
broad powers to borrow in furtherance of our objectives without a vote of our
shareholders. These powers are subject to a limitation on unsecured borrowings
in the Company's Bylaws described in "Limitations on Borrowings" below.
Issuance of Senior Securities: The Company has in the last three
years, and expects to continue, to issue additional series of preferred stock
that are senior to the Company's Common Stock and Equity Stock. At December
31, 2003, we had approximately $1.9 billion of preferred stock outstanding,
excluding one series that was called for redemption on December 5, 2003 and
subsequently repurchased on January 19, 2004. The preferred stock, which was
issued in series, has general preference rights with respect to liquidation
and quarterly distributions. We intend to continue to issue preferred
securities without a vote of our common shareholders.
8
Issuance of securities in exchange for property: The Company has
issued common equity in exchange for real estate and other investments in the
last three years. Future issuances will be dependent upon market conditions at
the time, including the market prices of our equity securities.
Development Joint Venture Financing: The Company has entered into two
separate development joint venture partnerships since 1997 in order to provide
development financing.
In November 1999, we formed PSAC Development Partners, L.P., (the
"Consolidated Development Joint Venture") with a joint venture partner (PSAC
Storage Investors, LLC) whose partners include a third party institutional
investor, owning approximately 35%, and Mr. Hughes, owning approximately 65%,
to develop approximately $100 million of storage facilities. At December 31,
2003, PSAC Development Partners, L.P. had completed construction on 22 storage
facilities with a total cost of approximately $108.6 million. We expect that
this second joint venture partnership will receive no additional capital
funding to develop any additional facilities.
PSAC Development Partners, L.P. is funded solely with equity capital
consisting of 51% from the Company and 49% from PSAC Storage Investors, LLC.
The term of the Consolidated Development Joint Venture is 15 years; however,
during the sixth year PSAC Storage Investors, LLC has the right to cause an
early termination of PSAC Development Partners, L.P. If PSAC Storage
Investors, LLC exercises this right, we then have the option, but not the
obligation, to acquire their interest for an amount that will allow them to
receive an annual return of 10.75%. If the Company does not exercise its
option to acquire PSAC Storage Investors, LLC's interest, PSAC Development
Partners, L.P.'s assets will be sold to third parties and the proceeds
distributed to the Company and PSAC Storage Investors, LLC in accordance with
the partnership agreement. If PSAC Storage Investors, LLC does not exercise
its right to early termination during the sixth year, the partnership will be
liquidated 15 years after its formation with the assets sold to third parties
and the proceeds distributed to the Company and PSAC Storage Investors, LLC in
accordance with the partnership agreement.
PSAC Storage Investors, LLC provides Mr. Hughes with a fixed yield of
approximately 8.0% per annum on his preferred non-voting interest
(representing an investment of approximately $64.1 million at December 31,
2003). In addition, Mr. Hughes can receive up to 1% of cash flow of the
Partnership (estimated to be less than $50,000 per year) if PSAC Storage
Investors, LLC elects an early termination. If PSAC Storage Investors, LLC
does not elect to cause an early termination, Mr. Hughes' 1% interest can
increase to up to 10%.
Disposition of properties: During 2003, the Company sold certain
self-storage facilities, which were located in non-strategic markets and
locations, for an aggregate of approximately $21.0 million. The Company used
the proceeds from these sales as a source of funding for developments. The
Company continually reviews its portfolio for facilities that are not
strategically located and determines the proper method of disposition of these
facilities.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Liquidity and Capital Resources."
Investments in Real Estate and Real Estate Entities
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Investment Policies and Practices with respect to our investments:
Following are our investment practices and policies which, though we do not
anticipate any significant alteration, can be changed by the Board of Directors
without a shareholder vote:
o Our investments primarily consist of direct ownership of
self-storage properties (the nature of our self-storage properties
is described in Item 2, "Properties"), as well as partial
interests in entities that own self-storage properties, which are
located in the United States.
o Our investments are acquired both for income and for capital gain.
9
o Our partial ownership interests primarily reflect general and
limited partnership interests in entities that own self-storage
facilities that are operated by the Company.
o Additional acquired interests in real estate (other than the
acquisition properties from third parties) will include common
equity interests in entities in which we already have an interest.
o To a lesser extent, we have interests in existing commercial
properties (described in Item 2, "Properties"), containing
commercial and industrial rental space, primarily through our
investment in PS Business Parks.
o The Company has a pipeline of 38 development projects, including
25 expansions of real estate facilities, for a total cost of
$156.3 million. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and
Capital Resources."
The following table outlines our ownership interest in self-storage
facilities at December 31, 2003:
Net Rentable Square
Footage of Storage
Number of Space (a)
Storage Facilities (in thousands)
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Consolidated storage facilities:
Wholly-owned by the Company............. 889 54,896
Owned by Consolidated Entities.......... 485 28,117
------------------ -------------------
1,374 83,013
Facilities owned by Unconsolidated Entities 36 2,186
------------------ -------------------
Total storage facilities in which the
Company has an ownership interest....... 1,410 85,199
================== ===================
(a)Square footage for the consolidated facilities includes 1,535,000 net
rentable square feet of industrial space for use in containerized
storage activities.
In addition to the Company's interest in self-storage facilities noted
above, the Company owns three stand-alone commercial facilities with an
aggregate of 204,000 net rentable square feet, owns five industrial facilities
with an aggregate of 404,000 net rentable square feet used by the continuing
containerized storage operations, and has 1,187,000 net rentable square feet of
commercial space at certain of the self-storage facilities. The Company and the
entities it controls also have a 44% common interest in PSB, which at December
31, 2003 owned and operated 18.3 million net rentable square feet of commercial
space.
Facilities Owned by Controlled Entities
- ---------------------------------------
In addition to our direct ownership of 889 storage facilities, at
December 31, 2003, we had controlling ownership interests in 38 entities owning
in aggregate 485 storage facilities. Because of our controlling interest in each
of these entities, we consolidate the assets, liabilities, and results of
operations of these entities on the Company's financial statements.
Facilities Owned by Unconsolidated Entities
- -------------------------------------------
At December 31, 2003, we had ownership interests in PSB and seven
limited partnerships (collectively the "Unconsolidated Entities"). Our ownership
interest in these entities is less than 50%.
Due to the Company's limited ownership interest and limited control of
these entities, we do not consolidate the accounts of these entities for
financial reporting purposes and account for such investments using the equity
method. PSB, which files financial statements with the Securities and Exchange
Commission, has debt and other obligations that are not included in the
Company's consolidated financial statements. The seven limited partnerships do
not have any significant amounts of debt or other obligations. See Note 6 to the
Company's financial statements for the year ended December 31, 2003 for further
disclosure regarding the assets and liabilities of the Unconsolidated Entities.
10
The following chart sets forth, as of December 31, 2003, the entities
in which the Company has a controlling interest and the entities in which the
Company has a minority interest:
- ---------------------------------------------------------------------------------------------------------------
Subsidiaries (Controlled Entities) Entities in which the Company
of the Company has a Minority Interest (Unconsolidated Entities)
- ---------------------------------------------------------------------------------------------------------------
Carson Storage Ventures Public Storage Alameda, Ltd. (2)
Connecticut Storage Fund Public Storage Glendale Freeway, Ltd. (11)
Del Amo Storage Partners, Ltd. Metropublic Storage Fund (10)
Diversified Storage Venture Fund PS Business Parks, Inc. (3)
Downey Storage Partners, Ltd. Public Storage Crescent Fund, Ltd. (4)
Huntington Beach Storage Partners, Ltd. Public Storage Partners, Ltd. (5)
Monterey Park Properties, Ltd. Public Storage Partners II, Ltd. (6)
PS Co-Investment Partners Public Storage Properties, Ltd. (7)
PS Insurance Company, Ltd.
PS Orangeco Holdings, Inc.
PS Orangeco, Inc.
PS Partners, Ltd.
PS Partners VIII, Ltd.
Public Storage Properties IV, Ltd. (8)
Public Storage Properties V, Ltd. (9)
PSA Institutional Partners, L.P.
PSAC Development Partners, L.P. (1)
Public Storage Euro Fund III, Ltd. (2)
Public Storage Euro Fund IV, Ltd. (2)
Public Storage Euro Fund V, Ltd. (2)
Public Storage Euro Fund VI, Ltd. (2)
Public Storage Euro Fund VII, Ltd. (2)
Public Storage Euro Fund VIII, Ltd. (2)
Public Storage Euro Fund IX, Ltd. (2)
Public Storage Euro Fund X, Ltd. (2)
Public Storage Euro Fund XI, Ltd. (2)
Public Storage Euro Fund XII, Ltd. (2)
Public Storage Euro Fund XIII, Ltd. (2)
Public Storage German Fund II, Ltd. (2)
Public Storage Institutional Fund
Public Storage Institutional Fund II (10)
Public Storage Institutional Fund III
Public Storage Institutional Fund IV (10)
Public Storage Pickup & Delivery, L.P.
STOR-Re Mutual Insurance Company, Inc.
Storage Trust Properties, L.P.
Van Nuys Storage Partners, Ltd.
Whittier Storage Partners, Ltd.
(1) PSAC Storage Investors, LLC owns a direct 49% ownership interest in this
entity. The partners of PSAC Storage Investors, LLC are Mr. Hughes, having
an approximately 65% ownership interest, and a third party institutional
investor having an approximately 35% ownership interest.
(2) B. Wayne Hughes owns approximately 20% of the general partner interest of
these entities.
(3) B. Wayne Hughes owns approximately 0.5% of the common shares of PS Business
Parks, Inc.
(4) B. Wayne Hughes owns approximately 17.9% of the general partnership
interest of this entity.
(5) The Hughes Family owns approximately 24.3% of the limited partnership
interests of this entity.
(6) TheHughes Family owns approximately 11.9% of the limited partnership
interests of this entity.
(7) The Hughes Family owns 20% of the general partner interests and 30.5% of
the limited partnership interests of this entity.
(8) The Hughes Family owns 20% of the general partner interests and 15.5% of
the limited partnership interests of this entity.
(9) The Hughes Family owns 20% of the general partner interests and 11.4% of
the limited partnership interests of this entity.
(10) B. Wayne Hughes is a general partner of this entity, and has no economic
interest.
(11) B. Wayne Hughes is a general partner in this entity and owns
a 0.02% equity interest.
11
Prohibited Investments and Activities
- -------------------------------------
The Company's Bylaws prohibit the Company from purchasing properties in
which the Company's officers or directors have an interest, or from selling
properties to such persons, unless the transactions are approved by a majority
of the independent directors and are fair to the Company based on an independent
appraisal. This Bylaw provision may be changed with shareholder approval. See
"Limitations on Debt" below for other restrictions in the Bylaws.
Borrowings
- ----------
We have a $200 million revolving line of credit (the "Credit
Agreement") that has a maturity date of October 31, 2004 and bears an annual
interest rate ranging from the London Interbank Offered Rate ("LIBOR") plus
0.45% to LIBOR plus 1.50% depending on our credit ratings (currently 0.45%). In
addition, we are required to pay a quarterly commitment fee ranging from 0.20%
per annum to 0.30% per annum depending on our credit ratings (currently the fee
is 0.20% per annum). At December 31, 2003 and March 11, 2004, we had no
borrowings on our line of credit.
The Credit Agreement includes various covenants, the more significant
of which require us to (i) maintain a balance sheet leverage ratio of less than
0.50 to 1.00, (ii) maintain certain quarterly interest and fixed-charge coverage
ratios (as defined) of not less than 2.50 to 1.0 and 1.75 to 1.0, respectively,
and (iii) maintain a minimum total shareholders' equity (as defined). In
addition, we are limited in our ability to incur additional borrowings (we are
required to maintain unencumbered assets with an aggregate book value equal to
or greater than two times our unsecured recourse debt). We were in compliance
with all the covenants of the Credit Agreement at December 31, 2003.
As of December 31, 2003, we had notes payable of approximately $76
million. See Notes 7 and 8 to the consolidated financial statements for a
summary of the Company's borrowings at December 31, 2003.
Subject to a limitation on unsecured borrowings in the Company's Bylaws
(described below), we have broad powers to borrow in support of the Company's
objectives. We have incurred in the past, and may incur in the future, both
short-term and long-term indebtedness to increase our funds available for
investment in real estate, capital expenditures and distributions.
Limitations on Debt
- -------------------
The Bylaws provide that the Board of Directors shall not authorize or
permit the incurrence of any obligation by the Company that would cause our
"Asset Coverage" of our unsecured indebtedness to become less than 300%. Asset
Coverage is defined in the Bylaws as the ratio (expressed as a percentage) by
which the value of the total assets (as defined in the Bylaws) of the Company
less the Company's liabilities (except liabilities for unsecured borrowings)
bears to the aggregate amount of all unsecured borrowings of the Company. This
Bylaw provision may be changed only upon a shareholder vote.
The Company's Bylaws prohibit us from issuing debt securities in a
public offering unless the Company's "cash flow" (which for this purpose means
net income, exclusive of extraordinary items, plus depreciation) for the most
recent 12 months for which financial statements are available, adjusted to give
effect to the anticipated use of the proceeds from the proposed sale of debt
securities, would be sufficient to pay the interest on such securities. This
Bylaw provision may be changed only upon a shareholder vote.
Without the consent of holders of the various series of Senior
Preferred Stock, we may not take any action that would result in a ratio of
"Debt" to "Assets" (the "Debt Ratio") in excess of 50%. As of December 31, 2003,
the Debt Ratio was approximately 1.2%. "Debt" means the liabilities (other than
"accrued and other liabilities" and "minority interest") that should, in
accordance with accounting principles generally accepted in the United States,
be reflected on the Company's consolidated balance sheet at the time of
determination. "Assets" means the Company's total assets before a reduction for
accumulated depreciation and amortization that should, in accordance with
generally accepted accounting principles, be reflected on the consolidated
balance sheet at the time of determination.
13
Our bank and senior unsecured debt agreements contain various financial
covenants, including limitations on the level of indebtedness of 30% of total
capitalization (as defined) and the prohibition of the payment of dividends upon
the occurrence of an event of default (as defined).
Employees
- ---------
We have approximately 4,500 employees at December 31, 2003 who render
services on behalf of the Company, primarily personnel engaged in property
operation, substantially all of whom are employed by a clearing company that
provides certain administrative and cost-sharing services to the Company and
other owners of properties operated by the Company.
Federal Income Tax
- ------------------
We believe that we have operated, and intend to continue to operate, in
such a manner as to qualify as a REIT under the Internal Revenue Code of 1986,
but no assurance can be given that we will at all times so qualify. To the
extent that we continue to qualify as a REIT, we will not be taxed, with certain
limited exceptions, on the taxable income (including gains from the sale of
securities and properties) that we distribute to our shareholders. Our taxable
REIT subsidiaries will be taxed on their taxable income.
For Federal tax purposes, our distributions to our shareholders are
treated by the shareholders as ordinary income, capital gains, return of capital
or a combination thereof. Distributions in excess of taxable income (as defined)
may be treated as nontaxable returns of capital or as capital gain to the extent
the distributions exceed a shareholder's adjusted basis in the shares.
Insurance
- ---------
We believe that our properties are adequately insured. Our facilities
have historically carried comprehensive insurance, including fire, earthquake,
liability and extended coverage through STOR-Re Mutual Insurance Company, Inc.
("STOR-Re"), one of the Consolidated Entities. The Company also insures portions
of these risks through nationally recognized insurance carriers. STOR-Re also
insures affiliates of the Company.
The Company, STOR-Re, and its affiliates' maximum aggregate annual
exposure for losses that are below the deductibles set forth in the third-party
insurance contracts, assuming multiple significant insurable events occur, is
approximately $30 million. In addition, if losses exhaust the third-party
insurers' limit of coverage of $125 million for property coverage and $101
million for general liability, our exposure could be greater. These limits are
higher than estimates of maximum probable losses that could occur from
individual catastrophic events (i.e. earthquake and wind damage) determined in
recent engineering and actuarial studies.
ITEM 1A. Risk Factors
In addition to the other information in our Form 10-K, you should
consider the following factors in evaluating the Company:
THE HUGHES FAMILY COULD CONTROL US.
At March 11, 2004, the Hughes family owned approximately 36% of our
outstanding shares of common stock. Consequently, the Hughes family could
control matters submitted to a vote of our shareholders, including electing
directors, amending our organizational documents, dissolving and approving other
extraordinary transactions, such as a takeover attempt, even though such actions
may be favorable to the other common shareholders.
14
PROVISIONS IN OUR ORGANIZATIONAL DOCUMENTS MAY PREVENT CHANGES IN CONTROL.
Restrictions in our organizational documents may further limit changes
in control. Unless our board of directors waives these limitations, no
shareholder may own more than (1) 2.0% of our outstanding shares of our common
stock or (2) 9.9% of the outstanding shares of each class or series of our
preferred or equity stock. Our organizational documents in effect provide,
however, that the Hughes family may continue to own the shares of our common
stock held by them at the time of the 1995 reorganization. These limitations are
designed, to the extent possible, to avoid a concentration of ownership that
might jeopardize our ability to qualify as a real estate investment trust or
REIT. These limitations, however, also may make a change of control
significantly more difficult (if not impossible) even if it would be favorable
to the interests of our public shareholders. These provisions will prevent
future takeover attempts not approved by our board of directors even if a
majority of our public shareholders deem it to be in their best interests
because they would receive a premium for their shares over the shares' then
market value or for other reasons.
WE WOULD INCUR ADVERSE TAX CONSEQUENCES IF WE FAIL TO QUALIFY AS A REIT.
You will be subject to the risk that we may not qualify as a REIT.
REITs are subject to a range of complex organizational and operational
requirements. As a REIT, we must distribute at least 90% of our REIT taxable
income to our shareholders. Other restrictions apply to our income and assets.
Our REIT status is also dependent upon the ongoing qualification of PS Business
Parks, Inc. as a REIT, as a result of our substantial ownership interest in that
company.
For any taxable year that we fail to qualify as a REIT and the relief
provisions do not apply, we would be taxed at the regular corporate rates on all
of our taxable income, whether or not we make any distributions to our
shareholders. Those taxes would reduce the amount of cash available for
distribution to our shareholders or for reinvestment. As a result, our failure
to qualify as a REIT during any taxable year could have a material adverse
effect upon our shareholders and us. Furthermore, unless certain relief
provisions apply, we would not be eligible to elect REIT status again until the
fifth taxable year that begins after the first year for which we fail to
qualify.
WE MAY PAY SOME TAXES.
Even if we qualify as a REIT for Federal income tax purposes, we are
required to pay some federal, state and local taxes on our income and property.
Several corporate subsidiaries of the Company have elected to be treated as
"taxable REIT subsidiaries" of the Company for Federal income tax purposes since
January 1, 2001. A taxable REIT subsidiary is a fully taxable corporation and is
limited in its ability to deduct interest payments made to us. In addition, we
will be subject to a 100% penalty tax on some payments that we receive if the
economic arrangements among our tenants, our taxable REIT subsidiaries and us
are not comparable to similar arrangements among unrelated parties. To the
extent that the Company or any taxable REIT subsidiary is required to pay
federal, state or local taxes, we will have less cash available for distribution
to shareholders.
WE WOULD INCUR A CORPORATE LEVEL TAX IF WE SELL CERTAIN ASSETS.
We will generally be subject to a corporate level tax on any net
built-in gain if before November 2005 we sell any of the assets we acquired in
the November 1995 reorganization.
OUR SHAREHOLDERS AND WE ARE SUBJECT TO FINANCING RISKS.
Debt increases the risk of loss. In making real estate investments, we
may borrow money, which increases the risk of loss. At December 31, 2003, our
debt of $76 million was approximately 1.5% of our total assets.
15
Certain securities have a liquidation preference over our common stock
and Equity Stock, Series A. If we liquidated, holders of our preferred
securities would be entitled to receive liquidating distributions, plus any
accrued and unpaid distributions, before any distribution of assets to the
holders of our common stock and Equity Stock, Series A. Holders of preferred
securities are entitled to receive, when declared by our board of directors,
cash distributions in preference to holders of our common stock and Equity
Stock, Series A.
SINCE OUR BUSINESS CONSISTS PRIMARILY OF ACQUIRING AND OPERATING REAL ESTATE, WE
ARE SUBJECT TO REAL ESTATE OPERATING RISKS.
The value of our investments may be reduced by general risks of real
estate ownership. Since we derive substantially all of our income from real
estate operations, we are subject to the general risks of owning real
estate-related assets, including:
o lack of demand for rental spaces or units in a locale;
o changes in general economic or local conditions;
o potential terrorist attacks;
o changes in supply of or demand for similar or competing facilities in
an area;
o the impact of environmental protection laws;
o changes in interest rates and availability of permanent mortgage funds
which may render the sale or financing of a property difficult or
unattractive; and
o changes in tax, real estate and zoning laws.
There is significant competition among self-storage facilities and from
other storage alternatives. Most of our properties are self-storage facilities,
which generated 95% of our rental revenue during 2003. Local market conditions
will play a significant part in how competition will affect us. Competition in
the market areas in which many of our properties are located from other
self-storage facilities and other storage alternatives is significant and has
affected the occupancy levels, rental rates and operating expenses of some of
our properties. Any increase in availability of funds for investment in real
estate may accelerate competition. Further development of self-storage
facilities may intensify competition among operators of self-storage facilities
in the market areas in which we operate. As discussed in Management's Discussion
and Analysis of Financial Condition and Results of Operations - Self-Storage
Operations, the net operating income prior to depreciation of the Consistent
Group of facilities declined 1.8% in the year ended December 31, 2003 as
compared to 2002. Such competition could have been a factor in this decline.
We may incur significant environmental costs and liabilities. As an
owner and operator of real properties, under various federal, state and local
environmental laws, we are required to clean up spills or other releases of
hazardous or toxic substances on or from our properties. Certain environmental
laws impose liability whether or not the owner knew of, or was responsible for,
the presence of the hazardous or toxic substances. In some cases, liability may
not be limited to the value of the property. The presence of these substances,
or the failure to properly remediate any resulting contamination, whether from
environmental or microbial issues, also may adversely affect the owner's or
operator's ability to sell, lease or operate its property or to borrow using its
property as collateral.
We have conducted preliminary environmental assessments of most of our
properties (and intend to conduct these assessments in connection with property
acquisitions) to evaluate the environmental condition of, and potential
environmental liabilities associated with, our properties. These assessments
generally consist of an investigation of environmental conditions at the
property (not including soil or groundwater sampling or analysis), as well as a
review of available information regarding the site and publicly available data
regarding conditions at other sites in the vicinity. In connection with these
property assessments, our operations and recent property acquisitions, we have
become aware that prior operations or activities at some facilities or from
nearby locations have or may have resulted in contamination to the soil or
groundwater at these facilities. In this regard, some of our facilities are or
may be the subject of federal or state environment investigations or remedial
actions. We have obtained, with respect to recent acquisitions, and intend to
obtain with respect to pending or future acquisitions, appropriate purchase
price adjustments or indemnifications that we believe are sufficient to cover
any related potential liability. Although we cannot provide any assurance, based
on the preliminary environmental assessments, we believe we have funds available
to cover any liability from environmental contamination or potential
contamination and we are not aware of any environmental contamination of our
facilities material to our overall business, financial condition or results of
operation.
16
There has been an increasing number of claims and litigation against
owners and managers of rental properties relating to moisture infiltration,
which can result in mold or other property damage. When we receive a complaint
concerning moisture infiltration, condensation or mold problems and/or become
aware that an air quality concern exists, we implement corrective measures in
accordance with guidelines and protocols we have developed with the assistance
of outside experts. We seek to work proactively with our tenants to resolve
moisture infiltration and mold-related issues, subject to our contractual
limitations on liability for such claims. However, we can make no assurance that
material legal claims relating to moisture infiltration and the presence of, or
exposure to, mold will not arise in the future.
Delays in development and fill-up of our properties would reduce our
profitability. Since January 1, 1999, we have opened 63 newly developed
self-storage facilities and 17 facilities that combine self-storage and
containerized storage space at the same location, with aggregate development
costs of $534.6 million. At December 31, 2003 the Company had 38 projects in
development that have total estimated costs of $156.3 million. Construction
delays due to weather, unforeseen site conditions, personnel problems, and other
factors, as well as cost overruns, would adversely affect the Company's
profitability. Delays in the rent-up of newly developed facilities as a result
of competition or other factors would also adversely impact the Company's
profitability.
Property taxes can increase and cause a decline in yields on
investments. Each of our properties is subject to real property taxes. These
real property taxes may increase in the future as property tax rates change and
as our properties are assessed or reassessed by tax authorities. Such increases
could adversely impact the Company's profitability.
We must comply with the Americans with Disabilities Act and fire and
safety regulations, which can require significant expenditures. All our
properties must comply with the Americans with Disabilities Act and with related
regulations (the "ADA"). The ADA has separate compliance requirements for
"public accommodations" and "commercial facilities," but generally requires that
buildings be made accessible to persons with disabilities. Various state laws
impose similar requirements. A failure to comply with the ADA or similar state
laws could result in government imposed fines on us and the award of damages to
individuals affected by the failure. In addition, we must operate our properties
in compliance with numerous local fire and safety regulations, building codes,
and other land use regulations. Compliance with these requirements can require
us to spend substantial amounts of money, which would reduce cash otherwise
available for distribution to shareholders. Failure to comply with these
requirements could also affect the marketability of our real estate facilities.
WE HAVE NO INTEREST IN CANADIAN SELF-STORAGE FACILITIES OWNED BY THE HUGHES
FAMILY.
B. Wayne Hughes, Chairman of the Board, and his family (the "Hughes
Family") have ownership interests in, and operate, approximately 38 self-storage
facilities in Canada under the name "Public Storage," pursuant to a license
agreement with the Company. We currently do not own any interests in these
facilities nor do we own any facilities in Canada. The Hughes Family owns
approximately 36% of our common stock outstanding at December 31, 2003. We have
a right of first refusal to acquire the stock or assets of the corporation
engaged in the operation of the 38 self-storage facilities in Canada if the
Hughes Family or the corporation agrees to sell them. However, we have no
interest in the operations of this corporation, have no right to acquire this
stock or assets unless the Hughes Family decides to sell, and receive no benefit
from the profits and increases in value of the Canadian self-storage facilities.
17
Company personnel have been engaged in the supervision and the
operation of these 38 properties and have provided certain administrative
services for the Canadian owners, and certain other services, primarily tax
services, with respect to certain other Hughes Family interests. The Hughes
Family and the Canadian owners have reimbursed us at cost for these services
(U.S. $542,499 with respect to the Canadian operations and U.S. $151,063 for
other services during 2003). There have been conflicts of interest in
allocating time of our personnel between Company properties, the Canadian
properties, and certain other Hughes Family interests. The sharing of Company
personnel with the Canadian entities was substantially eliminated by December
31, 2003.
OUR CONTAINERIZED STORAGE BUSINESS HAS INCURRED OPERATING LOSSES.
Public Storage Pickup & Delivery ("PSPUD") was organized in 1996 to
operate a portable self-storage business. We own all of the economic interest of
PSPUD. We cannot provide any assurance as to its ultimate profitability, because
this is a relatively new business segment. PSPUD incurred operating losses
amounting to $5,135,000 in 2000, $2,218,000 in 2001, $10,058,000 in 2002 and
operating income of $2,543,000 in 2003. PSPUD closed 31 facilities that were
deemed not strategic to the Company's business plan during 2002 and 2003.
The operating loss for 2002 includes a write-down for impaired assets
totaling $6,924,000 and lease termination charges of $2,447,000. The operating
income for 2003 was reduced by impairment charges and losses on sale of
$3,584,000 related to the fixed assets used in the facilities that were closed.
TERRORIST ATTACKS AND THE POSSIBILITY OF WIDER ARMED CONFLICT MAY HAVE AN
ADVERSE IMPACT ON OUR BUSINESS AND OPERATING RESULTS AND COULD DEREASE THE VALUE
OF OUR ASSETS.
Terrorist attacks and other acts of violence or war, such as those that
took place on September 11, 2001, could have a material adverse impact on our
business and operating results. There can be no assurance that there will not be
further terrorist attacks against the United States or its businesses or
interests. Attacks or armed conflicts that directly impact one or more of our
properties could significantly affect our ability to operate those properties
and thereby impair our operating results. Further, we may not have insurance
coverage for losses caused by a terrorist attack. Such insurance may not be
available, or if it is available and we decide to obtain such terrorist
coverage, the cost for the insurance may be significant in relationship to the
risk overall. In addition, the adverse effects that such violent acts and
threats of future attacks could have on the U.S. economy could similarly have a
material adverse effect on our business and results of operations. Finally,
further terrorist acts could cause the United States to enter into a wider armed
conflict which could further impact our business and operating results.
RECENTLY ENACTED TAX LEGISLATION COULD ADVERSELY AFFECT THE PRICE OF OUR STOCK.
Tax legislation enacted in 2003 generally reduces the maximum tax rate
for dividends payable to individuals to 15% through 2008. Dividends payable by
REITs, however, generally continue to be taxed at the normal rate applicable to
the individual recipient, rather than the preferential rates applicable to other
dividends. Although this legislation does not adversely affect the taxation of
REITs or dividends paid by REITs, the more favorable rates applicable to regular
corporate dividends could cause investors who are individuals to perceive
investments in REITs to be relatively less attractive than investments in the
stocks of non-REIT corporations that pay dividends, which could adversely affect
the value of the stock of REITs, including our common stock.
DEVELOPMENTS IN CALIFORNIA MAY HAVE AN ADVERSE IMPACT ON OUR BUSINESS.
We are headquartered in, and approximately one-quarter of our
properties are located in, California. California is facing serious budgetary
problems. Action that may be taken in response to these problems, such as an
increase in property taxes on commercial properties, could adversely impact our
business and results of operations. In addition, we could be adversely impacted
by the recently enacted legislation mandating, beginning in 2006, medical
insurance for employees of California businesses and members of their families.
18
ITEM 2. Properties
At December 31, 2003, we had direct and indirect ownership interests in
1,410 storage facilities located in 37 states:
At December 31, 2003
----------------------------------------
Number of Storage Net Rentable Square
Facilities (a) Feet (in thousands)
--------------- -------------------
California:
Northern............... 143 8,222
Southern............... 167 10,852
Texas....................... 163 10,989
Florida..................... 139 8,199
Illinois.................... 95 5,829
Georgia..................... 62 3,626
Colorado.................... 50 3,145
Washington.................. 43 2,736
Maryland.................... 43 2,458
New Jersey.................. 42 2,449
Missouri.................... 38 2,172
Virginia.................... 38 2,294
New York.................... 36 2,127
Ohio........................ 30 1,863
Oregon...................... 25 1,171
North Carolina.............. 24 1,266
South Carolina.............. 24 1,082
Tennessee................... 23 1,311
Kansas...................... 22 1,316
Nevada...................... 22 1,409
Alabama..................... 22 895
Other states (17 states).... 159 9,788
--------------- -------------------
Totals................. 1,410 85,199
=============== ===================
(a) Includes 1,374 self-storage facilities owned by the Company and entities
controlled by the Company. The remaining 36 facilities are self-storage
facilities owned by entities in which the Company has an interest; however,
the Company does not have a controlling interest in such entities. See
Schedule III: Real Estate and Accumulated Depreciation in the Company's
2003 financials, for a complete list of properties consolidated by the
Company.
Our facilities are generally operated to maximize cash flow through the
regular review and, when warranted by market conditions, adjustment of scheduled
rents. For the year ended December 31, 2003, the weighted average occupancy
level and the average total rental income per rentable square foot for our
self-storage facilities were approximately 87.9% and $11.37, respectively.
Included in the 1,410 storage facilities are 80 newly developed facilities
opened since January 1, 1999, substantially all of which were in the fill-up
stage in the year ended December 31, 2003.
At December 31, 2003, 21 of our facilities were encumbered by an
aggregate of $16.6 million in mortgage debt.
The Company has no specific policy as to the maximum size of any one
particular self-storage facility. However, none of our facilities involves, or
is expected to involve, 1% or more of the Company's total assets, gross revenues
or net income.
19
Description of Storage facilities: Storage facilities, which comprise
the majority of our investments (approximately 95% based on rental revenue), are
designed to offer accessible storage space for personal and business use at a
relatively low cost. A user rents a fully enclosed space which is for the user's
exclusive use and to which only the user has access on an unrestricted basis
during business hours. On-site operation is the responsibility of property
managers who are supervised by district managers. Some storage facilities also
include rentable uncovered parking areas for vehicle storage, as well as space
for portable storage containers. Leases for storage facility space may be on a
long-term or short-term basis, although typically spaces are rented on a
month-to-month basis. Rental rates vary according to the location of the
property, the size of the storage space and length of stay. All of our storage
facilities are operated under the "Public Storage" name.
Users of space in storage facilities include individuals and large and
small businesses. Individuals usually obtain this space for storage of
furniture, household appliances, personal belongings, motor vehicles, boats,
campers, motorcycles and other household goods. Businesses normally employ this
space for storage of excess inventory, business records, seasonal goods,
equipment and fixtures.
Our storage facilities generally consist of three to seven buildings
containing an aggregate of between 350 to 750 storage spaces, most of which have
between 25 and 400 square feet and an interior height of approximately 8 to 12
feet.
We experience minor seasonal fluctuations in the occupancy levels of
storage facilities with occupancies generally higher in the summer months than
in the winter months. We believe that these fluctuations result in part from
increased moving activity during the summer.
Our storage facilities are geographically diversified and are located
primarily in or near major metropolitan markets in 37 states in the United
States. Generally our storage facilities are located in heavily populated areas
and close to concentrations of apartment complexes, single family residences and
commercial developments. However, there may be circumstances in which it may be
appropriate to own a property in a less populated area, for example, in an area
that is highly visible from a major thoroughfare and close to, although not in,
a heavily populated area. Moreover, in certain population centers, land costs
and zoning restrictions may create a demand for space in nearby less populated
areas.
Competition from other self-storage facilities in the market areas in
which many of our properties are located is significant and has affected the
occupancy levels, rental rates, and operating expenses of some of our
properties.
Since our investments are primarily storage facilities, our ability to
preserve our investments and achieve our objectives is dependent in large part
upon success in this field. Historically, upon stabilization after an initial
fill-up period, our storage facility interests have generally shown a high
degree of consistency in generating cash flows, despite changing economic
conditions. We believe that our storage facilities, upon stabilization, have
attractive characteristics consisting of high profit margins, a broad tenant
base and low levels of capital expenditures to maintain their condition and
appearance.
Commercial Properties: In addition to our interest in 1,410 storage
facilities, we have an interest in PSB, which, as of December 31, 2003, owns and
operates 18.3 million net rentable square feet in eight states. At December 31,
2003, our investment in PS Business Parks represents less than 6% of our total
assets based upon cost of $282.4 million. The market value of our investment in
PSB at December 31, 2003 of $525.0 million represents 10.5% of the book value of
our total assets at December 31, 2003 of approximately $5.0 billion. We also
directly own three commercial properties with 204,000 net rentable square feet,
have 1,187,000 net rentable square feet of commercial space that is located at
certain of the self-storage facilities, and own five industrial facilities with
an aggregate of 404,000 net rentable square feet that are being used by the
continuing containerized storage operations.
The commercial properties owned by PSB consist of flex space, office
space and industrial space. Flex space is defined as buildings that are
configured with a combination of part warehouse space and part office space and
can be designed to fit a wide variety of uses. The warehouse component of the
flex space has a variety of uses including light manufacturing and assembly,
storage and warehousing, showroom, laboratory, distribution and research and
development activities. The office component of flex space is complementary to
the warehouse component by enabling businesses to accommodate management and
production staff in the same facility. PSB also owns low-rise suburban office
space, generally either in business parks that combine office and flex space or
in desirable submarkets where the economics of the market demand an office
build-out. PSB also owns industrial space that has characteristics similar to
the warehouse component of the flex space.
20
Environmental Matters: Our practice is to conduct environmental
investigations in connection with property acquisitions. As a result of
environmental investigations of our properties, which commenced in 1995, we
recorded an amount, which in management's best estimate, will be sufficient to
satisfy anticipated costs of known investigation and remediation requirements.
Although there can be no assurance, we are not aware of any environmental
contamination of any of our facilities that individually or in the aggregate
would be material to the Company's overall business, financial condition, or
results of operations.
ITEM 3. Legal Proceedings
Serrao v. Public Storage, Inc. (filed April 2003) (Superior Court - Orange
---------------------------------------------------------------------------
County)
--------
The plaintiff in this case filed a suit against the Company on behalf
of a putative class of renters who rented self-storage units from the Company.
Plaintiff alleges that the Company misrepresented the size of its storage units,
has brought claims under California statutory and common law relating to
consumer protection, fraud, unfair competition, and negligent misrepresentation,
and is seeking monetary damages, restitution, and declaratory and injunctive
relief.
The claim in this case is substantially similar to those in Henriquez
v. Public Storage, Inc., which was disclosed in prior reports. In January 2003,
the plaintiff caused the Henriquez action to be dismissed. Based upon the
uncertainty inherent in any putative class action, the Company cannot presently
determine the potential damages, if any, or the ultimate outcome of this
litigation. On November 3, 2003, the court granted the Company's motion to
strike the plaintiff's nationwide class allegations and to limit any putative
class to California residents only. The Company is vigorously contesting the
claims upon which this lawsuit is based including class certification efforts.
Salaam, et al v. Public Storage, Inc. (filed February 2000) (Superior Court
---------------------------------------------------------------------------
- Los Angeles County)
---------------------
The plaintiffs in this case are suing the Company on behalf of a
putative class of California resident property managers who claim that they were
not compensated for all the hours they worked. The named plaintiffs have
indicated that their claims total less than $20,000 in aggregate. On December 1,
2003, the California Court of Appeals affirmed the Supreme Court's 2002 denial
of plaintiff's motion for class certification. The maximum potential liability
cannot be estimated, but can only be increased if claims are permitted to be
brought on behalf of others under the California Unfair Business Practices Act.
The affirmation of denial of class certification does not address the claim
under the California Unfair Business Practices Act.
The Company is continuing to vigorously contest the claims in this case
and intends to resist any expansion beyond the named plaintiffs, including by
opposing claims on behalf of others under the California Unfair Business
Practices Act. The Company cannot presently determine the potential damages, if
any, or the ultimate outcome of this litigation.
Gustavson et al. v. Public Storage, Inc. (filed June 2003) (Superior
---------------------------------------------------------------------------
Court-Los Angeles County)
-------------------------
In November 2002, a shareholder of the Company made a demand on the
Board of Directors that challenged the fairness of the Company's acquisition of
PS Insurance Company, Ltd. ("PSIC") and demanded that the Board recover the
profits earned by PSIC from November 1995 through December 2001 and that the
entire purchase price paid by the Company for PSIC in excess of PSIC's net
assets be returned to the Company.
The contract to acquire PSIC was approved by the independent directors
of the Company in March 2001, and the transaction was closed in December 2001.
PSIC was formerly owned by B. Wayne Hughes, currently the Chairman of the Board
(and in 2001 also the Chief Executive Officer) of the Company, B. Wayne Hughes,
Jr., currently a director (and in 2001 also an officer) of the Company and
Tamara H. Gustavson, who in 2001 was an officer of the Company. In exchange for
the Hughes family's shares in PSIC, the Company issued to them 1,439,765 shares
of common stock (or a net of 1,138,733 shares, after taking into account 301,032
shares held by PSIC).
21
The shareholder has threatened litigation against the Hughes family and
the directors of the Company arising out of this transaction and alleged a
pattern of deceptive disclosures with respect to PSIC since 1995. In December
2002, the Board held a special meeting to authorize an inquiry by its
independent directors to review the fairness to the Company's shareholders of
its acquisition of PSIC and the ability of the Company to have started its own
tenant reinsurance business in 1995. The Company believes that, prior to the
effectiveness in 2001 of the federal REIT Modernization Act and corresponding
California legislation that authorized the creation and ownership of "taxable
REIT subsidiaries," the ownership by the Company of a reinsurance business
relating to its tenants would have jeopardized the Company's status as a REIT
and that other REITs faced similar concerns about tenant insurance programs.
In June 2003, the Hughes family filed a complaint for declaratory
relief relating to the Company's acquisition of PSIC naming the Company as
defendant. The Hughes family is seeking that the court make (i) a binding
declaration that the Company either is not entitled to recover profits or other
moneys earned by PSIC from November 1995 through December 2001; or alternatively
the amounts that the Hughes family should be ordered to surrender to the Company
if the court determines that the Company is entitled to recover any such profits
or moneys; and (ii) a binding declaration either that the Company cannot
establish that the acquisition agreement was not just and reasonable as to the
Company at the time it was authorized, approved or ratified; or alternatively
the amounts that the Hughes family should surrender to the Company, if the court
determines that the agreement was not just and reasonable to the Company at that
time. The Hughes family is not seeking any payments from the Company. In the
event of a determination that the Hughes family is obligated to pay certain
amounts to the Company, the complaint states that they have agreed to be bound
by that determination to pay such amounts to the Company.
In July 2003 the Company filed an answer to the Hughes family's
complaint requesting a final judicial determination of the Company's rights of
recovery against the Hughes family in respect of PSIC. In September 2003, by
order of the Superior Court, Malcolm Lucas, a former chief justice of the
California Supreme Court, was appointed to try the case. Discovery is proceeding
and it is expected that in mid-2004, Mr. Lucas will set a trial date for the
matter. The Company believes that the lawsuit by the Hughes family will
ultimately resolve matters relating to PSIC and will not have any financially
adverse effect on the Company (other than the costs and other expenses relating
to the lawsuit).
Sale of Partnership Units
-------------------------
In February 2000, the Company entered into a settlement of litigation
arising out of a 1997 tender offer for limited partnership units in two
affiliated partnerships. Under the settlement agreement, the Company agreed to
sell to the plaintiff units representing a 4% interest in each of the
partnerships for a total payment of approximately $1,523,000. The plaintiff
failed to tender the full purchase price at the scheduled closing, and the
settlement collapsed.
In September 2000, the plaintiff amended its complaint to add a claim
for breach of the settlement agreement seeking specific enforcement and a claim
seeking damages for unfair and deceptive trade practices in connection with the
alleged breach. By amending the complaint the Company believes the plaintiff
elected to abandon its underlying claims in the litigation. The Company asserted
affirmative defenses including the material breach by the plaintiff. Cross
motions for summary judgment were filed by the parties. In July 2002, the court
granted plaintiff's motion for summary judgment as to its claim for breach of
the settlement agreement and granted the Company's motion for summary judgment
to dismiss plaintiff's claim for unfair and deceptive trade practices.
In March 2003, the court granted plaintiff's motion to compel the sale
of the units to the plaintiff. On December 31, 2003, the Company sold the units
to the plaintiff for a total of $1,000,000. This amount reflects the $1,523,000
original agreement with a credit to the plaintiff of a portion of the
partnership's distributions received by the Company with respect to the units.
22
Other Items
-----------
The Company is a party to various claims, complaints, and other legal
actions that have arisen in the normal course of business from time to time,
that are not described above. We believe that it is unlikely that the outcome of
these other pending legal proceedings including employment and tenant claims, in
the aggregate, will have a material adverse effect upon the operations or
financial position of the Company.
ITEM 4. Submission of Matters to a Vote of Security Holders
The Company did not submit any matter to a vote of security holders in
the fourth quarter of the fiscal year ended December 31, 2003.
ITEM 4A. Executive Officers of the Company
The following is a biographical summary of the current executive
officers of the Company:
Ronald L. Havner, Jr., age 46, was appointed Vice Chairman and Chief
Executive Officer of the Company on November 7, 2002. Mr. Havner has been
employed by the Company in various accounting and operational capacities since
1986 and served as Senior Vice President and Chief Financial Officer of the
Company from November 1991 until December 1996 when be became Chairman,
President and Chief Executive Officer of PS Business Parks, Inc. (AMEX: symbol
PSB), an affiliate of the Company. He is a member of the National Association of
Real Estate Investment Trusts (NAREIT) and the Urban Land Institute (ULI) and a
director of Business Machine Security, Inc. and Mobile Storage Group, Inc. Mr.
Havner earned a Bachelor of Arts degree in Economics from the University of
California, Los Angeles.
Harvey Lenkin, age 67, became President and a director of the Company
in November 1991. Mr. Lenkin has been employed by the Company for 26 years. He
has been a director of PSB since March 1998 and was President of PSB from 1990
until March 1998. He is a director of Paladin Realty Income Properties I, Inc.
and a member of the Board of Governors of the National Association of Real
Estate Investment Trusts, Inc. (NAREIT).
John Reyes, age 43, a certified public accountant, joined the Company
in 1990 and was Controller of the Company from 1992 until December 1996 when he
became Chief Financial Officer. He became a Vice President of the Company in
November 1995 and a Senior Vice President of the Company in December 1996. From
1983 to 1990, Mr. Reyes was employed by Ernst & Young.
John S. Baumann, age 43, became Senior Vice President and Chief Legal
Officer of the Company in June 2003. From 1998 to 2002, Mr. Baumann was Senior
Vice President and General Counsel of Syncor International Corporation, an
international high technology health care services company. From 1995 to 1998,
he was Associate General Counsel of KPMG LLP, an international accounting, tax
and consulting firm.
PART II
ITEM 5. Market for the Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
a. Market Price of the Registrant's Common Equity:
The Common Stock (NYSE:PSA) has been listed on the New York
Stock Exchange since October 19, 1984 and on the Pacific Exchange since
December 26, 1996. The Depositary Shares each representing 1/1,000 of a
share of Equity Stock, Series A (NYSE:PSAA) (see section d. below) have
been listed on the New York Stock Exchange since February 14, 2000.
23
The following table sets forth the high and low sales prices
of the Common Stock on the New York Stock Exchange composite tapes for
the applicable periods.
Range
-------------------------------
Year Quarter High Low
---- ------- --------- ----------
2002 1st $ 38.400 $ 33.190
2nd 39.290 34.950
3rd 37.900 29.000
4th 32.530 27.980
2003 1st $ 33.600 $ 28.250
2nd 36.200 28.250
3rd 39.250 33.710
4th 45.810 39.150
The following table sets forth the high and low sales prices
of the Depositary Shares Each Representing 1/1,000 of a Share of Equity
Stock, Series A on the New York Stock Exchange composite tapes for the
applicable periods.
Range
-------------------------------
Year Quarter High Low
---- ------- --------- ----------
2002 1st $ 28.250 $ 26.650
2nd 28.400 27.160
3rd 28.180 25.700
4th 27.700 26.050
2003 1st $ 28.100 $ 26.480
2nd 28.900 26.870
3rd 29.120 27.300
4th 29.950 28.000
As of March 8, 2004, there were approximately 19,581 holders
of record of the Common Stock and approximately 12,304 holders of the
Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock,
Series A.
b. Dividends
We have paid quarterly distributions to our shareholders since
1981, our first full year of operations. Overall distributions on
Common Stock for 2003 amounted to $225.9 million or $1.80 per share.
Holders of Common Stock are entitled to receive distributions
when and if declared by the Company's Board of Directors out of any
funds legally available for that purpose. We are required to distribute
at least 90% of our net taxable ordinary income prior to the filing of
the Company's tax return and 85%, subject to certain adjustments,
during the calendar year, to maintain our REIT status for Federal
income tax purposes. It is our intention to pay distributions of not
less than this required amount.
24
For Federal income tax purposes, distributions to shareholders
are treated as ordinary income, capital gains, return of capital or a
combination thereof. For 2003, the dividends paid to the common
shareholders ($1.80 per share), on all the various classes of preferred
stock, and on our Equity Stock, Series A were classified as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
Ordinary Income.......... 99.72% 99.26% 99.98% 100.00%
Pre-May 6th Long-term
Capital Gain............. 0.28% 0.74% 0.02% 0.00%
----------- ----------- ----------- -----------
Total.................... 100.00% 100.00% 100.00% 100.00%
=========== =========== =========== ===========
A percentage of the long-term capital gain is unrecaptured
Section 1250 gain for the first, second and third quarters of 2003 as
follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
Unrecapturedss.1250 Gain.. 57.33% 96.36% 100.00% 0.00%
=========== =========== =========== ===========
For the corporate shareholders a portion of the long-term
capital gain is required to be recaptured as ordinary income. For the
first, second and third quarters for 2003 the percentages are as
follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
IRCss.291 Recapture....... 11.47% 19.27% 20.00% 0.00%
=========== =========== =========== ===========
The Jobs and Growth Tax Relief Reconciliation Act of 2003
introduced a new rule that reduces the tax rate for "qualified dividend
income." Generally, qualified dividend income is dividend income
received from a corporation that has been taxed on the dividends
distributed to its shareholders. Public Storage, Inc, as a real estate
investment trust ("REIT"), is generally not taxed on dividends it
distributes annually to its shareholders, and therefore the dividends
shareholders receive are not qualified dividend income subject to the
new lower rates.
During 2002, the dividends paid to the common shareholders
($1.80 per share), on all the various classes of preferred stock, and
on our Equity Stock, Series A were characterized as 100% ordinary
income.
For 2001, the dividends paid to the common shareholders ($1.69
per share), on all the various classes of preferred stock and on Equity
Stock, Series A were characterized as ordinary income and long-term
capital gain. The quarterly breakdown is as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
Ordinary Income.......... 96.60% 99.67% 100.00% 100.00%
Long-term Capital Gain... 3.40% 0.33% 0.00% 0.00%
----------- ----------- ----------- -----------
Total.................... 100.00% 100.00% 100.00% 100.00%
=========== =========== =========== ==========
c. Equity Stock
The Company is authorized to issue 200,000,000 shares of
Equity Stock. The Articles of Incorporation provide that the Equity
Stock may be issued from time to time in one or more series and gives
the Board of Directors broad authority to fix the dividend and
distribution rights, conversion and voting rights, redemption
provisions and liquidation rights of each series of Equity Stock.
25
In April 2001, the Company completed a public offering of
2,210,500 depositary shares each representing 1/1,000 of a share of
Equity Stock, Series A, ("Equity Stock A") raising net proceeds of
approximately $51,836,000. In May 2001, the Company completed a direct
placement of 830,000 depositary shares, raising net proceeds of
approximately $20,294,000. In November 2001, the Company completed a
direct placement of 100,000 depositary shares, raising net proceeds of
approximately $2,690,000. In January 2000, the Company issued 4,300,555
depositary shares (2,200,555 shares as part of a special distribution
declared on November 15, 1999 and 2,100,000 shares in a separate public
offering). In addition, in the second quarter of 2000, the Company
issued 52,547 depositary shares to a related party in connection with
the acquisition of real estate facilities. In December 2000, the
Company issued 1,282,500 depositary shares in a public offering. All of
the issuances of the depositary shares described in this paragraph were
registered under the Securities Act at the time of issuance.
At December 31, 2003, we had 8,776,102 depositary shares
outstanding, each representing 1/1,000 of a share of Equity Stock A.
The Equity Stock A ranks on a parity with common stock and junior to
the Senior Preferred Stock with respect to distributions and
liquidation and has a liquidation amount which cannot exceed $24.50 per
share. Distributions with respect to each depositary share shall be the
lesser of: a) five times the per share dividend on the Common Stock or
b) $2.45 per annum. Except in order to preserve the Company's federal
income tax status as a REIT, we may not redeem the depositary shares
before March 31, 2010. On or after March 31, 2010, we may, at our
option, redeem the depositary shares at $24.50 per depositary share. If
the Company fails to preserve its Federal income tax status as a REIT,
each depositary share will be convertible into 0.956 shares of our
common stock. The depositary shares are otherwise not convertible into
common stock. Holders of depositary shares vote as a single class with
our holders of common stock on shareholder matters, but the depositary
shares have the equivalent of one-tenth of a vote per depositary share.
We have no obligation to pay distributions on the depositary shares if
no distributions are paid to common shareholders.
In June 1997, we contributed $22,500,000 (225,000 shares) of
equity stock, now designated as Equity Stock, Series AA ("Equity Stock
AA") to a partnership in which we are the general partner. As a result
of this contribution, we obtained a controlling interest in the
partnership and began to consolidate the accounts of the partnership
and therefore the equity stock is eliminated in consolidation. The
Equity Stock AA ranks on a parity with Common Stock and junior to the
Senior Preferred Stock with respect to general preference rights and
has a liquidation amount of ten times the amount paid to each Common
Share up to a maximum of $100 per share. Quarterly distributions per
share on the Equity Stock AA are equal to the lesser of (i) 10 times
the amount paid per Common Stock or (ii) $2.20. We have no obligation
to pay distributions if no distributions are paid to common
shareholders.
In November 1999, we sold $100,000,000 (4,289,544 shares) of
Equity Stock, Series AAA ("Equity Stock AAA") to a newly formed joint
venture. We control the joint venture and consolidate the accounts of
the joint venture, and accordingly the Equity Stock AAA is eliminated
in consolidation. The Equity Stock AAA ranks on a parity with common
stock and junior to the Senior Preferred Stock (as defined below) with
respect to general preference rights, and has a liquidation amount
equal to 120% of the amount distributed to each common share. Annual
distributions per share are equal to the lesser of (i) five times the
amount paid per common share or (ii) $2.1564. We have no obligation to
pay distributions if no distributions are paid to common shareholders.
26
ITEM 6. Selected Financial Data
For the year ended December 31,
-------------------------------------------------------------------------
2003(1) 2002(1) 2001(1) 2000 (1) 1999 (1)
---------- ---------- ---------- ---------- ------------
(Amounts in thousands, except per share data)
Revenues:
Rental income and tenant reinsurance premiums. $866,443 $822,897 $760,309 $690,845 $622,299
Interest and other income..................... 8,628 8,661 14,225 18,836 16,700
---------- ---------- ---------- ---------- ------------
875,071 831,558 774,534 709,681 638,999
---------- ---------- ---------- ---------- ------------
Expenses:
Cost of operations............................ 318,498 287,144 257,244 241,669 211,847
Depreciation and amortization................. 185,775 177,978 164,914 147,473 136,663
General and administrative.................... 17,127 15,619 21,038 21,306 12,491
Interest expense.............................. 1,121 3,809 3,227 3,293 7,971
---------- ---------- ---------- ---------- ------------
522,521 484,550 446,423 413,741 368,972
---------- ---------- ---------- ---------- ------------
Income before equity in earnings of real estate entities, minority interest,
discontinued operations and gain (loss) on disposition of
real estate investments....................... 352,550 347,008 328,111 295,940 270,027
Equity in earnings of real estate entities...... 24,966 29,888 38,542 39,319 32,183
Minority interest in income .................... (43,703) (44,087) (46,015) (38,356) (16,006)
---------- ---------- ---------- ---------- ------------
Net income before discontinued operations and
gain on disposition of real estate............ 333,813 332,809 320,638 296,903 286,204
Discontinued operations (2)..................... 1,833 (11,530) (521) (391) (473)
Gain/(loss) on disposition of real estate
investments................................... 1,007 (2,541) 4,091 576 2,154
---------- ---------- ---------- ---------- ------------
Net income...................................... $336,653 $318,738 $324,208 $297,088 $287,885
========== ========== ========== ========== ============
- --------------------------------------------------- --------------- -------------- --------------- --------------- --------------
Per Common Share:
Distributions................................... $1.80 $1.80 $1.69 $1.48 $1.52
Net income - Basic.............................. $1.29 $1.15 $1.41 $1.41 $1.53
Net income - Diluted............................ $1.28 $1.14 $1.39 $1.41 $1.52
Weighted average common shares - Basic.......... 125,181 123,005 122,310 131,566 126,308
Weighted average common shares - Diluted........ 126,517 124,571 123,577 131,657 126,669
- --------------------------------------------------- --------------- -------------- --------------- --------------- --------------
Balance Sheet Data:
Total assets.................................... $4,968,069 $4,843,662 $4,625,879 $4,513,941 $4,214,385
Total debt...................................... $76,030 $115,867 $168,552 $156,003 $167,338
Minority interest (other partnership interests). $141,137 $154,499 $169,601 $167,918 $186,600
Minority interest (preferred partnership $285,000 $285,000 $285,000 $365,000 -
interests)......................................
Shareholders' equity............................ $4,219,799 $4,158,969 $3,909,583 $3,724,117 $3,689,100
- --------------------------------------------------- --------------- -------------- --------------- --------------- --------------
Other Data:
Net cash provided by operating activities....... $594,430 $588,961 $538,534 $525,775 $463,292
Net cash used in investing activities........... $(228,176) $(323,464) $(306,058) $(465,464) $(452,209)
Net cash provided used in financing activities.. $(264,545) $(211,720) $(272,596) $(25,969) $(7,183)
(1) During 2003, 2002, 2001, 2000, and 1999, we completed several significant
business combinations and equity transactions. See Notes 3, 9, and 10 to
the Company's consolidated financial statements.
(2) During the years ended December 31, 2002 and 2003, the Company adopted a
business plan that included the closure of 31 non-strategic containerized
storage facilities. Also, during 2002 we sold one of our commercial
facilities and during 2003 we sold five self-storage facilities. The
historical operations of the 31 containerized storage facilities, the
commercial facility, and the five sold self-storage 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.
27
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis should be read in conjunction
with our consolidated financial statements and notes thereto.
FORWARD LOOKING STATEMENTS: When used within this document, the words
"expects," "believes," "anticipates," "should," "estimates," and similar
expressions are intended to identify "forward-looking statements" within the
meaning of that term in Section 27A of the Securities Exchange Act of 1933, as
amended, and in Section 21F of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements involve known and unknown risks, uncertainties,
and other factors, which may cause the actual results and performance of the
Company to be materially different from those expressed or implied in the
forward looking statements. Such factors are described in Item 1A, "Risk
Factors" and include changes in general economic conditions and in the markets
in which the Company operates and the impact of competition from new and
existing storage and commercial facilities and other storage alternatives, which
could impact rents and occupancy levels at the Company's facilities;
difficulties in the Company's ability to evaluate, finance and integrate
acquired and developed properties into the Company's existing operations and to
fill up those properties, which could adversely affect the Company's
profitability; the impact of the regulatory environment as well as national,
state, and local laws and regulations including, without limitation, those
governing Real Estate Investment Trusts, which could increase the Company's
expense and reduce the Company's cash available for distribution; consumers'
failure to accept the containerized storage concept which would reduce the
Company's profitability; difficulties in raising capital at reasonable rates,
which would impede the Company's ability to grow; delays in the development
process, which could adversely affect the Company's profitability; and economic
uncertainty due to the impact of war or terrorism could adversely affect our
business plan. We disclaim any obligation to publicly release the results of any
revisions to these forward-looking statements reflecting new estimates, events
or circumstances after the date of this report.
Critical Accounting Policies
----------------------------
QUALIFICATION AS A REIT - INCOME TAX EXPENSE: We believe that we have
been organized and operated, and we intend to continue to operate, as a
qualifying Real Estate Investment Trust ("REIT") under the Internal Revenue Code
and applicable state laws. A qualifying REIT generally does not pay corporate
level income taxes on its taxable income that is distributed to its
shareholders, and accordingly, we do not pay or record as an expense income tax
on the share of our taxable income that is distributed to shareholders.
Given the complex nature of the REIT qualification requirements, the
ongoing importance of factual determinations and the possibility of future
changes in our circumstances, we cannot provide any assurance that we actually
have satisfied or will satisfy the requirements for taxation as a REIT for any
particular taxable year. For any taxable year that we fail or have failed to
qualify as a REIT and applicable relief provisions did not apply, we would be
taxed at the regular corporate rates on all of our taxable income, whether or
not we made or make any distributions to our shareholders. Any resulting
requirement to pay corporate income tax, including any applicable penalties or
interest, could have a material adverse impact on our financial condition or
results of operations. Unless entitled to relief under specific statutory
provisions, we also would be disqualified from taxation as a REIT for the four
taxable years following the year during which qualification was lost. There can
be no assurance that we would be entitled to any statutory relief.
IMPAIRMENT OF LONG-LIVED ASSETS: Substantially all of our assets
consist of long-lived assets, including real estate assets, associated with the
containerized storage business, goodwill, and other intangible assets. We
evaluate our goodwill for impairment on an annual basis, and on a quarterly
basis evaluate other long-lived assets for impairment. As described in Note 2 to
the consolidated financial statements, the evaluation of goodwill for impairment
entails valuation of the reporting unit to which goodwill is allocated, which
involves significant judgment in the area of projecting earnings and determining
appropriate price-earnings multiples and discount rates. In addition, the
evaluation of other long-lived assets for impairment requires determining
whether indicators of impairment exist, which is a subjective process. When any
indicators of impairment are found, the evaluation of such long-lived assets
then entails projections of future operating cash flows, which also involves
significant judgment. We identified one such impairment to our real estate
facilities during 2003, and recorded impairment charges with respect to the
containerized storage facilities (see Note 4). No additional impairments were
noted at December 31, 2003. Future events, or facts and circumstances that
currently exist that we have not yet identified, could cause us to conclude in
the future that other long-lived assets are impaired. Any resulting impairment
charge could have a material adverse impact on our financial condition and
results of operations.
28
ESTIMATED USEFUL LIVES OF LONG-LIVED ASSETS: Substantially all of our
assets consist of depreciable, long-lived assets. We record depreciation expense
with respect to these assets based upon their estimated useful lives. Any change
in the estimated useful lives of those assets, caused by functional or economic
obsolescence or other factors, could have a material adverse impact on our
financial condition or results of operations.
ESTIMATED LEVEL OF RETAINED RISK LIABILITIES: As described in Notes 2
and 16 to the consolidated financial statements, we retain certain risks with
respect to property perils, legal liability, and other such risks. In connection
with our retention of these risks, we accrue losses based upon our estimated
level of losses incurred using certain actuarial assumptions followed in the
insurance industry and based upon our experience. While we believe that the
amounts of the accrued losses are adequate, the ultimate liability may be in
excess of or less than the amounts provided.
ACCRUALS FOR CONTINGENCIES: We are exposed to business and legal
liability risks with respect to events that have occurred, but in accordance
with accounting principles generally accepted in the United States, we have not
accrued for such potential liabilities because the loss is either not probable
or not estimable or because we are not aware of the event. Future events and the
result of pending litigation could result in such potential losses becoming
probable and estimable, which could have a material adverse impact on our
financial condition or results of operations. Some of these potential losses,
which we are aware of, are described in Note 16 to the consolidated financial
statements.
ACCRUALS FOR OPERATING EXPENSES: We accrue for property tax expense and
other operating expenses based upon estimates and historical trends and current
and anticipated local and state government rules and regulations. If these
estimates and assumptions are incorrect, our expenses could be misstated.
Overview
--------
The self-storage industry is highly fragmented and is composed
predominantly of numerous local and regional operators. Competition in the
markets in which we operate is significant and has increased over the past
several years due to additional development of self-storage facilities. We
believe that the increase in competition has had a negative impact to our
occupancy levels and rental rates in many markets. However, we believe that we
possess several distinguishing characteristics that enable us to compete
effectively with other owners and operators.
We are the largest owner and operator of self-storage facilities in the
United States with direct and indirect ownership interests as of December 31,
2003 in 1,410 self-storage facilities containing approximately 85.2 million net
rentable square feet. All of our facilities are operated under the "Public
Storage" brand name, which we believe is the most recognized and established
name in the self-storage industry. Located in the major metropolitan markets of
37 states, our self-storage facilities are geographically diverse, giving us
national recognition and prominence. This concentration establishes us as one of
the dominant providers of storage space in most markets in which we operate and
enables us to use a variety of promotional activities, such as television
advertising as well as targeted discounting and referrals, which are generally
not economically viable to most of our competitors. In addition, we believe that
the geographic diversity of the portfolio reduces the impact from regional
economic downturns and provides a greater degree of revenue stability.
We will continue to focus our growth strategies on: (i) improving the
operating performance of our existing self-storage properties, (ii) increasing
our ownership of self-storage facilities through development and acquisitions,
(iii) improving the operating performance of our containerized storage business,
and (iv) participating in the growth of PS Business Parks, Inc. ("PSB"). Major
elements of these strategies are as follows:
29
o We will focus on enhancing the operating performance of our
self-storage properties, primarily through increases in revenues
achieved through the telephone reservation center and associated
marketing efforts. During 2002, the Consistent Group of facilities
exhibited reductions in rental income and net operating income before
depreciation of 3.3% and 5.7%, respectively. During 2003, while
revenues increased 2.1%, net operating income before depreciation
decreased 1.8% due to a 10.6% increase in operating expenses. We
believe that these trends in 2003 and 2002 were attributable to the
impact of changes in our marketing strategy as well as to general
economic conditions. See "Self-Storage Operations - Consistent Group of
Facilities" for further discussion. We expect future increases in
rental income to come from increases in occupancy and increases in
realized rent, although there can be no assurance.
o We will continue to develop new self-storage locations, though at a
lower level than occurred in previous years. During the five years
ending December 31, 2003, the Company and the Consolidated Development
Joint Venture developed and opened a total of 80 storage facilities at
a cost of approximately $534.6 million. In 2003, we opened 14
facilities with an aggregate cost of $107,126,000. At December 31,
2003, we have a development pipeline which includes 13 self-storage
facilities that are expected to cost an aggregate of $95.5 million,
which we expect will open over the next 12-24 months.
o We will look to expand and further invest into our existing
self-storage locations. During 2002 and 2003, we closed 31
containerized storage facilities of which 19 were facilities that
combine industrial space previously used by the containerized storage
operations with traditional self-storage space. These facilities offer
the opportunity to build out additional traditional self-storage space
at a low cost. We have added 208,000 net rentable square feet of
traditional self-storage space in connection with converting 5 of these
facilities for an aggregate cost of $5,569,000 in 2003, and at December
31, 2003 have 13 additional conversions in process with 779,000 net
rentable square feet of self-storage space at a cost of $25,515,000. In
addition to these conversions of space, we have 12 expansions of
existing self-storage facilities in our pipeline, with an estimated
cost of $35,354,000.
o We will acquire facilities from third parties. This activity has not
contributed significantly to our growth over the past three years, as
we have acquired only 10 self-storage facilities from third parties. We
believe that our national telephone reservation system and marketing
organization present an opportunity for increased revenues through
higher occupancies of the properties acquired from third parties, as
well as cost efficiencies through greater critical mass.
o We will attempt to continue to acquire self-storage facilities from
affiliates or interests in affiliated entities that own self-storage
facilities which we manage, as they become available from time to time.
The pool of such available acquisitions has continued to decrease as we
have acquired such remaining interests over the last several years.
o We will continue to focus on improving the containerized storage
operations. Over the last three years, we have developed facilities
that combine containerized storage and traditional self-storage. These
facilities have replaced facilities previously leased from third
parties, thereby reducing third-party lease expense. During 2002 and
2003, we closed a total of 31 facilities that were deemed to be
non-strategic to the Company's business plan. We continue to evaluate
the optimum level of containerized facility operations in each market
in which we operate and may close additional facilities during 2004. In
addition, we continue to refine the operating model of the
containerized storage business.
o Through our investment in PSB, we will continue to participate in the
growth of this company's investment in approximately 18.3 million net
rentable square feet of commercial space at December 31, 2003.
30
Results of Operations
- --------------------------------------------------------------------------------
NET INCOME: Net income for 2003 was $336,653,000 compared to
$318,738,000 for 2002, representing an increase of $17,915,000 or 5.6%. This
increase in net income is primarily a result of an increase in the operations of
our newly developed and expansion self-storage facilities, reduced losses from
discontinued containerized storage operations, improved operations of our
continuing containerized storage business, a net gain from the sale of real
estate assets versus a net loss recorded in 2002 and lower interest expense
resulting primarily from lower average debt balances. The effect of these
increases were partially offset by a reduction in our Consistent Group operating
results (as discussed below), increased depreciation expense resulting primarily
from new property additions, and a decrease in equity in earnings of real estate
entities. The decrease in equity in earnings of real estate entities is
primarily due to a reduction in our pro-rata share of the earnings of PS
Business Parks, Inc. ("PSB") caused by the impact of gains on sale of real
estate and asset impairment charges during 2003 and 2002.
Net income was $318,738,000 for 2002 compared to $324,208,000 for 2001,
representing a decrease of $5,470,000 or 1.7%. The decrease in net income was
caused primarily by a decrease in the operating results of our Consistent Group
of self-storage properties, increased depreciation expense resulting primarily
from new property additions, and charges relating to the closure of several
containerized storage facilities. The impact of these items was partially offset
by increased earnings generated by the acquisition of additional real estate
investments during 2001 and 2002, the earnings generated by the tenant
reinsurance business that was acquired at the end of 2001, reduced general and
administrative expense, and a decrease in income allocated to minority
interests.
ALLOCATIONS OF INCOME AMONG SHAREHOLDERS: In computing the net income
allocable to common shareholders for each period, we have deducted from net
income i) distributions paid to the holders of the Equity Stock, Series A
totaling $21,501,000 in 2003, $21,501,000 in 2002, and $19,455,000 in 2001, ii)
distributions paid to our preferred shareholders totaling $146,196,000 in 2003,
$148,926,000 in 2002, and $117,979,000 in 2001, and iii) amounts allocated to
preferred shareholders in connection with preferred stock redemption activities
as described below, totaling $7,120,000 in 2003, $6,888,000 in 2002 and
$14,835,000 in 2001.
In July 2003, the Securities and Exchange Commission clarified an
accounting standard ("EITF Topic D-42"), which we implemented in 2003, with
restatements for 2002 and 2001 to conform to the 2003 presentation. EITF Topic
D-42 requires that the original issuance costs of redeemed preferred stock (in
the case of the Company, these costs represent approximately 3.2% of the
liquidation preference, representing the underwriting discount, plus other
issuance costs) as an additional allocation of income to the preferred
shareholders, in determining the allocation of income to the common shareholders
and earnings per share. For the years ended December 31, 2003, 2002, and 2001,
such original issuance costs and resultant allocations of income to the
preferred shareholders total $7,120,000, $6,888,000, and $14,835,000,
respectively.
In the first quarter of 2004, we called for redemption our Series L
Cumulative Preferred stock and, accordingly, an additional allocation of income
to the preferred shareholders will be recorded of approximately $3,723,000 in
the first quarter of 2004. Future allocations of income pursuant to EITF Topic
D-42 will depend upon how much preferred stock we redeem and the original
issuance costs.
NET INCOME PER SHARE: Net income was $1.28 per common share, on a
diluted basis, for 2003 compared to $1.14 per common share for 2002. This
increase was attributable to the factors denoted above with respect to net
income and a reduction in income allocated to preferred shareholders described
above, partially offset by an increase in diluted shares outstanding from
124,571,000 in 2002 to 126,517,000 in 2003. The increase in shares outstanding
was due to the exercise of employee stock options and the issuance of common
shares in connection with the acquisition of partnership interests.
31
Net income was $1.14 per common share, on a diluted basis, for 2002
compared to $1.39 per common share for 2001. In addition to those factors
denoted above with respect to the reduction in net income in 2002, net income
per share, on a diluted basis, decreased due to an increase in net income
allocated to holders of the Equity Stock, Series A, an increase in net income
allocated to preferred shareholders with respect to distributions paid as
described above, and an increase in weighted average diluted common shares
outstanding. These factors were offset partially by a decrease in income
allocated to preferred shareholders, in accordance with the SEC Observer's
clarification of EITF Topic D-42 (described above), from $14,835,000 in 2001 to
$6,888,000 in 2002, which was due to a lower level of preferred stock
redemptions in 2002 as compared to 2001. Diluted weighted average common
equivalent shares outstanding totaled 124,571,000 for 2002 compared to
123,577,000 for 2001.
Included in the distributions paid to our preferred shareholders during
the year ended December 31, 2003, is approximately $3,087,000 paid to our
Series W and Series X Preferred shareholders. These two series of preferred
stock were issued during the fourth quarter of 2003, raising aggregate gross
proceeds of approximately $252.5 million. The net proceeds from these issuances
funded the redemption of two series of preferred stock (our Series K and Series
L) during the first quarter of 2004. In the interim, the net proceeds from these
issuances earned nominal interest income relative to the corresponding dividend
requirement. This difference resulted in an estimated reduction to earnings per
common share of approximately $0.02 per share (on a diluted basis) during the
year ended December 31, 2003.
During the first quarter 2004, we issued approximately $152.5 million
of additional preferred stock in two separate transactions. The net proceeds
from these issuances will be used primarily to redeem approximately $86.0
million of higher rate preferred stock during the third quarter of 2004. In the
interim, the net proceeds from these issuances are expected to earn nominal
interest income relative to the corresponding divided requirement. This
difference will result in an estimated reduction to earnings per common share.
In addition, we may issue up to $400 million of additional preferred stock
during 2004, raising the necessary funds to redeem additional high rate
preferred stock during the first quarter of 2005. These issuances similarly will
have a negative impact on earnings per share until the proceeds are utilized.
Real Estate Operations
- --------------------------------------------------------------------------------
SELF-STORAGE OPERATIONS: Our self-storage operations are by far the
largest component of our operating activities, representing approximately 91% of
our revenues generated during 2003. Rental income with respect to our
self-storage operations has grown from $719,765,000 in 2001 to $761,446,000 in
2002, representing an increase of 5.8%. In 2003, rental income grew to
$798,584,000, representing an increase of 4.9% over 2002. The year over year
improvements in rental income include changes in the performance of those
properties that we owned throughout the three-year period and the increase in
the number of properties in our portfolio either through our acquisition or
development activities.
At the end of 2000, we had a total of 1,240 self-storage facilities
included in our consolidated financial statements. Since that time we have
increased the net number of self-storage facilities by 134 facilities (2001 - 22
facilities, 2002 - 103 facilities and 2003 - 9 facilities). We sold five
facilities in 2003, and their revenues, cost of operations, depreciation expense
and net gain on sales for all periods presented are reported as "Discontinued
Operations" on the consolidated income statement. To enhance year-over-year
comparisons, the following table summarizes, and the ensuing discussion
describes, the self-storage operating results.
32
Self - storage operations summary: Year Ended December 31, Year Ended December 31,
- ---------------------------------- ------------------------------------ -------------------------------------
Percentage Percentage
2003 2002 Change 2002 2001 Change
----------- ---------- ---------- ----------- ---------- -----------
(Dollar amounts in thousands)
Rental income (a):
Consistent Group (b)........................ $672,125 $658,140 2.1% $658,140 $680,683 (3.3)%
Acquired Facilities (c)..................... 65,289 57,704 13.1% 57,704 3,518 1540.3%
Expansion Facilities (d).................... 21,729 20,479 6.1% 20,479 20,694 (1.0)%
Developed Facilities (e).................... 39,441 25,123 57.0% 25,123 14,870 69.0%
----------- ---------- ---------- ----------- ---------- -----------
Total rental income....................... 798,584 761,446 4.9% 761,446 719,765 5.8%
----------- ---------- ---------- ----------- ---------- -----------
Cost of operations:
Consistent Group............................ 232,788 210,526 10.6% 210,526 206,032 2.2%
Acquired Facilities......................... 20,668 17,390 18.8% 17,390 3,221 439.9%
Expansion Facilities........................ 8,623 8,342 3.4% 8,342 9,537 (12.5)%
Developed Facilities........................ 18,826 13,957 34.9% 13,957 9,652 44.6%
----------- ---------- ---------- ----------- ---------- -----------
Total cost of operations.................... 280,905 250,215 12.3% 250,215 228,442 9.5%
----------- ---------- ---------- ----------- ---------- -----------
Net operating income before depreciation:
Consistent Group............................ 439,337 447,614 (1.8)% 447,614 474,651 (5.7)%
Acquired Facilities......................... 44,621 40,314 10.7% 40,314 297 13473.7%
Expansion Facilities........................ 13,106 12,137 8.0% 12,137 11,157 8.8%
Developed Facilities........................ 20,615 11,166 84.6% 11,166 5,218 114.0%
----------- ---------- ---------- ----------- ---------- -----------
Total net operating income before depreciation 517,679 511,231 1.3% 511,231 491,323 4.1%
Depreciation.................................. (176,929) (170,887) 3.5% (170,887) (157,953) 8.2%
----------- ---------- ---------- ----------- ---------- -----------
Operating income............................ $340,750 $340,344 0.1% $340,344 $333,370 2.1%
=========== ========== ========== =========== ========== ===========
Number of self-storage facilities (at end of 1,374 1,362 0.9% 1,362 1,259 8.2%
period)........................................
Net rentable square feet (in thousands, at end of
period):....................................... 83,013 82,019 1.2% 82,019 76,115 7.8%
(a) Rental income includes late charges, administrative fees and lien fees and
is net of promotional discounts given. Rental income does not include
retail sales or truck rental income generated at the facilities.
(b) The Consistent Group includes 1,164 facilities containing 67,666,000 net
rentable square feet that were owned throughout the three years ended
December 31, 2003, and operated at a mature, stabilized occupancy level
throughout the periods presented.
(c) The Acquired Facilities includes 95 facilities containing 5,642,000 net
rentable square feet. These facilities were acquired in the three-year
period ending December 31, 2002. Substantially all of these facilities were
mature, stabilized facilities at the time of their acquisition.
(d) The Expansion Facilities include 35 facilities containing 3,807,000 net
rentable square feet (of which 823,000 square feet is industrial space
developed for containerized storage activities). These facilities were
owned for the entire three year period ending December 31, 2003, however,
year over year operating results are not comparable throughout the periods
presented due primarily to expansions in their net rentable square footage
or their conversion into facilities used by our containerized storage
operations. Such construction activities can cause a decline in revenue
levels, as existing capacity is made unavailable in order to accommodate
construction activities. During the four years ended December 31, 2003, we
completed construction with respect to these facilities totaling $129.5
million.
(e) The Developed Facilities includes 80 facilities containing 5,898,000 net
rentable square feet (of which 712,000 square feet is industrial space for
use in containerized storage activities, see "Containerized Storage" and
"Discontinued Operations"). These facilities were developed and opened
since January 1, 1999 at a total cost of $534.6 million.
33
Self-Storage Operations - Consistent Group of Facilities
At December 31, 2003, we owned 1,164 self-storage facilities that have
operated at a stabilized level of operations throughout the three-year period.
The Consistent Group of facilities contains approximately 67,666,000 net
rentable square feet, representing approximately 81% of the aggregate net
rentable square feet of our self-storage portfolio. Revenues and operating
expenses with respect to this group of properties are set forth in the above
Self-Storage Operations table under the caption, "Consistent Group." The
following table sets forth additional operating data with respect to the
Consistent Group of facilities:
CONSISTENT GROUP
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, Year Ended December 31,
----------------------------------- -------------------------------------
Percentage Percentage
2003 2002 Change 2002 2001 Change
---------- ---------- ----------- ----------- --------- -----------
(Dollar amounts in thousands, except rents per square foot)
Base rental income............................. $691,606 $654,693 5.6% $654,693 $662,565 (1.2)%
Promotional discounts.......................... (46,562) (18,423) 152.7% (18,423) (4,998) 268.6%
---------- ---------- ----------- ----------- --------- -----------
Adjusted base rental income................. 645,044 636,270 1.4% 636,270 657,567 (3.2)%
Late charges and administrative fees collected. 27,081 21,870 23.8% 21,870 23,116 (5.4)%
---------- ---------- ----------- ----------- --------- -----------
Total rental income......................... 672,125 658,140 2.1% 658,140 680,683 (3.3)%
---------- ---------- ----------- ----------- --------- -----------
Cost of operations:
Property taxes............................ 63,627 60,630 4.9% 60,630 58,604 3.5%
Direct property payroll................... 57,604 51,085 12.8% 51,085 47,717 7.1%
Cost of managing facilities............... 21,186 19,542 8.4% 19,542 18,053 8.2%
Advertising and promotion................. 19,544 18,208 7.3% 18,208 19,100 (4.7)%
Utilities................................. 16,110 15,497 4.0% 15,497 15,773 (1.7)%
Repairs and maintenance................... 19,331 15,340 26.0% 15,340 17,192 (10.8)%
Telephone reservation center.............. 9,987 9,172 8.9% 9,172 9,914 (7.5)%
Property insurance........................ 7,990 5,649 41.4% 5,649 5,542 1.9%
Other..................................... 17,409 15,403 13.0% 15,403 14,137 9.0%
---------- ---------- ----------- ----------- --------- -----------
Total cost of operations.................... 232,788 210,526 10.6% 210,526 206,032 2.2%
---------- ---------- ----------- ----------- --------- -----------
Net operating income before depreciation....... 439,337 447,614 (1.8)% 447,614 474,651 (5.7)%
Depreciation................................... (145,457) (142,710) 1.9% (142,710) (142,773) 0.0%
---------- ---------- ----------- ----------- --------- -----------
Operating income............................... $293,880 $304,904 (3.6)% $304,904 $331,878 (8.1)%
========== ========== =========== =========== ========== ===========
Gross margin (before depreciation)............. 65.4% 68.0% (3.8)% 68.0% 69.7% (2.4)%
Weighted average for the fiscal year:
Square foot occupancy (a)................... 89.1% 85.2% 4.6% 85.2% 88.9% (4.2)%
Realized annual rent per occupied square
foot (b).................................... $10.70 $11.04 (3.1)% $11.04 $10.93 1.0%
REVPAR (c).................................. $9.53 $9.40 1.4% $9.40 $9.72 (3.3)%
Weighted average at December 31:
Square foot occupancy....................... 89.5% 84.3% 6.2% 84.3% 85.2% (1.1)%
In place annual rent per occupied square foot $11.69 $11.64 0.4% $11.64 $11.76 (1.0)%
(d)......................................
Posted annual rent per square foot (e)...... $12.34 $11.65 5.9% $11.65 $13.33 (12.6)%
Total net rentable square feet (in thousands).. 67,666 67,666 - 67,666 67,666 -
(a) Square foot occupancies represent weighted average occupancy levels over
the entire fiscal year.
(b) Realized annual rent per occupied square foot is computed by dividing
adjusted base rental income by the weighted average occupied square footage
for the year. Realized rents per square foot take into consideration
promotional discounts, bad debt costs, credit card fees and other costs,
which reduce rental income from the contractual amounts due.
(c) Annualized revenue per available square foot ("REVPAR") represents adjusted
base rental income divided by total available net rentable square feet.
(d) In place annual rent per occupied square foot represents contractual rents
per occupied square foot without reductions for promotional discounts.
(e) Posted annual rent per square foot represents the rents charged to new
tenants prior to any promotional discounts.
34
As indicated in the table above, rental income for our Consistent Group
decreased 3.3% in 2002 as compared to 2001. This decrease was primarily due to a
4.2% reduction in the weighted average occupancy in 2002 compared to 2001
partially offset by an increase in realized annualized rent per square foot of
1.0%. We believe that the reduction in occupancy during 2002 was primarily due
to a change in our marketing strategy during 2001.
Historically, our marketing strategy was to offer a variety of
promotional discounts and to conservatively price our space to attract new
tenants. During 2000, the Consistent Group's occupancy levels averaged 91.0%.
This relatively high occupancy level was attained and sustained through a
variety of promotional activities offering new tenants move-in promotional
discounts aggregating $17.4 million in 2000. This annual level of discounts was
consistent with those given in years prior to 2000.
In 2001, we changed our marketing strategy and began to aggressively
increase rental rates and reduce the amount of promotional discounts offered to
new tenants. We believed that this strategy had the benefit of significantly
increasing our rental income, with the potential risk of lowering occupancy
levels. During the first nine months of 2001, this strategy significantly
enhanced the growth in our rental income. The downside to our more aggressive
strategy was that our average occupancy levels during the first nine months of
2001 were approximately 2.1% below the level experienced during the same period
in 2000. We believed that the decrease in occupancy levels was a manageable
reduction and was more than offset by the increase in rental income attained
through higher rental rates and less promotional discounting.
During the fourth quarter of 2001, there was a rapid decline in our
occupancy levels. This reduction coincided with a reduction in call volume into
our national telephone reservation center that we believe was attributable to
the absence of any significant promotional discounts offered to tenants as well
as to general economic conditions. In addition, during this time frame we also
experienced unusually high levels of move-out activity. .
Although we were very pleased with the rental growth experienced in
fiscal 2001, we were very concerned about the sudden and rapid decline in our
occupancy levels experienced in the fourth quarter of 2001 and into fiscal 2002.
During the first quarter of 2002, we reversed this strategy, and significantly
reduced rental rates charged to new incoming tenants and began a national
television advertising campaign that offered a significant promotional discount
to new move-ins. The campaign resulted in increased move-in activity during
April and May 2002 compared to the same period in the prior year and helped us
improve occupancy levels. May through July are seasonally high rental activity
months, accordingly, in the middle of May we terminated the advertising campaign
and discontinued promotional discounts. Unfortunately, we underestimated the
weakness in demand and in the absence of significant promotional discounts,
rental activity during June and July 2002 decreased as compared to the same
periods in 2001. Consequently, our average occupancy levels for the Consistent
Group of facilities again began to decline relative to the occupancies
experienced in 2001.
Beginning in mid-August 2002, we reinstated a promotional discount
program and advertised on television in selected markets in an effort to enhance
move-in activity and improve occupancy levels. As a result, occupancy levels
began to improve over the remainder of 2002. At December 31, 2002, our average
occupancy was 84.3% as compared to 85.2% at December 31, 2001, and although the
reduction was only 1.1% the occupancy level was still well below our
expectations.
The programs that we implemented in 2002 to increase the occupancy
level came with significant costs. Promotional discounts increased from
approximately $4,998,000 in 2001 to $18,423,000 in 2002, resulting in a negative
impact to our rental income. While occupancy was improving in the year, our
average occupancy levels for 2002 were still 4.2% lower than the average
occupancy levels for 2001 and as a result our revenues decreased 3.3% in 2002 as
compared to 2001.
During 2003, we continued advertising on television and expanded
promotional discounts to new incoming tenants. In addition, during the first
half of 2003 we reduced rental rates charged to new incoming tenants in many of
our markets to stimulate move-in activity. These actions had a positive impact,
as our average occupancy level for the Consistent Group was 89.1% for 2003 as
compared to 85.2% for 2002, representing an increase of 4.6%.
35
The increase in the occupancy level during 2003 also came at a
significant cost. Promotional discounts totaled $46,562,000 for 2003 as compared
to $18,423,000 for 2002, resulting in a significant negative impact to our
rental income. In addition, television advertising cost for 2003 was $8,343,000
as compared to $7,788,000 in 2002.
As indicated in the table above, rental income for our Consistent Group
increased 2.1% in 2003 as compared to 2002. This increase was primarily due to a
4.6% increase in the weighted average occupancy in 2003 compared to 2002
combined with increased late charge and administrative fees, partially offset by
a decrease in realized annualized rent per square foot of 3.1%.
By the end of 2003, we had attained our goal of reestablishing our
occupancy levels to historical levels. In addition, the improvement in occupancy
levels enabled us to begin to increase rent rates that we charge to new tenants,
which as of December 31, 2003 were 5.9% higher than at the same time in 2002.
More importantly, throughout 2003 we experienced positive year-over-year trends
in the growth of our quarterly REVPAR, resulting in improvements in the growth
trends of our rental income. For the Consistent Group, during 2003 rental income
for the first quarter decreased 2.6%, for the second quarter - increased 2.0%,
for the third quarter - increased 3.0% and for the fourth quarter -increased
6.1%, all compared to the same periods in 2002.
The growth in rental income during 2004 will depend on various factors,
among which will be our ability to stabilize and maintain high occupancy levels,
increase rental rates charged to new and existing tenants, and stabilize or
reduce the level of promotional discounts given to attract new tenants.
Despite our occupancy gains, our expectations are significantly
moderated by our experience that on average approximately 25% to 30% of our new
customers will move out within the first 60 to 90 days of their move-in date.
Our current occupancy levels have been achieved in large part by the elevated
move-in activity experienced over the past three quarters. Our elevated level of
move-outs has made it more important to continue to generate a high level of
move-ins in order to maintain occupancy levels. We have not been able to
demonstrate that we can generate the high level of move-ins necessary to sustain
high occupancy levels without the use of media and/or promotional discounts.
Accordingly, we expect to remain aggressive with promotional and media programs
at least through the first half of 2004 and, as a result, the up front costs of
these marketing activities, and the increases in promotional discounts, are
expected to continue to adversely impact our rental income.
We are working towards a goal of a high level of sustainable occupancy,
characterized by a less volatile tenant base that is not as heavily weighted
towards recent move-ins, thereby mitigating the level of move-outs. If we can
achieve this goal, it will allow for fewer promotional discounts and a reduction
in advertising and other customer acquisition costs. In furtherance of these
goals, we are continuously evaluating our call volume, reservation activity, and
move-in/move-out rates for each of our markets relative to our marketing
activities and rental rates. In addition, we are evaluating market supply and
demand factors and based upon these analyses we are continuing to adjust our
marketing activities. There can be no assurance that we will achieve our goals.
Total operating expenses for the Consistent Group increased 10.6% for
the year ended December 31, 2003 as compared to the same period in 2002. This
increase was primarily due to increases in payroll, advertising and promotion,
property tax, repairs and maintenance costs and property insurance. Direct
property payroll increased 12.8% due primarily to increased incentives paid to
and hours worked by property operating personnel. Advertising and promotion
increased 7.3% primarily due to an increase in television advertising from $7.8
million during 2002 to $8.3 million in 2003. Repairs and maintenance have
increased 17.6% during 2003 as compared to 2002 due to costs to remedy mold
issues in several facilities in Southern states, increased snow removal
expenses, as well as a general increase in costs to address deferred maintenance
at our facilities. Property insurance increased due to an increase in the
Company's self-insured portion of its risk.
With respect to our Consistent Group, we expect that the increase in
repairs and maintenance expense experienced in 2003 will continue in 2004, as we
continue to address maintenance at our facilities and improve their "rent ready"
condition and curb appeal. Payroll and property management costs will also
continue to increase in 2004, though not at the same growth rate experienced in
2003 due to higher staffing levels and higher compensation. We also expect that
property taxes will increase approximately 4%-5% in 2004 as compared to 2003.
36
The following table sets forth our rental income, cost of television
advertising, promotional discounts given, and average occupancies for each of
the quarters in 2003, 2002 and 2001:
For the Quarter Ended
----------------------------------------------------------------------
March 31 June 30 September 30 December 31 Entire Year
------------- ------------- -------------- ------------ ------------
(amounts in thousands)
Total rental income:
2003 $ 161,133 $ 166,584 $ 173,242 $ 171,166 $ 672,125
2002 $ 165,371 $ 163,279 $ 168,176 $ 161,314 $ 658,140
2001 $ 163,421 $ 169,588 $ 175,344 $ 172,330 $ 680,683
Promotional discounts given:
2003 $ 9,970 $ 12,965 $ 11,844 $ 11,783 $ 46,562
2002 $ 1,024 $ 5,378 $ 4,720 $ 7,301 $ 18,423
2001 $ 2,673 $ 1,868 $ 322 $ 135 $ 4,998
Total cost of operations:
2003 $ 54,274 $ 58,010 $ 58,867 $ 61,637 $ 232,788
2002 $ 50,062 $ 50,416 $ 52,338 $ 57,710 $ 210,526
2001 $ 50,887 $ 48,337 $ 52,912 $ 53,896 $ 206,032
Television advertising:
2003 $ 1,503 $ 2,719 $ 3,079 $ 1,042 $ 8,343
2002 $ 540 $ 1,403 $ 1,933 $ 3,912 $ 7,788
2001 $ 0 $ 908 $ 4,309 $ 2,687 $ 7,904
REVPAR:
2003 $ 9.15 $ 9.45 $ 9.83 $ 9.69 $ 9.53
2002 $ 9.47 $ 9.34 $ 9.61 $ 9.19 $ 9.40
2001 $ 9.31 $ 9.68 $ 10.00 $ 9.88 $ 9.72
Weighted average realized annual rent per occupied square foot:
2003 $ 10.79 $ 10.61 $ 10.70 $ 10.70 $ 10.70
2002 $ 11.34 $ 10.83 $ 11.21 $ 10.81 $ 11.04
2001 $ 10.58 $ 10.77 $ 11.03 $ 11.37 $ 10.93
Weighted average occupancy levels for the period
2003 84.8% 89.1% 91.9% 90.6% 89.1%
2002 83.5% 86.3% 85.7% 85.0% 85.2%
2001 88.0% 89.9% 90.7% 86.9% 88.9%
The following table sets forth regional trends in our consistent group
of facilities with respect to rental income, cost of operations, net operating
income, weighted average occupancy levels, and realized rent per net rentable
square foot.
37
Consistent Group Operating Trends by Region
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, Year Ended December 31,
------------------------------------- ----------------------------------
2003 2002 Change 2002 2001 Change
------------ ----------- ---------- ----------- ---------- --------
Rental income: (Dollar amounts in thousands, except rents per square foot)
Southern California (120
facilities)...................... $ 113,155 $ 105,972 6.8% $ 105,972 $ 106,623 (0.6)%
Northern California (108
facilities)...................... 78,193 76,814 1.8% 76,814 81,190 (5.4)%
Texas (140 facilities).......... 62,389 61,996 0.6% 61,996 64,771 (4.3)%
Florida (108 facilities)........ 56,842 54,423 4.4% 54,423 56,347 (3.4)%
Illinois (82 facilities)........ 50,824 52,850 (3.8)% 52,850 55,599 (4.9)%
Georgia (56 facilities)......... 23,723 23,177 2.4% 23,177 24,317 (4.7)%
All other states (550 facilities) 286,999 282,908 1.4% 282,908 291,836 (3.1)%
------------ ----------- ---------- ----------- ---------- --------
Total rental income................. 672,125 658,140 2.1% 658,140 680,683 (3.3)%
Cost of operations:
Southern California.............. 26,693 25,358 5.3% 25,358 22,672 11.8%
Northern California.............. 21,021 19,287 9.0% 19,287 18,754 2.8%
Texas............................ 28,960 26,083 11.0% 26,083 25,812 1.0%
Florida.......................... 22,334 19,493 14.6% 19,493 20,313 (4.0)%
Illinois......................... 22,114 20,707 6.8% 20,707 19,685 5.2%
Georgia.......................... 8,774 7,556 16.1% 7,556 8,210 (8.0)%
All other states................. 102,892 92,042 11.8% 92,042 90,586 1.6%
------------ ----------- ---------- ----------- ---------- --------
Total cost of operations............ 232,788 210,526 10.6% 210,526 206,032 2.2%
Net operating income before depreciation:
Southern California.............. 86,462 80,614 7.3% 80,614 83,951 (4.0)%
Northern California.............. 57,172 57,527 (0.6)% 57,527 62,436 (7.9)%
Texas............................ 33,429 35,913 (6.9)% 35,913 38,959 (7.8)%
Florida.......................... 34,508 34,930 (1.2)% 34,930 36,034 (3.1)%
Illinois......................... 28,710 32,143 (10.7)% 32,143 35,914 (10.5)%
Georgia.......................... 14,949 15,621 (4.3)% 15,621 16,107 (3.0)%
All other states................. 184,107 190,866 (3.5)% 190,866 201,250 (5.2)%
------------ ----------- ---------- ----------- ---------- --------
Total net operating income.......... $ 439,337 $ 447,614 (1.8)% $ 447,614 $ 474,651 (5.7)%
Weighted average occupancy:
Southern California.............. 90.6% 86.8% 4.4% 86.8% 90.7% (4.3)%
Northern California.............. 89.0% 84.8% 5.0% 84.8% 90.3% (6.1)%
Texas............................ 89.2% 84.6% 5.4% 84.6% 89.3% (5.3)%
Florida.......................... 90.5% 85.2% 6.2% 85.2% 88.1% (3.3)%
Illinois......................... 88.1% 84.3% 4.5% 84.3% 90.8% (7.2)%
Georgia.......................... 90.1% 84.3% 6.9% 84.3% 86.4% (2.4)%
All other states................. 88.5% 85.2% 3.9% 85.2% 88.2% (3.4)%
------------ ----------- ---------- ----------- ---------- --------
Total weighted average occupancy.... 89.1% 85.2% 4.6% 85.2% 88.9% (4.2)%
REVPAR:
Southern California.............. $ 14.54 $ 13.66 6.4% $ 13.66 $ 13.79 (0.9)%
Northern California.............. 12.91 12.72 1.5% 12.72 13.47 (5.6)%
Texas............................ 6.91 6.92 (0.1)% 6.92 7.21 (4.0)%
Florida.......................... 8.73 8.41 3.8% 8.41 8.69 (3.2)%
Illinois......................... 9.90 10.37 (4.5)% 10.37 11.03 (6.0)%
Georgia.......................... 6.97 6.96 0.1% 6.96 7.32 (4.9)%
All other states................. 8.78 8.73 0.6% 8.73 8.97 (2.7)%
------------ ----------- ---------- ----------- ---------- --------
Total REVPAR:....................... $ 9.53 $ 9.40 1.4% $ 9.40 $ 9.72 (3.3)%
Realized annual rent per occupied square foot:
Southern California.............. $ 16.05 $ 15.73 2.0% $ 15.73 $ 15.20 3.5%
Northern California.............. 14.50 15.00 (3.3)% 15.00 14.91 0.6%
Texas............................ 7.75 8.18 (5.3)% 8.18 8.08 1.2%
Florida.......................... 9.64 9.87 (2.3)% 9.87 9.86 0.1%
Illinois......................... 11.24 12.31 (8.7)% 12.31 12.15 1.3%
Georgia.......................... 7.74 8.25 (6.2)% 8.25 8.48 (2.7)%
All other states................. 9.92 10.25 (3.2)% 10.25 10.17 0.8%
------------ ----------- ---------- ----------- ---------- --------
Total realized rent per square foot:... $ 10.70 $ 11.04 (3.1)% $ 11.04 $ 10.93 1.0%
38
Self-Storage Operations - Acquired Facilities
Over the past three years, we acquired 95 self-storage facilities
containing 5,642,000 net rentable square feet. Substantially all of these
facilities were mature, stabilized facilities at the time of their acquisition.
The following table summarizes operating data with respect to these facilities.
ACQUIRED FACILITIES
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, Year Ended December 31,
-------------------------------------- ------------------------------------
2003 2002 Change 2002 2001 Change
------------- ------------ ---------- ------------ ---------- ----------
(Dollar amounts in thousands)
Rental income:
Self-storage facilities acquired in 2002.... $ 60,044 $ 53,497 $ 6,547 $ 53,497 $ - $ 53,497
Self-storage facilities acquired in 2001.... 560 445 115 445 143 302
Self-storage facilities acquired in 2000.... 4,685 3,762 923 3,762 3,375 387
------------- ------------ ---------- ------------ ---------- ----------
Total rental income....................... 65,289 57,704 7,585 57,704 3,518 54,186
------------- ------------ ---------- ------------ ---------- ----------
Cost of operations:
Self-storage facilities acquired in 2002.... $ 18,448 $ 15,822 $ 2,626 $ 15,822 $ - $ 15,822
Self-storage facilities acquired in 2001.... 200 191 9 191 66 125
Self-storage facilities acquired in 2000.... 2,020 1,377 643 1,377 3,155 (1,778)
------------- ------------ ---------- ------------ ---------- ----------
Total cost of operations.................. 20,668 17,390 3,278 17,390 3,221 14,169
------------- ------------ ---------- ------------ ---------- ----------
Net operating income before depreciation:
- ----------------------------------------
Self-storage facilities acquired in 2002.... $ 41,596 $ 37,675 $ 3,921 $ 37,675 $ - $ 37,675
Self-storage facilities acquired in 2001.... 360 254 106 254 77 177
Self-storage facilities acquired in 2000.... 2,665 2,385 280 2,385 220 2,165
------------- ------------ ---------- ------------ ---------- ----------
Net operating income...................... 44,621 40,314 4,307 40,314 297 40,017
Depreciation.................................. (11,946) (11,366) (580) (11,366) (2,948) (8,418)
------------- ------------ ---------- ------------ ---------- ----------
Operating income (loss)..................... $ 32,675 $ 28,948 $ 3,727 $ 28,948 $ (2,651) $ 31,599
============= ============ ========== ============ ========== ==========
Weighted average square foot occupancy during the
period:
Self-storage facilities acquired in 2002.... 90.0% 85.4% 5.4% 85.4% - -
Self-storage facilities acquired in 2001.... 92.2% 67.4% 36.8% 67.4% 55.8% 20.8%
Self-storage facilities acquired in 2000.... 84.5% 79.1% 6.8% 79.1% 77.1% 2.6%
------------- ------------ ---------- ------------ ---------- ----------
89.5% 84.5% 5.9% 84.5% 74.8% 13.0%
============= ============ ========== ============ ========== ==========
Number of self-storage facilities (at end of 95 95 - 95 8 87
period)........................................
Net rentable square feet (in thousands, at end of
period)..................................... 5,642 5,642 - 5,642 565 5,077
Cumulative acquisition cost (at end of period). $ 405,684 $ 405,684 $ - $ 405,684 $ 45,141 $360,543
Rental income and cost of operations for the Acquired Facilities have
increased significantly in 2002 as compared to 2001, due to the acquisition of
87 additional properties.
The 2002 acquisitions include 78 properties acquired from affiliated
entities, including 47 properties acquired on January 16, 2002 from an
affiliated development joint venture and 31 properties acquired on January 1,
2002 in connection with business combinations with two affiliated partnerships
(see Note 3 to the consolidated financial statements). The 2002 acquisitions
also include nine self-storage facilities acquired from third parties for an
aggregate of $30,117,000 in cash. The 2001 acquisition includes one facility
acquired from a third party for an aggregate cost of $3,503,000. The 2000
acquisitions include seven facilities acquired from third parties for an
aggregate of $41,638,000.
Similar to our Consistent Group of facilities, the Acquired Facilities
have experienced operating difficulties over the last two years. Marketing and
promotional strategies, as described above with respect to our Consistent Group,
were employed in 2002, and enhanced marketing strategies were employed in 2003,
which affected the operations of these facilities in the same manner they
affected the Consistent Group facilities.
39
Self-Storage Operations - Expansion Facilities
Throughout the three-year period ended December 31, 2003, we expanded
35 self-storage facilities or converted them to facilities that combine both
traditional self-storage and containerized storage at the same location. These
activities caused a drop in revenue levels, as existing capacity was made
unavailable in order to accommodate construction activities. Accordingly, the
operating results are not comparable in each of the three years ended December
31, 2003. At December 31, 2003, the weighted average occupancy level was
approximately 78.9% as compared to 68.7% one year earlier. The operating results
for these facilities are presented in the Self-Storage Operations table above
under the caption, "Expansion Facilities."
Depreciation expense with respect to the expansion facilities was
$6,031,000 in 2003, $6,188,000 in 2002, and $4,986,000 in 2001. The increases in
depreciation expense are due to the opening of the expanded facilities.
These 35 facilities contain approximately 3,807,000 net rentable square
feet at December 31, 2002 (which includes the expanded space, and 823,000 square
feet of industrial space developed for containerized storage activities - see
"Containerized Storage" and "Discontinued Operations"). The aggregate
construction costs to complete these expansions totaled approximately
$129,543,000 during the four years ended December 31, 2003.
Self-Storage Operations -Developed Facilities
Since January 1, 1999, we have opened 63 newly developed self-storage
facilities and 17 facilities that contain both self-storage and containerized
storage at the same location ("Combination Facilities"). These newly developed
facilities have an aggregate of 5,898,000 net rentable square feet (of which
712,000 net rentable square feet is industrial space developed for containerized
storage activities - see "Containerized Storage" and "Discontinued Operations").
Aggregate development cost for these 80 facilities was approximately $534.6
million. The operating results of the self-storage facilities and Combination
facilities are reflected in the Self-Storage Operations table under the caption,
"Developed Facilities."
40
The following chart sets forth the operations of the Developed
Facilities:
Year ended December 31, Year ended December 31,
------------------------------------- -------------------------------------
2003 2002 Change 2002 2001 Change
----------- ---------- ---------- ----------- ----------- -----------
(Amounts in thousands, except No. of facilities)
Rental income:
Self-storage facilities............ $ 28,796 $ 18,360 $ 10,436 $ 18,360 $ 11,580 $ 6,780
Combination facilities............. 10,645 6,763 3,882 6,763 3,290 3,473
----------- ---------- ---------- ----------- ----------- -----------
Total rental income.............. 39,441 25,123 14,318 25,123 14,870 10,253
----------- ---------- ---------- ----------- ----------- -----------
Cost of operations:
Self-storage facilities............ 13,950 8,921 5,029 8,921 6,590 2,331
Combination facilities............. 4,876 5,036 (160) 5,036 3,062 1,974
----------- ---------- ---------- ----------- ----------- -----------
Total cost of operations......... 18,826 13,957 4,869 13,957 9,652 4,305
----------- ---------- ---------- ----------- ----------- -----------
Net operating income before depreciation:
Self-storage facilities............ 14,846 9,439 5,407 9,439 4,990 4,449
Combination facilities............. 5,769 1,727 4,042 1,727 228 1,499
----------- ---------- ---------- ----------- ----------- -----------
Net operating income............. 20,615 11,166 9,449 11,166 5,218 5,948
Depreciation......................... (13,495) (10,623) (2,872) (10,623) (7,246) (3,377)
----------- ---------- ---------- ----------- ----------- -----------
Operating income (loss)............ $ 7,120 $ 543 $ 6,577 $ 543 $ (2,028) $ 2,571
=========== ========== ========== =========== =========== ===========
Self-storage facilities, at end of
period:
Number of facilities............... 63 49 14 49 35 14
Net rentable square feet........... 4,055 3,061 994 3,061 2,154 907
Total development cost............. $ 375,908 $ 267,004 $ 108,904 $ 267,004 $ 174,895 $ 92,109
Combination facilities, at end of period:
Number of facilities............... 17 17 - 17 15 2
Net rentable square feet (a)....... 1,844 1,844 - 1,844 1,605 239
Total development cost (a)......... $ 158,677 $ 154,177 $ 4,500 $ 154,177 $ 139,325 $ 14,852
(a) At December 31, 2003, net rentable square feet includes approximately
1,132,000 net rentable square feet related to traditional self-storage and
712,000 net rentable square feet for containerized storage operations. In
2003, we converted 166,000 net rentable square feet of containerized
storage space previously used by the discontinued containerized storage
operations into 166,000 net rentable square feet of traditional
self-storage space for an aggregate cost of $4,500,000.
41
The following table summarizes operating data for the 63 newly
developed self-storage facilities included in the table above:
DEVELOPED SELF-STORAGE FACILITIES
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, Year Ended December 31,
--------------------------------------- --------------------------------------
2003 2002 Change 2002 2001 Change
------------ ----------- ------------ ----------- ----------- ------------
(Dollar amounts in thousands)
Rental income (a):
Self-storage facilities opened in 2003....... $ 1,566 $ - $ 1,566 $ - $ - $ -
Self-storage facilities opened in 2002....... 6,737 1,435 5,302 1,435 - 1,435
Self-storage facilities opened in 2001....... 6,579 4,474 2,105 4,474 1,608 2,866
Self-storage facilities opened in 2000 and 1999 13,914 12,451 1,463 12,451 9,972 2,479
------------ ----------- ------------ ----------- ----------- ------------
Total rental income....................... 28,796 18,360 10,436 18,360 11,580 6,780
------------ ----------- ------------ ----------- ----------- ------------
Cost of operations:
Self-storage facilities opened in 2003....... $ 1,347 $ - $ 1,347 $ - $ - $ -
Self-storage facilities opened in 2002....... 3,660 1,399 2,261 1,399 - 1,399
Self-storage facilities opened in 2001....... 3,389 2,667 722 2,667 1,368 1,299
Self-storage facilities opened in 2000 and 1999 5,554 4,855 699 4,855 5,222 (367)
------------ ----------- ------------ ----------- ----------- ------------
Total cost of operations.................. 13,950 8,921 5,029 8,921 6,590 2,331
------------ ----------- ------------ ----------- ----------- ------------
Net operating income before depreciation:
Self-storage facilities opened in 2003....... $ 219 $ - $ 219 $ - $ - $ -
Self-storage facilities opened in 2002....... 3,077 36 3,041 36 - 36
Self-storage facilities opened in 2001....... 3,190 1,807 1,383 1,807 240 1,567
Self-storage facilities opened in 2000 and 1999 8,360 7,596 764 7,596 4,750 2,846
------------ ----------- ------------ ----------- ----------- ------------
Net operating income........................ 14,846 9,439 5,407 9,439 4,990 4,449
Depreciation.................................. (9,061) (7,032) (2,029) (7,032) (4,522) (2,510)
------------ ----------- ------------ ----------- ----------- ------------
Operating income............................ $ 5,785 $ 2,407 $ 3,378 $ 2,407 $ 468 $ 1,939
============ =========== ============ =========== =========== ============
Weighted average square foot occupancy during the
period:
Self-storage facilities opened in 2003....... 24.4% - - - - -
Self-storage facilities opened in 2002....... 61.3% 20.6% 197.6% 20.6% - -
Self-storage facilities opened in 2001....... 74.3% 44.0% 68.9% 44.0% 22.2% 98.2%
Self-storage facilities opened in 2000 and 1999 89.3% 78.5% 13.8% 78.5% 61.1% 28.5%
------------ ----------- ------------ ----------- ----------- ------------
64.2% 52.3% 22.8% 52.3% 46.7% 12.0%
============ =========== ============ =========== =========== ============
Number of facilities:
Self-storage facilities opened in 2003....... 14 - 14 - - -
Self-storage facilities opened in 2002....... 14 14 - 14 - 14
Self-storage facilities opened in 2001....... 12 12 - 12 12 -
Self-storage facilities opened in 2000 and 1999 23 23 - 23 23 -
------------ ----------- ------------ ----------- ----------- ------------
63 49 14 49 35 14
============ =========== ============ =========== =========== ============
Cumulative development cost:
Self-storage facilities opened in 2003....... $ 107,126 $ - $ 107,126 $ - $ - $ -
Self-storage facilities opened in 2002....... 93,887 92,109 1,778 92,109 - 92,109
Self-storage facilities opened in 2001....... 66,905 66,905 - 66,905 66,905 -
Self-storage facilities opened in 2000 and 1999 107,990 107,990 - 107,990 107,990 -
------------ ----------- ------------ ----------- ----------- ------------
$ 375,908 $ 267,004 $108,904 $ 267,004 $ 174,895 $ 92,109
============ =========== ============ =========== =========== ============
42
Unlike many other forms of real estate, we are unable to pre-lease our
newly developed facilities due to the nature of our tenants. Accordingly, at the
time a newly developed facility first opens for operation the facility is
entirely vacant generating no rental income. Historically, we estimated that on
average it takes approximately 36 months for a newly developed facility to fill
up and reach a targeted occupancy level of approximately 90%.
We believe that the newly developed self-storage facilities have been
affected by the operating trends in occupancy and realized rents noted above
with respect to the Consistent Group of facilities. In addition, move-in
discounts, which increased significantly in 2002 and 2003, have had a more
pronounced effect upon realized rates for the newly developed facilities,
because such facilities tend to have a higher ratio of newer tenants. During
2003, the Developed Self-Storage Facilities had a weighted average occupancy
level of approximately 64.2%, as compared to 52.3% in 2002 and 46.7% in 2001.
Property operating expenses are substantially fixed, consisting
primarily of payroll, property taxes, utilities, and marketing costs. The rental
revenue of a newly developed facility will generally not cover its property
operating expenses (excluding depreciation) until the facility has reach an
occupancy level of approximately 30% to 34%. However, at that occupancy level,
the rental revenues from the facility are still not sufficient to cover related
depreciation expense and cost of capital with respect to the facility's
development cost. During construction of the self-storage facility, we
capitalize interest costs and include such cost as part of the overall
development cost of the facility. Once the facility is opened for operations
interest is no longer capitalized.
Due to the relationship between the generation of rental income and
immediate recognition of expenses upon opening of a facility, our development
activities have had a negative impact on our net income. The yield on
development cost for these facilities for the year ended December 31, 2003,
based on net operating income before depreciation, was approximately 3.9%, which
is lower than our ultimate yield expectations. We expect these yields to improve
significantly as these facilities continue to increase their occupancy levels
and rental income.. This improvement in yield will be a source of earnings
growth in future years. We continue to develop facilities, despite the
short-term earnings dilution experienced during the fill-up period, because we
believe that the ultimate returns on developed facilities are favorable. In
addition, we believe that it is advantageous for us to continue to expand our
asset base and benefit from the resulting increased critical mass, with
facilities that will improve our portfolio's overall average construction and
location quality.
We expect that over at least the next 12 months, the Developed
Self-Storage Facilities will continue to have a negative impact to our earnings.
Furthermore, the 38 expansion and newly developed facilities in our development
pipeline described in "Liquidity and Capital Resources - Acquisition and
Development of Facilities" that will be opened for operation over the next 12 -
24 months will also negatively impact our earnings until they reach a stabilized
occupancy level.
COMMERCIAL PROPERTY OPERATIONS: Commercial property operations included
in our consolidated financial statements include commercial space owned by the
Company and entities consolidated by the Company. We have a much larger interest
in commercial properties through our ownership interest in PSB. Our investment
in PSB is accounted for on the equity method of accounting, and accordingly our
share of PSB's earnings is reflected as "Equity in earnings of real estate
entities", see below.
Our commercial operations are comprised of 1,187,000 net rentable
commercial space operated at certain of the self-storage facilities and three
stand-alone commercial facilities having a total of 204,000 net rentable square
feet.
The following table sets forth the historical commercial property amounts
included in the financial statements:
43
Commercial Property Operations
(excluding discontinued operations):
Year Ended December 31, Year Ended December 31,
------------------------------------- -------------------------------------
2003 2002 Change 2002 2001 Change
------------- ------------ --------- ------------- ---------- ---------
(Amounts in thousands)
Rental income ............... $11,442 $11,781 $(339) $11,781 $12,070 $(289)
Cost of operations............ 4,688 4,462 226 4,462 3,861 601
------------- ------------ --------- ------------- ---------- ---------
Net operating income....... 6,754 7,319 (565) 7,319 8,209 (890)
Depreciation expense.......... 2,535 2,544 (9) 2,544 2,569 (25)
------------- ------------ --------- ------------- ---------- ---------
Operating income........... $4,219 $4,775 $(556) $4,775 $5,640 $(865)
============= ============ ========= ============= ========== =========
The decrease in rental income in 2003 as compared to 2002 is due
primarily to a vacancy in one of the three stand-alone commercial facilities,
which caused a reduction in rental income of approximately $250,000 during 2003
as compared to 2002.
During 2002, we sold one of our commercial facilities to a third party
for an aggregate $3.9 million in cash. The historical operations with respect to
this facility are classified as "Discontinued Operations" in our income
statement and are not included in the above table.
CONTAINERIZED STORAGE OPERATIONS: In August 1996, Public Storage Pickup
& Delivery ("PSPUD"), a subsidiary of the Company, made its initial entry into
the containerized storage business through its acquisition of a single facility
operator located in Irvine, California. At December 31, 2001, PSPUD had 55
facilities that had been opened between 1996 and 2001 either through development
or leasing of facilities. During 2002, we reevaluated our operational strategy
and closed 22 facilities. In 2003 we closed an additional nine non-strategic
facilities. Collectively the 31 discontinued facilities are referred to as the
"Closed Facilities." At December 31, 2003, PSPUD operated 24 facilities in 11
states, which are located in major markets in which we have significant market
presence with respect to our traditional self-storage facilities. The operations
with respect to the Closed Facilities, including historical operating results
for previous periods, are not included in the table below and instead are
included in "Discontinued Operations - containerized storage" on our income
statement. PSPUD's operations, which exclude the Closed Facilities, are
reflected on the table below:
Containerized storage
(excluding discontinued operations):
Year Ended December 31, Year Ended December 31,
----------------------------------- -----------------------------------
2003 2002 Change 2002 2001 Change
---------- --------- --------- ----------- ---------- --------
(Dollar amounts in thousands)
Rental and other income ............ $33,953 $29,723 $4,230 $29,723 $28,474 $1,249
---------- --------- --------- ----------- ---------- ---------
Cost of operations:
Direct operating costs.......... 19,239 21,373 (2,134) 21,373 20,888 485
Facility lease expense.......... 1,679 1,683 (4) 1,683 4,053 (2,370)
---------- --------- --------- ----------- ---------- ---------
Total cost of operations..... 20,918 23,056 (2,138) 23,056 24,941 (1,885)
---------- --------- --------- ----------- ---------- ---------
Operating income prior to
depreciation.................. 13,035 6,667 6,368 6,667 3,533 3,134
Depreciation expense (a)............ (6,311) (4,547) (1,764) (4,547) (4,392) (155)
---------- --------- --------- ----------- ---------- ---------
Operating income (loss)............. $ 6,724 $ 2,120 $4,604 $ 2,120 $ (859) $2,979
========== ========= ========= =========== ========== =========
(a) Depreciation expense principally relates to the depreciation related to the
containers, however, depreciation expense for 2003, 2002 and 2001 includes
$1,566,000, $1,012,000, and $786,000, respectively, related to real estate
facilities.
Rental and other income includes monthly rental charges to customers
for storage of the containers and service fees charged for pickup and delivery
of containers to customers' homes. Rental income increased to $33,953,000 in
2003 as compared to $29,723,000 in 2002 as a result of higher per container
rents. At December 31, 2003, there were approximately 33,780 occupied containers
in the 24 facilities that are reflected in "ongoing" operations. We continue to
evaluate the business operations and additional facilities may be closed.
44
Direct operating costs principally includes payroll, equipment lease
expense, property taxes, utilities and vehicle expenses (fuel and insurance).
During 2002, an asset impairment charge was recorded in the amount of $420,000
with respect to machinery and equipment of the containerized storage facilities
because such equipment was no longer required.
Facility lease expense decreased from $4,053,000 in 2001 to $1,683,000
in 2002, principally due to moving operations from leased facilities to
wholly-owned facilities, and thus eliminating the lease expense paid to third
parties as well as discontinuing operations at leased facilities. This process
was completed in 2002.
At December 31, 2003, six of the 24 containerized storage facilities
are leased from third parties. The remaining 18 facilities were operated in
facilities owned by the Company, comprised of 13 combination facilities with an
aggregate of 805,000 square feet of industrial space (this square footage is a
component of the total net rentable square footage of the Expansion Facilities
and the Developed Facilities in the table above) and five industrial facilities
having an aggregate of 404,000 net rentable square feet.
The containerized storage operations may continue to adversely impact
our future earnings and cash flows. There can be no assurance as to the level of
the containerized storage business's expansion, level of gross rentals, level of
move-outs or profitability.
See "Discontinued Operations" below for a discussion of operating
results of the Closed Facilities.
TENANT REINSURANCE OPERATIONS: On December 31, 2001, we acquired PS
Insurance Company, Ltd. ("PS Insurance") from a related party. PS Insurance
reinsures policies against losses to goods stored by tenants in our self-storage
facilities. Effective January 1, 2002, the operations of PS Insurance are
included in the income statement under "Revenues - tenant reinsurance premiums"
and "Cost of operations - tenant reinsurance." The tenant reinsurance business
earned $22,464,000 and $19,947,000 in revenues for the years ended December 31,
2003 and 2002, respectively, and incurred $11,987,000 and $9,411,000 in
operating expenses, with respect to the same period. PS Insurance generated net
operating profits of $10,477,000 and $10,536,000 for the years ended December
31, 2003 and 2002, respectively.
The level of tenant reinsurance revenues is largely dependent upon our
occupancy level and move-in activity. As of December 31, 2003 and 2002,
approximately 37% of our self-storage tenant base had such policies. New
insurance business comes from tenants who sign up for insurance as they move
into our self-storage facilities.
We have outside third-party insurance coverage for losses from any
individual event that exceeds a loss of $500,000, to a limit of $10,000,000.
Losses below these amounts are recorded as cost of operations for the tenant
reinsurance operations.
EQUITY IN EARNINGS OF REAL ESTATE ENTITIES: In addition to our
ownership of equity interests in PSB, we had general and limited partnership
interests in seven limited partnerships at December 31, 2003 (PSB and the
limited partnerships are collectively referred to as the "Unconsolidated
Entities"). Due to our limited ownership interest and limited control of these
entities, we do not consolidate the accounts of these entities for financial
reporting purposes, and account for such investments using the equity method.
45
Equity in earnings of real estate entities for the year ended December
31, 2003 consists of our pro-rata share of the Unconsolidated Entities based
upon our ownership interest for the period. The following table sets forth the
significant components of equity in earnings of real estate entities:
Historical summary: Year Ended December 31, Year Ended December 31,
- ------------------- ------------------------- Dollar ------------------------ Dollar
2003 2002 Change 2002 2001 Change
----------- ---------- --------- ----------- ---------- --------
(Amounts in thousands)
Property operations:
PSB $64,242 $65,212 $(970) $65,212 $52,200 $13,012
Disposed Investments (1)............... 10 325 (315) 325 16,278 (15,953)
Other Investments (2).................. 6,278 5,667 611 5,667 5,769 (102)
----------- ---------- --------- ----------- ---------- --------
70,530 71,204 (674) 71,204 74,247 (3,043)
----------- ---------- --------- ----------- ---------- --------
Depreciation:
PSB.................................... (26,048) (25,459) (589) (25,459) (17,534) (7,925)
Disposed Investments (1)............... - (65) 65 (65) (5,843) 5,778
Other Investments (2).................. (1,705) (1,554) (151) (1,554) (1,719) 165
----------- ---------- --------- ----------- ---------- --------
(27,753) (27,078) (675) (27,078) (25,096) (1,982)
----------- ---------- --------- ----------- ---------- --------
Other: (3)
PSB (4)................................ (18,507) (15,292) (3,215) (15,292) (11,440) (3,852)
Disposed Investments (1)............... - - - - (296) 296
Other Investments (2).................. 696 1,054 (358) 1,054 1,127 (73)
----------- ---------- --------- ----------- ---------- --------
(17,811) (14,238) (3,573) (14,238) (10,609) (3,629)
----------- ---------- --------- ----------- ---------- --------
Total equity in earnings of real estate
entities.................................. $24,966 $29,888 $(4,922) $29,888 $38,542 $(8,654)
=========== ========== ========= =========== ========= ========
(1) Amounts include our pro-rata share of the earnings for the Development
Joint Venture, which we began to consolidate effective January 16, 2002 and
two partnerships that we began to consolidate effective January 1, 2002. On
the respective dates of consolidation, we had obtained a controlling
interest in these partnerships and began to consolidate the operations of
these partnerships, and no longer account for our interest in these
partnerships using the equity method (see Note 3 to the consolidated
financial statements). Amounts also include income with respect to an
investment that was disposed of in the second quarter of 2003.
(2) Amounts include equity in earnings recorded for investments that have been
held consistently throughout the three years ended December 31, 2003.
(3) "Other" reflects our share of general and administrative expense, interest
expense, interest income, and other non-property, non-depreciation related
operating results of these entities.
(4) Our equity in earnings includes our pro-rata share of gain on disposition
of real estate investments totaling $187,000 and $3,737,000, respectively,
during 2003 and 2002 (none in 2001).
The decrease in equity in earnings of real estate entities when
comparing 2002 to 2001, is caused by the consolidation of the Development Joint
Venture and two additional partnerships (as discussed in Note 3 to the
consolidated financial statements), partially offset by our pro-rata share of
PSB's gain on sale of real estate investments totaling $3,737,000 for 2002.
The decrease in equity in earnings of real estate entities when
comparing 2003 to 2002 is caused by the net impact of PSB's gains, losses, and
impairment charges recorded in these periods.
Equity in earnings of PSB represents our pro-rata share (approximately
44% at December 31, 2003 and 2002) of the earnings of PS Business Parks, Inc., a
publicly traded real estate investment trust (American Stock Exchange symbol
"PSB") organized by the Company on January 2, 1997. As of December 31, 2003, we
owned 5,418,273 common shares and 7,305,355 operating partnership units (units
which are convertible into common shares on a one-for-one basis) in PSB. At
December 31, 2003, PSB owned and operated 18.3 million net rentable square feet
of commercial space located in eight states. PSB also manages approximately
960,000 net rentable square feet of commercial space owned by the Company and
affiliated entities at December 31, 2003 pursuant to property management
agreements.
46
Accordingly, our future equity income from PSB will be dependent
entirely upon PSB's operating results. PSB's filings and selected financial
information can be accessed through the Securities and Exchange Commission, and
on its website, www.psbusinessparks.com.
On January 16, 2002, we acquired the remaining 70% ownership interest
in the Development Joint Venture for cash totaling approximately $153,078,000.
As a result, we began consolidating the operating results of the Development
Joint Venture and no further equity in earnings will be recorded with respect to
this entity for periods after January 16, 2002. Effective January 1, 2002 (see
Note 3 to the financial statements), we began consolidating the operating
results of two other partnerships and no longer record equity in these entity's
earnings with respect to our investments in these partnerships. Our earnings
with respect our interests in these entities are included in the table above in
the line "Disposed Investments." No further equity in earnings will be recorded
with respect to these entities for periods after their respective dates of
consolidation or disposal.
The "Other Investments" includes our equity in earnings with respect to
our pro-rata share of earnings with respect to seven limited partnerships, for
which we held an approximately consistent level of equity interest during the
three years ended December 31, 2002. The Company formed these limited
partnerships during the 1980's. The Company is the general partner in each
limited partnership, and manages each of these facilities for a management fee
that is included in "interest and other income." The limited partners consist of
numerous individual investors, including the Company, which throughout the
1990's acquired units of limited partnership interests in these limited
partnerships in various transactions.
Our future earnings with respect to the "Other investments" will be
dependent upon the operating results of the 36 self-storage facilities that
these entities own. The operating characteristics of these facilities are
similar to those of the Company's self-storage facilities, and are subject to
the same operational issues as the Consistent Group of self-storage facilities
as discussed above with respect to Self-Storage Operations. See Note 6 to the
consolidated financial statements for the operating results of these entities
for the years ended December 31, 2003 and 2002.
Other Income and Expense Items
- --------------------------------------------------------------------------------
INTEREST AND OTHER INCOME: Interest in other income includes (i) the
net operating results from our third party property management operations, (ii)
the net operating results from our merchandise sales and consumer truck rentals
and (iii) interest income.
Interest and other income remained constant in 2003 as compared to
2002, reflecting the impact of improved operating results from our merchandise
sales and consumer truck rentals, offset by lower interest income attributable
to lower average interest rates on short-term cash investments and principal
payments received on notes receivable.
Interest and other income has decreased in 2002 as compared to 2001
principally as a result of lower cash balances invested in interest bearing
accounts, lower interest rates, and the reduction in income generated from
affiliated entities that were acquired by the Company.
DEPRECIATION AND AMORTIZATION: Depreciation and amortization expense
was $185,775,000 in 2003, $177,978,000 in 2002, and $164,914,000 in 2001.
Included in depreciation expense with respect to our real estate facilities was
$171,561,000 in 2003, $166,871,000 in 2002, and $151,999,000 in 2001; the
increases are due to the acquisition and development of additional real estate
facilities in 1999 through 2003. Depreciation expense with respect to other
assets, primarily depreciation of equipment and containers associated with the
containerized storage operations, was $7,610,000 in 2003, $4,503,000 in 2002,
and $3,606,000 in 2001. Amortization expense with respect to intangible assets
totaled $6,604,000 for the years ended December 31, 2003 and 2002, respectively,
and $9,309,000 for the year ended December 31, 2001.
47
Depreciation and amortization during 2003 with respect to real estate
facilities acquired or developed during 2003 amounted to $971,000 which was for
a partial period for the time they were acquired until December 31, 2003, and we
expect the annual depreciation expense with respect to these facilities for 2003
and forward will approximate $2,705,000.
GENERAL AND ADMINISTRATIVE EXPENSE: General and administrative expense
was $17,127,000 in 2003, $15,619,000 in 2002, and $21,038,000 in 2001. General
and administrative costs for each year principally consist of state income
taxes, investor relation expenses, and corporate and executive salaries. In
addition, general and administrative expense includes expenses that vary
depending upon the Company's activity levels in certain areas, such as overhead
associated with the acquisition and development of real estate facilities,
employee severance, and product research and development expenditures.
The increase in general and administrative expense from 2002 to 2003 is
primarily due to higher stock-based compensation expense. Included in general
and administrative expense for 2003 is $2,685,000 with respect to stock-based
compensation expense, including $530,000 in stock option expense, $970,000 in
restricted stock expense, and $1,185,000 in payroll taxes and other costs
associated with employees' exercise of 2,743,000 stock options in 2003.
Stock-based compensation expense totaled $543,000 for 2002, which is comprised
of $163,000 in stock option expense and $380,000 in payroll taxes and other
costs associated with employees' exercise of 949,000 stock options during 2002.
Restricted stock expense, based upon restricted stock units outstanding
and the market price of our common stock at December 31, 2003, should
approximate $2,592,000 in 2004, while stock option expense should approximate
$600,000 in 2004, exclusive of payroll taxes on exercises of options. Future
grants of restricted stock units and stock options could further increase our
future stock-based compensation expense. The future level of payroll taxes and
other costs associated with employees' exercise of stock options will depend
upon the timing of employees' exercise of approximately 3,088,618 stock options
outstanding at December 31, 2003, the Company's stock price at the time of
exercise, and the level of future grants of stock options.
General and administrative expense decreased in 2002 as compared to
2001, due primarily to a reduction in expenditures for product research,
development overhead, consulting fees, lease termination costs relating to our
PSPUD business, and employee severance costs, all of which totaled $5,630,000 in
2001.
INTEREST EXPENSE: Interest expense was $1,121,000 in 2003, $3,809,000
in 2002, and $3,227,000 in 2001. Debt and related interest expense remain
relatively low compared to our overall asset base. The decrease in interest
expense in 2003 compared to 2002 and 2001 is principally the result of lower
average debt balances, offset partially by decreased capitalized interest due to
lower average in-process development balances. Capitalized interest expense
totaled $6,010,000 in 2003, $6,513,000 in 2002, and $8,992,000 in 2001 in
connection with our development activities.
Interest paid, including capitalized interest, was $7,131,000 in 2003,
$10,322,000 in 2002, and $12,219,000 in 2001.
We expect that our aggregate interest cost (interest expensed and
capitalized interest combined) during fiscal 2004 will continue to decline as a
result of principal amortization. During fiscal 2004, scheduled principal
amortization approximates $40.0 million, of which approximately $28.0 million
should be paid in the first half of 2004.
In 2004, we expect that our average in-process development balances
will exceed our average debt balances, and therefore we believe that virtually
all of our interest will be capitalized in 2004. Accordingly, we expect that
interest expense, net of capitalization, will be nominal.
48
MINORITY INTEREST IN INCOME: Minority interest in income represents the
income allocable to equity interests in Consolidated Entities, which are not
owned by the Company. The following table summarizes minority interest in income
for each of the three years ended December 31, 2003:
Minority interest in income for the year ended
------------------------------------------------
December 31, December 31, December 31,
Description 2003 2002 2001
----------- -------------- ------------- --------------
(in thousands)
Preferred partnership interests............... $ 26,906 $ 26,906 $ 31,737
Consolidated Development Joint Venture (a).... 2,905 2,399 1,074
Newly Consolidated Partnerships (b)........... 3,649 3,357 -
Convertible Partnership Units (c)............. 305 283 359
Acquired minority interests (d)............... 415 3,003 4,611
Other minority interests (e).................. 9,523 8,139 8,234
-------------- ------------- --------------
Total minority interests in income............ $ 43,703 $ 44,087 $ 46,015
============== ============= ==============
(a) These amounts reflect income allocated to the minority interests in the
Consolidated Development Joint Venture. Included in minority interest in
income is $3,362,000, $3,227,000, and $2,386,000 in depreciation expense
for the years ended December 31, 2003, 2002, and 2001, respectively.
(b) These amounts reflect the minority interests in two partnerships that we
began consolidating effective January 1, 2002, as described in Note 3 to
the Company's consolidated financial statements. Included in minority
interest in income is $647,000 and $721,000 in depreciation expense for the
years ended December 31, 2003 and 2002.
(c) These amounts reflect the minority interests represented by the Convertible
Partnership Units (see Note 9 to the consolidated financial statements).
Included in minority interest is $342,000, $354,000, and $308,000 in
depreciation expense for the years ended December 31, 2003, 2002, and 2001,
respectively.
(d) These amounts reflect income allocated to minority interests that the
Company acquired as of December 31, 2003, and are therefore no longer
outstanding at December 31, 2003. Included in minority interest in income
is $216,000, $2,286,000, and $3,000,000 in depreciation expense for the
years ended December 31, 2003, 2002, and 2001, respectively.
(e) These amounts reflect income allocated to minority interests that were
outstanding consistently throughout the three years ended December 31,
2003. Included in minority interest in income is $1,761,000, $1,499,000,
and $2,153,000 in depreciation expense for the years ended December 31,
2003, 2002, and 2001, respectively.
On March 17, 2000, one of our consolidated operating partnerships
issued $240.0 million of 9.5% Series N Cumulative Redeemable Perpetual Preferred
Units. On March 29, 2000 the partnership issued $75.0 million of 9.125% Series O
Cumulative Redeemable Perpetual Preferred Units and on August 11, 2000, issued
$50.0 million of 8.75% Series P Cumulative Redeemable Perpetual Preferred Units.
In August 2001, we repurchased, at par, $30 million of 9.125% Series O
Cumulative Redeemable Perpetual Preferred Units. In October 2001, we
repurchased, at par, $50 million of 8.75% Series P Cumulative Redeemable
Perpetual Preferred Units. For the years ended December 31, 2001, 2002, and
2003, the holders of our preferred partnership units were paid in aggregate
approximately $31,737,000, $26,906,000 and $26,906,000, respectively, in
distributions and received a corresponding allocation of minority interest in
earnings for the respective period. We estimate that during 2004 we will pay
aggregate distributions totaling $26.9 million to these units with a
corresponding allocation of income to minority interest in earnings.
In November 1999, we formed a development joint venture (the
"Consolidated Development Joint Venture") with a joint venture partner whose
partners include an institutional investor and the Company's Chairman and former
CEO, B. Wayne Hughes ("Mr. Hughes"). The Consolidated Development Joint Venture
is funded solely with equity capital consisting of 51% from the Company and 49%
from the joint venture partner. Included in minority interest in income for the
years ended December 31, 2001, 2002, and 2003 is $1,074,000, $2,399,000, and
$2,905,000, respectively, representing our joint venture partner's pro-rata
interest in the operations of the Consolidated Development Joint Venture. The
facilities in the entity are newly developed facilities that are all in the
fill-up phase. The increase in minority interest in income in 2003 and 2002 as
compared to the preceding years with respect to the Consolidated Development
Joint Venture is due to the opening and fill-up of the facilities owned by this
entity. We expect that such minority interest in income will continue to
increase during 2004 as the facilities continue to fill-up and increase the
earnings of this entity.
49
Newly Consolidated Partnerships reflect the minority interests in two
partnerships that we began consolidating effective January 1, 2002, as described
in Note 3 to the consolidated financial statements. In addition, as described in
Note 8, during 2002 we recorded the pending sale of a partnership interest in
the Newly Consolidated Partnerships, and for all periods following the sale of
this interest, income will be allocated to these interests.
The acquired minority interests reflect interests in the consolidated
entities that the Company acquired as of December 31, 2003 and are therefore no
longer outstanding. There will be no further income allocated to these interests
in 2004 and beyond.
Other minority interests reflect income allocated to minority interests
that have maintained a consistent level of interest throughout the three years
ended December 31, 2003, comprised of investments in the Consolidated Entities
and the Operating Partnership Units described in Note 9 to the Company's
financial statements. The level of income allocated to these interests in the
future is dependent upon the operating results of the storage facilities that
these entities own, as well as any acquisitions of minority interests that the
Company does in the future.
DISCONTINUED OPERATIONS: As described more fully in the Note 4 to the
consolidated financial statements, during 2002 and 2003 we implemented a
business plan that included the closure of 31 of the 55 containerized storage
facilities that were open at December 31, 2001 (these 31 facilities are referred
to hereinafter as the "Closed Facilities"). Also, in 2003, we sold five
self-storage facilities (the "Sold Self-Storage Facilities"), and in 2002 we
sold one of our commercial facilities (the "Sold Commercial Property") to a
third party.
During 2002, in connection primarily with the closure or planned
closure of 22 of the Closed Facilities, we recorded asset impairment losses with
respect to the containers and equipment utilized by these facilities totaling
$6,504,000. In 2003, we recorded impairment charges on assets for nine Closed
Facilities of $2,479,000 and a $750,000 impairment charge on a real estate
facility previously used by the containerized storage business, as well as an
additional $355,000 loss upon sale of this real estate facility.
During 2002, lease termination costs, representing the expected
remaining lease liability following closure of the facilities, were accrued in
the amount of $2,447,000 for 2002. In accordance with the provisions of
Statement of Financial Accounting Standards No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" which we adopted on January 1,
2003, we no longer accrue for such lease termination or other liabilities and
instead recognize such expenses as they are incurred. Such lease termination
accruals would have been approximately $610,000 in the year ended December 31,
2003.
The historical operations of the aforementioned facilities (including
the asset impairment losses and lease termination costs) are classified as
discontinued operations, with the rental income, cost of operations, and
depreciation expense with respect to these facilities for current and prior
periods included in the line-item "Discontinued Operations" on the consolidated
income statement. These amounts are set forth below:
50
Discontinued Operations:
- ------------------------
Year Ended December 31, Year Ended December 31,
------------------------------------- ------------------------------------
2003 2002 Change 2002 2001 Change
------------- ---------- ---------- ----------- --------- ---------
(Dollar amounts in thousand)
Rental income (a):
Sold self-storage facilities.... $1,579 $1,841 $(262) $1,841 $1,897 $(56)
Closed facilities............... 9,385 22,396 (13,011) 22,396 19,212 3,184
Sold commercial property........ - 268 (268) 268 460 (192)
------------- ---------- ---------- ----------- --------- ---------
Total rental income......... 10,964 24,505 (13,541) 24,505 21,569 2,936
Cost of operations (a):
Sold self-storage facilities.... 617 742 (125) 742 769 (27)
Closed facilities............... 8,178 22,588 (14,410) 22,588 18,063 4,525
Sold commercial property........ - 84 (84) 84 111 (27)
------------- ---------- ---------- ----------- --------- ---------
Total cost of operations.... 8,795 23,414 (14,619) 23,414 18,943 4,471
Depreciation and amortization (a):
Sold self-storage facilities.... 424 528 (104) 528 523 5
Closed facilities............... 1,804 3,035 (1,231) 3,035 2,508 527
Sold commercial property........ - 107 (107) 107 116 (9)
------------- ---------- ---------- ----------- --------- ---------
Total depreciation and
amortization ....................... 2,228 3,670 (1,442) 3,670 3,147 523
------------- ---------- ---------- ----------- --------- ---------
Loss before other items............. (59) (2,579) 2,520 (2,579) (521) (2,058)
Other items:
Sold self-storage facilities (b) 5,476 - 5,476 - - -
Closed facilities (c)........... (3,584) (8,951) 5,367 (8,951) - (8,951)
Sold commercial property........ - - - - - -
------------- ---------- ---------- ----------- --------- ---------
Total other items............ 1,892 (8,951) 10,843 (8,951) - (8,951)
------------- ---------- ---------- ----------- --------- ---------
Net discontinued operations (d)..... $1,833 ($11,530) $13,363 ($11,530) $521 ($11,009)
============= ========== ========== =========== ========= =========
(a) These amounts represent the historical operations of the Closed Facilities
and the Sold Facilities. Amounts with respect to these facilities for
periods prior to 2002 were previously classified as rental income, cost of
operations, and depreciation expense and gain/(loss) on sales in the
financial statements.
(b) This represents the gain on sale recorded upon the completion of the sale
of the Sold Self-storage facilities.
(c) Other charges include asset impairment charges with respect to the
furniture, fixtures, and other assets of the Closed Facilities totaling
$2,479,000 and $6,504,000 for the years ended December 31, 2003 and 2002,
respectively. Amounts for 2003 also include a $750,000 impairment charge
and a $355,000 loss on sale with respect to a real estate facility
previously used by one of the Closed Facilities, which was sold in December
2003. Amounts for 2002 also include lease termination accruals.
(d) The net discontinued operations have resulted in an increase in our
earnings per share of $0.01 per diluted common share for 2003 and
reductions to our earnings per share of $0.09 and $0.00 per diluted common
share for each of the two years ended December 31, 2002 and 2001,
respectively.
Six of the Closed Facilities are in the process of closing which may
take up to several months to complete. We expect that these facilities will
continue to generate operating losses until final closure.
51
GAIN (LOSS) IN DISPOSITION OF REAL ESTATE: In the year ended December
31, 2003, we recorded a net gain on disposition of real estate assets of
$1,007,000, as compared to a loss of $2,541,000 in 2002 and a gain of $4,091,000
in 2001. The gain in 2003 is composed of a gain on sale of investments of
$316,000, and a gain on sale of seven parcels of land and two self-storage
facilities aggregating $691,000. The net loss in 2002 is composed of a loss on
disposition of land and a commercial facility totaling $702,000 as described in
Note 6, combined with a loss on disposition of partnership interests in the
amount of $1,839,000 as described in Note 9. The gain in 2001 is related to the
disposition of two real estate facilities and a parcel of land.
Liquidity and Capital Resources
- --------------------------------------------------------------------------------
We believe that our internally generated net cash provided by operating
activities will continue to be sufficient to enable us to meet our operating
expenses, capital improvements, debt service requirements and distributions to
shareholders for the foreseeable future.
Operating as a real estate investment trust ("REIT"), our ability to
retain cash flow for reinvestment is restricted. In order for us to maintain our
REIT status, a substantial portion of our operating cash flow must be used to
make distributions to our shareholders (see "Requirement to Pay Distributions"
below). However, despite the significant distribution requirements, we have been
able to retain a significant amount of our operating cash flow. The following
table summarizes our ability to fund distributions to the minority interest,
capital improvements to maintain our facilities, and distributions to our
shareholders through the use of cash provided by operating activities. The
remaining cash flow generated is available to make both scheduled and optional
principal payments on debt and for reinvestment.
For the Year Ended December 31,
(Amount in thousands)
-----------------------------------------
2003 2002 2001
---------- ---------- ----------
Net cash provided by operating activities............................. $594,430 $588,961 $538,534
Allocable to minority interests (Preferred Units)..................... (26,906) (26,906) (31,737)
Allocable to minority interests (common equity)....................... (23,125) (25,268) (22,125)
---------- ---------- ----------
Cash from operations allocable to our shareholders.................... 544,399 536,787 484,672
Capital improvements to maintain our facilities:
Self-storage facilities............................................. (29,287) (25,952) (34,436)
Commercial properties............................................... (888) (1,041) (1,042)
Add back: minority interest share of capital improvements to maintain
facilities........................................................ 505 926 1,267
---------- ---------- ----------
Remaining operating cash flow available for distributions to our
shareholders....................................................... 514,729 510,720 450,461
Distributions paid:
Preferred stock dividends.......................................... (146,196) (148,926) (117,979)
Equity Stock, Series A dividends................................... (21,501) (21,501) (19,455)
Regular distributions to Common and Class B shareholders........... (225,864) (221,299) (162,481)
Special distributions to Common and Class B shareholders (a)....... - - (42,115)
---------- ---------- ----------
Cash available for principal payments on debt and reinvestment........ $121,168 $118,994 $108,431
========== ========== ==========
(a) The special distribution in 2001 enabled the Company to maintain its REIT
status with respect to the distribution requirements.
52
Our financial profile is characterized by a low level of debt to total
capitalization, increasing net income, increasing cash flow from operations, and
a conservative dividend payout ratio with respect to the common stock. We expect
to fund our growth strategies with cash on hand at December 31, 2003, internally
generated retained cash flows, and proceeds from issuing equity securities. In
general, our current strategy is to continue to finance our growth with
permanent capital, either common or preferred equity. We have in the past used
our $200 million line of credit as temporary "bridge" financing, and repaid
those amounts with internally generated cash flows and proceeds from the
placement of permanent capital. As of December 31, 2003, we had no outstanding
borrowings under our $200 million bank line of credit, which matures on October
31, 2004. We are currently in the process of amending this credit facility to
provide for, among other items, an extension of the maturity date and
enhancement to certain covenants.
Over the past three years we have funded substantially all of our
acquisitions with permanent capital (both common and preferred securities). We
have elected to use preferred securities as a form of leverage despite the fact
that the dividend rates of our preferred securities exceed the prevailing market
interest rates on conventional debt. We have chosen this method of financing for
the following reasons: (i) under the REIT structure, a significant amount of
operating cash flow needs to be distributed to our shareholders making it
difficult to repay debt with operating cash flow alone, (ii) our perpetual
preferred stock has no sinking fund requirement, or maturity date and does not
require redemption, all of which eliminate any future refinancing risks, (iii)
after the end of a non-call period, we have the option to redeem the preferred
stock at any time, which in 2003, 2002, and 2001 enabled us to effectively
refinance higher coupon preferred stock with new preferred stock at lower rates,
(iv) preferred stock does not contain onerous covenants, thus allowing us to
maintain significant financial flexibility, and (v) dividends on the preferred
stock can be applied to our REIT distribution requirements.
Our credit ratings on each of our series of Cumulative Preferred Stock
by each of the three major credit agencies are "Baa2" by Moody's and "BBB+" by
both Standard & Poor's and Fitch IBCA.
Our portfolio of real estate facilities remains substantially
unencumbered. At December 31, 2003, we had mortgage debt outstanding of $16.6
million (which encumbers 21 facilities with a book value of $55.5 million) and
unsecured debt in the amount of $59.4 million.
We believe that our size and financial flexibility enables us to access
capital when appropriate. Since 2001, we completed the following capital raising
activities (amounts are presented net of issuance costs):
Cumulative Equity Stock
Securities issued Date issued Preferred Stock Series A
- ------------------------------------------- ------------------- --------------- ------------
(in thousands)
8.600% Cumulative Preferred Stock, Series Q January 19, 2001 $ 166,966 $ -
Public issuance of Equity Stock, Series A April 11, 2001 - 51,836
Direct placement of Equity Stock, Series A May 31, 2001 - 20,294
8.00% Cumulative Preferred Stock, Series R September 28, 2001 493,085 -
7.875% Cumulative Preferred Stock, Series S October 31, 2001 139,022 -
Direct placement of Equity Stock, Series A November 21, 2001 - 2,690
7.625% Cumulative Preferred Stock, Series T January 18, 2002 145,075 -
7.625% Cumulative Preferred Stock, Series U February 19, 2002 145,075 -
7.500% Cumulative Preferred Stock, Series V September 30, 2002 166,866 -
6.500% Cumulative Preferred Stock, Series W October 6, 2003 128,126 -
6.500% Cumulative Preferred Stock, Series X November 13, 2003 116,020 -
6.850% Cumulative Preferred Stock, Series Y January 2, 2004 40,000 -
6.250% Cumulative Preferred Stock, Series Z March 5, 2004 108,956 -
--------------- ------------
$1,649,191 $74,820
=============== ============
On January 2, 2004, in a private transaction, we sold 1,600,000 shares
(par value of $40,000,000) of our Preferred Stock, Series Y, priced at 6.850%.
On March 5, 2004, we sold 4,500,000 depositary shares, with each depositary
share representing 1/1,000 of a share of 6.250% Cumulative Preferred Stock,
Series Z (par value $112,500,000).
53
We used approximately $1,034,521,000 of these net proceeds in order to
redeem higher-coupon preferred securities, as follows:
Preferred
Date Redeemed or Cumulative Partnership
Security Redeemed or Repurchased Repurchased Preferred Stock Units
- ------------------------------------------- --------------------- ----------------- -----------
(in thousands)
9.125% Cumulative Preferred Units, Series O August 31, 2001 $ - $ 30,000
8.875% Cumulative Preferred Stock, Series G September 28, 2001 172,525 -
8.450% Cumulative Preferred Stock, Series H October 5, 2001 168,775 -
8.750% Cumulative Preferred Units, Series P October 15, 2001 - 50,000
8.625% Cumulative Preferred Stock, Series I November 13, 2001 100,025 -
10.00% Cumulative Preferred Units, Series A September 30, 2002 45,643 -
8.000% Cumulative Preferred Stock, Series J October 7, 2002 150,018 -
Cumulative Preferred Stock, Series C October 7, 2002 30,018 -
9.200% Cumulative Preferred Stock, Series B March 31, 2003 57,517 -
8.250% Cumulative Preferred Stock, Series K January 19, 2004 115,000 -
8.250% Cumulative Preferred Stock, Series L March 10, 2004 115,000 -
----------------- ----------
$ 954,521 $80,000
================= ==========
The Cumulative Preferred Stock amounts listed above include redemption
costs.
During 2005, approximately $398 million of preferred securities become
redeemable, at our option, having a weighted average rate of 9.6%. It is our
intent to redeem these securities with lower rate preferred securities. As
indicated above, we recently issued preferred securities with a rate of 6.25%.
There is no assurance that rates will continue at these historical low levels.
We may, during the course of 2004, issued preferred stock in anticipation of the
aforementioned 2005 redemptions.
REQUIREMENT TO PAY DISTRIBUTIONS: We have operated, and intend to
continue to operate, in such a manner as to qualify as a REIT under the Internal
Revenue Code of 1986, but no assurance can be given that we will at all times so
qualify. To the extent that the Company continues to qualify as a REIT, we will
not be taxed, with certain limited exceptions, on the taxable income that is
distributed to our shareholders, provided that at least 90% of our taxable
income is so distributed to our shareholders prior to filing of the Company's
tax return. We have satisfied the REIT distribution requirement since 1980.
Aggregate dividends paid during 2003 totaled $146.2 million to the
holders of our Cumulative Preferred Stock, $225.9 million to the holders of our
Common Stock and $21.5 million to the holders of our Equity Stock, Series A.
Although we have not finalized the calculation of our 2003 taxable income, we
believe that the aggregate dividends paid in 2003 to our shareholders enabled us
to continue to qualify as a REIT.
We estimate that the distribution requirements for fiscal 2004 with
respect to our Cumulative Preferred Stock outstanding, and assuming the
redemption of Cumulative Preferred Stock, Series K, will be approximately $147.6
million.
During 2003, we paid distributions totaling $26.9 million with respect
to our Preferred Partnership Units. We estimate the annual distributions
requirements with respect to the preferred partnership units outstanding at
December 31, 2003 to be approximately $26.9 million.
For 2003, distributions with respect to the Common Stock and Equity
Stock, Series A will be determined based upon our REIT distribution requirements
after taking into consideration distributions to the preferred shareholders. We
anticipate that, at a minimum, quarterly distributions per common share will
remain at $0.45 per common share. For the first quarter of 2004, our Board of
Directors has declared a quarterly distribution of $0.45 per common share.
54
With respect to the depositary shares of Equity Stock, Series A, we
have no obligation to pay distributions if no distributions are paid to the
common shareholders. To the extent that we do pay common distributions in any
year, the holders of the depositary shares receive annual distributions equal to
the lesser of (i) five times the per share dividend on the common stock or (ii)
$2.45. The depositary shares are non-cumulative, and have no preference over our
Common Stock either as to dividends or in liquidation.
CAPITAL IMPROVEMENT REQUIREMENTS: During 2004, we have budgeted
approximately $53.0 million for capital improvements. Capital improvements
include major repairs or replacements to the facilities that keep the facilities
in good operation condition and maintain their visual appeal. Capital
improvements do not include costs relating to the development or expansion of
facilities.
DEBT SERVICE REQUIREMENTS: We do not believe we have any significant
refinancing risks with respect to our mortgage debt, all of which is fixed rate.
At December 31, 2003, we had total outstanding notes payable of approximately
$76.0 million. See Note 7 to the consolidated financial statements for
approximate principal maturities of such borrowings. We anticipate that our
retained operating cash flow will continue to be sufficient to enable us to make
scheduled principal payments. It is our current intent to fully amortize our
debt as opposed to refinance debt maturities with additional debt.
ACQUISITION AND DEVELOPMENT OF FACILITIES: No facilities were acquired
from third parties during 2003. During 2002, we acquired nine self-storage
facilities for approximately $30.1 million. Our low level of third party
acquisitions over the past two years is not indicative of either the supply of
facilities offered for sale or our ability to finance the acquisitions, but is
primarily due to prices sought by sellers and our lack of desire to pay such
prices. During 2004, we will continue to seek to acquire additional self-storage
facilities from third parties; however, it is difficult to estimate the amount
of third party acquisitions we will undertake.
During 2003, we acquired through a merger all of the remaining limited
partnership interest not currently owned by the Company in PS Partners IV, Ltd.,
a partnership that is consolidated with the Company. The acquisition cost was
approximately $23,377,000, consisting of the issuance of 426,859 shares of our
common stock ($13,510,000) valued at the closing trading price of the shares at
the date of the acquisition, and cash of approximately $9,867,000; this
acquisition had the effect of reducing minority interest by $6,690,000, with the
excess of cost over underlying book value ($16,687,000) allocated to real
estate.
In June 2004, we anticipate that we will acquire a limited partnership
interest in one of our Consolidated Entities. Our estimate of the acquisition
cost is approximately $25 million.
In November 1999, we formed a second joint venture partnership for the
development of approximately $100 million of self-storage facilities. The
venture is funded solely with equity capital consisting of 51% from us and 49%
from the joint venture partner. The term of the joint venture is 15 years. After
six years, the joint venture partner has the right to cause the Company to
purchase the joint venture partner's interest for an amount necessary to provide
them with a maximum return of 10.75% or less in certain circumstances. Our
estimate of the purchase price of this interest is approximately $105 million.
On January 1, 2004, we entered into a joint venture with an
institutional investor for the purpose of acquiring up to $125.0 million of
existing self-storage properties in the United States from third parties. The
venture will be funded entirely with equity consisting of 30% from the Company
and 70% from the institutional investor. The venture has a nine-month investment
period (through September 2004) to identify and acquire facilities. To date no
facilities have been acquired by the venture.
We currently have a development "pipeline" of 38 self-storage
facilities and expansions to existing self-storage facilities with an aggregate
estimated cost of approximately $156.3 million (unaudited). Approximately $69.6
million of development cost has been incurred as of December 31, 2003. We have
acquired the land for 33 of these projects, which have an aggregate estimated
cost of approximately $121.4 million (unaudited), and costs incurred as of
December 31, 2003 of approximately $67.8 million. The remaining five facilities
represent identified sites where we have an agreement in place to acquire the
land, generally within one year. We anticipate that the development cost of
these projects will be funded solely by the Company.
55
The development and fill-up of these storage facilities is subject to
significant contingencies such as obtaining appropriate governmental approvals.
We estimate that the amount remaining to be spent of approximately $86.7 million
will be incurred over the next 18 - 24 months. The following table sets forth
certain information with respect to our development pipeline.
DEVELOPMENT PIPELINE SUMMARY
Number Net Total estimated Costs incurred
of rentable development through Costs to
projects sq. ft. costs 12/31/03 complete
---------- --------- --------------- -------------- ----------
(Amounts in thousands)
Facilities currently under construction:
Self-storage facilities 6 435 $ 50,186 $ 44,749 $ 5,437
Expansions to existing self-storage 14 613 34,094 17,837 16,257
facilities
---------- --------- --------------- -------------- ----------
20 1,048 84,280 62,586 21,694
Facilities awaiting construction, where land
is acquired:
Self-storage facilities 2 123 10,361 4,432 5,929
Expansions to existing self-storage 11 433 26,775 808 25,967
facilities
---------- --------- --------------- -------------- ----------
13 556 37,136 5,240 31,896
Self-storage facilities awaiting
construction, where land has not yet been
acquired 5 32 34,920 1,794 33,126
---------- --------- --------------- -------------- ----------
Total Development Pipeline 38 1,930 $ 156,336 $ 69,620 $ 86,716
========== ========= =============== ============== ==========
In addition to the above projects, we have five parcels of land held
for development with total costs of approximately $12,236,000 at December 31,
2003. These parcels will either be developed or sold.
STOCK REPURCHASE PROGRAM: The Company's Board of Directors has
authorized the repurchase from time to time of up to 25,000,000 shares of the
Company's common stock on the open market or in privately negotiated
transactions. During 2001, we repurchased a total of 10,585,593 common shares,
for a total aggregate cost of approximately $276.9 million. During 2003, we
repurchased 175,000 shares for approximately $6.0 million. From the inception of
the repurchase program through December 31, 2003, we have repurchased a total of
21,672,020 shares of common stock at an aggregate cost of approximately $541.9
million.
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
To limit our exposure to market risk, we principally finance our
operations and growth with permanent equity capital consisting either of common
or preferred stock. At December 31, 2003, the Company's debt as a percentage of
total shareholders' equity (based on book values) was 1.8%.
Our preferred stock is not redeemable at the option of the holders.
Except under certain conditions relating to the Company's qualification as a
REIT, the Senior Preferred Stock is not redeemable by the Company prior to the
following dates: Series D - September 30, 2004, Series E - January 31, 2005,
Series F - April 30, 2005, Series K - January 19, 2004, Series L - March 10,
2004, Series M - August 17, 2004, Series Q - January 19, 2006, Series R -
September 28, 2006, Series S - October 31, 2006, Series T - January 18, 2007,
Series U - February 19, 2007, Series V - September 30, 2007, Series W - October
6, 2008, Series X - November 13, 2008, Series Y - January 2, 2009 and Series Z -
March 5, 2009. On or after the respective dates, each of the series of Senior
Preferred Stock will be redeemable at the option of the Company, in whole or in
part, at $25 per share (or depositary share in the case of the Series K through
Series X, and Series Z), plus accrued and unpaid dividends.
Our market risk sensitive instruments include notes payable, which
totaled $76,030,000 at December 31, 2003. All of our notes payable bear interest
at fixed rates. See Note 7 to the consolidated financial statements for terms,
valuations and approximate principal maturities of the notes payable as of
December 31, 2003.
56
ITEM 8. Financial Statements and Supplementary Data
The financial statements of the Company at December 31, 2003 and
December 31, 2002 and for each of the three years in the period ended December
31, 2003 and the report of Ernst & Young LLP, Independent Auditors, thereon and
the related financial statement schedule, are included elsewhere herein.
Reference is made to the Index to Financial Statements and Schedules in Item 15.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
ITEM 9A. Controls and Procedures
The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in reports the
Company files and submits under the Exchange Act, is recorded, processed,
summarized and reported within the time periods specified in accordance with SEC
guidelines and that such information is communicated to the Company's
management, including its Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure based on the definition
of "disclosure controls and procedures" in Rule 13a-15(e) of the Exchange Act.
In designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives. Also, the Company has investments in certain unconsolidated
entities. As the Company does not control or manage these entities, its
disclosure controls and procedures with respect to such entities are
substantially more limited than those it maintains with respect to its
consolidated subsidiaries.
At the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer, Chief
Operating Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures
pursuant to Exchange Act Rule 13a-15(e). Based upon that evaluation, the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective. During the fourth
quarter of 2003, there were no changes in the Company's internal control over
financial reporting that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.
57
PART III
ITEM 10. Directors and Executive Officers of the Registrant
The information required by this item with respect to directors is
hereby incorporated by reference to the material appearing in the Company's
definitive proxy statement filed in connection with the annual shareholders'
meeting to be held on May 6, 2004 (the "Proxy Statement") under the caption
"Election of Directors." Information required by this item with respect to
executive officers is provided in Item 4A of this report. See "Executive
Officers of the Company."
The information required by this item with respect to audit committee
financial expert is hereby incorporated by reference to the material appearing
in the Company's definitive proxy statement filed in connection with the annual
shareholders' meeting to be held on May 6, 2004 (the "Proxy Statement") under
the caption "Election of Directors - Directors and Committee Meetings."
The information required by this item with respect to the adoption of a
code of ethics is hereby incorporated by reference to the material appearing in
the Company's definitive proxy statement filed in connection with the annual
shareholders' meeting to be held on May 6, 2004 (the "Proxy Statement") under
the caption "Election of Directors - Directors and Committee Meetings." The code
of ethics adopted by senior management is filed herewith as Exhibit 14.
ITEM 11. Executive Compensation
The information required by this item is hereby incorporated by
reference to the material appearing in the Proxy Statement under the captions
"Compensation" and "Compensation Committee Interlocks and Insider
Participation."
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and
Related Shareholder Matters
The information required by this item is hereby incorporated by
reference to the material appearing in the Proxy Statement under the captions
"Election of Directors - Security Ownership of Certain Beneficial Owners" and
"Security Ownership of Management."
The following table sets forth information as of December 31, 2003 on
the Company's equity compensation plans:
Number of
securities to be Weighted
issued upon average Number of securities
exercise of exercise price remaining available
outstanding of outstanding for future issuance
options, options, under equity
warrants and warrants and compensation plans
rights rights
----------------- --------------- --------------------
Equity compensation plans approved
by security holders 3,054,450 $27.15 4,223,207
Equity compensation plans not
approved by security holders 34,168 $26.35 236,669
The outstanding options granted under plans not approved by the
Company's shareholders were granted under the Company's 2001
Non-Executive/Non-Director Plan, which does not allow participation by the
Company's executive officers and directors. The principal terms of this plan are
as follows: (1) 500,000 shares of common stock were authorized for grant, (2)
this plan is administered by the Equity Awards Committee, except that grants in
excess of 100,000 shares to any one person requires approval by the Executive
Equity Awards Committee, (3) options are granted at fair market value on the
date of grant, (4) options have a ten year term and (5) options vest over three
years in equal installments.
58
ITEM 13. Certain Relationships and Related Transactions
The information required by this item is hereby incorporated by
reference to the material appearing in the Proxy Statement under the caption
"Certain Relationships and Related Transactions and Legal Proceedings."
ITEM 14. Principal Accountant Fees and Services
Fees billed to the Company by Ernst & Young LLP for 2002 and 2003, as
are follows:
Audit Fees: Audit fees billed (or expected to be billed) to the Company
by Ernst & Young LLP for the audit of the Company's annual financial
statements, reviews of the quarterly financial statements included in
the Company's quarterly reports on Form 10-Q and services in connection
with the Company's registration statements and securities offerings
totaled $360,400 for 2002 and $369,400 in 2003.
Tax Fees: Tax fees billed (or expected to be billed) to the Company by
Ernst & Young LLP for tax services (primarily federal and state income
tax preparation) totaled $590,200 in 2002 and $615,700 in 2003.
Audit Related Fees and Other Fees: During 2002 and 2003 Ernst & Young
LLP did not bill the Company for audit related services or any other
services, except audit services and tax services denoted above.
The Audit Committee of the Company pre-approves all services performed
by Ernst & Young LLP, including those listed above. At this time, the Audit
Committee has not delegated pre-approval authority to any member or members of
the Audit Committee.
59
PART IV
ITEM 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
a. 1. Financial Statements
The financial statements listed in the accompanying Index to
Financial Statements and Schedules hereof are filed as part of
this report.
2. Financial Statement Schedules
The financial statements schedules listed in the accompanying
Index to Financial Statements and Schedules are filed as part
of this report.
3. Exhibits
See Index to Exhibits contained herein.
b. Reports on Form 8-K
The Company furnished a Current Report on Form 8-K dated and filed November
6, 2003, pursuant to Item 7 with its press release announcing its results for
the quarter ended September 30, 2003.
The Company filed a Current Report on Form 8-K, dated November 6, 2003 (filed
November 7, 2003), pursuant to Item 5, in connection with the Company's
public offering in November 2003 of depositary shares, each representing
1/1,000 of a share of the Company's 6.450% Cumulative Preferred Stock, Series
X.
c. Exhibits:
See Index to Exhibits contained herein.
d. Financial Statement Schedules
Not applicable.
60
PUBLIC STORAGE, INC.
INDEX TO EXHIBITS
(Items 15(a)(3) and 15(c))
3.1 Restated Articles of Incorporation. Filed with Registrant's
Registration Statement No. 33-54557 and incorporated herein by
reference.
3.2 Certificate of Determination for the 10% Cumulative Preferred Stock,
Series A. Filed with Registrant's Registration Statement No. 33-54557
and incorporated herein by reference.
3.3 Certificate of Determination for the 9.20% Cumulative Preferred Stock,
Series B. Filed with Registrant's Registration Statement No. 33-54557
and incorporated herein by reference.
3.4 Amendment to Certificate of Determination for the 9.20% Cumulative
Preferred Stock, Series B. Filed with Registrant's Registration
Statement No. 33-56925 and incorporated herein by reference.
3.5 Certificate of Determination for the 8.25% Convertible Preferred Stock.
Filed with Registrant's Registration Statement No. 33-54557 and
incorporated herein by reference.
3.6 Certificate of Determination for the Adjustable Rate Cumulative
Preferred Stock, Series C. Filed with Registrant's Registration
Statement No. 33-54557 and incorporated herein by reference.
3.7 Certificate of Determination for the 9.50% Cumulative Preferred Stock,
Series D. Filed with Registrant's Form 8-A/A Registration Statement
relating to the 9.50% Cumulative Preferred Stock, Series D and
incorporated herein by reference.
3.8 Certificate of Determination for the 10% Cumulative Preferred Stock,
Series E. Filed with Registrant's Form 8-A/A Registration Statement
relating to the 10% Cumulative Preferred Stock, Series E and
incorporated herein by reference.
3.9 Certificate of Determination for the 9.75% Cumulative Preferred Stock,
Series F. Filed with Registrant's Form 8-A/A Registration Statement
relating to the 9.75% Cumulative Preferred Stock, Series F and
incorporated herein by reference.
3.10 Certificate of Determination for the Convertible Participating
Preferred Stock. Filed with Registrant's Registration Statement No.
33-63947 and incorporated herein by reference.
3.11 Certificate of Amendment of Articles of Incorporation. Filed with
Registrant's Registration Statement No. 33-63947 and incorporated
herein by reference.
3.12 Certificate of Determination for the 8-7/8% Cumulative Preferred Stock,
Series G. Filed with Registrant's Form 8-A/A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 8-7/8% Cumulative Preferred Stock, Series G and incorporated herein
by reference.
3.13 Certificate of Determination for the 8.45% Cumulative Preferred Stock,
Series H. Filed with Registrant's Form 8-A/A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 8.45% Cumulative Preferred Stock, Series H and incorporated herein
by reference.
3.14 Certificate of Determination for the Convertible Preferred Stock,
Series CC. Filed with Registrant's Registration Statement No. 333-03749
and incorporated herein by reference.
3.15 Certificate of Correction of Certificate of Determination for the
Convertible Participating Preferred Stock. Filed with Registrant's
Registration Statement No. 333-08791 and incorporated herein by
reference.
61
3.16 Certificate of Determination for 8-5/8% Cumulative Preferred Stock,
Series I. Filed with Registrant's Form 8-A/A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 8-5/8% Cumulative Preferred Stock, Series I and incorporated herein
by reference.
3.17 Certificate of Amendment of Articles of Incorporation. Filed with
Registrant's Registration Statement No. 333-18395 and incorporated
herein by reference.
3.18 Certificate of Determination for Equity Stock, Series A. Filed with
Registrant's Form 10-Q for the quarterly period ended June 30, 1997 and
incorporated herein by reference.
3.19 Certificate of Determination for Equity Stock, Series AA. Filed with
Registrant's Form 10-Q for the quarterly period ended September 30,
1999 and incorporated herein by reference.
3.20 Certificate Decreasing Shares Constituting Equity Stock, Series A.
Filed with Registrant's Form 10-Q for the quarterly period ended
September 30, 1999 and incorporated herein by reference.
3.21 Certificate of Determination for Equity Stock, Series A. Filed with
Registrant's Form 10-Q for the quarterly period ended September 30,
1999 and incorporated herein by reference.
3.22 Certificate of Determination for 8% Cumulative Preferred Stock, Series
J. Filed with Registrant's Form 8-A/A Registration Statement relating
to the Depositary Shares Each Representing 1/1,000 of a Share of 8%
Cumulative Preferred Stock, Series J and incorporated herein by
reference.
3.23 Certificate of Correction of Certificate of Determination for the 8.25%
Convertible Preferred Stock. Filed with Registrant's Registration
Statement No. 333-61045 and incorporated herein by reference.
3.24 Certificate of Determination for 8-1/4% Cumulative Preferred Stock,
Series K. Filed with Registrant's Form 8-A/A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 8-1/4% Cumulative Preferred Stock, Series K and incorporated herein
by reference.
3.25 Certificate of Determination for 8-1/4% Cumulative Preferred Stock,
Series L. Filed with Registrant's Form 8-A/A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 8-1/4% Cumulative Preferred Stock, Series L and incorporated herein
by reference.
3.26 Certificate of Determination for 8.75% Cumulative Preferred Stock,
Series M. Filed with Registrant's Form 8-A/A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 8.75% Cumulative Preferred Stock, Series M and incorporated herein
by reference.
3.27 Certificate of Determination for Equity Stock, Series AAA. Filed with
Registrant's Current Report on Form 8-K dated November 15, 1999 and
incorporated herein by reference.
3.28 Certificate of Determination for 9.5% Cumulative Preferred Stock,
Series N. Filed with Registrant's Annual Report on Form 10-K for the
year ended December 31, 1999 and incorporated herein by reference.
3.29 Certificate of Determination for 9.125% Cumulative Preferred Stock,
Series O. Filed with Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2000 and incorporated herein by
reference.
3.30 Certificate of Determination for 8.75% Cumulative Preferred Stock,
Series P. Filed with Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2000 and incorporated herein by
reference.
3.31 Certificate of Determination for 8.600% Cumulative Preferred Stock,
Series, Q. Filed with Registrant's Form 8-A/A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 8.600% Cumulative Preferred Stock, Series Q and incorporated herein
by reference.
3.32 Amendment to Certificate of Determination for Equity Stock, Series A.
Filed with Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2001 and incorporated herein by reference.
62
3.33 Certificate of Determination for 8.000% Cumulative Preferred Stock,
Series R. Filed with Registrant's Form 8-A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 8.000% Cumulative Preferred Stock, Series R and incorporated herein
by reference.
3.34 Certificate of Determination for 7.875% Cumulative Preferred Stock,
Series S. Filed with Registrant's Form 8-A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 7.875% Cumulative Preferred Stock, Series S and incorporated herein
by reference.
3.35 Certificate of Determination for 7.625% Cumulative Preferred Stock,
Series T. Filed with Registrant's Form 8-A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 7.625% Cumulative Preferred Stock, Series T and incorporated herein
by reference.
3.36 Certificate of Determination for 7.625% Cumulative Preferred Stock,
Series U. Filed with Registrant's Form 8-A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 7.625% Cumulative Preferred Stock, Series U and incorporated herein
by reference.
3.37 Amendment to Certificate of Determination for 7.625% Cumulative
Preferred Stock, Series T. Filed with Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2002 and
incorporated herein by reference.
3.38 Certificate of Determination for 7.500% Cumulative Preferred Stock,
Series V. Filed with Registrant's Form 8-A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 7.500% Cumulative Preferred Stock, Series V and incorporated herein
by reference.
3.39 Certificate of Determination for 6.500% Cumulative Preferred Stock,
Series W. Filed with Registrant's Form 8-A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 6.500% Cumulative Preferred Stock, Series W and incorporated herein
by reference.
3.40 Certificate of Determination for 6.450% Cumulative Preferred Stock,
Series X. Filed with Registrant's Form 8-A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 6.450% Cumulative Preferred Stock, Series W and incorporated herein
by reference.
3.41 Certificate of Determination for 6.850% Cumulative Preferred Stock,
Series Y. Filed herewith relating to the Shares of 6.850% Cumulative
Preferred Stock, Series Y and incorporated as Exhibit 3.41.
3.42 Certificate of Determination for 6.250% Cumulative Preferred Stock,
Series Z. Filed with Registrant's Form 8-A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 6.250% Cumulative Preferred Stock, Series Z and incorporated herein
by reference.
3.43 Bylaws, as amended. Filed with Registrant's Registration Statement No.
33-64971 and incorporated herein by reference.
3.44 Amendment to Bylaws adopted on May 9, 1996. Filed with Registrant's
Registration Statement No. 333-03749 and incorporated herein by
reference.
3.45 Amendment to Bylaws adopted on June 26, 1997. Filed with Registrant's
Registration Statement No. 333-41123 and incorporated herein by
reference.
3.46 Amendment to Bylaws adopted on January 6, 1998. Filed with Registrant's
Registration Statement No. 333-41123 and incorporated herein by
reference.
3.47 Amendment to Bylaws adopted on February 10, 1998. Filed with
Registrant's Current Report on Form 8-K dated February 10, 1998 and
incorporated herein by reference.
3.48 Amendment to Bylaws adopted on March 4, 1999. Filed with Registrant's
Current Report on Form 8-K dated March 4, 1999 and incorporated herein
by reference.
3.49 Amendment to Bylaws adopted on May 6, 1999. Filed with Registrants'
Form 10-Q for the quarterly period ended March 31, 1999 and
incorporated herein by reference.
63
3.50 Amendment to Bylaws adopted on November 7, 2002. Filed with
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2002 and incorporated herein by reference.
3.51 Amendment to Bylaws adopted on March 11,2004. Filed herewith.
10.1 Second Amended and Restated Management Agreement by and among
Registrant and the entities listed therein dated as of November 16,
1995. Filed with PS Partners, Ltd.'s Annual Report on Form 10-K for the
year ended December 31, 1996 and incorporated herein by reference.
10.2 Amended Management Agreement between Registrant and Public Storage
Commercial Properties Group, Inc. dated as of February 21, 1995. Filed
with Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994 and incorporated herein by reference.
10.3 Loan Agreement between Registrant and Aetna Life Insurance Company
dated as of July 11, 1988. Filed with Registrant's Current Report on
Form 8-K dated July 14, 1988 and incorporated herein by reference.
10.4 Amendment to Loan Agreement between Registrant and Aetna Life Insurance
Company dated as of September 1, 1993. Filed with Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993 and
incorporated herein by reference.
10.5 Second Amended and Restated Credit Agreement by and among Registrant,
Wells Fargo Bank, National Association, as agent, and the financial
institutions party thereto dated as of February 25, 1997. Filed with
Registrant's Registration Statement No. 333-22665 and incorporated
herein by reference.
10.6 Note Assumption and Exchange Agreement by and among Public Storage
Management, Inc., Public Storage, Inc., Registrant and the holders of
the notes dated as of November 13, 1995. Filed with Registrant's
Registration Statement No. 33-64971 and incorporated herein by
reference.
10.7 Registrant's 1990 Stock Option Plan. Filed with Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference.
10.8* Registrant's 1994 Stock Option Plan. Filed with Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997 and
incorporated herein by reference.
10.9* Registrant's 1996 Stock Option and Incentive Plan. Filed with
Registrant's Annual Report on Form 10-K for the year ended December 31,
2000 and incorporated herein by reference.
10.10 Deposit Agreement dated as of December 13, 1995, among Registrant, The
First National Bank of Boston, and the holders of the depositary
receipts evidencing the Depositary Shares Each Representing 1/1,000 of
a Share of 8-7/8% Cumulative Preferred Stock, Series G. Filed with
Registrant's Form 8-A/A Registration Statement relating to the
Depositary Shares Each Representing 1/1,000 of a Share of 8-7/8%
Cumulative Preferred Stock, Series G and incorporated herein by
reference.
10.11 Deposit Agreement dated as of January 25, 1996, among Registrant, The
First National Bank of Boston, and the holders of the depositary
receipts evidencing the Depositary Shares Each Representing 1/1,000 of
a Share of 8.45% Cumulative Preferred Stock, Series H. Filed with
Registrant's Form 8-A/A Registration Statement relating to the
Depositary Shares Each Representing 1/1,000 of a Share of 8.45%
Cumulative Preferred Stock, Series H and incorporated herein by
reference.
10.12** Employment Agreement between Registrant and B. Wayne Hughes dated as of
November 16, 1995. Filed with Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995 and incorporated herein by
reference.
10.13 Deposit Agreement dated as of November 1, 1996, among Registrant, The
First National Bank of Boston, and the holders of the depositary
receipts evidencing the Depositary Shares Each Representing 1/1,000 of
a Share of 8-5/8% Cumulative Preferred Stock, Series I. Filed with
Registrant's Form 8-A/A Registration Statement relating to the
Depositary Shares Each Representing 1/1,000 of a Share of 8-5/8%
Cumulative Preferred Stock, Series I and incorporated herein by
reference.
64
10.14 Limited Partnership Agreement of PSAF Development Partners, L.P.
between PSAF Development, Inc. and the Limited Partner dated as of
April 10, 1997. Filed with Registrant's Form 10-Q for the quarterly
period ended March 31, 1997 and incorporated herein by reference.
10.15 Deposit Agreement dated as of August 28, 1997 among Registrant, The
First National Bank of Boston, and the holders of the depositary
receipts evidencing the Depositary Shares Each Representing 1/1,000 of
a Share of 8% Cumulative Preferred Stock, Series J. Filed with
Registrant's Form 8-A/A Registration Statement relating to the
Depositary Shares Each Representing 1/1,000 of a Share of 8% Cumulative
Preferred Stock, Series J and incorporated herein by reference.
10.16 Agreement of Limited Partnership of PS Business Parks, L.P. dated as of
March 17, 1998. Filed with PS Business Parks, Inc.'s Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 1998 and
incorporated herein by reference.
10.17 Deposit Agreement dated as of January 19, 1999 among Registrant,
BankBoston, N.A. and the holders of the depositary receipts evidencing
the Depositary Shares Each Representing 1/1,000 of a Share of 8-1/4%
Cumulative Preferred Stock, Series K. Filed with Registrant's Form
8-A/A Registration Statement relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 8-1/4% Cumulative Preferred Stock,
Series K and incorporated herein by reference.
10.18 Agreement and Plan of Merger among Storage Trust Realty, Registrant and
Newco Merger Subsidiary, Inc. dated as of November 12, 1998. Filed with
Registrant's Registration Statement No. 333-68543 and incorporated
herein by reference.
10.19 Amendment No. 1 to Agreement and Plan of Merger among Storage Trust
Realty, Registrant, Newco Merger Subsidiary, Inc. and STR Merger
Subsidiary, Inc. dated as of January 19, 1999. Filed with registrant's
Registration Statement No. 333-68543 and incorporated herein by
reference.
10.20 Amended and Restated Agreement of Limited Partnership of Storage Trust
Properties, L.P., dated as of March 12, 1999. Filed with Registrant's
Form 10-Q for the quarterly period ended June 30, 1999 and incorporated
herein by reference.
10.21* Storage Trust Realty 1994 Share Incentive Plan. Filed with Storage
Trust Realty's Annual Report on Form 10-K for the year ended December
31, 1997 and incorporated herein by reference.
10.22 Amended and Restated Storage Trust Realty Retention Bonus Plan
effective as of November 12, 1998. Filed with Registrant's Registration
Statement No. 333-68543 and incorporated herein by reference.
10.23 Deposit Agreement dated as of March 10, 1999 among Registrant,
BankBoston, N.A. and the holders of the depositary receipts evidencing
the Depositary Shares Each Representing 1/1,000 of a Share of 8-1/4%
Cumulative Preferred Stock, Series L. Filed with Registrant's Form
8-A/A Registration Statement relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 8-1/4% Cumulative Preferred Stock,
Series L and incorporated herein by reference.
10.24 Note Purchase Agreement and Guaranty Agreement with respect to
$100,000,000 of Senior Notes of Storage Trust Properties, L.P. Filed
with Storage Trust Realty's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by reference.
10.25 Deposit Agreement dated as of August 17, 1999 among Registrant,
BankBoston, N.A. and the holders of the depositary receipts evidencing
the Depositary Shares Each Representing 1/1,000 of a Share of 8.75%
Cumulative Preferred Stock, Series M. Filed with Registrant's Form
8-A/A Registration Statement relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 8.75% Cumulative Preferred Stock,
Series M and incorporated herein by reference.
10.26 Limited Partnership Agreement of PSAC Development Partners, L.P. among
PS Texas Holdings, Ltd., PS Pennsylvania Trust and PSAC Storage
Investors, L.L.C. dated as November 15, 1999. Filed with Registrant's
Current Report on Form 8-K dated November 15, 1999 and incorporated
herein by reference.
65
10.27 Agreement of Limited Liability Company of PSAC Storage Investors,
L.L.C. dated as of November 15, 1999. Filed with Registrant's Current
Report on Form 8-K dated November 15, 1999 and incorporated herein by
reference.
10.28 Deposit Agreement dated as of January 14, 2000 among Registrant,
BankBoston, N.A. and the holders of the depositary receipts evidencing
the Depositary Shares Each Representing 1/1,000 of a Share of Equity
Stock, Series A. Filed with Registrant's Form 8-A/A Registration
Statement relating to the Depositary Shares Each Representing 1/1,000
of a Share of Equity Stock, Series A and incorporated herein by
reference.
10.29 Amended and Restated Agreement of Limited Partnership of PSA
Institutional Partners, L.P. among PS Texas Holdings, Ltd. and the
Limited Partners dated as of March 29, 2000. Filed with Registrant's
Annual Report on Form 10-K for the year ended December 31, 1999 and
incorporated herein by reference.
10.30 Amended and Restated Agreement of Limited Partnership of PSA
Institutional Partners, L.P. among PS Texas Holdings, Ltd. and the
Limited Partners dated as of August 11, 2000. Filed with Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2000 and incorporated herein by reference.
10.31* Registrant's 2000 Non-Executive/Non-Director Stock Option and Incentive
Plan. Filed with Registrant's Registration Statement No, 333-52400 and
incorporated herein by reference.
10.32 Deposit Agreement dated as of January 19, 2001 among Registrant, Fleet
National Bank and the holders of the depositary receipts evidencing the
Depositary Shares Each Representing 1/1,000 of a Share of 8.600%
Cumulative Preferred Stock, Series Q. Filed with Registrant's Form
8-A/A Registration Statement relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 8.600% Cumulative Preferred Stock,
Series Q and incorporated herein by reference.
10.33* Registrant's 2001 Non-Executive/Non-Director Stock Option and Incentive
Plan. Filed with Registrant's Registration Statement No. 333-59218 and
incorporated herein by reference.
10.34* Registrant's 2001 Stock Option and Incentive Plan. Filed with
Registrant's Registration Statement No. 333-59218 and incorporated
herein by reference.
10.35 Deposit Agreement dated as of September 28, 2001 among Registrant,
Fleet National Bank and the holders of the depositary receipts
evidencing the Depositary Shares Each Representing 1/1,000 of a Share
of 8.000% Cumulative Preferred Stock, Series R. Filed with Registrant's
Form 8-A Registration Statement relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 8.000% Cumulative Preferred Stock,
Series R and incorporated herein by reference.
10.36 Deposit Agreement dated as of October 31, 2001 among Registrant, Fleet
National Bank and the holder of the depositary receipts evidencing the
Depositary Shares Each Representing 1/1,000 of a Share of 7.875%
Cumulative Preferred Stock, Series S. Filed with Registrant's Form 8-A
Registration Statement relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.875% Cumulative Preferred Stock,
Series S and incorporated herein by reference.
10.37 Credit Agreement by and among Registrant, Wells Fargo Bank, National
Association, as agent, and the financial institutions party thereto
dated as of November 1, 2001. Filed with Registrant's Quarterly Report
on Form 10-Q for the quarterly period ended September 30, 2001 and
incorporated herein by reference.
10.38 Deposit Agreement dated as of January 18, 2002 among Registrant, Fleet
National Bank and the holders of the depositary receipts evidencing the
Depositary Shares Each Representing 1/1,000 of a Share of 7.625%
Cumulative Preferred Stock, Series T. Filed with Registrant's Form 8-A
Registration Statement relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock,
Series T and incorporated herein by reference.
66
10.39 Deposit Agreement dated as of February 19, 2002 among Registrant, Fleet
National Bank and the holders of the depositary receipts evidencing the
Depositary Shares Each Representing 1/1,000 of a Share of 7.625%
Cumulative Preferred Stock, Series U. Filed with Registrant's Form 8-A
Registration Statement relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock,
Series U and incorporated herein by reference.
10.40 Deposit Agreement dated as of September 30, 2002 among Registrant,
Fleet National Bank and the holders of the depositary receipts
evidencing the Depositary Shares Each Representing 1/1,000 of a Share
of 7.500% Cumulative Preferred Stock, Series V. Filed with Registrant's
Form 8-A Registration Statement relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.500% Cumulative Preferred Stock,
Series V and incorporated herein by reference.
10.41 Deposit Agreement dated as of October 6, 2003 among Registrant,
EquiServe Trust Company, N.A. and the holders of the depositary
receipts evidencing the Depositary Shares Each Representing 1/1,000 of
a Share of 6.500% Cumulative Preferred Stock, Series W. Filed with
Registrant's Form 8-A Registration Statement relating to the Depositary
Shares Each Representing 1/1,000 of a Share of 5.500% Cumulative
Preferred Stock, Series W and incorporated herein by reference.
10.42 Deposit Agreement dated as of November 13, 2003 among Registrant,
EquiServe Trust Company, N.A. and the holders of the depositary
receipts evidencing the Depositary Shares Each Representing 1/1,000 of
a Share of 6.450% Cumulative Preferred Stock, Series X. Filed with
Registrant's Form 8-A Registration Statement relating to the Depositary
Shares Each Representing 1/1,000 of a Share of 6.450% Cumulative
Preferred Stock, Series X and incorporated herein by reference.
10.43 Deposit Agreement dated as of March 5, 2004 among Registrant, EquiServe
Trust Company, N.A. and the holders of the depositary receipts
evidencing the Depositary Shares Each Representing 1/1,000 of a Share
of 6.250% Cumulative Preferred Stock, Series Z. Filed with Registrant's
Form 8-A Registration Statement relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 6.250% Cumulative Preferred Stock,
Series Z and incorporated herein by reference.
10.44 Limited Partnership Agreement of PSAF Acquisition Partners, L.P.
between PS Texas Holdings, Ltd. and the Limited Partner dated as of
December 18, 2003. Filed herewith.
11 Statement Re: Computation of Ratio of Earnings per Share. Filed
herewith.
12 Statement Re: Computation of Ratio of Earnings to Fixed Charges. Filed
herewith.
14 Code of Ethics for Senior Financial Officers. Filed herewith.
21 Subsidiaries of the Registrant. File herewith.
23 Consent of Independent Auditors. Filed herewith.
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
signed and dated by Ronald L. Havner. Filed herewith.
31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
signed and dated by Harvey Lenkin. Filed herewith.
31.3 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
signed and dated by John Reyes. Filed herewith.
32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
signed and dated by Ronald L. Havner, Harvey Lenkin and John Reyes.
Furnished herewith.
* Compensatory benefit plan.
** Management contract.
67
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
PUBLIC STORAGE, INC.
Date: March 12, 2004 By: /s/ Harvey Lenkin
-----------------
Harvey Lenkin, President
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
- ------------------------------- ------------------------------------------------------- --------------
/s/ Ronald L. Havner, Jr. March 12, 2004
- ------------------------------- Vice-Chairman of the Board, Chief
Ronald L. Havner, Jr. Executive Officer and Director
(principal executive officer)
/s/ Harvey Lenkin President and Director March 12, 2004
- -------------------------------
Harvey Lenkin
/s/ John Reyes Senior Vice President and March 12, 2004
- ------------------------------- Chief Financial Officer
John Reyes (principal financial officer and principal
accounting Officer)
/s/ B. Wayne Hughes Chairman of the Board March 12, 2004
- -------------------------------
B. Wayne Hughes
/s/ B. Wayne Hughes, Jr. Director March 12, 2004
- -------------------------------
B. Wayne Hughes, Jr.
/s/ Robert J. Abernethy Director March 12, 2004
- -------------------------------
Robert J. Abernethy
/s/ Dann V. Angeloff Director March 12, 2004
- -------------------------------
Dann V. Angeloff
/s/ William C. Baker Director March 12, 2004
- -------------------------------
William C. Baker
/s/ John T. Evans Director March 12, 2004
- -------------------------------
John T. Evans
/s/ Uri P. Harkham Director March 12, 2004
- -------------------------------
Uri P. Harkham
/s/ Daniel C. Staton Director March 12, 2004
- -------------------------------
Daniel C. Staton
68
PUBLIC STORAGE, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND SCHEDULES
(Item 15 (a))
Page References
Report of Independent Auditors................................... F-1
Consolidated balance sheets as of December 31, 2003 and 2002..... F-2
For each of the three years in the period ended December 31, 2003:
Consolidated statements of income................................ F-3
Consolidated statements of shareholders' equity ................. F-4
Consolidated statements of cash flows............................ F-5 - F-6
Notes to consolidated financial statements....................... F-7 - F- 42
Schedule:
III - Real estate and accumulated depreciation................... F-43 - F-80
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements or notes thereto.
69
REPORT OF INDEPENDENT AUDITORS
------------------------------
The Board of Directors and Shareholders
Public Storage, Inc.
We have audited the accompanying consolidated balance sheets of Public Storage,
Inc. as of December 31, 2003 and 2002, and the related consolidated statements
of income, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 2003. Our audits also included the financial
statement schedule listed in the Index at Item 15(a). These financial statements
and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Public
Storage, Inc. at December 31, 2003 and 2002, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2003, in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Los Angeles, California
February 20, 2004
F-1
PUBLIC STORAGE, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2003 and 2002
(amounts in thousands, except share data)
December 31, December 31,
2003 2002
--------------- ---------------
ASSETS
Cash and cash equivalents.................................................... $ 204,833 $ 103,124
Real estate facilities, at cost:
Land...................................................................... 1,332,882 1,304,881
Buildings................................................................. 3,792,616 3,683,645
--------------- ---------------
5,125,498 4,988,526
Accumulated depreciation.................................................. (1,153,059) (987,546)
--------------- ---------------
3,972,439 4,000,980
Construction in process................................................... 69,620 87,516
Land held for development................................................. 12,236 17,807
--------------- ---------------
4,054,295 4,106,303
Investment in real estate entities........................................... 336,696 329,679
Goodwill..................................................................... 78,204 78,204
Intangible assets, net....................................................... 111,289 117,893
Notes receivable, primarily due from related parties......................... 100,510 24,324
Other assets................................................................. 82,242 84,135
--------------- ---------------
Total assets................................................... $ 4,968,069 $ 4,843,662
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable................................................................ $ 76,030 $ 115,867
Preferred stock called for redemption........................................ 115,000 -
Accrued and other liabilities................................................ 131,103 129,327
--------------- ---------------
Total liabilities................................................... 322,133 245,194
Minority interest:
Preferred partnership interests........................................... 285,000 285,000
Other partnership interests............................................... 141,137 154,499
Commitments and contingencies
Shareholders' equity:
Cumulative Preferred Stock, $0.01 par value, 50,000,000 shares authorized,
5,763,986 shares issued (in series) and outstanding, (9,258,486 at
December 31, 2002) at liquidation preference............................ 1,867,025 1,817,025
Common Stock, $0.10 par value, 200,000,000 shares authorized, 126,986,734
shares issued and outstanding (116,991,455 at December 31, 2002)........ 12,699 11,699
Equity Stock, Series A, $0.01 par value, 200,000,000 shares authorized,
8,776.102 shares issued and outstanding................................. - -
Class B Common Stock, $0.10 par value, 7,000,000 shares authorized, no shares
issued and outstanding (7,000,000 at December 31, 2002)................. - 700
Paid-in capital........................................................... 2,438,632 2,371,194
Cumulative net income..................................................... 2,366,660 2,030,007
Cumulative distributions paid............................................. (2,465,217) (2,071,656)
--------------- ---------------
Total shareholders' equity.......................................... 4,219,799 4,158,969
--------------- ---------------
Total liabilities and shareholders' equity..................... $ 4,968,069 $ 4,843,662
=============== ===============
See accompanying notes.
F-2
PUBLIC STORAGE, INC.
CONSOLIDATED STATEMENTS OF INCOME
For each of the three years in the period ended December 31, 2003
(amounts in thousands, except per share data)
2003 2002 2001
------------- ------------- -------------
Revenues:
Rental income:
Self-storage facilities................................... $ 798,584 $ 761,446 $ 719,765
Commercial properties..................................... 11,442 11,781 12,070
Containerized storage facilities.......................... 33,953 29,723 28,474
Tenant reinsurance premiums.................................. 22,464 19,947 -
Interest and other income.................................... 8,628 8,661 14,225
------------- ------------- -------------
875,071 831,558 774,534
------------- ------------- -------------
Expenses:
Cost of operations:
Storage facilities........................................ 280,905 250,215 228,442
Commercial properties..................................... 4,688 4,462 3,861
Containerized storage facilities.......................... 20,918 23,056 24,941
Tenant reinsurance........................................ 11,987 9,411 -
Depreciation and amortization................................. 185,775 177,978 164,914
General and administrative.................................... 17,127 15,619 21,038
Interest expense.............................................. 1,121 3,809 3,227
------------- ------------- -------------
522,521 484,550 446,423
------------- ------------- -------------
Income before equity in earnings of real estate entities, minority interest,
discontinued operations and gain (loss) on
disposition of real estate and real estate investments....... 352,550 347,008 328,111
Equity in earnings of real estate entities ..................... 24,966 29,888 38,542
Minority interest in income:
Preferred partnership interests............................... (26,906) (26,906) (31,737)
Other partnership interests................................... (16,797) (17,181) (14,278)
Discontinued operations......................................... 1,833 (11,530) (521)
Gain (loss) on disposition of real estate and real estate 1,007 (2,541) 4,091
investments .................................................
------------- ------------- -------------
Net income...................................................... $ 336,653 $ 318,738 $ 324,208
============= ============= =============
Net income allocation:
- ----------------------
Allocable to preferred shareholders:
Based on distributions paid.............................. $ 146,196 $ 148,926 $ 117,979
Based on redemptions of preferred stock (Note 2)......... 7,120 6,888 14,835
Allocable to Equity Stock, Series A.......................... 21,501 21,501 19,455
Allocable to common shareholders............................. 161,836 141,423 171,939
------------- ------------- -------------
$ 336,653 $ 318,738 $ 324,208
============= ============= =============
Net income per common share - basic
Continuing operations........................................ $1.28 $1.24 $1.41
Discontinued operations...................................... 0.01 (0.09) -
------------- ------------- -------------
$1.29 $1.15 $1.41
============= ============= =============
Net income per common share - diluted
Continuing operations........................................ $1.27 $1.23 $1.39
Discontinued operations...................................... 0.01 (0.09) -
------------- ------------- -------------
$1.28 $1.14 $1.39
============= ============= =============
Net income per depositary share of Equity Stock, Series A (basic
and diluted) ................................................ $2.45 $2.45 $2.45
============= ============= =============
Basic weighted average common shares outstanding................ 125,181 123,005 122,310
============= ============= =============
Diluted weighted average common shares outstanding.............. 126,517 124,571 123,577
============= ============= =============
Weighted average shares of Equity Stock, Series A (basic and
diluted) .................................................... 8,776 8,776 7,940
============= ============= =============
See acompanying note.
F-3
PUBLIC STORAGE, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For each of the three years in the period ended December 31, 2003
(Amounts in thousands, except share and per share amounts)
Cumulative Class B
Preferred Common Common Paid-in
Stock Stock Stock Capital
----------- --------- -------- -----------
Balances at December 31, 2000.................................... $1,155,150 $12,370 $ 700 $2,506,736
Issuance of Cumulative Preferred Stock; Series Q (6,900 shares),
Series R (20,400 shares) and Series S (5,750 shares)........ 826,250 - - (27,177)
Redemption of Cumulative Preferred Stock; Series G (6,900
shares), Series H (6,750 shares) and Series I (4,000 shares) (441,250) - - (75)
Issuance of Equity Stock, Series A (3,140.500 shares)......... - - - 74,820
Issuance of Common Stock (1,843,634 shares) .................. - 184 - 46,487
Repurchase of Common Stock (10,585,593 shares)................ - (1,058) - (275,803)
Issuance of Put Option (Note 10)............................. - - - 910
Net income.................................................... - - - -
Distributions to shareholders:
Cumulative Preferred Stock.................................. - - - -
Equity Stock, Series A...................................... - - - -
Common Stock ($1.69 per common share and common share - - - -
equivalent).................................................
----------- --------- -------- -----------
Balances at December 31, 2001.................................... 1,540,150 11,496 700 2,325,898
Issuance of Cumulative Preferred Stock; Series T (6,000 shares),
Series U (6,000 shares) and Series V (6,900 shares)......... 472,500 - - (15,484)
Redemption of Cumulative Preferred Stock; Series A (1,825,000
shares) and Series J (6,000 shares)......................... (195,625) - - (36)
Issuance of Common Stock (2,040,540 shares)................... - 204 - 61,033
Repurchase of Common Stock (11,000 shares).................... - (1) - (380)
Stock option expense.......................................... - - - 163
Net income.................................................... - - - -
Distributions to shareholders:
Cumulative Preferred Stock.................................. - - - -
Equity Stock, Series A...................................... - - - -
Common Stock ($1.80 per common share and common share - - - -
equivalent).................................................
----------- --------- -------- -----------
Balances at December 31, 2002.................................... 1,817,025 11,699 700 2,371,194
Issuance of Cumulative Preferred Stock; Series W (5,300 shares)
and Series X (4,800 shares)................................. 252,500 - - (8,354)
Redemption of Cumulative Preferred Stock; Series B (2,300,000
shares), Series C (1,200,000 shares) and Series K (4,600 (202,500) - - (35)
shares).....................................................
Conversion of Class B Common Stock (7,000,000 shares) (Note 10) - 700 (700) -
Issuance of Common Stock (3,170,279 shares) (Note 10)......... - 317 - 81,281
Repurchase of Common Stock (175,000 shares) (Note 10)......... - (17) - (5,984)
Stock option expense (Note 12)................................ - - - 530
Net income.................................................... - - - -
Distributions to shareholders:
Cumulative Preferred Stock.................................. - - - -
Equity Stock, Series A...................................... - - - -
Common Stock ($1.80 per share).............................. - - - -
----------- --------- -------- -----------
Balances at December 31, 2003.................................... $ 1,867,025 $ 12,699 $ - $2,438,632
=========== ========= ======== ============
Total
Cumulative Cumulative Shareholders'
Net Income Distributions Equity
----------- -------------- --------------
Balances at December 31, 2000.................................... $1,387,061 $(1,337,900) $ 3,724,117
Issuance of Cumulative Preferred Stock; Series Q (6,900 shares),
Series R (20,400 shares) and Series S (5,750 shares)........ - - 799,073
Redemption of Cumulative Preferred Stock; Series G (6,900
shares), Series H (6,750 shares) and Series I (4,000 shares) - - (441,325)
Issuance of Equity Stock, Series A (3,140.500 shares)......... - - 74,820
Issuance of Common Stock (1,843,634 shares) .................. - - 46,671
Repurchase of Common Stock (10,585,593 shares)................ - - (276,861)
Issuance of Put Option (Note 10)............................. - - 910
Net income.................................................... 324,208 - 324,208
Distributions to shareholders:
Cumulative Preferred Stock.................................. - (117,979) (117,979)
Equity Stock, Series A...................................... - (19,455) (19,455)
Common Stock ($1.69 per common share and common share - (204,596) (204,596)
equivalent).................................................
----------- -------------- --------------
Balances at December 31, 2001.................................... 1,711,269 (1,679,930) 3,909,583
Issuance of Cumulative Preferred Stock; Series T (6,000 shares),
Series U (6,000 shares) and Series V (6,900 shares)......... - - 457,016
Redemption of Cumulative Preferred Stock; Series A (1,825,000
shares) and Series J (6,000 shares)......................... - - (195,661)
Issuance of Common Stock (2,040,540 shares)................... - - 61,237
Repurchase of Common Stock (11,000 shares).................... - - (381)
Stock option expense.......................................... - - 163
Net income.................................................... 318,738 - 318,738
Distributions to shareholders:
Cumulative Preferred Stock.................................. - (148,926) (148,926)
Equity Stock, Series A...................................... - (21,501) (21,501)
Common Stock ($1.80 per common share and common share - (221,299) (221,299)
equivalent).................................................
----------- -------------- --------------
Balances at December 31, 2002.................................... 2,030,007 (2,071,656) 4,158,969
Issuance of Cumulative Preferred Stock; Series W (5,300 shares)
and Series X (4,800 shares)................................. - - 244,146
Redemption of Cumulative Preferred Stock; Series B (2,300,000
shares), Series C (1,200,000 shares) and Series K (4,600 - - (202,535)
shares).....................................................
Conversion of Class B Common Stock (7,000,000 shares) (Note 10) - - -
Issuance of Common Stock (3,170,279 shares) (Note 10)......... - - 81,598
Repurchase of Common Stock (175,000 shares) (Note 10)......... - - (6,001)
Stock option expense (Note 12)................................ - - 530
Net income.................................................... 336,653 - 336,653
Distributions to shareholders:
Cumulative Preferred Stock.................................. - (146,196) (146,196)
Equity Stock, Series A...................................... - (21,501) (21,501)
Common Stock ($1.80 per share).............................. - (225,864) (225,864)
----------- -------------- --------------
Balances at December 31, 2003.................................... $2,366,660 $(2,465,217) $ 4,219,799
=========== ============== ==============
See accompanying notes.
F-4
PUBLIC STORAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For each of the three years in the period ended December 31, 2003
(amounts in thousands)
2003 2002 2001
------------- ------------ ------------
Cash flows from operating activities:
Net income............................................................... $ 336,653 $ 318,738 $ 324,208
Adjustments to reconcile net income to net cash provided by operating
activities:
Gain, loss and impairment charges (net) included in equity in
earnings of real estate investments................................. (187) (3,737) -
(Gain)/loss on disposition of real estate and real estate (1,007) 2,541 (4,091)
investments.........................................................
Depreciation and amortization....................................... 185,775 177,978 164,914
Depreciation included in equity in earnings of real estate entities. 27,753 27,078 25,096
Depreciation, impairment losses, and other items associated with
discontinued operations (Note 4).................................. 336 10,174 3,147
Minority interest in income......................................... 43,703 44,087 46,015
Other operating activities.......................................... 1,404 12,102 (20,755)
------------- ------------ ------------
Total adjustments................................................. 257,777 270,223 214,326
------------- ------------ ------------
Net cash provided by operating activities......................... 594,430 588,961 538,534
------------- ------------ ------------
Cash flows from investing activities:
Principal payments received on mortgage notes receivable............ 23,814 35,513 2,199
Issuance of notes receivable to affiliates.......................... (100,000) - (35,000)
Business combinations............................................... - (139,680) 6,276
Capital improvements to real estate facilities ..................... (30,175) (26,993) (35,478)
Construction in process............................................. (102,428) (101,110) (184,290)
Acquisition of minority interests................................... (9,867) (27,544) (11,841)
Acquisition of real estate facilities............................... - (30,117) (3,503)
Acquisition of investments in real estate entities.................. (35,118) (33,956) (55,468)
Proceeds from the sale of real estate facilities and real estate 34,883 15,209 19,936
investments.......................................................
Other investing activities.......................................... (9,285) (14,786) (8,889)
------------- ------------ ------------
Net cash used in investing activities............................. (228,176) (323,464) (306,058)
------------- ------------ ------------
Cash flows from financing activities:
Net borrowings on line of credit.................................... - (25,000) 25,000
Principal payments on notes payable................................. (39,837) (27,685) (12,451)
Net proceeds from the issuance of Common Stock...................... 68,618 23,333 15,857
Net proceeds from the issuance of Cumulative Preferred Stock........ 244,146 457,016 799,073
Net proceeds from the issuance of Equity Stock, Series A............ - - 74,820
Issuance of Put Option.............................................. - - 910
Repurchase of Common Stock.......................................... (6,001) (381) (276,861)
Repurchase of preferred partnership units........................... - - (80,000)
Redemption of Cumulative Preferred Stock............................ (87,535) (195,661) (441,325)
Distributions paid to shareholders.................................. (393,561) (391,726) (342,030)
Distributions paid to minority interests............................ (50,031) (52,174) (53,862)
Investment by minority interests.................................... (344) 558 18,273
------------- ------------ ------------
Net cash used in financing activities............................. (264,545) (211,720) (272,596)
------------- ------------ ------------
Net increase (decrease) in cash and cash equivalents..................... 101,709 53,777 (40,120)
Cash and cash equivalents at the beginning of the year................... 103,124 49,347 89,467
------------- ------------ ------------
Cash and cash equivalents at the end of the year......................... $ 204,833 $ 103,124 $ 49,347
============= ============ ============
See acompanying notes.
F-5
PUBLIC STORAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For each of the three years in the period ended December 31, 2003
(amounts in thousands)
(Continued)
2003 2002 2001
------------- ------------ ------------
Supplemental schedule of non cash investing and financing activities:
Business combinations (Note 3):
Real estate facilities.............................................. $ - $(330,426) $ -
Investment in real estate entities.................................. - 160,236 -
Other assets........................................................ - (8,187) (4,538)
Accrued and other liabilities....................................... - 23,891 6,993
Minority interest................................................... - 14,806 -
Goodwill............................................................ - - (26,993)
Disposition of real estate facilities in exchange for notes receivable,
other assets, and investment in real estate entities.................. - 493 16,150
Notes receivable issued in connection with real estate dispositions..... - (493) (305)
Disposition of minority interest in exchange for other assets:
Other assets........................................................ - (1,450) -
Minority interest................................................... - 3,289 -
Acquisition of minority interest in exchange for common stock (Note 9):
Real estate facilities.............................................. (16,687) (39,780) -
Minority interest................................................... (6,690) (25,668) -
Exchange of Cumulative Preferred Stock, Series B for Cumulative Preferred
Stock, Series T:
Reduction in Cumulative Preferred Stock, Series B.................. - (2,150) -
Increase in Cumulative Preferred Stock, Series T................... - 2,150 -
Issuance of Common Stock:
In connection with business combinations............................ - - 30,814
To acquire minority interests....................................... 13,510 37,904 -
Exchange of Common Stock for Common Stock, Series B:
Reduction in Common Stock, Series B (7,000,000 shares).............. (700) - -
Increase in Common Stock (7,000,000 shares)......................... 700 - -
See accompanying notes.
F-6
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
1. Description of the business
Public Storage, Inc. (the "Company") is a California corporation,
which was organized in 1980. We are a fully integrated, self-administered
and self-managed real estate investment trust ("REIT") whose principal
business activities include the acquisition, development, ownership and
operation of self-storage facilities which offer storage spaces for lease,
usually on a month-to-month basis, for personal and business use. In
addition, to a much lesser extent, we have interests in commercial
properties, containing commercial and industrial rental space, and
interests in facilities that lease storage containers.
We invest in real estate facilities by acquiring wholly owned
facilities or by acquiring interests in real estate entities which own
facilities. At December 31, 2003, we had direct and indirect equity
interests in 1,410 storage facilities located in 37 states and operating
under the "Public Storage" name. We also have direct and indirect equity
interests in approximately 20.1 million net rentable square feet of
commercial space located in 10 states.
2. Summary of significant accounting policies
Basis of presentation
---------------------
The consolidated financial statements include the accounts of the
Company and 38 controlled entities (the "Consolidated Entities").
Collectively, the Company and the Consolidated Entities own a total of
1,382 real estate facilities, consisting of 1,374 self-storage facilities,
five industrial facilities used by the containerized storage operations and
three commercial properties.
At December 31, 2003, we had equity investments in seven limited
partnerships in which we do not have a controlling interest. These limited
partnerships collectively own 36 self-storage facilities, which are managed
by the Company. In addition, we own approximately 44% of the common equity
of PS Business Parks, Inc. ("PSB"), which owns and operates 18.3 million
net rentable square feet of commercial space as of December 31, 2003. We do
not control these entities, accordingly, our investments in these limited
partnerships and PSB (these entities are referred to collectively as the
"Unconsolidated Entities") are accounted for using the equity method.
Use of estimates
----------------
The preparation of the consolidated financial statements in
conformity with accounting principles generally accepted in the United
States requires management to make estimates and assumptions that affect
the amounts reported in the consolidated financial statements and
accompanying notes. Actual results could differ from those estimates.
Income taxes
------------
For all taxable years subsequent to 1980, the Company qualified
and intends to continue to qualify as a REIT, as defined in Section 856 of
the Internal Revenue Code. As a REIT, we are not taxed on that portion of
our taxable income which is distributed to our shareholders provided that
we meet certain tests. We believe we have met these tests during 2003, 2002
and 2001; accordingly, no provision for income taxes has been made in the
accompanying financial statements.
F-7
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
Financial instruments
---------------------
The methods and assumptions used to estimate the fair value of
financial instruments are described below. We have estimated the fair value
of our financial instruments using available market information and
appropriate valuation methodologies. Considerable judgment is required in
interpreting market data to develop estimates of market value. Accordingly,
estimated fair values are not necessarily indicative of the amounts that
could be realized in current market exchanges.
For purposes of financial statement presentation, we consider all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
Due to the short period to maturity of our cash and cash
equivalents, accounts receivable, and other financial assets included in
other assets, and accrued and other liabilities, the carrying values as
presented on the consolidated balance sheets are reasonable estimates of
fair value. The carrying amount of notes receivable approximates fair value
because the applicable interest rates approximates market rates for these
loans. Notes receivable were all current at December 31, 2003. A comparison
of the carrying amount of notes payable to their estimated fair value is
included in Note 8, "Notes Payable."
Financial assets that are exposed to credit risk consist primarily
of cash and cash equivalents, accounts receivable, and notes receivable.
Cash and cash equivalents, which consist of short-term investments,
including commercial paper, are only invested in entities with an
investment grade rating. Notes receivable consist primarily of $100.0
million due from Public Storage Business Parks ("PSB") that was repaid
entirely by March 11, 2004. Accounts receivable from customers are a
component of other assets, and are not a significant component of total
assets.
Included in cash and cash equivalents at December 31, 2003 is
$1,835,000 ($11,423,000 at December 31, 2002) held by STOR-Re Mutual
Insurance Company, Inc. ("STOR-Re"). Insurance and other regulations place
significant restrictions on our ability to withdraw these funds for
purposes other than insurance activities (see Note 3). Other assets at
December 31, 2003 includes investments totaling $27,995,000 ($13,801,000 at
December 31, 2002) in held to maturity debt securities owned by STOR-Re
stated at amortized cost which approximates fair value.
Real estate facilities
----------------------
Real estate facilities are recorded at cost. Costs associated with
the acquisition, development, construction, renovation, and improvement of
properties are capitalized. Interest, property taxes, and other costs
associated with development incurred during the construction period are
capitalized as building cost. Expenditures for repairs and maintenance are
charged to expense when incurred. Depreciation is computed using the
straight-line method over the estimated useful lives of the buildings and
improvements, which are generally between 5 and 25 years.
Evaluation of asset impairment
------------------------------
In August 2001, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"). In June
2001, the FASB issued Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" ("SFAS No. 142"). We adopted both of
these statements effective January 1, 2002.
F-8
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
With respect to goodwill, we evaluate impairment annually through
a two-step process. In the first step, if the fair value of the reporting
unit to which the goodwill applies is equal to or greater than the carrying
amount of the assets of the reporting unit, including the goodwill, the
goodwill is considered unimpaired and the second step is unnecessary. If,
however, the fair value of the reporting unit is less than the carrying
amount, the second step is performed. In this test, we compute the implied
fair value of the goodwill based upon the allocations that would be made to
the goodwill, other assets and liabilities of the reporting unit if a
business combination transaction were consummated at the fair value of the
reporting unit. An impairment loss is recorded to the extent that the
implied fair value of the goodwill is less than the goodwill's carrying
amount. No impairments of our goodwill were identified in our annual
evaluations at December 31, 2003 and December 31, 2002.
With respect to other long-lived assets, we evaluate such assets
on a quarterly basis. We first evaluate these assets for indicators of
impairment such as a) a significant decrease in the market price of a
long-lived asset, b) a significant adverse change in the extent or manner
in which a long-lived asset is being used or in its physical condition, c)
a significant adverse change in legal factors or the business climate that
could affect the value of the long-lived asset, d) an accumulation of costs
significantly in excess of the amount originally projected for the
acquisition or construction of the long-lived asset, or e) a current-period
operating or cash flow loss combined with a history of operating or cash
flow losses or a projection or forecast that demonstrates continuing losses
associated with the use of the long-lived asset. When any such indicators
of impairment are noted, we compare the carrying value of these assets to
the future estimated undiscounted cash flows attributable to these assets.
If the asset's recoverable amount is less than the carrying value of the
asset, then an impairment charge is booked for the excess of carrying value
over the asset's fair value.
Any long-lived assets that we expect to sell or dispose of prior
to their previously estimated useful life are stated at the lower of their
estimated net realizable value (less cost to sell) or their carrying value.
Impairments were identified with respect to our long-lived assets
associated with our Discontinued Operations as described further in Note 4.
In addition, an impairment charge in the amount of $420,000 was recorded in
the year ended December 31, 2002 relating to trucks and other equipment of
the continuing containerized storage business. No other impairments were
identified.
Accounting for Stock-Based Compensation
---------------------------------------
We utilize the Fair Value Method of accounting for our employee
stock options issued after December 31, 2001, and utilize the APB 25 Method
for employee stock options issued prior to January 1, 2002. Restricted
Stock Unit expense is recorded over the relevant vesting period. See Note
12 for a full discussion of our accounting with respect to employee stock
options and restricted stock units.
Other assets
------------
Other assets primarily consist of containers and equipment
associated with the containerized storage operations, assets associated
with the truck rental business, accounts receivable, and prepaid expenses.
Accounts receivable due from tenants are net of allowances for estimated
doubtful accounts.
Containers and equipment utilized in our containerized storage
business totaled $10,895,000 and $20,275,000 at December 31, 2003 and 2002,
respectively. The carrying amounts are net of accumulated depreciation and
asset impairment charges. As discussed in Note 4, during 2003 and 2002
impairment charges amounting to $2,479,000 and $6,504,000, respectively,
were recorded with respect to containers and equipment utilized in the
discontinued containerized storage operations. In addition, during 2002, an
impairment charge of $420,000 was recorded with respect to assets used in
the continuing containerized storage operations.
F-9
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
Included in depreciation and amortization expense for 2003, 2002
and 2001 is $7,610,000, $4,503,000, and $3,606,000 respectively, related to
depreciation of other assets. Included in discontinued operations for 2003,
2002, and 2001, respectively, is depreciation expense of $1,461,000,
$2,518,000, and $2,245,000 respectively, related to depreciation of
containers and equipment of the discontinued operations of the
containerized storage business.
Other assets at December 31, 2003 also includes investments
totaling $27,995,000 ($13,801,000 at December 31, 2002) in held to maturity
debt securities owned by STOR-Re (see Note 3) stated at amortized cost,
which approximates fair value.
Accrued and other liabilities
-----------------------------
Accrued and other liabilities consist primarily of trade payables,
real and personal property tax accruals, accrued interest, and losses and
loss adjustment liabilities, as discussed below.
STOR-Re (see Note 3) provides limited property and liability
insurance coverage to the Company and affiliates of the Company. This
entity accrues liabilities for losses and loss adjustment expense, which at
December 31, 2003 totaled $28,741,000 ($22,911,000 at December 31, 2002).
PS Insurance Company, Ltd. reinsures policies against claims for losses to
goods stored by tenants in our self-storage facilities (see Note 3). This
entity accrues liabilities for losses and loss adjustment expense, which at
December 31, 2003 totaled $2,486,000 ($2,135,000 at December 31, 2002).
Liabilities for losses and loss adjustment expenses include an
amount determined from loss reports and individual cases and an amount,
based on recommendations from an outside actuary using a frequency and
severity method, for losses incurred but not reported. Determining the
liability for unpaid losses and loss adjustment expense is based upon
estimates and while we believe that the amount is adequate, the ultimate
loss may be in excess of or less than the amounts provided. The methods for
making such estimates and for establishing the resulting liability are
continually reviewed.
The Company, STOR-Re, and its affiliates' maximum aggregate annual
exposure for losses that are below the deductibles set forth in the
third-party insurance contracts, assuming multiple significant events
occur, is approximately $30 million. In addition, if losses exhaust the
third-party insurers' limit of coverage of $125,000,000 for property
coverage and $101,000,000 for general liability, our exposure could be
greater. These limits, however, are higher than estimates of maximum
probable losses that could occur from individual catastrophic events (i.e.,
earthquake and wind damage) determined in recent engineering and actuarial
studies.
PS Insurance Company, Ltd. has outside third-party insurance
coverage for losses from any individual event that exceeds a loss of
$500,000, to a limit of $10,000,000. Losses below the third-party insurers'
deductible amounts are accrued as cost of operations for the tenant
reinsurance operations.
Intangible assets and goodwill
------------------------------
Intangible assets consist of property management contracts
($165,000,000) and the excess of the acquisition cost over the fair value
of net tangible and identifiable intangible assets or "goodwill"
($94,719,000) acquired in business combinations.
Prior to January 1, 2002, we amortized goodwill using the
straight-line method over 25 years. Goodwill on our balance sheet has an
indeterminate life and, in accordance with the provisions of Statement of
Financial Accounting Standards No. 142, amortization of goodwill ceased
effective January 1, 2002. Our other intangibles have a defined life and
continue to be amortized over 25 years. Had we continued to amortize
goodwill in 2002 and 2003 as we did in 2001, net income would have been
reduced by $2,705,000 in each year and basic and diluted earnings per share
would have been reduced $0.02 per share in each of 2003 and 2002,
respectively.
F-10
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
Goodwill is net of accumulated amortization of $16,515,000 at
December 31, 2003 and 2002. At December 31, 2003, property management
contracts are net of accumulated amortization of $53,711,000 ($47,107,000
at December 31, 2002). Included in depreciation and amortization expense
for 2003, 2002, and 2001 is $6,604,000 with respect to the amortization of
property management contracts. We expect amortization expense with respect
to property management contracts will be $6,604,000 per year in each of the
five years ended through December 2008. Included in depreciation and
amortization expense for 2001 is $2,705,000 relating to the amortization of
goodwill (none for 2002 and 2003).
Revenue and expense recognition
-------------------------------
Rental income, which is generally earned pursuant to
month-to-month leases for storage space, is recognized as earned.
Promotional discounts are recognized as a reduction to rental income over
the promotional period, which is generally during the first month of
occupancy. Late charges and administrative fees are recognized as rental
income when collected. Tenant reinsurance premiums are recognized as
premiums are collected. Interest income is recognized as earned. Equity in
earnings of real estate entities is recognized based on our ownership
interest in the earnings of each of the unconsolidated real estate
entities.
We accrue for property tax expense based upon estimates and
historical trends. If these estimates are incorrect, the timing of expense
recognition could be affected.
Cost of operations, general and administrative expense, interest
expense, as well as television, yellow page, and other advertising
expenditures are expensed as incurred. Television, yellow page, and other
advertising expense totaled $25,231,000, $25,610,000, and $21,897,000 for
the years ended December 31, 2003, 2002, and 2001, respectively.
Environmental costs
-------------------
Our policy is to accrue environmental assessments and/or
remediation cost when it is probable that such efforts will be required and
the related costs can be reasonably estimated. Our current practice is to
conduct environmental investigations in connection with property
acquisitions. Although there can be no assurance, we are not aware of any
environmental contamination of any of our facilities, which individually or
in the aggregate would be material to our overall business, financial
condition, or results of operations.
Net income per common share
---------------------------
Cumulative Preferred Stock dividends totaling $146,196,000,
$148,926,000, and $117,979,000 for the years ended December 31, 2003, 2002
and 2001, respectively, have been deducted from net income to arrive at net
income allocable to our common shareholders.
In addition, during 2003, we implemented the Security and Exchange
Commission's (the "SEC") clarification of Emerging Issues Task Force
("EITF") Topic D-42. EITF Topic D-42, "The Effect on the Calculation of
Earnings per Share for the Redemption or Induced Conversion of Preferred
Stock" provides, among other things, that any excess of (1) the fair value
of the consideration transferred to the holders of preferred stock redeemed
over (2) the carrying amount of the preferred stock should be subtracted
from net earnings to determine net earnings available to common
stockholders in the calculation of earnings per share.
During 2001, 2002, and 2003, we called for redemption various
series of our cumulative perpetual preferred stock. Our interpretation of
EITF Topic D-42, prior to the clarification, was that the carrying amount
of our preferred stock was equivalent to the liquidation preference as
recorded on our balance sheet. Each of the series of preferred stock that
was called for redemption was redeemed at the liquidation preference.
Accordingly, based upon our interpretation, the fair value of the
consideration given at redemption was equivalent to the carrying amount on
our balance sheet, resulting in no impact to net earnings available to
common stockholders in the calculation of earnings per share.
F-11
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
At the July 31, 2003 meeting of the EITF, the Securities and
Exchange Commission Observer clarified that for the purposes of applying
EITF Topic D-42, the carrying amount of the preferred stock should be
reduced by the issuance costs of the preferred stock, regardless of where
in the stockholders' equity section those costs were initially classified
on issuance. We therefore revised our accounting treatment in 2003 to
conform to the SEC Observer's clarification, and have reflected adjustments
to amounts previously reported in 2001 and 2002 to conform such
presentations to the SEC Observer's clarification.
As a result of this implementation, we allocated an additional
$7,120,000 ($0.06 per diluted share) for the year ended December 31, 2003
for the excess of the redemption amount over the carrying amount of our
Cumulative Preferred Stock. In addition, the 2002 and 2001 allocations of
net income and earnings per share have been restated to reflect the
allocation of $6,888,000 ($0.06 per diluted share) and $14,835,000 ($0.12
per diluted share), respectively, for such excess with respect to
redemptions of our Cumulative Preferred Stock. It is our policy to record
such allocation at the time the securities are called for redemption. This
implementation had no impact upon our reported net income; however, the
implementation did result in a reallocation of such net income between our
preferred and common shareholders.
Net income allocated to our common shareholders has been further
allocated between our two classes of common stock; our regular common stock
and our Equity Stock, Series A. The allocation among each class was based
upon the two-class method. Under the two-class method, earnings per share
for each class of common stock is determined according to dividends
declared (or accumulated) and participation rights in undistributed
earnings. Under the two-class method, the Equity Stock, Series A for the
years ended December 31, 2003, 2002 and 2001 were allocated approximately
$21,501,000, $21,501,000 and $19,455,000, respectively, of net income. The
remaining $161,836,000, $141,423,000, and $171,939,000, for the years ended
December 31, 2003, 2002, and 2001, respectively, was allocated to our
common stock.
Basic net income per share is computed using the weighted average
common shares outstanding (prior to the dilutive impact of stock options
and restricted stock outstanding). Diluted net income per common share is
computed using the weighted average common shares outstanding (adjusted for
the dilutive impact of stock options and restricted stock outstanding that
totaled 1,336,000 in 2003, 1,566,000 in 2002 and 1,267,000 shares in 2001).
Commencing January 1, 2000, the 7,000,000 Class B common shares
outstanding began to participate in distributions of the Company's
earnings. Distributions per share of Class B common stock are equal to 97%
of the per share distribution paid to the regular common shares. As a
result of this participation in the distribution of our earnings, we have
included 6,790,000 (7,000,000 x 97%) Class B common shares in the weighted
average common equivalent shares for the year ended December 31, 2001.
As of March 31, 2002, the remaining contingency for the conversion
of the Class B common stock into regular common stock was satisfied. As a
result, beginning April 1, 2002, we began to include all 7,000,000 Class B
common shares in the computation of the weighted average common equivalent
shares. The Class B common stock converted into 7,000,000 shares of common
stock on January 1, 2003.
F-12
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
Reclassifications
-----------------
Certain amounts previously reported have been reclassified to
conform to the December 31, 2003 presentation, including Discontinued
Operations (see Note 4) and the application of the SEC Observer's
clarification of EITF Topic D-42 (see "Net Income per Common Share" above).
3. Business combinations
Development Joint Venture
-------------------------
On January 16, 2002, we acquired the remaining 70% interest we did
not own in a partnership (the "Development Joint Venture"). The Development
Joint Venture was formed in April 1997 to develop self-storage facilities
and was funded with equity capital consisting of 30% from the Company and
70% from an institutional investor. The Development Joint Venture developed
and owns a total of 47 self-storage facilities. Prior to January 16, 2002,
we accounted for our investment in the Development Joint Venture using the
equity method of accounting. The aggregate cost of this business
combination was $268,209,000, consisting of our pre-existing investment in
the Development Joint Venture of $115,131,000 and cash of $153,078,000 paid
to the institutional investor to acquire its interest.
STOR-Re Mutual Insurance Company, Inc. (STOR-Re)
------------------------------------------------
As a result of obtaining a controlling ownership interest,
effective July 1, 2002 we began consolidating STOR-Re. Accordingly, the
assets and liabilities and operating results subsequent to July 1, 2002 of
STOR-Re are included on our financial statements. Our investment in
STOR-Re, which at June 30, 2002 was classified as an Other Asset in the
amount of $8,541,000, was allocated to the cash, other assets, and
liabilities of STOR-Re as described in the table below.
STOR-Re was formed in 1994 as an association captive insurance
company owned by the Company and its affiliates. STOR-Re provides limited
property and liability insurance to the Company and its affiliates. The
Company also utilizes other insurance carriers to provide property and
liability coverage in excess of STOR-Re's limitations.
Prior to July 1, 2002, the insurance premiums paid to STOR-Re were
included in property operating expenses. After June 30, 2002, the insured
liabilities costs incurred by STOR-Re with respect to the Company and the
Consolidated Entities facilities are presented as property operating
expenses. The insured liability costs incurred by STOR-Re are substantially
equivalent to the premiums paid by the Company and its affiliates;
accordingly, the consolidation of STOR-Re had no material impact upon the
Company's income statement. The net operating results of STOR-Re with
respect to its insurance services provided to the Unconsolidated Entities
are included in "Interest and other income."
Other Partnerships
------------------
As a result of obtaining a controlling ownership interest, we
began to consolidate the accounts of two publicly held limited partnerships
owning 31 self-storage facilities in which we are the general partner,
effective January 1, 2002. Our $45,105,000 investment at December 31, 2001
was allocated to the cash, other assets, liabilities, and minority
interests of these entities as described in the table below. Prior to 2002,
we accounted for our investment in these entities using the equity method
of accounting.
F-13
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
PS Insurance Company, Ltd.
--------------------------
On December 31, 2001, we acquired all of the capital stock of PS
Insurance Company, Ltd. ("PS Insurance Company"), which reinsures policies
against losses to goods stored by tenants in our self-storage facilities
and which owned, and continues to own, 301,032 shares of the Company's
common stock. Prior to December 31, 2001, PS Insurance Company was owned by
our chairman and former chief executive officer, B. Wayne Hughes, and
members of his family (collectively, "Hughes").
The acquisition cost was $24,538,000, which was composed of
$30,814,000 in common stock (1,439,765 shares issued to Hughes less the
301,032 shares held by PS Insurance Company valued at the market price of
the common stock at the time the acquisition agreement was entered into and
announced publicly) less $6,276,000 cash held by PS Insurance Company.
The purchase price was allocated first to the tangible assets and
liabilities of PS Insurance Company. The difference between the purchase
price and the net tangible assets was determined to be related to the value
of the ongoing operations of the enterprise as a whole (and not to any
specific intangible asset) and was therefore allocated to goodwill. The
goodwill has an indeterminate life and therefore will not be amortized.
Each of the business combinations, indicated above, has been
accounted for using the purchase method. Accordingly, allocations of the
total acquisition cost to the net assets acquired were made based upon the
fair value of such assets and liabilities assumed with respect to the
transactions, with the remainder, if any, allocated to goodwill.
Accordingly, allocations of the total acquisition cost to the net assets
acquired were made based upon the fair value of such assets and liabilities
assumed with respect to the transactions occurring in 2002 and 2001 (none
in 2003) are summarized as follows:
Development Partnership PS Insurance
Joint Venture STOR - Re Acquisitions Acquisition Total
-------------- ----------- -------------- ------------ ------------
(Amounts in thousands)
2002 business combinations:
Real estate facilities.... $ 269,898 $ - $ 60,528 $ - $ 330,426
Cash...................... - 12,647 751 - 13,398
Other assets.............. 1,122 14,553 1,053 - 16,728
Accrued and other liabilities (2,811) (18,659) (2,421) - (23,891)
Minority interest ........ - - (14,806) - (14,806)
-------------- ----------- -------------- ------------ ------------
$ 268,209 $ 8,541 $ 45,105 $ - $ 321,855
============== =========== ============== ============ ============
2001 business combinations:
Goodwill.................. $ - $ - $ - $ 26,993 $ 26,993
Other assets.............. - - - 4,538 4,538
Accrued and other liabilities - - - (6,993) (6,993)
-------------- ----------- -------------- ------------ -----------
$ - $ - $ - $ 24,538 $ 24,538
============== =========== ============== ============ ============
F-14
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
The historical operating results of the above acquisitions prior
to each respective acquisition date have not been included in the Company's
historical operating results. Pro-forma data (unaudited) for the year ended
December 31, 2002 (there were no pro-forma adjustments required for the
year ended December 31, 2003 as all the transactions denoted above had
occurred by December 31, 2002) as though the business combinations above
had been effective at the beginning of fiscal 2002 are as follows:
For the Year
Ended December 31, 2002
------------------------
(in thousands except
per share data)
Revenues.................................... $832,905
Net income.................................. $318,503
Net income per common share (Basic)......... $1.15
Net income per common share (Diluted)....... $1.13
The pro-forma data does not purport to be indicative either of
results of operations that would have occurred had the transactions
occurred at the beginning of fiscal 2001 or future results of operations of
the Company. Certain pro-forma adjustments were made to the combined
historical amounts to reflect (i) expected reductions in general and
administrative expenses, (ii) estimated increased interest expense from
bank borrowings to finance the cash portion of the acquisition cost and
(iii) estimated increase in depreciation expense.
4. Discontinued Operations
Statement of Financial Accounting Standards No. 144 ("SFAS No.
144") addresses accounting for discontinued operations. The Statement
requires the segregation of all disposed components of an entity with
operations that (i) can be distinguished from the rest of the entity and
(ii) will be eliminated from the ongoing operations of the entity in a
disposal transaction.
During 2002, we adopted a business plan that included the closure
of 22 non-strategic containerized storage facilities. During 2003, we
identified an additional 9 facilities for closure. Each of these 31
containerized storage facilities (collectively, the "Closed Facilities")
represented components of our Containerized Storage business segment. The
related assets of the Closed Facilities (consisting primarily of storage
containers) were deemed not recoverable from future operations, and as a
result asset impairment charges for the excess of these assets' net book
value over their fair value, determined based upon the values of similar
assets, was recorded during 2002 and 2003 totaling $6,504,000 and
$2,479,000, respectively.
In 2003, we decided to sell an industrial facility that was
previously used by one of the closed facilities. We determined in the
quarter ended June 30, 2003 that the net proceeds from this sale would be
$750,000 less than the book value and, accordingly, we recorded an
impairment charge of $750,000. The sale of the facility was completed in
December 2003, and a loss on sale, representing the difference between the
net proceeds received and the book value (net of the $750,000 impairment
charge) of $355,000 was recorded. The impairment charge and loss on sale is
included in discontinued operations.
During 2002, lease termination costs, representing the expected
remaining lease liability following closure of the facilities, were accrued
in the amount of $2,447,000 for 2002. In accordance with the provisions of
Statement of Financial Accounting Standards No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" which we adopted on January 1,
2003, we no longer accrue for such lease termination or other liabilities
and instead recognize such expenses as they are incurred. If recorded, such
lease termination accruals would have decreased net income by $610,000 for
the year ended December 31, 2003.
F-15
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
The historical operations of the Closed Facilities (including the
asset impairment and lease termination costs) are classified as
discontinued operations, with the rental income, cost of operations, and
depreciation expense with respect to these facilities for current and prior
periods included in the line item "Discontinued Operations" on the income
statement.
During 2003, we sold four self-storage facilities that we owned in
the Knoxville, Tennessee, and one self-storage facility located in
Perrysburg, Ohio. The operations of these facilities and the Knoxville
Facilities (collectively, the "Sold Self-Storage Facilities"), including
the gain on sale of $5,476,000, are reported as discontinued operations.
During 2002, we sold one of our commercial properties (the "Sold
Commercial Property") to a third party. The historical operations of this
property for 2002 and 2001 are included in Discontinued Operations.
The following table summarizes the historical operations of the
Sold Self-Storage Facilities, the Closed Facilities and the Sold Commercial
Property:
Discontinued Operations: Year ended December 31,
- ------------------------- --------------------------------------
2003 2002 2001
----------- ---------- ------------
(Amounts in thousands)
Rental income (a):
Sold self-storage facilities.... $ 1,579 $ 1,841 $ 1,897
Closed facilities............... 9,385 22,396 19,212
Sold commercial property........ - 268 460
----------- ---------- ------------
Total rental income........ 10,964 24,505 21,569
----------- ---------- ------------
Cost of operations (a):
Sold self-storage facilities.... 617 742 769
Closed facilities............... 8,178 22,588 18,063
Sold commercial property........ - 84 111
----------- ---------- ------------
Total cost of operations... 8,795 23,414 18,943
----------- ---------- ------------
Depreciation and amortization (a):
Sold self-storage facilities... 424 528 523
Closed facilities............... 1,804 3,035 2,508
Sold commercial property........ - 107 116
----------- ---------- ------------
Total expenses............. 2,228 3,670 3,147
----------- ---------- ------------
Loss before other items........... (59) (2,579) (521)
Other items:
Sold self-storage facilities (b) 5,476 - -
Closed facilities (c)........... (3,584) (8,951) -
Commercial properties........... - - -
----------- ---------- ------------
Total other items.......... 1,892 (8,951) -
----------- ---------- ------------
Total discontinued operations..... $ 1,833 $(11,530) $ (521)
=========== ========== ============
(a) These amounts represent the historical operations of the Sold Self-Storage
Facilities, the Closed Facilities, and the Sold Commercial Property, and
include amounts previously classified as rental income, cost of operations,
and depreciation expense in the financial statements of prior periods.
(b) Represents the net gain on sale.
(c) Other items include asset impairment charges with respect to the containers
and equipment of the Closed Facilities totaling $2,479,000 and $6,504,000
for the years ended December 31, 2003 and 2002, respectively. Amounts for
2003 also include a $750,000 impairment charge and a $355,000 loss on sale
with respect to a facility previously used by one of the Closed Facilities,
which was sold in December 2003. Amounts for 2002 also include $2,447,000
in lease termination accruals.
F-16
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
There are no significant assets or liabilities of discontinued
operations at December 31, 2003 or 2002.
5. Real estate facilities
Activity in real estate facilities during 2003, 2002 and 2001 is
as follows:
2003 2002 2001
------------- ------------- -------------
(Amounts in thousands)
Operating facilities, at cost:
Beginning balance....................................... $ 4,988,526 $ 4,431,054 $ 4,134,417
Property acquisitions:
Business combinations (Note 3) ...................... - 330,426 -
Other acquisitions................................... - 30,117 3,503
Disposition of facilities............................... (31,327) (4,619) (9,603)
Newly developed facilities opened for operations........ 121,437 134,775 264,161
Acquisition of minority interest (Note 9)............... 16,687 39,780 3,098
Capital improvements.................................... 30,175 26,993 35,478
------------- ------------- -------------
Ending balance.......................................... 5,125,498 4,988,526 4,431,054
------------- ------------- -------------
Accumulated depreciation:
Beginning balance....................................... (987,546) (819,932) (668,018)
Additions during the year (a)........................... (172,328) (168,023) (152,901)
Disposition of facilities............................... 6,815 409 987
------------- ------------- -------------
Ending balance.......................................... (1,153,059) (987,546) (819,932)
------------- ------------- -------------
Construction in process:
Beginning balance...................................... 87,516 121,181 217,140
Current development.................................... 102,428 101,110 171,865
Transfers to land held for development................. 1,113 - (3,663)
Newly developed facilities opened for operations....... (121,437) (134,775) (264,161)
------------- ------------- -------------
Ending balance......................................... 69,620 87,516 121,181
------------- ------------- -------------
Land held for development:
Beginning balance....................................... 17,807 30,001 21,447
Acquisitions............................................ - - 12,425
Transfers to land held for development.................. (1,113) - 3,663
Dispositions............................................ (4,458) (12,194) (7,534)
------------- ------------- -------------
Ending balance.......................................... 12,236 17,807 30,001
------------- ------------- -------------
Total real estate facilities............................. $ 4,054,295 $ 4,106,303 $ 3,762,304
============= ============= =============
(a) Included in additions for the years ended December 31, 2003, 2002, and
2001, respectively, is $767,000, $635,000, and $902,000 in real estate
depreciation expense with respect to discontinued operations. See Note
4.
Operating Facilities
--------------------
During 2003, we opened 14 newly developed self-storage facilities
with an aggregate cost of $107,126,000. We also completed expansions to
eight existing self-storage facilities with a total cost of $12,533,000 and
incurred additional costs with respect to facilities opened in prior years
of $1,778,000.
F-17
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
During 2003 we sold five self-storage facilities and an industrial
facility previously used by the containerized storage operations for
aggregate net proceeds of $20,950,000 of cash. An aggregate net gain on
sale of $5,121,000 was recorded for these sales, combined with an
impairment charge in the amount of $750,000 which was recorded when it was
determined that the industrial facility would be sold for less than its
book value. The gain and impairment charge are included in Discontinued
Operations.
In addition, during 2003 we sold excess land and completed the
sale of two additional self-storage facilities for aggregate net proceeds
of $13,082,000, recognizing a net gain on sale of $691,000. The two
self-storage facilities had been operated by the buyer pursuant to a lease
arrangement, with the lease income with respect to these two facilities
included in "Interest and Other Income."
During 2002, we opened 14 newly developed traditional self-storage
facilities with an aggregate cost of $92,109,000 and two newly developed
facilities that combine traditional self-storage facilities and
containerized storage facilities in the same location ("Combination
Facilities") with an aggregate cost of $14,852,000. We also completed
expansions to existing self-storage facilities with a total cost of
$27,814,000 and acquired nine self-storage facilities, in separate
transactions from third parties, for $30,117,000 cash.
During 2002, we sold four plots of land and one commercial
facility for an aggregate of $15,702,000, consisting of $15,209,000 of cash
and notes receivable in the amount of $493,000. An aggregate loss in the
amount of $702,000 was recorded on the sale of these properties.
During 2001, we opened 12 newly developed self-storage facilities
at a total cost of approximately $66,905,000 and 10 Combination Facilities
at a total cost of approximately $106,004,000. In addition, we opened an
industrial facility we had acquired and renovated for use in the
containerized storage operations, at a total cost of approximately
$9,993,000. We also completed expansions to existing self-storage
facilities with a total cost of approximately $81,259,000 and acquired one
self-storage facility from a third party for approximately $3,503,000 in
cash.
During 2001, we disposed of two facilities and a parcel of land
for a total of $20,241,000, composed of $19,936,000 cash and a note
receivable of $305,000. An aggregate gain of $4,091,000 was recorded on
these dispositions.
At December 31, 2003, the unaudited adjusted basis of real estate
facilities for federal tax purposes was approximately $3.0 billion.
Construction in process and land held for development
-----------------------------------------------------
Construction in process consists of land and development costs
relating to the development of storage facilities. At December 31, 2003,
construction in process consists primarily of 13 facilities that will be
developed on newly acquired land and the expansion and remodeling of 25
existing self-storage facilities. In addition, at December 31, 2003 we have
five parcels of land held for development with total costs of approximately
$12,236,000.
6. Investments in real estate entities
At December 31, 2003, our investments in real estate entities
consist of ownership interests in seven partnerships, which principally own
self-storage facilities, and our ownership interest in PSB. These interests
are non-controlling interests of less than 50% and are accounted for using
the equity method of accounting. Accordingly, earnings are recognized based
upon our ownership interest in each of the partnerships. The accounting
policies of these entities are similar to the Company's.
F-18
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
During 2003, 2002 and 2001, we recognized earnings from our
investments of $24,966,000, $29,888,000, and $38,542,000, respectively, and
received cash distributions totaling $17,754,000, $19,496,000, and
$24,124,000, respectively. In addition, during 2003 and 2002, we recognized
gains of $187,000 and $3,737,000, respectively, representing our share of
PSB's gains on sale of investments in real estate; these gains are
presented in "Equity in earnings from real estate entities" in our
consolidated income statement.
During 2003, 2002, and 2001, we invested a total of $340,000,
$223,000, and $15,954,000 in the real estate entities.
The following table sets forth our investments in the
Unconsolidated Entities at December 31, 2003 and 2002 and our equity in
earnings of real estate investments for each of the three years ended
December 31, 2003:
Investments in Real Estate Equity in Earnings of Real Estate Entities
Entities at December 31, for the year ended December 31,
-------------------------------- -------------------------------------------
2003 2002 2003 2002 2001
-------------- ------------ ----------- ---------- -----------
PSB (a)........................ $ 282,428 $ 273,790 $ 19,687 $ 24,461 $ 23,226
Other investments.............. 54,268 55,364 5,269 5,167 5,177
Disposed investments (b)....... - 525 10 260 10,139
-------------- ------------ ----------- ---------- -----------
Total...................... $ 336,696 $ 329,679 $ 24,966 $ 29,888 $ 38,542
============== ============ =========== ========== ===========
(a) Included in equity in earnings for 2003 and 2002 is our pro-rata share
of PSB's gain on sale of investments in real estate in the amount of
$187,000 and $3,737,000, respectively.
(b) Represents amounts associated with investments no longer held as of
December 31, 2003. As described in Note 3, in 2002 we began
consolidating the results of the Development Joint Venture and two
other partnerships (the Acquired Partnerships), and as a result
eliminated our respective investment in each entity. In addition, we
disposed of a real estate investment during 2003, receiving net
proceeds of $851,000, and recognizing a gain of $316,000 - representing
the excess of the net proceeds over the book value of this investment.
Investment in PS Business Parks, Inc. ("PSB")
---------------------------------------------
On January 2, 1997, we reorganized our commercial property
operations into an entity now known as PS Business Parks, Inc., a REIT
traded on the American Stock Exchange, and an operating partnership
controlled by PS Business Parks, Inc. (collectively, the REIT and the
operating partnership are referred to as "PSB"). The Company and certain
partnerships in which the Company has a controlling interest have a 44%
common equity interest in PSB as of December 31, 2003. This 44% common
equity interest is comprised of the ownership of 5,418,273 shares of common
stock and 7,305,355 limited partnership units in the operating partnership;
these limited partnership units are convertible at our option, subject to
certain conditions, on a one-for-one basis into PSB common stock. Based
upon PSB's trading price at December 31, 2003 ($41.26), the shares and
units had a market value of approximately $524,977,000 as compared to a
book value of $282,428,000.
At December 31, 2003, PSB owned and operated approximately 18.3
million net rentable square feet of commercial space. In addition, PSB
manages 960,000 net rentable square feet of commercial space owned by the
Company and the Consolidated Entities pursuant to property management
agreements.
The following table sets forth the condensed statements of
operations for each of the two years ended December 31, 2003 and 2002, and
the condensed balance sheets of PSB at December 31, 2003 and 2002. The
amounts below represent 100% of PSB's balances and not our pro-rata share.
F-19
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
For the Year Ended December 31,
----------------------------------
2003 2002
---------------- ---------------
(Amount in thousands)
For the year ended December 31,
Total revenue (a).................................... $ 198,035 $ 192,363
Cost of operations and other expenses................ (62,761) (61,621)
Depreciation and amortization........................ (58,927) (55,183)
Discontinued operations (b).......................... 3,334 14,041
Minority interest.................................... (30,585) (32,170)
---------------- ---------------
Net income......................................... $ 49,096 $ 57,430
================ ===============
At December 31,
Total assets (primarily real estate)................. $ 1,358,861 $ 1,156,802
Total debt (c)....................................... 264,694 70,279
Other liabilities.................................... 35,701 36,902
Preferred equity and preferred minority interests.... 386,423 388,563
Common equity........................................ 672,043 661,058
(a) Included in total revenue are gains on sale of marketable
securities totaling $2,043,000 and $41,000 for the years ended
December 31, 2003 and 2002, respectively.
(b) Included in discontinued operations is an impairment charge
recorded on impending real estate sales totaling $5,907,000 and
$900,000 for the years ended December 31, 2003 and 2002,
respectively; net gains on sale of real estate facilities totaling
$2,897,000 and $9,023,000 for the years ended December 31, 2003 and
2002, respectively; and equity income in discontinued property
operations totaling $6,344,000 and $5,918,000 for the years ended
December 31, 2003 and 2002, respectively.
(c) Total debt at December 31, 2003 includes $100,000,000 due to the
Company pursuant to a loan agreement. See Note 11, Related Party
Transactions, below.
Other Investments
-----------------
The Other Investments consist primarily of an average 41% common
equity ownership, which we owned throughout the three-year period ending
December 31, 2003, in seven limited partnerships (collectively, the "Other
Investments") owning an aggregate of 36 storage facilities. During 2003 and
2002, we acquired additional equity interests in these entities for a total
of $340,000 and $223,000, respectively.
The following table sets forth certain condensed financial
information (representing 100% of these entities' balances and not our
pro-rata share) with respect to Other Investments:
2003 2002
--------------- ---------------
(Amount in thousands)
For the year ended December 31,
Total revenue........................ $ 26,763 $ 25,884
Cost of operations and other expenses (9,109) (8,605)
Depreciation and amortization........ (2,573) (2,535)
--------------- ---------------
Net income....................... $ 15,081 $ 14,744
=============== ===============
At December 31,
Total assets (primarily storage $ 56,592 $ 56,731
facilities)......................
Total debt........................... 1,930 5,450
Other liabilities.................... 1,618 1,121
Partners' equity..................... 53,044 50,160
F-20
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
7. Revolving line of credit
We have a $200 million revolving line of credit (the "Credit
Agreement") that has a maturity date of October 31, 2004 and bears an
annual interest rate ranging from the London Interbank Offered Rate
("LIBOR") plus 0.45% to LIBOR plus 1.50% depending on our credit ratings
(currently 0.45%). In addition, we are required to pay a quarterly
commitment fee ranging from 0.20% per annum to 0.30% per annum depending on
our credit ratings (currently the fee is 0.20% per annum). At December 31,
2003, we had no borrowings on our line of credit.
The Credit Agreement includes various covenants, the more
significant of which requires us to (i) maintain a balance sheet leverage
ratio of less than 0.50 to 1.00, (ii) maintain certain quarterly interest
and fixed-charge coverage ratios (as defined) of not less than 2.50 to 1.0
and 1.75 to 1.0, respectively, and (iii) maintain a minimum total
shareholders' equity (as defined). In addition, we are limited in our
ability to incur additional borrowings (we are required to maintain
unencumbered assets with an aggregate book value equal to or greater than
two times our unsecured recourse debt). We were in compliance with all the
covenants of the Credit Agreement at December 31, 2003.
8. Notes payable
Notes payable at December 31, 2003 and 2002 consist of the
following:
2003 2002
----------------------- -----------------------
Carrying Carrying
amount Fair value amount Fair value
---------- ----------- ---------- ----------
(Amounts in thousands)
Unsecured senior notes:
7.47% note due January 2004............................. $ 14,600 $ 14,600 $ 29,300 $ 29,300
7.66% note due January 2007............................. 44,800 44,800 56,000 56,000
7.08% note due November 2003............................ - - 10,000 10,000
Mortgage notes payable:
10.55% mortgage notes secured by real estate facilities,
principal and interest payable monthly, due August 2004 14,863 15,266 18,167 19,409
7.134% to 8.75% mortgage notes secured by real estate
facilities, principal and interest payable monthly, due
at varying dates between May 2004 and September 2028 1,767 1,767 2,400 2,400
---------- ----------- ---------- ----------
Total notes payable.............................. $ 76,030 $ 76,433 $115,867 $117,109
========== =========== ========== ==========
All of our notes payable are fixed rate. The senior notes require
interest and principal payments to be paid semi-annually and have various
restrictive covenants, all of which have been met at December 31, 2003.
The 10.55% mortgage notes consist of five notes, which are
cross-collateralized by 19 properties and are due to a life insurance
company. Although there is a negative spread between the carrying value and
the estimated fair value of the notes, the notes provide for the prepayment
of principal subject to the payment of penalties, which exceed this
negative spread. Accordingly, prepayment of the notes at this time would
not be economically practicable (unaudited).
Mortgage notes payable are secured by 21 real estate facilities
having an aggregate net book value of approximately $55.5 million at
December 31, 2003.
F-21
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
At December 31, 2003, approximate principal maturities of notes
payable are as follows:
Unsecured
Senior Notes Mortgage debt Total
------------ -------------- ----------
(dollar amounts in thousands)
2004.........................$ 25,800 $ 15,010 $ 40,810
2005......................... 11,200 156 11,356
2006......................... 11,200 170 11,370
2007......................... 11,200 185 11,385
2008......................... - 202 202
Thereafter................... - 907 907
------------ -------------- ----------
$ 59,400 $ 16,630 $ 76,030
============ ============== ==========
Weighted average rate........ 7.6% 10.3% 8.2%
============ ============== ==========
Interest paid (including interest related to the borrowings under
the Credit Agreement) during 2003, 2002 and 2001 was $7,131,000,
$10,322,000, and $12,219,000, respectively. In addition, in 2003, 2002 and
2001, capitalized interest totaled $6,010,000, $6,513,000, and $8,992,000,
respectively, related to construction of real estate facilities.
9. Minority interest
In consolidation, we classify ownership interests in the net
assets of each of the Consolidated Entities, other than our own, as
minority interest on the consolidated financial statements. Minority
interest in income consists of the minority interests' share of the
operating results of the Company relating to the consolidated operations of
the Consolidated Entities.
Preferred partnership interests:
--------------------------------
During 2000, one of our consolidated operating partnerships issued
in aggregate $365.0 million of preferred partnership units: March 17, 2000,
- $240.0 million of 9.5% Series N Cumulative Redeemable Perpetual Preferred
Units, March 29, 2000 - $75.0 million of 9.125% Series O Cumulative
Redeemable Perpetual Preferred Units, and August 11, 2000 - $50.0 million
of 8.75% Series P Cumulative Redeemable Perpetual Preferred Units.
We incurred approximately $3,750,000 in costs in connection with
the issuances; these costs were recorded as a reduction to Paid in Capital
during 2000. The issuance of these units in 2000 had the effect of
increasing minority interest by $365.0 million. For each of the years ended
December 31, 2003, 2002, and 2001, the holders of these preferred units
were paid in aggregate approximately $26,906,000, $26,906,000, and
$31,737,000, respectively, in distributions and received an equivalent
allocation of minority interest in earnings.
During 2001, we repurchased all of the 8.75% Series P Cumulative
Redeemable Perpetual Preferred Units and $30 million of the 9.125% Series O
Cumulative Redeemable Perpetual Preferred Units. The units were repurchased
at an amount equal to the original issuance price.
F-22
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
The following table summarizes the preferred partnership units
outstanding:
At December 31, 2003 and 2002
--------------------------------
Distribution Units
Series Rate Outstanding Carrying Amount
- ------------------- ------------- ------------ --------------
(Units and dollar amounts in thousands)
Series N............ 9.500% 9,600 $240,000
Series O............ 9.125% 1,800 45,000
------------ --------------
Total............... 11,400 $285,000
============ ==============
These preferred units are not redeemable during the first 5 years,
thereafter, at our option, we can call the units for redemption at the
issuance amount plus any unpaid distributions. The units are not redeemable
by the holder. Subject to certain conditions, the Series N preferred units
are convertible into shares of 9.5% Series N Cumulative Preferred Stock,
and the Series O preferred units are convertible into shares of 9.125%
Series O Cumulative Preferred Stock of the Company.
Other partnership interests:
----------------------------
Minority interest at December 31, 2003 and 2002, and minority
interest in income for the three years ended December 31, 2003 with respect
to the other partnership interests are comprised of the following:
Minority interest at Minority interest in income for the year ended
----------------------------- -------------------------------------------------
December 31, December 31, December 31, December 31, December 31,
Description of Minority Interest 2003 2002 2003 2002 2001
------------ ------------- -------------- -------------- --------------
(Amounts in thousands)
Consolidated Development Joint
Venture........................ $ 68,490 $ 75,432 $ 2,905 $ 2,399 $ 1,074
Convertible Partnership Units... 6,259 6,274 305 283 359
Newly consolidated partnerships . - 18,215 3,649 3,357 -
Other consolidated partnerships.. 66,388 54,578 9,938 11,142 12,845
------------ ------------- -------------- -------------- --------------
Total other partnership interests $ 141,137 $ 154,499 $ 16,797 $ 17,181 $ 14,278
============ ============= ============== ============== ==============
The partnership agreements of the Other Consolidated Partnerships,
the Consolidated Development Joint Venture, and the Newly Consolidated
Partnerships included in the table above have termination dates that cannot
be unilaterally extended by the Company and, upon termination of each
partnership, the net assets of these entities would be liquidated and paid
to the minority interests and the Company based upon their relative
ownership interests. See Note 15, "Recent Accounting Pronouncements -
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity" for further discussion of the impact of recent
accounting pronouncements on the accounting for these interests.
Consolidated Development Joint Venture
--------------------------------------
In November 1999, we formed a development joint venture (the
"Consolidated Development Joint Venture") with a joint venture partner
(PSAC Storage Investors, LLC) whose partners include a third party
institutional investor and Mr. Hughes, to develop approximately $100
million of self-storage facilities and to purchase $100 million of the
Company's Equity Stock, Series AAA (see Note 10). At December 31, 2003, the
Consolidated Development Joint Venture was fully committed, having
completed construction on 22 storage facilities with a total cost of $108.6
million.
F-23
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
The Consolidated Development Joint Venture is funded solely with
equity capital consisting of 51% from the Company and 49% from PSAC Storage
Investors. The accounts of the Consolidated Development Joint Venture are
included in the Company's consolidated financial statements. The accounts
of PSAC Storage Investors are not included in the Company's consolidated
financial statements, as the Company has no ownership interest in this
entity. Minority interests primarily represent the total contributions
received from PSAC Storage Investors combined with the accumulated net
income allocated to PSAC Storage Investors, net of cumulative
distributions. The amounts included in our financial statements with
respect to the minority interest in the Consolidated Development Joint
Venture are denoted in the tables above.
The term of the Consolidated Development Joint Venture is 15
years; however, during the sixth year PSAC Storage Investors has the right
to cause an early termination of the partnership. If PSAC Storage Investors
exercises this right, we then have the option, but not the obligation, to
acquire their interest for an amount that will allow them to receive an
annual return of 10.75%. If the Company does not exercise its option to
acquire PSAC Storage Investors' interest, the partnership's assets will be
sold to third parties and the proceeds distributed to the Company and PSAC
Storage Investors in accordance with the partnership agreement. If PSAC
Storage Investors does not exercise its right to early termination during
the sixth year, the partnership will be liquidated 15 years after its
formation with the assets sold to third parties and the proceeds
distributed to the Company and PSAC Storage Investors in accordance with
the partnership agreement.
PSAC Storage Investors, LLC provides Mr. Hughes with a fixed yield
of approximately 8.0% per annum on his preferred non-voting interest
(representing an investment of approximately $64.1 million at December 31,
2003 and 2002). In addition, Mr. Hughes receives 1% of the remaining cash
flow of PSAC Storage Investors, LLC (estimated to be less than $50,000 per
year). If PSAC Storage Investors, LLC does not elect to cause an early
termination, Mr. Hughes' 1% interest in residual cash flow can increase to
10%.
In consolidation, the Equity Stock, Series AAA owned by the joint
venture and the related dividend income has been eliminated. Minority
interests primarily represent the total contributions received from PSAC
Storage Investors combined with the accumulated net income allocated to
PSAC Storage Investors, net of cumulative distributions.
Convertible Partnership Units
-----------------------------
As of December 31, 2003, one of our Consolidated Entities had
approximately 237,935 operating partnership units ("Convertible Units")
outstanding, representing a limited partnership interest in the
partnership. The Convertible Units are convertible on a one-for-one basis
(subject to certain limitations) into common shares of the Company at the
option of the unitholder. Minority interest in income with respect to
Convertible Units reflects the Convertible Units' share of the net income
of the Company, with net income allocated to minority interests with
respect to weighted average outstanding Convertible Units on a per unit
basis equal to diluted earnings per common share. During the years ended
December 31, 2003, 2002, and 2001, no units were converted.
Newly Consolidated Partnerships
-------------------------------
As described in Note 3, effective January 1, 2002, we began
consolidating the results of two partnerships owning 31 properties, and as
a result, minority interest increased by $14,806,000 in 2002.
F-24
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
Other Consolidated Partnerships
-------------------------------
At December 31, 2003, the Other Consolidated Partnerships reflect
common equity interests that the Company does not own in 25 entities owning
an aggregate of 123 self-storage facilities.
During 2003, we acquired through a merger all of the remaining
limited partnership interest not currently owned by the Company in PS
Partners IV, Ltd., a partnership, which is consolidated with the Company.
The acquisition cost was approximately $23,377,000, consisting of the
issuance of 426,859 shares of our common stock ($13,510,000) valued at the
closing trading price of the shares at the date of the acquisition, and
cash of approximately $9,867,000; this acquisition had the effect of
reducing minority interest by $6,690,000, with the excess of cost over
underlying book value ($16,687,000) allocated to real estate.
During 2002, we acquired minority interests in the Consolidated
Entities for an aggregate cash cost of $27,544,000 and issued an aggregate
of 1,091,608 shares ($37,904,000) of our common stock valued at the closing
trading price of the shares at the date of the acquisition; these
acquisitions had the effect of reducing minority interest by $25,668,000,
with the excess of cost over underlying book value ($39,780,000) allocated
to real estate.
In addition, during 2002, we recorded the pending sale of a
partnership interest in the Consolidated Entities for an aggregate of
$1,450,000. We recorded a loss on sale of the interest in the amount of
$1,839,000. As a result of this pending sale, minority interest increased
by $3,289,000. This sale was completed in 2003, with no additional gain or
loss on sale recorded. See Note 16 "Commitments and Contingencies."
During 2001, we acquired minority interests in the Consolidated
Entities for an aggregate cash cost of $11,841,000; these acquisitions had
the effect of reducing minority interest by $8,743,000, with the excess of
cost over underlying book value ($3,098,000) to real estate.
F-25
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
10. Shareholders' equity
Cumulative Preferred Stock
--------------------------
At December 31, 2003 and 2002, we had the following series of
Cumulative Preferred Stock outstanding:
At December 31, 2003 At December 31, 2002
------------------------------- -------------------------------
Earliest
Redemption Dividend Shares Carrying Shares Carrying
Series Date Rate Outstanding Amount Outstanding Amount
- -------------------- ------------ ---------- --------------- ------------- -------------- -------------
(Dollar amount in thousands) (Dollar amount in thousands)
Series B 3/31/03(a) 9.200% - $ - 2,300,000 $ 57,500
Series C 6/30/03(a) Adjustable - - 1,200,000 30,000
Series D 9/30/04 9.500% 1,200,000 30,000 1,200,000 30,000
Series E 1/31/05 10.000% 2,195,000 54,875 2,195,000 54,875
Series F 4/30/05 9.750% 2,300,000 57,500 2,300,000 57,500
Series K (b) 1/19/04(a) 8.250% - - 4,600 115,000
Series L 3/10/04(a) 8.250% 4,600 115,000 4,600 115,000
Series M 8/17/04 8.750% 2,250 56,250 2,250 56,250
Series Q 1/19/06 8.600% 6,900 172,500 6,900 172,500
Series R 9/28/06 8.000% 20,400 510,000 20,400 510,000
Series S 10/31/06 7.875% 5,750 143,750 5,750 143,750
Series T 1/18/07 7.625% 6,086 152,150 6,086 152,150
Series U 2/19/07 7.625% 6,000 150,000 6,000 150,000
Series V 9/30/07 7.500% 6,900 172,500 6,900 172,500
Series W 10/6/08 6.500% 5,300 132,500 - -
Series X 11/13/08 6.450% 4,800 120,000 - -
--------------- -------------- -------------- -------------
Total Cumulative Preferred Stock 5,763,986 $ 1,867,025 9,258,486 $ 1,817,025
=============== ============== ============== =============
(a) Series was redeemed on the date indicated.
(b) The Series K Cumulative Preferred Stock was called for
redemption in December 2003, and was redeemed in January 2004
along with the unpaid distributions from December 31, 2003 through
the redemption date. Accordingly, the redemption value of
$115,000,000 was classified as a liability at December 31, 2003.
During 2003, we issued our Series W and Series X Cumulative
Preferred Stock: Series W - issued on October 6, 2003, net proceeds of
$128,126,000 and Series X - issued November 13, 2003, net proceeds of
$116,020,000.
During 2003, we redeemed our Series B and Series C Cumulative
Preferred Stock, at par, at a total cost of $57,517,000 and $30,018,000
(including related redemption expenses), respectively. In December 2003, we
called for redemption our Series K Cumulative Preferred Stock, at par. The
total cost of redemption of the Series K was approximately $115,000,000,
plus accrued dividends, on the redemption date, January 20, 2004.
Accordingly, the $115,000,000 Series K Preferred Stock was classified as a
liability at December 31, 2003.
F-26
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
During 2002, we issued our Series T, Series U and Series V
Cumulative Preferred Stock: Series T - issued on January 18, 2002, net
proceeds of $145,075,000, Series U - issued on February 19, 2002, net
proceeds of $145,075,000 and Series V - issued September 30, 2002, net
proceeds of $166,866,000.
During 2002, we redeemed our Series A and Series J Cumulative
Preferred Stock, at par, at a total cost of $45,643,000 and $150,018,000
(including related redemption expenses), respectively.
On August 30, 2002, in a private transaction, we exchanged an
aggregate of 86,000 shares (par value of $2,150,000) of our Preferred
Stock, Series B for 86 shares (representing 86,000 depositary shares with a
par value of $2,150,000) of our Preferred Stock, Series T.
In 2004 (unaudited), we issued Series Y and Series Z Cumulative
Preferred Stock: On January 2, 2004, in a private transaction, we sold
1,600,000 shares (par value of $40,000,000) of our Preferred Stock, Series
Y, priced at 6.850%; and on March 5, 2004, 4,500,000 depositary shares,
with each depositary share representing 1/1,000 of a share of 6.250%
Cumulative Preferred Stock, Series Z (par value $112,500,000). We also
called for redemption all outstanding shares of our 8.25% Cumulative
Preferred Stock, Series L at a redemption price of $25 per share for a
total of $57,500,000, plus accrued dividends as of March 10, 2004
(unaudited).
The Series B through Series Z (collectively the "Cumulative Senior
Preferred Stock") have general preference rights with respect to
liquidation and quarterly distributions. Holders of the preferred stock,
except under certain conditions and as noted below, will not be entitled to
vote on most matters. In the event of a cumulative arrearage equal to six
quarterly dividends or failure to maintain a Debt Ratio (as defined) of 50%
or less, holders of all outstanding series of preferred stock (voting as a
single class without regard to series) will have the right to elect two
additional members to serve on the Company's Board of Directors until
events of default have been cured. At December 31, 2003, there were no
dividends in arrears and the Debt Ratio was 1.2%.
Upon issuance of our Preferred Stock, we classify the liquidation
value as preferred stock, with any issuance costs recorded as a reduction
in Paid-in capital.
Except under certain conditions relating to the Company's
qualification as a REIT, the Senior Preferred Stock is not redeemable prior
to the following dates: Series D - September 30, 2004, Series E - January
31, 2005, Series F - April 30, 2005, Series L - March 10, 2004, Series M -
August 17, 2004, Series Q - January 19, 2006, Series R - September 28,
2006, Series S - October 31, 2006, Series T - January 18, 2007, Series U -
February 19, 2007, Series V - September 30, 2007, Series W - October 6,
2008, Series X - November 13, 2008, Series Y - January 2, 2009, Series Z -
March 5, 2009. On or after the respective dates, each of the series of
Cumulative Senior Preferred Stock will be redeemable, at the option of the
Company, in whole or in part, at $25 per share (or depositary share in the
case of the Series L through Series X and Series Z), plus accrued and
unpaid dividends.
F-27
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
Common Stock
During 2003, 2002 and 2001, we issued and repurchased shares of
our common stock as follows:
2003 2002 2001
------------------------ ------------------------- ------------------------
(Dollar amount in thousands)
Shares Amount Shares Amount Shares Amount
---------- ----------- ----------- ----------- ----------- -----------
Exercise of stock options........... 2,743,420 $ 68,088 948,932 $ 23,333 704,901 $ 15,857
Acquisition of minority interests 426,859 13,510 1,091,608 37,904 - -
Business Combinations (Note 3)... - - - - 1,138,733 30,814
Conversion of Class B Common Stock 7,000,000 700 - - - -
Repurchases of common stock (a).. (175,000) (6,001) (11,000) (381) (10,585,593) (276,861)
---------- ----------- ----------- ----------- ----------- -----------
9,995,279 $76,297 2,029,540 $ 60,856 (8,741,959) $ (230,190)
========== =========== =========== =========== =========== ===========
(a) Includes 10,000 shares purchased in January 2001 from a corporation
wholly-owned by a director of the Company for an aggregate of $251,875
cash. Includes 2,619,893 shares purchased in March 2001 from a limited
liability company of which a director of the Company is a controlling
member for an aggregate of $68,064,820 in cash. In each transaction, the
purchase price approximated market value as of the date of each
transaction.
At December 31, 2003, entities consolidated with the Company owned
723,732 common shares of the Company. These shares continue to be legally
issued and outstanding. In the consolidation process, these shares and the
related balance sheet amounts have been eliminated. In addition, these
shares are not included in the computation of weighted average shares
outstanding.
The following chart reconciles the Company's legally issued and
outstanding shares of common stock and the reported outstanding shares of
common stock at December 31, 2003 and December 31, 2002:
At December 31, At December 31,
Reconciliation of Common Shares Outstanding 2003 2002
- ------------------------------------------- --------------- ----------------
Legally issued and outstanding shares....... 127,710,466 117,540,187
Less - Shares owned by the Consolidated
Entities that are eliminated in (723,732) (548,732)
consolidation...........................
---------------- ----------------
Reported issued and outstanding shares...... 126,986,734 116,991,455
================ ================
As previously announced, the Board of Directors authorized the
repurchase from time to time of up to 10,000,000 shares of the Company's
common stock on the open market or in privately negotiated transactions. On
March 4, 2000, the Board of Directors increased the authorized number of
shares that the Company could repurchase to 15,000,000. On March 15, 2001,
the Board of Directors increased the authorized number of shares the
Company could repurchase to 20,000,000. During 2001, the Board of Directors
increased the authorized number of shares the Company could repurchase to
25,000,000. Cumulatively through December 31, 2003, we repurchased a total
of 21,672,020 shares of common stock at an aggregate cost of approximately
$541,863,000.
During 2001, we entered into an arrangement with a financial
institution whereby we sold to the institution the right to require us to
purchase from the institution (or, at our option, pay in cash or common
stock the differential between the market price and $26.26 per share) up to
1,000,000 shares of our common stock at a price of $26.26 on certain dates
in September 2001 and October 2001. In exchange for this right, the
financial institution paid us $910,000, the amount of which was reflected
as an increase to our paid-in capital. The right expired without being
exercised.
F-28
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
At December 31, 2003, we had 7,548,494 shares of common stock
reserved in connection with the Company's stock option plans Note 12 and
237,935 shares reserved for the conversion of Convertible Units.
Class B Common Stock
--------------------
The 7,000,000 shares of Class B Common Stock were converted into
7,000,000 shares of Common Stock on January 1, 2003. During 2002 and 2001,
the Class B Common Stock participated in distributions at 97% of the per
share distributions on the Common Stock, which were subject to the
condition (which was met) that cumulative distributions of at least $0.22
per quarter per share had been paid on the Common Stock. The Class B Common
Stock could not participate in liquidating distributions, and Class B
shareholders were not entitled to vote (except as expressly required by
California law).
Equity Stock
------------
The Company is authorized to issue up to 200,000,000 shares of
Equity Stock. The Articles of Incorporation provide that the Equity Stock
may be issued from time to time in one or more series and gives the Board
of Directors broad authority to fix the dividend and distribution rights,
conversion and voting rights, redemption provisions and liquidation rights
of each series of Equity Stock.
Equity Stock, Series A
----------------------
As of December 31, 2003, there were 8,776,102 depositary shares,
each representing 1/1,000 of a share, of Equity Stock, Series A
outstanding. The following table summarizes the activity:
2003 2002 2001
------------------------- ------------------------- -------------------------
Depositary Issuance Depositary Issuance Depositary Issuance
Shares Amount Shares Amount Shares Amount
------------ ---------- ------------- ---------- ----------- ------------
(Dollar amounts in thousands)
Amount at beginning of
year................ 8,776,102 $ 188,174 8,776,102 $ 188,174 5,635,602 $ 113,354
Public offerings...... - - - - 2,210,500 51,836
Direct placements..... - - - - 930,000 22,984
------------ ---------- ------------- ---------- ----------- ------------
Amount at end of year. 8,776,102 $ 188,174 8,776,102 $ 188,174 8,776,102 $ 188,174
============ ========== ============= ========== =========== ============
The issuance amounts have been recorded as part of paid-in capital
on the consolidated balance sheet.
The Equity Stock, Series A ranks on parity with our common stock
and junior to the Cumulative Preferred Stock with respect to general
preference rights and has a liquidation amount that cannot exceed $24.50
per share. Distributions with respect to each depositary share shall be the
lesser of: a) five times the per share dividend on the common stock or b)
$2.45 per annum. Except in order to preserve the Company's federal income
tax status as a REIT, we may not redeem the depositary shares before March
31, 2010. On or after March 31, 2010, we may, at our option, redeem the
depositary shares at $24.50 per depositary share. If the Company fails to
preserve its federal income tax status as a REIT, each depositary share
will be convertible into 0.956 shares of our common stock. The depositary
shares are otherwise not convertible into common stock. Holders of
depositary shares vote as a single class with our holders of common stock
on shareholder matters, but the depositary shares have the equivalent of
one-tenth of a vote per depositary share. We have no obligation to pay
distributions if no distributions are paid to common shareholders.
F-29
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
Equity Stock, Series AA
-----------------------
In June 1997, we contributed $22,500,000 (225,000 shares) of
equity stock, now designated as Equity Stock, Series AA (Equity Stock AA")
to a partnership in which we are the general partner. The Company has a
controlling interest in the partnership and therefore consolidates the
accounts of the partnership. As a result, the Equity Stock AA is eliminated
in consolidation. The Equity Stock AA ranks on a parity with our common
stock and junior to the Cumulative Preferred Stock with respect to general
preference rights and has a liquidation amount of ten times the amount paid
to each common share up to a maximum of $100 per share. Quarterly
distributions per share on the Equity Stock AA are equal to the lesser of
(i) 10 times the amount paid per share of Common Stock or (ii) $2.20. We
have no obligation to pay distributions on these shares if no distributions
are paid to common shareholders.
If the Company determines that it is necessary to maintain its
status as a Real Estate Investment Trust, subject to certain limitations it
may cause the redemption of shares of Equity Stock, Series AA at a price of
$100 per share. The shares are not otherwise redeemable or convertible into
shares of any other class or series of the Company's capital stock. Other
than as required by law, the Equity Stock, Series AA has no voting rights.
Equity Stock, Series AAA
------------------------
In November 1999, we sold $100,000,000 (4,289,544 shares) of
Equity Stock, Series AAA ("Equity Stock AAA") to a newly formed joint
venture. We control the joint venture and consolidate the accounts of the
joint venture, and accordingly the Equity Stock AAA is eliminated in
consolidation. The Equity Stock AAA ranks on a parity with our common stock
and junior to the Cumulative Preferred Stock (as defined below) with
respect to general preference rights, and has a liquidation amount equal to
120% of the amount distributed to each common share. Annual distributions
per share are equal to the lesser of (i) five times the amount paid per
common share or (ii) $2.1564. We have no obligation to pay distributions on
these shares if no distributions are paid to common stockholders.
Upon liquidation of the Consolidated Development Joint Venture, at
the Company's option either a) each share of Equity Stock, Series AAA shall
convert into 1.2 shares of our common stock or b) the Company can redeem
the Equity Stock, Series AAA at a per share amount equal to 120% of the
market price of our common stock. In addition, if the Company determines
that it is necessary to maintain its status as a Real Estate Investment
Trust, subject to certain limitations it may cause the redemption of shares
of Equity Stock, Series AAA at a per share amount equal to 120% of the
market price of our common stock. The shares are not otherwise redeemable
or convertible into shares of any other class or series of the Company's
capital stock. Other than as required by law, the Equity Stock, Series AAA
has no voting rights.
Dividends
---------
The unaudited characterization of dividends for Federal income tax
purposes is made based upon earnings and profits of the Company, as defined
by the Internal Revenue Code. For the tax year ended December 31, 2003,
distributions for the common stock, Equity Stock, Series A, and all the
various series of preferred stocks were classified as follows:
2003 (unaudited)
-----------------------------------------------------------------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------------- --------------- ------------- -----------------
Ordinary Income 99.72% 99.26% 99.98% 100.00%
Pre-May 6th Long-Term Gain 0.28% 0.74% 0.02% 0.00%
----------------- --------------- ------------- -----------------
Total 100.00% 100.00% 100.00% 100.0%
================= =============== ============= =================
F-30
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
A percentage of the long-term capital gain is unrecaptured section 1250
gain for the first, second and third quarters of 2003 as follows:
2003 Percentage of Total Long-Term Capital Gain Distribution
-----------------------------------------------------------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
---------------- ----------------- ----------------- ------------------
Unrecaptured Section 1250 Gain 57.33% 96.36% 100.00% 0.00%
================ ================= ================= ==================
For corporate shareholders a portion of the total long-term capital gain is
required to be recaptured as ordinary income. For the first, second and
third quarters of 2003 the percentages are as follows:
2003 Percentage of Total Long-Term Capital Gain Distribution
-----------------------------------------------------------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
---------------- ----------------- ----------------- ------------------
IRCss.291 Recapture 11.47% 19.27% 20.00% 0.00%
================ ================= ================= ==================
The following table summarizes dividends for the years ended
December 31, 2003, 2002 and 2001:
2003 2002 2001
-------------------- ------------------ ---------------------
Per share Total Per share Total Per share Total
---------- ---------- ---------- ------- ---------- --------
(in thousands, except per share data)
Cumulative Preferred Stock
- --------------------------
Series A $ - $ - $1.875 $3,422 $2.500 $4,563
Series B $0.575 1,322 $2.343 5,389 $2.300 5,488
Series C $0.844 1,013 $1.688 2,024 $1.688 2,024
Series D $2.375 2,850 $2.375 2,850 $2.375 2,850
Series E $2.500 5,488 $2.500 5,488 $2.500 5,488
Series F $2.437 5,606 $2.437 5,606 $2.437 5,606
Series G - - - - $1.664 11,482
Series H - - - - $1.608 10,853
Series I - - - - $1.869 7,475
Series J - - $1.533 9,200 $2.000 12,000
Series K $2.063 9,488 $2.063 9,488 $2.063 9,488
Series L $2.063 9,488 $2.063 9,488 $2.063 9,488
Series M $2.188 4,922 $2.188 4,922 $2.188 4,922
Series Q $2.150 14,835 $2.150 14,835 $2.048 14,134
Series R $2.000 40,800 $2.000 40,800 $0.500 10,200
Series S $1.969 11,320 $1.969 11,320 $0.334 1,918
Series T $1.906 11,601 $1.809 11,011 - -
Series U $1.906 11,438 $1.641 9,849 - -
Series V $1.875 12,938 $0.469 3,234 - -
Series W $0.388 2,057 - - - -
Series X $0.215 1,030 - - - -
---------- ---------- ---------- ------- ---------- --------
146,196 148,926 117,979
Common Stock
- ------------
Common Stock $1.800 225,864 $1.800 209,077 $1.690 193,121
Equity Stock, Series A $2.450 21,501 $2.450 21,501 $2.450 19,455
Class B Common Stock - - $1.746 12,222 $1.639 11,475
---------- --------- ---------
Total Distributions $393,561 $391,726 $342,030
========== ========= =========
F-31
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
11. Related Party Transactions
Relationships and transactions with the Hughes Family
-----------------------------------------------------
B. Wayne Hughes, Chairman of the Board, and his family (the
"Hughes Family") have ownership interests in, and operate, approximately 38
self-storage facilities in Canada under the name "Public Storage," pursuant
to a license agreement with the Company. We currently do not own any
interests in these facilities nor do we own any facilities in Canada. The
Hughes Family owns approximately 36% of our common stock outstanding at
December 31, 2003. We have a right of first refusal to acquire the stock or
assets of the corporation engaged in the operation of the 38 self-storage
facilities in Canada if the Hughes family or the corporation agrees to sell
them. However, we have no interest in the operations of this corporation,
have no right to acquire this stock or assets unless the Hughes family
decides to sell, and receive no benefit from the profits and increases in
value of the Canadian self-storage facilities.
Our personnel have been engaged in the supervision and the
operation of these 38 self-storage facilities and currently provide certain
administrative services for the Canadian owners, and certain other
services, primarily tax services, with respect to certain other Hughes
Family interests. The Hughes Family and the Canadian owners reimbursed us
at cost for these services (U.S. $542,499 and $638,000 in respect of the
Canadian operations for 2003 and 2002, respectively, and U.S. $151,063 and
$167,930 for other services during 2003 and 2002, respectively). There may
be conflicts of interest in allocating the time of our personnel between
our properties, the Canadian properties, and certain other Hughes Family
interests. The sharing of personnel and systems with the Canadian entities
was substantially discontinued by December 31, 2003.
On December 31, 2001, the Company purchased all of the capital
stock of PS Insurance Company from B. Wayne Hughes, who is Chairman, and at
the time was chief executive officer of the Company, and members of his
family. This acquisition is discussed more fully in Note 3.
In November 1999, we formed the Consolidated Development Joint
Venture with a joint venture partner whose partners include an
institutional investor and Mr. Hughes. This transaction is discussed more
fully in Note 9.
On December 31, 2001, the Company acquired equity interests in the
Consolidated Entities from Mr. Hughes for a cash price of $786,770, a price
representing the Hughes family's original cost in these equity interests.
This amount is included in the acquisition of minority interests described
as the "Other consolidated partnerships" in Note 9.
Other Related Party Transactions
--------------------------------
Ronald L. Havner, Jr. is our vice-chairman and chief executive
officer, and he is chairman of the board of PSB. Until August 2003, Mr.
Havner was also the Chief Executive Officer of PSB. For 2003 services, Mr.
Havner was compensated by PSB, as well as by the Company.
In January 2001, the Company repurchased 10,000 shares of common
stock from a corporation wholly-owned by a director of the Company for an
aggregate of $251,875 cash. In March 2001, the Company repurchased
2,619,893 shares of common stock from a limited liability company of which
a director of the Company was at the time of the transaction a controlling
member for an aggregate of $68,064,820 cash. In each transaction, the
purchase price approximated market value as of the date of each
transaction.
F-32
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
In December 2003, the Company loaned $100,000,000 to PSB. This
loan bore interest at the rate of 1.45% per year. This loan, which was
fully repaid on March 8, 2004, was included in Notes Receivable at
December 31, 2003. Also, in December 2001, the Company loaned $35,000,000
to PSB. This loan bore interest at the rate of 3.25% per year. This loan
was repaid in full on January 28, 2002.
In June 2002, we sold an undeveloped parcel of land at cost to PSB
for an aggregate of $1,100,000 cash.
PSB manages certain of the commercial facilities owned by the
Company pursuant to management agreements for a management fee equal to 5%
of revenues. The Company paid a total of $581,000, $578,000, and $642,000,
respectively, in 2003, 2002 and 2001 in management fees with respect to
PSB's property management services.
12. Stock-based compensation
Stock Options
-------------
The Company has a 1990 Stock Option Plan (the "1990 Plan") that
provides for the grant of non-qualified stock options. The Company has a
1994 Stock Option Plan (the "1994 Plan"), a 1996 Stock Option and Incentive
Plan (the "1996 Plan") and a 2000 Non-Executive/Non-Director Stock Option
and Incentive Plan (the "2000 Plan"), each of which provides for the grant
of non-qualified options and incentive stock options. (The 1990 Plan, the
1994 Plan, the 1996 Plan and the 2000 Plan are collectively referred to as
the "PSI Plans"). Under the PSI Plans, the Company has granted
non-qualified options to certain directors, officers and key employees to
purchase shares of the Company's common stock at a price equal to the fair
market value of the common stock at the date of grant. Generally, options
under the Plans vest over a three-year period from the date of grant at the
rate of one-third per year and expire (i) under the 1990 Plan, five years
after the date they became exercisable and (ii) under the 1994 Plan, the
1996 Plan and the 2000 Plan, ten years after the date of grant. The 1996
Plan and the 2000 Plan also provide for the grant of restricted stock to
officers, key employees and service providers on terms determined by an
authorized committee of the Board of Directors; no shares of restricted
stock have been granted. In connection with the Storage Trust merger in
March 1999, we assumed the outstanding non-qualified options under the
Storage Trust Realty 1994 Share Incentive Plan (the "Storage Trust Plan"),
which were converted into non-qualified options to purchase our common
stock (the PSI Plans and the Storage Trust Plan are collectively referred
to as the "Plans.")
Information with respect to the Plans during 2003, 2002 and 2001
is as follows:
2003 2002 2001
-------------------------- ------------------------- --------------------------
Number Average Number Average Number Average
of Price per of Price per of Price per
Options Share Options Share Options Share
----------- ---------- ------------ ----------- ------------ ----------
Options outstanding January 1 5,939,224 $25.79 6,677,334 $24.81 6,412,576 $23.65
Granted 272,500 34.50 792,000 33.20 1,776,500 27.93
Exercised (2,743,420) 24.85 (948,932) 24.59 (704,901) 22.50
Canceled (379,686) 28.33 (581,178) 26.61 (806,841) 24.51
----------- ---------- ------------ ----------- ------------ ----------
Options outstanding December 31 3,088,618 $27.14 5,939,224 $25.79 6,677,334 $24.81
========== =========== ==========
$14.88 $14.88 $14.88
Option price range at December 31 (a) to $39.23 to $37.40 to $34.68
Option excercisable at December 31 2,305,868 $25.24 3,666,641 $24.46 2,618,889 $24.14
=========== ========== ============ ========== ============ ==========
Options available for grant at
December 31 4,459,876 4,352,690 4,563,512
=========== ============ ============
(a) Approximately 2,159,944, 5,059,000, and 6,532,334 of options outstanding at
December 31, 2003, 2002 and 2001, had exercise prices less than $30.
F-33
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
Accounting principles generally accepted in the United States
permit, but do not require, companies to recognize compensation expense for
stock-based awards based on their fair value at date of grant, which is
then amortized as compensation expense over the vesting period (the "Fair
Value Method"). Companies can also elect to disclose, but not recognize as
an expense, stock option expense when stock options are granted to
employees at an exercise price equal to the market price at the date of
grant (the "APB 25 Method").
For periods prior to December 31, 2001, we utilized the APB 25
Method of accounting for employee stock options. As of January 1, 2002, we
adopted the Fair Value Method, and have elected to use the prospective
method of transition, whereby the Company applies the recognition
provisions of the Fair Value Method to all stock options granted after the
beginning of the fiscal year in which the Company adopts such method.
Accordingly, we recognize compensation expense in our income statement
using the Fair Value Method only with respect to stock options issued after
January 1, 2002.
The following table sets forth financial disclosures with respect
to the accounting for stock options:
For the years ended December 31,
----------------------------------------------------
Selected information with respect to employee stock options 2003 2002 2001
------------ ----------- ----------
Average estimated value per option granted, utilizing the
Black-Scholes method.............................................. $1.95 $1.86 $1.48
Assumptions used in valuing options with the Black-Scholes method:
Expected life of options in years............................. 5 5 5
Risk-free interest rate....................................... 3.0% 3.2% 4.1%
Expected volatility........................................... 0.180 0.170 0.155
Expected dividend yield....................................... 7.0% 7.0% 7.0%
Net income information with respect to each year
Net income, as reported........................................... $336,653 $318,738 $324,208
Add back: stock-based employee compensation expense included in net
income......................................................... 530 163 -
Less: stock-based employee compensation cost that would have been
included if the fair value method were applied for all awards.. (3,311) (3,595) (4,176)
------------ ----------- ----------
Net income, assuming consistent application of the fair value method
$333,872 $315,306 $320,032
============ =========== ==========
Earnings per share, as reported:
Basic ......................................................... $1.29 $1.15 $1.41
Diluted........................................................ $1.28 $1.14 $1.39
Earnings per share, assuming consistent application of the fair value
method
Basic ......................................................... $1.27 $1.12 $1.37
Diluted........................................................ $1.26 $1.11 $1.36
F-34
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
Restricted Stock Units
----------------------
Restricted stock units vest over a five-year period from the date
of grant at the rate of one-fifth per year. The employee is entitled to
receive per-unit dividends on the outstanding restricted stock units equal
to the per-share dividends received by the common shares. Upon vesting, the
employee receives either regular common shares equal to the number of
vested restricted stock units in exchange for the units or, at the
employee's option, the equivalent in cash. The total value of each
restricted stock unit grant, based upon the market price of the Company's
common stock at the date of grant, combined with the estimated payroll
taxes and other payroll burden costs to be incurred upon vesting, is
amortized over the vesting period as compensation expense and accrued as a
liability. Any changes in the market price of the Company's common stock
price are reflected prospectively as adjustments to compensation expense
with respect to unvested restricted stock units over the applicable
remaining service period. Dividends paid on restricted stock units are
accounted for as dividends on common stock. Outstanding restricted stock
units are included on a one-for-one basis in the Company's diluted weighted
average shares, less a reduction for the treasury stock method applied to
the average cumulative measured but unrecognized compensation expense
during the period.
Throughout 2003, the Company granted a total of 249,000 restricted
stock units to employees of the Company. The fair market value of the grant
was approximately $10,804,000 based upon a closing price of $43.39 per
common share on December 31, 2003. A total of $970,000 in restricted stock
expense was recorded in the year ended December 31, 2003, representing the
applicable amortization of the 249,000 unit grant.
13. Disclosures regarding segment reporting
Description of each reportable segment
--------------------------------------
Our reportable segments reflect significant operating activities
that are evaluated separately by management. We have four reportable
segments: self-storage operations, containerized storage operations,
commercial property operations, and tenant reinsurance operations.
The self-storage segment comprises the direct ownership,
development, and operation of traditional storage facilities, and the
ownership of equity interests in entities that own storage properties. The
containerized storage operations represent another segment. The commercial
property segment reflects our interest in the ownership, operation, and
management of commercial properties. The vast majority of the commercial
property operations are conducted through PSB, and to a much lesser extent
the Company and certain of its unconsolidated subsidiaries own commercial
space, managed by PSB, within facilities that combine storage and
commercial space for rent. The tenant reinsurance segment reflects the
operations of PS Insurance Company, which reinsures policies against losses
to goods stored by tenants in our self-storage facilities
Measurement of segment profit or loss
-------------------------------------
We evaluate performance and allocate resources based upon the net
segment income of each segment. Net segment income represents net income in
conformity with accounting principles generally accepted in the United
States and our significant accounting policies as denoted in Note 2, before
interest and other income, interest expense, corporate general and
administrative expense, and minority interest in income. The accounting
policies of the reportable segments are the same as those described in the
Summary of Significant Accounting Policies.
Interest and other income, interest expense, corporate general and
administrative expense, minority interest in income and gains and losses
are not allocated to segments because management does not utilize them to
evaluate the results of operations of each segment.
F-35
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
Measurement of segment assets
-----------------------------
No segment data relative to assets or liabilities is presented,
because management does not consider the historical cost of the Company's
real estate facilities and investments in real estate entities in
evaluating the performance of operating management or in evaluating
alternative courses of action. The only other types of assets that might be
allocated to individual segments are trade receivables, payables, and other
assets that arise in the ordinary course of business, but they are also not
a significant factor in the measurement of segment performance.
Presentation of segment information
-----------------------------------
Our income statement provides most of the information required in
order to determine the performance of each of the Company's three segments.
The following tables reconcile the performance of each segment, in terms of
segment revenues and segment income, to our consolidated revenues and net
income. It further provides detail of the segment components of the income
statement item, "Equity in earnings of real estate entities."
The following table reconciles revenue by segment to the Company's
consolidated revenues:
Reconciliation of Revenues by Segment Years Ended December 31, Years Ended December 31,
- ------------------------------------- -------------------------------------------- ---------------------------------------------
2003 2002 Change 2002 2001 Change
------------ ------------- ------------- ------------- ------------ -------------
(amounts in thousands)
Self-storage facility rentals....... $ 798,584 $ 761,446 $ 37,138 $ 761,446 $ 719,765 $ 41,681
Commercial property rentals......... 11,442 11,781 (339) 11,781 12,070 (289)
Containerized storage rentals....... 33,953 29,723 4,230 29,723 28,474 1,249
Tenant re-insurance premiums........ 22,464 19,947 2,517 19,947 - 19,947
Interest and other income (not
allocated to segments)............ 8,628 8,661 (33) 8,661 14,225 (5,564)
------------ ------------- ------------- ------------- ------------ -------------
Total revenues.................. $ 875,071 $ 831,558 $ 43,513 $ 831,558 $ 774,534 $ 57,024
============ ============= ============= ============= ============ =============
F-36
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
The following table sets forth a reconciliation of each segment's
net income to the Company's consolidated net income:
Year Ended December 31, Year Ended December 31,
------------------------------------- ---------------------------------------
2003 2002 Change 2002 2001 Change
-------------- ----------- --------- -------------- ----------- -----------
(Dollar amounts in thousands)
Reconciliation of Net Income by Segment:
Self-storage
Self-storage net operating income......... $517,679 $511,231 $6,448 $511,231 $491,323 $19,908
Self-storage depreciation................. (176,929) (170,887) (6,042) (170,887) (157,953) (12,934)
Equity in earnings - storage property
operations............................. 6,288 5,992 296 5,992 22,047 (16,055)
Equity in earnings - depreciation
(self-storage) ........................ (1,705) (1,619) (86) (1,619) (7,562) 5,943
Discontinued self-storage operations...... 6,014 571 5,443 571 605 (34)
-------------- ----------- --------- -------------- ----------- -----------
Total self-storage segment net income. 351,347 345,288 6,059 345,288 348,460 (3,172)
-------------- ----------- --------- -------------- ----------- -----------
Commercial properties
Commercial properties..................... 6,754 7,319 (565) 7,319 8,209 (890)
Depreciation and amortization - commercial
properties............................. (2,535) (2,544) 9 (2,544) (2,569) 25
Equity in earnings - commercial property
operations............................. 64,242 65,212 (970) 65,212 52,200 13,012
Equity in earnings - depreciation
(commercial properties) ............... (26,048) (25,459) (589) (25,459) (17,534) (7,925)
Discontinued operations (Note 4) ......... - 77 (77) 77 233 (156)
-------------- ----------- --------- -------------- ----------- -----------
Total commercial property segment net
income............................... 42,413 44,605 (2,192) 44,605 40,539 4,066
-------------- ----------- --------- -------------- ----------- -----------
Containerized storage
Containerized storage net operating income 13,035 6,667 6,368 6,667 3,533 3,134
Containerized storage depreciation........ (6,311) (4,547) (1,764) (4,547) (4,392) (155)
Discontinued operations (Note 4) ......... (4,181) (12,178) 7,997 (12,178) (1,359) (10,819)
-------------- ----------- --------- -------------- ----------- -----------
Total containerized storage segment
net income/(loss).................. 2,543 (10,058) 12,601 (10,058) (2,218) (7,840)
-------------- ----------- --------- -------------- ----------- -----------
Tenant Reinsurance
Tenant reinsurance operating income.... 10,477 10,536 (59) 10,536 - 10,536
-------------- ----------- --------- -------------- ----------- -----------
Other items not allocated to segments
-------------------------------------
Equity in earnings - general and
administrative and other............... (17,811) (14,238) (3,573) (14,238) (10,609) (3,629)
Interest and other income................. 8,628 8,661 (33) 8,661 14,225 (5,564)
General and administrative ............... (17,127) (15,619) (1,508) (15,619) (21,038) 5,419
Interest expense.......................... (1,121) (3,809) 2,688 (3,809) (3,227) (582)
Minority interest in income .............. (43,703) (44,087) 384 (44,087) (46,015) 1,928
Gain/(loss) on disposition of real estate. 1,007 (2,541) 3,548 (2,541) 4,091 (6,632)
-------------- ----------- --------- -------------- ----------- -----------
Total other items not allocated to segments (70,127) (71,633) 1,506 (71,633) (62,573) (9,060)
-------------- ----------- --------- -------------- ----------- -----------
Total consolidated company net income $336,653 $318,738 $17,915 $318,738 $324,208 $ (5,470)
============== =========== ========= ============== =========== ===========
F-37
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
14. Events subsequent to December 31, 2003 (unaudited)
On January 30, 2004, we called for redemption all of the
outstanding shares of our 8.25% Cumulative Preferred Stock, Series L, at
$25 per share plus accrued dividends. The redemption was completed on
March 10, 2004.
On January 2, 2004, we issued in a private transaction 1,600,000
shares of our 6.850% Cumulative Preferred Stock, Series Y (par value
$40,000,000) On March 5, 2004, we issued 4,500,000 depositary shares, each
representing 1/1,000 of a share of our 6.250% Cumulative Preferred Stock,
Series Z (par value ($112,500,000).
On January 1, 2004, we entered into a joint venture with an
institutional investor for the purpose of acquiring up to $125.0 million of
existing self-storage properties in the United States from third parties.
The venture will be funded entirely with equity consisting of 30% from the
Company and 70% from the institutional investor. The venture has a
nine-month investment period (through September 2004) to identify and
acquire facilities. Through March 11, 2004, no facilities have been
acquired by the venture.
15. Recent accounting pronouncements and guidance
Accounting for Certain Financial Instruments with Characteristics of Both
----------------------------------------------------------------------------
Liabilities and Equity
----------------------
In May 2003, the FASB issued Statement of Financial Accounting
Standards No. 150 - "Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity" ("SFAS 150"). This
statement prescribes reporting standards for financial instruments that
have characteristics of both liabilities and equity. This standard
generally indicates that certain financial instruments that give the issuer
a choice of settling an obligation with a variable number of securities or
settling an obligation with a transfer of assets, any mandatory redeemable
security, and certain put options and forward purchase contracts, should be
classified as a liability on the balance sheet. With the exception of
minority interests, described below, we implemented this Statement on July
1, 2003, and the adoption had no impact on our financial statements.
The provisions of SFAS 150 indicate certain minority interests in
consolidated entities are to be classified as liabilities at fair value.
However, on October 29, 2003, the FASB decided to defer indefinitely the
implementation of SFAS 150 as it relates to these minority interests.
Assuming the FASB had not deferred the implementation of SFAS 150
as it relates to minority interests, the impact on the Company's balance
sheet at December 31, 2003 would have been to reclassify the Company's
minority interests described in Note 9 as the "Consolidated Development
Joint Venture and the "Other Consolidated Partnerships", as liabilities at
their estimated fair value. Such adoption would reduce the Company's common
minority interest by $134,878,000, and increase liabilities by
$317,763,000, representing the estimated settlement value of these minority
interests at December 31, 2003.
FASB Interpretation No. 46 - Consolidation of Variable Interest Entities
------------------------------------------------------------------------
In January 2003, the Financial Accounting Standards Board issued
FASB Interpretation No. 46 - "Consolidation of Variable Interest Entities,
an interpretation of Accounting Research Bulletin No. 51." This
interpretation explains how to identify variable interest entities and how
an enterprise assesses its interests in a variable interest entity to
decide whether to consolidate that entity. In general, a variable interest
entity is a corporation, partnership, trust, or any other legal structure
used for business purposes that either (a) does not have equity investors
with voting rights, or (b) has equity investors that do not provide
sufficient financial resources for the entity to support its activities.
This statement is applicable at the beginning of the Company's quarter
ended March 31, 2004. We do not believe that adoption of this accounting
standard will have an impact on our financial statements.
F-38
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
16. Commitments and Contingencies
LEGAL PROCEEDINGS
Serrao v. Public Storage, Inc. (filed April 2003) (Superior Court - Orange
----------------------------------------------------------------------------
County)
-------
The plaintiff in this case filed a suit against the Company on
behalf of a putative class of renters who rented self-storage units from
the Company. Plaintiff alleges that the Company misrepresented the size of
its storage units, has brought claims under California statutory and common
law relating to consumer protection, fraud, unfair competition, and
negligent misrepresentation, and is seeking monetary damages, restitution,
and declaratory and injunctive relief.
The claim in this case is substantially similar to those in
Henriquez v. Public Storage, Inc., which was disclosed in prior reports. In
January 2003, the plaintiff caused the Henriquez action to be dismissed.
Based upon the uncertainty inherent in any putative class action, the
Company cannot presently determine the potential damages, if any, or the
ultimate outcome of this litigation. On November 3, 2003, the court granted
the Company's motion to strike the plaintiff's nationwide class allegations
and to limit any putative class to California residents only. The Company
is vigorously contesting the claims upon which this lawsuit is based
including class certification efforts.
Salaam, et al v. Public Storage, Inc. (filed February 2000) (Superior Court
----------------------------------------------------------------------------
- Los Angeles County)
---------------------
The plaintiffs in this case are suing the Company on behalf of a
putative class of California resident property managers who claim that they
were not compensated for all the hours they worked. The named plaintiffs
have indicated that their claims total less than $20,000 in aggregate. On
December 1, 2003, the California Court of Appeals affirmed the Supreme
Court's 2002 denial of plaintiff's motion for class certification. The
maximum potential liability cannot be estimated, but can only be increased
if claims are permitted to be brought on behalf of others under the
California Unfair Business Practices Act. The affirmation of denial of
class certification does not address the claim under the California Unfair
Business Practices Act.
The Company is continuing to vigorously contest the claims in this
case and intends to resist any expansion beyond the named plaintiffs,
including by opposing claims on behalf of others under the California
Unfair Business Practices Act. The Company cannot presently determine the
potential damages, if any, or the ultimate outcome of this litigation.
Gustavson et al. v. Public Storage, Inc. (filed June 2003) (Superior
----------------------------------------------------------------------------
Court-Los Angeles County)
--------------------------
In November 2002, a shareholder of the Company made a demand on
the Board of Directors that challenged the fairness of the Company's
acquisition of PS Insurance Company, Ltd. ("PSIC") and demanded that the
Board recover the profits earned by PSIC from November 1995 through
December 2001 and that the entire purchase price paid by the Company for
PSIC in excess of PSIC's net assets be returned to the Company.
The contract to acquire PSIC was approved by the independent
directors of the Company in March 2001, and the transaction was closed in
December 2001. PSIC was formerly owned by B. Wayne Hughes, currently the
Chairman of the Board (and in 2001 also the Chief Executive Officer) of the
Company, B. Wayne Hughes, Jr., currently a director (and in 2001 also an
officer) of the Company and Tamara H. Gustavson, who in 2001 was an officer
of the Company. In exchange for the Hughes family's shares in PSIC, the
Company issued to them 1,439,765 shares of common stock (or a net of
1,138,733 shares, after taking into account 301,032 shares held by PSIC).
F-39
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
The shareholder has threatened litigation against the Hughes
family and the directors of the Company arising out of this transaction and
alleged a pattern of deceptive disclosures with respect to PSIC since 1995.
In December 2002, the Board held a special meeting to authorize an inquiry
by its independent directors to review the fairness to the Company's
shareholders of its acquisition of PSIC and the ability of the Company to
have started its own tenant reinsurance business in 1995. The Company
believes that, prior to the effectiveness in 2001 of the federal REIT
Modernization Act and corresponding California legislation that authorized
the creation and ownership of "taxable REIT subsidiaries," the ownership by
the Company of a reinsurance business relating to its tenants would have
jeopardized the Company's status as a REIT and that other REITs faced
similar concerns about tenant insurance programs.
In June 2003, the Hughes family filed a complaint for declaratory
relief relating to the Company's acquisition of PSIC naming the Company as
defendant. The Hughes family is seeking that the court make (i) a binding
declaration that the Company either is not entitled to recover profits or
other moneys earned by PSIC from November 1995 through December 2001; or
alternatively the amounts that the Hughes family should be ordered to
surrender to the Company if the court determines that the Company is
entitled to recover any such profits or moneys; and (ii) a binding
declaration either that the Company cannot establish that the acquisition
agreement was not just and reasonable as to the Company at the time it was
authorized, approved or ratified; or alternatively the amounts that the
Hughes family should surrender to the Company, if the court determines that
the agreement was not just and reasonable to the Company at that time. The
Hughes family is not seeking any payments from the Company. In the event of
a determination that the Hughes family is obligated to pay certain amounts
to the Company, the complaint states that they have agreed to be bound by
that determination to pay such amounts to the Company.
In July 2003 the Company filed an answer to the Hughes family's
complaint requesting a final judicial determination of the Company's rights
of recovery against the Hughes family in respect of PSIC. In September
2003, by order of the Superior Court, Malcolm Lucas, a former chief justice
of the California Supreme Court, was appointed to try the case. Discover is
proceeding and it is expected that in mid-2004, Mr. Lucas will set a trial
date for the matter. The Company believes that the lawsuit by the Hughes
family will ultimately resolve matters relating to PSIC and will not have
any financially adverse effect on the Company (other than the costs and
other expenses relating to the lawsuit).
Sale of Partnership Units
-------------------------
In February 2000, the Company entered into a settlement of
litigation arising out of a 1997 tender offer for limited partnership units
in two affiliated partnerships. Under the settlement agreement, the Company
agreed to sell to the plaintiff units representing a 4% interest in each of
the partnerships for a total payment of approximately $1,523,000. The
plaintiff failed to tender the full purchase price at the scheduled
closing, and the settlement collapsed.
In September 2000, the plaintiff amended its complaint to add a
claim for breach of the settlement agreement seeking specific enforcement
and a claim seeking damages for unfair and deceptive trade practices in
connection with the alleged breach. By amending the complaint the Company
believes the plaintiff elected to abandon its underlying claims in the
litigation. The Company asserted affirmative defenses including the
material breach by the plaintiff. Cross motions for summary judgment were
filed by the parties. In July 2002, the court granted plaintiff's motion
for summary judgment as to its claim for breach of the settlement agreement
and granted the Company's motion for summary judgment to dismiss
plaintiff's claim for unfair and deceptive trade practices.
F-40
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
In March 2003, the court granted plaintiff's motion to compel the
sale of the units to the plaintiff. On December 31, 2003, the Company sold
the units to the plaintiff for a total of $1,000,000. This amount reflects
the $1,523,000 original agreement with a credit to the plaintiff of a
portion of the partnership's distributions received by the Company with
respect to the units.
Other Items
-----------
The Company is a party to various claims, complaints, and other
legal actions that have arisen in the normal course of business from time
to time, that are not described above. We believe that it is unlikely that
the outcome of these other pending legal proceedings including employment
and tenant claims, in the aggregate, will have a material adverse impact
upon the operations or financial position of the Company.
INSURANCE AND LOSS EXPOURE
Our facilities have historically carried comprehensive insurance,
including fire, earthquake, liability and extended coverage through
STOR-Re, one of the Consolidated Entities, and insure portions of these
risks through nationally recognized insurance carriers. STOR-Re also
insures affiliates of the Company.
The Company, STOR-Re, and its affiliates' maximum aggregate annual
exposure for losses that are below the deductibles set forth in the
third-party insurance contracts, assuming multiple significant events
occur, is approximately $30 million. In addition, if losses exhaust the
third-party insurers' limit of coverage of $125,000,000 for property
coverage and $101,000,000 for general liability, our exposure could be
greater. These limits are higher than estimates of maximum probable losses
that could occur from individual catastrophic events (i.e. earthquake and
wind damage) determined in recent engineering and actuarial studies.
PS Insurance Company reinsures policies against claims for losses
to goods stored by tenants at our self-storage facilities (see Note 3).
PSIC reinsures its risks with third-party insurers from any individual
event that exceeds a loss of $500,000 up to the policy limit of
$10,000,000.
DEVELOPMENT OF REAL ESTATE FACILITIES
We currently have 38 projects in our development pipeline,
including 13 newly developed self-storage facilities, with total estimated
development costs of $156,336,000 (unaudited), of which $69,620,000 has
been spent at December 31, 2003. Development of these facilities is subject
to contingencies.
F-41
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
17. Supplementary quarterly financial data (unaudited)
Three months ended
--------------------------------------------------------------
March 31, June 30, September 30, December 31,
2003 2003 2003 2003
------------ ------------ ------------ ------------
(in thousands, except per share data)
Revenues (a)..................... $ 206,866 $ 217,114 $ 227,955 $ 223,136
============ ============ ============ ============
Cost of operations (a)........... $ 74,041 $ 79,912 $ 80,890 $ 83,655
============ ============ ============ ============
Net income....................... $ 76,639 $ 84,297 $ 89,747 $ 85,970
============ ============ ============ ============
Per Common Share (Note 2):
Net income - Basic........... $ 0.25 $ 0.34 $ 0.39 $ 0.31
============ ============ ============ ============
Net income - Diluted......... $ 0.26 $ 0.33 $ 0.39 $ 0.30
============ ============ ============ ============
Three months ended
--------------------------------------------------------------
March 31, June 30, September 30, December 31,
2002 2002 2002 2002
------------ ------------ ------------ ------------
(in thousands, except per share data)
Revenues (a)..................... $ 203,992 $ 206,391 $ 214,484 $ 206,691
============ ============ ============ ============
Cost of operations (a)........... $ 65,302 $ 69,156 $ 72,610 $ 80,076
============ ============ ============ ============
Net income....................... $ 87,455 $ 80,718 $ 83,351 $ 67,214
============ ============ ============ ============
Per Common Share (Note 2):
Net income - Basic............ $ 0.38 $ 0.30 $ 0.27 $ 0.20
============ ============ ============ ============
Net income - Diluted.......... $ 0.37 $ 0.30 $ 0.27 $ 0.20
============ ============ ============ ============
(a) Revenues and cost of operations as presented in this table differ
from the revenue and cost of operations as presented in the Company's
quarterly reports due primarily to the impact of discontinued operations
accounting with respect to certain containerized storage facilities that
were closed in 2003, as described in Note 4 and from the impact of the
application EITF Topic D-42 in September 2003.
F-42
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority -
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------ -
Miniwarehouses
1/1/81 VirginiaBeach/DiamondSprings 384,000 186,000 1,094,000 679,000 -
1/1/81 NewportNews/JeffersonAvenue 330,000 108,000 1,071,000 613,000 -
8/1/81 SanJose/Snell - 312,000 1,815,000 404,000 -
10/1/81 Tampa/LazyLane - 282,000 1,899,000 652,000 -
6/1/82 MountainView 837,000 1,180,000 1,182,000 566,000 -
6/1/82 Cupertino/Storage 659,000 572,000 1,270,000 514,000 -
6/1/82 SanCarlos/Storage 580,000 780,000 1,387,000 593,000 -
6/1/82 SanJose/Tully 484,000 645,000 1,579,000 12,131,000 -
10/1/82 Northwood 899,000 1,034,000 1,522,000 358,000 -
10/1/82 SorrentoValley 593,000 1,002,000 1,343,000 (805,000) -
12/1/82 Port/Halsey - 357,000 1,150,000 (393,000) 326,000
12/1/82 Sacto/Folsom - 396,000 329,000 672,000 323,000
1/1/83 Platte - 409,000 953,000 473,000 428,000
1/1/83 Raleigh/Yonkers - 203,000 914,000 462,000 425,000
1/1/83 Semoran - 442,000 1,882,000 6,156,000 720,000
3/1/83 Blackwood - 213,000 1,559,000 312,000 595,000
4/1/83 Vailsgate - 103,000 990,000 453,000 505,000
5/1/83 DeltaDrive - 67,000 481,000 233,000 241,000
6/1/83 Ventura - 658,000 1,734,000 231,000 583,000
9/1/83 Dover - 107,000 1,462,000 482,000 627,000
9/1/83 Ft.Wayne/Bluffton - 88,000 675,000 205,000 285,000
9/1/83 Ft.Wayne/W.Coliseum - 160,000 1,395,000 334,000 535,000
9/1/83 Hobart - 215,000 1,491,000 656,000 838,000
9/1/83 Langhorne - 263,000 3,549,000 530,000 1,445,000
9/1/83 Newark - 208,000 2,031,000 354,000 746,000
9/1/83 Newcastle - 227,000 2,163,000 452,000 817,000
9/1/83 Southhampton - 331,000 1,738,000 677,000 806,000
9/1/83 Southington - 124,000 1,233,000 355,000 546,000
9/1/83 Webster/Keystone - 449,000 1,688,000 733,000 813,000
10/1/83 OrlandoJ.Y.Parkway - 383,000 1,512,000 424,000 622,000
11/1/83 Aurora - 505,000 758,000 348,000 341,000
11/1/83 Campbell - 1,379,000 1,849,000 (483,000) 474,000
11/1/83 ColSprings/Ed - 471,000 1,640,000 206,000 554,000
11/1/83 ColSprings/Mv - 320,000 1,036,000 270,000 441,000
11/1/83 OklahomaCity - 454,000 1,030,000 885,000 620,000
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
- --------------- -------------- -------------- -------------
186,000 1,773,000 1,959,000 1,547,000
108,000 1,684,000 1,792,000 1,476,000
312,000 2,219,000 2,531,000 1,958,000
282,000 2,551,000 2,833,000 2,202,000
1,181,000 1,747,000 2,928,000 1,507,000
572,000 1,784,000 2,356,000 1,447,000
780,000 1,980,000 2,760,000 1,662,000
4,525,000 9,830,000 14,355,000 2,466,000
1,034,000 1,880,000 2,914,000 1,513,000
651,000 889,000 1,540,000 742,000
357,000 1,083,000 1,440,000 725,000
396,000 1,324,000 1,720,000 906,000
409,000 1,854,000 2,263,000 1,180,000
203,000 1,801,000 2,004,000 1,253,000
442,000 8,758,000 9,200,000 2,424,000
213,000 2,466,000 2,679,000 1,597,000
103,000 1,948,000 2,051,000 1,299,000
68,000 954,000 1,022,000 630,000
658,000 2,548,000 3,206,000 1,636,000
107,000 2,571,000 2,678,000 1,651,000
88,000 1,165,000 1,253,000 742,000
160,000 2,264,000 2,424,000 1,422,000
215,000 2,985,000 3,200,000 1,927,000
263,000 5,524,000 5,787,000 3,559,000
208,000 3,131,000 3,339,000 1,995,000
227,000 3,432,000 3,659,000 2,204,000
331,000 3,221,000 3,552,000 2,112,000
123,000 2,135,000 2,258,000 1,349,000
449,000 3,234,000 3,683,000 2,162,000
383,000 2,558,000 2,941,000 1,622,000
505,000 1,447,000 1,952,000 910,000
1,380,000 1,839,000 3,219,000 1,176,000
471,000 2,400,000 2,871,000 1,551,000
320,000 1,747,000 2,067,000 1,129,000
454,000 2,535,000 2,989,000 1,616,000
F-43
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
11/1/83 Thorton - 418,000 1,400,000 153,000 536,000
11/1/83 Tucson - 343,000 778,000 651,000 420,000
11/1/83 Webster/Nasa - 1,570,000 2,457,000 1,110,000 1,372,000
12/1/83 Augusta - 97,000 747,000 365,000 324,000
12/1/83 Charlotte - 165,000 1,274,000 486,000 442,000
12/1/83 Columbia - 171,000 1,318,000 520,000 492,000
12/1/83 Greensboro/Electra - 112,000 869,000 388,000 382,000
12/1/83 Greensboro/Market - 214,000 1,653,000 700,000 794,000
12/1/83 Richmond - 176,000 1,360,000 478,000 468,000
12/1/83 Tacoma - 553,000 1,173,000 480,000 487,000
1/1/84 Belton - 175,000 858,000 713,000 378,000
1/1/84 Fremont/Albrae - 636,000 1,659,000 502,000 532,000
1/1/84 Gladstone - 275,000 1,799,000 560,000 640,000
1/1/84 Hickman/112 - 257,000 1,848,000 484,000 618,000
1/1/84 Holmes - 289,000 1,333,000 415,000 455,000
1/1/84 Independence - 221,000 1,848,000 391,000 609,000
1/1/84 Merriam - 255,000 1,469,000 440,000 480,000
1/1/84 Olathe - 107,000 992,000 371,000 361,000
1/1/84 Shawnee - 205,000 1,420,000 487,000 502,000
1/1/84 Topeka - 75,000 1,049,000 295,000 356,000
3/1/84 Manassas - 320,000 1,556,000 432,000 553,000
3/1/84 Marrietta/Cobb - 73,000 542,000 350,000 259,000
3/1/84 PicoRivera - 743,000 807,000 370,000 321,000
4/1/84 Milwaukie/Oregon - 289,000 584,000 289,000 311,000
4/1/84 Providence - 92,000 1,087,000 439,000 423,000
5/1/84 Garland - 356,000 844,000 248,000 360,000
5/1/84 Philadelphia/Grant - 1,041,000 3,262,000 592,000 971,000
5/1/84 Raleigh/Departure - 302,000 2,484,000 548,000 788,000
5/1/84 VirginiaBeach - 509,000 2,121,000 747,000 776,000
6/1/84 Baltimore - 382,000 1,793,000 892,000 634,000
6/1/84 Cincinnati - 402,000 1,573,000 649,000 672,000
6/1/84 Delran - 279,000 1,472,000 363,000 573,000
6/1/84 Florence - 185,000 740,000 492,000 376,000
6/1/84 Laurel - 501,000 2,349,000 739,000 824,000
6/1/84 Lorton - 435,000 2,040,000 571,000 682,000
6/1/84 OrangeBlossom - 226,000 924,000 268,000 398,000
7/1/84 Trevose/OldLincoln - 421,000 1,749,000 451,000 582,000
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
418,000 2,089,000 2,507,000 1,353,000
343,000 1,849,000 2,192,000 1,149,000
1,572,000 4,937,000 6,509,000 3,256,000
97,000 1,436,000 1,533,000 966,000
165,000 2,202,000 2,367,000 1,477,000
171,000 2,330,000 2,501,000 1,597,000
112,000 1,639,000 1,751,000 1,105,000
214,000 3,147,000 3,361,000 2,145,000
176,000 2,306,000 2,482,000 1,518,000
553,000 2,140,000 2,693,000 1,423,000
175,000 1,949,000 2,124,000 1,286,000
636,000 2,693,000 3,329,000 1,848,000
275,000 2,999,000 3,274,000 1,986,000
257,000 2,950,000 3,207,000 1,999,000
289,000 2,203,000 2,492,000 1,467,000
221,000 2,848,000 3,069,000 1,920,000
255,000 2,389,000 2,644,000 1,608,000
107,000 1,724,000 1,831,000 1,155,000
205,000 2,409,000 2,614,000 1,606,000
75,000 1,700,000 1,775,000 1,127,000
320,000 2,541,000 2,861,000 1,690,000
73,000 1,151,000 1,224,000 765,000
743,000 1,498,000 2,241,000 1,032,000
289,000 1,184,000 1,473,000 806,000
92,000 1,949,000 2,041,000 1,308,000
356,000 1,452,000 1,808,000 942,000
1,040,000 4,826,000 5,866,000 3,175,000
302,000 3,820,000 4,122,000 2,550,000
499,000 3,654,000 4,153,000 2,408,000
382,000 3,319,000 3,701,000 2,132,000
402,000 2,894,000 3,296,000 1,819,000
279,000 2,408,000 2,687,000 1,506,000
185,000 1,608,000 1,793,000 1,001,000
501,000 3,912,000 4,413,000 2,603,000
435,000 3,293,000 3,728,000 2,187,000
226,000 1,590,000 1,816,000 1,008,000
421,000 2,782,000 3,203,000 1,842,000
F-44
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
8/1/84 Kaplan/Irving - 677,000 1,592,000 4,646,000 639,000
8/1/84 Kaplan/WalnutHill - 971,000 2,359,000 896,000 1,041,000
8/1/84 Medley - 584,000 1,016,000 412,000 464,000
8/1/84 NewportNews - 356,000 2,395,000 731,000 1,013,000
8/1/84 OklahomaCity - 340,000 1,310,000 611,000 652,000
9/1/84 CockrellHill - 380,000 913,000 1,132,000 675,000
11/1/84 Hialeah - 886,000 1,784,000 389,000 672,000
11/1/84 Omaha - 109,000 806,000 528,000 399,000
12/1/84 Austin/Lamar - 643,000 947,000 550,000 443,000
12/1/84 FortWorth - 122,000 928,000 44,000 303,000
12/1/84 Montgomeryville - 215,000 2,085,000 420,000 776,000
12/1/84 Pompano - 399,000 1,386,000 679,000 698,000
1/1/85 BossierCity - 184,000 1,542,000 558,000 656,000
1/1/85 Cranston - 175,000 722,000 347,000 267,000
2/1/85 Hurst - 231,000 1,220,000 249,000 480,000
2/1/85 SimiValley - 737,000 1,389,000 360,000 520,000
3/1/85 Houston/Westheimer 286,000 850,000 1,179,000 791,000 -
3/1/85 Chattanooga - 202,000 1,573,000 520,000 683,000
3/1/85 Fairfield - 338,000 1,187,000 522,000 527,000
3/1/85 FernPark - 144,000 1,107,000 273,000 432,000
3/1/85 Portland - 285,000 941,000 335,000 438,000
4/1/85 Austin/S.First - 778,000 1,282,000 379,000 711,000
4/1/85 Cincinnati/Colerain - 253,000 1,717,000 423,000 932,000
4/1/85 Cincinnati/E.Kemper - 232,000 1,573,000 331,000 853,000
4/1/85 Florence/TannerLane - 218,000 1,477,000 416,000 835,000
4/1/85 LagunaHills - 1,224,000 3,303,000 445,000 1,213,000
5/1/85 Arlington - 201,000 1,497,000 480,000 618,000
5/1/85 Columbus/BuschBlvd. - 202,000 1,559,000 448,000 592,000
5/1/85 Columbus/KinnearRd. - 241,000 1,865,000 416,000 771,000
5/1/85 Longwood - 355,000 1,645,000 323,000 669,000
5/1/85 Manchester/S.Willow - 371,000 2,129,000 (112,000) 854,000
5/1/85 Milwaukie/Mcloughlin - 458,000 742,000 421,000 620,000
5/1/85 Tacoma/PhillipsRd. - 396,000 1,204,000 319,000 669,000
5/1/85 Worthington - 221,000 1,824,000 424,000 709,000
6/1/85 GroveCity/MarlaneDrive - 150,000 1,157,000 419,000 471,000
6/1/85 N.Hollywood/Raymer - 967,000 848,000 269,000 515,000
6/1/85 Reynoldsburg - 204,000 1,568,000 482,000 598,000
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
- - -------------- -------------- -------------- -------------
678,000 6,876,000 7,554,000 2,054,000
971,000 4,296,000 5,267,000 2,719,000
584,000 1,892,000 2,476,000 1,192,000
356,000 4,139,000 4,495,000 2,623,000
340,000 2,573,000 2,913,000 1,607,000
380,000 2,720,000 3,100,000 1,737,000
886,000 2,845,000 3,731,000 1,781,000
109,000 1,733,000 1,842,000 1,103,000
643,000 1,940,000 2,583,000 1,171,000
122,000 1,275,000 1,397,000 811,000
215,000 3,281,000 3,496,000 2,011,000
399,000 2,763,000 3,162,000 1,730,000
184,000 2,756,000 2,940,000 1,694,000
175,000 1,336,000 1,511,000 871,000
231,000 1,949,000 2,180,000 1,218,000
737,000 2,269,000 3,006,000 1,401,000
850,000 1,970,000 2,820,000 1,461,000
202,000 2,776,000 2,978,000 1,691,000
338,000 2,236,000 2,574,000 1,331,000
144,000 1,812,000 1,956,000 1,106,000
285,000 1,714,000 1,999,000 1,044,000
778,000 2,372,000 3,150,000 1,322,000
253,000 3,072,000 3,325,000 1,658,000
232,000 2,757,000 2,989,000 1,498,000
218,000 2,728,000 2,946,000 1,477,000
1,225,000 4,960,000 6,185,000 3,070,000
201,000 2,595,000 2,796,000 1,569,000
202,000 2,599,000 2,801,000 1,541,000
241,000 3,052,000 3,293,000 1,838,000
355,000 2,637,000 2,992,000 1,625,000
371,000 2,871,000 3,242,000 1,567,000
458,000 1,783,000 2,241,000 977,000
396,000 2,192,000 2,588,000 1,187,000
221,000 2,957,000 3,178,000 1,773,000
150,000 2,047,000 2,197,000 1,224,000
967,000 1,632,000 2,599,000 916,000
204,000 2,648,000 2,852,000 1,573,000
F-45
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
7/1/85 Columbus/KenneyRd. - 199,000 1,531,000 457,000 598,000
7/1/85 Columbus/MorseRd. - 195,000 1,510,000 439,000 670,000
7/1/85 Concord/Hwy29 - 150,000 750,000 405,000 587,000
7/1/85 Dayton/ExecutiveBlvd. - 160,000 1,207,000 459,000 569,000
7/1/85 Dayton/NeedmoreRoad - 144,000 1,108,000 446,000 460,000
7/1/85 Lilburn - 331,000 969,000 252,000 424,000
7/1/85 SanDiego/KearnyMesaRd - 783,000 1,750,000 349,000 962,000
7/1/85 Scottsdale/70thSt - 632,000 1,368,000 366,000 742,000
7/1/85 Springfield - 90,000 699,000 376,000 332,000
7/1/85 Westerville - 199,000 1,517,000 619,000 620,000
9/1/85 Columbus/Sinclair - 307,000 893,000 369,000 519,000
9/1/85 Madison/CoppsAve. - 450,000 1,150,000 437,000 665,000
9/1/85 Philadelphia/TaconySt - 118,000 1,782,000 300,000 856,000
10/1/85 Columbus/Ambleside - 124,000 1,526,000 39,000 644,000
10/1/85 Dallas/AlvinSt. - 359,000 1,266,000 181,000 559,000
10/1/85 Dallas/S.Westmoreland - 474,000 1,670,000 207,000 734,000
10/1/85 FortWorth/CockrellSt. - 323,000 1,136,000 181,000 515,000
10/1/85 FortWorth/E.Seminary - 382,000 1,346,000 213,000 552,000
10/1/85 FortWorth/W.BeachSt. - 356,000 1,252,000 212,000 531,000
10/1/85 Hartford/Roberts - 219,000 1,481,000 386,000 966,000
10/1/85 Indianapolis/BeachGrove - 198,000 1,342,000 276,000 709,000
10/1/85 Indianapolis/PikePlace - 229,000 1,531,000 378,000 856,000
10/1/85 Joplin/S.RangeLine - 264,000 904,000 229,000 465,000
10/1/85 N.Hollywood/Whitsett - 1,524,000 2,576,000 383,000 1,302,000
10/1/85 Portland/SE82ndSt - 354,000 496,000 356,000 380,000
10/1/85 SanAntonio/Callaghan - 288,000 1,016,000 470,000 543,000
10/1/85 SanAntonio/Fredericksburg - 287,000 1,009,000 595,000 597,000
10/1/85 SanAntonio/Hackberry - 388,000 1,367,000 2,521,000 1,001,000
10/1/85 SanAntonio/WetmoreRd. - 306,000 1,079,000 611,000 638,000
10/1/85 SanAntonio/Zarzamora - 364,000 1,281,000 644,000 674,000
10/1/85 Wichita/CareyLane - 192,000 674,000 45,000 296,000
10/1/85 Wichita/E.Harry - 313,000 1,050,000 157,000 468,000
10/1/85 Wichita/E.Kellogg - 185,000 658,000 (21,000) 261,000
10/1/85 Wichita/E.Macarthur - 220,000 775,000 (92,000) 323,000
10/1/85 Wichita/S.RockRd. - 501,000 1,478,000 260,000 657,000
10/1/85 Wichita/S.Tyler - 294,000 1,004,000 116,000 530,000
10/1/85 Wichita/S.Woodlawn - 263,000 905,000 158,000 437,000
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
199,000 2,586,000 2,785,000 1,561,000
195,000 2,619,000 2,814,000 1,577,000
150,000 1,742,000 1,892,000 987,000
159,000 2,236,000 2,395,000 1,367,000
144,000 2,014,000 2,158,000 1,197,000
330,000 1,646,000 1,976,000 1,006,000
783,000 3,061,000 3,844,000 1,704,000
632,000 2,476,000 3,108,000 1,306,000
90,000 1,407,000 1,497,000 833,000
199,000 2,756,000 2,955,000 1,591,000
307,000 1,781,000 2,088,000 943,000
450,000 2,252,000 2,702,000 1,209,000
118,000 2,938,000 3,056,000 1,595,000
124,000 2,209,000 2,333,000 1,161,000
359,000 2,006,000 2,365,000 1,157,000
474,000 2,611,000 3,085,000 1,478,000
323,000 1,832,000 2,155,000 1,058,000
382,000 2,111,000 2,493,000 1,211,000
356,000 1,995,000 2,351,000 1,129,000
219,000 2,833,000 3,052,000 1,500,000
198,000 2,327,000 2,525,000 1,249,000
229,000 2,765,000 2,994,000 1,406,000
264,000 1,598,000 1,862,000 847,000
1,525,000 4,260,000 5,785,000 2,329,000
354,000 1,232,000 1,586,000 678,000
288,000 2,029,000 2,317,000 1,096,000
287,000 2,201,000 2,488,000 1,152,000
389,000 4,888,000 5,277,000 1,562,000
306,000 2,328,000 2,634,000 1,210,000
364,000 2,599,000 2,963,000 1,372,000
192,000 1,015,000 1,207,000 564,000
285,000 1,703,000 1,988,000 929,000
185,000 898,000 1,083,000 506,000
220,000 1,006,000 1,226,000 562,000
642,000 2,254,000 2,896,000 1,198,000
294,000 1,650,000 1,944,000 949,000
263,000 1,500,000 1,763,000 797,000
F-46
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
10/1/85 Wichita/W.Maple - 234,000 805,000 (46,000) 313,000
11/1/85 Everett/Evergreen - 706,000 2,294,000 624,000 1,076,000
11/1/85 Seattle/EmpireWay - 1,652,000 5,348,000 695,000 2,198,000
12/1/85 Amherst/NiagraFalls - 132,000 701,000 264,000 400,000
12/1/85 Brockton/Main - 153,000 2,020,000 (184,000) 678,000
12/1/85 Denver/Leetsdale - 603,000 847,000 265,000 408,000
12/1/85 Eatontown/Hwy35 - 308,000 4,067,000 498,000 1,648,000
12/1/85 MacArthurRd. - 204,000 1,628,000 203,000 638,000
12/1/85 Milpitas - 1,623,000 1,577,000 300,000 913,000
12/1/85 Pleasanton/SantaRita - 1,226,000 2,078,000 402,000 1,160,000
12/1/85 WestSamsBlvd. - 164,000 1,159,000 (240,000) 383,000
1/1/86 Bordentown/Groveville - 196,000 981,000 187,000 471,000
1/1/86 LasVegas/Highland - 432,000 848,000 288,000 420,000
1/1/86 Mapleshade/Rudderow - 362,000 1,811,000 360,000 825,000
1/1/86 SunValley/Sheldon - 544,000 1,836,000 375,000 793,000
2/1/86 Brea/ImperialHwy - 1,069,000 2,165,000 384,000 954,000
2/1/86 ColoradoSprings/Sinton - 535,000 1,115,000 393,000 631,000
2/1/86 CostaMesa/Pomona - 1,405,000 1,520,000 387,000 693,000
2/1/86 OklahomaCity/39th - 238,000 812,000 356,000 477,000
2/1/86 OklahomaCity/Penn - 146,000 829,000 165,000 406,000
2/1/86 Skokie/McCormick - 638,000 1,912,000 288,000 779,000
3/1/86 Jacksonville/Wiley - 140,000 510,000 297,000 331,000
3/1/86 St.Louis/Forder - 517,000 1,133,000 348,000 534,000
3/3/86 Tampa/56th 262,000 450,000 1,360,000 564,000 -
4/1/86 FortWorth/EastLoop - 196,000 804,000 270,000 369,000
4/1/86 Reno/Telegraph - 649,000 1,051,000 540,000 682,000
4/1/86 St.Louis/Kirkham - 199,000 1,001,000 238,000 401,000
4/1/86 St.Louis/Reavis - 192,000 958,000 216,000 384,000
5/1/86 Sacramento/FranklinBlvd. - 872,000 978,000 492,000 389,000
5/1/86 WestlakeVillage - 1,205,000 995,000 251,000 429,000
6/1/86 RichlandHills - 543,000 857,000 448,000 404,000
6/1/86 WestValley/So.3600 - 208,000 1,552,000 450,000 413,000
7/1/86 CapitalHeights/CentralAve. - 649,000 3,851,000 414,000 1,277,000
7/1/86 ColoradoSprings/HollowTree - 574,000 726,000 319,000 426,000
7/1/86 Pontiac/DixieHwy. - 259,000 2,091,000 171,000 756,000
7/1/86 Portland/JohnsLandingArea - 663,000 1,637,000 (16,000) 538,000
7/1/86 WestLA/PurdueAve. - 2,415,000 3,585,000 256,000 1,212,000
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
234,000 1,072,000 1,306,000 602,000
706,000 3,994,000 4,700,000 2,260,000
1,653,000 8,240,000 9,893,000 4,682,000
132,000 1,365,000 1,497,000 787,000
153,000 2,514,000 2,667,000 1,421,000
603,000 1,520,000 2,123,000 840,000
308,000 6,213,000 6,521,000 3,518,000
204,000 2,469,000 2,673,000 1,393,000
1,624,000 2,789,000 4,413,000 1,492,000
1,227,000 3,639,000 4,866,000 1,926,000
164,000 1,302,000 1,466,000 751,000
196,000 1,639,000 1,835,000 912,000
432,000 1,556,000 1,988,000 873,000
362,000 2,996,000 3,358,000 1,649,000
544,000 3,004,000 3,548,000 1,712,000
1,069,000 3,503,000 4,572,000 1,985,000
535,000 2,139,000 2,674,000 1,108,000
1,406,000 2,599,000 4,005,000 1,479,000
238,000 1,645,000 1,883,000 925,000
146,000 1,400,000 1,546,000 792,000
638,000 2,979,000 3,617,000 1,656,000
140,000 1,138,000 1,278,000 643,000
517,000 2,015,000 2,532,000 1,106,000
450,000 1,924,000 2,374,000 1,343,000
196,000 1,443,000 1,639,000 833,000
649,000 2,273,000 2,922,000 1,289,000
199,000 1,640,000 1,839,000 953,000
192,000 1,558,000 1,750,000 918,000
872,000 1,859,000 2,731,000 1,113,000
1,206,000 1,674,000 2,880,000 940,000
543,000 1,709,000 2,252,000 1,027,000
208,000 2,415,000 2,623,000 1,356,000
649,000 5,542,000 6,191,000 3,116,000
574,000 1,471,000 2,045,000 786,000
259,000 3,018,000 3,277,000 1,669,000
663,000 2,159,000 2,822,000 1,263,000
2,417,000 5,051,000 7,468,000 2,866,000
F-47
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
8/1/86 Hammond/Calumet - 97,000 751,000 541,000 366,000
8/1/86 Laurel/Ft.MeadeRd. - 475,000 1,475,000 317,000 630,000
9/1/86 KansasCity/S.44th. - 509,000 1,906,000 574,000 737,000
9/1/86 Lakewood/Wadsworth-6th - 1,070,000 3,155,000 684,000 1,027,000
10/1/86 Anniston/Whiteside - 59,000 566,000 206,000 329,000
10/1/86 Austin/ResearchBlvd. - 1,390,000 1,710,000 567,000 672,000
10/1/86 Birmingham/Centerpoint - 265,000 1,305,000 351,000 525,000
10/1/86 Birmingham/Eastwood - 166,000 1,184,000 327,000 612,000
10/1/86 Birmingham/Forestdale - 152,000 948,000 277,000 519,000
10/1/86 Birmingham/Greensprings - 347,000 1,173,000 366,000 281,000
10/1/86 Birmingham/Highland - 89,000 786,000 244,000 398,000
10/1/86 Birmingham/Hoover-Lorna - 372,000 1,128,000 406,000 431,000
10/1/86 Birmingham/Riverchase - 262,000 1,338,000 464,000 645,000
10/1/86 Birmingham/RoebuckPlaza - 101,000 399,000 310,000 425,000
10/1/86 Houston/LongPoint - 451,000 1,187,000 626,000 563,000
10/1/86 Houston/NorthFreeway - 719,000 1,987,000 83,000 609,000
10/1/86 Houston/OldKatyRoad - 1,365,000 3,431,000 1,064,000 1,274,000
10/1/86 Houston/PlainfieldRoad - 904,000 2,319,000 789,000 920,000
10/1/86 Houston/SouthLoopWest - 1,299,000 3,491,000 1,259,000 1,366,000
10/1/86 Houston/Gessner - 1,032,000 1,693,000 976,000 746,000
10/1/86 Houston/Glenvista - 595,000 1,043,000 673,000 494,000
10/1/86 Houston/Gulfton - 1,732,000 3,036,000 1,099,000 1,398,000
10/1/86 Houston/I-45 - 704,000 1,146,000 804,000 604,000
10/1/86 Houston/Richmond-Fairdale - 1,502,000 2,506,000 1,125,000 1,160,000
10/1/86 Houston/Rogerdale - 1,631,000 2,792,000 666,000 1,232,000
10/1/86 Houston/Westpark - 503,000 854,000 223,000 435,000
10/1/86 Huntsville/Drake - 253,000 1,172,000 301,000 538,000
10/1/86 Huntsville/LeemanFerryRd. - 158,000 992,000 307,000 558,000
10/1/86 Jonesboro - 157,000 718,000 252,000 370,000
10/1/86 Midfield/Bessemer - 170,000 355,000 358,000 112,000
10/1/86 Peralta/Fremont - 851,000 1,074,000 321,000 456,000
11/1/86 Arleta/OsborneStreet - 987,000 663,000 275,000 290,000
12/1/86 Denver/SheridanBoulevard - 1,033,000 2,792,000 941,000 1,007,000
12/1/86 Gresham/Burnside&202nd - 351,000 1,056,000 407,000 482,000
12/1/86 Hillsboro/T.V.Highway - 461,000 574,000 271,000 414,000
12/1/86 Lynnwood/196thStreet - 1,063,000 1,602,000 5,865,000 571,000
12/1/86 Marietta/CobbParkway - 536,000 2,764,000 773,000 1,016,000
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
97,000 1,658,000 1,755,000 951,000
475,000 2,422,000 2,897,000 1,345,000
509,000 3,217,000 3,726,000 1,821,000
1,070,000 4,866,000 5,936,000 2,898,000
107,000 1,053,000 1,160,000 627,000
1,391,000 2,948,000 4,339,000 1,769,000
273,000 2,173,000 2,446,000 1,196,000
232,000 2,057,000 2,289,000 1,156,000
190,000 1,706,000 1,896,000 948,000
16,000 2,151,000 2,167,000 1,197,000
150,000 1,367,000 1,517,000 815,000
266,000 2,071,000 2,337,000 1,145,000
278,000 2,431,000 2,709,000 1,391,000
340,000 895,000 1,235,000 511,000
451,000 2,376,000 2,827,000 1,504,000
661,000 2,737,000 3,398,000 1,684,000
1,366,000 5,768,000 7,134,000 3,539,000
904,000 4,028,000 4,932,000 2,430,000
1,300,000 6,115,000 7,415,000 3,685,000
1,032,000 3,415,000 4,447,000 2,019,000
595,000 2,210,000 2,805,000 1,228,000
1,733,000 5,532,000 7,265,000 3,145,000
704,000 2,554,000 3,258,000 1,579,000
1,503,000 4,790,000 6,293,000 2,738,000
1,632,000 4,689,000 6,321,000 2,593,000
503,000 1,512,000 2,015,000 843,000
248,000 2,016,000 2,264,000 1,113,000
198,000 1,817,000 2,015,000 1,048,000
157,000 1,340,000 1,497,000 771,000
95,000 900,000 995,000 493,000
851,000 1,851,000 2,702,000 1,043,000
987,000 1,228,000 2,215,000 743,000
1,033,000 4,740,000 5,773,000 2,736,000
351,000 1,945,000 2,296,000 1,167,000
461,000 1,259,000 1,720,000 852,000
1,307,000 7,794,000 9,101,000 2,059,000
536,000 4,553,000 5,089,000 2,691,000
F-48
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
12/1/86 N.Auburn/AuburnWayN. - 606,000 1,144,000 438,000 533,000
12/1/86 SanAntonio/WestSunsetRoad - 1,206,000 1,594,000 565,000 649,000
12/31/86 Northridge 991,000 3,624,000 1,922,000 2,496,000 -
12/31/86 Monrovia/MyrtleAvenue 660,000 1,149,000 2,446,000 203,000 -
12/31/86 Chatsworth/Topanga 447,000 1,447,000 1,243,000 251,000 -
12/31/86 SantaClara/Duane 386,000 1,950,000 1,004,000 406,000 -
12/31/86 Houston/Larkwood 168,000 247,000 602,000 396,000 -
12/31/86 OysterPoint - 1,569,000 1,490,000 439,000 -
12/31/86 Walnut - 767,000 613,000 3,599,000 -
3/1/87 Annandale/Ravensworth - 679,000 1,621,000 280,000 596,000
4/1/87 CityOfIndustry/Amar - 748,000 2,052,000 510,000 702,000
5/1/87 OklahomaCity/W.Hefner - 459,000 941,000 317,000 417,000
7/1/87 OakbrookTerrace - 912,000 2,688,000 172,000 399,000
8/1/87 SanAntonio/AustinHwy. - 400,000 850,000 (5,000) 164,000
10/1/87 Plantation/S.StateRd. - 924,000 1,801,000 (200,000) 298,000
10/1/87 Rockville/FredrickRd. - 1,695,000 3,305,000 (206,000) 519,000
2/1/88 Anaheim/Lakeview - 995,000 1,505,000 28,000 256,000
6/7/88 Mesquite/SorrentoDrive - 928,000 1,011,000 3,467,000 -
7/1/88 FortWayne - 101,000 1,524,000 87,000 663,000
1/1/92 CostaMesa - 533,000 980,000 708,000 -
3/1/92 Dallas/WalnutSt. - 537,000 1,008,000 306,000 -
5/1/92 CampCreek - 576,000 1,075,000 322,000 -
9/1/92 Jacksonville/Arlington - 554,000 1,065,000 231,000 -
9/1/92 Orlando/W.Colonial - 368,000 713,000 188,000 -
10/1/92 Stockton/Mariners - 381,000 730,000 225,000 -
11/18/92 VirginiaBeach/GeneralBoothBlvd - 599,000 1,119,000 415,000 -
1/1/93 BaldwinPark/GarveyAve - 840,000 1,561,000 406,000 -
1/1/93 CityOfIndustry - 1,611,000 2,991,000 333,000 -
1/1/93 RedwoodCity/Storage - 907,000 1,684,000 253,000 -
1/1/93 SanJose/Felipe - 1,124,000 2,088,000 381,000 -
3/19/93 Westminister/W.80th - 840,000 1,586,000 299,000 -
4/26/93 CostaMesa/Newport 897,000 2,141,000 3,989,000 5,174,000 -
5/13/93 Austin/N.Lamar - 919,000 1,695,000 6,700,000 -
5/28/93 Jacksonville/PhillipsHwy. - 406,000 771,000 228,000 -
5/28/93 Tampa/NebraskaAvenue - 550,000 1,043,000 177,000 -
6/9/93 Calabasas/VenturaBlvd. - 1,762,000 3,269,000 206,000 -
6/9/93 Carmichael/FairOaks - 573,000 1,052,000 248,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
606,000 2,115,000 2,721,000 1,280,000
1,208,000 2,806,000 4,014,000 1,673,000
3,626,000 4,416,000 8,042,000 1,867,000
1,150,000 2,648,000 3,798,000 1,799,000
1,448,000 1,493,000 2,941,000 1,149,000
1,951,000 1,409,000 3,360,000 930,000
247,000 998,000 1,245,000 625,000
1,570,000 1,928,000 3,498,000 1,223,000
769,000 4,210,000 4,979,000 1,030,000
679,000 2,497,000 3,176,000 1,479,000
748,000 3,264,000 4,012,000 1,176,000
459,000 1,675,000 2,134,000 958,000
912,000 3,259,000 4,171,000 2,480,000
400,000 1,009,000 1,409,000 791,000
924,000 1,899,000 2,823,000 1,461,000
1,696,000 3,617,000 5,313,000 2,776,000
995,000 1,789,000 2,784,000 1,340,000
1,045,000 4,361,000 5,406,000 1,519,000
101,000 2,274,000 2,375,000 1,051,000
535,000 1,686,000 2,221,000 1,219,000
537,000 1,314,000 1,851,000 1,261,000
576,000 1,397,000 1,973,000 736,000
554,000 1,296,000 1,850,000 673,000
368,000 901,000 1,269,000 463,000
381,000 955,000 1,336,000 479,000
599,000 1,534,000 2,133,000 769,000
840,000 1,967,000 2,807,000 953,000
1,612,000 3,323,000 4,935,000 1,489,000
907,000 1,937,000 2,844,000 923,000
1,125,000 2,468,000 3,593,000 1,150,000
840,000 1,885,000 2,725,000 881,000
3,732,000 7,572,000 11,304,000 1,956,000
1,422,000 7,892,000 9,314,000 1,767,000
406,000 999,000 1,405,000 499,000
550,000 1,220,000 1,770,000 580,000
1,763,000 3,474,000 5,237,000 1,561,000
573,000 1,300,000 1,873,000 651,000
F-49
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
6/9/93 SantaClara/Duane - 454,000 834,000 112,000 -
6/10/93 CitrusHeights/SylvanRoad - 438,000 822,000 212,000 -
6/25/93 Trenton/AllenRoad - 623,000 1,166,000 253,000 -
6/30/93 LosAngeles/W.JeffersonBlvd - 1,085,000 2,017,000 218,000 -
7/16/93 Austin/So.CongressAve - 777,000 1,445,000 365,000 -
8/1/93 Gaithersburg/E.Diamond - 602,000 1,139,000 181,000 -
8/11/93 Atlanta/Northside - 1,150,000 2,149,000 361,000 -
8/11/93 Smyrna/RosswillRd - 446,000 842,000 239,000 -
8/13/93 So.Brunswick/Highway - 1,076,000 2,033,000 334,000 -
10/1/93 CitrusHeights - 527,000 987,000 118,000 -
10/1/93 Denver/FederalBlvd - 875,000 1,633,000 212,000 -
10/1/93 Lakewood/6thAve - 798,000 1,489,000 15,000 -
10/27/93 Houston/SShaverSt - 481,000 896,000 213,000 -
11/3/93 Upland/S.EuclidAve. - 431,000 807,000 429,000 -
11/16/93 Norcross/JimmyCarter - 627,000 1,167,000 204,000 -
11/16/93 Seattle/13th - 1,085,000 2,015,000 634,000 -
12/9/93 SaltLakeCity - 765,000 1,422,000 6,000 -
12/16/93 WestValleyCity - 683,000 1,276,000 235,000 -
12/21/93 PinellasPark/34thSt.W - 607,000 1,134,000 251,000 -
12/28/93 NewOrleans/S.CarrolltonAve - 1,575,000 2,941,000 573,000 -
12/29/93 ElCajon/Magnolia - 421,000 791,000 555,000 -
12/29/93 Frederick/ProspectBlvd. - 573,000 1,082,000 599,000 -
12/29/93 Fullerton/W.Commonwealth - 904,000 1,687,000 1,042,000 -
12/29/93 Gardena/WesternAve. - 552,000 1,035,000 613,000 -
12/29/93 Indianapolis/E.Washington - 403,000 775,000 536,000 -
12/29/93 Irving/WestLoop12 - 341,000 643,000 213,000 -
12/29/93 LosAlimitos/Cerritos - 695,000 1,299,000 704,000 -
12/29/93 N.Lauderdale/McnabRd - 628,000 1,182,000 729,000 -
12/29/93 Orange/Main - 1,238,000 2,317,000 1,427,000 -
12/29/93 Orlando/S.SemoranBlvd. - 462,000 872,000 678,000 -
12/29/93 PalmBay/BobcockStreet - 409,000 775,000 536,000 -
12/29/93 Sunnyvale/Wedell - 554,000 1,037,000 784,000 -
12/29/93 Tampa/W.HillsboroughAve - 352,000 665,000 451,000 -
1/10/94 Hialeah/W.20ThAve. - 1,855,000 3,497,000 267,000 -
1/12/94 Honolulu/Iwaena - - 3,382,000 709,000 -
1/12/94 Miami/GoldenGlades - 579,000 1,081,000 431,000 -
1/12/94 Sunnyvale/N.FairOaksAve - 689,000 1,285,000 335,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
454,000 946,000 1,400,000 450,000
438,000 1,034,000 1,472,000 513,000
623,000 1,419,000 2,042,000 629,000
1,085,000 2,235,000 3,320,000 993,000
777,000 1,810,000 2,587,000 900,000
602,000 1,320,000 1,922,000 592,000
1,151,000 2,509,000 3,660,000 1,154,000
446,000 1,081,000 1,527,000 539,000
1,076,000 2,367,000 3,443,000 1,084,000
527,000 1,105,000 1,632,000 510,000
875,000 1,845,000 2,720,000 818,000
685,000 1,617,000 2,302,000 708,000
481,000 1,109,000 1,590,000 525,000
508,000 1,159,000 1,667,000 525,000
627,000 1,371,000 1,998,000 631,000
1,085,000 2,649,000 3,734,000 1,315,000
633,000 1,560,000 2,193,000 321,000
683,000 1,511,000 2,194,000 670,000
607,000 1,385,000 1,992,000 643,000
1,576,000 3,513,000 5,089,000 1,486,000
542,000 1,225,000 1,767,000 532,000
692,000 1,562,000 2,254,000 664,000
1,161,000 2,472,000 3,633,000 1,037,000
695,000 1,505,000 2,200,000 619,000
505,000 1,209,000 1,714,000 515,000
355,000 842,000 1,197,000 398,000
874,000 1,824,000 2,698,000 747,000
798,000 1,741,000 2,539,000 725,000
1,594,000 3,388,000 4,982,000 1,407,000
601,000 1,411,000 2,012,000 625,000
525,000 1,195,000 1,720,000 520,000
725,000 1,650,000 2,375,000 710,000
436,000 1,032,000 1,468,000 450,000
1,591,000 4,028,000 5,619,000 1,674,000
- 4,091,000 4,091,000 1,667,000
557,000 1,534,000 2,091,000 674,000
657,000 1,652,000 2,309,000 688,000
F-50
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
1/21/94 Herndon/CentrevilleRoad - 1,584,000 2,981,000 488,000 -
2/8/94 LasVegas/S.MartinLutherKingBlvd. - 1,383,000 2,592,000 1,077,000 -
2/28/94 Arlingtn/OldJeffersnDavishwy - 735,000 1,399,000 313,000 -
3/8/94 Beaverton/SwBarnesRoad - 942,000 1,810,000 201,000 -
3/21/94 Austin/Arboretum - 473,000 897,000 2,775,000 -
3/25/94 EastBrunswick/MilltownRoad - 1,282,000 2,411,000 365,000 -
3/25/94 Mercerville/QuakerbridgeRoad - 1,109,000 2,111,000 276,000 -
3/25/94 TintonFalls/ShrewsburyAve - 1,074,000 2,033,000 236,000 -
3/31/94 Hypoluxo - 735,000 1,404,000 1,913,000 -
4/26/94 No.Highlands/RosevilleRoad - 980,000 1,835,000 367,000 -
5/12/94 FortPierce/OkeechobeeRoad - 438,000 842,000 298,000 -
5/24/94 Hempstead/PeninsulaBlvd. - 2,053,000 3,832,000 309,000 -
5/24/94 La/Huntington - 483,000 905,000 162,000 -
6/9/94 Chattanooga/BrainerdRoad - 613,000 1,170,000 269,000 -
6/9/94 Chattanooga/RinggoldRoad - 761,000 1,433,000 440,000 -
6/18/94 LasVegas/S.ValleyViewBlvd - 837,000 1,571,000 171,000 -
6/23/94 Henderson/GreenValleyPkwy - 1,047,000 1,960,000 191,000 -
6/23/94 LasVegas/Tropicana - 750,000 1,408,000 242,000 -
6/24/94 LasVegas/N.LambBlvd. - 869,000 1,629,000 71,000 -
6/30/94 Birmingham/W.OxmoorRoad - 532,000 1,004,000 389,000 -
7/20/94 Milpitas/DempseyRoad - 1,260,000 2,358,000 238,000 -
8/17/94 Alsip/27th - 406,000 765,000 116,000 -
8/17/94 Beaverton/S.W.DennyRoad - 663,000 1,245,000 127,000 -
8/17/94 Irwindale/CentralAve. - 674,000 1,263,000 101,000 -
8/17/94 Lombard/64th - 847,000 1,583,000 169,000 -
8/17/94 NewOrleans/I-10 - 784,000 1,470,000 219,000 -
8/17/94 NorthBrunswick/HowLane - 1,238,000 2,323,000 130,000 -
8/17/94 Suitland/St.BarnabasRd - 1,530,000 2,913,000 349,000 -
9/15/94 Huntsville/OldMonroviaRoad - 613,000 1,157,000 252,000 -
9/27/94 WestHaven/BullHillLane - 455,000 873,000 5,308,000 -
9/30/94 Alexandria/S.Pickett - 1,550,000 2,879,000 250,000 -
9/30/94 Aloha/S.W.Shaw - 805,000 1,495,000 144,000 -
9/30/94 Arlington/Collins - 228,000 435,000 265,000 -
9/30/94 Austin/LamarBlvd - 781,000 1,452,000 161,000 -
9/30/94 Baltimore/HillenStreet - 580,000 1,095,000 277,000 -
9/30/94 Blackwood/ErialRoad - 774,000 1,437,000 130,000 -
9/30/94 Concord/Monument - 1,092,000 2,027,000 396,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
1,359,000 3,694,000 5,053,000 1,339,000
1,437,000 3,615,000 5,052,000 1,500,000
630,000 1,817,000 2,447,000 805,000
807,000 2,146,000 2,953,000 957,000
1,555,000 2,590,000 4,145,000 810,000
1,099,000 2,959,000 4,058,000 1,271,000
950,000 2,546,000 3,496,000 1,118,000
921,000 2,422,000 3,343,000 1,062,000
630,000 3,422,000 4,052,000 2,440,000
840,000 2,342,000 3,182,000 1,033,000
375,000 1,203,000 1,578,000 578,000
1,764,000 4,430,000 6,194,000 1,816,000
414,000 1,136,000 1,550,000 509,000
525,000 1,527,000 2,052,000 675,000
653,000 1,981,000 2,634,000 908,000
718,000 1,861,000 2,579,000 778,000
898,000 2,300,000 3,198,000 963,000
643,000 1,757,000 2,400,000 759,000
669,000 1,900,000 2,569,000 485,000
461,000 1,464,000 1,925,000 772,000
1,080,000 2,776,000 3,856,000 1,135,000
348,000 939,000 1,287,000 408,000
568,000 1,467,000 2,035,000 611,000
578,000 1,460,000 2,038,000 594,000
726,000 1,873,000 2,599,000 760,000
672,000 1,801,000 2,473,000 759,000
1,062,000 2,629,000 3,691,000 1,035,000
1,313,000 3,479,000 4,792,000 1,415,000
525,000 1,497,000 2,022,000 666,000
1,965,000 4,671,000 6,636,000 1,052,000
1,330,000 3,349,000 4,679,000 1,322,000
690,000 1,754,000 2,444,000 721,000
195,000 733,000 928,000 408,000
669,000 1,725,000 2,394,000 707,000
497,000 1,455,000 1,952,000 631,000
663,000 1,678,000 2,341,000 668,000
936,000 2,579,000 3,515,000 1,089,000
F-51
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
9/30/94 DaytonBch/N.NovaRoad - 396,000 735,000 158,000 -
9/30/94 Houston/Bellaire - 623,000 1,157,000 250,000 -
9/30/94 Houston/Highway6North - 1,120,000 2,083,000 250,000 -
9/30/94 LongBeach/SouthStreet - 1,778,000 3,307,000 356,000 -
9/30/94 MapleShade/Route38 - 994,000 1,846,000 217,000 -
9/30/94 Marlton/Route73N. - 938,000 1,742,000 86,000 -
9/30/94 Miami/S.W.119thAve - 656,000 1,221,000 73,000 -
9/30/94 Milwaukee/LoversLaneRd - 469,000 871,000 149,000 -
9/30/94 Montebello/E.Whittier - 383,000 732,000 170,000 -
9/30/94 Monterey/DelReyOaks - 1,093,000 1,897,000 129,000 -
9/30/94 Naperville/E.OgdenAve - 683,000 1,268,000 157,000 -
9/30/94 Rochester/LeeRoad - 469,000 871,000 246,000 -
9/30/94 SanAntonio/AustinHwy - 592,000 1,098,000 203,000 -
9/30/94 SanAntonio/NacogdochesRd - 571,000 1,060,000 248,000 -
9/30/94 SanFrancisco/MarinSt. - 1,227,000 2,339,000 1,230,000 -
9/30/94 SanFrancisco/10th&Howard - 1,423,000 2,668,000 268,000 -
9/30/94 SanRafael/MerrydaleRd - 1,705,000 3,165,000 220,000 -
9/30/94 SanRamon/SanRamonValley - 1,530,000 2,840,000 439,000 -
9/30/94 Sharonville/E.Kemper - 574,000 1,070,000 271,000 -
9/30/94 St.Petersburg/66ThSt. - 427,000 793,000 198,000 -
10/13/94 Carrollton/MarshLane - 770,000 1,437,000 1,417,000 -
10/13/94 Davie/StateRoad84 - 744,000 1,467,000 890,000 -
10/31/94 ShermanOaks/VanNuysBlvd - 1,278,000 2,461,000 943,000 -
12/19/94 SaltLakeCity/WestNorthTemple - 490,000 917,000 (47,000) -
12/28/94 LasVegas/JonesBlvd - 1,208,000 2,243,000 186,000 -
12/28/94 Milpitas/Watson - 1,575,000 2,925,000 267,000 -
12/28/94 Venice/Guthrie - 578,000 1,073,000 144,000 -
12/30/94 AppleValley/FoliageAve - 910,000 1,695,000 249,000 -
1/4/95 ChulaVista/MainStreet - 735,000 1,802,000 191,000 -
1/5/95 Pantego/WestPark - 315,000 735,000 161,000 -
1/12/95 Roswell/Alpharetta - 423,000 993,000 386,000 -
1/23/95 NorthBergen/Tonne - 1,564,000 3,772,000 364,000 -
1/23/95 SanLeandro/Hesperian - 734,000 1,726,000 145,000 -
1/24/95 Nashville/ElmHill - 338,000 791,000 384,000 -
2/3/95 Reno/S.MccarronBlvd - 1,080,000 2,537,000 194,000 -
2/15/95 LA/Sepulveda - 1,453,000 3,390,000 124,000 -
2/15/95 Lansing - 1,514,000 3,534,000 170,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
339,000 950,000 1,289,000 418,000
534,000 1,496,000 2,030,000 619,000
960,000 2,493,000 3,453,000 1,036,000
1,525,000 3,916,000 5,441,000 1,523,000
852,000 2,205,000 3,057,000 877,000
804,000 1,962,000 2,766,000 773,000
563,000 1,387,000 1,950,000 548,000
402,000 1,087,000 1,489,000 466,000
329,000 956,000 1,285,000 413,000
903,000 2,216,000 3,119,000 917,000
585,000 1,523,000 2,108,000 604,000
402,000 1,184,000 1,586,000 525,000
507,000 1,386,000 1,893,000 603,000
489,000 1,390,000 1,879,000 573,000
1,372,000 3,424,000 4,796,000 1,358,000
1,222,000 3,137,000 4,359,000 1,263,000
1,462,000 3,628,000 5,090,000 1,451,000
1,312,000 3,497,000 4,809,000 1,424,000
492,000 1,423,000 1,915,000 585,000
366,000 1,052,000 1,418,000 463,000
1,022,000 2,602,000 3,624,000 998,000
638,000 2,463,000 3,101,000 951,000
1,424,000 3,258,000 4,682,000 1,313,000
385,000 975,000 1,360,000 206,000
1,035,000 2,602,000 3,637,000 1,007,000
1,351,000 3,416,000 4,767,000 1,318,000
495,000 1,300,000 1,795,000 522,000
780,000 2,074,000 2,854,000 830,000
735,000 1,993,000 2,728,000 866,000
315,000 896,000 1,211,000 409,000
423,000 1,379,000 1,802,000 580,000
1,552,000 4,148,000 5,700,000 1,570,000
734,000 1,871,000 2,605,000 713,000
338,000 1,175,000 1,513,000 609,000
1,080,000 2,731,000 3,811,000 1,052,000
1,454,000 3,513,000 4,967,000 1,127,000
1,515,000 3,703,000 5,218,000 1,199,000
F-52
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
2/15/95 Pleasanton - 1,257,000 2,932,000 93,000 -
2/15/95 SchillerPark - 1,688,000 3,939,000 313,000 -
2/28/95 Amherst/Sheridan - 484,000 1,151,000 186,000 -
2/28/95 Burlingame/AdrianRd - 2,280,000 5,349,000 330,000 -
2/28/95 Chicago/ClarkStreet - 442,000 1,031,000 348,000 -
2/28/95 Decatur/FlatShoal - 970,000 2,288,000 454,000 -
2/28/95 Downey/Bellflower - 916,000 2,158,000 156,000 -
2/28/95 FederalWay/Pacific - 785,000 1,832,000 281,000 -
2/28/95 Kent/PacificHwy - 728,000 1,711,000 151,000 -
2/28/95 Kirkland - 1,254,000 2,932,000 225,000 -
2/28/95 LaPuente/ValleyBlvd - 591,000 1,390,000 233,000 -
2/28/95 Lynnwood/180thSt - 516,000 1,205,000 225,000 -
2/28/95 Miami/Biscayne - 1,313,000 3,076,000 138,000 -
2/28/95 Miami/Cloverleaf - 606,000 1,426,000 291,000 -
2/28/95 Milwaukie/40thStreet - 576,000 1,388,000 132,000 -
2/28/95 Palatine/Dundee - 698,000 1,643,000 294,000 -
2/28/95 Pinole/SanPablo - 639,000 1,502,000 261,000 -
2/28/95 Portland/N.Lombard - 812,000 1,900,000 220,000 -
2/28/95 SanJose/CapitolE - 1,215,000 2,852,000 154,000 -
2/28/95 SanJose/Mabury - 892,000 2,088,000 158,000 -
2/28/95 Smyrna/S.Cobb - 663,000 1,559,000 274,000 -
2/28/95 SouthGate/Firesto - 1,442,000 3,449,000 394,000 -
2/28/95 Tampa/S.Dale - 791,000 1,852,000 245,000 -
2/28/95 Vallejo/Lincoln - 445,000 1,052,000 220,000 -
2/28/95 Williamsville/Transit - 284,000 670,000 231,000 -
3/2/95 Burien/1StAveSouth - 763,000 1,783,000 303,000 -
3/2/95 Everett/Highway99 - 859,000 2,022,000 237,000 -
3/2/95 Kent/South238thStreet - 763,000 1,783,000 279,000 -
3/31/95 Cheverly/CentralAve - 911,000 2,164,000 191,000 -
5/1/95 Sandy/S.StateStreet - 1,043,000 2,442,000 (272,000) -
5/3/95 Largo/UlmertonRoa - 263,000 654,000 146,000 -
5/8/95 Dallas/W.Mockingbird - 1,440,000 3,371,000 173,000 -
5/8/95 EastPoint/Lakewood - 884,000 2,071,000 359,000 -
5/8/95 Fairfield/WesternStreet - 439,000 1,030,000 93,000 -
6/12/95 Baltimore/OldWaterloo - 769,000 1,850,000 154,000 -
6/12/95 MountainView/OldMiddlefield - 2,095,000 4,913,000 119,000 -
6/12/95 PleasantHill/Hookston - 766,000 1,848,000 115,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
1,258,000 3,024,000 4,282,000 959,000
1,689,000 4,251,000 5,940,000 1,402,000
484,000 1,337,000 1,821,000 553,000
2,281,000 5,678,000 7,959,000 2,160,000
442,000 1,379,000 1,821,000 609,000
970,000 2,742,000 3,712,000 1,169,000
916,000 2,314,000 3,230,000 877,000
785,000 2,113,000 2,898,000 895,000
728,000 1,862,000 2,590,000 735,000
1,255,000 3,156,000 4,411,000 1,211,000
591,000 1,623,000 2,214,000 702,000
516,000 1,430,000 1,946,000 601,000
1,314,000 3,213,000 4,527,000 1,203,000
606,000 1,717,000 2,323,000 693,000
579,000 1,517,000 2,096,000 611,000
698,000 1,937,000 2,635,000 746,000
639,000 1,763,000 2,402,000 744,000
812,000 2,120,000 2,932,000 843,000
1,216,000 3,005,000 4,221,000 1,144,000
892,000 2,246,000 3,138,000 835,000
663,000 1,833,000 2,496,000 762,000
1,443,000 3,842,000 5,285,000 1,552,000
791,000 2,097,000 2,888,000 862,000
445,000 1,272,000 1,717,000 533,000
284,000 901,000 1,185,000 381,000
763,000 2,086,000 2,849,000 870,000
859,000 2,259,000 3,118,000 927,000
763,000 2,062,000 2,825,000 869,000
911,000 2,355,000 3,266,000 888,000
923,000 2,290,000 3,213,000 461,000
263,000 800,000 1,063,000 373,000
1,441,000 3,543,000 4,984,000 1,302,000
884,000 2,430,000 3,314,000 997,000
439,000 1,123,000 1,562,000 432,000
769,000 2,004,000 2,773,000 743,000
2,096,000 5,031,000 7,127,000 1,776,000
742,000 1,987,000 2,729,000 744,000
F-53
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
6/30/95 Pacoima/PaxtonStreet 875,000 840,000 1,976,000 157,000 -
6/30/95 AltamonteSprings - 566,000 1,326,000 154,000 -
6/30/95 Beaverton/S.W.110 - 572,000 1,342,000 173,000 -
6/30/95 Bridgeton/Pennridge - 283,000 661,000 203,000 -
6/30/95 CherryHill/DobbsLane - 716,000 1,676,000 154,000 -
6/30/95 Dallas/AudeliaRoad - 1,166,000 2,725,000 863,000 -
6/30/95 EdgewaterPark/Route130 - 683,000 1,593,000 135,000 -
6/30/95 Elmhurst/LakeFrontageRd - 748,000 1,758,000 165,000 -
6/30/95 Fairfield/KingsHighway - 1,811,000 4,273,000 232,000 -
6/30/95 FortWorth/Hwy80 - 379,000 891,000 137,000 -
6/30/95 GrandPrairie/19th - 566,000 1,329,000 157,000 -
6/30/95 Greenfield/S.108th - 728,000 1,707,000 258,000 -
6/30/95 Houston/N.W.Freeway - 447,000 1,066,000 153,000 -
6/30/95 Houston/S.W.Freeway - 537,000 1,254,000 5,377,000 -
6/30/95 Independence/E.42nd - 438,000 1,023,000 183,000 -
6/30/95 Joliet/JeffersonStreet - 501,000 1,181,000 189,000 -
6/30/95 Lauderhill/StateRoad - 644,000 1,508,000 184,000 -
6/30/95 Lawrenceville/Brunswick - 841,000 1,961,000 132,000 -
6/30/95 Liverpool/OswegoRoad - 545,000 1,279,000 254,000 -
6/30/95 LosAngeles/BeverlyBlvd - 787,000 1,886,000 357,000 -
6/30/95 Markham/W.159ThPlace - 230,000 539,000 164,000 -
6/30/95 MiamiGardens - 823,000 1,929,000 216,000 -
6/30/95 Milwaukee/Brown - 358,000 849,000 209,000 -
6/30/95 OrangePark/BlandingBlvd - 394,000 918,000 239,000 -
6/30/95 Orlando/W.OakRidge - 698,000 1,642,000 247,000 -
6/30/95 Pasadena/E.Beltway - 757,000 1,767,000 161,000 -
6/30/95 Portland/Gantenbein - 537,000 1,262,000 180,000 -
6/30/95 Portland/Prescott - 647,000 1,509,000 188,000 -
6/30/95 Portland/S.E.92nd - 638,000 1,497,000 210,000 -
6/30/95 Richmond/Carlson - 865,000 2,025,000 303,000 -
6/30/95 Rochester/EastAve - 578,000 1,375,000 225,000 -
6/30/95 SanJose/BlossomHill - 1,467,000 3,444,000 199,000 -
6/30/95 Seattle/DelridgeWay - 760,000 1,779,000 240,000 -
6/30/95 St.Louis/PageServiceDrive - 531,000 1,241,000 192,000 -
6/30/95 St.Petersburg - 352,000 827,000 222,000 -
6/30/95 St.Petersburg/Joe'SCreek - 704,000 1,642,000 206,000 -
6/30/95 UpperChichester/MarketSt. - 569,000 1,329,000 135,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
840,000 2,133,000 2,973,000 782,000
566,000 1,480,000 2,046,000 556,000
572,000 1,515,000 2,087,000 587,000
283,000 864,000 1,147,000 373,000
715,000 1,831,000 2,546,000 660,000
1,167,000 3,587,000 4,754,000 1,586,000
683,000 1,728,000 2,411,000 627,000
748,000 1,923,000 2,671,000 727,000
1,812,000 4,504,000 6,316,000 1,667,000
379,000 1,028,000 1,407,000 422,000
566,000 1,486,000 2,052,000 580,000
728,000 1,965,000 2,693,000 754,000
447,000 1,219,000 1,666,000 496,000
1,607,000 5,561,000 7,168,000 872,000
438,000 1,206,000 1,644,000 496,000
501,000 1,370,000 1,871,000 547,000
644,000 1,692,000 2,336,000 637,000
841,000 2,093,000 2,934,000 758,000
545,000 1,533,000 2,078,000 615,000
787,000 2,243,000 3,030,000 946,000
229,000 704,000 933,000 299,000
823,000 2,145,000 2,968,000 799,000
358,000 1,058,000 1,416,000 429,000
394,000 1,157,000 1,551,000 481,000
698,000 1,889,000 2,587,000 747,000
757,000 1,928,000 2,685,000 718,000
537,000 1,442,000 1,979,000 562,000
647,000 1,697,000 2,344,000 667,000
638,000 1,707,000 2,345,000 663,000
865,000 2,328,000 3,193,000 905,000
578,000 1,600,000 2,178,000 606,000
1,468,000 3,642,000 5,110,000 1,330,000
760,000 2,019,000 2,779,000 751,000
531,000 1,433,000 1,964,000 564,000
352,000 1,049,000 1,401,000 445,000
704,000 1,848,000 2,552,000 705,000
569,000 1,464,000 2,033,000 551,000
F-54
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
7/13/95 Tarzana/BurbankBlvd - 2,895,000 6,823,000 387,000 -
7/31/95 MissionBay 3,495,000 1,617,000 3,785,000 491,000 -
7/31/95 SanJose/Tully 1,408,000 912,000 2,137,000 318,000 -
7/31/95 Livermore/Portola 1,140,000 921,000 2,157,000 204,000 -
7/31/95 Orlando/Lakehurst 849,000 450,000 1,063,000 176,000 -
7/31/95 CastroValley/Grove - 757,000 1,772,000 106,000 -
7/31/95 Chicago/WabashAve - 645,000 1,535,000 682,000 -
7/31/95 Honolulu/Kaneohe - 1,215,000 2,846,000 2,057,000 -
7/31/95 HuntingtonBch/Gotham - 765,000 1,808,000 176,000 -
7/31/95 LasVegas/Decatur - 1,147,000 2,697,000 356,000 -
7/31/95 Marietta/CantonRoad - 600,000 1,423,000 252,000 -
7/31/95 Pleasanton/Stanley - 1,624,000 3,811,000 210,000 -
7/31/95 Springfield/Parker - 765,000 1,834,000 155,000 -
7/31/95 Tucker/Lawrenceville - 630,000 1,480,000 204,000 -
7/31/95 Wheeling/Hintz - 450,000 1,054,000 147,000 -
8/1/95 Decatur/Covington - 720,000 1,694,000 214,000 -
8/1/95 Gresham/Division - 607,000 1,428,000 116,000 -
8/1/95 Tucker/Lawrenceville - 600,000 1,405,000 271,000 -
8/11/95 StudioCity/Ventura - 1,285,000 3,015,000 160,000 -
8/12/95 Smyrna/HargroveRoad - 1,020,000 3,038,000 377,000 -
9/1/95 Hayward/MissionBlvd - 1,020,000 2,383,000 179,000 -
9/1/95 LasVegas/Rainbow - 1,050,000 2,459,000 122,000 -
9/1/95 MountainView/Reng - 945,000 2,216,000 159,000 -
9/1/95 NewCastle/DupontParkway - 990,000 2,369,000 176,000 -
9/1/95 ParkCity/Belvider - 600,000 1,405,000 111,000 -
9/1/95 SimiValley/LosAngeles - 1,590,000 3,724,000 219,000 -
9/1/95 SpringValley/Foreman - 1,095,000 2,572,000 170,000 -
9/1/95 Venice/Cadillac - 930,000 2,182,000 238,000 -
9/6/95 Darien/FrontageRoad - 975,000 2,321,000 108,000 -
9/30/95 Carson - 375,000 735,000 160,000 428,000
9/30/95 DelAmo - 474,000 742,000 166,000 922,000
9/30/95 Downey - 191,000 317,000 192,000 825,000
9/30/95 HuntingtonBeach - 176,000 321,000 215,000 738,000
9/30/95 MontereyPark - 124,000 346,000 147,000 782,000
9/30/95 VanNuys/Balboa - 295,000 657,000 149,000 1,148,000
9/30/95 VanNuys/BalboaBlvd - 1,920,000 4,504,000 376,000 -
9/30/95 Whittier - 215,000 384,000 247,000 781,000
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
2,896,000 7,209,000 10,105,000 2,711,000
1,618,000 4,275,000 5,893,000 1,657,000
912,000 2,455,000 3,367,000 933,000
921,000 2,361,000 3,282,000 879,000
450,000 1,239,000 1,689,000 479,000
757,000 1,878,000 2,635,000 677,000
645,000 2,217,000 2,862,000 1,092,000
2,134,000 3,984,000 6,118,000 1,288,000
765,000 1,984,000 2,749,000 763,000
1,148,000 3,052,000 4,200,000 1,128,000
600,000 1,675,000 2,275,000 677,000
1,625,000 4,020,000 5,645,000 1,452,000
765,000 1,989,000 2,754,000 746,000
630,000 1,684,000 2,314,000 668,000
450,000 1,201,000 1,651,000 466,000
720,000 1,908,000 2,628,000 750,000
607,000 1,544,000 2,151,000 578,000
600,000 1,676,000 2,276,000 698,000
1,286,000 3,174,000 4,460,000 1,140,000
1,020,000 3,415,000 4,435,000 1,194,000
1,020,000 2,562,000 3,582,000 919,000
1,050,000 2,581,000 3,631,000 922,000
945,000 2,375,000 3,320,000 846,000
990,000 2,545,000 3,535,000 916,000
600,000 1,516,000 2,116,000 553,000
1,591,000 3,942,000 5,533,000 1,403,000
1,095,000 2,742,000 3,837,000 985,000
930,000 2,420,000 3,350,000 915,000
975,000 2,429,000 3,404,000 893,000
375,000 1,323,000 1,698,000 434,000
474,000 1,830,000 2,304,000 864,000
191,000 1,334,000 1,525,000 492,000
176,000 1,274,000 1,450,000 461,000
124,000 1,275,000 1,399,000 504,000
295,000 1,954,000 2,249,000 760,000
1,921,000 4,879,000 6,800,000 1,511,000
215,000 1,412,000 1,627,000 493,000
F-55
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
10/31/95 Chicago/W.47thStreet - 300,000 708,000 220,000 -
10/31/95 LosAngeles/Eastern - 455,000 1,070,000 153,000 -
10/31/95 SanLorenzo/Hesperian - 1,590,000 3,716,000 390,000 -
11/15/95 CitrusHeights/Sunrise - 520,000 1,213,000 147,000 -
11/15/95 CostaMesa - 522,000 1,218,000 72,000 -
11/15/95 Modesto/BriggsmoreAve - 470,000 1,097,000 120,000 -
11/15/95 Pacheco/BuchananCircle - 1,681,000 3,951,000 273,000 -
11/15/95 Plano/E.14th - 705,000 1,646,000 104,000 -
11/15/95 SoSanFrancisco/Spruce - 1,905,000 4,444,000 347,000 -
11/16/95 DelrayBeach - 600,000 1,407,000 172,000 -
11/16/95 PalmBeachGardens - 657,000 1,540,000 154,000 -
1/1/96 BedfordHts/Miles - 835,000 1,577,000 301,000 929,000
1/1/96 Bensenville/YorkRd - 667,000 1,602,000 213,000 895,000
1/1/96 Bowie/Woodcliff - 718,000 2,336,000 111,000 1,292,000
1/1/96 Clinton/MalcolmRoad - 593,000 2,123,000 239,000 1,187,000
1/1/96 Coram/MiddleCount - 507,000 1,421,000 124,000 792,000
1/1/96 Denver/SQuebec - 1,849,000 1,941,000 195,000 1,086,000
1/1/96 DesMoines - 448,000 1,350,000 112,000 768,000
1/1/96 Englewood/Federal - 481,000 1,395,000 133,000 777,000
1/1/96 Houston/FM1960 - 635,000 1,294,000 223,000 783,000
1/1/96 Houston/Westheimer - 1,508,000 2,274,000 265,000 1,304,000
1/1/96 Hyattsville/Kenilworth - 509,000 1,757,000 155,000 1,000,000
1/1/96 Kent/MilitaryTrail - 409,000 1,670,000 195,000 956,000
1/1/96 Livonia/Newburgh - 635,000 1,407,000 126,000 783,000
1/1/96 Louisville/Preston - 211,000 1,060,000 88,000 594,000
1/1/96 MapleShade/Fellowship - 331,000 1,421,000 143,000 803,000
1/1/96 MerrionettePark - 818,000 2,020,000 120,000 1,122,000
1/1/96 Milwaukee/S.84th - 444,000 1,868,000 302,000 1,091,000
1/1/96 OrlandHills/W.159th - 917,000 2,392,000 260,000 1,342,000
1/1/96 Oxonhill/Indianhead - 772,000 2,017,000 282,000 1,141,000
1/1/96 Sacramento/N.16th - 582,000 2,610,000 172,000 1,466,000
1/1/96 SanJose/AbornRoad - 615,000 1,342,000 100,000 759,000
1/1/96 SanPablo/SanPablo - 565,000 1,232,000 154,000 713,000
1/1/96 Sewell/Rts.553 - 323,000 1,138,000 137,000 658,000
1/1/96 Sunland/SunlandBlvd. - 631,000 1,965,000 103,000 1,090,000
1/1/96 Tigard/S.W.Pacific - 633,000 1,206,000 136,000 705,000
1/1/96 Turnersville/Black - 165,000 1,360,000 138,000 758,000
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
300,000 928,000 1,228,000 342,000
455,000 1,223,000 1,678,000 415,000
1,591,000 4,105,000 5,696,000 1,244,000
520,000 1,360,000 1,880,000 499,000
522,000 1,290,000 1,812,000 444,000
470,000 1,217,000 1,687,000 436,000
1,682,000 4,223,000 5,905,000 1,401,000
705,000 1,750,000 2,455,000 587,000
1,906,000 4,790,000 6,696,000 1,620,000
600,000 1,579,000 2,179,000 603,000
657,000 1,694,000 2,351,000 625,000
835,000 2,807,000 3,642,000 838,000
667,000 2,710,000 3,377,000 827,000
718,000 3,739,000 4,457,000 980,000
593,000 3,549,000 4,142,000 923,000
507,000 2,337,000 2,844,000 673,000
1,850,000 3,221,000 5,071,000 964,000
448,000 2,230,000 2,678,000 674,000
481,000 2,305,000 2,786,000 725,000
635,000 2,300,000 2,935,000 741,000
1,509,000 3,842,000 5,351,000 1,134,000
509,000 2,912,000 3,421,000 833,000
409,000 2,821,000 3,230,000 822,000
635,000 2,316,000 2,951,000 664,000
211,000 1,742,000 1,953,000 525,000
331,000 2,367,000 2,698,000 677,000
818,000 3,262,000 4,080,000 973,000
444,000 3,261,000 3,705,000 892,000
917,000 3,994,000 4,911,000 1,207,000
772,000 3,440,000 4,212,000 967,000
582,000 4,248,000 4,830,000 1,020,000
615,000 2,201,000 2,816,000 681,000
565,000 2,099,000 2,664,000 609,000
323,000 1,933,000 2,256,000 586,000
631,000 3,158,000 3,789,000 864,000
633,000 2,047,000 2,680,000 628,000
165,000 2,256,000 2,421,000 666,000
F-56
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
1/1/96 W.Hollywood/SantaMonica - 3,415,000 4,577,000 250,000 2,552,000
1/1/96 Waterbury/Captain - 434,000 2,089,000 151,000 1,162,000
1/3/96 SanGabriel - 1,005,000 2,345,000 232,000 -
1/5/96 SanFrancisco,SecondSt. - 2,880,000 6,814,000 201,000 -
1/12/96 SanAntonio,TX - 912,000 2,170,000 96,000 -
2/29/96 Brandon,FL/WBrandonBlvd. - 1,928,000 4,523,000 913,000 -
2/29/96 CoralSpringsFL/WSampleRd. - 3,480,000 8,148,000 244,000 -
2/29/96 DelrayBeachFL/SMilitaryTr. - 941,000 2,222,000 191,000 -
2/29/96 JupiterFL/MilitaryTrail - 2,280,000 5,347,000 323,000 -
2/29/96 LakeWorth,FL/S.MilitaryTr. - 1,782,000 4,723,000 177,000 -
2/29/96 LakeworthFL/LakeWorthRd - 737,000 1,742,000 170,000 -
2/29/96 Naples,FL/OldUS41 - 849,000 2,016,000 171,000 -
2/29/96 NewPortRichey/StateRd54 - 857,000 2,025,000 192,000 -
2/29/96 SanfordFL/SOrlandoDr - 734,000 1,749,000 1,965,000 -
3/8/96 Atlanta/Roswell - 898,000 3,649,000 112,000 -
3/31/96 Baltimore - 842,000 2,180,000 208,000 -
3/31/96 Carrollton - 578,000 1,495,000 110,000 -
3/31/96 Dallas - 315,000 810,000 1,733,000 -
3/31/96 Houston - 543,000 1,402,000 125,000 -
3/31/96 Houston - 669,000 1,724,000 472,000 -
3/31/96 Irvine - 1,920,000 4,975,000 576,000 -
3/31/96 Jacksonville - 713,000 1,845,000 218,000 -
3/31/96 Milwaukee - 542,000 1,402,000 118,000 -
3/31/96 NewHaven - 740,000 1,907,000 (202,000) -
3/31/96 Oakland - 1,065,000 2,764,000 283,000 -
3/31/96 Plano - 650,000 1,682,000 132,000 -
3/31/96 Randallstown - 1,359,000 3,527,000 261,000 -
3/31/96 Saratoga - 2,339,000 6,081,000 150,000 -
3/31/96 Torrance - 1,415,000 3,675,000 175,000 -
4/1/96 Chicago/Pulaski - 764,000 1,869,000 164,000 -
4/1/96 Houston/Westheimer - 1,390,000 3,402,000 4,226,000 -
4/1/96 LasVegas/DesertInn - 1,115,000 2,729,000 119,000 -
4/1/96 Rockville/Randolph - 1,153,000 2,823,000 166,000 -
4/1/96 SimiValley/EastStreet - 970,000 2,374,000 70,000 -
4/1/96 St.Louis/BarrettStationRoad - 630,000 1,542,000 115,000 -
4/1/96 Torrance/Crenshaw - 916,000 2,243,000 122,000 -
4/1/96 Weymouth - 485,000 1,187,000 169,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
3,417,000 7,377,000 10,794,000 2,151,000
434,000 3,402,000 3,836,000 865,000
1,005,000 2,577,000 3,582,000 960,000
2,881,000 7,014,000 9,895,000 2,321,000
912,000 2,266,000 3,178,000 761,000
1,929,000 5,435,000 7,364,000 2,280,000
3,482,000 8,390,000 11,872,000 2,703,000
941,000 2,413,000 3,354,000 855,000
2,281,000 5,669,000 7,950,000 1,840,000
1,783,000 4,899,000 6,682,000 1,605,000
737,000 1,912,000 2,649,000 685,000
849,000 2,187,000 3,036,000 747,000
857,000 2,217,000 3,074,000 755,000
975,000 3,473,000 4,448,000 1,149,000
898,000 3,761,000 4,659,000 1,211,000
842,000 2,388,000 3,230,000 798,000
578,000 1,605,000 2,183,000 552,000
315,000 2,543,000 2,858,000 518,000
543,000 1,527,000 2,070,000 531,000
669,000 2,196,000 2,865,000 797,000
1,921,000 5,550,000 7,471,000 1,804,000
713,000 2,063,000 2,776,000 717,000
542,000 1,520,000 2,062,000 530,000
668,000 1,777,000 2,445,000 617,000
1,065,000 3,047,000 4,112,000 1,051,000
650,000 1,814,000 2,464,000 631,000
1,360,000 3,787,000 5,147,000 1,257,000
2,340,000 6,230,000 8,570,000 1,976,000
1,416,000 3,849,000 5,265,000 1,249,000
764,000 2,033,000 2,797,000 626,000
1,391,000 7,627,000 9,018,000 2,237,000
1,116,000 2,847,000 3,963,000 877,000
1,154,000 2,988,000 4,142,000 879,000
970,000 2,444,000 3,414,000 715,000
630,000 1,657,000 2,287,000 497,000
916,000 2,365,000 3,281,000 691,000
485,000 1,356,000 1,841,000 379,000
F-57
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
4/3/96 Naples - 1,187,000 2,809,000 227,000 -
6/26/96 BocaRaton - 3,180,000 7,468,000 1,227,000 -
6/28/96 Venice - 669,000 1,575,000 163,000 -
6/30/96 BedfordPark - 606,000 1,419,000 211,000 -
6/30/96 Brooklyn - 783,000 1,830,000 467,000 -
6/30/96 LasVegas - 921,000 2,155,000 193,000 -
6/30/96 LosAngeles - 692,000 1,616,000 106,000 -
6/30/96 Newark - 1,051,000 2,458,000 119,000 -
6/30/96 SilverSpring - 1,513,000 3,535,000 259,000 -
7/2/96 GlenBurnie/FurnaceBrRd - 1,755,000 4,150,000 185,000 -
7/22/96 Lakewood/WHampton - 717,000 2,092,000 80,000 -
8/13/96 Norcross/HolcombBridgeRd - 955,000 3,117,000 126,000 -
9/5/96 SpringValley/SPascackrd - 1,260,000 2,966,000 308,000 -
9/16/96 CanogaPark/ShermanWay - 1,543,000 3,716,000 558,000 -
9/16/96 ColoradoSprings/TomahDrive - 731,000 1,759,000 114,000 -
9/16/96 Dallas/RoyalLane - 1,008,000 2,426,000 211,000 -
9/16/96 Denver/W.Hampden - 1,084,000 2,609,000 164,000 -
9/16/96 Fairfield/DixieHighway - 427,000 1,046,000 122,000 -
9/16/96 FortWorth/Brentwood - 823,000 2,016,000 140,000 -
9/16/96 Glendale/SanFernandoRoad - 2,500,000 6,124,000 171,000 -
9/16/96 Greenbrook/Route22 - 1,227,000 2,954,000 278,000 -
9/16/96 Houston/GulfFreeway - 701,000 1,718,000 3,304,000 -
9/16/96 Houston/Harwin - 549,000 1,344,000 165,000 -
9/16/96 Houston/W.MontgomeryRd. - 524,000 1,261,000 203,000 -
9/16/96 Irvine/CowanStreet - 1,890,000 4,631,000 229,000 -
9/16/96 Jacksonville/SouthLaneAve. - 554,000 1,334,000 228,000 -
9/16/96 LasVegas/BoulderHwy. - 947,000 2,279,000 303,000 -
9/16/96 LasVegas/S.DecaturBlvd. - 1,037,000 2,539,000 153,000 -
9/16/96 Lewisville/S.Stemmons - 603,000 1,451,000 141,000 -
9/16/96 Littleton/SouthparkWay - 922,000 2,221,000 278,000 -
9/16/96 Mesa/CountryClubDrive - 701,000 1,718,000 205,000 -
9/16/96 Monsey/Route59 - 1,068,000 2,572,000 145,000 -
9/16/96 NewportNews/WarwickBlvd. - 575,000 1,385,000 166,000 -
9/16/96 Petaluma/BaywoodDrive - 861,000 2,074,000 167,000 -
9/16/96 RichlandHills/AirportFwy. - 473,000 1,158,000 208,000 -
9/16/96 SanFrancisco/GearyBlvd. - 2,957,000 7,244,000 307,000 -
9/16/96 SantaRosa/SantaRosaAve. - 575,000 1,385,000 113,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
1,188,000 3,035,000 4,223,000 1,059,000
3,181,000 8,694,000 11,875,000 2,786,000
669,000 1,738,000 2,407,000 613,000
606,000 1,630,000 2,236,000 581,000
783,000 2,297,000 3,080,000 864,000
921,000 2,348,000 3,269,000 791,000
692,000 1,722,000 2,414,000 573,000
1,051,000 2,577,000 3,628,000 820,000
1,514,000 3,793,000 5,307,000 1,251,000
1,756,000 4,334,000 6,090,000 1,356,000
716,000 2,173,000 2,889,000 672,000
955,000 3,243,000 4,198,000 1,005,000
1,261,000 3,273,000 4,534,000 1,094,000
1,544,000 4,273,000 5,817,000 1,285,000
731,000 1,873,000 2,604,000 590,000
1,008,000 2,637,000 3,645,000 839,000
1,084,000 2,773,000 3,857,000 843,000
427,000 1,168,000 1,595,000 367,000
823,000 2,156,000 2,979,000 690,000
2,501,000 6,294,000 8,795,000 1,835,000
1,228,000 3,231,000 4,459,000 1,008,000
701,000 5,022,000 5,723,000 922,000
549,000 1,509,000 2,058,000 498,000
524,000 1,464,000 1,988,000 491,000
1,891,000 4,859,000 6,750,000 1,474,000
554,000 1,562,000 2,116,000 530,000
947,000 2,582,000 3,529,000 798,000
1,037,000 2,692,000 3,729,000 827,000
603,000 1,592,000 2,195,000 530,000
922,000 2,499,000 3,421,000 787,000
701,000 1,923,000 2,624,000 605,000
1,068,000 2,717,000 3,785,000 817,000
575,000 1,551,000 2,126,000 507,000
861,000 2,241,000 3,102,000 698,000
473,000 1,366,000 1,839,000 464,000
2,958,000 7,550,000 10,508,000 2,229,000
575,000 1,498,000 2,073,000 469,000
F-58
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
9/16/96 Sarasota/S.TamiamiTrail - 584,000 1,407,000 3,169,000 -
9/16/96 Tempe/McKellipsRoad - 823,000 1,972,000 244,000 -
9/16/96 WillowGrove/MarylandRoad - 673,000 1,620,000 110,000 -
10/11/96 Chesapeake/MilitaryHwy - 912,000 1,974,000 401,000 -
10/11/96 Hampton/PembrokeRoad - 1,080,000 2,346,000 (203,000) -
10/11/96 Norfolk/WidgeonRoad - 1,110,000 2,405,000 (329,000) -
10/11/96 Orlando/EOakridgeRd - 927,000 2,020,000 242,000 -
10/11/96 Orlando/SouthHwy17-92 - 1,170,000 2,549,000 189,000 -
10/11/96 Richmond/BloomLane - 1,188,000 2,512,000 (177,000) -
10/11/96 Richmond/MidlothianPark - 762,000 1,588,000 487,000 -
10/11/96 Roanoke/PetersCreekRoad - 819,000 1,776,000 262,000 -
10/11/96 VirginiaBeach/SouthernBlvd - 282,000 610,000 246,000 -
10/25/96 Austin/Renelli - 1,710,000 3,990,000 252,000 -
10/25/96 Austin/Santiago - 900,000 2,100,000 209,000 -
10/25/96 Dallas/DentonDrive - 900,000 2,100,000 135,000 -
10/25/96 Dallas/EastN.W.Highway - 698,000 1,628,000 175,000 -
10/25/96 Houston/Hempstead - 518,000 1,207,000 257,000 -
10/25/96 Pasadena/So.Shaver - 420,000 980,000 224,000 -
10/31/96 Houston/JoelWheatonRd - 465,000 1,085,000 207,000 -
10/31/96 MtHolly/541Bypass - 360,000 840,000 221,000 -
11/13/96 TownEast/Mesquite - 330,000 770,000 133,000 -
11/14/96 BossierCityLA - 633,000 1,488,000 (134,000) -
12/5/96 LakeForest/BakeParkway - 971,000 2,173,000 576,000 -
12/16/96 Arlington/S.WatsonRd. - 930,000 2,170,000 448,000 -
12/16/96 CherryHill/OldCuthbert - 645,000 1,505,000 410,000 -
12/16/96 OklahomaCity/SSantaFe - 360,000 840,000 171,000 -
12/16/96 OklahomaCity/S.May - 360,000 840,000 153,000 -
12/16/96 OklahomaCity/SW74th - 375,000 875,000 115,000 -
12/16/96 Richardson/E.Arapaho - 1,290,000 3,010,000 299,000 -
12/23/96 Alsip/115thStreet - 750,000 1,848,000 1,919,000 -
12/23/96 Arlington/Algonquin - 991,000 2,569,000 384,000 -
12/23/96 Auburn/RStreet - 690,000 1,700,000 199,000 -
12/23/96 BedfordPark/Cicero - 1,321,000 3,426,000 298,000 -
12/23/96 Broadview/S.25thAvenue - 1,289,000 3,257,000 303,000 -
12/23/96 Carmichael/FairOaks - 809,000 2,045,000 215,000 -
12/23/96 Clifton/BroadStreet - 1,411,000 3,659,000 155,000 -
12/23/96 Dallas/LemmonAve. - 1,710,000 4,214,000 150,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
584,000 4,576,000 5,160,000 475,000
823,000 2,216,000 3,039,000 704,000
673,000 1,730,000 2,403,000 532,000
912,000 2,375,000 3,287,000 857,000
914,000 2,309,000 3,223,000 469,000
908,000 2,278,000 3,186,000 479,000
927,000 2,262,000 3,189,000 730,000
1,171,000 2,737,000 3,908,000 879,000
995,000 2,528,000 3,523,000 541,000
762,000 2,075,000 2,837,000 834,000
819,000 2,038,000 2,857,000 696,000
282,000 856,000 1,138,000 367,000
1,711,000 4,241,000 5,952,000 1,324,000
900,000 2,309,000 3,209,000 758,000
900,000 2,235,000 3,135,000 722,000
698,000 1,803,000 2,501,000 593,000
518,000 1,464,000 1,982,000 532,000
420,000 1,204,000 1,624,000 415,000
465,000 1,292,000 1,757,000 447,000
360,000 1,061,000 1,421,000 360,000
330,000 903,000 1,233,000 313,000
557,000 1,430,000 1,987,000 316,000
973,000 2,747,000 3,720,000 719,000
930,000 2,618,000 3,548,000 943,000
645,000 1,915,000 2,560,000 635,000
360,000 1,011,000 1,371,000 354,000
360,000 993,000 1,353,000 351,000
375,000 990,000 1,365,000 342,000
1,291,000 3,308,000 4,599,000 1,008,000
750,000 3,767,000 4,517,000 849,000
991,000 2,953,000 3,944,000 938,000
690,000 1,899,000 2,589,000 617,000
1,322,000 3,723,000 5,045,000 1,135,000
1,290,000 3,559,000 4,849,000 1,062,000
809,000 2,260,000 3,069,000 706,000
1,412,000 3,813,000 5,225,000 1,130,000
1,711,000 4,363,000 6,074,000 1,305,000
F-59
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
12/23/96 Decatur/Covington - 930,000 2,292,000 201,000 -
12/23/96 DenverEastEvans - 1,740,000 4,288,000 197,000 -
12/23/96 EagleRock/Colorado - 330,000 813,000 383,000 -
12/23/96 Englewood/Costilla - 1,739,000 4,393,000 129,000 -
12/23/96 FederalHeights/W.48thAve. - 720,000 1,774,000 120,000 -
12/23/96 ForestPark/JonesboroRd. - 540,000 1,331,000 159,000 -
12/23/96 Ft.Lauderdale/Powerline - 660,000 1,626,000 292,000 -
12/23/96 Ft.Lauderdale/StateRoad - 1,199,000 3,030,000 223,000 -
12/23/96 GreenAcres/JogRoad - 600,000 1,479,000 137,000 -
12/23/96 Hillside/Glenwood - 563,000 4,051,000 300,000 -
12/23/96 Kent/PacificHwySouth - 930,000 2,292,000 154,000 -
12/23/96 LakeWorth/LkWorth - 1,111,000 2,880,000 222,000 -
12/23/96 LasVegas/Charleston - 1,049,000 2,651,000 142,000 -
12/23/96 LasVegas/SouthArvill - 929,000 2,348,000 132,000 -
12/23/96 Lilburn/BeaverRuinRoad - 600,000 1,515,000 170,000 -
12/23/96 LosAngeles/SantaMonica - 3,328,000 8,407,000 231,000 -
12/23/96 Madison/GallatinRoad - 780,000 1,922,000 243,000 -
12/23/96 MangoniaPark/AustralianAve. - 840,000 2,070,000 182,000 -
12/23/96 Napa/Industrial - 660,000 1,666,000 137,000 -
12/23/96 Nashville/DickersonPike - 990,000 2,440,000 183,000 -
12/23/96 OverlandPark/Mastin - 990,000 2,440,000 3,218,000 -
12/23/96 Philadelphia/Byberry - 1,019,000 2,575,000 167,000 -
12/23/96 Philadelphia/Oxford - 900,000 2,218,000 173,000 -
12/23/96 Phoenix/19thAvenue - 991,000 2,569,000 224,000 -
12/23/96 Pittsburgh/CaliforniaAve. - 630,000 1,552,000 119,000 -
12/23/96 PlymouthMeeting/Chemical - 1,109,000 2,802,000 155,000 -
12/23/96 PompanoBeach/S.DixieHwy. - 930,000 2,292,000 341,000 -
12/23/96 PompanoBeach/SampleRoad - 1,320,000 3,253,000 162,000 -
12/23/96 Portland/DivisionStreet - 989,000 2,499,000 152,000 -
12/23/96 Portland/N.E.71stAvenue - 869,000 2,196,000 238,000 -
12/23/96 Renton174thSt. - 960,000 2,366,000 229,000 -
12/23/96 Sacramento/Northgate - 1,021,000 2,647,000 146,000 -
12/23/96 Seattle/15thAvenue - 781,000 2,024,000 170,000 -
12/23/96 Seattle/PacificHwy.South - 689,000 1,742,000 201,000 -
12/23/96 Southington/Spring - 811,000 2,102,000 147,000 -
12/23/96 Tampa/15thStreet - 420,000 1,060,000 256,000 -
12/23/96 Topeka/8thStreet - 150,000 370,000 161,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
930,000 2,493,000 3,423,000 765,000
1,741,000 4,484,000 6,225,000 1,338,000
444,000 1,082,000 1,526,000 223,000
1,740,000 4,521,000 6,261,000 1,328,000
720,000 1,894,000 2,614,000 561,000
540,000 1,490,000 2,030,000 498,000
660,000 1,918,000 2,578,000 663,000
1,200,000 3,252,000 4,452,000 980,000
600,000 1,616,000 2,216,000 520,000
563,000 4,351,000 4,914,000 1,353,000
930,000 2,446,000 3,376,000 769,000
1,112,000 3,101,000 4,213,000 946,000
1,049,000 2,793,000 3,842,000 832,000
929,000 2,480,000 3,409,000 747,000
600,000 1,685,000 2,285,000 536,000
3,329,000 8,637,000 11,966,000 2,510,000
780,000 2,165,000 2,945,000 713,000
840,000 2,252,000 3,092,000 702,000
660,000 1,803,000 2,463,000 579,000
990,000 2,623,000 3,613,000 841,000
1,307,000 5,341,000 6,648,000 1,002,000
1,019,000 2,742,000 3,761,000 838,000
900,000 2,391,000 3,291,000 723,000
991,000 2,793,000 3,784,000 843,000
630,000 1,671,000 2,301,000 534,000
1,109,000 2,957,000 4,066,000 509,000
930,000 2,633,000 3,563,000 849,000
1,321,000 3,414,000 4,735,000 1,036,000
989,000 2,651,000 3,640,000 811,000
869,000 2,434,000 3,303,000 773,000
960,000 2,595,000 3,555,000 814,000
1,021,000 2,793,000 3,814,000 855,000
781,000 2,194,000 2,975,000 693,000
689,000 1,943,000 2,632,000 641,000
811,000 2,249,000 3,060,000 698,000
420,000 1,316,000 1,736,000 461,000
150,000 531,000 681,000 213,000
F-60
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
12/23/96 UpperDarby/Lansdowne - 899,000 2,272,000 206,000 -
12/23/96 W.PalmBeach/Belvedere - 960,000 2,366,000 208,000 -
12/23/96 Warren/SchoenherrRd. - 749,000 1,894,000 184,000 -
12/23/96 Wheatridge/W.44thAvenue - 1,439,000 3,636,000 139,000 -
12/23/96 Whittier/Colima - 540,000 1,331,000 87,000 -
12/23/96 WinterSprings/W.St.Rte434 - 689,000 1,742,000 127,000 -
12/23/96 Wyndmoor/IvyHill - 2,160,000 5,323,000 233,000 -
12/30/96 Concorde/Treat - 1,396,000 3,258,000 133,000 -
12/30/96 SanMateo - 2,408,000 5,619,000 202,000 -
12/30/96 VirginiaBeach - 535,000 1,248,000 141,000 -
1/22/97 Austin,1033E.41Street - 257,000 3,633,000 79,000 -
4/12/97 Annandale/Backlick - 955,000 2,229,000 348,000 -
4/12/97 Antioch/SunsetDrive - 1,035,000 2,416,000 222,000 -
4/12/97 Aurora/Abilene - 1,406,000 3,280,000 383,000 -
4/12/97 Aurora/S.Idalia - 1,002,000 2,338,000 488,000 -
4/12/97 Berlin/WilburCross - 756,000 1,764,000 260,000 -
4/12/97 Burien/FirstAve.So. - 792,000 1,847,000 258,000 -
4/12/97 Campbell/S.Curtner - 2,550,000 5,950,000 684,000 -
4/12/97 Columbia/BroadRiverRd. - 121,000 282,000 167,000 -
4/12/97 Columbus/EastlandDrive - 602,000 1,405,000 236,000 -
4/12/97 Dallas/Winsted - 1,375,000 3,209,000 455,000 -
4/12/97 Denver/Blake - 602,000 1,405,000 193,000 -
4/12/97 Evansville/GreenRiverRoad - 470,000 1,096,000 161,000 -
4/12/97 Farmingdale/BroadHollowRd. - 1,568,000 3,658,000 555,000 -
4/12/97 FountainValley/Newhope - 1,137,000 2,653,000 334,000 -
4/12/97 Ft.Worth/WestFreeway - 667,000 1,556,000 253,000 -
4/12/97 Gaithersburg/ChristopherAve. - 972,000 2,268,000 280,000 -
4/12/97 Garland/Plano - 889,000 2,073,000 243,000 -
4/12/97 Indianapolis/LafayetteRoad - 682,000 1,590,000 299,000 -
4/12/97 Indianapolis/Route31 - 619,000 1,444,000 315,000 -
4/12/97 Livermore/S.FrontRoad - 876,000 2,044,000 197,000 -
4/12/97 Manchester/TollandTurnpike - 807,000 1,883,000 212,000 -
4/12/97 Peabody/NewburyStreet - 1,159,000 2,704,000 461,000 -
4/12/97 RanchoCordova/MatherField - 494,000 1,153,000 175,000 -
4/12/97 RanchoCordova/Sunrise - 1,048,000 2,445,000 375,000 -
4/12/97 SanJose/StoryRoad - 1,352,000 3,156,000 337,000 -
4/12/97 SantaCruz/Capitola - 1,037,000 2,420,000 318,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
- - -------------- -------------- -------------- -------------
899,000 2,478,000 3,377,000 758,000
960,000 2,574,000 3,534,000 803,000
749,000 2,078,000 2,827,000 648,000
1,440,000 3,774,000 5,214,000 1,119,000
540,000 1,418,000 1,958,000 450,000
689,000 1,869,000 2,558,000 582,000
2,161,000 5,555,000 7,716,000 1,631,000
1,397,000 3,390,000 4,787,000 1,013,000
2,409,000 5,820,000 8,229,000 1,672,000
535,000 1,389,000 1,924,000 443,000
257,000 3,712,000 3,969,000 1,033,000
955,000 2,577,000 3,532,000 741,000
1,035,000 2,638,000 3,673,000 749,000
1,407,000 3,662,000 5,069,000 1,048,000
1,002,000 2,826,000 3,828,000 790,000
756,000 2,024,000 2,780,000 618,000
792,000 2,105,000 2,897,000 621,000
2,551,000 6,633,000 9,184,000 1,831,000
121,000 449,000 570,000 194,000
602,000 1,641,000 2,243,000 503,000
1,376,000 3,663,000 5,039,000 1,071,000
602,000 1,598,000 2,200,000 472,000
470,000 1,257,000 1,727,000 387,000
1,569,000 4,212,000 5,781,000 1,235,000
1,138,000 2,986,000 4,124,000 831,000
667,000 1,809,000 2,476,000 543,000
972,000 2,548,000 3,520,000 751,000
889,000 2,316,000 3,205,000 677,000
682,000 1,889,000 2,571,000 575,000
619,000 1,759,000 2,378,000 530,000
876,000 2,241,000 3,117,000 638,000
807,000 2,095,000 2,902,000 615,000
1,160,000 3,164,000 4,324,000 915,000
494,000 1,328,000 1,822,000 411,000
1,048,000 2,820,000 3,868,000 841,000
1,353,000 3,492,000 4,845,000 1,014,000
1,037,000 2,738,000 3,775,000 776,000
F-61
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
4/12/97 Seattle/Aurora - 1,145,000 2,671,000 270,000 -
4/12/97 Slickerville/BlackHorsePike - 539,000 1,258,000 214,000 -
4/12/97 SugarLand/Eldridge - 705,000 1,644,000 224,000 -
4/12/97 Tyson'sCorner/SpringhillRd. - 3,861,000 9,010,000 1,238,000 -
4/12/97 Whittier/WhittierBlvd. - 648,000 1,513,000 162,000 -
6/25/97 Alexandria - 1,533,000 3,576,000 489,000 -
6/25/97 AllenPark - 953,000 2,223,000 536,000 -
6/25/97 Atlanta - 1,183,000 2,761,000 103,000 -
6/25/97 Aurora - 808,000 1,886,000 436,000 -
6/25/97 Austin - 813,000 1,897,000 83,000 -
6/25/97 Bellevue - 1,653,000 3,858,000 78,000 -
6/25/97 Bensalem - 1,159,000 2,705,000 88,000 -
6/25/97 Berlin - 825,000 1,925,000 296,000 -
6/25/97 Birmingham - 539,000 1,258,000 110,000 -
6/25/97 Carrollton - 441,000 1,029,000 45,000 -
6/25/97 Carrollton - 1,158,000 2,702,000 495,000 -
6/25/97 Chicago - 1,160,000 2,708,000 428,000 -
6/25/97 Chicoppe - 663,000 1,546,000 316,000 -
6/25/97 CitrusHeights - 642,000 1,244,000 509,000 -
6/25/97 Dallas - 699,000 1,631,000 74,000 -
6/25/97 Dallas - 1,627,000 3,797,000 658,000 -
6/25/97 Dallas/VilbigRd. - 508,000 1,184,000 230,000 -
6/25/97 Davie - 1,086,000 2,533,000 638,000 -
6/25/97 Davis - 628,000 1,465,000 231,000 -
6/25/97 Decatur - 951,000 2,220,000 404,000 -
6/25/97 Denver - 1,316,000 3,071,000 490,000 -
6/25/97 EastHazelCrest - 753,000 1,757,000 2,079,000 -
6/25/97 EastL.A./BoyleHeights - 957,000 2,232,000 492,000 -
6/25/97 Edmonds - 1,187,000 2,770,000 414,000 -
6/25/97 ElkGrove - 642,000 1,497,000 264,000 -
6/25/97 Evansville - 429,000 1,000,000 54,000 -
6/25/97 Fairfield - 740,000 1,727,000 53,000 -
6/25/97 FosterCity - 1,064,000 2,483,000 329,000 -
6/25/97 Garland - 486,000 1,135,000 64,000 -
6/25/97 Gretna - 1,069,000 2,494,000 438,000 -
6/25/97 HarborCity - 1,244,000 2,904,000 240,000 -
6/25/97 Houston/SouthDairyashford - 856,000 1,997,000 314,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
1,146,000 2,940,000 4,086,000 840,000
539,000 1,472,000 2,011,000 470,000
705,000 1,868,000 2,573,000 564,000
3,863,000 10,246,000 14,109,000 2,891,000
648,000 1,675,000 2,323,000 475,000
1,534,000 4,064,000 5,598,000 1,109,000
953,000 2,759,000 3,712,000 765,000
1,184,000 2,863,000 4,047,000 821,000
808,000 2,322,000 3,130,000 631,000
813,000 1,980,000 2,793,000 562,000
1,654,000 3,935,000 5,589,000 1,119,000
1,160,000 2,792,000 3,952,000 780,000
825,000 2,221,000 3,046,000 600,000
539,000 1,368,000 1,907,000 408,000
441,000 1,074,000 1,515,000 316,000
1,159,000 3,196,000 4,355,000 907,000
1,161,000 3,135,000 4,296,000 886,000
663,000 1,862,000 2,525,000 566,000
642,000 1,753,000 2,395,000 561,000
699,000 1,705,000 2,404,000 505,000
1,628,000 4,454,000 6,082,000 1,262,000
508,000 1,414,000 1,922,000 421,000
1,086,000 3,171,000 4,257,000 897,000
628,000 1,696,000 2,324,000 487,000
951,000 2,624,000 3,575,000 745,000
1,317,000 3,560,000 4,877,000 994,000
1,237,000 3,352,000 4,589,000 1,116,000
957,000 2,724,000 3,681,000 756,000
1,188,000 3,183,000 4,371,000 893,000
642,000 1,761,000 2,403,000 500,000
401,000 1,082,000 1,483,000 321,000
740,000 1,780,000 2,520,000 499,000
1,064,000 2,812,000 3,876,000 766,000
486,000 1,199,000 1,685,000 356,000
1,069,000 2,932,000 4,001,000 868,000
1,245,000 3,143,000 4,388,000 940,000
856,000 2,311,000 3,167,000 648,000
F-62
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
6/25/97 Houston/VeteransMemorialDr. - 458,000 1,070,000 188,000 -
6/25/97 Idianapolis - 471,000 1,098,000 116,000 -
6/25/97 Irving - 469,000 1,093,000 217,000 -
6/25/97 Jacksonville - 653,000 1,525,000 297,000 -
6/25/97 Kirkland-Totem - 2,131,000 4,972,000 181,000 -
6/25/97 L.A./VeniceBlvd. - 523,000 1,221,000 1,786,000 -
6/25/97 LaHabra - 822,000 1,918,000 61,000 -
6/25/97 LAX - 1,312,000 3,062,000 529,000 -
6/25/97 Lilburn - 507,000 1,182,000 343,000 -
6/25/97 Littleton - 1,340,000 3,126,000 491,000 -
6/25/97 Littleton - 868,000 2,026,000 462,000 -
6/25/97 Lombard - 1,527,000 3,564,000 1,740,000 -
6/25/97 LosAngeles/Olympic - 4,392,000 10,247,000 1,218,000 -
6/25/97 Louisville - 717,000 1,672,000 312,000 -
6/25/97 Lynnwood - 839,000 1,959,000 365,000 -
6/25/97 Metairie - 1,229,000 2,868,000 460,000 -
6/25/97 Miami - 1,762,000 4,111,000 846,000 -
6/25/97 Naperville - 1,108,000 2,585,000 373,000 -
6/25/97 Parma - 881,000 2,055,000 507,000 -
6/25/97 PelhamManor - 1,209,000 2,820,000 672,000 -
6/25/97 Philadelphia - 924,000 2,155,000 339,000 -
6/25/97 Plano - 1,369,000 3,193,000 438,000 -
6/25/97 Sacramento - 489,000 1,396,000 (195,000) -
6/25/97 Sacramento - 592,000 1,380,000 898,000 -
6/25/97 Sacramento/57thStreet - 869,000 2,029,000 475,000 -
6/25/97 SanDiego/16thStreet - 932,000 2,175,000 608,000 -
6/25/97 SanJose - 1,273,000 2,971,000 27,000 -
6/25/97 Seattle - 1,498,000 3,494,000 254,000 -
6/25/97 Spring - 461,000 1,077,000 214,000 -
6/25/97 Springfield/AlbanStation - 1,317,000 3,074,000 658,000 -
6/25/97 Stanton - 948,000 2,212,000 64,000 -
6/25/97 StatenIsland - 1,676,000 3,910,000 563,000 -
6/25/97 SterlingHeights - 766,000 1,787,000 454,000 -
6/25/97 Waipahu - 1,620,000 3,780,000 533,000 -
6/25/97 Westford - 857,000 1,999,000 95,000 -
6/25/97 WheatRidge - 1,054,000 2,459,000 354,000 -
8/13/97 SantaMonica/WilshireBlvd. - 2,040,000 4,760,000 266,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
- - -------------- -------------- -------------- -------------
458,000 1,258,000 1,716,000 368,000
471,000 1,214,000 1,685,000 369,000
469,000 1,310,000 1,779,000 393,000
653,000 1,822,000 2,475,000 544,000
2,132,000 5,152,000 7,284,000 1,494,000
1,044,000 2,486,000 3,530,000 501,000
822,000 1,979,000 2,801,000 571,000
1,313,000 3,590,000 4,903,000 1,014,000
507,000 1,525,000 2,032,000 458,000
1,341,000 3,616,000 4,957,000 1,000,000
868,000 2,488,000 3,356,000 683,000
2,048,000 4,783,000 6,831,000 1,238,000
4,394,000 11,463,000 15,857,000 3,089,000
717,000 1,984,000 2,701,000 563,000
839,000 2,324,000 3,163,000 671,000
1,230,000 3,327,000 4,557,000 943,000
1,763,000 4,956,000 6,719,000 1,351,000
1,108,000 2,958,000 4,066,000 812,000
881,000 2,562,000 3,443,000 712,000
1,210,000 3,491,000 4,701,000 949,000
924,000 2,494,000 3,418,000 691,000
1,370,000 3,630,000 5,000,000 982,000
489,000 1,201,000 1,690,000 351,000
720,000 2,150,000 2,870,000 570,000
869,000 2,504,000 3,373,000 714,000
932,000 2,783,000 3,715,000 830,000
1,274,000 2,997,000 4,271,000 823,000
1,499,000 3,747,000 5,246,000 1,192,000
461,000 1,291,000 1,752,000 375,000
1,318,000 3,731,000 5,049,000 1,031,000
948,000 2,276,000 3,224,000 632,000
1,677,000 4,472,000 6,149,000 1,235,000
766,000 2,241,000 3,007,000 630,000
1,621,000 4,312,000 5,933,000 1,195,000
857,000 2,094,000 2,951,000 599,000
1,054,000 2,813,000 3,867,000 766,000
2,041,000 5,025,000 7,066,000 1,453,000
F-63
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
10/1/97 Baltimore/YorkRoad - 1,538,000 1,952,000 363,000 708,000
10/1/97 BocaRaton/N.W.20 - 1,140,000 2,256,000 401,000 774,000
10/1/97 Bolingbrook - 737,000 1,776,000 254,000 617,000
10/1/97 BridgeWater/Main - 445,000 2,054,000 265,000 161,000
10/1/97 Bridgeport - 4,877,000 2,739,000 601,000 231,000
10/1/97 Burbank/SanFernando - 1,825,000 2,210,000 222,000 745,000
10/1/97 CarolStream/St.Charles - 185,000 1,187,000 186,000 418,000
10/1/97 DalyCity/Mission - 389,000 2,921,000 276,000 980,000
10/1/97 Denver/Leetsdale - 1,407,000 1,682,000 214,000 588,000
10/1/97 Denver/Sheridan - 429,000 1,105,000 184,000 401,000
10/1/97 Denver/TamaracPark - 2,545,000 1,692,000 417,000 662,000
10/1/97 DesPlaines/GolfRd - 1,363,000 3,093,000 223,000 238,000
10/1/97 Dublin/SanRamonRd - 942,000 1,999,000 162,000 155,000
10/1/97 Emeryville/BaySt - 1,602,000 1,830,000 190,000 627,000
10/1/97 Enfield/ElmStreet - 399,000 1,900,000 289,000 645,000
10/1/97 Forrestville/Penn. - 1,056,000 2,347,000 293,000 192,000
10/1/97 Fremont/WarmSprings - 848,000 2,885,000 247,000 227,000
10/1/97 Geneva/Roosevelt - 355,000 1,302,000 203,000 461,000
10/1/97 Gresham/Powell - 322,000 1,298,000 207,000 439,000
10/1/97 HydePark/RiverSt - 626,000 1,748,000 279,000 142,000
10/1/97 Justice/Industrial - 233,000 1,181,000 169,000 412,000
10/1/97 Kent/Central - 483,000 1,321,000 211,000 463,000
10/1/97 LakeOswego/N.State - 465,000 1,956,000 270,000 660,000
10/1/97 Lax/Imperial - 1,662,000 2,079,000 217,000 715,000
10/1/97 LosAngeles/Jefferson - 1,090,000 1,580,000 253,000 127,000
10/1/97 LosAngeles/Martin - 869,000 1,152,000 118,000 93,000
10/1/97 Lynn/Lynnway - 463,000 3,059,000 394,000 1,067,000
10/1/97 MadisonHeights - 428,000 1,686,000 2,055,000 565,000
10/1/97 Marietta/CobbPark - 420,000 1,131,000 302,000 426,000
10/1/97 Marietta/AustellRd - 398,000 1,326,000 265,000 462,000
10/1/97 Mercer/ParksideAve - 359,000 1,763,000 224,000 142,000
10/1/97 Milwaukee/Appleton - 324,000 1,385,000 240,000 488,000
10/1/97 Monterey/DelRey - 257,000 1,048,000 220,000 360,000
10/1/97 MortonGrove/Wauke - 2,658,000 3,232,000 3,635,000 (412,000)
10/1/97 MountlakeTerrace - 1,017,000 1,783,000 240,000 605,000
10/1/97 NorthHollywood/Vine - 906,000 2,379,000 184,000 185,000
10/1/97 Norwalk/HoytStreet - 2,369,000 3,049,000 540,000 255,000
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
1,539,000 3,022,000 4,561,000 899,000
1,141,000 3,430,000 4,571,000 946,000
737,000 2,647,000 3,384,000 789,000
445,000 2,480,000 2,925,000 705,000
4,879,000 3,569,000 8,448,000 1,119,000
1,826,000 3,176,000 5,002,000 934,000
185,000 1,791,000 1,976,000 533,000
389,000 4,177,000 4,566,000 1,126,000
1,408,000 2,483,000 3,891,000 772,000
429,000 1,690,000 2,119,000 521,000
2,546,000 2,770,000 5,316,000 887,000
1,364,000 3,553,000 4,917,000 1,186,000
942,000 2,316,000 3,258,000 782,000
1,603,000 2,646,000 4,249,000 767,000
399,000 2,834,000 3,233,000 777,000
1,056,000 2,832,000 3,888,000 899,000
848,000 3,359,000 4,207,000 976,000
355,000 1,966,000 2,321,000 602,000
322,000 1,944,000 2,266,000 567,000
626,000 2,169,000 2,795,000 630,000
233,000 1,762,000 1,995,000 530,000
483,000 1,995,000 2,478,000 605,000
465,000 2,886,000 3,351,000 787,000
1,663,000 3,010,000 4,673,000 901,000
1,090,000 1,960,000 3,050,000 615,000
869,000 1,363,000 2,232,000 445,000
463,000 4,520,000 4,983,000 1,238,000
428,000 4,306,000 4,734,000 686,000
420,000 1,859,000 2,279,000 564,000
398,000 2,053,000 2,451,000 619,000
359,000 2,129,000 2,488,000 622,000
324,000 2,113,000 2,437,000 587,000
257,000 1,628,000 1,885,000 442,000
2,659,000 6,454,000 9,113,000 1,675,000
1,017,000 2,628,000 3,645,000 765,000
906,000 2,748,000 3,654,000 820,000
2,370,000 3,843,000 6,213,000 1,078,000
F-64
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
10/1/97 Novato/Landing - 2,416,000 3,496,000 242,000 308,000
10/1/97 Oakland/International - 358,000 1,568,000 249,000 129,000
10/1/97 Odenton/Route175 - 456,000 2,104,000 264,000 724,000
10/1/97 Pinole/AppianWay - 728,000 1,827,000 211,000 624,000
10/1/97 PompanoBeach - 1,077,000 1,527,000 548,000 534,000
10/1/97 Randolph/WarrenSt - 2,330,000 1,914,000 483,000 156,000
10/1/97 Roselle/LakeStreet - 312,000 1,411,000 218,000 493,000
10/1/97 SanLeandro/E.14th - 627,000 1,289,000 119,000 103,000
10/1/97 SanLeandro/Washington - 660,000 1,142,000 180,000 395,000
10/1/97 SantaCruz/Portola - 535,000 1,526,000 160,000 123,000
10/1/97 Seattle/StoneWay - 829,000 2,180,000 286,000 175,000
10/1/97 St.Louis/Lindberg - 584,000 1,508,000 265,000 127,000
10/1/97 Stockton/MarchLane - 663,000 1,398,000 132,000 111,000
10/1/97 StudioCity/Ventura - 2,421,000 1,610,000 165,000 537,000
10/1/97 Tucson/TanqueVerde - 345,000 1,709,000 170,000 136,000
10/1/97 Vallejo/Humboldt - 473,000 1,651,000 164,000 132,000
10/1/97 Venice/Rose - 5,468,000 5,478,000 649,000 1,814,000
10/1/97 Ventura/VenturaBlvd - 911,000 2,227,000 250,000 762,000
10/1/97 W.Olympia - 149,000 1,096,000 283,000 92,000
10/1/97 Warren/MoundRoad - 268,000 1,025,000 210,000 363,000
10/1/97 WashingtonDc/SoCapital - 1,437,000 4,489,000 510,000 1,528,000
10/1/97 Woodside/Brooklyn - 5,016,000 3,950,000 406,000 2,107,000
11/2/97 Lansing - 758,000 1,768,000 140,000 -
11/7/97 Phoenix - 1,197,000 2,793,000 133,000 -
11/13/97 TinleyPark - 1,422,000 3,319,000 55,000 -
3/17/98 Arlington/E.Pioneer - 922,000 2,152,000 202,000 -
3/17/98 Austin/BenWhite - 692,000 1,614,000 74,000 -
3/17/98 Branford/SummitPlace - 728,000 1,698,000 130,000 -
3/17/98 Houston/EastFreeway - 593,000 1,384,000 166,000 -
3/17/98 Houston/DeSotoDr. - 659,000 1,537,000 131,000 -
3/17/98 LasVegas/Charleston - 791,000 1,845,000 112,000 -
3/17/98 LasVegas/Tropicana - 1,285,000 2,998,000 156,000 -
3/17/98 Nesconset/Southern - 1,423,000 3,321,000 107,000 -
3/17/98 Pasadena/ArroyoPrkwy - 3,005,000 7,012,000 214,000 -
3/17/98 Phoenix/BlackCanyon - 380,000 886,000 147,000 -
Gross Carrying Amount
At December 31, 2003
- -------------------------------------------- Accumulated
Land Buidling Total Depreciation
- -------------- -------------- -------------- -------------
2,417,000 4,045,000 6,462,000 1,352,000
358,000 1,946,000 2,304,000 625,000
456,000 3,092,000 3,548,000 750,000
728,000 2,662,000 3,390,000 789,000
1,077,000 2,609,000 3,686,000 666,000
2,331,000 2,552,000 4,883,000 709,000
312,000 2,122,000 2,434,000 618,000
627,000 1,511,000 2,138,000 490,000
660,000 1,717,000 2,377,000 497,000
535,000 1,809,000 2,344,000 562,000
829,000 2,641,000 3,470,000 740,000
584,000 1,900,000 2,484,000 617,000
663,000 1,641,000 2,304,000 538,000
2,422,000 2,311,000 4,733,000 692,000
345,000 2,015,000 2,360,000 606,000
473,000 1,947,000 2,420,000 593,000
5,470,000 7,939,000 13,409,000 2,173,000
911,000 3,239,000 4,150,000 960,000
149,000 1,471,000 1,620,000 411,000
268,000 1,598,000 1,866,000 449,000
1,438,000 6,526,000 7,964,000 1,564,000
5,018,000 6,461,000 11,479,000 1,492,000
758,000 1,908,000 2,666,000 556,000
1,198,000 2,925,000 4,123,000 798,000
1,423,000 3,373,000 4,796,000 848,000
922,000 2,354,000 3,276,000 587,000
682,000 1,698,000 2,380,000 433,000
728,000 1,828,000 2,556,000 474,000
593,000 1,550,000 2,143,000 422,000
659,000 1,668,000 2,327,000 421,000
791,000 1,957,000 2,748,000 495,000
1,286,000 3,153,000 4,439,000 774,000
1,424,000 3,427,000 4,851,000 831,000
3,006,000 7,225,000 10,231,000 1,699,000
380,000 1,033,000 1,413,000 294,000
F-65
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
3/17/98 Phoenix/N.43rdAve - 443,000 1,033,000 153,000 -
3/17/98 Phoenix/BlackCanyon - 136,000 317,000 188,000 -
3/17/98 Phoenix/No.43rd - 380,000 886,000 416,000 -
3/17/98 So.SanFrancisco - 1,550,000 3,617,000 95,000 -
3/17/98 Tempe/E.Broadway - 633,000 1,476,000 151,000 -
4/1/98 Akron/BrittainRd. - 275,000 2,248,000 (194,000) -
4/1/98 Arcadia/LowerAzusa - 821,000 1,369,000 144,000 -
4/1/98 ArlingtonHts/University - 670,000 3,004,000 88,000 -
4/1/98 Artesia/Artesia - 625,000 1,419,000 100,000 -
4/1/98 Atlanta/JohnWesley - 1,233,000 1,665,000 206,000 -
4/1/98 Baltimore/W.Patap - 403,000 2,650,000 136,000 -
4/1/98 Bellevue/Northup - 1,232,000 3,306,000 239,000 -
4/1/98 Bethesda/ButlerRd - 1,146,000 2,509,000 74,000 -
4/1/98 Chicago/Cuyler - 1,400,000 2,695,000 93,000 -
4/1/98 Chicago/PulaskiRd. - 1,276,000 2,858,000 80,000 -
4/1/98 Chicago/S.Harlem - 791,000 1,424,000 90,000 -
4/1/98 ChicagoHeights/West - 468,000 1,804,000 118,000 -
4/1/98 Chicago/BurrRidgeRd. - 421,000 2,165,000 82,000 -
4/1/98 Chicago/E.95thSt. - 397,000 2,357,000 125,000 -
4/1/98 Chicago/HarlemAve - 1,430,000 3,038,000 122,000 -
4/1/98 Chicago/N.WellsSt. - 1,446,000 2,828,000 94,000 -
4/1/98 Chicago/N.WesternAve - 1,453,000 3,205,000 111,000 -
4/1/98 Chicago/NorthwestHwy - 925,000 2,412,000 68,000 -
4/1/98 Chicago/W.HowardSt. - 974,000 2,875,000 137,000 -
4/1/98 Cicero/Ogden - 1,678,000 2,266,000 278,000 -
4/1/98 Dallas/Kingsly - 1,095,000 1,712,000 109,000 -
4/1/98 Dundalk/WiseAve - 447,000 2,005,000 93,000 -
4/1/98 Fraser/GroesbeckHwy - 368,000 1,796,000 87,000 -
4/1/98 Havertown/WestChester - 1,254,000 2,926,000 114,000 -
4/1/98 Hollywood/Cole&Wilshire - 1,590,000 1,785,000 85,000 -
4/1/98 IslandPark/Austin - 2,313,000 3,015,000 (600,000) -
4/1/98 IslandPark/Austin - 2,313,000 3,015,000 89,000 -
4/1/98 LaDowntwn/10Fwy - 1,608,000 3,358,000 165,000 -
4/1/98 LakeCity/ForestPark - 248,000 1,445,000 94,000 -
4/1/98 Manassas/Centreville - 405,000 2,137,000 208,000 -
4/1/98 Miami/5thStreet - 2,327,000 3,234,000 111,000 -
4/1/98 Montebello/S.Maple - 1,274,000 2,299,000 92,000 -
4/1/98 Patchogue/W.Sunrise - 936,000 2,184,000 142,000 -
4/1/98 SanDiego/54th&Euclid - 952,000 2,550,000 100,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
443,000 1,186,000 1,629,000 334,000
136,000 505,000 641,000 169,000
380,000 1,302,000 1,682,000 274,000
1,551,000 3,711,000 5,262,000 896,000
633,000 1,627,000 2,260,000 420,000
669,000 1,660,000 2,329,000 345,000
821,000 1,513,000 2,334,000 487,000
670,000 3,092,000 3,762,000 808,000
625,000 1,519,000 2,144,000 507,000
1,234,000 1,870,000 3,104,000 683,000
403,000 2,786,000 3,189,000 877,000
1,233,000 3,544,000 4,777,000 1,184,000
1,147,000 2,582,000 3,729,000 865,000
1,401,000 2,787,000 4,188,000 744,000
1,277,000 2,937,000 4,214,000 749,000
791,000 1,514,000 2,305,000 545,000
468,000 1,922,000 2,390,000 509,000
421,000 2,247,000 2,668,000 796,000
397,000 2,482,000 2,879,000 874,000
1,431,000 3,159,000 4,590,000 1,090,000
1,447,000 2,921,000 4,368,000 773,000
1,454,000 3,315,000 4,769,000 881,000
925,000 2,480,000 3,405,000 651,000
974,000 3,012,000 3,986,000 818,000
1,679,000 2,543,000 4,222,000 728,000
1,095,000 1,821,000 2,916,000 599,000
447,000 2,098,000 2,545,000 690,000
368,000 1,883,000 2,251,000 597,000
1,250,000 3,044,000 4,294,000 753,000
1,591,000 1,869,000 3,460,000 608,000
1,375,000 3,353,000 4,728,000 786,000
2,314,000 3,103,000 5,417,000 1,172,000
1,609,000 3,522,000 5,131,000 1,130,000
248,000 1,539,000 1,787,000 510,000
405,000 2,345,000 2,750,000 782,000
2,328,000 3,344,000 5,672,000 1,152,000
1,275,000 2,390,000 3,665,000 763,000
936,000 2,326,000 3,262,000 594,000
952,000 2,650,000 3,602,000 940,000
F-66
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
4/1/98 SchillerPark/River - 568,000 1,390,000 99,000 -
4/1/98 SilverSpring/Hill - 922,000 2,080,000 149,000 -
4/1/98 Silverlake/Glendale - 2,314,000 5,481,000 158,000 -
4/1/98 St.Charles/Highway - 623,000 1,501,000 124,000 -
4/1/98 St.Louis/Hwy.141 - 659,000 1,628,000 4,706,000 -
4/1/98 St.Louis/Hwy.141 - 659,000 1,628,000 69,000 -
4/1/98 Vallejo/MiniDrive - 560,000 1,803,000 84,000 -
4/1/98 Yonkers/Route9a - 1,722,000 3,823,000 137,000 -
5/1/98 Berkeley/2ndSt. - 1,914,000 4,466,000 (121,000) -
5/8/98 Aurora/Farnsworth - 960,000 2,350,000 75,000 -
5/8/98 Chicago/S.Chicago - 840,000 2,057,000 72,000 -
5/8/98 Cleveland/W.117th - 930,000 2,277,000 210,000 -
5/8/98 GoldenValley/Winn - 630,000 1,542,000 122,000 -
5/8/98 La/VeniceBlvd - 1,470,000 3,599,000 100,000 -
5/8/98 SantaRosa/Hopper - 1,020,000 2,497,000 102,000 -
5/8/98 St.Louis/Benham - 810,000 1,983,000 145,000 -
10/1/98 Atlanta/MemorialDr. - 414,000 2,239,000 167,000 -
10/1/98 Brooklyn/RockawayAve - 6,272,000 9,691,000 370,000 -
10/1/98 Chicago/111th - 341,000 2,898,000 2,246,000 -
10/1/98 Chicago/N.Broadway - 1,918,000 3,824,000 152,000 -
10/1/98 Chicago/W.79thSt - 861,000 2,789,000 266,000 -
10/1/98 CoonRapids/Hwy10 - 330,000 1,646,000 86,000 -
10/1/98 Dallas/Greenville - 1,933,000 2,892,000 110,000 -
10/1/98 EastLa/Figueroa&4th - 1,213,000 2,689,000 58,000 -
10/1/98 ElSegundo/Sepulveda - 6,586,000 5,795,000 126,000 -
10/1/98 Farmington/9Mile - 580,000 2,526,000 99,000 -
10/1/98 Ft.Lauderdale/S.W. - 1,046,000 2,928,000 92,000 -
10/1/98 Griffith/Cline - 299,000 2,118,000 48,000 -
10/1/98 LasVegas/E.Charles - 602,000 2,545,000 194,000 -
10/1/98 Laurel/BaltimoreAve - 1,899,000 4,498,000 163,000 -
10/1/98 LosGatos/University - 2,234,000 3,890,000 (239,000) -
10/1/98 Miami/Nw73rdSt - 1,050,000 3,064,000 125,000 -
10/1/98 Miami/SunsetDrive - 1,656,000 2,321,000 1,972,000 -
10/1/98 N.Hollywood - 1,484,000 3,143,000 56,000 -
10/1/98 Oldsmar/TampaRoad - 760,000 2,154,000 2,729,000 -
10/1/98 Oxnard/HuenemeRd - 923,000 3,925,000 114,000 -
10/1/98 Petaluma/Transport - 460,000 1,840,000 4,878,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
568,000 1,489,000 2,057,000 385,000
922,000 2,229,000 3,151,000 799,000
2,315,000 5,638,000 7,953,000 1,908,000
623,000 1,625,000 2,248,000 603,000
1,345,000 5,648,000 6,993,000 838,000
659,000 1,697,000 2,356,000 648,000
560,000 1,887,000 2,447,000 608,000
1,723,000 3,959,000 5,682,000 1,357,000
1,838,000 4,421,000 6,259,000 1,079,000
960,000 2,425,000 3,385,000 574,000
840,000 2,129,000 2,969,000 494,000
930,000 2,487,000 3,417,000 631,000
630,000 1,664,000 2,294,000 415,000
1,471,000 3,698,000 5,169,000 851,000
1,020,000 2,599,000 3,619,000 615,000
810,000 2,128,000 2,938,000 539,000
414,000 2,406,000 2,820,000 603,000
6,275,000 10,058,000 16,333,000 2,298,000
432,000 5,053,000 5,485,000 763,000
1,919,000 3,975,000 5,894,000 945,000
861,000 3,055,000 3,916,000 772,000
330,000 1,732,000 2,062,000 420,000
1,934,000 3,001,000 4,935,000 691,000
1,214,000 2,746,000 3,960,000 633,000
6,589,000 5,918,000 12,507,000 1,343,000
580,000 2,625,000 3,205,000 605,000
1,046,000 3,020,000 4,066,000 688,000
299,000 2,166,000 2,465,000 501,000
602,000 2,739,000 3,341,000 642,000
1,900,000 4,660,000 6,560,000 1,079,000
2,235,000 3,650,000 5,885,000 834,000
1,050,000 3,189,000 4,239,000 740,000
2,268,000 3,681,000 5,949,000 693,000
1,485,000 3,198,000 4,683,000 729,000
1,049,000 4,594,000 5,643,000 804,000
923,000 4,039,000 4,962,000 937,000
857,000 6,321,000 7,178,000 810,000
F-67
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
10/1/98 Revere/ChargerSt - 1,997,000 3,727,000 207,000 -
10/1/98 SanDiego/Morena - 3,173,000 5,469,000 96,000 -
10/1/98 SanJose/Santa - 966,000 3,870,000 86,000 -
10/1/98 SantaCruz/Soquel - 832,000 2,385,000 96,000 -
10/1/98 St.Louis/Gravois - 312,000 2,327,000 134,000 -
10/1/98 Tacoma/Orchard - 358,000 1,987,000 91,000 -
10/1/98 Tigard/McEwan - 597,000 1,652,000 87,000 -
10/1/98 UpperDarby/Market - 808,000 5,011,000 142,000 -
10/1/98 Vancouver/Millplain - 343,000 2,000,000 81,000 -
10/1/98 WhiteBearLake - 578,000 2,079,000 131,000 -
1/1/99 NewOrleans/St.Charles - 1,463,000 2,634,000 (347,000) -
1/6/99 Brandon/E.BrandonBlvd - 1,560,000 3,695,000 65,000 -
3/12/99 Addison/InwoodRoad - 1,204,000 2,808,000 61,000 -
3/12/99 Alpharetta/MaxwellRd - 1,075,000 2,509,000 74,000 -
3/12/99 Alpharetta/N.MainSt - 1,240,000 2,893,000 82,000 -
3/12/99 Apopka/S.OrangeBlossom - 307,000 717,000 113,000 -
3/12/99 Arlington/CooperSt - 779,000 1,818,000 55,000 -
3/12/99 Arlington/Division - 998,000 2,328,000 86,000 -
3/12/99 Arvada/64thAve - 671,000 1,566,000 89,000 -
3/12/99 Atlanta/BoltonRd - 866,000 2,019,000 175,000 -
3/12/99 Atlanta/BriarcliffRd - 2,171,000 5,066,000 241,000 -
3/12/99 Atlanta/DunwoodyPlace - 1,410,000 3,296,000 230,000 -
3/12/99 Augusta/PeachOrchardRd - 860,000 2,007,000 290,000 -
3/12/99 Aurora/Business30 - 900,000 2,097,000 129,000 -
3/12/99 Austin/N.MopacExpressway - 865,000 2,791,000 74,000 -
3/12/99 CarolStream/PhillipsCourt - 829,000 1,780,000 59,000 -
3/12/99 CarolStream/S.MainPlace - 1,320,000 3,079,000 177,000 -
3/12/99 Carpentersville/N.WesternAve - 911,000 2,120,000 116,000 -
3/12/99 Carrollton/TrinityMillsWest - 530,000 1,237,000 98,000 -
3/12/99 CasselberryIi - 1,160,000 2,708,000 142,000 -
3/12/99 Centreville/LeeHwy - 1,650,000 3,851,000 123,000 -
3/12/99 Charleston/AshleyRiverRd - 1,114,000 2,581,000 132,000 -
3/12/99 Charleston/SamRittenbergBlvd - 555,000 1,296,000 110,000 -
3/12/99 Charleston/AshleyPhosphate - 839,000 1,950,000 178,000 -
3/12/99 Charlotte/EastWtHarrisBlvd - 736,000 1,718,000 107,000 -
3/12/99 Charlotte/NorthTryonSt. - 708,000 1,653,000 205,000 -
3/12/99 Charlotte/SouthBlvd - 641,000 1,496,000 122,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
1,998,000 3,933,000 5,931,000 937,000
3,174,000 5,564,000 8,738,000 1,264,000
966,000 3,956,000 4,922,000 921,000
832,000 2,481,000 3,313,000 594,000
312,000 2,461,000 2,773,000 605,000
358,000 2,078,000 2,436,000 504,000
597,000 1,739,000 2,336,000 436,000
808,000 5,153,000 5,961,000 1,178,000
343,000 2,081,000 2,424,000 509,000
578,000 2,210,000 2,788,000 514,000
1,039,000 2,711,000 3,750,000 550,000
1,561,000 3,759,000 5,320,000 671,000
1,205,000 2,868,000 4,073,000 576,000
1,075,000 2,583,000 3,658,000 534,000
1,241,000 2,974,000 4,215,000 602,000
307,000 830,000 1,137,000 205,000
779,000 1,873,000 2,652,000 387,000
998,000 2,414,000 3,412,000 488,000
671,000 1,655,000 2,326,000 353,000
866,000 2,194,000 3,060,000 459,000
2,172,000 5,306,000 7,478,000 1,077,000
1,411,000 3,525,000 4,936,000 715,000
860,000 2,297,000 3,157,000 579,000
900,000 2,226,000 3,126,000 473,000
865,000 2,865,000 3,730,000 525,000
829,000 1,839,000 2,668,000 377,000
1,321,000 3,255,000 4,576,000 691,000
911,000 2,236,000 3,147,000 473,000
530,000 1,335,000 1,865,000 297,000
1,161,000 2,849,000 4,010,000 589,000
1,637,000 3,987,000 5,624,000 817,000
1,115,000 2,712,000 3,827,000 558,000
555,000 1,406,000 1,961,000 321,000
825,000 2,142,000 2,967,000 488,000
736,000 1,825,000 2,561,000 399,000
708,000 1,858,000 2,566,000 421,000
641,000 1,618,000 2,259,000 363,000
F-68
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
3/12/99 Chesapeake/WesternBranch - 1,274,000 2,973,000 137,000 -
3/12/99 Chicago/N.BroadwaySt - 535,000 1,249,000 229,000 -
3/12/99 Chicago/N.NatchezAve - 1,684,000 3,930,000 130,000 -
3/12/99 Chicago/S.PulaskiRoad - 458,000 2,118,000 262,000 -
3/12/99 Chicago/W.CermakRoad - 1,294,000 3,019,000 490,000 -
3/12/99 Chicago/W.JarvisAve - 313,000 731,000 85,000 -
3/12/99 Chicago/West47thSt. - 705,000 1,645,000 65,000 -
3/12/99 Cincinnati/WesternHills - 758,000 1,769,000 201,000 -
3/12/99 Clearwater/HighlandAve - 724,000 1,690,000 153,000 -
3/12/99 ColoSprngs/AstrozonCourt - 810,000 1,889,000 134,000 -
3/12/99 ColoSprngs/CentennialBlvd - 1,352,000 3,155,000 94,000 -
3/12/99 ColoSprngs/ParkmoorVillage - 620,000 1,446,000 102,000 -
3/12/99 ColoSprngs/VanTeylingen - 1,216,000 2,837,000 152,000 -
3/12/99 ColoSprngs/N.Powers - 1,124,000 2,622,000 165,000 -
3/12/99 Columbia/BroadRiver - 1,463,000 3,413,000 235,000 -
3/12/99 Columbia/BucknerRd - 714,000 1,665,000 274,000 -
3/12/99 Columbia/DeckerParkRd - 605,000 1,412,000 124,000 -
3/12/99 Columbia/PlumbersRd - 368,000 858,000 150,000 -
3/12/99 Columbia/RiverDr - 671,000 1,566,000 178,000 -
3/12/99 Columbia/RosewoodDr - 777,000 1,814,000 98,000 -
3/12/99 Columbus/MorseRoad - 1,415,000 3,302,000 296,000 -
3/12/99 Dallas/InwoodRoad - 1,478,000 3,448,000 51,000 -
3/12/99 Davie/University - 313,000 4,379,000 195,000 -
3/12/99 Decatur/Covington - 1,764,000 4,116,000 115,000 -
3/12/99 Decatur/NDecaturRd - 933,000 2,177,000 139,000 -
3/12/99 DeerfieldBeach/Sw10thSt. - 1,844,000 4,302,000 77,000 -
3/12/99 Denver/So.ClintonSt. - 462,000 1,609,000 97,000 -
3/12/99 Denver/WashingtonSt. - 795,000 1,846,000 322,000 -
3/12/99 Doraville/McelroyRd - 827,000 1,931,000 220,000 -
3/12/99 Douglasville/DuraleeLane - 533,000 1,244,000 135,000 -
3/12/99 Douglasville/Highway5 - 804,000 1,875,000 452,000 -
3/12/99 Douglasville/Westmoreland - 453,000 1,056,000 188,000 -
3/12/99 Duncanville/S.CedarRidge - 1,477,000 3,447,000 211,000 -
3/12/99 Durham/E.ClubBlvd - 947,000 2,209,000 107,000 -
3/12/99 Durham/KangarooDr. - 1,102,000 2,572,000 243,000 -
3/12/99 Durham/N.DukeSt. - 769,000 1,794,000 130,000 -
3/12/99 Elgin/BigTimberRoad - 1,347,000 3,253,000 217,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
1,275,000 3,109,000 4,384,000 645,000
535,000 1,478,000 2,013,000 355,000
1,685,000 4,059,000 5,744,000 830,000
458,000 2,380,000 2,838,000 453,000
1,295,000 3,508,000 4,803,000 871,000
313,000 816,000 1,129,000 206,000
705,000 1,710,000 2,415,000 354,000
758,000 1,970,000 2,728,000 430,000
724,000 1,843,000 2,567,000 396,000
810,000 2,023,000 2,833,000 440,000
1,353,000 3,248,000 4,601,000 638,000
620,000 1,548,000 2,168,000 326,000
1,217,000 2,988,000 4,205,000 609,000
1,125,000 2,786,000 3,911,000 596,000
1,464,000 3,647,000 5,111,000 798,000
714,000 1,939,000 2,653,000 504,000
605,000 1,536,000 2,141,000 348,000
368,000 1,008,000 1,376,000 233,000
671,000 1,744,000 2,415,000 400,000
777,000 1,912,000 2,689,000 416,000
1,416,000 3,597,000 5,013,000 769,000
1,479,000 3,498,000 4,977,000 697,000
313,000 4,574,000 4,887,000 913,000
1,765,000 4,230,000 5,995,000 862,000
933,000 2,316,000 3,249,000 514,000
1,845,000 4,378,000 6,223,000 874,000
462,000 1,706,000 2,168,000 342,000
795,000 2,168,000 2,963,000 440,000
827,000 2,151,000 2,978,000 492,000
533,000 1,379,000 1,912,000 303,000
804,000 2,327,000 3,131,000 577,000
453,000 1,244,000 1,697,000 313,000
1,478,000 3,657,000 5,135,000 761,000
947,000 2,316,000 3,263,000 490,000
1,102,000 2,815,000 3,917,000 620,000
769,000 1,924,000 2,693,000 408,000
1,348,000 3,469,000 4,817,000 768,000
F-69
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
3/12/99 Elgin/E.ChicagoSt. - 570,000 2,163,000 71,000 -
3/12/99 Fairfield/Dixie - 519,000 1,211,000 91,000 -
3/12/99 FergusonArea-W.Florissant - 1,194,000 2,732,000 279,000 -
3/12/99 Florissant/N.Hwy67 - 971,000 2,265,000 193,000 -
3/12/99 Florissant/NewHallsFerryRd - 1,144,000 2,670,000 233,000 -
3/12/99 ForestPark/Jonesboro - 659,000 1,537,000 181,000 -
3/12/99 ForestPark/OldDixieHwy - 895,000 2,070,000 201,000 -
3/12/99 FortCollins/So.CollegeAve - 745,000 1,739,000 136,000 -
3/12/99 FortWorth/Loop820North - 729,000 1,702,000 106,000 -
3/12/99 Ft.Myers/TamiamiTrailSouth - 834,000 1,945,000 87,000 -
3/12/99 Ft.Worth/GranburyRoad - 763,000 1,781,000 57,000 -
3/12/99 Garland/BuckinghamRoad - 492,000 1,149,000 112,000 -
3/12/99 Garland/JacksonDrive - 755,000 1,761,000 77,000 -
3/12/99 Gastonia/S.YorkRd - 467,000 1,089,000 125,000 -
3/12/99 Geneva/GaryAve - 1,072,000 2,501,000 78,000 -
3/12/99 Golden/SimmsStreet - 918,000 2,143,000 274,000 -
3/12/99 Greensboro/O'henryBlvd - 577,000 1,345,000 204,000 -
3/12/99 Greenville/PineknollRd - 927,000 2,163,000 198,000 -
3/12/99 Greenville/WhitehorseRd - 882,000 2,058,000 101,000 -
3/12/99 Greenville/WoodsLakeRd - 364,000 849,000 121,000 -
3/12/99 HanoverPark/W.LakeStreet - 1,320,000 3,081,000 107,000 -
3/12/99 HiltonHead/OfficeParkRd - 1,279,000 2,985,000 109,000 -
3/12/99 HiltonHead/YachtCoveDr - 1,182,000 2,753,000 154,000 -
3/12/99 Houston/AddicksSatsuma - 409,000 954,000 106,000 -
3/12/99 Houston/BingleRoad - 576,000 1,345,000 127,000 -
3/12/99 Houston/Fm1960West - 513,000 1,198,000 100,000 -
3/12/99 Houston/FondrenSouth - 647,000 1,510,000 85,000 -
3/12/99 Houston/HayesRoad - 916,000 2,138,000 95,000 -
3/12/99 Houston/Hwy6South - 569,000 1,328,000 55,000 -
3/12/99 Houston/LochKatrineLane - 580,000 1,352,000 78,000 -
3/12/99 Houston/MangumRoad - 737,000 1,719,000 128,000 -
3/12/99 Houston/MilweeSt. - 779,000 1,815,000 170,000 -
3/12/99 Houston/NewCastle - 2,346,000 5,473,000 1,250,000 -
3/12/99 Houston/SouthMain - 1,461,000 3,409,000 91,000 -
3/12/99 Houston/WallisvilleRd. - 744,000 1,736,000 70,000 -
3/12/99 Houston/WestheimerWest - 1,075,000 2,508,000 47,000 -
3/12/99 Independence/291 - 871,000 2,032,000 117,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
570,000 2,234,000 2,804,000 449,000
519,000 1,302,000 1,821,000 284,000
1,195,000 3,010,000 4,205,000 656,000
971,000 2,458,000 3,429,000 502,000
1,145,000 2,902,000 4,047,000 621,000
659,000 1,718,000 2,377,000 397,000
895,000 2,271,000 3,166,000 517,000
745,000 1,875,000 2,620,000 392,000
729,000 1,808,000 2,537,000 382,000
834,000 2,032,000 2,866,000 430,000
763,000 1,838,000 2,601,000 384,000
492,000 1,261,000 1,753,000 298,000
755,000 1,838,000 2,593,000 387,000
467,000 1,214,000 1,681,000 293,000
1,072,000 2,579,000 3,651,000 529,000
918,000 2,417,000 3,335,000 514,000
577,000 1,549,000 2,126,000 377,000
927,000 2,361,000 3,288,000 512,000
882,000 2,159,000 3,041,000 456,000
364,000 970,000 1,334,000 232,000
1,321,000 3,187,000 4,508,000 656,000
1,280,000 3,093,000 4,373,000 629,000
1,183,000 2,906,000 4,089,000 615,000
409,000 1,060,000 1,469,000 241,000
576,000 1,472,000 2,048,000 325,000
513,000 1,298,000 1,811,000 292,000
647,000 1,595,000 2,242,000 334,000
916,000 2,233,000 3,149,000 453,000
569,000 1,383,000 1,952,000 295,000
580,000 1,430,000 2,010,000 313,000
737,000 1,847,000 2,584,000 406,000
779,000 1,985,000 2,764,000 426,000
2,240,000 6,829,000 9,069,000 1,205,000
1,462,000 3,499,000 4,961,000 714,000
744,000 1,806,000 2,550,000 386,000
1,075,000 2,555,000 3,630,000 519,000
871,000 2,149,000 3,020,000 442,000
F-70
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
3/12/99 Jacksonville/Ft.CarolineRd. - 1,037,000 2,420,000 169,000 -
3/12/99 Jacksonville/ParkAvenue - 905,000 2,113,000 134,000 -
3/12/99 Jacksonville/PhillipsHwy - 665,000 1,545,000 174,000 -
3/12/99 Jacksonville/RooseveltBlvd. - 851,000 1,986,000 295,000 -
3/12/99 Jacksonville/SouthsideBlvd. - 1,278,000 2,982,000 174,000 -
3/12/99 Jonesboro/TaraBlvd - 785,000 1,827,000 255,000 -
3/12/99 Kannapolis/OregonSt - 463,000 1,081,000 102,000 -
3/12/99 KansasCity/34thMainStreet - 114,000 2,599,000 575,000 -
3/12/99 KansasCity/E.47thSt. - 610,000 1,424,000 151,000 -
3/12/99 KansasCity/JamesA.ReedRd - 749,000 1,748,000 80,000 -
3/12/99 KansasCity/StateAve - 645,000 1,505,000 185,000 -
3/12/99 KansasCity/E.67thTerrace - 1,136,000 2,643,000 88,000 -
3/12/99 Katy/DominionDrive - 995,000 2,321,000 57,000 -
3/12/99 Kennedale/BowmanSprgs - 425,000 991,000 76,000 -
3/12/99 Kennesaw/RutledgeRoad - 803,000 1,874,000 208,000 -
3/12/99 Lawrence/HaskellAve - 636,000 1,484,000 144,000 -
3/12/99 Lawrenceville/BufordDr. - 256,000 597,000 80,000 -
3/12/99 Lenexa/LongSt. - 720,000 1,644,000 44,000 -
3/12/99 Lenexa/SantaFeTrailRoad - 713,000 1,663,000 117,000 -
3/12/99 Lewisville/Highway121 - 688,000 1,605,000 96,000 -
3/12/99 Longmont/WedgewoodAve - 717,000 1,673,000 59,000 -
3/12/99 Louisville - 554,000 1,292,000 138,000 -
3/12/99 Louisville/BreckenridgeLane - 581,000 1,356,000 87,000 -
3/12/99 Louisville/PoplarLevel - 463,000 1,080,000 149,000 -
3/12/99 Manassas/SudleyRoad - 776,000 1,810,000 160,000 -
3/12/99 Marietta/Cobb - 727,000 1,696,000 236,000 -
3/12/99 Marietta/Whitlock - 1,016,000 2,370,000 152,000 -
3/12/99 Martinez/OldPetersburgRd - 407,000 950,000 133,000 -
3/12/99 Mauldin/N.MainStreet - 571,000 1,333,000 143,000 -
3/12/99 Miami/Nw14thStreet - 1,739,000 4,058,000 114,000 -
3/12/99 Miami/Nw7thAve - 783,000 1,827,000 158,000 -
3/12/99 MiamiBeach/DadeBlvd - 962,000 2,245,000 276,000 -
3/12/99 MiamiLakes/Nw153rdSt. - 425,000 992,000 71,000 -
3/12/99 Miami-Kendall/Sw84thStreet - 935,000 2,180,000 155,000 -
3/12/99 Milford/BranchHill - 527,000 1,229,000 2,232,000 -
3/12/99 Milwaukee/W.DeanRoad - 1,362,000 3,163,000 346,000 -
3/12/99 Mission/FoxridgeDr - 1,657,000 3,864,000 127,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
1,037,000 2,589,000 3,626,000 561,000
905,000 2,247,000 3,152,000 489,000
665,000 1,719,000 2,384,000 400,000
851,000 2,281,000 3,132,000 530,000
1,279,000 3,155,000 4,434,000 680,000
785,000 2,082,000 2,867,000 456,000
463,000 1,183,000 1,646,000 273,000
114,000 3,174,000 3,288,000 747,000
610,000 1,575,000 2,185,000 335,000
749,000 1,828,000 2,577,000 390,000
645,000 1,690,000 2,335,000 373,000
1,137,000 2,730,000 3,867,000 560,000
995,000 2,378,000 3,373,000 484,000
425,000 1,067,000 1,492,000 234,000
803,000 2,082,000 2,885,000 462,000
636,000 1,628,000 2,264,000 338,000
256,000 677,000 933,000 171,000
720,000 1,688,000 2,408,000 347,000
713,000 1,780,000 2,493,000 377,000
688,000 1,701,000 2,389,000 367,000
717,000 1,732,000 2,449,000 362,000
554,000 1,430,000 1,984,000 320,000
581,000 1,443,000 2,024,000 317,000
463,000 1,229,000 1,692,000 280,000
776,000 1,970,000 2,746,000 421,000
727,000 1,932,000 2,659,000 452,000
1,016,000 2,522,000 3,538,000 530,000
407,000 1,083,000 1,490,000 253,000
571,000 1,476,000 2,047,000 341,000
1,740,000 4,171,000 5,911,000 856,000
783,000 1,985,000 2,768,000 449,000
962,000 2,521,000 3,483,000 516,000
425,000 1,063,000 1,488,000 242,000
935,000 2,335,000 3,270,000 504,000
527,000 3,461,000 3,988,000 491,000
1,363,000 3,508,000 4,871,000 788,000
1,658,000 3,990,000 5,648,000 811,000
F-71
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
3/12/99 Mobile/AzaleaRoad - 517,000 1,206,000 134,000 -
3/12/99 Mobile/GovernmentBlvd - 407,000 950,000 110,000 -
3/12/99 Mobile/GrelotRoad - 804,000 1,877,000 131,000 -
3/12/99 Mobile/HillcrestRoad - 554,000 1,293,000 139,000 -
3/12/99 Mobile/MoffatRoad - 537,000 1,254,000 128,000 -
3/12/99 Mt.Prospect/CentralRoad - 802,000 1,847,000 184,000 -
3/12/99 N.Charleston/Dorchester - 487,000 1,137,000 154,000 -
3/12/99 N.Charleston/DorchesterRd - 380,000 886,000 107,000 -
3/12/99 Naperville/LasalleAve - 1,501,000 3,502,000 99,000 -
3/12/99 NewOrleans/Tchoupitoulas - 1,092,000 2,548,000 233,000 -
3/12/99 Norcross/DawsonBlvd - 1,232,000 2,874,000 207,000 -
3/12/99 Norcross/JonesMillRd - 1,142,000 2,670,000 157,000 -
3/12/99 NorthMiamiBeach/69thSt - 1,594,000 3,720,000 159,000 -
3/12/99 Orlando/L.B.McleodRoad - 521,000 1,217,000 78,000 -
3/12/99 Orlando/SouthSemoran - 565,000 1,319,000 70,000 -
3/12/99 Orlando/S.OrangeBlossomTrail - 1,229,000 2,867,000 165,000 -
3/12/99 OverlandPark/HemlockSt - 1,168,000 2,725,000 114,000 -
3/12/99 Pensacola/BrentLane - 402,000 938,000 104,000 -
3/12/99 Pensacola/CreightonRoad - 454,000 1,060,000 216,000 -
3/12/99 Plano/ParkerRoad-AvenueK - 1,517,000 3,539,000 129,000 -
3/12/99 PonteVedra/PalmValleyRd. - 745,000 2,749,000 436,000 -
3/12/99 Raleigh/MaitlandDr - 679,000 1,585,000 112,000 -
3/12/99 Raytown/WoodsonRd - 915,000 2,134,000 96,000 -
3/12/99 Richardson/CentralExpressway - 465,000 1,085,000 109,000 -
3/12/99 RiverGrove/N.5thAve. - 1,094,000 2,552,000 9,000 -
3/12/99 Riverdale/GeorgiaHwy85 - 1,075,000 2,508,000 99,000 -
3/12/99 Roswell/Alpharetta - 1,772,000 4,135,000 135,000 -
3/12/99 Schaumburg/PalmerDrive - 1,333,000 3,111,000 122,000 -
3/12/99 Schaumburg/S.RoselleRoad - 659,000 1,537,000 93,000 -
3/12/99 Shawnee/HedgeLaneTerrace - 570,000 1,331,000 85,000 -
3/12/99 Simpsonville/GrandViewDr - 582,000 1,358,000 130,000 -
3/12/99 Spartanburg/ChesneeHwy - 533,000 1,244,000 273,000 -
3/12/99 St.Ann/MarylandHeights - 1,035,000 2,414,000 173,000 -
3/12/99 St.Charles/E.MainSt. - 951,000 2,220,000 (303,000) -
3/12/99 St.Louis/Airport - 785,000 1,833,000 157,000 -
3/12/99 St.Louis/N.LindberghBlvd. - 1,688,000 3,939,000 224,000 -
3/12/99 St.Louis/VandeventerMidtown - 699,000 1,631,000 120,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
517,000 1,340,000 1,857,000 305,000
407,000 1,060,000 1,467,000 239,000
804,000 2,008,000 2,812,000 429,000
554,000 1,432,000 1,986,000 324,000
537,000 1,382,000 1,919,000 315,000
802,000 2,031,000 2,833,000 454,000
487,000 1,291,000 1,778,000 296,000
380,000 993,000 1,373,000 228,000
1,502,000 3,600,000 5,102,000 748,000
1,092,000 2,781,000 3,873,000 606,000
1,233,000 3,080,000 4,313,000 652,000
1,143,000 2,826,000 3,969,000 602,000
1,595,000 3,878,000 5,473,000 807,000
521,000 1,295,000 1,816,000 277,000
565,000 1,389,000 1,954,000 294,000
1,230,000 3,031,000 4,261,000 639,000
1,169,000 2,838,000 4,007,000 572,000
402,000 1,042,000 1,444,000 241,000
454,000 1,276,000 1,730,000 300,000
1,518,000 3,667,000 5,185,000 758,000
745,000 3,185,000 3,930,000 746,000
679,000 1,697,000 2,376,000 376,000
915,000 2,230,000 3,145,000 462,000
465,000 1,194,000 1,659,000 263,000
1,034,000 2,621,000 3,655,000 761,000
1,075,000 2,607,000 3,682,000 539,000
1,773,000 4,269,000 6,042,000 857,000
1,334,000 3,232,000 4,566,000 660,000
659,000 1,630,000 2,289,000 353,000
570,000 1,416,000 1,986,000 312,000
574,000 1,496,000 2,070,000 332,000
533,000 1,517,000 2,050,000 363,000
1,035,000 2,587,000 3,622,000 526,000
802,000 2,066,000 2,868,000 654,000
785,000 1,990,000 2,775,000 398,000
1,689,000 4,162,000 5,851,000 838,000
699,000 1,751,000 2,450,000 372,000
F-72
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
3/12/99 St.Louis/S.ThirdSt - 1,096,000 2,557,000 76,000 -
3/12/99 St.Louis/S.ThirdSt - 206,000 480,000 28,000 -
3/12/99 Sterling/S.SterlingBlvd - 1,282,000 2,992,000 134,000 -
3/12/99 Streamwood/OldChurchRoad - 855,000 1,991,000 56,000 -
3/12/99 TarponSprings/Highway19 - 1,179,000 2,751,000 125,000 -
3/12/99 TarponSprings/UsHighway19 - 892,000 2,081,000 187,000 -
3/12/99 Taylors/WadeHamptonBlvd - 650,000 1,517,000 128,000 -
3/12/99 TinleyPark/BrennanHwy - 771,000 1,799,000 132,000 -
3/12/99 VeroBeach/UsHwy1 - 678,000 1,583,000 77,000 -
3/12/99 W.Columbia/AirportBlvd - 493,000 1,151,000 121,000 -
3/12/99 W.Columbia/OrchardDr. - 272,000 634,000 144,000 -
3/12/99 Waukesha/FosterCourt - 765,000 1,785,000 163,000 -
3/12/99 Webster/Fm528Road - 756,000 1,764,000 84,000 -
3/12/99 Webster/Highway3 - 677,000 1,580,000 78,000 -
3/12/99 Winfield/RooseveltRoad - 1,109,000 2,587,000 119,000 -
3/31/99 ForestPark - 270,000 3,378,000 1,036,000 -
4/1/99 Fresno - 44,000 206,000 (297,000) 804,000
5/1/99 Stockton - 151,000 402,000 (254,000) 2,017,000
6/30/99 Anaheim/LaPalma - 1,378,000 851,000 200,000 1,221,000
6/30/99 Bradenton/CortezRoad - 476,000 885,000 316,000 906,000
6/30/99 BrickTownship/Brick - 590,000 1,431,000 281,000 1,364,000
6/30/99 Concord/Arnold - 827,000 1,553,000 411,000 1,874,000
6/30/99 Edison/OldPostRd - 498,000 1,267,000 260,000 1,175,000
6/30/99 Fairfax/LeeHighway - 586,000 1,078,000 304,000 1,106,000
6/30/99 FallsChurch/Columbia - 901,000 975,000 301,000 1,141,000
6/30/99 FortWorth/McCart - 372,000 942,000 188,000 703,000
6/30/99 Ft.Myers/Tamiami - 948,000 962,000 298,000 1,208,000
6/30/99 Gresham/Burnside - 354,000 544,000 204,000 627,000
6/30/99 Houston/Highway6So. - 751,000 1,006,000 473,000 1,057,000
6/30/99 Houston/MillridgeN. - 1,160,000 1,983,000 255,000 2,433,000
6/30/99 HuntingtonBch/Gotham - 952,000 890,000 302,000 1,130,000
6/30/99 HuntingtonBeach - 1,026,000 1,437,000 120,000 1,450,000
6/30/99 Hyattsville - 768,000 2,186,000 273,000 1,919,000
6/30/99 Irving/W.Airport - 419,000 960,000 203,000 857,000
6/30/99 Jacksonville/University - 211,000 741,000 231,000 700,000
6/30/99 Littleton/Centennial - 421,000 804,000 256,000 812,000
6/30/99 Mountainside - 1,260,000 1,237,000 341,000 1,523,000
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
1,096,000 2,633,000 3,729,000 537,000
206,000 508,000 714,000 115,000
1,283,000 3,125,000 4,408,000 644,000
855,000 2,047,000 2,902,000 420,000
1,180,000 2,875,000 4,055,000 593,000
892,000 2,268,000 3,160,000 495,000
650,000 1,645,000 2,295,000 369,000
771,000 1,931,000 2,702,000 419,000
678,000 1,660,000 2,338,000 357,000
493,000 1,272,000 1,765,000 277,000
272,000 778,000 1,050,000 203,000
765,000 1,948,000 2,713,000 393,000
756,000 1,848,000 2,604,000 393,000
677,000 1,658,000 2,335,000 354,000
1,109,000 2,706,000 3,815,000 556,000
270,000 4,414,000 4,684,000 1,876,000
193,000 564,000 757,000 121,000
590,000 1,726,000 2,316,000 350,000
1,721,000 1,929,000 3,650,000 376,000
594,000 1,989,000 2,583,000 412,000
736,000 2,930,000 3,666,000 508,000
1,032,000 3,633,000 4,665,000 793,000
622,000 2,578,000 3,200,000 498,000
732,000 2,342,000 3,074,000 476,000
1,126,000 2,192,000 3,318,000 423,000
464,000 1,741,000 2,205,000 317,000
1,184,000 2,232,000 3,416,000 445,000
442,000 1,287,000 1,729,000 278,000
937,000 2,350,000 3,287,000 468,000
1,449,000 4,382,000 5,831,000 842,000
1,189,000 2,085,000 3,274,000 415,000
1,282,000 2,751,000 4,033,000 500,000
959,000 4,187,000 5,146,000 723,000
524,000 1,915,000 2,439,000 403,000
263,000 1,620,000 1,883,000 353,000
526,000 1,767,000 2,293,000 358,000
1,574,000 2,787,000 4,361,000 518,000
F-73
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority -
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------ -
Miniwarehouses
6/30/99 N.RichlandHills - 455,000 769,000 252,000 832,000
6/30/99 Newark/CedarBlvd - 729,000 971,000 244,000 1,067,000
6/30/99 Northridge/Parthenia - 1,848,000 1,486,000 186,000 1,839,000
6/30/99 OakPark/Greenfield - 621,000 1,735,000 198,000 1,490,000
6/30/99 Rockville/GudeDrive - 602,000 768,000 364,000 880,000
6/30/99 RollingMeadows/Lois - 441,000 849,000 356,000 898,000
6/30/99 SanAntonio/NwLoop - 511,000 786,000 206,000 855,000
6/30/99 SanDiego/Clairemont - 1,601,000 2,035,000 337,000 2,034,000
6/30/99 SpringValley/Sweetwater - 271,000 380,000 4,719,000 416,000
6/30/99 StoneMountain/Rock - 1,233,000 288,000 330,000 852,000
6/30/99 Tujunga/FoothillBlvd - 1,746,000 2,383,000 170,000 2,370,000
6/30/99 UnionCity/Alvarado - 992,000 1,776,000 211,000 1,690,000
6/30/99 WheatRidge/W.44th - 480,000 789,000 249,000 831,000
6/30/99 WinterPark/N.Semor - 342,000 638,000 376,000 728,000
6/30/99 Woodbridge/Davis - 1,796,000 1,623,000 419,000 1,996,000
6/30/99 Woodbridge/Jefferson - 840,000 1,689,000 261,000 1,446,000
7/1/99 Antioch/CaneRidgeRd - 353,000 823,000 168,000 -
7/1/99 Hermitage/CentralCt - 646,000 1,508,000 150,000 -
7/1/99 Hixson/GaddRd - 207,000 484,000 260,000 -
7/1/99 Hixson/Highway153 - 488,000 1,138,000 195,000 -
7/1/99 Madison/MyattDr - 441,000 1,028,000 93,000 -
7/1/99 Madison/WilliamsAve - 1,318,000 3,076,000 259,000 -
7/1/99 Nashville/LafayetteSt - 486,000 1,135,000 156,000 -
7/1/99 Nashville/McnallyDr - 884,000 2,062,000 348,000 -
7/1/99 Nashville/MetroplexDr - 380,000 886,000 155,000 -
7/1/99 Nashville/WelshwoodDr - 934,000 2,179,000 178,000 -
7/1/99 Pantego/W.PioneerPkwy - 432,000 1,228,000 70,000 -
7/1/99 RedBank/HardingRd - 452,000 1,056,000 185,000 -
9/1/99 Charlotte/AshleyRoad - 664,000 1,551,000 30,000 -
9/1/99 Charlotte/SouthBlvd. - 734,000 1,715,000 44,000 -
9/1/99 Greensboro/W.MarketSt. - 603,000 1,409,000 23,000 -
9/1/99 Raleigh/CapitalBlvd - 927,000 2,166,000 (10,000) -
10/8/99 Belmont/O'neillAve - 869,000 4,659,000 95,000 -
10/11/99 Matthews - 937,000 3,165,000 247,000 -
11/15/99 Poplar,Memphis - 1,631,000 3,093,000 279,000 -
12/17/99 Dallas/SwissAve - 1,862,000 4,344,000 138,000 -
12/30/99 OakPark/GreenfieldRd - 1,184,000 3,685,000 (98,000) -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
569,000 1,739,000 2,308,000 366,000
910,000 2,101,000 3,011,000 406,000
2,308,000 3,051,000 5,359,000 523,000
775,000 3,269,000 4,044,000 572,000
751,000 1,863,000 2,614,000 394,000
551,000 1,993,000 2,544,000 418,000
638,000 1,720,000 2,358,000 344,000
1,999,000 4,008,000 6,007,000 785,000
338,000 5,448,000 5,786,000 148,000
1,540,000 1,163,000 2,703,000 217,000
2,180,000 4,489,000 6,669,000 696,000
1,239,000 3,430,000 4,669,000 603,000
599,000 1,750,000 2,349,000 364,000
427,000 1,657,000 2,084,000 388,000
2,243,000 3,591,000 5,834,000 680,000
1,048,000 3,188,000 4,236,000 565,000
353,000 991,000 1,344,000 240,000
646,000 1,658,000 2,304,000 373,000
207,000 744,000 951,000 231,000
488,000 1,333,000 1,821,000 316,000
441,000 1,121,000 1,562,000 263,000
1,319,000 3,334,000 4,653,000 734,000
486,000 1,291,000 1,777,000 320,000
884,000 2,410,000 3,294,000 611,000
380,000 1,041,000 1,421,000 252,000
934,000 2,357,000 3,291,000 521,000
432,000 1,298,000 1,730,000 129,000
452,000 1,241,000 1,693,000 303,000
651,000 1,594,000 2,245,000 328,000
719,000 1,774,000 2,493,000 364,000
591,000 1,444,000 2,035,000 307,000
909,000 2,174,000 3,083,000 437,000
878,000 4,745,000 5,623,000 933,000
994,000 3,355,000 4,349,000 507,000
1,732,000 3,271,000 5,003,000 516,000
1,879,000 4,465,000 6,344,000 891,000
1,197,000 3,574,000 4,771,000 647,000
F-74
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
12/30/99 SantaAnna - 2,657,000 3,293,000 364,000 -
1/21/00 HanoverPark - 262,000 3,104,000 40,000 -
1/25/00 Memphis/N.GermantwnPkwy - 884,000 3,024,000 225,000 -
1/31/00 RowlandHeights/Walnut - 681,000 1,589,000 122,000 -
2/8/00 Lewisville/JustinRd - 529,000 2,919,000 210,000 -
2/28/00 Plano/AvenueK - 2,064,000 10,407,000 438,000 -
4/1/00 Hyattsville/Edmonson - 1,036,000 2,657,000 46,000 -
4/29/00 St.Louis/EllisvilleTwnCentre - 765,000 4,377,000 337,000 -
5/2/00 CulverCity - 2,439,000 5,689,000 (689,000) -
5/2/00 MillValley - 1,412,000 3,294,000 (371,000) -
5/26/00 Phoenix/N.35thAve - 868,000 2,967,000 57,000 -
6/5/00 MountSinai/Route25a - 950,000 3,338,000 255,000 -
6/15/00 PinellasPark - 526,000 2,247,000 271,000 -
6/30/00 SanAntonio/BroadwaySt - 1,131,000 4,558,000 22,000 -
7/13/00 Lincolnwood - 1,598,000 3,727,000 165,000 -
7/17/00 LaPalco/NewOrleans - 1,023,000 3,204,000 129,000 -
7/29/00 Tracy/1615&1650W.11thS - 1,745,000 4,530,000 293,000 -
8/1/00 Pineville - 2,197,000 3,417,000 357,000 -
8/23/00 MorrisPlains - 1,501,000 4,300,000 317,000 -
8/31/00 Florissant/NewHallsFry - 800,000 4,225,000 79,000 -
8/31/00 Orange,CA - 661,000 1,542,000 56,000 -
9/1/00 Bayshore,NY - 1,277,000 2,980,000 966,000 -
9/1/00 LosAngeles,CA - 590,000 1,376,000 461,000 -
9/13/00 Merrillville - 343,000 2,474,000 169,000 -
9/15/00 Alexandria/PickettIi - 2,743,000 6,198,000 282,000 -
9/15/00 Bethpage/HempsteadTurnpike - 2,899,000 5,457,000 244,000 -
9/15/00 Brooklyn/St.JohnsPlace - 3,492,000 6,026,000 248,000 -
9/15/00 Chicago/AshlandAvenue - 850,000 4,880,000 221,000 -
9/15/00 Evanston/Greenbay - 846,000 4,436,000 163,000 -
9/15/00 Gardena/W.ElSegundo - 1,532,000 3,424,000 116,000 -
9/15/00 Hawthorne/CrenshawBlvd. - 1,079,000 2,913,000 131,000 -
9/15/00 LakeRonkonkoma/PortionRd. - 937,000 4,199,000 156,000 -
9/15/00 LosAngeles/Coliseum - 3,109,000 4,013,000 151,000 -
9/15/00 Northport/FortSalongaRoad - 2,999,000 5,698,000 243,000 -
9/15/00 Oakland/Macarthur - 678,000 2,751,000 149,000 -
9/15/00 Rockaway/U.S.Route46 - 2,424,000 4,945,000 246,000 -
9/15/00 RoyalOak/CoolidgeHighway - 1,062,000 2,576,000 159,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
2,821,000 3,493,000 6,314,000 527,000
256,000 3,150,000 3,406,000 450,000
937,000 3,196,000 4,133,000 497,000
688,000 1,704,000 2,392,000 341,000
562,000 3,096,000 3,658,000 480,000
2,089,000 10,820,000 12,909,000 4,106,000
1,036,000 2,703,000 3,739,000 448,000
812,000 4,667,000 5,479,000 660,000
2,218,000 5,221,000 7,439,000 866,000
1,284,000 3,051,000 4,335,000 511,000
868,000 3,024,000 3,892,000 517,000
1,008,000 3,535,000 4,543,000 490,000
547,000 2,497,000 3,044,000 251,000
1,132,000 4,579,000 5,711,000 702,000
1,614,000 3,876,000 5,490,000 700,000
1,094,000 3,262,000 4,356,000 439,000
1,763,000 4,805,000 6,568,000 805,000
2,333,000 3,638,000 5,971,000 517,000
1,595,000 4,523,000 6,118,000 578,000
807,000 4,297,000 5,104,000 721,000
667,000 1,592,000 2,259,000 270,000
1,534,000 3,689,000 5,223,000 708,000
708,000 1,719,000 2,427,000 333,000
364,000 2,622,000 2,986,000 333,000
2,744,000 6,479,000 9,223,000 801,000
2,900,000 5,700,000 8,600,000 705,000
3,494,000 6,272,000 9,766,000 743,000
850,000 5,101,000 5,951,000 695,000
846,000 4,599,000 5,445,000 575,000
1,533,000 3,539,000 5,072,000 468,000
1,079,000 3,044,000 4,123,000 396,000
937,000 4,355,000 5,292,000 525,000
3,110,000 4,163,000 7,273,000 501,000
3,000,000 5,940,000 8,940,000 727,000
678,000 2,900,000 3,578,000 391,000
2,425,000 5,190,000 7,615,000 666,000
1,062,000 2,735,000 3,797,000 358,000
F-75
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
9/15/00 Tampa/GunnHwy - 1,843,000 4,300,000 92,000 -
9/18/00 Tampa/N.DelMabry - 2,204,000 2,447,000 7,476,000 -
9/30/00 Lilburn/IndianTrail - 1,695,000 5,170,000 1,365,000 -
9/30/00 Marietta/Kennestone&Hwy5 - 622,000 3,388,000 1,511,000 -
11/15/00 Largo/Missouri - 1,092,000 4,270,000 240,000 -
11/21/00 St.Louis/Wilson - 1,608,000 3,913,000 1,818,000 -
12/21/00 Houston/10801KatyFrwy - 1,664,000 3,884,000 83,000 -
12/21/00 Houston/7715KatyFrwy - 2,274,000 5,307,000 103,000 -
12/21/00 Houston/MainSt - 1,681,000 3,924,000 102,000 -
12/21/00 Houston/W.Loop/S.Frwy - 2,036,000 4,749,000 112,000 -
12/29/00 Chicago - 1,946,000 6,002,000 18,000 -
12/30/00 Frazier - 800,000 3,324,000 17,000 -
12/30/00 Raleigh/Glenwood - 1,545,000 3,628,000 83,000 -
1/5/01 Troy/E.BigBeaverRd - 2,195,000 4,221,000 355,000 -
1/11/01 FtLauderdale - 954,000 3,972,000 342,000 -
1/16/01 NoHollywood/ShermanWay - 2,173,000 5,442,000 37,000 -
1/18/01 Tuscon/E.Speedway - 735,000 2,895,000 189,000 -
1/25/01 Lombard/Finley - 851,000 3,806,000 359,000 -
3/15/01 LosAngeles/WestPico - 8,579,000 8,630,000 803,000 -
4/1/01 Lakewood/CedarDr. - 1,329,000 9,356,000 121,000 -
4/7/01 Farmingdale/Rte110 - 2,364,000 5,807,000 (52,000) -
4/17/01 Philadelphia/Aramingo - 968,000 4,539,000 15,000 -
4/18/01 Largo/WalsinghamRoad - 1,000,000 3,545,000 (237,000) -
6/17/01 PortWashington/Seaview&W.Sh - 2,381,000 4,608,000 122,000 -
6/18/01 SilverSprings/Prosperity - 1,065,000 5,391,000 18,000 -
6/19/01 Tampa/W.WatersAve&Wilsky - 953,000 3,785,000 16,000 -
6/26/01 Middletown - 1,535,000 4,258,000 335,000 -
7/29/01 Miami/Sw85thAve - 2,755,000 4,951,000 18,000 -
8/28/01 Hoover/JohnHawkinsPkwy - 1,050,000 2,453,000 43,000 -
9/30/01 Syosset - 2,461,000 5,312,000 382,000 -
12/27/01 Howell/Hgwy9 - 941,000 4,070,000 235,000 -
12/27/01 LosAngeles/W.Jefferson - 8,285,000 9,429,000 811,000 -
12/29/01 Catonsville/Kent - 1,378,000 5,289,000 640,000 -
12/29/01 OldBridge/Rte9 - 1,244,000 4,960,000 (31,000) -
12/29/01 Sacremento/Roseville - 876,000 5,344,000 133,000 -
12/31/01 SantaAna/E.Mcfadden - 7,587,000 8,612,000 905,000 -
1/1/02 AirportI - 346,000 861,000 41,000 (32,000)
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
1,844,000 4,391,000 6,235,000 594,000
2,226,000 9,901,000 12,127,000 2,732,000
1,713,000 6,517,000 8,230,000 771,000
628,000 4,893,000 5,521,000 633,000
1,158,000 4,444,000 5,602,000 527,000
1,629,000 5,710,000 7,339,000 695,000
1,668,000 3,963,000 5,631,000 365,000
2,278,000 5,406,000 7,684,000 484,000
1,685,000 4,022,000 5,707,000 367,000
2,039,000 4,858,000 6,897,000 442,000
1,939,000 6,027,000 7,966,000 717,000
800,000 3,341,000 4,141,000 294,000
1,561,000 3,695,000 5,256,000 538,000
2,330,000 4,441,000 6,771,000 501,000
1,070,000 4,198,000 5,268,000 482,000
2,176,000 5,476,000 7,652,000 771,000
780,000 3,039,000 3,819,000 348,000
903,000 4,113,000 5,016,000 454,000
8,599,000 9,413,000 18,012,000 1,326,000
1,333,000 9,473,000 10,806,000 1,365,000
2,343,000 5,776,000 8,119,000 693,000
968,000 4,554,000 5,522,000 498,000
800,000 3,508,000 4,308,000 392,000
2,359,000 4,752,000 7,111,000 464,000
1,065,000 5,409,000 6,474,000 604,000
954,000 3,800,000 4,754,000 392,000
1,630,000 4,498,000 6,128,000 436,000
2,758,000 4,966,000 7,724,000 491,000
1,051,000 2,495,000 3,546,000 250,000
2,613,000 5,542,000 8,155,000 460,000
998,000 4,248,000 5,246,000 357,000
8,305,000 10,220,000 18,525,000 814,000
1,379,000 5,928,000 7,307,000 509,000
1,245,000 4,928,000 6,173,000 401,000
526,000 5,827,000 6,353,000 507,000
7,605,000 9,499,000 17,104,000 765,000
346,000 870,000 1,216,000 177,000
F-76
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
1/1/02 Azusa - 933,000 1,659,000 18,000 4,926,000
1/1/02 Belmont/DairyLane - 915,000 1,252,000 48,000 -
1/1/02 Carmichael/FairOaks - 584,000 1,431,000 23,000 (2,000)
1/1/02 Carson/CarsonSt - 507,000 877,000 46,000 1,000
1/1/02 Concord - 650,000 1,332,000 66,000 (44,000)
1/1/02 Ft.Lauderdale/Sun - 452,000 1,254,000 34,000 (48,000)
1/1/02 Ft.Lauderdale/Sun - 532,000 1,444,000 59,000 (56,000)
1/1/02 Marietta/CobbPark - 419,000 1,571,000 23,000 (2,000)
1/1/02 Miami/27thAve - 272,000 1,572,000 48,000 1,000
1/1/02 Miami/Airport - 517,000 915,000 44,000 2,000
1/1/02 Miami/MarlinRoad - 562,000 1,345,000 37,000 (49,000)
1/1/02 Oakland/SanLeandro - 330,000 1,116,000 82,000 (34,000)
1/1/02 Palmdale/PStreet - 218,000 1,287,000 40,000 3,000
1/1/02 Pasadena/SFairOaks - 1,313,000 1,905,000 51,000 (2,000)
1/1/02 Pasadena/SierraMadre - 706,000 872,000 72,000 (28,000)
1/1/02 PembrokePark - 475,000 1,259,000 17,000 (47,000)
1/1/02 Redlands - 423,000 1,202,000 119,000 (34,000)
1/1/02 Richmond/Jacuzzi - 419,000 1,224,000 44,000 (44,000)
1/1/02 Riverside - 95,000 1,106,000 30,000 (41,000)
1/1/02 Sacramento/Capitol - 186,000 1,284,000 19,000 (49,000)
1/1/02 Sacramento/Florin - 624,000 1,710,000 70,000 3,000
1/1/02 Sacramento/Howe - 361,000 1,181,000 21,000 (45,000)
1/1/02 SanCarlos/Shorewa - 737,000 1,360,000 17,000 (52,000)
1/1/02 SanJose/Capitol - 400,000 1,183,000 29,000 1,000
1/1/02 SanJose/FelipeAve - 517,000 1,482,000 46,000 (3,000)
1/1/02 SantaClara/Laurel - 1,178,000 1,789,000 53,000 (62,000)
1/1/02 So.SanFrancisco - 1,018,000 2,464,000 43,000 39,000
1/1/02 Tucker/MontrealRd - 760,000 1,485,000 33,000 (3,000)
1/1/02 Tucker/Mountain - 519,000 1,385,000 66,000 -
1/1/02 Tustin - 962,000 1,465,000 33,000 (53,000)
1/3/02 StCharles/VeteransMemorialPkwy - 687,000 1,602,000 134,000 -
1/7/02 Bothell/N.BothellWay - 1,063,000 4,995,000 144,000 -
1/15/02 Houston/N.Loop - 2,045,000 6,178,000 (1,000) -
1/16/02 Annapolis/WestSt - 955,000 3,669,000 13,000 -
1/16/02 Austin/UsHwy183 - 608,000 3,856,000 16,000 -
1/16/02 Austin/W.6thSt - 2,399,000 4,493,000 90,000 -
1/16/02 Birmingham/Commons - 1,125,000 3,938,000 32,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
933,000 6,603,000 7,536,000 461,000
915,000 1,300,000 2,215,000 263,000
584,000 1,452,000 2,036,000 289,000
507,000 924,000 1,431,000 179,000
650,000 1,354,000 2,004,000 253,000
452,000 1,240,000 1,692,000 244,000
532,000 1,447,000 1,979,000 285,000
419,000 1,592,000 2,011,000 314,000
272,000 1,621,000 1,893,000 315,000
517,000 961,000 1,478,000 196,000
562,000 1,333,000 1,895,000 267,000
330,000 1,164,000 1,494,000 227,000
218,000 1,330,000 1,548,000 273,000
1,314,000 1,953,000 3,267,000 396,000
706,000 916,000 1,622,000 166,000
475,000 1,229,000 1,704,000 252,000
423,000 1,287,000 1,710,000 234,000
419,000 1,224,000 1,643,000 239,000
95,000 1,095,000 1,190,000 219,000
186,000 1,254,000 1,440,000 255,000
624,000 1,783,000 2,407,000 344,000
361,000 1,157,000 1,518,000 236,000
737,000 1,325,000 2,062,000 265,000
400,000 1,213,000 1,613,000 238,000
517,000 1,525,000 2,042,000 296,000
1,179,000 1,779,000 2,958,000 342,000
1,018,000 2,546,000 3,564,000 470,000
760,000 1,515,000 2,275,000 297,000
519,000 1,451,000 1,970,000 275,000
962,000 1,445,000 2,407,000 295,000
687,000 1,736,000 2,423,000 159,000
1,063,000 5,139,000 6,202,000 402,000
2,046,000 6,176,000 8,222,000 463,000
955,000 3,682,000 4,637,000 299,000
608,000 3,872,000 4,480,000 309,000
2,400,000 4,582,000 6,982,000 380,000
1,126,000 3,969,000 5,095,000 321,000
F-77
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
1/16/02 Casselberry/State - 1,628,000 3,308,000 5,000 -
1/16/02 Charlotte/Cambridge - 836,000 3,908,000 3,000 -
1/16/02 Crestwood/WatsonRd - 1,232,000 3,093,000 3,000 -
1/16/02 GardenCity/Stewart - 1,489,000 4,039,000 5,000 -
1/16/02 Gilbert/WParkAve - 497,000 3,534,000 2,000 -
1/16/02 Hawthorne/GoffleRd - 2,414,000 4,918,000 - -
1/16/02 Hiawassee/N.Hiawassee - 1,622,000 1,892,000 5,000 -
1/16/02 Honolulu/Waialae - 10,631,000 10,783,000 2,000 -
1/16/02 Honolulu/Kahala - 3,722,000 8,525,000 9,000 -
1/16/02 Indianapolis/Madison - 716,000 2,655,000 11,000 -
1/16/02 Indianapolis/Rockville - 704,000 2,704,000 6,000 -
1/16/02 Indianapolis/W.86th - 812,000 2,421,000 6,000 -
1/16/02 Issaquah/Pickering - 1,138,000 3,704,000 6,000 -
1/16/02 LagunaHills/Moulton - 2,319,000 5,200,000 13,000 -
1/16/02 Longwood/StateRd - 2,123,000 3,083,000 46,000 -
1/16/02 Martinez/ArnoldDr - 847,000 5,422,000 - -
1/16/02 Memphis/Covington - 620,000 3,076,000 1,000 -
1/16/02 Memphis/SummerAve - 1,103,000 2,772,000 4,000 -
1/16/02 Millersville/Veterans - 1,036,000 4,229,000 13,000 -
1/16/02 Naperville/Washington - 2,712,000 2,225,000 415,000 -
1/16/02 NewOrleans/I-10 - 1,286,000 3,380,000 18,000 -
1/16/02 Northglenn/HuronSt - 688,000 2,075,000 8,000 -
1/16/02 Novato/RushLanding - 1,858,000 2,574,000 6,000 -
1/16/02 Orlando/S.Kirkman - 889,000 3,180,000 2,000 -
1/16/02 Pasadena/E.Colorado - 1,125,000 5,160,000 10,000 -
1/16/02 Phoenix/WUnionHills - 1,071,000 2,934,000 21,000 -
1/16/02 RanchoCucamonga - 579,000 3,222,000 3,000 -
1/16/02 Renton/Kent - 768,000 4,078,000 16,000 -
1/16/02 RochellePark/168 - 744,000 4,430,000 18,000 -
1/16/02 SanMateo/S.Delaware - 1,921,000 4,602,000 13,000 -
1/16/02 SanRamon/SanRamo - 1,522,000 3,510,000 6,000 -
1/16/02 SantaClara/Lafayette - 1,393,000 4,626,000 5,000 -
1/16/02 SantaCruz/River - 2,148,000 6,584,000 (2,000) -
1/16/02 Schaumburg/W.Wise - 1,158,000 2,598,000 8,000 -
1/16/02 Scottsdale/N.Hayden - 2,111,000 3,564,000 18,000 -
1/16/02 Skokie/SkokieBlvd - 716,000 5,285,000 4,000 -
1/16/02 Southfield/Telegraph - 2,869,000 5,507,000 1,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
1,629,000 3,312,000 4,941,000 273,000
836,000 3,911,000 4,747,000 325,000
1,233,000 3,095,000 4,328,000 255,000
1,490,000 4,043,000 5,533,000 327,000
497,000 3,536,000 4,033,000 297,000
2,415,000 4,917,000 7,332,000 403,000
1,623,000 1,896,000 3,519,000 168,000
10,636,000 10,780,000 21,416,000 831,000
3,724,000 8,532,000 12,256,000 678,000
716,000 2,666,000 3,382,000 225,000
704,000 2,710,000 3,414,000 229,000
812,000 2,427,000 3,239,000 207,000
1,139,000 3,709,000 4,848,000 303,000
2,320,000 5,212,000 7,532,000 446,000
2,124,000 3,128,000 5,252,000 269,000
847,000 5,422,000 6,269,000 448,000
620,000 3,077,000 3,697,000 261,000
1,103,000 2,776,000 3,879,000 232,000
1,036,000 4,242,000 5,278,000 361,000
2,713,000 2,639,000 5,352,000 193,000
1,293,000 3,391,000 4,684,000 281,000
688,000 2,083,000 2,771,000 181,000
1,859,000 2,579,000 4,438,000 220,000
889,000 3,182,000 4,071,000 255,000
1,126,000 5,169,000 6,295,000 423,000
1,066,000 2,960,000 4,026,000 250,000
579,000 3,225,000 3,804,000 274,000
768,000 4,094,000 4,862,000 338,000
744,000 4,448,000 5,192,000 350,000
1,922,000 4,614,000 6,536,000 376,000
1,523,000 3,515,000 5,038,000 291,000
1,394,000 4,630,000 6,024,000 381,000
2,149,000 6,581,000 8,730,000 537,000
1,159,000 2,605,000 3,764,000 214,000
2,114,000 3,579,000 5,693,000 302,000
716,000 5,289,000 6,005,000 439,000
2,870,000 5,507,000 8,377,000 451,000
F-78
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
1/16/02 SunnyIslesBch - 931,000 2,845,000 14,000 -
1/16/02 W.Babylon/Sunrise - 1,609,000 3,959,000 7,000 -
1/16/02 W.PalmBeach/Okeechobee - 2,149,000 4,650,000 30,000 -
1/16/02 Waukegan/Greenbay - 933,000 3,826,000 2,000 -
1/16/02 WestLa/WOlympic - 6,532,000 5,975,000 37,000 -
1/16/02 Woodlawn/Whitehead - 2,682,000 3,355,000 21,000 -
2/2/02 Nashua/SouthwoodDr - 2,493,000 4,326,000 159,000 -
2/15/02 Houston/Fm1960East - 859,000 2,004,000 51,000 -
3/7/02 Baltimore/RussellStreet - 1,763,000 5,821,000 175,000 -
3/11/02 Weymouth/MainSt - 1,440,000 4,433,000 141,000 -
3/28/02 Clinton/BranchAve&Schultz - 1,257,000 4,108,000 294,000 -
4/17/02 LaMirada/Alondra - 1,749,000 5,044,000 360,000 -
5/1/02 N.RichlndHls/RufeSnowDr - 632,000 6,337,000 (3,000) -
5/2/02 Parkville/E.Joppa - 898,000 4,306,000 127,000 -
6/17/02 Waltham/LexingtonSt - 3,183,000 5,733,000 132,000 -
6/30/02 Nashville/Charlotte - 876,000 2,004,000 62,000 -
7/2/02 MtJuliet/LebonanRd - 516,000 1,203,000 52,000 -
7/14/02 Yorktown/GeorgeWashington - 707,000 1,684,000 24,000 -
7/22/02 Brea/E.Lambert&ClifwoodPk - 2,114,000 3,555,000 145,000 -
8/1/02 Bricktown/Route70 - 1,292,000 3,690,000 123,000 -
8/1/02 Danvers/NewburySt. - 1,311,000 4,140,000 240,000 -
8/15/02 Montclair/HoltBlvd. - 889,000 2,074,000 157,000 -
8/21/02 RockvilleCentre/MerrickRd - 3,693,000 6,990,000 273,000 -
9/13/02 Kent/PacificHighway - 1,839,000 4,291,000 87,000 -
9/13/02 Lacey/MartinWay - 1,379,000 3,217,000 53,000 -
9/13/02 Lakewood/Bridgeport - 1,286,000 3,000,000 79,000 -
11/4/02 ScotchPlains/Route22 - 2,124,000 5,072,000 50,000 -
12/23/02 SntaClarita/Viaprincssa - 2,508,000 3,008,000 448,000 -
2/13/03 Malden/EasternAve - 3,212,000 2,739,000 7,000 -
2/13/03 Pasadena/RitchieHwy - 2,253,000 4,218,000 8,000 -
2/24/03 Miami/SW137thAve - 1,600,000 4,684,000 - -
3/3/03 Chantilly/DullesSouthCourt - 2,190,000 4,314,000 7,000 -
3/6/03 Medford/MysticAve - 3,886,000 4,982,000 8,000 -
5/27/03 CastroValley/GroveWay - 2,247,000 5,881,000 5,000 -
8/2/03 Sacramento/E.StocktonBlvd - 554,000 4,175,000 4,000 -
8/13/03 Timonium/W.PadoniaRoad - 1,932,000 3,681,000 4,000 -
8/21/03 VanNuys/Sepulveda-B - 1,698,000 3,886,000 1,000 -
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
931,000 2,859,000 3,790,000 233,000
1,610,000 3,965,000 5,575,000 325,000
2,150,000 4,679,000 6,829,000 387,000
933,000 3,828,000 4,761,000 317,000
6,535,000 6,009,000 12,544,000 489,000
2,683,000 3,375,000 6,058,000 293,000
2,494,000 4,484,000 6,978,000 340,000
859,000 2,055,000 2,914,000 158,000
1,764,000 5,995,000 7,759,000 441,000
1,441,000 4,573,000 6,014,000 338,000
1,335,000 4,324,000 5,659,000 303,000
1,857,000 5,296,000 7,153,000 336,000
632,000 6,334,000 6,966,000 481,000
898,000 4,433,000 5,331,000 297,000
3,184,000 5,864,000 9,048,000 368,000
876,000 2,066,000 2,942,000 138,000
516,000 1,255,000 1,771,000 88,000
707,000 1,708,000 2,415,000 110,000
2,115,000 3,699,000 5,814,000 222,000
1,294,000 3,811,000 5,105,000 231,000
1,312,000 4,379,000 5,691,000 256,000
889,000 2,231,000 3,120,000 146,000
3,695,000 7,261,000 10,956,000 401,000
1,840,000 4,377,000 6,217,000 44,000
1,380,000 3,269,000 4,649,000 33,000
1,287,000 3,078,000 4,365,000 31,000
2,125,000 5,121,000 7,246,000 273,000
2,503,000 3,461,000 5,964,000 161,000
3,212,000 2,746,000 5,958,000 87,000
2,253,000 4,226,000 6,479,000 152,000
1,600,000 4,684,000 6,284,000 148,000
2,190,000 4,321,000 6,511,000 114,000
3,886,000 4,990,000 8,876,000 129,000
2,247,000 5,886,000 8,133,000 139,000
554,000 4,179,000 4,733,000 82,000
1,932,000 3,685,000 5,617,000 38,000
1,698,000 3,887,000 5,585,000 39,000
F-79
Adjustments
Resulting
from the
Initial Cost Subsequent
---------------------------- Costs Acquisition
Date Encum- Buildings & to of Minority
Acquired Description brances Land Improvements Acquisition Interest
- ------------------ ------------------------------ ------------ ------------- -------------- ------------- ------------
Miniwarehouses
9/9/03 Westwood/EastSt - 3,267,000 5,013,000 4,000 -
10/21/03 SanDiego/MiramarRoad - 2,244,000 6,653,000 1,000 -
11/3/03 ElSobrante/SanPabloDamRoad - 1,255,000 4,990,000 - -
11/6/03 PearlCity/KamehamehaHwy - 4,428,000 4,839,000 - -
12/23/03 Boston/SouthamptonStreet - 5,334,000 7,511,000 2,000 -
OtherProperties
Glendale/WesternAvenue - 1,622,000 3,771,000 12,799,000 -
12/13/99 Burlingame(Commercial&PUD) - 4,043,000 9,434,000 172,000 -
12/30/99 WestPalmBeach - 984,000 2,358,000 40,000 -
4/28/00 SanDiego/Sorrento - 1,282,000 3,016,000 10,000 -
6/1/98 Renton/Sw39thSt. - 725,000 2,196,000 92,000 -
6/29/98 PompanoBch/CenterPortCircle - 795,000 2,312,000 180,000 -
12/9/98 Miami/Nw115thAve - 1,095,000 2,349,000 212,000 -
12/30/99 TamaracParkway - 1,902,000 4,467,000 1,350,000 -
12/29/00 Gardena - 1,737,000 5,456,000 17,000 -
4/2/02 LongBeach - 887,000 6,251,000 - -
ConstructioninProgress - - 81,856,000
----------- -------------- -------------- ------------ -------------
$16,630,000 $1,316,705,000 $3,095,471,000 $547,978,000 $247,200,000
=========== ============== ============== ============ =============
Gross Carrying Amount
At December 31, 2003
-------------------------------------------- Accumulated
Land Buidling Total Depreciation
-------------- -------------- -------------- -------------
3,267,000 5,017,000 8,284,000 51,000
2,244,000 6,654,000 8,898,000 66,000
1,255,000 4,990,000 6,245,000 33,000
4,428,000 4,839,000 9,267,000 32,000
5,334,000 7,513,000 12,847,000 -
1,615,000 16,577,000 18,192,000 15,543,000
4,043,000 9,606,000 13,649,000 1,657,000
913,000 2,469,000 3,382,000 394,000
1,024,000 3,284,000 4,308,000 607,000
725,000 2,288,000 3,013,000 637,000
795,000 2,492,000 3,287,000 670,000
1,102,000 2,554,000 3,656,000 548,000
1,890,000 5,829,000 7,719,000 766,000
1,737,000 5,473,000 7,210,000 791,000
887,000 6,251,000 7,138,000 1,286,000
12,236,000 69,620,000 81,856,000 -
-------------- ------------- -------------- --------------
$1,345,118,000 $3,862,236,000$5,207,354,000 $1,153,059,000
============== ============= ============== ==============
F-80