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, 2004 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
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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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9.750% Cumulative Preferred Stock, Series F, $.01 par value..................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 8.600% 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 6.125% Cumulative
Preferred Stock, Series A $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 7.125% Cumulative
Preferred Stock, Series B $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.600% Cumulative
Preferred Stock, Series C $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.180% Cumulative
Preferred Stock, Series D $.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)
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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, 2004:
Common Stock, $0.10 Par Value - $3,687,482,000 (computed on the basis of $46.01
per share which was the reported closing sale price of the Company's Common
Stock on the New York Stock Exchange on June 30, 2004).
Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series
A, $.01 Par Value - $194,799,000 (computed on the basis of $26.11 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, 2004).
The number of shares outstanding of the registrant's classes of common stock as
of March 14, 2005:
Common Stock, $.10 Par Value - 129,560,552 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 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 2005 are incorporated by reference
into Part III.
2
PART I
ITEM 1. Business
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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
21E 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 Public Storage, Inc. (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 self-storage facilities. We are the largest owner and operator
of storage space in the United States with direct and indirect equity
investments in 1,464 storage facilities containing approximately 89.2 million
square feet of net rentable space at December 31, 2004. 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,
2004, owned and operated commercial properties containing approximately 18.0
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 we continue to qualify as a REIT, we will
not be subject to tax, with certain limited exceptions, on the taxable income
that is distributed to our shareholders.
We have reported annually to the Securities and Exchange Commission
("SEC") on Form 10-K, which includes financial statements certified by
independent public accountants. We have also reported quarterly to the
Securities and Exchange Commission on Form 10-Q, which included unaudited
financial statements with such filings. We expect to continue such reporting.
Our website is www.publicstorage.com, and we make available free of charge
on our website our 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. (47) 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 (71) 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 (68), President and Chief Operating
Officer, 27 years; John Reyes (44), Senior Vice President - Chief Financial
Officer, 14 years; John S. Baumann (44), Senior Vice President - Chief Legal
Officer, who joined the Company in June 2003; John E. Graul (53), Senior Vice
President and President, Self-Storage Operations, who joined the Company in
February 2004 and David F. Doll (46), Senior Vice President and President, Real
Estate Group, who joined the Company in February 2005.
Our senior management has a significant ownership position in the Company
with executive officers, directors and their families owning approximately 46.5
million shares or 36% of the common stock as of March 14, 2005.
INVESTMENT OBJECTIVE
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Our primary objective is to increase the value of each share through
internal growth (by increasing net income, 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. 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. The increase in the amount of funds available for real estate
investments has increased competition for ownership interests in facilities and
may reduce yields on acquisitions.
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 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. During 2003 and 2004, we implemented an
upgraded information system platform, which has enabled us to more quickly
adapt our pricing and marketing efforts to market conditions. This distribution
system, among other benefits, is designed to maximize revenue and occupancy
levels through automated pricing.
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.
ECONOMIES OF SCALE: We are the largest provider of storage space in the
industry. As of December 31, 2004, we operated 1,464 storage facilities in
which we had an interest and managed 28 storage facilities for third parties.
These facilities are in markets within 37 states. At December 31, 2004, we had
over 748,000 spaces rented. The size and scope of our operations have enabled
us to achieve a high level of profit margins and low level of administrative
costs relative to revenues.
Our size in many markets has enabled us to market efficiently using
television as a media source. We believe the high cost of television makes it
impractical for our competitors to use this form of media without the high
concentration of facilities in markets.
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 virtually
all markets 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.
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
continues to expand its retail activities.
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, we 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 our storage facilities. This
subsidiary receives the premiums and bears the risks associated with the
re-insurance. We believe 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
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) expanding and repackaging
existing real estate facilities, 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 properties 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, rental rates, and promotional discounting 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. 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 our
consolidated financial statements for the year ended December 31, 2004, as well
as the "Other Partnership Interests" and "Consolidated Development Joint
Venture" in Note 10 to the consolidated financial statements for the year ended
December 31, 2004.
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 MARKET: Since 1995, the Company and its
joint venture partnerships (described below in "Financing of the Company's
Growth Strategies") have opened a total of 140 facilities, including 23
facilities in 2000, 22 facilities in 2001, 16 facilities in 2002, 14 facilities
in 2003 and seven in 2004. During 2004, these 140 facilities contributed
significantly to the growth in our earning as they continue to gain occupancy
and grow their revenues. We expect that these facilities will continue to
provide growth to our earnings into 2005. As of December 31, 2004, we have a
development "pipeline" of 10 newly-developed self-storage facilities with an
aggregate estimated cost of approximately $98.4 million, and an aggregate of
754,000 net rentable square feet. 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.
EXPAND AND REPACKAGE EXISTING REAL ESTATE FACILITIES: We have a
substantial number of facilities that were developed and constructed 20 or more
years ago based upon local competitive and demographic conditions in place at
that time. Since such conditions may have changed since then, there are
opportunities to expand and further invest into our existing self-storage
locations, either by improving their visual and structural appeal, or by
expanding these facilities at a per square foot cost that is typically less
than the cost incurred in developing a new location. In addition, there are
opportunities to convert existing vacant space previously used by our
containerized storage facilities into traditional self-storage space. During
2002, 2003, and 2004, we have invested a total of $71.5 million in such
expansion, conversion, and repackaging activities. At December 31, 2004, we
have identified 37 such projects to expand or repackage our existing
facilities, and to convert the vacant space previously used by the discontinued
containerized storage facilities, for an aggregate of $112.3 million, which
will add an aggregate of approximately 2,246,000 net rentable square feet.
6
Completion of these projects is subject to contingencies, including obtaining
governmental agency approvals. We continue to evaluate our existing real estate
portfolio to identify additional expansion and repackaging opportunities.
PARTICIPATE IN THE GROWTH OF COMMERCIAL FACILITIES PRIMARILY THROUGH OUR
OWNERSHIP IN PS BUSINESS PARKS, INC.: We own a 44% common equity interest in PS
Business Parks, Inc. and its operating partnership (PS Business Parks Inc. and
the related operating partnership are hereinafter referred to collectively as
"PSB") as of December 31, 2004, 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, 2004,
PSB owned and operated approximately 18.0 million net rentable square feet of
commercial space located in eight states.
In addition to our investment in PSB, we have direct interests in four
commercial facilities with an aggregate of 302,000 net rentable square feet. In
addition, certain of our self-storage facilities rent a total of 1,040,000 net
rentable square feet of commercial space at the same location, 1.2 million of
which, is managed by PSB pursuant to management agreements.
POLICIES WITH RESPECT TO INVESTING ACTIVITIES: Following are our 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: We have made loans in connection with
the sale of properties, have made short-term loans to PSB, Inc. in the
last three years and may make loans to third parties as part of our
investment objectives. However, we do not expect such items to be a
significant part of our investing activities.
o Investing in the securities of other issuers for the purpose of
exercising control: There have been two instances in the past six years
where we 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, resulting in the sale of these securities
on the open market. We may engage in these activities in the future as a
component of our real estate acquisition strategy. We also own
partnership interests in various consolidated and unconsolidated
partnerships. See "Investments in Real Estate and Real Estate Entities."
o Underwriting securities of other issuers: We have not engaged in this
activity in the last three years, and do not intend to in the future.
o Short-term investing: We have 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, we have acquired real estate
assets and held them for an extended period of time. We do not
anticipate any such short-term investments.
o Repurchasing or reacquiring our common shares or other securities: The
Board of Directors has authorized the repurchase from time to time of up
to 25,000,000 shares of our common stock on the open market or in
privately negotiated transactions. Cumulatively through March 14, 2005,
we repurchased a total of 22,117,720 shares of common stock at an
aggregate cost of approximately $562,158,000. Cumulatively through March
14, 2005, we have called for redemption or repurchased $1,095,500,000 of
our senior preferred stock and $165,000,000 of our preferred partnership
units for cash, representing a refinancing of these securities into
lower-coupon preferred securities. Any future repurchases of our common
stock will depend primarily upon the attractiveness of repurchases
compared to our other investment alternatives. Future redemptions or
repurchases of our 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.
7
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 the cash portion (represented by our acquisition cost less
debt assumed, as described below) of our acquisitions with permanent capital
(predominantly retained cash flow 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. During 2004, we assumed long-term secured
mortgage notes of $94.7 million in connection with property acquisitions. Prior
to 2004, we incurred long-term debt during the merger with Storage Trust in
1999 wherein we assumed $100 million in senior unsecured notes. We were unable
to prepay these debt balances either because of the nature of the loan terms or
because it was not economically advantageous to do so. 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: We have in the last three years, and expect
to continue, to issue additional series of preferred stock that are senior to
our Common Stock and Equity Stock. At December 31, 2004, we had approximately
$2.1 billion of preferred stock outstanding, excluding one series that was
called for redemption on December 22, 2004 and subsequently redeemed on January
31, 2005. 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.
ISSUANCE OF SECURITIES IN EXCHANGE FOR PROPERTY: We have issued common and
preferred equity in exchange for real estate and other investments in the last
three years. On October 12, 2004, we issued $25 million in preferred units in
conjunction with the acquisition of a self-storage business. Future issuances
will be dependent upon market conditions at the time, including the market
prices of our equity securities.
DEVELOPMENT JOINT VENTURE FINANCING: We entered into two separate
development joint venture partnerships since 1997 in order to provide
development financing. The first development joint venture partnership was
formed in 1997 and completed in 2001.
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,
2004, 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 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 us 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 we do not exercise our 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 us 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 us and
PSAC Storage Investors, LLC in accordance with the partnership agreement.
8
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, 2004). 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%.
FINANCING ACQUISITION JOINT VENTURE: In January 2004, we entered into a
joint venture partnership 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 "Acquisition Joint Venture"). The venture is
funded entirely with equity consisting of 30% from the Company and 70% from the
institutional investor. For a six-month period beginning 54 months after
formation, we have the right to acquire our joint venture partner's interest
based upon the market value of the properties. If we do not exercise our option,
our joint venture partner can elect to purchase our interest in the properties
during a six-month period commencing upon expiration of our six-month option
period. If our joint venture partner fails to exercise its option, the
partnership will be liquidated and the proceeds will be distributed to the
partners according to the joint venture agreement. As of December 31, 2004, the
Acquisition Joint Venture owned a total of nine self-storage facilities with an
aggregate cost of $32,079,000. In January 2005, the Acquisition Joint Venture
acquired a significant interest in an additional three facilities from us for an
aggregate of $27.4 million in cash. See Note 2 to our consolidated financial
statements at December 31, 2004 for further discussion of the accounting for the
Acquisition Joint Venture. We do not expect the Acquisition Joint Venture to
acquire any additional facilities.
DISPOSITION OF PROPERTIES: During 2004, we sold a commercial property for
proceeds of approximately $3.8 million. During 2003, we sold five self-storage
facilities, which were located in non-strategic markets and locations, and an
industrial facilitiy for an aggregate of approximately $21.0 million. We used
the proceeds from these sales as a source of funding for developments and
third-party acquisitions. We continually review our portfolio for facilities
that are not strategically located and determine 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.
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 under the "Public Storage" name.
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 PSB.
o We have a pipeline of 47 development projects, including 35 expansions
of real estate facilities, for a total cost of $210.7 million. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations - Liquidity and Capital Resources."
9
The following table outlines our ownership interest in self-storage
facilities at December 31, 2004:
Net Rentable Square
Number of Footage of Storage
Storage Space (a)
Facilities (in thousands)
------------ ----------------
Consolidated self-storage facilities:
Wholly-owned by the Company............. 908 56,683
Owned by Consolidated Entities.......... 518 30,198
------------ ----------------
1,426 86,881
Facilities owned by Unconsolidated Entities 38 2,336
------------ ----------------
Total self-storage facilities in which the
Company has an ownership interest....... 1,464 89,217
============ ================
(a) Square footage for the consolidated facilities includes 1,040,000 net
rentable square feet of industrial space for use in containerized storage
activities.
In addition to our interest in self-storage facilities noted above, the
Company owns four stand-alone commercial facilities with an aggregate of
302,000 net rentable square feet, owns three industrial facilities with an
aggregate of 242,000 net rentable square feet used by the continuing
containerized storage operations, and has 1,040,000 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, 2004 owned and operated approximately 18.0 million net rentable square feet
of commercial space.
FACILITIES OWNED BY CONTROLLED ENTITIES
- ---------------------------------------
In addition to our direct ownership of 908 storage facilities at December
31, 2004, we had controlling ownership interests in 37 entities owning in
aggregate of 518 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 our financial statements.
FACILITIES OWNED BY UNCONSOLIDATED ENTITIES
- -------------------------------------------
At December 31, 2004, we had ownership interests in PSB and eight limited
partnerships (collectively the "Unconsolidated Entities"). Our ownership
interest in these entities is less than 50%.
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 we 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 our
consolidated financial statements. The eight limited partnerships do not have
any significant amounts of debt or other obligations. See Note 6 to our
consolidated financial statements for the year ended December 31, 2004 for
further disclosure regarding the assets and liabilities of the Unconsolidated
Entities.
10
The following chart sets forth, as of December 31, 2004, the entities in
which we have a controlling interest and the entities in which we have a
minority interest:
Subsidiaries (Controlled Entities) Entities in which we have
of the Company a Minority Interest (Unconsolidated Entities)
- ------------------------------------------------ --------------------------------------------------
Carson Storage Partners, Ltd. Public Storage Alameda, Ltd. (2)
Carson Storage Ventures Public Storage Glendale Freeway, Ltd. (11)
Connecticut Storage Fund Metropublic Storage Fund (10)
Del Amo Storage Partners, Ltd. 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 Orangeco Partnerships, Inc. PSAF Acquisition Partners, Ltd.
PS Partners, Ltd.
PS Partners VIII, Ltd.
PS Texas Holdings, II, 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)
Secure Mini-Storage
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) The Hughes 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
- -------------------------------------
Our Bylaws prohibit us 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 April 1, 2007 and bears an annual interest rate
ranging from the London Interbank Offered Rate ("LIBOR") plus 0.45% to LIBOR
plus 1.20% depending on our credit ratings (currently LIBOR plus 0.45%). In
addition, we are required to pay a quarterly commitment fee ranging from 0.15%
per annum to 0.30% per annum depending on our credit ratings (currently the fee
is 0.15% per annum). At December 31, 2004 and March 15, 2005, 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
0.55 to 1.00, (ii) maintain certain quarterly interest and fixed-charge
coverage ratios (as defined) of not less than 2.25 to 1.0 and 1.5 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 1.5 times our unsecured recourse debt). We
were in compliance with all the covenants of the Credit Agreement at December
31, 2004.
As of December 31, 2004, we had notes payable of approximately $129.5
million and debt to a joint venture partner of approximately $16.1 million. See
Notes 8 and 9 to the consolidated financial statements for a summary of our
borrowings at December 31, 2004.
Subject to a limitation on unsecured borrowings in our Bylaws (described
below), we have broad powers to borrow in support of our 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 which 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.
Our Bylaws prohibit us from issuing debt securities in a public offering
unless our "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, 2004, the Debt
Ratio was approximately 2.2%. "Debt" means the liabilities (other than "accrued
12
and other liabilities" and "minority interest") that should, in accordance with
accounting principles generally accepted in the United States, be reflected on
our 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.
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 4,149 employees at December 31, 2004 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 our captive insurance programs
(described below), and insure portions of these risks through nationally
recognized insurance carriers. Our captive insurance programs also insure
affiliates of the Company.
For losses incurred prior to April 1, 2004, the Company's captive
insurance activities were conducted through STOR-Re Mutual Insurance Company,
Inc. ("STOR-Re"), an association captive insurance company owned by the
Company, the Consolidated Entities, and the Unconsolidated Entities. For losses
incurred after March 31, 2004, these activities were conducted by an entity
wholly owned by the Company, PS Insurance Company Hawaii, Ltd. ("PSIC - H").
The Company, STOR-Re, PSIC-H 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 $35 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.
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:
13
THE HUGHES FAMILY COULD CONTROL US AND TAKE ACTIONS ADVERSE TO OTHER
SHAREHOLDERS.
At March 14, 2005, 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 not be favorable to the other common shareholders.
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 PSB 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 us and our shareholders. 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, REDUCING CASH AVAILABLE FOR SHAREHOLDERS.
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.
14
WE HAVE BECOME INCREASINGLY DEPENDENT UPON AUTOMATED PROCESSES AND THE INTERNET
AND ARE FACED WITH SECURITY SYSTEM RISKS.
We have become increasingly centralized and dependent upon automated
information technology processes. As a result, we could be severely impacted by
a catastrophic occurrence, such as a natural disaster or a terrorist attack. In
addition, a portion of our business operations are conducted over the internet,
increasing the risk of viruses that could cause system failures and disruptions
of operations. Experienced computer programmers may be able to penetrate our
network security and misappropriate our confidential information, create system
disruptions or cause shutdowns.
WE AND OUR SHAREHOLDERS 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, 2004, our debt
of $145.6 million was 2.8% of our total assets.
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 natural disasters, such as earthquakes;
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;
o changes in tax, real estate and zoning laws; and
o tenant claims.
In addition, we self-insure certain of our property loss, liability, and
workers compensation risks that other real estate companies may use third-party
insurers for. This results in a higher risk of losses that are not covered by
third-party insurance contracts, as described in Note 17 to our consolidated
financial statements at December 31, 2004 under "Insurance and Loss Exposure."
There is significant competition among self-storage facilities and from
other storage alternatives. Most of our properties are self-storage facilities,
which generated 93% of our revenue for the year ended December 31, 2004. Local
15
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.
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.
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, 2000, we have opened 65 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 $584.6 million. In addition, at December 31, 2004 we had 47 projects
in development that are expected to be completed in approximately the next two
years. These 47 projects have total estimated costs of $210.7 million.
Construction delays due to weather, unforeseen site conditions, personnel
problems, and other factors, as well as cost overruns, would adversely affect
our profitability. Delays in the rent-up of newly developed facilities as a
result of competition or other factors would also adversely impact our
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 our 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
16
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.
Any failure by us to manage acquisitions and other significant
transactions successfully could negatively impact our financial results. As an
increasing part of our business, we acquire other self-storage facilities. We
also evaluate from time to time other significant transactions. If these
facilities are not properly integrated into our system, our financial results
may suffer.
We incur liability from employment related claims. From time to time we
must resolve employment related claims by corporate level and field personnel.
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 40
self-storage facilities in Canada under the name "Public Storage." 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, 2004. We have a right of first refusal to acquire
the stock or assets of the corporation engaged in the operation of the
self-storage facilities in Canada if the Hughes family or the corporation
agrees to sell them. However, we have no ownership interest in the operations
of this corporation, have no right to acquire their 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.
Company personnel have been engaged in the supervision and the operation
of these 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 in the amount of
$542,499 with respect to the Canadian operations and $151,063 for other
services during 2003 (in United States dollars). 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.
The corporation engaged in the operations of the Canadian facilities has
advised us that it intends to reorganize the entities owning and operating the
Canadian facilities and has proposed that the Company consent to this
reorganization, which would impact the license agreement and the right of first
refusal agreement with the Company. The reorganization is designed to enhance
the entities' financial flexibility and growth potential. In November 2004, the
Board appointed a special committee, comprised of independent directors, to
consider the Company's alternatives in this matter, including a possible
investment in the reorganized Canadian entities.
OUR CONTAINERIZED STORAGE BUSINESS HAS INCURRED OPERATING LOSSES.
Public Storage Pickup & Delivery ("PSPUD") was organized in 1996 to
operate a containerized storage business. We own all of the economic interest
of PSPUD. Since PSPUD will operate profitably only if it can succeed in the
relatively new field of containerized storage, we cannot provide any assurance
as to its profitability. PSPUD incurred an operating loss of $10,058,000 in
2002, and generated operating profits of $2,543,000 in 2003 and $684,000 for
the year ended December 31, 2004. Since 2002, PSPUD closed or consolidated 43
of 55 facilities that were deemed not strategic to our business plan.
17
INCREASES IN INTEREST RATES MAY ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK.
One of the factors that influences the market price of our common stock
and our other securities is the annual rate of distributions that we pay on the
securities, as compared with interest rates. An increase in interest rates may
lead purchasers of REIT shares to demand higher annual distribution rates,
which could adversely affect the market price of our common stock and other
securities.
TERRORIST ATTACKS AND THE POSSIBILITY OF WIDER ARMED CONFLICT MAY HAVE AN
ADVERSE IMPACT ON OUR BUSINESS AND OPERATING RESULTS AND COULD DECREASE 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 United States 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.
2003 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 paid 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
efforts to reenact legislation mandating medical insurance for employees of
California businesses and members of their families.
18
ITEM 2. PROPERTIES
----------
At December 31, 2004, we had direct and indirect ownership interests in
1,464 storage facilities located in 37 states:
At December 31, 2004
------------------------------------------
Number of Storage Net Rentable Square
Facilities (a) Feet (in thousands)
------------------ -------------------
California:
Southern............... 168 10,932
Northern............... 143 8,346
Texas....................... 169 11,438
Florida..................... 149 9,052
Illinois.................... 96 5,888
Georgia..................... 64 3,776
Colorado.................... 50 3,189
Washington.................. 43 2,747
New Jersey.................. 44 2,583
Maryland.................... 43 2,458
Virginia.................... 39 2,388
New York.................... 39 2,335
Missouri.................... 38 2,172
Ohio........................ 30 1,863
Minnesota................... 26 1,635
Nevada...................... 22 1,409
Pennsylvania................ 20 1,360
Kansas...................... 22 1,316
Tennessee................... 23 1,311
North Carolina.............. 24 1,266
Oregon...................... 25 1,171
South Carolina.............. 24 1,082
Wisconsin................... 15 1,071
Indiana..................... 18 1,050
Other states (14 states).... 130 7,379
------------------ -------------------
Totals................. 1,464 89,217
================== ===================
(a) Includes 1,426 self-storage facilities owned by the Company and entities
controlled by the Company. The remaining 38 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
2004 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, 2004, the weighted average
occupancy level and the average total rental income per rentable square foot
for our self-storage facilities were approximately 90.0% and $10.35,
respectively. Included in the 1,426 storage facilities are 82 newly developed
facilities opened since January 1, 2000.
At December 31, 2004, 34 of our facilities were encumbered by an aggregate
of $95.9 million in mortgage debt.
We have 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 our total assets, gross revenues or net income.
DESCRIPTION OF SELF-STORAGE FACILITIES: Self-storage facilities, which
comprise the majority of our investments (approximately 97% 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
19
an unrestricted basis during business hours. On-site operation is the
responsibility of property managers who are supervised by district managers.
Some self-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 self-storage facilities are operated under the
"Public Storage" name.
Users of space in self-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 self-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
self-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 self-storage facilities are geographically diversified and are located
primarily in or near major metropolitan markets in 37 states in the United
States. Generally our self-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 self-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 self-storage facility interests have generally
shown a high degree of consistency in generating cash flows, despite changing
economic conditions. We believe that our self-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 1,464 self-storage
facilities, we have an interest in PSB, which, as of December 31, 2004, owns
and operates approximately 18.0 million net rentable square feet in eight
states. At December 31, 2004, our investment in PSB represents less than 6% of
our total assets based upon cost of $284.6 million. The market value of our
investment in PSB at December 31, 2004 of approximately $573.8 million
represents 11.0% of the book value of our total assets at December 31, 2004 of
approximately $5.2 billion. We also directly own four commercial properties
with 302,000 net rentable square feet, have 1,040,000 net rentable square feet
of commercial space that is located at certain of the self-storage facilities,
and own three industrial facilities with an aggregate of 242,000 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
20
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.
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 which 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 - Sacramento County); Holzman et al v. Public Storage,
- ------------------------------------------------------------------------
Inc. (filed October 2004) (Superior Court - Sacramento County)
- --------------------------------------------------------------
This action, which was described in the Company's prior reports, was
disposed of in February 2005.
Gustavson et al v. Public Storage, Inc. (filed June 2003) (Superior Court
- ----------------------------------------------------------------------------
- - Los Angeles County); Potter, et al v. Hughes, et al
- ---------------------------------------------------------
(filed December 2004) (United States District Court -
- ------------------------------------------------------
Central District of California)
- -------------------------------
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).
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
21
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
(Gustavson, et al.v. Public Storage, Inc.) 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, Justice Malcolm Lucas, a former chief justice of the
California Supreme Court, was appointed to try the case. Justice Lucas has set
this matter for trial at the end of March 2005. We believe 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).
At the end of December 2004, the same shareholder referred to above and a
second shareholder filed a shareholder's derivative complaint (Potter, et al.
v. Hughes, et al.) naming as defendants the Company's directors (and two former
directors) and certain officers of the Company. The matters alleged in this
Potter complaint relate to PSIC, the Hughes family's Canadian self-storage
operations and the Company's 1995 reorganization. The Company is currently in
the process of evaluating the Potter complaint and believes the litigation will
not have any financially adverse effect on the Company (other than the costs
and other expenses relating to the lawsuit).
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
---------------------------------------------------
We did not submit any matter to a vote of security holders in the fourth
quarter of the fiscal year ended December 31, 2004.
PART II
-------
ITEM 5. MARKET FOR 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 c. below) have been listed on the New York
Stock Exchange since February 14, 2000.
22
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
---------------- ------------- --------------- ---------------
2003 1st $ 33.600 $ 28.250
2nd 36.200 28.250
3rd 39.250 33.710
4th 45.810 39.150
2004 1st 50.000 43.470
2nd 49.800 39.500
3rd 52.670 45.240
4th 57.640 49.600
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
---------------- ------------- --------------- ---------------
2003 1st $ 28.100 $ 26.480
2nd 28.900 26.870
3rd 29.120 27.300
4th 29.950 28.000
2004 1st 31.500 29.220
2nd 30.500 26.010
3rd 28.480 26.130
4th 29.500 27.860
As of March 14, 2005, there were approximately 18,700 holders of record of
the Common Stock and approximately 11,900 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 2004 amounted to $230.8 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
23
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.
For Federal income tax purposes, distributions to shareholders
are treated as ordinary income, capital gains, return of capital or a
combination thereof. For 2004, 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.......... 99.8683% 99.8694% 99.8712% 98.0855%
Long-term Capital Gain... 0.1317% 0.1306% 0.1288% 1.9145%
------------ ------------ ------------ -------------
Total.................... 100.0000% 100.0000% 100.0000% 100.0000%
============ ============ ============ =============
A percentage of the long-term capital gain is unrecaptured
Section 1250 gain for each of 2004 as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
------------ ------------ ------------ -------------
Unrecaptured ss.1250 Gain.. 34.8559% 34.8559% 34.8559% 43.7003%
============ ============ ============ =============
For the corporate shareholders a portion of the long-term
capital gain is required to be recaptured as ordinary income. For each
quarter of 2004 the percentage is as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
------------ ------------ ------------ -------------
IRC ss.291 Recapture....... 6.9709% 6.9709% 6.9709% 8.7400%
============ ============ ============ =============
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
------------ ------------ ------------ -------------
Unrecaptured ss.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
------------ ------------ ------------ -------------
IRC ss.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,
24
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 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.
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.
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, 2004, 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 consolidated partnership in which we are the general
partner. On June 30, 2004, the Equity Stock, Series AA was retired in
connection with our aforementioned acquisition of the remaining
interests we did not own in the consolidated partnership.
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.
25
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
For the year ended December 31,
-------------------------------------------------------------------------
2004 (1) 2003 (1) 2002 (1) 2001 (1) 2000 (1)
---------- ----------- ------------ ---------- -----------
(Amounts in thousands, except per share data)
Revenues:
Rental income and tenant reinsurance premiums. $917,811 $856,040 $815,052 $755,020 $687,394
Interest and other income..................... 10,165 8,628 8,661 14,225 18,836
---------- ----------- ------------ ---------- -----------
927,976 864,668 823,713 769,245 706,230
---------- ----------- ------------ ---------- -----------
Expenses:
Cost of operations............................ 330,531 311,414 281,497 252,068 237,955
Depreciation and amortization................. 183,148 184,145 175,834 164,025 146,996
General and administrative.................... 18,813 17,127 15,619 21,038 21,306
Interest expense.............................. 760 1,121 3,809 3,227 3,293
---------- ----------- ------------ ---------- -----------
533,252 513,807 476,759 440,358 409,550
---------- ----------- ------------ ---------- -----------
Income from continuing operations before equity
in earnings of real estate entities, gain
(loss) on disposition of real estate
investments and casualty loss and minority
interest in income............................ 394,724 350,861 346,954 328,887 296,680
Equity in earnings of real estate entities...... 22,564 24,966 29,888 38,542 39,319
Gain/(loss) on disposition of real estate
investments and casualty loss................. 67 1,007 (2,541) 4,091 576
Minority interest in income (3)................. (49,913) (43,703) (44,087) (46,015) (38,356)
---------- ----------- ------------ ---------- -----------
Income from continuing operations............... 367,442 333,131 330,214 325,505 298,219
Discontinued operations (2)..................... (1,229) 3,522 (11,476) (1,297) (1,131)
---------- ----------- ------------ ---------- -----------
Net income...................................... $366,213 $336,653 $318,738 $324,208 $297,088
========== =========== ============ ========== ===========
- -----------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE:
- -----------------
Distributions................................... $1.80 $1.80 $1.80 $1.69 $1.48
Net income - Basic.............................. $1.39 $1.29 $1.15 $1.41 $1.41
Net income - Diluted............................ $1.38 $1.28 $1.14 $1.39 $1.41
Weighted average common shares - Basic.......... 127,836 125,181 123,005 122,310 131,566
Weighted average common shares - Diluted........ 128,681 126,517 124,571 123,577 131,657
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA:
- -------------------
Total assets.................................... $5,204,790 $4,968,069 $4,843,662 $4,625,879 $4,513,941
Total debt...................................... $145,614 $76,030 $115,867 $168,552 $156,003
Minority interest (other partnership interests). $118,903 $141,137 $154,499 $169,601 $167,918
Minority interest (preferred partnership
interests)...................................... $310,000 $285,000 $285,000 $285,000 $365,000
Shareholders' equity............................ $4,429,967 $4,219,799 $4,158,969 $3,909,583 $3,724,117
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER DATA:
- -----------
Net cash provided by operating activities....... $647,443 $608,624 $591,283 $538,534 $525,775
Net cash used in investing activities........... $(188,417) $(242,370) $(325,786) $(306,058) $(465,464)
Net cash provided used in financing activities.. $(297,604) $(264,545) $(211,720) $(272,596) $(25,969)
(1) During 2004, 2003, 2002, 2001, and 2000, we completed several significant
asset acquisitions, business combinations and equity transactions. See
Notes 3, 6, 9, and 10 to our consolidated financial statements.
(2) During the years ended December 31, 2002, 2003 and 2004, we adopted and
modified a business plan that included the closure or consolidation of
certain non-strategic containerized storage facilities. We sold two
commercial properties - one in 2002, the other in 2004. During 2003 we sold
five self-storage facilities. The historical operations of these facilities
are classified as discontinued operations, with the rental income, cost of
operations, depreciation expense and gain or loss on disposition of these
facilities for current and prior periods included in the line-item
"Discontinued Operations" on the consolidated income statement.
(3) During 2004, holders of $200,000,000 of our Series N preferred partnership
units agreed to a restructuring which included reducing their distribution
rate from 9.5% to 6.4% in exchange for a special distribution of
$8,000,000. This special distribution, combined with $2,063,000 in costs
incurred at the time the units were originally issued that were charged
against income in accordance with the Securities and Exchange
Commission's clarification of EITF Topic D-42, are included in minority
interest in income.
26
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 21E 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 our actual results and performance to be
materially different from those expressed or implied in the forward looking
statements. Such factors are described in Item 2A, "Risk Factors" and include
changes in general economic conditions in the markets in which we operate, the
impact of competition from new and existing storage and commercial facilities
and other storage alternatives, which could impact rents and occupancy levels
at our facilities; difficulties in our ability to evaluate, finance and
integrate acquired and developed properties into our operations and to fill up
those properties, which could adversely affect our 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 our expense and reduce our cash
available for distribution; consumers' failure to accept the containerized
storage concept which would reduce our profitability; difficulties in raising
capital at reasonable rates, which would impede our ability to grow; delays in
the development process, which could adversely affect our 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.
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,
2004 in 1,464 self-storage facilities containing approximately 89.2 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 self-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) acquiring
properties operated and partially owned by the Company, (iii) acquiring
properties owned or operated by others, (iv) developing properties in selected
markets, (v) expanding and repackaging existing real estate facilities, and
(vi) participating in the growth of PS Business Parks, Inc. ("PSB"). Major
elements of these strategies are as follows:
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. See "Self-Storage Operations - Consistent Group of
Facilities" for further discussion. We expect future increases in
rental income to come primarily from increases in realized rent,
although there can be no assurance.
27
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.
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 consolidated financial
statements for the year ended December 31, 2004, as well as the "Other
Partnership Interests" and "Consolidated Development Joint Venture" in
Note 10 to the consolidated financial statements for the year ended
December 31, 2004.
o We will acquire facilities from third parties. Prior to 2004, this
activity had not contributed significantly to our growth over the past
three years. However, during 2004, we acquired interests in 47
self-storage facilities from third parties at an aggregate cost of
approximately $268.6 million. In addition, in January 2005, we acquired
six additional self-storage facilities from third parties (total net
rentable square feet of 304,000) at an aggregate cost of approximately
$23.6 million in cash, and we currently have under contract to purchase
six self-storage facilities (total net rentable square feet of 448,000)
at an aggregate cost of approximately $48.1 million. We believe that
our national telephone reservation system and our marketing and
promotional activities present an opportunity to increase revenues at
these facilities through higher occupancies, as well as cost
efficiencies through greater critical mass.
o We will continue to develop new self-storage locations. During the five
years ending December 31, 2004, the Company and the Consolidated
Development Joint Venture developed and opened a total of 82 storage
facilities with total costs of approximately $584.6 million. In 2004,
we opened seven facilities with an aggregate cost of $61,558,000. At
December 31, 2004, we have a development pipeline which includes 10
self-storage facilities that are expected to cost an aggregate of $98.4
million, which we expect will open over the next 24 months.
o We will look to expand and further invest into our existing
self-storage locations, either by improving their visual and structural
appeal, expanding these facilities at a per square foot cost that is
typically less than the cost incurred in developing a new location, or
converting existing vacant space previously used by our containerized
storage operations into traditional self-storage space. During 2002,
2003, and 2004, we have invested a total of $71.5 million in such
expansion, conversion, and repackaging activities. At December 31,
2004, we have a pipeline of 37 such projects to expand or repackage our
existing facilities, and to convert substantially all of the vacant
space previously used by our containerized storage operations, for an
aggregate of $112.3 million, which will add approximately 2,246,000 net
rentable square feet. Completion of these projects is subject to
contingencies, including obtaining governmental agency approvals. We
continue to evaluate our existing real estate portfolio to identify
additional expansion and repackaging opportunities.
o Through our investment in PSB, we will continue to participate in the
potential growth of this company's investment in approximately 18.0
million net rentable square feet of commercial space at
December 31, 2004.
CRITICAL ACCOUNTING POLICIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations discusses our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of financial statements and related
disclosures in conformity with generally accepted accounting principles and our
28
discussion and analysis of our financial condition and results of operations
requires management to make judgments, assumptions and estimates that affect
the amounts reported in our consolidated financial statements and accompanying
notes. Note 2 to the consolidated financial statements in Item 8 of this Form
10-K summarizes the significant accounting policies and methods used in the
preparation of our consolidated financial statements and related disclosures.
Management believes the following are critical accounting policies whose
application has a material impact on the Company's financial presentation. That
is, they are both important to the portrayal of our financial condition and
results, and they require management to make judgments and estimates about
matters that are inherently uncertain.
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 income tax on the share of our taxable income that
is distributed to shareholders.
We therefore don't estimate or accrue any federal income tax expense. This
estimate could be incorrect, because due to 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 be
assured 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, 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 impairment charges in
the year ended December 31, 2004 related to our plan to close and consolidate
certain containerized storage facilities - see Note 4 to the consolidated
financial statements. 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 loss
could have a material adverse impact on our financial condition and results of
operations.
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 AND UNPAID TENANT CLAIM LIABILITIES: As
described in Notes 2 and 17 to the consolidated financial statements, we retain
certain risks with respect to property perils, legal liability, and other such
risks. In addition, a wholly-owned subsidiary of the Company reinsures policies
against claims for losses to goods stored by tenants in our self-storage
facilities. In connection with these risks, we accrue losses based upon our
estimated level of losses incurred using certain actuarial assumptions followed
in the insurance industry and based on recommendations from an independent
actuary that is a member of the American Academy of Actuaries. 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.
29
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,
of which we are aware, are described in Note 17 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. Cost
of operations, interest expense, general and administrative expense, as well as
television, yellow page, and other advertising expenditures are expensed as
incurred.
30
Results of Operations
- ------------------------------------------------------------------------------
NET INCOME:
Net income for the year ended December 31, 2004 was $366,213,000 compared
to $336,653,000 for the same period in 2003, representing an increase of
$29,560,000 or 8.8%. This increase is primarily due to improved operations from
our Consistent Group of self-storage facilities, acquired and newly developed
self-storage facilities, combined with a decrease in income allocable to
minority interests based upon ongoing distributions as a result of our
restructuring of $200 million of our Series N preferred partnership units.
These factors are partially offset by an increase in the allocation of income
to minority interest of $10,063,000 attributable to the restructuring of our
preferred partnership interests, increased general and administrative expense
attributable primarily to increased stock-based compensation expense and
reduced gains from the sale of discontinued real estate facilities.
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, improved contributions with respect to
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 PSB caused by the impact of gains from the sale of real estate and
asset impairment charges during 2003 and 2002.
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 each of 2004, 2003, and 2002, ii) distributions paid to
our preferred shareholders totaling $157,925,000 in 2004, $146,196,000 in 2003,
and $148,926,000 in 2002, and iii) amounts allocated to preferred shareholders
in connection with preferred stock redemption activities as described below,
totaling $8,724,000 in 2004, $7,120,000 in 2003 and $6,888,000 in 2002.
The Securities and Exchange Commission's clarification of Emerging Issues
Task Force Topic D-42 ("EITF Topic D-42") in July 2003 requires that the
original issuance costs of redeemed preferred stock be treated as an additional
allocation of income to the holders of the preferred stock in determining the
allocation of income to the common shareholders and earnings per share.
In the first quarter of 2005, we expect to call for redemption our 9.750%
Series F Preferred Stock, which will be redeemable in April 2005. Accordingly,
we expect an allocation of additional income to our preferred shareholders with
respect to EITF Topic D-42 totaling $1,905,000 in 2005. Future allocations of
income pursuant to EITF Topic D-42 will depend upon how much preferred stock we
redeem and the related original issuance costs.
NET INCOME PER SHARE: Net income was $1.38 per common share, on a diluted
basis, for 2004 compared to $1.28 per common share for 2003. This increase was
attributable to the factors denoted above with respect to net income offset
partially by an increase in income allocated to preferred shareholders, as
described above, and an increase in diluted shares outstanding from 126,517,000
in 2003 to 128,681,000 in 2004. The increase in shares outstanding was due
primarily to the issuance of shares in connection with the exercise of employee
stock options.
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 issuance of shares
in connection with the exercise of employee stock options and the issuance of
common shares in connection with the acquisition of partnership interests.
31
Real Estate Operations
- -------------------------------------------------------------------------------
Self-Storage Operations: Our self-storage operations are by far the
largest component of our operating activities, representing approximately 93%
of our revenues generated during 2004. Rental income with respect to our
self-storage operations has grown from $761,446,000 in 2002 to $798,584,000 in
2003, representing an increase of 4.9%. In 2004, rental income grew to
$863,463,000, representing an increase of 8.1% over 2003. The year-over-year
improvements in rental income are due to improvements in the performance of
those facilities that we owned throughout each of the three years and the
addition of new facilities to our portfolio, either through our acquisition or
development activities.
At the end of 2001, we had a total of 1,262 self-storage facilities
included in our consolidated financial statements. Since that time we have
increased the net number of self-storage facilities by 164 facilities (2002 -
103 facilities, 2003 - 9 facilities and 2004 - 52 facilities). We sold five
facilities in 2003, and their revenues, cost of operations, depreciation
expense and the net gain on these 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.
SELF - STORAGE OPERATIONS SUMMARY: Year Ended December 31, Year Ended December 31,
- ---------------------------------- ------------------------------------- ------------------------------------
Percentage Percentage
2004 2003 Change 2003 2002 Change
---------- ------------ ----------- ----------- ----------- -----------
(Dollar amounts in thousands)
Rental income (a):
- -----------------
Consistent Group (b)........................ $725,351 $691,737 4.9% $691,737 $676,191 2.3%
Acquired Facilities (c)..................... 54,652 45,929 19.0% 45,929 38,979 17.8%
Expansion Facilities (d).................... 28,348 24,622 15.1% 24,622 24,272 1.4%
Developed Facilities (e).................... 55,112 36,296 51.8% 36,296 22,004 65.0%
---------- ------------ ----------- ----------- ----------- -----------
Total rental income....................... 863,463 798,584 8.1% 798,584 761,446 4.9%
---------- ------------ ----------- ----------- ----------- -----------
Cost of operations:
Consistent Group............................ 249,547 237,870 4.9% 237,870 215,357 10.5%
Acquired Facilities......................... 18,245 15,709 16.1% 15,709 12,869 22.1%
Expansion Facilities........................ 10,295 9,605 7.2% 9,605 9,105 5.5%
Developed Facilities........................ 22,834 17,721 28.9% 17,721 12,884 37.5%
---------- ------------ ----------- ----------- ----------- -----------
Total cost of operations.................... 300,921 280,905 7.1% 280,905 250,215 12.3%
---------- ------------ ----------- ----------- ----------- -----------
Net operating income before depreciation:
Consistent Group............................ 475,804 453,867 4.8% 453,867 460,834 (1.5)%
Acquired Facilities......................... 36,407 30,220 20.5% 30,220 26,110 15.7%
Expansion Facilities........................ 18,053 15,017 20.2% 15,017 15,167 (1.0)%
Developed Facilities........................ 32,278 18,575 73.8% 18,575 9,120 103.7%
---------- ------------ ----------- ----------- ----------- -----------
Total net operating income before depreciation 562,542 517,679 8.7% 517,679 511,231 1.3%
Depreciation.................................. (176,488) (176,929) (0.2)% (176,929) (170,887) 3.5%
---------- ------------ ----------- ----------- ----------- -----------
Net operating income........................ $386,054 $340,750 13.3% $340,750 $340,344 0.1%
========== ============ =========== =========== =========== ===========
Number of self-storage facilities (at end of
period)........................................ 1,426 1,374 3.8% 1,374 1,362 0.9%
Net rentable square feet (in thousands, at end of
period):....................................... 86,881 83,013 4.7% 83,013 82,019 1.2%
(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 1,194 facilities containing 69,402,000 net
rentable square feet that were owned throughout the three years ended
December 31, 2004, and operated at a mature, stabilized occupancy level
throughout the periods presented.
(c) The Acquired Facilities includes 109 facilities containing 7,084,000 net
rentable square feet. These facilities were acquired in the three-year
period ending December 31, 2004. Substantially all of these facilities were
mature, stabilized facilities at the time of their acquisition.
(d) The Expansion Facilities include 41 facilities containing 3,426,000 net
rentable square feet of self-storage space and 690,000 square feet of
industrial space developed for containerized storage activities. These
32
facilities were owned since January 1, 2002, however, operating results are
not comparable throughout the periods presented due primarily to expansions
in their net rentable square feet or their conversion into Combination
Facilities (described below).
(e) The Developed Facilities includes 82 facilities containing 5,886,000 net
rentable square feet of self-storage space and 393,000 square feet of
industrial space initially developed for use in containerized storage
activities.
Self-Storage Operations - Consistent Group of Facilities
At December 31, 2004, we owned 1,194 self-storage facilities that we have
operated at a stabilized level of operations throughout the three-year period.
The Consistent Group of facilities contains approximately 69.4 million net
rentable square feet, representing approximately 80% 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
2004 2003 Change 2003 2002 Change
---------- ---------- ----------- ------------ ----------- -------------
(Dollar amounts in thousands, except rents per square foot)
Rental income, net of discounts................ $694,136 $663,860 4.6% $663,860 $653,693 1.6%
Late charges and administrative fees collected. 31,215 27,877 12.0% 27,877 22,498 23.9%
---------- ---------- ----------- ------------ ----------- -------------
Total rental income......................... 725,351 691,737 4.9% 691,737 676,191 2.3%
---------- ---------- ----------- ------------ ----------- -------------
Cost of operations:
Property taxes............................ 65,845 64,440 2.2% 64,440 61,527 4.7%
Direct property payroll................... 54,366 52,374 3.8% 52,374 46,985 11.5%
Advertising and promotion................. 20,873 20,066 4.0% 20,066 18,672 7.5%
Repairs and maintenance................... 21,154 19,716 7.3% 19,716 15,826 24.6%
Utilities................................. 17,770 16,541 7.4% 16,541 15,944 3.7%
Telephone reservation center.............. 10,016 10,230 (2.1)% 10,230 9,398 8.9%
Property insurance........................ 8,320 8,189 1.6% 8,189 5,780 41.7%
Other cost of management.................. 51,203 46,314 10.6% 46,314 41,225 12.3%
---------- ---------- ----------- ------------ ----------- -------------
Total cost of operations.................... 249,547 237,870 4.9% 237,870 215,357 10.5%
---------- ---------- ----------- ------------ ----------- -------------
Net operating income before depreciation....... 475,804 453,867 4.8% 453,867 460,834 (1.5)%
Depreciation................................... (141,300) (148,232) (4.7)% (148,232) (144,980) 2.2%
---------- ---------- ----------- ------------ ----------- -------------
Net operating income.......................... $334,504 $305,635 9.4% $305,635 $315,854 (3.2)%
========== ========== =========== ============ =========== =============
Gross margin (before depreciation)............. 65.6% 65.6% (0.0)% 65.6% 68.2% (3.8)%
Weighted average for the fiscal year:
Square foot occupancy (a)................... 90.9% 89.2% 2.0% 89.2% 85.1% 4.7%
Realized annual rent per occupied square foot (b) $11.00 $10.72 2.6% $10.72 $11.07 (3.2)%
REVPAF (c).................................. $10.00 $9.57 4.5% $9.57 $9.42 1.6%
Weighted average at December 31:
Square foot occupancy....................... 89.9% 89.6% 0.4% 89.6% 84.3% 6.2%
In place annual rent per occupied square foot (d) $12.10 $11.73 3.2% $11.73 $11.67 0.5%
Total net rentable square feet (in thousands).. 69,402 69,402 - 69,402 69,402 -
(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 that reduce rental income from the contractual amounts due.
(c) Annualized revenue per available square foot ("REVPAF") 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.
33
ANALYSIS OF OPERATING RESULTS IN 2002 THROUGH 2004
During 2004, the net operating income generated by our Consistent Group
increased 9.6% as compared to 2003. This increase was due to improved rental
income combined with a reduction in depreciation expense, partially offset by
increased cost of operations.
Rental income, net of discounts, increased by 4.6% in 2004 as compared to
2003. This increase was primarily attributable to a 2.0% increase in weighted
average square foot occupancy in 2004 as compared to 2003 combined with a 2.6%
increase in realized annual rent per occupied square foot.
Cost of operations increased by 4.9% in 2004 as compared to 2003. This
increase was attributable primarily to an increase in direct property payroll
due to higher incentives and other compensation to property operating and
management personnel, as well as an increase in other cost of management due
primarily to increased recruiting and training expenses and information
technology costs.
Depreciation expense declined 5.3%, due primarily to a reduction in
depreciation expense with respect to capital expenditures due to increases in
capital expenditures becoming fully depreciated relative to new capital
expenditures coming on-line.
During 2003, the net operating income of the Consistent Group of
facilities declined 1.5% from the same period in 2003. This decline was due to
higher cost of operations offset partially by higher rental income.
Cost of operations increased 10.5%, primarily due to increases in payroll,
advertising and promotion, property tax, repairs and maintenance costs, and
property insurance. Direct property payroll increased 11.5% due primarily to
increased incentives paid to and hours worked by property operating personnel.
Advertising and promotion increased 7.5% due primarily to an increase in
television advertising from $8,048,000 in 2002 to $8,662,000 in 2003. Repairs
and maintenance increased 24.6% 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 our self-insured portion of its risks.
Rental income, net of discounts increased by 1.6% in 2004 as compared to
2003. This increase was primarily attributable to a 4.7% increase in the
weighted average occupancy, partially offset by a decrease in realized rent per
occupied square foot of 3.2%.
As previously reported, in 2001, we changed our historical marketing
strategy and began to aggressively increase rental rates and reduce the amount
of promotional discounts offered to new tenants. During the first nine months
of 2001, this strategy significantly enhanced the growth in our rental income
from our historically experienced levels, and while our occupancy levels
dropped during the first nine months of 2001, it was at a level that we
believed manageable. During the fourth quarter of 2001, we experienced 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 our pricing strategy as well as to general economic conditions.
We also experienced unusually high levels of move-out activity.
Beginning in early 2002, we reversed our aggressive pricing strategy by
reducing rates charged to incoming tenants and increasing move-in discounts
offered to these tenants and expanding our television advertising campaign.
However, there was a pause in these activities during the peak move-in period
in 2002 from May through July, due to an expectation that proved incorrect,
that the demand during the peak season would be sufficient to stabilize our
occupancy levels in the absence of significant promotional activities. We
reduced our rates, continued our television advertising campaign, and continued
to offer move-in promotional discounts throughout the remainder of 2002 and
2003.
34
By the end of 2003, we had largely attained our goal of reestablishing our
occupancy levels to historical levels. In addition, the improvement in
occupancy levels enabled us to begin to increase rates that we charged to new
tenants, which at the end of 2003 were 6.2% higher than at the same time in
2002.
Throughout 2004 we continued our television advertising campaign in
selected markets, and continued to offer various move-in promotional discounts
where warranted to sustain our occupancy levels and rental rates. During the
first half of 2004, we were able to generate year-over-year rental income
growth of approximately 5.7%. This growth was largely due to a 4.0% improvement
in occupancy levels combined with improved realized rental rates per occupied
square foot. During the second half of 2004, year-over-year rental income grew
approximately 4.1% as compared to the same period in 2003. However, unlike the
first half of 2004 where rental growth was primarily driven by occupancy gains,
in the second half of the year rental growth was primarily driven by a 3.9%
increase in realized rents per occupied square foot.
We experience minor seasonal fluctuations in the occupancy levels of
self-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. We also believe that our
occupancy levels with respect to the Consistent Group of facilities have become
more stabilized and therefore further year-over-year gains in occupancy levels
will be difficult to generate. We are currently working on new processes to
improve our inventory management which may help us drive occupancy levels
modestly higher; however, there can be no assurance that we will achieve our
goal.
REVENUE OUTLOOK
Our goals are a sustainable occupancy level and moderate growth in rental
income. Few expect that future growth in rental income will come principally
from increases in rates, rather than increases in occupancy. We are
continuously evaluating our call volume, reservation activity, and
move-in/move-out ratios 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 refine our
marketing, promotional, and pricing activities to maximize rental income. There
can be no assurance that we will achieve our goals.
EXPENSE TRENDS AND OUTLOOK
Throughout 2003 and 2004, we have increased regular and incentive
compensation of our field operating and management personnel, as our field
organization has focused upon improving customer service and productivity.
Accordingly, direct property payroll increased 11.5% in 2003 as compared to
2002, and 3.8% in 2004 as compared to 2003.
In addition, during 2003 and 2004, we increased the level of repairs and
maintenance significantly, in order to improve the curb appeal and "rent ready"
condition of our facilities. Repairs and maintenance increased 24.6% in 2003 as
compared to 2002, and 7.3% in 2004 as compared to 2003. The increase in 2003
also included increased snow removal expenses and costs to remedy mold issues
at several facilities in Southern states. Snow removal and mold-related
expenses declined in 2004 as compared to 2003.
Advertising and promotion expenses increased 7.5% in 2003 as compared to
2002, and 4.0% in 2004 as compared to 2003. This was principally due to
increases in television advertising expenditures, which increased from
$8,048,000 in 2002 to $8,662,000 in 2003 to $10,193,000 in 2004. Future
television advertising expense will be dependent upon market conditions and the
results of our pricing and promotional strategies.
For 2005, we expect that operating expenses for our Consistent Group of
facilities will continue to rise, probably matching the 2004 increase of 4% to
5%.
35
The following table summarizes selected financial data, with respect to
the Consistent Group Facilitates, for each of the quarters in 2004, 2003 and
2002:
For the Quarter Ended
------------------------------------------------------------------------
March 31 June 30 September 30 December 31 Entire Year
--------------- ----------------- ---------------- ------------------- ---------------
(amounts in thousands)
Total rental income:
2004 $ 175,923 $ 180,594 $ 184,897 $ 183,937 $ 725,351
2003 $ 165,821 $ 171,431 $ 178,301 $ 176,184 $ 691,737
2002 $ 169,812 $ 167,616 $ 172,810 $ 165,953 $ 676,191
Total cost of operations:
2004 $ 63,022 $ 61,936 $ 61,143 $ 63,446 $ 249,547
2003 $ 55,379 $ 59,270 $ 60,221 $ 63,000 $ 237,870
2002 $ 51,082 $ 51,556 $ 53,643 $ 59,076 $ 215,357
Media advertising expense:
2004 $ 3,098 $ 1,842 $ 1,892 $ 3,361 $ 10,193
2003 $ 1,580 $ 2,818 $ 3,166 $ 1,098 $ 8,662
2002 $ 560 $ 1,441 $ 2,013 $ 4,034 $ 8,048
REVPAF:
2004 $ 9.69 $ 9.96 $ 10.21 $ 10.14 $ 10.00
2003 $ 9.18 $ 9.48 $ 9.85 $ 9.75 $ 9.57
2002 $ 9.48 $ 9.35 $ 9.63 $ 9.22 $ 9.42
Weighted average realized annual rent per occupied square foot:
2004 $ 10.83 $ 10.90 $ 11.12 $ 11.20 $ 11.00
2003 $ 10.81 $ 10.63 $ 10.72 $ 10.75 $ 10.72
2002 $ 11.36 $ 10.85 $ 11.23 $ 10.84 $ 11.07
Weighted average occupancy levels for the period:
2004 89.5% 91.4% 91.8% 90.6% 90.9%
2003 84.9% 89.2% 91.9% 90.7% 89.2%
2002 83.5% 86.2% 85.7% 85.0% 85.1%
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.
36
Consistent Group Operating Trends by Region
- --------------------------------------------------------------------------------------------------------------------
Year Ended December 31, Year Ended December 31,
------------------------------------ -----------------------------------
2004 2003 Change 2003 2002 Change
---------- ---------- ------------ ----------- ----------- ---------
Rental income: (Dollar amounts in thousands, except rents per square foot)
Southern California (124
facilities)...................... $ 122,665 $ 116,644 5.2% $ 116,644 $ 109,118 6.9%
Northern California (124
facilities)...................... 92,048 89,274 3.1% 89,274 87,824 1.7%
Texas (143 facilities).......... 66,574 64,068 3.9% 64,068 63,049 1.6%
Florida (116 facilities)........ 65,976 61,693 6.9% 61,693 59,028 4.5%
Illinois (79 facilities)........ 51,089 49,316 3.6% 49,316 51,367 (4.0)%
Georgia (60 facilities)......... 26,593 25,341 4.9% 25,341 24,790 2.2%
All other states (548 facilities) 300,406 285,401 5.3% 285,401 281,015 1.6%
---------- ---------- ------------ ----------- ----------- ---------
Total rental income................. 725,351 691,737 4.9% 691,737 676,191 2.3%
Cost of operations:
Southern California.............. 28,930 27,367 5.7% 27,367 26,119 4.8%
Northern California.............. 23,906 23,624 1.2% 23,624 21,617 9.3%
Texas............................ 29,766 29,599 0.6% 29,599 26,677 11.0%
Florida.......................... 25,857 24,052 7.5% 24,052 21,070 14.2%
Illinois......................... 22,583 21,531 4.9% 21,531 20,148 6.9%
Georgia.......................... 9,802 9,348 4.9% 9,348 8,155 14.6%
All other states................. 108,703 102,349 6.2% 102,349 91,571 11.8%
---------- ---------- ------------ ----------- ----------- ---------
Total cost of operations............ 249,547 237,870 4.9% 237,870 215,357 10.5%
Net operating income before depreciation:
Southern California.............. 93,735 89,277 5.0% 89,277 82,999 7.6%
Northern California.............. 68,142 65,650 3.8% 65,650 66,207 (0.8)%
Texas............................ 36,808 34,469 6.8% 34,469 36,372 (5.2)%
Florida.......................... 40,119 37,641 6.6% 37,641 37,958 (0.8)%
Illinois......................... 28,506 27,785 2.6% 27,785 31,219 (11.0)%
Georgia.......................... 16,791 15,993 5.0% 15,993 16,635 (3.9)%
All other states................. 191,703 183,052 4.7% 183,052 189,444 (3.4)%
---------- ---------- ------------ ----------- ----------- ---------
Total net operating income.......... $ 475,804 $ 453,867 4.8% $ 453,867 $ 460,834 (1.5)%
Weighted average occupancy:
Southern California.............. 92.1% 90.7% 1.5% 90.7% 86.9% 4.4%
Northern California.............. 89.4% 88.7% 0.8% 88.7% 84.9% 4.5%
Texas............................ 89.9% 89.1% 0.9% 89.1% 84.0% 6.1%
Florida.......................... 92.3% 90.6% 1.9% 90.6% 85.2% 6.3%
Illinois......................... 89.8% 88.0% 2.0% 88.0% 84.3% 4.4%
Georgia.......................... 91.5% 90.1% 1.6% 90.1% 84.3% 6.9%
All other states................. 90.9% 88.6% 2.6% 88.6% 85.2% 4.0%
---------- ---------- ------------ ----------- ----------- ---------
Total weighted average occupancy.... 90.9% 89.2% 2.0% 89.2% 85.1% 4.7%
REVPAR:
Southern California.............. $ 15.12 $ 14.42 4.8% $ 14.42 $ 13.53 6.6%
Northern California.............. 13.25 12.91 2.7% 12.91 12.75 1.3%
Texas............................ 7.13 6.87 3.7% 6.87 6.82 0.8%
Florida.......................... 9.55 8.91 7.3% 8.91 8.59 3.7%
Illinois......................... 10.17 9.86 3.2% 9.86 10.35 (4.7)%
Georgia.......................... 7.25 6.93 4.7% 6.93 6.93 0.0%
All other states................. 9.21 8.78 4.9% 8.78 8.72 0.7%
---------- ---------- ------------ ----------- ----------- ---------
Total REVPAR:....................... $ 10.00 $ 9.57 4.5% $ 9.57 $ 9.42 1.6%
Realized annual rent per occupied square foot:
Southern California.............. $ 16.42 $ 15.90 3.2% $ 15.90 $ 15.57 2.1%
Northern California.............. 14.82 14.55 1.9% 14.55 15.01 (3.1)%
Texas............................ 7.93 7.71 2.8% 7.71 8.12 (5.0)%
Florida.......................... 10.35 9.83 5.3% 9.83 10.08 (2.5)%
Illinois......................... 11.33 11.20 1.1% 11.20 12.28 (8.7)%
Georgia.......................... 7.93 7.69 3.1% 7.69 8.21 (6.4)%
All other states................. 10.13 9.91 2.2% 9.91 10.23 (3.2)%
---------- ---------- ------------ ----------- ----------- ---------
Total realized rent per square foot:... $ 11.00 $ 10.72 2.6% $ 10.72 $ 11.07 (3.2)%
37
Self-Storage Operations - Acquired Facilities
Over the past three years, we acquired 109 self-storage facilities
containing 7,084,000 net rentable square feet. The following table summarizes
operating data with respect to these facilities.
ACQUIRED FACILITIES
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, Year Ended December 31,
------------------------------------ ----------------------------------------
2004 2003 Change 2003 2002 Change
----------- ----------- ---------- ----------- ----------- --------------
(Dollar amounts in thousands)
Rental income:
- --------------
Self-storage facilities acquired in 2004.... $ 4,705 $ - $ 4,705 $ - $ - $ -
Self-storage facilities acquired in 2002.... 44,102 40,684 3,418 40,684 34,772 5,912
Self-storage facilities acquired in 2001.... 592 560 32 560 445 115
Self-storage facilities acquired in 2000.... 5,253 4,685 568 4,685 3,762 923
----------- ----------- ---------- ----------- ----------- --------------
Total rental income......................... 54,652 45,929 8,723 45,929 38,979 6,950
----------- ----------- ---------- ----------- ----------- --------------
Cost of operations:
- -------------------
Self-storage facilities acquired in 2004.... $ 1,606 $ - $ 1,606 $ - $ $ -
Self-storage facilities acquired in 2002.... 14,393 13,489 904 13,489 11,301 2,188
Self-storage facilities acquired in 2001.... 222 200 22 200 191 9
Self-storage facilities acquired in 2000.... 2,024 2,020 4 2,020 1,377 643
----------- ----------- ---------- ----------- ----------- --------------
Total cost of operations.................... 18,245 15,709 2,536 15,709 12,869 2,840
----------- ----------- ---------- ----------- ----------- --------------
Net operating income before depreciation:
- -----------------------------------------
Self-storage facilities acquired in 2004.... $ 3,099 $ - $ 3,099 $ - $ - $ -
Self-storage facilities acquired in 2002.... 29,709 27,195 2,514 27,195 23,471 3,724
Self-storage facilities acquired in 2001.... 370 360 10 360 254 106
Self-storage facilities acquired in 2000.... 3,229 2,665 564 2,665 2,385 280
Total net operating income before depreciation 36,407 30,220 6,187 30,220 26,110 4,110
Depreciation................................... (11,400) (9,666) (1,734) (9,666) (9,306) (360)
----------- ----------- ---------- ----------- ----------- --------------
Net operating income........................ $ 25,007 $ 20,554 $ 4,453 $ 20,554 $ 16,804 $ 3,750
=========== =========== ========== =========== =========== ==============
Weighted average square foot occupancy during the
- -------------------------------------------------
period:
- ------
Self-storage facilities acquired in 2004.... 80.4% - - - - -
Self-storage facilities acquired in 2002.... 92.1% 89.9% 2.5% 89.9% 84.2% 6.8%
Self-storage facilities acquired in 2001.... 94.3% 92.2% 2.3% 92.2% 67.4% 36.8%
Self-storage facilities acquired in 2000.... 91.4% 84.5% 8.2% 84.5% 68.8% 22.8%
----------- ----------- ---------- ----------- ----------- --------------
90.4% 89.2% 1.2% 89.2% 81.9% 8.9%
=========== =========== ========== =========== =========== ==============
Number of self-storage facilities (at end of
period)........................................ 109 64 45 64 64 -
Net rentable square feet (in thousands, at end of
period)........................................ 7,084 3,975 3,109 3,975 3,975 -
Cumulative acquisition cost (at end of period). $ 604,643 $ 345,156 $259,487 $ 345,156 $ 345,156 $ -
Rental income and cost of operations for the Acquired Facilities have
increased significantly in 2004 as compared to 2003. This increase, in part,
is due to the acquisition of 45 additional properties from third parties for
an aggregate cost of $259.5 million. These acquisitions are described below:
o During July 2004, we acquired two facilities from a third party for an
aggregate cost of approximately $8.3 million. One of these facilities
was located in Salt Lake City, and had been managed by us for many
years.
o On October 12, 2004, we acquired 26 facilities from a third party for
an aggregate cost of approximately $102.4 million. This acquisition
increased our presence in the Minneapolis and Milwaukee markets, and
will allow us to cost-effectively introduce media advertising in these
markets, improve our yellow page ad placement, and drive operational
efficiency. In addition, the average rental rates and average
occupancies of these properties are lower than comparable properties
that we currently own in these markets..
38
o On October 13, 2004, we acquired six facilities in Dallas from a third
party for an aggregate of approximately $19.8 million. We believe that
this acquisition improved our presence in submarkets of Dallas where we
were underrepresented.
o On November 23, 2004, we acquired 10 facilities in the Miami market for
an aggregate of $119.5 million. We believe that these properties are
well-built and located in highly desirable submarkets in Miami. All of
these facilities were built between 1997 and 2003.
o On November 24, 2004, we acquired a facility in a submarket of
San Diego for approximately $9.5 million.
Operating results for the 2004 acquisitions, in the table above,
represents the results of these acquisitions from the respective acquisition
dates through December 31, 2004. On December 31, 2004, seven of these
facilities (the facility in Salt Lake City and the six facilities in Dallas)
were sold to our Acquisition Joint Venture. This transaction, however, will be
accounted for as a financing arrangement, accordingly, the operations of these
properties will continue to be consolidated in our financial statements, see
Note 9 to the consolidated financial statements. In addition, in January 2005,
a significant interest in three of the 10 facilities acquired in Miami were
sold to our Acquisition Joint Venture. Similarly these transactions will be
accounted for as a financing arrangement.
The 2002 acquisitions include 47 properties acquired on January 16,
2002 from an affiliated development joint venture (see Note 3 to the
consolidated financial statements). The 2002 acquisitions also included 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.
Operating results for the 2000, 2001 and 2002 acquisitions
collectively showed strong improvement in 2003 and 2004. These results were
primarily driven by improved occupancy levels combined with improved realized
rental rates per occupied square foot which combined improved rental income.
Notwithstanding the damage to the facility discussed below, we believe these
acquisitions will continue to provide growth to our earnings into 2005 due to
improved year-over-year occupancy levels and rental rates.
During September 2004, a facility located in Florida, and included in
our 2002 acquisitions, was significantly damaged by hurricanes. As a result,
occupancy levels and operating results for this facility were negatively
affected during the fourth quarter of 2004 and are expected to continue to be
negatively impacted into 2005. For 2004, rental income and cost of operations
for this facility were $766,000 and $352,000, respectively, as compared to
$884,000 and $321,000, respectively, for 2003. Occupancy for this facility was
19.3% and 92.1% at December 31, 2004 and 2003, respectively. We are in the
process of repairing the damage and should bring the facility back on line
fully during 2005.
In January 2005, we acquired 6 additional self-storage facilities from
third parties (total net rentable square feet of 304,000) at an aggregate cost
of approximately $23.6 million of cash. As of March 14, 2005, we are under
contract to purchase six self-storage facilities (total approximate net
rentable square feet of 448,000) at an aggregate cost of approximately $48.1
million.
Self-Storage Operations - Expansion Facilities
As a result primarily of expansions to existing self-storage
facilities, the net rentable space at certain of our self-storage facilities'
operations has changed. Accordingly, the operating results are not comparable
in each of the three years ended December 31, 2004. The operating results for
these facilities are presented in the Self-Storage Operations table above under
the caption, "Expansion Facilities."
39
These 41 facilities contain approximately 3,426,000 net rentable
square feet of self-storage space at December 31, 2004, and 690,000 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 $80.5
million during the four years ended December 31, 2004.
We have 37 projects to repackage and expand our facilities, with an
aggregate cost of $112.3 million in our development pipeline at December 31,
2004, which will increase our traditional self-storage space by an aggregate of
2,246,000 net rentable square feet, including the conversion of certain of the
industrial space developed for containerized storage activities into
traditional self-storage space. These activities will result in short-term
dilution to earnings from these activities. However, we believe that expansion
of our existing self-storage facilities in markets that have unmet storage
demand, and improving our existing facilities' competitive position through
enhancing their visual and structural appeal, provide an important means to
improve the Company's earnings. There can be no assurance about the future
level of such expansion and enhancement opportunities.
We expect that these 41 facilities will continue to provide growth to
our earnings into 2005 as we continue to fill the newly added vacant space. At
December 31, 2004, the weighted average occupancy level of these facilities was
approximately 83.1% as compared to 77.3% one year earlier.
Depreciation expense with respect to the expansion facilities was
$7,101,000 in 2004, $6,254,000 in 2003, and $6,688,000 in 2002. The increases
in depreciation expense are due to the opening of the expanded portion of the
facilities.
Self-Storage Operations -Developed Facilities
Since January 1, 2000, we have opened 65 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 6,279,000 net rentable square feet (of which
393,000 net rentable square feet is industrial space developed for
containerized storage activities - see "Containerized Storage" and
"Discontinued Operations"). Aggregate development cost for these 82 facilities
was approximately $584.6 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,
----------------------------------- ---------------------------------------
2004 2003 Change 2003 2002 Change
---------- ----------- ------------ ---------- ------------- ------------
(Amounts in thousands, except No. of facilities)
Rental income:
- --------------
Self-storage facilities.................. $ 40,877 $ 25,651 $ 15,226 $ 25,651 $ 15,241 $ 10,410
Combination facilities................... 14,235 10,645 3,590 10,645 6,763 3,882
---------- ----------- ------------ ---------- ------------- ------------
Total rental income.................... 55,112 36,296 18,816 36,296 22,004 14,292
---------- ----------- ------------ ---------- ------------- ------------
Cost of operations:
- ------------------
Self-storage facilities.................. 17,135 12,845 4,290 12,845 7,848 4,997
Combination facilities................... 5,699 4,876 823 4,876 5,036 (160)
---------- ----------- ------------ ---------- ------------- ------------
Total cost of operations............... 22,834 17,721 5,113 17,721 12,884 4,837
---------- ----------- ------------ ---------- ------------- ------------
Net operating income before depreciation:
- ----------------------------------------
Self-storage facilities................. 23,742 12,806 10,936 12,806 7,393 5,413
Combination facilities.................. 8,536 5,769 2,767 5,769 1,727 4,042
---------- ----------- ------------ ---------- ------------- ------------
Net operating income before depreciation 32,278 18,575 13,703 18,575 9,120 9,455
Depreciation.............................. (16,687) (12,777) (3,910) (12,777) (9,913) (2,864)
---------- ----------- ------------ ---------- ------------- ------------
Net operating income (loss)............. $ 15,591 $ 5,798 $ 9,793 $ 5,798 $ (793) $ 6,591
========== =========== ============ ========== ============= ============
SELF-STORAGE FACILITIES, AT END OF PERIOD:
Number of facilities.................... 65 58 7 58 44 14
Net rentable square feet................ 4,320 3,780 540 3,780 2,787 993
Total development cost.................. $ 415,755 $ 350,737 $ 65,018 $ 350,737 $ 241,833 $108,904
COMBINATION FACILITIES, AT END OF PERIOD:
Number of facilities.................... 17 17 - 17 17 -
Net rentable square feet (a) (b)....... 1,959 1,844 115 1,844 1,844 -
Total development cost (a) (b)......... $ 168,844 $ 158,677 $ 10,167 $ 158,677 $ 154,177 $ 4,500
(a) During 2003, we completed the conversion of 166,000 net rentable square
feet of containerized storage space into 166,000 net rentable square feet
of self-storage space at an aggregate cost of $4,500,000. During 2004, we
completed the conversion of 248,000 net rentable square feet of
containerized storage space into 363,000 net rentable square feet of
self-storage space at an aggregate cost of $10,167,000.
(b) Approximately 393,000 net rentable square feet of this storage space
represents industrial space that was developed for use in our containerized
storage activities.
41
The following table summarizes operating data for the 65 newly
developed self-storage facilities included in the table above:
DEVELOPED SELF-STORAGE FACILITIES
- ----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, Year Ended December 31,
----------------------------------- ----------------------------------------
2004 2003 Change 2003 2002 Change
----------- ---------- ---------- ------------ ------------ ------------
(Dollar amounts in thousands)
Rental income (a):
- -----------------
Self-storage facilities opened in 2004....... $ 1,234 $ - $ 1,234 $ - $ - $ -
Self-storage facilities opened in 2003....... 8,705 1,566 7,139 1,566 - 1,566
Self-storage facilities opened in 2002....... 10,344 6,737 3,607 6,737 1,435 5,302
Self-storage facilities opened in 2001....... 8,706 6,579 2,127 6,579 4,474 2,105
Self-storage facilities opened in 2000....... 11,888 10,769 1,119 10,769 9,332 1,437
----------- ---------- ---------- ------------ ------------ ------------
Total rental income....................... 40,877 25,651 15,226 25,651 15,241 10,410
----------- ---------- ---------- ------------ ------------ ------------
Cost of operations:
- -------------------
Self-storage facilities opened in 2004....... $ 1,149 $ - $ 1,149 $ - $ - $ -
Self-storage facilities opened in 2003....... 3,788 1,347 2,441 1,347 - 1,347
Self-storage facilities opened in 2002....... 4,009 3,660 349 3,660 1,399 2,261
Self-storage facilities opened in 2001....... 3,576 3,389 187 3,389 2,667 722
Self-storage facilities opened in 2000....... 4,613 4,449 164 4,449 3,782 667
----------- ---------- ---------- ------------ ------------ ------------
Total cost of operations.................. 17,135 12,845 4,290 12,845 7,848 4,997
----------- ---------- ---------- ------------ ------------ ------------
Net operating income before depreciation:
- -----------------------------------------
Self-storage facilities opened in 2004....... $ 85 $ - $ 85 $ - $ - $ -
Self-storage facilities opened in 2003....... 4,917 219 4,698 219 - 219
Self-storage facilities opened in 2002....... 6,335 3,077 3,258 3,077 36 3,041
Self-storage facilities opened in 2001....... 5,130 3,190 1,940 3,190 1,807 1,383
Self-storage facilities opened in 2000....... 7,275 6,320 955 6,320 5,550 770
Net operating income before depreciation.... 23,742 12,806 10,936 12,806 7,393 5,413
Depreciation.................................. (11,824) (8,343) (3,481) (8,343) (6,322) (2,021)
----------- ---------- ---------- ------------ ------------ ------------
Net operating income........................ $ 11,918 $ 4,463 $ 7,455 $ 4,463 $ 1,071 $ 3,392
=========== ========== ========== ============ ============ ============
Weighted average square foot occupancy during the
- -------------------------------------------------
period:
- -------
Self-storage facilities opened in 2004....... 35.2% - - - - -
Self-storage facilities opened in 2003....... 64.8% 24.4% 165.6% 24.4% - -
Self-storage facilities opened in 2002....... 88.8% 61.3% 44.9% 61.3% 20.6% 197.6%
Self-storage facilities opened in 2001....... 93.5% 74.3% 25.8% 74.3% 44.0% 68.9%
Self-storage facilities opened in 2000....... 92.8% 88.8% 4.5% 88.8% 76.1% 16.7%
----------- ---------- ---------- ------------ ------------ ------------
81.0% 62.2% 30.2% 62.2% 52.9% 17.6%
=========== ========== ========== ============ ============ ============
Number of facilities:
- ---------------------
Self-storage facilities opened in 2004....... 7 - 7 - - -
Self-storage facilities opened in 2003....... 14 14 - 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....... 18 18 - 18 18 -
----------- ---------- ---------- ------------ ------------ ------------
65 58 7 58 44 14
=========== ========== ========== ============ ============ ============
Cumulative development cost:
- ----------------------------
Self-storage facilities opened in 2004....... $ 61,558 $ - $ 61,558 $ - $ - $ -
Self-storage facilities opened in 2003....... 107,452 107,126 326 107,126 - 107,126
Self-storage facilities opened in 2002 (a).. 97,021 93,887 3,134 93,887 92,109 1,778
Self-storage facilities opened in 2001....... 66,905 66,905 - 66,905 66,905 -
Self-storage facilities opened in 2000....... 82,819 82,819 - 82,819 82,819 -
----------- ---------- ---------- ------------ ------------ ------------
$ 415,755 $ 350,737 $ 65,018 $ 350,737 $ 241,833 $ 108,904
=========== ========== ========== ============ ============ ============
(a) In the quarter ended September 30, 2004, we expanded an existing
self-storage facility that was originally developed in 2002, adding 33,000
net rentable square feet at a cost of $3,134,000.
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 have a more pronounced effect upon realized rates for the newly
developed facilities, because such facilities tend to have a higher ratio of
newer tenants.
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.
The yield on cost for these facilities for the year ended December 31,
2004, based on net operating income before depreciation, was approximately
5.7%, which is lower than our ultimate yield expectations. We expect these
yields to increase as these facilities fill up. Properties that were developed
before 2004 have contributed greatly to our earnings growth with net operating
income before depreciation increasing by approximately $10.9 million in 2004 as
compared to 2003. This growth was primarily due to higher occupancy levels in
2004 as compared to 2003. We expect that these facilities will continue to
provide growth, however, at a growth rate that is much lower than experienced
in 2004 as occupancy levels become more stabilized.
With respect to our Combination Facilities, we have been steadily
converting these facilities into entirely self-storage facilities by converting
the industrial space once used by our containerized storage operations into
self-storage space. As of December 31, 2004, nine of the 17 Combination
Facilities have been converted into entirely self-storage. The remaining eight
facilities are expected to be converted over the next two years. Weighted
average occupancy levels for the Combination Facilities at December 31, 2004
was 74.0% as compared to 84.1% at December 31, 2003, the drop in occupancy due
to the addition of more space during 2004.
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 47 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 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
43
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 1,040,000 net rentable
commercial space operated at certain of the self-storage facilities and four
stand-alone commercial facilities having a total of 302,000 net rentable square
feet.
The results of our commercial operations are provided in the table below:
COMMERCIAL PROPERTY OPERATIONS
(EXCLUDING DISCONTINUED OPERATIONS):
------------------------------------
Year Ended December 31, Year Ended December 31,
----------------------- -----------------------
2004 2003 Change 2003 2002 Change
------------ ----------- --------- ----------- ---------- ----------
(Amounts in thousands)
Rental income ............... $10,750 $11,001 $(251) $11,001 $11,304 $(303)
Cost of operations............ 4,328 4,583 (255) 4,583 4,259 324
------------ ----------- --------- ----------- ---------- ----------
Net operating income before
depreciation............ 6,422 6,418 4 6,418 7,045 (627)
Depreciation expense.......... (2,114) (2,436) 322 (2,436) (2,436) -
------------ ----------- --------- ----------- ---------- ----------
Net operating income....... $4,308 $3,982 $326 $3,982 $4,609 $(627)
============ =========== ========= =========== ========== ==========
Our commercial property operations consist primarily of facilities that
are at a stabilized level of operations, and generally reflect the conditions
in the markets in which they operate. We do not expect any significant growth
in net operating income from this segment of our business for 2005.
CONTAINERIZED STORAGE OPERATIONS: During 2002, 2003, and 2004, we have
significantly curtailed the scope and number of facilities of our containerized
storage operations, and continue to evaluate additional facilities for closure.
At December 31, 2004, we operated 12 containerized storage facilities located
in major markets in which we have significant traditional self-storage market
presence. The operations with respect to the facilities that were closed or
consolidated in 2002, 2003, and 2004 (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. The following table sets forth
continuing operations:
CONTAINERIZED STORAGE
(EXCLUDING DISCONTINUED OPERATIONS):
- ------------------------------------
Year Ended December 31, Year Ended December 31,
------------------------ --------------------------
2004 2003 Change 2003 2002 Change
----------- ---------- ---------- ------------ ---------- ----------
(Dollar amounts in thousands)
Rental and other income ............ $19,355 $23,991 $(4,636) $23,991 $22,355 $1,636
Cost of operations:
Direct operating costs.......... 10,448 12,796 (2,348) 12,796 16,505 (3,709)
Facility lease expense.......... 1,326 1,143 183 1,143 1,107 36
----------- ---------- ---------- ------------ ---------- ----------
Total cost of operations..... 11,774 13,939 (2,165) 13,939 17,612 (3,673)
----------- ---------- ---------- ------------ ---------- ----------
Operating income prior to
depreciation.................. 7,581 10,052 (2,471) 10,052 4,743 5,309
Depreciation expense (a)............ (4,546) (4,780) 234 (4,780) (2,511) (2,269)
----------- ---------- ---------- ------------ ---------- ----------
Net operating income ............... $3,035 $5,272 $(2,237) $5,272 $2,232 $3,040
=========== ========== ========== ============ ========== ==========
(a) Depreciation expense principally relates to the depreciation related
to the containers, however, depreciation expense for 2004, 2003
and 2002 includes $1,020,000, $1,218,000, and $592,000, respectively,
related to real estate facilities.
Rental and other income includes monthly rental charges to customers for
storage of the containers, service fees charged for pickup and delivery of
containers to customers' homes and businesses and, prior to the termination of
this moving service, moving service fees to move customers' goods from city to
city. Rental and other income decreased to $19,355,000 for the year ended
December 31, 2004 from $23,991,000 for the same period in 2003, primarily as a
result of the termination of our long-distance moving service. At December 31,
2004, there were approximately 20,800 occupied containers at the 12 facilities.
44
Direct operating costs principally includes payroll, equipment lease
expense, utilities and vehicle expenses (fuel and insurance). The reduction in
direct operating costs is due primarily to the aforementioned termination of
our long-distance moving service.
We expect that the net operating income of our containerized storage
facilities in 2005 will be substantially equivalent to 2004's results, with
increases in net operating income (prior to advertising) substantially offset
by increased yellow page and other media advertising. There can be no assurance
as to the ultimate level of the containerized storage business's expansion,
level of gross rentals, level of occupancy or profitability. We continue to
evaluate the business operations, and additional facilities may be closed.
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 $24,243,000, $22,464,000, and $19,947,000 in
revenues for the years ended December 31, 2004, 2003, and 2002, respectively,
and incurred $13,508,000, $11,987,000, and $9,411,000 in operating expenses,
for the same periods. PS Insurance generated net operating profits of
$10,735,000, $10,477,000 and $10,536,000 for the years ended December 31, 2004,
2003 and 2002, respectively.
The future level of tenant reinsurance revenues is largely dependent upon
our occupancy level and move-in activity, as well as the level of such tenants
that opt for such insurance. For the years ended December 31, 2004, 2003, and
2002, approximately 35%, 37%, and 37%, respectively, 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.
The increase in operating expenses for the year ended December 31, 2004 as
compared to the same period in 2003 is due primarily to $1,500,000 in estimated
tenant claim payments resulting from a series of hurricanes in Florida that
occurred in the quarter ended September 30, 2004.
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
eight limited partnerships at December 31, 2004 (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,
2004 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, Dollar Year Ended December 31, Dollar
- ------------------- ------------------------ -------------------------
2004 2003 Change 2003 2002 Change
----------- ----------- ---------- ---------- ---------- ------------
(Amounts in thousands)
Property operations:
PSB $68,545 $64,242 $4,303 $64,242 $65,212 $(970)
Acquisition Joint Venture.............. 23 - 23 - - -
Disposed Investments (1)............... - 10 (10) 10 325 (315)
Other Investments (2).................. 6,587 6,278 309 6,278 5,667 611
----------- ----------- ---------- ---------- ---------- ------------
75,155 70,530 4,625 70,530 71,204 (674)
----------- ----------- ---------- ---------- ---------- ------------
Depreciation:
PSB.................................... (32,063) (26,048) (6,015) (26,048) (25,459) (589)
Acquisition Joint Venture.............. (96) - (96) - - -
Disposed Investments (1)............... - - - - (65) 65
Other Investments (2).................. (1,561) (1,705) 144 (1,705) (1,554) (151)
----------- ----------- ---------- ---------- ---------- ------------
(33,720) (27,753) (5,967) (27,753) (27,078) (675)
----------- ----------- ---------- ---------- ---------- ------------
Other: (3)
PSB (4)................................ (19,587) (18,507) (1,080) (18,507) (15,292) (3,215)
Other Investments (2).................. 716 696 20 696 1,054 (358)
----------- ----------- ---------- ---------- ---------- ------------
(18,871) (17,811) (1,060) (17,811) (14,238) (3,573)
----------- ----------- ---------- ---------- ---------- ------------
Total equity in earnings of real estate
entities.................................. $22,564 $24,966 $(2,402) $24,966 29,888 (4,922)
=========== =========== ========== ========== ========== ============
(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,
2004.
(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, impairment charges on real
estate assets, and EITF Topic D-42 charges totaling $4,544,000,
$187,000 and $3,737,000, respectively, during 2004, 2003 and 2002.
The decrease in equity in earnings of real estate entities when
comparing 2003 to 2002, and 2004 to 2003, is caused by the net impact of PSB's
gains, losses, impairment charges and EITF D-42 charges recorded in these
periods. The decrease in comparing 2004 to 2003 also includes our pro-rata
share of increased depreciation expense recorded by PSB due to its property
acquisition activities in late 2003.
Equity in earnings of PSB represents our pro-rata share (approximately
44% at December 31, 2004 and 2003) 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, 2004, 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, 2004, PSB owned and operated 18.0 million net rentable square feet
of commercial space located in eight states.
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.
------------------------
46
In January 2004, we entered into a joint venture partnership 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
"Acquisition Joint Venture"). The venture is funded entirely with equity
consisting of 30% from us and 70% from the institutional investor. As described
more fully in Note 2 to the Consolidated Financial Statements for the year
ended December 31, 2004, our pro-rata share of earnings with respect to two of
the facilities acquired directly by the Acquisition Joint Venture are reflected
in Equity in Earnings in the table above. These two facilities were acquired by
the Acquisition Joint Venture directly from third parties at an aggregate cost
of $9,086,000. Our investment, with respect to these two facilities, was
approximately $2,930,000. Our future equity in earnings with respect to the
Acquisition Joint Venture will be dependent upon the level of earnings
generated by these two properties owned by the Acquisition Joint Venture.
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, 2004. These limited partnerships were formed by
the Company 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, 2004 and 2003.
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 increased in 2004 as compared to 2003, due
primarily to higher interest income attributable to higher average cash
balances and higher average interest rates on short-term cash investments,
offset partially by principal payments received on notes receivable.
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.
As discussed more fully in "Liquidity and Capital Resources" below, at
December 31, 2004, we had cash balances totaling approximately $366.3 million.
In addition, during the first quarter 2005, we issued approximately $135.0
million of our 6.18% Series D Cumulative Preferred Stock. The net proceeds from
this issuance and our December 31, 2004 cash balances will be used primarily to
fund future development, acquisition, and preferred redemption activities (see
also "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Liquidity and Capital Resources"). In the interim, the net
proceeds from our cash balances is 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 additional preferred stock during 2005, raising the necessary funds to
redeem additional high rate preferred stock during 2006. These issuances
similarly will have a negative impact on earnings per share until the proceeds
are utilized.
47
DEPRECIATION AND AMORTIZATION: Depreciation and amortization expense
was $183,148,000 in 2004, $184,145,000 in 2003, and $175,834,000 in 2002.
Included in depreciation expense with respect to our real estate facilities was
$169,000,000 in 2004, $171,114,000 in 2003, and $166,343,000 in 2002. The
decrease in depreciation and amortization with respect to real estate
facilities for 2004 as compared 2003 is due primarily to a reduction in
depreciation with respect to maintenance capital expenditures, offset partially
by an increase in depreciation with respect to newly developed and acquired
facilities. The increase from 2002 to 2003 is 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 $7,544,000 in 2004, $6,427,000 in 2003, and $2,887,000 in 2002.
Amortization expense with respect to intangible assets totaled $6,604,000 for
each of the three years ended December 31, 2004.
Depreciation and amortization during 2004 with respect to real estate
facilities acquired or developed during 2004 amounted to $866,000 which was for
a partial period for the time they were acquired until December 31, 2004, and
we expect the annual depreciation expense with respect to these facilities for
2005 and forward will approximate $7,266,000.
GENERAL AND ADMINISTRATIVE EXPENSE: General and administrative expense
was $18,813,000 in 2004, $17,127,000 in 2003, and $15,619,000 in 2002. 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 2003 to 2004 is
primarily due to higher stock-based compensation expense. Included in general
and administrative expense for 2004 is $3,932,000 with respect to stock-based
compensation expense, including $709,000 in stock option expense, $2,254,000 in
restricted stock expense, and $969,000 in payroll taxes and other costs
associated with employees' exercise of 1,958,000 stock options in 2004.
Stock-based compensation expense totaled $2,685,000 for 2003, which is
comprised of $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 during 2003.
Total restricted stock and stock option expense, exclusive of payroll
taxes on the exercise of options, should approximate $3.0 million based upon
options and restricted stock outstanding at December 31, 2004. 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 1,441,901 remaining stock
options outstanding at December 31, 2004, the Company's stock price at the time
of exercise, and the level of future grants of stock options.
General and administrative expense increased in 2003 as compared to
2002, is primarily due to an increase in stock-based compensation expense from
$543,000 in 2002 to $2,685,000 for 2003.
INTEREST EXPENSE: Interest expense was $760,000 in 2004, $1,121,000 in
2003, and $3,809,000 in 2002. Debt and related interest expense remain
relatively low compared to our overall asset base. The decrease in interest
expense in 2004 compared to 2003 and 2002 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 $3,617,000 in 2004, $6,010,000 in 2003, and $6,513,000 in 2002 in
connection with our development activities.
During 2004, we assumed notes with an aggregate principal balance of
$94.7 million and an average interest rate of approximately 5.2% in connection
with property acquisitions, and incurred interest expense with respect to these
notes of $879,000 for the partial period these notes were became our
liabilities.
48
As described more fully in Note 2 to the Consolidated Financial
Statements, on December 31, 2004, seven facilities were acquired by the
Acquisition Joint Venture from us for an aggregate of $23.0 million in cash.
Our Joint Venture Partner's interest in these properties will be accounted from
as a financing arrangement and their pro-rata share of income with respect to
their investment in these facilities will be included in interest expense. In
January 2005, the Acquisition Joint Venture acquired interests in three
additional facilities from us for an aggregate of $27.4 million in cash, and
our joint venture partner's pro rata share of income will similarly be included
in interest expense. We do not expect any further facilities to be acquired by
the Acquisition Joint Venture, and future interest expense will be dependent
upon the level of operations at the facilities acquired from us by the
Acquisition Joint Venture.
We expect interest expense to increase in fiscal 2005 as compared to
2004, due to the assumption of additional notes combined with interest expense
with respect to our Acquisition Joint Venture, offset partially by the effect
of scheduled principal payments of approximately $15,506,000 in 2005.
Interest paid, including capitalized interest, was $5,240,000 in 2004,
$7,131,000 in 2003, and $10,322,000 in 2002.
MINORITY INTEREST IN INCOME: Minority interest in income represents the
income allocable to equity interests in the 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, 2004:
Minority interest in income for the year ended
-------------------------------------------------
December 31, December 31, December 31,
Description 2004 2003 2002
- ----------------------------------------------- -------------- ---------------- ---------------
(in thousands)
Preferred partnership interests:
Ongoing distributions.................... $ 22,423 $ 26,906 $ 26,906
Special distribution and EITF Topic D-42
allocation............................. 10,063 - -
Consolidated Development Joint Venture (a).... 5,652 4,211 2,399
Convertible Partnership Units (b)............. 328 305 283
Acquired minority interests (c)............... 842 2,170 4,821
Other minority interests (d).................. 10,605 10,111 9,678
-------------- ---------------- ---------------
Total minority interests in income............ $ 49,913 $ 43,703 $ 44,087
============== ================ ===============
(a) These amounts reflect income allocated to the minority interests in the
Consolidated Development Joint Venture. Included in minority interest
in income is $3,619,000, $3,362,000, and $3,227,000 in depreciation
expense for the years ended December 31, 2004, 2003, and 2002,
respectively.
(b) 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 $333,000, $342,000, and
$354,000 in depreciation expense for the years ended December 31, 2004,
2003, and 2002, respectively.
(c) These amounts reflect income allocated to minority interests that the
Company acquired as of December 31, 2004, and are therefore no longer
outstanding at December 31, 2004. Included in minority interest in
income is $309,000, $812,000, and $2,915,000 in depreciation expense
for the years ended December 31, 2004, 2003, and 2002, respectively.
(d) These amounts reflect income allocated to minority interests that were
outstanding consistently throughout the three years ended December 31,
2004. Included in minority interest in income is $1,785,000,
$1,812,000, and $1,591,000 in depreciation expense for the years ended
December 31, 2004, 2003, and 2002, respectively.
On March 22, 2004, certain investors who held $200 million of our 9.5%
Series N Cumulative Redeemable Perpetual Preferred Units agreed, in exchange for
a special distribution of $8,000,000, to a reduction in the distribution rate on
their preferred units from 9.50% per year to 6.40% per year, and an extension of
the call date for these securities to March 17, 2010. The investors also
received their distribution that accrued from January 1, 2004 through the
effective date of the exchange.
49
Principally as a result of the rate reduction, ongoing distributions
paid to the preferred partnership interests was reduced by $4,483,000 in 2004
as compared to 2003. This decrease was offset by an increase in income
allocable to minority interests of approximately $10,063,000 due to (i) the
$8,000,000 special distribution to the holders of the preferred units and (ii)
the application of EITF Topic D-42, "The Effect on the Calculation of Earnings
per Share for the Redemption or Induced Conversion of Preferred Stock" totaling
$2,063,000, which represents the excess of the $200 million stated amount of
the preferred units over their carrying amount.
We have called for redemption our 9.5% Series N Preferred Units ($40.0
million) and our 9.125% Series O Preferred Units ($45.0 million). Each of these
securities will be redeemed for cash in March 2005. We expect additional
allocations with respect to these units in accordance with EITF Topic D-42 will
approximate $873,000 in the first quarter of 2005, as a result of these
redemptions. We expect that our aggregate annual distributions for 2005 with
respect to our Cumulative Redeemable Perpetual Preferred Units will approximate
$16.2 million after taking into consideration the March 2005 planned
redemptions.
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, 2002, 2003, and 2004 is $2,399,000,
$4,211,000, and $5,652,000, 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
have been in the fill-up phase. The increase in minority interest in income in
2004 and 2003 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 2005 as the facilities continue to
fill-up and increase the earnings of this entity.
The acquired minority interests reflect interests in the consolidated
entities that we acquired as of December 31, 2004 and are therefore no longer
outstanding. There will be no further income allocated to these interests in
2005 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, 2004, comprised of investments in the Consolidated Entities
and the Operating Partnership Units described in Note 10 to the Company's
consolidated 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 we may acquire in the future.
DISCONTINUED OPERATIONS: As described more fully in Note 4 to the
consolidated financial statements, during 2002, 2003 and 2004, we implemented a
business plan which included the closure of 43 of 55 containerized storage
facilities that were open at December 31, 2001. The 43 facilities are
hereinafter referred to as the "Closed Facilities."
During 2004, we sold one of our commercial facilities located in West
Palm Beach, Florida. The facility was sold to a third party on October 28, 2004
for an aggregate of $3.8 million in cash. In 2002, we sold one of our
commercial facilities to a third party for an aggregate $3.9 million in cash.
These facilities are referred to as the "Sold Commercial Facilities"
During the first quarter of 2003, we entered into a business plan to
exit the Knoxville, Tennessee market, and listed our four self-storage
facilities in this market for sale. In addition, in October 2003, we sold a
self-storage facility located in Perrysburg, Ohio (collectively, these five
facilities are referred to as the "Sold Self-Storage Facilities"). These
facilities were sold in 2003 for a gain of approximately $5,476,000 included in
the table below.
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
50
totaling $6,504,000. In 2003, we recorded impairment charges on assets for nine
Closed Facilities of $2,479,000 and a $750,000 asset 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 2004, impairment charges of 1,575,000 were recorded with respect to the
Closed Facilitates.
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. 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.
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:
Discontinued Operations:
- -----------------------
Year Ended December 31, Year Ended December 31,
------------------------ ------------------------
2004 2003 Change 2003 2002 Change
----------- ----------- ----------- ------------- --------- -----------
(Dollar amounts in thousand)
Rental income (a):
Sold self-storage facilities..... $ - $1,579 $(1,579) $1,579 $1,841 $(262)
Closed facilities................ 7,488 19,347 (11,859) 19,347 29,764 (10,417)
Sold commercial properties....... 314 441 (127) 441 745 (304)
----------- ----------- ----------- ------------- --------- -----------
Total rental income.......... 7,802 21,367 (13,565) 21,367 32,350 (10,983)
Cost of operations (a):
Sold self-storage facilities..... - 617 (617) 617 742 (125)
Closed facilities................ 6,733 15,157 (8,424) 15,157 28,032 (12,875)
Sold commercial properties....... 81 105 (24) 105 287 (182)
----------- ----------- ----------- ------------- --------- -----------
Total cost of operations..... 6,814 15,879 (9,065) 15,879 29,061 (13,182)
Depreciation and amortization (a):
Sold self-storage facilities..... - 424 (424) 424 528 (104)
Closed facilities................ 1,115 3,335 (2,220) 3,335 5,071 (1,736)
Sold commercial properties....... 82 99 (17) 99 215 (116)
----------- ----------- ----------- ------------- --------- -----------
Total depreciation and
amortization .......... 1,197 3,858 (2,661) 3,858 5,814 (1,956)
----------- ----------- ----------- ------------- --------- -----------
Income (loss) before other items.... (209) 1,630 (1,839) 1,630 (2,525) 4,155
Other items:
Asset impairment charges............. (1,575) (3,229) 1,654 (3,229) (6,504) 3,275
Lease termination costs.............. (416) - (416) - (2,447) 2,447
Net gain on disposition of assets... 971 5,121 (4,150) 5,121 - 5,121
----------- ----------- ----------- ------------- --------- -----------
Total other items............. (1,020) 1,892 (2,912) 1,892 (8,951) 10,843
----------- ----------- ----------- ------------- --------- -----------
Net discontinued operations......... $(1,229) $3,522 $(4,751) $3,522 ($11,476) $14,998
=========== =========== =========== ============= ========= ===========
(a) These amounts represent the historical operations of the Closed
Facilities and the Sold Facilities. Amounts with respect to these
facilities, prior to their discontinuance, were previously classified
as rental income, cost of operations, and depreciation expense and
gain/(loss) on sales in the consolidated financial statements.
Two of the Closed Facilities are in the process of closing which we
expect will be completed in the first half of 2005. 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, 2004, we recorded a net gain on disposition of real estate assets of
$67,000, as compared to a net gain of $1,007,000 in 2003 and a loss of
$2,541,000 in 2002. The gain in 2004 is composed of a gain on sale of four
vacant parcels of land and partial condemnation with respect to two existing
self-storage facilities totaling $1,317,000, as well as $1,250,000 casualty
loss with respect to real-estate assets damaged as a result of hurricanes in
the State of Florida. 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 5, combined with a loss on disposition of partnership
interests in the amount of $1,839,000.
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. Cash and cash
equivalents totaled $366.3 million at December 31, 2004. We expect that these
funds will be utilized to fund our acquisition and development activities, and
fund the redemptions of preferred securities that become callable at our option
during 2005.
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)
2004 2003 2002
----------- ------------- -------------
Net cash provided by operating activities............................. $647,443 $608,624 $591,283
Allocable to minority interests (Preferred Units) - ongoing distributions (22,423) (26,906) (26,906)
Allocable to minority interests (Preferred Units) - special
distribution(a).................................................... (8,000) - -
Allocable to minority interests (common equity)....................... (23,473) (23,125) (25,268)
----------- ------------- -------------
Cash from operations allocable to our shareholders.................... 593,547 558,593 539,109
Capital improvements to maintain our facilities....................... (35,868) (30,175) (26,993)
Add back: minority interest share of capital improvements............. 494 505 926
----------- ------------- -------------
Remaining operating cash flow available for distributions to our
shareholders....................................................... 558,173 528,923 513,042
Distributions paid to:
Preferred shareholders............................................. (157,925) (146,196) (148,926)
Equity Stock, Series A shareholders................................ (21,501) (21,501) (21,501)
Common and Class B shareholders.................................... (230,834) (225,864) (221,299)
----------- ------------- -------------
Cash available for principal payments on debt and reinvestment........ $147,913 $135,362 $121,316
=========== ============= =============
(a) The $8 million special distribution was paid to a unitholder of our 9.5%
Series N Cumulative Redeemable Perpetual Preferred Units in conjunction
with a March 22, 2004 agreement that, among other things, lowered the
distribution rate from 9.5% to 6.4%.
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, 2004,
52
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. In addition, we have assumed existing debt
in connection with the acquisition of facilities. As of December 31, 2004, we
had no outstanding borrowings under our $200 million bank line of credit.
Our portfolio of real estate facilities remains substantially
unencumbered. At December 31, 2004, we had mortgage debt outstanding of $95.9
million (which encumbers 34 facilities with a book value of $195.3 million) and
unsecured debt in the amount of $33.6 million. We also have Debt to Joint
Venture Partner amounting to $16.1 million with respect to seven real estate
facilities with an aggregate book value of $24.7 million.
Over the past three years we have funded substantially all of our
growth 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 during 2001 through 2004 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
are "Baa2" by Moody's and "BBB+" by Standard & Poor's.
We believe that our size and financial flexibility enables us to
access capital when appropriate. Since the beginning of 2002, we completed the
following capital raising activities (amounts are presented net of issuance
costs):
Cumulative
Securities issued Date issued Preferred Stock
- --------------------------------------------- --------------------- --------------------
(in thousands)
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 108,756
6.125% Cumulative Preferred Stock, Series A March 31, 2004 111,178
7.125% Cumulative Preferred Stock, Series B June 30, 2004 105,124
6.600% Cumulative Preferred Stock, Series C September 13, 2004 111,178
6.180% Cumulative Preferred Stock, Series D February 28, 2005 130,548
--------------------
$1,307,946
====================
53
We used approximately $654.4 million of these net proceeds in order to
redeem higher-coupon preferred securities, as follows:
Date Redeemed or Cumulative
Security Redeemed or Repurchased Repurchased Preferred Stock
- -------------------------------------------- ---------------------- -----------------
(in thousands)
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 115,021
8.750% Cumulative Preferred Stock, Series M August 14, 2004 56,270
9.500% Cumulative Preferred Stock, Series D September 30, 2004 30,020
10.00% Cumulative Preferred Stock, Series E January 31, 2005 54,895
-----------------
$ 654,402
=================
The Cumulative Preferred Stock amounts listed above include redemption
costs.
We currently have approximately $142.5 million of additional preferred
securities that become redeemable at our option in 2005, as follows.
Earliest
Redemption Dividend Liquidation
Security Date Rate Value (000's)
- ----------------------------------------- --------------- ----------- ---------------
Series N Preferred Units (a) 3/17/05 9.500% $ 40,000
Series O Preferred Units (a) 3/29/05 9.125% 45,000
Series F Preferred Stock 4/30/05 9.750% 57,500
----------- ---------------
Total securities available for
redemption through 12/31/05 9.482% $ 142,500
=========== ===============
(a) During February 2005, these securities were called for redemption. The
redemptions will take effect on their earliest redemption dates noted
in the table above.
We expect that we will redeem each of these securities at each
respective earliest redemption date. Cash on-hand at December 31, 2004, will be
utilized to redeem these securities.
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 2004 totaled $157.9 million to the
holders of our Cumulative Preferred Stock, $230.8 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 2004 taxable income, we
believe that the aggregate dividends paid in 2004 to our shareholders enabled
us to continue to qualify as a REIT.
54
We estimate that the distribution requirements for fiscal 2005 with
respect to our Cumulative Preferred Stock outstanding, and assuming the
redemption of the preferred securities mentioned above, will be approximately
$160.3 million.
During 2004, we paid distributions totaling $30.4 million, including a
special onetime distribution of $8 million, with respect to our Preferred
Partnership Units. We estimate the 2005 distribution requirements with respect
to the preferred partnership units outstanding at December 31, 2004, assuming
redemption of the Series N and O Preferred Units at the dates indicated, to be
approximately $16.2 million.
For 2005, 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
2005, a quarterly distribution of $0.45 per common share has been declared by
our Board of Directors.
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 2005, we have budgeted
approximately $50 million for capital improvements. Capital improvements
include major repairs or replacements to the facilities which 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 Notes Payable and Debt to Joint Venture
Partners. Except for the debt to joint venture partners all such debt is fixed
rate. At December 31, 2004, we had total outstanding notes payable of
approximately $145.6 million. See Note 8 & 9 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: During 2005, 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. For 2005, we do not anticipate that our joint
venture partnerships will fund additional acquisitions from third parties or
developments, all of which we expect to be funded entirely by the Company.
In January 2005, we acquired six additional self-storage facilities
from third parties (total net rentable square feet of 304,000) at an aggregate
cost of approximately $23.6 million of cash. These acquisitions were funded
entirely by us.
As of March 14, 2005, we are under contract to purchase six
self-storage facilities (total approximate net rentable square feet of 448,000)
at an aggregate cost of approximately $48.1 million. We anticipate that these
acquisitions will be funded entirely by us. Each of these contracts is subject
to significant contingencies, and there is no assurance that any of these
facilities will be acquired.
We currently have a development "pipeline" of 47 self-storage
facilities and expansions to existing self-storage facilities with an aggregate
estimated cost of approximately $210.7 million (unaudited). Approximately $47.3
million of development cost has been incurred as of December 31, 2004. 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 $163.4 million will be
incurred over the next 24 months. The following table sets forth certain
information with respect to our development pipeline.
55
DEVELOPMENT PIPELINE SUMMARY
Number Net Total Costs incurred
of rentable estimated through Costs to
projects sq. ft. development 12/31/04 complete
--------- ----------- ------------- --------------- ---------------
costs
(Amounts in thousands)
FACILITIES CURRENTLY UNDER CONSTRUCTION:
Self-storage facilities 5 333 $ 33,776 $ 21,718 $ 12,058
Expansions to existing self-storage
facilities 6 192 9,227 3,147 6,080
--------- ----------- ------------- --------------- ---------------
11 525 43,003 24,865 18,138
FACILITIES AWAITING CONSTRUCTION, WHERE LAND
IS ACQUIRED:
Self-storage facilities 4 361 53,589 19,307 34,282
Expansions to existing self-storage
facilities 29 1,931 95,054 2,736 92,318
--------- ----------- ------------- --------------- ---------------
33 2,292 148,643 22,043 126,600
SELF-STORAGE FACILITIES AWAITING
CONSTRUCTION, WHERE LAND HAS NOT YET BEEN
ACQUIRED:
Self Storage Facility 1 60 11,038 263 10,775
Expansions to Self-storage Facility 2 123 7,973 106 7,867
--------- ----------- ------------- --------------- ---------------
3 183 19,011 369 18,642
--------- ----------- ------------- --------------- ---------------
TOTAL DEVELOPMENT PIPELINE 47 3,000 $ 210,657 $ 47,277 $ 163,380
========= =========== ============= =============== ===============
In addition to the above projects, we have five parcels of land held
for development with total costs of approximately $8,883,000 at December 31,
2004. 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 2003, we repurchased 175,000 shares for approximately $6.0
million. During 2004, we repurchased 445,700 shares for approximately $20.3
million. From the inception of the repurchase program through December 31,
2004, we have repurchased a total of 22,117,720 shares of common stock at an
aggregate cost of approximately $562.2 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, 2004, the Company's debt as a percentage of
total shareholders' equity (based on book values) was 3.3%.
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 F - April 30, 2005, 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, Series A - March 31, 2009, Series B - June 30, 2009,
Series C - September 13, 2009 and Series D - February 28, 2010. On or after the
respective dates, each of the series of 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 Q through Series X, Series Z, and Series A
through Series D, plus accrued and unpaid dividends.
Our market risk sensitive instruments include notes payable, which
totaled $129,519,000 at December 31, 2004. 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, 2004.
56
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The financial statements of the Company at December 31, 2004 and
December 31, 2003 and for each of the three years in the period ended December
31, 2004 and the report of Ernst & Young LLP, Independent Registered Public
Accountants, 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
-----------------------
CONCLUSION REGARDING THE EFFECTIVENESS OF DISCLOSURE 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 Rules 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 and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures in reaching that level of reasonable assurance. 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.
As of December 31, 2004, 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 and the Company's Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as such term is defined in Rules
13a - 15(e) and 15d - 15(e) under the Securities Act of 1934 as amended). Based
on that evaluation, the Company's Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures were
effective as of December 31, 2004.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in
Exchange Act Rules 13a-15(f). Under the supervision and with the participation
of our management, including our Chief Executive Office and Chief Financial
Officer, we conducted an evaluation of the effectiveness of our internal
control over financial reporting based on the framework in Internal
Control-Integrated Framework issued by the Committee on Sponsoring
Organizations of the Treadway Commission. Based on our evaluation under the
framework in Internal Control-Integrated Framework, our management concluded
that our internal control over financial reporting was effective as of December
31, 2004.
Our management's assessment of the effectiveness of our internal
control over financial reporting as of December 31, 2004 has been audited by
Ernst & Young LLP, an independent registered public accounting firm, as stated
in their report which is included herein.
57
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have not been any changes in our internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the quarter to which this report relates that have
materially affected, or are reasonable likely to materially affect, our
internal control over financial reporting.
58
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Public Storage, Inc.:
We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that Public
Storage, Inc. maintained effective internal control over financial reporting as
of December 31, 2004, based on criteria established in Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). Public Storage,
Inc.'s management is responsible for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting. Our responsibility is to express an
opinion on management's assessment and an opinion on the effectiveness of the
company's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control
over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the company's assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
In our opinion, management's assessment that Public Storage, Inc. maintained
effective internal control over financial reporting as of December 31, 2004, is
fairly stated, in all material respects, based on the COSO criteria. Also, in
our opinion, Public Storage, Inc. maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2004,
based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets of
Public Storage, Inc. as of December 31, 2004 and 2003, and the related
consolidated statements of income, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 2004 of Public
Storage, Inc. and our report dated March 14, 2005 expressed an unqualified
opinion thereon.
Ernst & Young LLP
Los Angeles, CA
March 14, 2005
59
PART III
--------
ITEM 9B. OTHER INFORMATION
-----------------
Not Applicable.
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 5, 2005 (the "Proxy Statement") under the caption "Election of
Directors."
The information required by this item with respect to the audit committee
and the audit committee financial expert is hereby incorporated by reference to
the material appearing in the Proxy Statement under the caption "Election of
Directors - Directors and Committee Meetings."
The information required by this item with respect to Section 16(a)
compliance is hereby incorporated by reference to the material appearing in the
Proxy Statement under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance."
The information required by this item with respect to a code of ethics is
hereby incorporated by reference to the material appearing in the Proxy
Statement under the caption "Election of Directors - Directors and Committee
Meetings." Any amendments to or waivers of the code of ethics granted to the
Company's executive officers or the controller will be published promptly on
our website or by other appropriate means in accordance with SEC rules and
regulations.
The following is a biographical summary of the current executive officers
of the Company:
Ronald L. Havner, Jr., age 47, has been Vice Chairman, Chief Executive
Officer and a director of the Company since November 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, a capacity in which he served until
September 2002. He is a member of the Board of Governors of the National
Association of Real Estate Investment Trusts (NAREIT) and the Urban Land
Institute (ULI) and a director of Business Machine Security, Inc., The Mobile
Storage Group, and Union BanCal and its primary subsidiary, Union Bank of
California, N.A. Mr. Havner earned a Bachelor of Arts degree in Economics from
the University of California, Los Angeles.
Harvey Lenkin, age 68, became President and a director of the Company in
November 1991. Mr. Lenkin has been employed by the Company for 27 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.,
a director of Huntington Memorial Hospital in Pasadena, California, and a
former member of the Executive Committee of the Board of Governors of the
National Association of Real Estate Investment Trusts, Inc. (NAREIT).
John Reyes, age 44, 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.
60
John S. Baumann, age 44, 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.
John E. Graul, age 53, became Senior Vice President and President,
Self-Storage Operations, in February 2004, with overall responsibility for the
Company's national operations. From 1992 until joining the Company, Mr. Graul
was employed by McDonald's Corporation where he served in various management
positions, most recently as Vice President and General Manager - Pacific Sierra
Region.
David F. Doll, age 46, became Senior Vice President and President, Real
Estate Group, in February 2005, with responsibility for Company's real estate
activities, including property acquisitions, developments, and repackagings.
Before joining the Company, Mr. Doll was Senior Executive Vice President of
Development for Westfield Corporation, a major international owner and operator
of shopping malls, where he was employed since 1995.
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, 2004 on the
Company's equity compensation plans:
Number of
securities to be Weighted
issued upon average Number of
exercise of exercise price securities
outstanding of outstanding remaining available
options, options, for future issuance
warrants and warrants and under equity
rights rights compensation plans
------------------- -------------------- ---------------------
Equity compensation plans approved
by security holders (a).......... 1,683,722 (b) $36.42 2,608,882
Equity compensation plans not
approved by security holders (c). 10,219 $25.74 2,121,671
(a) The Company's stock option and stock incentive plans are described
more fully in Note 13 to the consolidated financial statements.
All plans other than the 2000 and 2001 Non-Executive/Non-Director
Plans, were approved by the Company's shareholders.
(b) Includes 252,040 restricted stock units that, if and when vested,
will be settled in shares of common stock of the Company on a one
for one basis.
(c) The outstanding options granted under plans not approved by the
Company's shareholders were granted under the Company's 2000 and
2001 Non-Executive/Non-Director Plan, which does not allow
participation by the Company's executive officers and directors.
The principal terms of these plans are as follows: (1) 2,500,000
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 or as indicated by the applicable grant agreement.
61
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
--------------------------------------
The information required by this item with respect to fees and services
provided by the Company's independent auditors is hereby incorporated by
reference to the material appearing in the Proxy Statement under the caption
"Ratification of Auditors--Fees Billed to the Company by Ernst & Young LLP for
2003 and 2004".
62
PART IV
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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
------------------------------------------
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. Exhibits:
See Index to Exhibits contained herein.
c. Financial Statement Schedules
Not applicable.
63
PUBLIC STORAGE, INC.
INDEX TO EXHIBITS (1)
(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 Amendment to Certificate of Determination for the 10% Cumulative
Preferred Stock, Series A. Filed with the Registrant's Form 10-Q for
the quarterly period ended March 31, 2004 and incorporated herein by
reference.
3.4 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.
3.5 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.
3.6 Amendment to Certificate of Determination for the 9.20% Cumulative
Preferred Stock Series B. Filed with the Registrant's Form 10-Q for the
quarterly period ended June 30, 2004 and incorporated herein by
reference.
3.7 Certificate of Determination for the 8.25% Convertible Preferred
Stock. Filed with Registrant's Registration Statement No. 33-54557 and
incorporated herein by reference.
3.8 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.
3.9 Amendment to Certificate of Determination for the Adjustable Rate
Cumulative Preferred Stock Series C. Filed with Registrant's Form 10-Q
for the quarterly period ended September 30, 2004 and incorporated
herein by reference.
3.10 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.
3.11 Amendment to Certificate of Determination of Preferences of 9.50%
Cumulative Preferred Stock, Series D. Filed herewith.
3.12 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.
3.13 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.
3.14 Registration Statement No. 33-63947 and incorporated herein by
reference.
64
3.15 Certificate of Amendment of Articles of Incorporation. Filed with
Registrant's Registration Statement No. 33-63947 and incorporated
herein by reference.
3.16 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.
3.17 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.
3.18 Certificate of Determination for the Convertible Preferred Stock,
Series CC. Filed with Registrant's Registration Statement No.
333-03749 and incorporated herein by reference.
3.19 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.
3.20 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.
3.21 Certificate of Amendment of Articles of Incorporation. Filed with
Registrant's Registration Statement No. 333-18395 and incorporated
herein by reference.
3.22 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.
3.23 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.
3.24 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.
3.25 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.
3.26 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.
3.27 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.
3.28 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.
3.29 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.
3.30 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.
65
3.31 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.
3.32 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.
3.33 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 June 30, 2000 and incorporated herein by
reference.
3.34 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.
3.35 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.
3.36 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.
3.37 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.
3.38 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.
3.39 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.
3.40 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.
3.41 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.
3.42 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.
3.43 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.
3.44 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 X and incorporated herein
by reference.
66
3.45 Certificate of Determination for the 6.85% Cumulative Preferred Stock,
Series Y. Filed with the Registrant's Form 10-Q for the quarterly
period ended March 31, 2004 and incorporated herein by reference.
3.46 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.
3.47 Certificate of Determination for 6.125% Cumulative Preferred Stock,
Series A. Filed with Registrant's Form 8-A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 6.125% Cumulative Preferred Stock, Series A and incorporated herein
by reference.
3.48 Certificate of Determination for 6.40% Cumulative Preferred Stock,
Series NN. Filed with Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2004 and incorporated herein by
reference.
3.49 Certificate of Determination for 7.125% Cumulative Preferred Stock,
Series B. Filed with Registrant's Form 8-A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 7.125% Cumulative Preferred Stock, Series B and incorporated herein
by reference.
3.50 Certificate of Determination for 6.60% Cumulative Preferred Stock,
Series C. Filed with Registrant's Form 8-A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 6.60% Cumulative Preferred Stock, Series C and incorporated herein
by reference.
3.51 Certificate of Determination for 6.18% Cumulative Preferred Stock,
Series D. Filed with Registrant's Form 8-A Registration Statement
relating to the Depositary Shares Each Representing 1/1,000 of a Share
of 6.18% Cumulative Preferred Stock, Series D and incorporated herein
by reference.
3.52 Bylaws, as amended. Filed with Registrant's Registration Statement No.
33-64971 and incorporated herein by reference.
3.53 Amendment to Bylaws adopted on May 9, 1996. Filed with Registrant's
Registration Statement No. 333-03749 and incorporated herein by
reference.
3.54 Amendment to Bylaws adopted on June 26, 1997. Filed with Registrant's
Registration Statement No. 333-41123 and incorporated herein by
reference.
3.55 Amendment to Bylaws adopted on January 6, 1998. Filed with
Registrant's Registration Statement No. 333-41123 and incorporated
herein by reference.
3.56 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.
3.57 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.
3.58 Amendment to Bylaws adopted on May 6, 1999. Filed with Registrants'
Form 10-Q for the quarterly period ended June 30, 1999 and
incorporated herein by reference.
3.59 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.
3.60 Amendment to Bylaws adopted on May 8, 2003. Filed with Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2003 and incorporated herein by reference.
67
3.61 Amendment to Bylaws adopted on August 5, 2003. Filed with Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2003 and incorporated herein by reference.
3.62 Amendment to Bylaws adopted on March 11, 2004. Filed with Registrant's
Annual Report on Form 10-K for the year ended December 31, 2003 and
incorporated herein by reference.
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.
68
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.
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 June 30, 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.
69
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.
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.
70
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,
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 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.
10.39 Deposit Agreement dated as of February 19, 2002 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 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,
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 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* Employment Agreement between Registrant and Harvey Lenkin dated as of
August 5, 2003. Filed with Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 2003 and incorporated herein
by reference.
10.42 Deposit Agreement dated as of October 6, 2003 among Registrant,
Equiserve Inc., 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 6.500%
Cumulative Preferred Stock, Series W and incorporated herein by
reference.
10.43 Deposit Agreement dated as of November 13, 2003 among Registrant,
Equiserve Inc., 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.
10.44 Deposit Agreement dated as of March 5, 2004 among Registrant,
Equiserve Inc., 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.
10.45 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 with Registrant's Annual Report on Form 10-K
for the year ended December 31, 2003 and incorporated herein by
reference.
10.46 Second Amendment to 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 22, 2004.
Filed with Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2004 and incorporated herein by
reference.
71
10.47 Second Amendment to Credit Agreement by and among Registrant, Wells
Fargo Bank, National Association, as agent, and the financial
institutions party thereto dated as of March 25, 2004. Filed with
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2004 and incorporated herein by reference.
10.48 Deposit Agreement dated as of March 31, 2004 among Registrant,
Equiserve Inc., 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 6.125% Cumulative Preferred Stock, Series A.
Filed with Registrant's Form 8-A Registration Statement relating to
the Depositary Shares Each Representing 1/1,000 of a Share of 6.125%
Cumulative Preferred Stock, Series A and incorporated herein by
reference.
10.49 Deposit Agreement dated as of June 30, 2004 among Registrant,
Equiserve Inc., 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 7.125% Cumulative Preferred Stock, Series B.
Filed with Registrant's Form 8-A Registration Statement relating to
the Depositary Shares Each Representing 1/1,000 of a Share of 7.125%
Cumulative Preferred Stock, Series B and incorporated herein by
reference.
10.50 Deposit Agreement dated as of September 13, 2004 among Registrant,
Equiserve Inc., 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 6.60% Cumulative Preferred Stock, Series C.
Filed with Registrant's Form 8-A Registration Statement relating to
the Depositary Shares Each Representing 1/1,000 of a Share of 6.60%
Cumulative Preferred Stock, Series C and incorporated herein by
reference.
10.51 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 October 12, 2004. Filed with Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2004 and incorporated herein by reference.
10.52 Deposit Agreement dated as of February 28, 2005 among Registrant,
Equiserve Inc., 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 6.18% Cumulative Preferred Stock, Series D.
Filed with Registrant's Form 8-A Registration Statement relating to
the Depositary Shares Each Representing 1/1,000 of a Share of 6.18%
Cumulative Preferred Stock, Series D and incorporated herein by
reference.
10.53* Form of 2001 Stock Option and Incentive Plan Non-qualified Stock
Option Agreement. Filed with Registrant's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 2004 and
incorporated herein by reference.
1054* Form of Restricted Stock Unit Agreement. Filed with the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2004 and incorporated herein by reference.
10.55* Form of 2001 Stock Option and Incentive Plan Outside Director Stock
Option Agreement. Filed with Registrant's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 2004 and
incorporated herein by reference.
10.56* Form of Indemnification Agreement with Executive Officers. Filed
herewith.
11 Statement Re: Computation 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 with the
Registrant's Quarterly Report on Form 10-K for the year ended December
31, 2003 and incorporated herein by reference.
72
21 Subsidiaries of the Registrant Filed Herewith.
23 Consent of Independent Auditors Filed herewith.
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. Filed herewith.
31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. Filed herewith.
31.3 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. Filed herewith.
32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. Filed herewith.
- -------------------------
1. SEC File No. 001-08389 unless otherwise indicated.
* Compensatory benefit plan or arrangement or management contract.
73
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 14, 2005 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. Vice-Chairman of the Board, Chief March 14, 2005
- ------------------------
Ronald L. Havner, Jr. Executive Officer and Director
(principal executive officer)
/s/ Harvey Lenkin President and Director March 14, 2005
- ------------------------
Harvey Lenkin
/s/ John Reyes Senior Vice President and March 14, 2005
- ------------------------
John Reyes Chief Financial Officer
(principal financial officer and principal accounting
officer)
/s/ B. Wayne Hughes Chairman of the Board March 14, 2005
- ------------------------
B. Wayne Hughes
/s/ B. Wayne Hughes, Jr. Director March 14, 2005
- ------------------------
B. Wayne Hughes, Jr.
/s/ Robert J. Abernethy Director March 14, 2005
- ------------------------
Robert J. Abernethy
/s/ Dann V. Angeloff Director March 14, 2005
- ------------------------
Dann V. Angeloff
Director March 14, 2005
- ------------------------
William C. Baker
/s/ John T. Evans Director March 14, 2005
- ------------------------
John T. Evans
/s/ Uri P. Harkham Director March 14, 2005
- ------------------------
Uri P. Harkham
/s/ Daniel C. Staton Director March 14, 2005
- ------------------------
Daniel C. Staton
74
PUBLIC STORAGE, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND SCHEDULES
(Item 15 (a))
Page References
-----------------
Report of Independent Registered Public Accounting Firm................... F-1
Consolidated balance sheets as of December 31, 2004 and 2003.............. F-2
For each of the three years in the period ended December 31, 2004:
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- 43
Schedule:
III - Real estate and accumulated depreciation............................ F-44 - F-82
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.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
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, 2004 and 2003, and the related consolidated statements
of income, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 2004. 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 the standards of the Public Company
Accounting Oversight Board (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, 2004 and 2003, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2004, in conformity with US generally accepted accounting
principles. 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
We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of Public Storage,
Inc.'s internal control over financial reporting as of December 31, 2004, based
on criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report
dated March 14, 2005 expressed an unqualified opinion thereon.
ERNST & YOUNG LLP
Los Angeles, California
March 14, 2005
F-1
PUBLIC STORAGE, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2004 and 2003
(amounts in thousands, except share data)
December 31, December 31,
2004 2003
----------------- -----------------
ASSETS
Cash and cash equivalents.................................................... $ 366,255 $ 204,833
Real estate facilities, at cost:
Land...................................................................... 1,431,148 1,332,882
Buildings................................................................. 4,079,602 3,792,616
----------------- -----------------
5,510,750 5,125,498
Accumulated depreciation.................................................. (1,320,200) (1,153,059)
----------------- -----------------
4,190,550 3,972,439
Construction in process................................................... 47,277 69,620
Land held for development................................................. 8,883 12,236
----------------- -----------------
4,246,710 4,054,295
Investment in real estate entities........................................... 341,304 336,696
Goodwill..................................................................... 78,204 78,204
Intangible assets, net....................................................... 104,685 111,289
Notes receivable, primarily due from related parties......................... 492 100,510
Other assets................................................................. 67,140 82,242
----------------- -----------------
Total assets................................................... $ 5,204,790 $ 4,968,069
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable................................................................ $ 129,519 $ 76,030
Preferred stock called for redemption........................................ 54,875 115,000
Debt to joint venture partner................................................ 16,095 -
Accrued and other liabilities................................................ 145,431 131,103
----------------- -----------------
Total liabilities................................................... 345,920 322,133
Minority interest:
Preferred partnership interests........................................... 310,000 285,000
Other partnership interests............................................... 118,903 141,137
Commitments and contingencies (Note 17)...................................... - -
Shareholders' equity:
Cumulative Preferred Stock, $0.01 par value, 50,000,000 shares authorized,
3,980,186 shares issued (in series) and outstanding, (5,763,986 at
December 31, 2003) at liquidation preference............................ 2,102,150 1,867,025
Common Stock, $0.10 par value, 200,000,000 shares authorized, 128,526,450
shares issued and outstanding (126,986,734 at December 31, 2003)........ 12,853 12,699
Equity Stock, Series A, $0.01 par value, 200,000,000 shares authorized,
8,776.102 shares issued and outstanding................................. - -
Paid-in capital........................................................... 2,457,568 2,438,632
Cumulative net income..................................................... 2,732,873 2,366,660
Cumulative distributions paid............................................. (2,875,477) (2,465,217)
----------------- -----------------
Total shareholders' equity.......................................... 4,429,967 4,219,799
----------------- -----------------
Total liabilities and shareholders' equity..................... $ 5,204,790 $ 4,968,069
================= =================
See accompanying notes.
F-2
PUBLIC STORAGE, INC.
CONSOLIDATED STATEMENTS OF INCOME
For each of the three years in the period ended December 31, 2004
(amounts in thousands, except per share data)
2004 2003 2002
--------------- ---------------- ---------------
Revenues:
Rental income:
Self-storage facilities................................... $ 863,463 $ 798,584 $ 761,446
Commercial properties..................................... 10,750 11,001 11,304
Containerized storage facilities.......................... 19,355 23,991 22,355
Tenant reinsurance premiums.................................. 24,243 22,464 19,947
Interest and other income.................................... 10,165 8,628 8,661
--------------- ---------------- ---------------
927,976 864,668 823,713
--------------- ---------------- ---------------
Expenses:
Cost of operations:
Storage facilities........................................ 300,921 280,905 250,215
Commercial properties..................................... 4,328 4,583 4,259
Containerized storage facilities.......................... 11,774 13,939 17,612
Tenant reinsurance........................................ 13,508 11,987 9,411
Depreciation and amortization................................. 183,148 184,145 175,834
General and administrative.................................... 18,813 17,127 15,619
Interest expense.............................................. 760 1,121 3,809
--------------- ---------------- ---------------
533,252 513,807 476,759
--------------- ---------------- ---------------
Income from continuing operations before equity in earnings of real estate
entities, gain (loss) on disposition of real estate
investments and casualty loss and minority interest in income 394,724 350,861 346,954
Equity in earnings of real estate entities (Note 6)............. 22,564 24,966 29,888
Gain (loss) on disposition of real estate and real estate
investments and casualty loss ............................... 67 1,007 (2,541)
Minority interest in income:
Preferred partnership interests:
Based on ongoing distributions paid........................ (22,423) (26,906) (26,906)
Special distribution and restructuring allocation (Note 10) (10,063) - -
Other partnership interests................................... (17,427) (16,797) (17,181)
--------------- ---------------- ---------------
Income from continuing operations............................... 367,442 333,131 330,214
Discontinued operations (Note 4)................................ (1,229) 3,522 (11,476)
--------------- ---------------- ---------------
Net income...................................................... $ 366,213 $ 336,653 $ 318,738
=============== ================ ===============
Net income allocation:
- ----------------------
Allocable to preferred shareholders:
Based on distributions paid................................ $ 157,925 $ 146,196 $ 148,926
Based on redemptions of preferred stock (Note 2)........... 8,724 7,120 6,888
Allocable to Equity Stock, Series A.......................... 21,501 21,501 21,501
Allocable to common shareholders............................. 178,063 161,836 141,423
--------------- ---------------- ---------------
$ 366,213 $ 336,653 $ 318,738
=============== ================ ===============
Net income per common share - basic
Continuing operations........................................ $ 1.40 $ 1.26 $ 1.24
Discontinued operations...................................... (0.01) 0.03 (0.09)
--------------- ---------------- ---------------
$ 1.39 $ 1.29 $ 1.15
=============== ================ ===============
Net income per common share - diluted
Continuing operations........................................ $ 1.39 $ 1.25 $ 1.23
Discontinued operations...................................... (0.01) 0.03 (0.09)
--------------- ---------------- ---------------
$ 1.38 $ 1.28 $ 1.14
=============== ================ ===============
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................ 127,836 125,181 123,005
=============== ================ ===============
Diluted weighted average common shares outstanding.............. 128,681 126,517 124,571
=============== ================ ===============
Weighted average shares of Equity Stock, Series A (basic and
diluted) .................................................... 8,776 8,776 8,776
=============== ================ ===============
See accompanying notes.
F-3
PUBLIC STORAGE, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For each of the three years in the period ended December 31, 2004
(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, 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 (Note 13).................................. - - - 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
shares)....................................................... (202,500) - - (35)
Conversion of Class B Common Stock (7,000,000 shares) (Note 11) - 700 (700) -
Issuance of Common Stock (3,170,279 shares) (Note 11)........... - 317 - 81,281
Repurchase of Common Stock (175,000 shares) (Note 11)........... - (17) - (5,984)
Stock option and restricted stock expense (Note 13)............. - - - 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
Issuance of Cumulative Preferred Stock; Series Y (1,600,000
shares), Series Z (4,500 shares), Series A (4,600 shares),
Series B (4,350 shares), and Series C (4,600 shares) ........... 491,250 - - (15,016)
Redemption of Cumulative Preferred Stock; Series L (4,600
shares), Series M (2,250 shares), Series D (1,200,000 shares),
and Series E (2,195,000 shares)................................. (256,125) - - 81
Restructuring of Series N preferred partnership units (Note 10). - - - 2,063
Issuance of common stock in connection with:
Exercise of employee stock options (1,957,907 shares).......... - 196 49,733
Vesting of restricted stock (27,509 shares).................... - 3 - (3)
Repurchase of common stock (445,700 shares) (Note 11)........... - (45) - (20,250)
Stock option and restricted stock expense (Note 13)............. - - - 2,490
Net income...................................................... - - - -
Distributions to shareholders: - - - -
Cumulative Preferred Stock.................................... - - - -
Equity Stock, Series A........................................ - - - -
Common Stock ($1.80 per share)................................ - - - -
--------------- ------------ --------- -----------
Balances at December 31, 2004...................................... $ 2,102,150 $ 12,853 $ - $ 2,457,568
=============== ============ ========= ===========
Total
Cumulative Cumulative Shareholders'
Net Income Distributions Equity
------------- --------------- ----------------
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 (Note 13).................................. - - 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
equivalent)................................................... - (221,299) (221,299)
------------- --------------- ----------------
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
shares)....................................................... - - (202,535)
Conversion of Class B Common Stock (7,000,000 shares) (Note 11) - - -
Issuance of Common Stock (3,170,279 shares) (Note 11)........... - - 81,598
Repurchase of Common Stock (175,000 shares) (Note 11)........... - - (6,001)
Stock option and restricted stock expense (Note 13)............. - - 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
Issuance of Cumulative Preferred Stock; Series Y (1,600,000
shares), Series Z (4,500 shares), Series A (4,600 shares),
Series B (4,350 shares), and Series C (4,600 shares) ........... - - 476,234
Redemption of Cumulative Preferred Stock; Series L (4,600
shares), Series M (2,250 shares), Series D (1,200,000 shares),
and Series E (2,195,000 shares)................................. - - (256,206)
Restructuring of Series N preferred partnership units (Note 10). - - 2,063
Issuance of common stock in connection with:
Exercise of employee stock options (1,957,907 shares).......... - - 49,929
Vesting of restricted stock (27,509 shares).................... - - -
Repurchase of common stock (445,700 shares) (Note 11)........... - - (20,295)
Stock option and restricted stock expense (Note 13)............. - - 2,490
Net income...................................................... 366,213 - 366,213
Distributions to shareholders: -
Cumulative Preferred Stock.................................... - (157,925) (157,925)
Equity Stock, Series A........................................ - (21,501) (21,501)
Common Stock ($1.80 per share)................................ - (230,834) (230,834)
------------- --------------- ----------------
Balances at December 31, 2004...................................... $ 2,732,873 $ (2,875,477) $ 4,429,967
============= =============== ================
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, 2004
(amounts in thousands)
2004 2003 2002
-------------- ------------- --------------
Cash flows from operating activities:
Net income.................................................................. $ 366,213 $ 336,653 $ 318,738
Adjustments to reconcile net income to net cash provided by operating
activities:
Gain on sale of assets, net of impairment charge, and impact of EITF Topic
D-42 included in equity in earnings of real estate investments (Note 6). (4,544) (187) (3,737)
(Gain)/loss on disposition of real estate and real estate investments
and casualty loss.................................................... (67) (1,007) 2,541
Depreciation and amortization........................................... 183,148 184,145 175,834
Depreciation included in equity in earnings of real estate entities..... 33,720 27,753 27,078
Minority interest in income............................................. 49,913 43,703 44,087
Depreciation, impairment losses, and other items associated with
discontinued operations (Note 4)..................................... 1,801 1,966 12,318
Other operating activities.............................................. 17,259 15,598 14,424
-------------- ------------- --------------
Total adjustments.................................................... 281,230 271,971 272,545
-------------- ------------- --------------
Net cash provided by operating activities............................ 647,443 608,624 591,283
-------------- ------------- --------------
Cash flows from investing activities:
Principal payments received on mortgage notes receivable................ 18 23,814 35,513
Paydown/(issuance) of notes receivable to affiliates.................... 100,000 (100,000) -
Business combinations................................................... - - (139,680)
Capital improvements to real estate facilities ......................... (35,868) (30,175) (26,993)
Construction in process and acquisition of land held for development.... (71,602) (102,428) (101,110)
Acquisition of minority interests (Note 10)............................. (24,851) (9,867) (27,544)
Acquisition of real estate facilities................................... (139,794) - (30,117)
Investments in real estate entities..................................... (33,784) (35,118) (33,956)
Proceeds from the sale of real estate facilities, land, and real estate 12,648 34,883 15,209
investments..........................................................
Net liquidation (acquisition) of held to maturity debt securities held
by captives (Note 2) ................................................ 7,066 (14,194) (2,322)
Other investing activities.............................................. (2,250) (9,285) (14,786)
-------------- ------------- --------------
Net cash used in investing activities................................ (188,417) (242,370) (325,786)
-------------- ------------- --------------
Cash flows from financing activities:
Principal payments on notes payable and paydowns on line of credit...... (41,204) (39,837) (52,685)
Net proceeds from the issuance of common stock.......................... 49,929 68,618 23,333
Net proceeds from the issuance of cumulative preferred stock............ 476,234 244,146 457,016
Repurchase of common stock.............................................. (20,295) (6,001) (381)
Redemption of cumulative preferred stock................................ (316,331) (87,535) (195,661)
Distributions paid to shareholders...................................... (410,260) (393,561) (391,726)
Distributions paid to holders of preferred partnership interests........ (22,423) (26,906) (26,906)
Special distribution paid to holders of preferred partnership interests (8,000) - -
(Note 10)............................................................
Distributions paid to minority interests, net of reinvestments.......... (21,349) (23,469) (24,710)
Net proceeds from financing through acquisition joint venture........... 16,095 - -
-------------- ------------- --------------
Net cash used in financing activities................................ (297,604) (264,545) (211,720)
-------------- ------------- --------------
Net increase in cash and cash equivalents................................... 161,422 101,709 53,777
Cash and cash equivalents at the beginning of the year...................... 204,833 103,124 49,347
-------------- ------------- --------------
Cash and cash equivalents at the end of the year............................ $ 366,255 $ 204,833 $ 103,124
============== ============= ==============
See accompanying notes.
F-5
(Continued)
2004 2003 2002
-------------- ------------- --------------
Supplemental schedule of non cash investing and financing activities:
Acquisition of real estate facilities in exchange for minority interests
and assumption of mortgage notes payable:
Real estate facilities.............................................. $ (119,693) $ - $ -
Mortgage notes payable.............................................. 94,693 - -
Preferred partnership interests..................................... 25,000 - -
Business combinations (Note 3):
Real estate facilities.............................................. - - (330,426)
Investment in real estate entities.................................. - - 160,236
Other assets........................................................ - - (8,187)
Accrued and other liabilities....................................... - - 23,891
Minority interest................................................... - - 14,806
Disposition of real estate facilities in exchange for notes receivable,
other assets, and investment in real estate entities.................. - - 493
Notes receivable issued in connection with real estate dispositions..... - - (493)
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 10):
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 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, 2004
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.
At December 31, 2004, we had direct and indirect equity interests
in 1,464 self-storage facilities located in 37 states and operating under
the "Public Storage" name. We also have direct and indirect equity
interests in approximately 19.6 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 37 controlled entities (the "Consolidated Entities").
Collectively, the Company and the Consolidated Entities own a total of
1,433 real estate facilities, consisting of 1,426 self-storage facilities,
three industrial facilities used by the containerized storage operations
and four commercial properties.
At December 31, 2004, we had equity investments in eight limited
partnerships in which we do not have a controlling interest. These limited
partnerships collectively own 38 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 18.0 million
net rentable square feet of commercial space as of December 31, 2004. We do
not control these entities; accordingly, our investments in these limited
partnerships and PSB (collectively the "Unconsolidated Entities") are
accounted for using the equity method.
Certain amounts previously reported have been reclassified to
conform to the December 31, 2004 presentation, including discontinued
operations (see Note 4).
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 2004, 2003
and 2002; 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, 2004
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. A comparison of the carrying amount of notes payable to their
estimated fair value is included in Note 8, "Notes Payable." Debt assumed
in connection with property acquisitions is recorded at fair value, based
upon the present value of future interest and principal payments discounted
at the estimated market interest rate for similar loans. Any premium or
discount is amortized over the remaining life of the loans using the
effective interest method.
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. 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, 2004 is
$1,984,000 ($1,835,000 at December 31, 2003) held by our captive insurance
programs. Insurance and other regulations place significant restrictions on
our ability to withdraw these funds for purposes other than insurance
activities (see Note 3). Our captive insurance programs are conducted by
STOR-Re Mutual Insurance Company, Inc. ("STOR-Re"), an association captive
insurance company owned by the Company and its affiliates, which is
approximately 90.1% owned by the Company and the Consolidated Entities, and
PS Insurance Company Hawaii, Ltd. ("PSIC-H"), a captive insurer formed on
December 31, 2003 which is wholly owned by a subsidiary of the Company.
Other assets at December 31, 2004 include aggregate investments totaling
$20,929,000 ($27,995,000 at December 31, 2003) in held to maturity debt
securities owned by our captive insurance programs 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
expense 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.
Accounting for Acquisition Joint Venture
----------------------------------------
In January 2004, we entered into a joint venture partnership 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 "Acquisition Joint Venture"). The venture is funded entirely with
equity consisting of 30% from the Company and 70% from the institutional
investor. For a six-month period beginning 54 months after formation, we
have the right to acquire our joint venture partner's interest based upon
the market value of the properties. If we do not exercise our option, our
joint venture partner can elect to purchase our interest in the properties
during a six-month period commencing upon expiration of our six-month
option period. If our joint venture partner fails to exercise its option,
the partnership will be liquidated and the proceeds will be distributed to
the partners according to the joint venture agreement.
F-8
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
We have determined that the Acquisition Joint Venture is not a
variable interest entity, and we do not control this entity. Therefore, we
do not consolidate the accounts of the Acquisition Joint Venture on our
financial statements.
During the year ended December 31, 2004, the Acquisition Joint
Venture acquired two facilities directly from third parties at an aggregate
cost of $9,086,000. We account for our investment with respect to these
facilities using the equity method, with our pro-rata share of the income
from these facilities recorded as "Equity in earnings of real estate
entities" on our income statement. See Note 6 for further discussion of
these amounts.
In addition, at the end of December 2004, we sold seven facilities
that we recently acquired to the Acquisition Joint Venture for an aggregate
cost of $22,993,000 representing our original cost. Due to our continuing
interest in these facilities and our option to acquire our Partner's
investment as described above in Year 5 we are precluded from treating
these transactions as completed sales of facilities pursuant to Statement
of Financial Accounting Standards No. 66 ("SFAS 66"). Therefore, we
continue to reflect these properties and associated operations on our
financial statements.
We believe that it is likely that we will exercise our option to
acquire our joint venture partner's interest and, accordingly, we consider
the transactions to be, in substance, debt financing. Our joint venture
partner's 70% investment in the Acquisition Joint Venture with respect to
the seven properties is therefore reflected as a liability on our balance
sheet, "Debt to Joint Venture Partner," with our joint venture partner's
share of operations reflected on our income statement as interest expense.
The balance of the liability is adjusted each period to equal the current
value to the extent fair value exceeds the original liability. See Note 9
for a further discussion of these debt amounts.
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.
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 including goodwill 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.
F-9
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
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 which we expect to sell or otherwise dispose
of prior to its previously estimated useful life is stated at what we
estimate to be the lower of its estimated net realizable value (less cost
to sell) or its carrying value. During 2004, 2003 and 2002 we recorded
impairment charges related to containers, trucks, and other equipment at
containerized storage facilities identified for closure (see Note 4). These
impairment charges were based upon the differential between book value and
the estimated net realizable value, which was based upon prices for similar
assets, and were equal to the net proceeds ultimately received. No other
impairments were identified from our evaluations.
Accounting for stock-based compensation
---------------------------------------
We utilize the Fair Value Method (as defined in Note 13) of
accounting for our employee stock options issued after December 31, 2001,
and utilize the APB 25 Method (as defined in Note 13) for employee stock
options issued prior to January 1, 2002. Restricted stock unit expense is
recorded over the relevant vesting period. See Note 13 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 $4,395,000 and $10,895,000 at December 31, 2004 and 2003,
respectively. The carrying amounts are net of accumulated depreciation and
asset impairment charges. As discussed in Note 4, during 2004, 2003 and
2002 impairment charges amounting to $1,575,000, $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.
Included in depreciation and amortization expense for 2004, 2003
and 2002 is $7,544,000, $6,427,000, and $2,887,000 respectively, related to
depreciation of other assets. Included in discontinued operations for 2004,
2003, and 2002, respectively, is depreciation expense of $726,000,
$2,644,000, and $4,134,000 respectively, related to depreciation of
containers and equipment of the discontinued operations of the
containerized storage business.
Other assets at December 31, 2004 also includes investments
totaling $20,929,000 ($27,995,000 at December 31, 2003) in held to maturity
debt securities owned by our captive insurance programs stated at amortized
cost, which approximates fair value. Approximately $5,224,000 of these
securities held at December 31, 2004 have maturity dates of within 1 year,
and the remainder have maturity dates of between 1 to 5 years.
F-10
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
Accrued and other liabilities
-----------------------------
Accrued and other liabilities consist primarily of trade payables,
real and personal property tax accruals, prepayments of rents, accrued
interest, and losses and loss adjustment liabilities from our insurance
programs, as discussed below. Prepaid rent totals $26,289,000 and
$23,029,000 at December 31, 2004 and 2003, respectively.
Liabilities for losses and loss adjustment expenses include an
amount we determine from loss reports and individual cases and an amount,
based on recommendations from an independent actuary that is a member of
the American Academy of Actuaries 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. 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.
STOR-Re, which is consolidated with the Company, was formed in
1994 as an association captive insurance company owned by the Company and
affiliates of the Company. STOR-Re provides limited property and liability
insurance to the Company and its affiliates for losses incurred during
policy periods prior to April 1, 2004, and was succeeded by PSIC-H with
respect to these insurance activities for policy periods following March
31, 2004. The Company also utilizes other insurance carriers to provide
property and liability insurance coverage in excess of STOR-Re's and
PSIC-H's limitations which are described in Note 17. STOR-Re and PSIC-H
accrue liabilities for covered losses and loss adjustment expense, which at
December 31, 2004 totaled $34,192,000 ($28,741,000 at December 31, 2003)
with respect to insurance provided to the Company and its affiliates.
PS Insurance Company, Ltd ("PSIC"), a wholly-owned subsidiary of
the Company, reinsured policies against claims for losses to goods stored
by tenants in our self-storage facilities for policy periods prior to March
31, 2004. PSIC-H succeeded PSIC with respect to these tenant insurance
activities effective April 1, 2004. Both of these entities utilize
third-party insurance coverage for losses from any individual event that
exceeds a loss of $500,000, to a maximum of $10,000,000. Losses below the
third-party insurers' deductible amounts are accrued as cost of operations
for the tenant insurance operations. Included in cost of operations for the
year ended December 31, 2004 is approximately $1.5 million in estimated
losses from tenant claims as a result of damage sustained from the recent
hurricanes in Florida. The accrued liability for losses and loss adjustment
expense with respect to tenant insurance activities totaled $4,898,000 at
December 31, 2004 including the aforementioned $1.5 million in estimated
losses from tenant claims ($2,486,000 at December 31, 2003).
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 independent actuary that is a member of
the American Academy of Actuaries 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. 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.
Intangible assets and goodwill
------------------------------
Intangible assets consist of property management contracts
($165,000,000) and the excess of acquisition cost over the fair value of
net tangible and identifiable intangible assets or "goodwill" ($94,719,000)
acquired in business combinations. Our goodwill has an indeterminate life
and, accordingly, is not amortized. Our other intangibles have a defined
life and are amortized on a straight-line basis over a 25 year period.
F-11
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
Goodwill is net of accumulated amortization of $16,515,000 at
December 31, 2004 and December 31, 2003. At December 31, 2004, property
management contracts are net of accumulated amortization of $60,315,000
($53,711,000 at December 31, 2003). Included in depreciation and
amortization expense for each of the years ended December 31, 2004, 2003
and 2002 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 following the year ended December 31, 2004.
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
premium revenue when 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 $27,336,000, $25,231,000, and $25,610,000 for
the years ended December 31, 2004, 2003, and 2002, 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
---------------------------
Distributions paid to the holders of our Cumulative Preferred
Stock totaling $157,925,000, $146,196,000, and $148,926,000 for the years
ended December 31, 2004, 2003 and 2002, respectively, have been deducted
from net income to arrive at net income allocable to our common
shareholders.
Emerging Issues Task Force ("EITF") Topic D-42, "The Effect on the
Calculation of Earnings per Share for the Redemption or the Induced
Conversion of Preferred Stock" provides, among other things, that any
excess of the fair value of the consideration transferred to the holders of
preferred stock redeemed over 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. At the
July 31, 2003 meeting of the EITF, the Securities and Exchange Commission
Observer clarified that for 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.
In conformity with the SEC Observer's clarification, an additional
$8,724,000 ($0.07 per diluted share), $7,120,000 ($0.06 per diluted share)
and $6,888,000 ($0.06 per diluted share) was allocated to our preferred
stockholders in connection with the redemption of such securities for the
years ended December 31, 2004, 2003, and 2002, respectively.
F-12
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
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 was
allocated net income of $21,501,000 for each of the three years ended
December 31, 2004, 2003 and 2002. The remaining $178,063,000, $161,836,000,
and $141,423,000, for the years ended December 31, 2004, 2003, and 2002,
respectively, was allocated to our regular common stockholders.
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 units 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
units outstanding, computed using the treasury stock method, that totaled
845,000 in 2004, 1,336,000 in 2003, and 1,566,000 in 2002).
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.
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 owned 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.
--------------------------------------
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 consolidated 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.
F-13
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
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.
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 (none in 2003 or
2004) are summarized as follows:
Development Partnership
Joint Venture STOR-Re Acquisitions 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
============== ============ ============= ============
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
years ended December 31, 2003 or 2004 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.................................... $825,060
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 2002 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.
F-14
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
4. Discontinued Operations
-----------------------
We segregate all of our disposed components that have 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, 2003, and 2004, we have closed a total of 43
containerized storage facilities that were determined to be non-strategic
(the "Closed Facilities."). As the decision was made to close each
facility, the related assets were deemed not recoverable from operations
and therefore asset impairment charges for the excess of these assets' net
book value over their fair value (less costs to sell), determined based
upon the values of similar assets, were recorded. These asset impairment
charges totaled $1,575,000, $3,229,000 (including $750,000 with respect to
a real estate facility previously utilized by the Closed Facilities), and
$6,504,000 for the years ended December 31, 2004, 2003 and 2002,
respectively. A loss on sale in the amount of $355,000 was also recorded in
2003 in connection with the sale of the real estate facility previously
utilized by the Closed Facilities. Amounts for 2004 and 2002 also include
$416,000 and $2,447,000 in lease termination costs, respectively.
During 2003, we sold five self-storage facilities and recorded an
aggregate gain on sale of $5,476,000. The historical operations of these
facilities are reported as discontinued operations in the table below as
the "Sold Self-Storage Facilities."
During 2002, we sold one of our commercial properties to a third
party, and no gain or loss was recorded from this sale. During 2004, we
sold another commercial property to a third party and recorded a gain on
sale of $971,000. The historical operating results of these facilities are
reported as discontinued operations in the table below as the "Sold
Commercial Facilities."
F-15
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
The following table summarizes the historical operations of the
Closed Facilities, the Sold Self-Storage Facilities, and the Sold
Commercial Facilities:
Discontinued Operations:
Year Ended December 31,
-------------------------------------
2004 2003 2002
---------- ---------- ----------
(Amounts in thousands)
Rental income:
Closed Facilities............... $ 7,488 $ 19,347 $ 29,764
Sold Self-Storage Facilities.... - 1,579 1,841
Sold Commercial Facilities...... 314 441 745
----------- ---------- ----------
Total rental income............... 7,802 21,367 32,350
----------- ---------- ----------
Cost of operations:
Closed Facilities............... (6,733) (15,157) (28,032)
Sold Self-Storage Facilities.... - (617) (742)
Sold Commercial Facilities...... (81) (105) (287)
----------- ---------- ----------
Total cost of operations.......... (6,814) (15,879) (29,061)
----------- ---------- ----------
Depreciation expense:
Closed Facilities .............. (1,115) (3,335) (5,071)
Sold Self-Storage Facilities.... - (424) (528)
Sold Commercial Facilities...... (82) (99) (215)
----------- ---------- ----------
Total depreciation ............... (1,197) (3,858) (5,814)
----------- ---------- ----------
Other
Asset impairment charges........ (1,575) (3,229) (6,504)
Lease termination costs......... (416) - (2,447)
Net gain (loss) on dispositions. 971 5,121 -
----------- ---------- ----------
Total other ...................... (1,020) 1,892 (8,951)
----------- ---------- ----------
Total discontinued operations $ (1,229) $ 3,522 $ (11,476)
=========== ========== ==========
F-16
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
5. Real estate facilities
----------------------
Activity in real estate facilities during 2004, 2003 and 2002 is
as follows:
2004 2003 2002
---------------- ---------------- ---------------
(Amounts in thousands)
Operating facilities, at cost:
Beginning balance....................................... $ 5,125,498 $ 4,988,526 $ 4,431,054
Property acquisitions:
Business combinations (Note 3) ...................... - - 330,426
Other acquisitions................................... 259,487 - 30,117
Disposition of facilities............................... (6,785) (31,327) (4,619)
Completed projects opened for operations................ 93,017 121,437 134,775
Casualty losses......................................... (2,874) - -
Acquisition of minority interest (Note 10).............. 6,539 16,687 39,780
Capital improvements.................................... 35,868 30,175 26,993
---------------- ---------------- ---------------
Ending balance.......................................... 5,510,750 5,125,498 4,988,526
---------------- ---------------- ---------------
Accumulated depreciation:
Beginning balance....................................... (1,153,059) (987,546) (819,932)
Additions during the year (a)........................... (169,471) (172,328) (168,023)
Casualty losses......................................... 1,624 - -
Disposition of facilities............................... 706 6,815 409
---------------- ---------------- ---------------
Ending balance.......................................... (1,320,200) (1,153,059) (987,546)
---------------- ---------------- ---------------
Construction in process:
Beginning balance...................................... 69,620 87,516 121,181
Current development.................................... 71,602 102,428 101,110
Transfers (to) from land held for development.......... (928) 1,113 -
Completed projects opened for operations............... (93,017) (121,437) (134,775)
---------------- ---------------- ---------------
Ending balance......................................... 47,277 69,620 87,516
---------------- ---------------- ---------------
Land held for development:
Beginning balance....................................... 12,236 17,807 30,001
Transfers from (to) construction in process............. 928 (1,113) -
Dispositions............................................ (4,281) (4,458) (12,194)
Ending balance.......................................... 8,883 12,236 17,807
---------------- ---------------- ---------------
Total real estate facilities............................. $ 4,246,710 $ 4,054,295 $ 4,106,303
================ ================ ===============
Operating Facilities
--------------------
During the year ended December 31, 2004, we opened seven newly
developed self-storage facilities (505,000 net rentable square feet) with
an aggregate cost of $61,558,000. We also completed nine projects to
convert 460,000 net rentable square feet previously used by our
containerized storage business into 606,000 net rentable square feet of
self-storage space for an aggregate cost of $17,022,000, as well as various
projects that structurally and visually enhanced certain projects, and
expanded the square footage of our existing self-storage facilities
(108,000 net rentable square feet) for an aggregate cost of $12,918,000. In
addition, we incurred $1,519,000 in additional costs with respect to
projects completed in 2003.
In 2004 we also acquired interests from third parties in 45
self-storage facilities (3,109,000 net rentable square feet) at an
aggregate cost of $259,487,000, comprised of $139,794,000 cash, $94,693,000
in assumed debt (Note 8) and the issuance of $25 million of our Series Z
Perpetual Preferred Units (Note 10).
F-17
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
During year ended December 31, 2004, we sold one discontinued
commercial facility, four vacant parcels of land and received partial
condemnation proceeds with respect to two existing self-storage facilities.
Total aggregate net proceeds totaled $12,648,000. We recorded a gain from
these transactions of $2,288,000, of which, $1,317,000 is recorded to the
line item "Gain (loss) on disposition of real estate and real estate
investments and casualty loss" on our income statement and $971,000 is
recorded in discontinued operations (Note 4) with respect to the
aforementioned commercial facility.
In addition, in 2004, we recorded a $1,250,000 casualty loss with
respect to real estate assets damaged as a result of hurricanes occurring
in the state of Florida. This casualty loss is comprised of $2,874,000 in
buildings and $1,624,000 in accumulated depreciation and is reflected on
the condensed consolidated statement of income as "Casualty Loss."
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.
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. See Note 4.
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.
At December 31, 2004, the unaudited adjusted basis of real estate
facilities for federal tax purposes was approximately $3.4 billion.
Construction in process and land held for development
-----------------------------------------------------
Construction in process at December 31, 2004 consists primarily of
10 self-storage facilities (754,000 net rentable square feet) and 37
expansion projects and various remodeling projects to enhance the visual
and structural appeal of existing self-storage facilities (2,246,000 net
rentable square feet). In addition, we have five parcels of land held for
development with total costs of approximately $8,883,000.
6. Investments in real estate entities
-----------------------------------
At December 31, 2004, our investments in real estate entities
consist of ownership interests in eight 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 ours.
A total of approximately $44 million of the Company's consolidated
retained earnings is represented by undistributed earnings of the
Unconsolidated Entities.
F-18
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
During 2004, 2003 and 2002, we recognized earnings from our
investments of $22,564,000, $24,966,000, and $29,888,000, respectively, and
received cash distributions totaling $20,961,000, $17,754,000, and
$19,496,000, respectively. During 2004, 2003 and 2002, earnings from our
investments includes the net impact of PSB's gains on sale of real estate
impairment charges, and EITF Topic D-42 charges aggregating $4,544,000,
$187,000, and $3,737,000 in 2004, 2003 and 2002 respectively.
During 2004, 2003, and 2002, we invested a total of $3,005,000,
$340,000 and $223,000 in investments in real estate entities.
The following table sets forth our investments in the
Unconsolidated Entities at December 31, 2004 and 2003 and our equity in
earnings of real estate investments for each of the three years ended
December 31, 2004:
Investments in Real Estate Equity in Earnings of Real Estate Entities
Entities at December 31, for the year ended December 31,
------------------------------- ------------------------------------------
2004 2003 2004 2003 2002
-------------- ------------ ------------ ----------- -----------
PSB (a)........................ $ 284,564 $ 282,428 $ 16,895 $ 19,687 $ 24,461
Other investments.............. 53,883 54,268 5,742 5,279 5,427
Acquisition Joint Venture...... 2,857 - (73) - -
-------------- ------------ ------------ ----------- -----------
Total...................... $ 341,304 $ 336,696 $ 22,564 $ 24,966 $ 29,888
============== ============ ============ =========== ===========
(a) Included in equity in earnings for 2004, 2003 and 2002 is the net
impact of PSB's gains on sale of real estate impairment charges,
and EITF Topic D-42 charges aggregating $4,544,000, $187,000, and
$3,737,000 in 2004, 2003 and 2002 respectively.
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, 2004. 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, 2004 ($45.10), the shares and
units had a market value of approximately $573,836,000 as compared to a
book value of $284,564,000, which is substantially equivalent to our
underlying equity in this entity.
At December 31, 2004, PSB owned and operated approximately 18.0
million net rentable square feet of commercial space. In addition, PSB
manages 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, 2004 and 2003, and
the condensed balance sheets of PSB at December 31, 2004 and 2003. 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, 2004
-------------------------------------
2004 2003
------------------ -----------------
(Amount in thousands)
For the year ended December 31,
Total revenue and interest and other income, and gain
on sale of Marketable securities.................. $ 219,477 $ 197,903
Cost of operations and other expenses................ (72,651) (62,108)
Depreciation and amortization........................ (72,336) (57,436)
Discontinued operations (b).......................... 17,658 1,322
Minority interest.................................... (30,005) (30,585)
------------------ -----------------
Net income......................................... $ 62,143 $ 49,096
================== =================
At December 31,
Total assets (primarily real estate)................. $ 1,363,829 $ 1,358,861
Total debt (c)....................................... 11,367 264,694
Other liabilities.................................... 38,453 35,701
Preferred equity and preferred minority interests.... 638,600 386,423
Common equity........................................ 675,409 672,043
(a) Included in discontinued operations is an impairment charge
recorded on impending real estate sales totaling $5,907,000 for the
year ended December 31, 2003; net gains on sale of real estate
facilities totaling $15,462,000 and $2,897,000 for the years ended
December 31, 2004 and 2003, respectively. Also included in
discontinued operations is equity in income from a disposed
investment of $2,296,000 for the year ended December 31, 2003.
(b) Total debt at December 31, 2003 includes $100,000,000 due to the
Company pursuant to a loan agreement. See Note 12, Related Party
Transactions, below.
Acquisition Joint Venture
-------------------------
As described more fully under "Accounting for Acquisition Joint
Venture" in Note 2, we formed a partnership (the "Acquisition Joint
Venture") in January 2004 for the purpose of acquiring up to $125 million
in existing self-storage facilities from third parties. Through December
31, 2004, the Acquisition Joint Venture had acquired two self-storage
facilities directly from third parties at an aggregate cost of $9,086,000,
of which our joint venture share was $2,930,000. Our investment in these
two facilities is accounted for using the equity method of accounting.
The following table sets forth certain condensed financial
information (representing 100% of this entity's balances and not our
pro-rata share) with respect to the two self-storage facilities acquired by
the Acquisition Joint Venture.
Year Ended December 31, 2004
----------------------------
(Amounts in thousands)
Total revenue.................................... $ 447
Cost of operations and other expenses............ (192)
Depreciation and amortization.................... (97)
Net income..................................... $ 158
At December 31, 2004
----------------------------
(Amounts in thousands)
Total assets (primarily storage facilitites)..... $ 9,168
Liabilities...................................... 11
Partners' equity................................. 9,157
F-20
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
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, 2004, in seven limited partnerships (collectively, the "Other
Investments") owning an aggregate of 36 storage facilities. The book value
of these investments ($53,883,000) is approximately $30,812,000 higher than
our aggregate underlying equity in these entities; 70% of this difference
(representing the portion allocated to building) is amortized as a
reduction to equity in earnings over 25-year period. During 2004 and 2003,
we acquired additional equity interests in these entities for a total of
$75,000 and $340,000, 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:
2004 2003
--------------- ---------------
(Amount in thousands)
For the year ended December 31,
Total revenue........................ $ 28,376 $ 26,763
Cost of operations and other expenses (9,870) (9,109)
Depreciation and amortization........ (2,247) (2,573)
--------------- ---------------
Net income....................... $ 16,259 $ 15,081
=============== ===============
At December 31,
Total assets (primarily storage $ 58,124 $ 56,592
facilities)......................
Total debt........................... - 1,930
Other liabilities.................... 1,853 1,618
Partners' equity..................... 56,271 53,044
7. Revolving line of credit
------------------------
We have a $200 million revolving line of credit (the "Credit
Agreement") that has a maturity date of April 1, 2007 and bears an annual
interest rate ranging from the London Interbank Offered Rate ("LIBOR") plus
0.45% to LIBOR plus 1.20% depending on our credit ratings (currently LIBOR
plus 0.45%). In addition, we are required to pay a quarterly commitment fee
ranging from 0.15% per annum to 0.30% per annum depending on our credit
ratings (currently the fee is 0.15% per annum). At December 31, 2004 and at
March 15, 2005, we had no outstanding 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 0.55 to 1.00, (ii) maintain certain quarterly interest
and fixed-charge coverage ratios (as defined therein) of not less than 2.25
to 1.0 and 1.5 to 1.0, respectively, and (iii) maintain a minimum total
shareholders' equity (as defined therein). 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
1.5 times our unsecured recourse debt). We were in compliance with all
covenants of the Credit Agreement at December 31, 2004.
F-21
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
8. Notes payable
-------------
Notes payable at December 31, 2004 and 2003 consist of the
following:
2004 2003
------------------------- -------------------------
Carrying Carrying
amount Fair value amount Fair value
------------ ------------ ----------- ------------
(Amounts in thousands)
Unsecured senior notes:
7.47% note repaid in January 2004....................... $ - $ - $ 14,600 $ 15,001
7.66% note due January 2007............................. 33,600 35,355 44,800 49,346
Mortgage notes payable:
10.55% mortgage notes repaid in June 2004............... - - 14,863 15,266
7.134% and 8.75% mortgage notes secured by two real estate
facilities with a net book value of $11.2 million,
principal and interest payable monthly, due at varying
dates between October 2009 and September 2028....... 1,629 1,782 1,767 1,956
5.05% mortgage notes (including note premium of $2.4 million)
secured by 25 real estate facilities with a net book
value of $95.9 million, principal and interest due
monthly, due at varying dates between October 2010 and
May 2023............................................ 41,470 41,470 - -
5.25% mortgage notes (including note premium of $4.0 million)
secured by 7 real estate facilities with a net book
value of $88.3 million, principal and interest due
monthly, due at varying dates between June 2011 and July
2013................................................ 52,820 52,820 - -
------------ ------------ ----------- ------------
Total notes payable.............................. $129,519 $131,427 $ 76,030 $ 81,569
============ ============ =========== ============
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, 2004.
Substantially all of our mortgage notes have prepayment penalties
or restrictions on prepayment that make prepayment of these notes
economically impractical.
We assumed the 5.05% and 5.25% mortgage notes in connection with
property acquisitions in 2004. The stated interest rates on the notes range
from 5.4% to 8.1% with a weighted average of approximately 6.65%. The notes
were recorded at their estimated fair value based upon the estimated market
rate of 5.05% and 5.25%, an aggregate of approximately $94,693,000 as
compared to actual outstanding balances aggregating approximately
$88,247,000. This premium of approximately $6,446,000 over the principal
balance of the notes payable, will be amortized over the remaining term of
the loans based upon the effective interest method.
F-22
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
At December 31, 2004, approximate principal maturities of notes
payable are as follows:
Unsecured
Senior Notes Mortgage debt Total
------------- --------------- ------------
(dollar amounts in thousands)
2005......................... $ 11,200 $ 4,306 $ 15,506
2006......................... 11,200 4,539 15,739
2007......................... 11,200 4,783 15,983
2008......................... - 5,034 5,034
2009......................... - 5,213 5,213
Thereafter................... - 72,044 72,044
------------- --------------- ------------
$ 33,600 $ 95,919 $ 129,519
============= =============== ============
Weighted average rate........ 7.7% 5.2% 5.8%
============= =============== ============
Interest paid (including interest related to the borrowings under
the Credit Agreement) during 2004, 2003 and 2002 was $4,377,000,
$7,131,000, and $10,322,000, respectively. In addition, in 2004, 2003 and
2002, capitalized interest totaled $3,617,000, $6,010,000, and $6,513,000,
respectively, related to construction of real estate facilities.
9. Debt to Joint Venture Partner
-----------------------------
On December 31, 2004, we sold seven self-storage facilities that
we had recently acquired from third parties to our Acquisition Joint
Venture for $22,993,000, an amount that was equal to fair value and our
cost. As described more fully in Note 2, we accounted for the sale of these
seven facilities as a financing transaction pursuant to guidance under SFAS
66. As a result, our joint venture partner's interest in these facilities
($16,095,000 at December 31, 2004) is accounted for as debt on our
consolidated balance sheet. Our partner's pro-rata share of net earnings
with respect to these properties and will be recorded as interest expense
on our consolidated income statement.
We expect that this debt will be repaid during 2008, assuming that
we exercise our option to acquire our partner's interest in the Acquisition
Joint Venture.
Subsequent to December 31, 2004, we sold a significant interest in
three additional self-storage facilities that we had recently acquired from
a third party to our Acquisition Joint Venture for approximately $27.4
million. This transaction will also be accounted for as a financing
arrangement whereby our joint venture partner's interest approximately (a
$19.2 million with respect to these three properties) will be presented as
debt on our consolidated balance sheet.
10. 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.
F-23
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
Preferred partnership interests:
--------------------------------
At December 31, 2003 and 2004, we had the following series of
Preferred Units outstanding:
At December 31, 2004 At December 31, 2003
Earliest Distribution Units Carrying Units Carrying
Series Redemption Date (a) Rate Outstanding Amount Outstanding Amount
- ------------------ ---------------------- ------------- ------------ ----------- ----------- -----------
(Units and dollar amounts in thousands)
Series N (b)..... March 17, 2005 9.500% 1,600 $ 40,000 9,600 $ 240,000
Series NN........ March 17, 2010 6.400% 8,000 200,000 - -
Series O (b)..... March 29, 2005 9.125% 1,800 45,000 1,800 45,000
Series Z(a)...... October 12, 2009 6.250% 1,000 25,000 - -
------------ ----------- ----------- -----------
Total............ 12,400 $ 310,000 11,400 $ 285,000
============ =========== =========== ===========
(a) After these dates, at our option, we can redeem the units at the
issuance amount plus any unpaid distributions. The units are not
redeemable by the holder with the exception of the Series Z units. The
holders of the Series Z units have a one-time option, exercisable five
years from issuance, to require us to redeem their units for
$25,000,000 cash plus unpaid and accrued distributions.
(b) The Series N and Series O units outstanding at December 31, 2004 were
called for redemption during February 2005 and will be redeemed on
March 17, 2005 and March 29, 2005, respectively. See Note 15 - Events
subsequent to December 31, 2004.
Subject to certain conditions, the Series N preferred units are
convertible into shares of our 9.5% Series N Cumulative Preferred Stock,
the Series O preferred units are convertible into shares of our 9.125%
Series O Cumulative Preferred Stock, the Series NN preferred units are
convertible into shares of our 6.4% Series NN Cumulative Preferred Stock,
and the Series Z preferred units are convertible into shares of our 6.25%
Series Z Cumulative Preferred Stock.
These preferred units are not redeemable during the first five
years, thereafter, at our option, we can call the units for redemption at
the issuance amount plus any unpaid distributions. The Series N, NN and O
units are not redeemable by the holder.
The holders of the Series Z units have a one-time option,
exercisable five years from issuance, to require us to redeem their units
for $25.0 million in cash plus any unpaid distributions.
For each of the years ended December 31, 2004, 2003, and 2002, the
holders of these preferred units were paid in aggregate approximately
$22,423,000, $26,906,000, and $26,906,000, respectively, in distributions
and received an equivalent allocation of minority interest in earnings.
On March 22, 2004, certain investors who held $200 million of our
9.5% Series N Cumulative Redeemable Perpetual Preferred Units agreed, in
exchange for a special distribution of $8,000,000, to exchange their 9.5%
Series N Cumulative Redeemable Perpetual Preferred Units for $200 million
of our 6.4% Series NN Cumulative Redeemable Perpetual Preferred Units. The
investors also received a distribution for dividends that accrued from
January 1, 2004 through the effective date of the exchange.
F-24
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
The restructure of these Preferred Units resulted in an increase
in income allocated to minority interests and a reduction to our net income
for the year ended December 31, 2004 of $10,063,000 from (1) the special
distribution to the holders of the preferred units ($8,000,000) and (2) the
application of the SEC's clarification of EITF Topic D-42 ($2,063,000). The
$2,063,000 additional reduction in our net income represents the excess of
the stated amount of the preferred units over their carrying amount.
During October 2004, in connection with property acquisitions, one
of our consolidated operating partnerships issued $25.0 million of 6.250%
Series Z Cumulative Redeemable Perpetual Preferred Units.
Other partnership interests:
----------------------------
Minority interest at December 31, 2004 and 2003, and minority
interest in income for the three years ended December 31, 2004 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 2004 2003 2004 2003 2002
- --------------------------------- ------------- ------------- -------------- -------------- --------------
(Amounts in thousands)
Consolidated Development Joint
Venture........................ $ 64,297 $ 68,490 $ 5,652 $ 4,211 $ 2,399
Convertible Partnership Units... 6,160 6,259 328 305 283
Other consolidated partnerships.. 48,446 66,388 11,447 12,281 14,499
------------- ------------- -------------- -------------- --------------
Total other partnership interests $ 118,903 $ 141,137 $ 17,427 $ 16,797 $ 17,181
============= ============= ============== ============== ==============
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.
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, 2004, the
Consolidated Development Joint Venture was fully committed, having
completed construction on 22 storage facilities with a total cost of $108.6
million.
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.
F-25
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
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,
2004 and 2003). 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 have 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, 2004, 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, 2004, 2003, and 2002, no units were converted.
Other Consolidated Partnerships
-------------------------------
At December 31, 2004, the Other Consolidated Partnerships reflect
common equity interests that we do not own in 24 entities owning an
aggregate of 123 self-storage facilities.
On June 30, 2004, we acquired the remaining interest we did not
own in one of the Consolidated Entities, for an aggregate of $24,851,000 in
cash. This acquisition had the effect of reducing minority interest by
$18,312,000, with the excess of cost over underlying book value
($6,539,000) allocated to real estate. Subsequent to December 31, 2004, we
acquired an additional interest for $4,368,000 in cash (see Note 15).
F-26
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
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.
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 sale, minority interest increased by
$3,289,000. This sale was completed in 2003, with no additional gain or
loss on sale recorded.
11. Shareholders' equity
--------------------
Cumulative Preferred Stock
--------------------------
At December 31, 2004 and 2003, we had the following series of
Cumulative Preferred Stock outstanding:
At December 31, 2004 At December 31, 2003
-------------------------- --------------------------
Earliest
Redemption Dividend Shares Carrying Shares Carrying
Series Date Rate Outstanding Amount Outstanding Amount
- ----------------------------- ------------ -------- ------------ ------------ ----------- ----------
(Dollar amount in thousands)
Series D 9/30/04 (a) 9.500% - $ - 1,200,000 $ 30,000
Series E 1/31/05 (a) 10.000% - - 2,195,000 54,875
Series F 4/30/05 9.750% 2,300,000 57,500 2,300,000 57,500
Series L 3/10/04 (a) 8.250% - - 4,600 115,000
Series M 8/17/04 (a) 8.750% - - 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 5,300 132,500
Series X 11/13/08 6.450% 4,800 120,000 4,800 120,000
Series Y 1/2/09 6.850% 1,600,000 40,000 - -
Series Z 3/5/09 6.250% 4,500 112,500 - -
Series A 3/31/09 6.125% 4,600 115,000 - -
Series B 6/30/09 7.125% 4,350 108,750 - -
Series C 9/13/09 6.600% 4,600 115,000 - -
------------ ------------ ----------- ----------
Total Cumulative Preferred Stock 3,980,186 $2,102,150 5,763,986 $1,867,025
============ ============ =========== ==========
(a) Series was redeemed on the date indicated. The Series E Cumulative
Preferred Stock was called for redemption in December 2004, and was
redeemed in January 2005 along with the unpaid distributions from
December 31, 2004 through the redemption date. Accordingly, the
redemption value of $54,875,000 was classified as a liability at
December 31, 2004.
F-27
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
During 2004, we issued five series of Cumulative Preferred Stock:
Series Y - issued January 2, 2004, net proceeds $40,000,000, Series Z -
issued March 5, 2004, net proceeds $108,756,000, Series A - issued March
31, 2004, net proceeds $111,177,000, Series B - issued June 30, 2004, net
proceeds $105,124,000, Series C - issued September 13, 2004, net proceeds
$111,177,000.
During 2004, we redeemed our Series K (which was called for
redemption in December 2003), Series L, Series M, and Series D with
redemption costs (including redemption expenses) of $115,021,000,
$56,270,000, and $30,020,000, plus accrued dividends. In December 2004, we
called for redemption our Series E Cumulative Preferred Stock, at par. The
total cost of redemption of the Series E was approximately $54,895,000,
plus accrued dividends, on the redemption date, January 31, 2005.
Accordingly, the redemption value of $54,875,000 Series E Preferred Stock
was classified as a liability at December 31, 2004.
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.
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 privately negotiated 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.
On February 28, 2005 (unaudited), we issued 5,400,000 depositary
shares, with each depositary share representing 1/1,000 of a share of
6.180% Cumulative Preferred Stock, Series D (par value $135,000,000). See
Note 15 for more information.
The holders of our 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,
2004, there were no dividends in arrears and the Debt Ratio was 2.2%.
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 F - April 30, 2005, 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, Series A - March 31, 2009,
Series B - June 30, 2009, Series C - September 13, 2009, and Series D -
February 28, 2010. 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 depositary share (or share in the
case of Series F and Series Y), plus accrued and unpaid dividends.
F-28
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
Common Stock
------------
During 2004, 2003 and 2002, we issued and repurchased shares of
our common stock as follows:
2004 2003 2002
------------------------ --------------------------- ------------------------
(Dollar amount in thousands)
Shares Amount Shares Amount Shares Amount
----------- ----------- -------------- ------------ ----------- -----------
Exercise of stock options and
vesting of restricted stock units. 1,985,416 $ 49,929 2,743,420 $ 68,088 948,932 $ 23,333
Acquisition of minority interests - - 426,859 13,510 1,091,608 37,904
Conversion of Class B Common Stock
- - 7,000,000 700 - -
Repurchases of common stock...... (445,700) (20,295) (175,000) (6,001) (11,000) (381)
----------- ------------ ------------- ------------ ----------- -----------
1,539,716 $ 29,634 9,995,279 $ 76,297 2,029,540 $ 60,856
=========== ============ ============== ============ =========== ===========
At December 31, 2004, certain Consolidated Entities owned 929,432
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, 2004 and December 31, 2003:
At December 31, December 31,
Reconciliation of Common Shares Outstanding 2004 2003
- ------------------------------------------- -------------- -------------
Legally issued and outstanding shares....... 129,455,882 127,710,466
Less - Shares owned by the Consolidated
Entities that are eliminated in
consolidation (a)....................... (929,432) (723,732)
-------------- ------------
Reported issued and outstanding shares...... 128,526,450 126,986,734
============== ============
(a) The increase in shares owned by the Consolidated Entities is due to the
Consolidated Entities' purchases of 205,700 shares of our common stock
during the year ended December 31, 2004.
As previously reported, 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. During 2001, the
Board of Directors increased the authorized number of shares the Company
could repurchase to 25,000,000. Cumulatively through December 31, 2004, we
repurchased a total of 22,117,720 shares of common stock at an aggregate
cost of approximately $562,158,000.
At December 31, 2004 and 2003, we had 5,548,277 and 7,548,494
shares of common stock reserved in connection with the Company's stock
option plans, respectively, (see Note 13) and 237,935 shares reserved for
the conversion of Convertible Partnership Units.
F-29
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
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 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, 2004 and 2003, there were 8,776,102 depositary
shares, each representing 1/1,000 of a share, of Equity Stock, Series A
outstanding. We have not issued any shares of our Equity Stock, Series A
since May 2001. The issuance amounts were 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 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 if no distributions are paid to common shareholders.
Equity Stock, Series AA
-----------------------
In June 1997, we contributed $22,500,000 (225,000 shares) of
equity stock, to a consolidated partnership in which we are the general
partner.
On June 30, 2004, the Equity Stock, Series AA was retired in
connection with our aforementioned acquisition of the remaining interests
we did not own in the consolidated partnership. For periods prior to June
30, 2004, the Equity Stock, Series AA and related dividends were eliminated
in consolidation.
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.
F-30
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
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, 2004,
distributions for the common stock, Equity Stock, Series A, and all the
various series of preferred stocks were classified as follows:
2004 (unaudited)
------------------ ------------------- ------------------- ------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
------------------ ------------------- ------------------- ------------------
Ordinary Income 99.8683% 99.8694% 99.8712% 98.0855%
Long-Term Capital Gain 0.1317% 0.1306% 0.1288% 1.9145%
------------------ ------------------- ------------------- ------------------
Total 100.00% 100.00% 100.00% 100.00%
================== =================== ================== ==================
A percentage of the long-term capital gain is unrecaptured section 1250
gain for each quarter of 2004 as follows:
2004 Percentage of Total Long-Term Capital Gain Distribution
------------------------------------------------------------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------------- ---------------- ----------------- -------------------
Unrecaptured Section 1250 Gain 34.8559% 34.8559% 34.8559% 43.7003%
================= ================ ================= ===================
For corporate shareholders a portion of the total long-term capital gain is
required to be recaptured as ordinary income. For each quarter of 2004 the
percentages are as follows:
2004 Percentage of Total Long-Term Capital Gain Distribution
------------------------------------------------------------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------------- ---------------- ----------------- -------------------
IRC ss.291 Recapture 6.9709% 6.9709% 6.9709% 8.7400%
================= ================ ================= ===================
F-31
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
The following table summarizes dividends for the years ended
December 31, 2004, 2003 and 2002:
2004 2003 2002
-------------------- --------------------- ---------------------
Per share Total Per share Total Per share Total
--------- --------- --------- --------- --------- --------
(in thousands, except per share data)
Cumulative Preferred Stock
Series A $ - $ - $ - $ $1.875 $ 3,422
Series B - - $0.575 1,322 $2.343 5,389
Series C - - $0.844 1,013 $1.688 2,024
Series D $1.776 2,131 $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 J - - - - $1.533 9,200
Series K $0.109 501 $2.063 9,488 $2.063 9,488
Series L $0.395 1,818 $2.063 9,488 $2.063 9,488
Series M $1.373 3,089 $2.188 4,922 $2.188 4,922
Series Q $2.150 14,835 $2.150 14,835 $2.150 14,835
Series R $2.000 40,800 $2.000 40,800 $2.000 40,800
Series S $1.969 11,320 $1.969 11,320 $1.969 11,320
Series T $1.906 11,601 $1.906 11,601 $1.809 11,011
Series U $1.906 11,438 $1.906 11,438 $1.641 9,849
Series V $1.875 12,938 $1.875 12,938 $0.469 3,234
Series W $1.625 8,612 $0.388 2,057 - -
Series X $1.613 7,740 $0.215 1,030 - -
Series Y $1.708 2,732 - - - -
Series Z $1.289 5,801 - - - -
Series A $1.153 5,302 - - - -
Series B $0.896 3,896 - - - -
Series C $0.495 2,277 - - - -
---------- --------- --------
157,925 146,196 148,926
Common Equivalent Stock
Common Stock $1.800 230,834 $1.800 225,864 $1.800 209,077
Equity Stock, Series A $2.450 21,501 $2.450 21,501 $2.450 21,501
Class B Common Stock - - - - $1.746 12,222
---------- --------- --------
Total Distributions $410,260 $393,561 $391,726
========== ========= ========
12. 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 40
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 37% of our common stock outstanding at
December 31, 2004. We have a right of first refusal to acquire the stock or
assets of the corporation engaged in the operation of approximately 40
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.
F-32
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
Prior to December 31, 2003, our personnel were engaged in the
supervision and the operation of these Canadian self-storage facilities and
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
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 have been 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. The Canadian entities claim that the Company owes them CAD $653,424
representing the amount charged to them for the development of certain
systems that they no longer utilize. This amount has been accrued on the
Company's financial statements for the year ended December 31, 2004.
The Company, through subsidiaries, continues to reinsure risks
relating to loss of goods stored by tenants in the self-storage facilities
in Canada. The Company had acquired the tenant insurance business on
December 31, 2001 through its acquisition of PSIC. During 2004, 2003, and
2002, respectively, PSIC received $1,069,000, $1,017,000, and $834,000,
respectively, in reinsurance premiums attributable to the Canadian
Facilities. PSIC has no contractual right to provide tenant reinsurance to
the Canadian Facilities and there is no assurance that these premiums will
continue.
The corporation engaged in the operation of the Canadian
facilities has advised us that it intends to reorganize the entities owning
and operating the Canadian facilities and has proposed that the Company
consent to this reorganization, which would impact the license agreement
and the right of first refusal agreement with the Company, and might also
impact our ability to sell tenant insurance The reorganization is designed
to enhance the entities' financial flexibility and growth potential. In
November 2004, the Board appointed a special committee, comprised of
independent directors, to consider the Company's alternatives in this
matter, including a possible investment in the reorganized Canadian
entities.
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 10.
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 and 2004
services, Mr. Havner was compensated by PSB, as well as by the Company.
In December 2003, we 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, we 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 that we own
pursuant to management agreements for a management fee equal to 5% of
revenues. We paid a total of $562,000, $581,000, and $578,000,
respectively, in 2004, 2003 and 2002 in management fees with respect to
PSB's property management services.
Stor-Re provided limited property and liability insurance to the
Company, PSB and our affiliates for losses incurred during policy periods
prior to April 1, 2004.
F-33
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
13. Stock-based Compensation
------------------------
Stock Options
-------------
We have a 1990 Stock Option Plan (the "1990 Plan") which provides
for the grant of non-qualified stock options. We have a 1994 Stock Option
Plan (the "1994 Plan"), a 1996 Stock Option and Incentive Plan (the "1996
Plan"), a 2000 Non-Executive/Non-Director Stock Option and Incentive Plan
(the "2000 Plan"), a 2001 Non-Executive/Non Director Stock Option and
Incentive Plan (the "2001 non-executive Plan") and a 2001 Stock Option and
Incentive Plan (the "2001 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 PSI
Plans vest over a three-year period from the date of grant at the rate of
one-third per year (options granted after December 31, 2002 vest generally
over a five-year period at the rate of one-fifth 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, the 2000 Plan, the 2001 non-executive
Plan and the 2001 Plan also provide for the grant of restricted stock (see
below) to officers, key employees and service providers on terms determined
by an authorized committee of the Board of Directors. A total of
approximately 4,730,553, 5,087,593, and 5,229,407 securities were available
for grant at December 31, 2004, 2003, and 2002, respectively, under these
plans.
Information with respect to the Plans during 2004, 2003 and 2002
is as follows:
2004 2003 2002
---------------------------- --------------------------- --------------------------
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 3,088,618 $27.14 5,939,224 $25.79 6,677,334 $24.81
Granted 353,500 51.46 272,500 34.50 792,000 33.20
Exercised (1,957,907) 25.51 (2,743,420) 24.85 (948,932) 24.59
Cancelled (42,310) 32.75 (379,686) 28.33 (581,178) 26.61
------------- ------------ ------------- ----------- ------------ -----------
Options outstanding December 31 (a) 1,441,901 $35.08 3,088,618 $27.14 5,939,224 $25.79
============ =========== ===========
$18.00 $14.88 $14.88
Option price range at December 31 (b) to $56.12 to $39.23 to $37.40
Options exercisable at December 31 651,013 $27.13 2,305,868 $25.24 3,666,641 $24.46
============= ============ ============ =========== ============ ===========
a) The options outstanding at December 31, 2004, have remaining average
contractual lives of 7.5 years.
(b) Approximately 472,788, 2,159,944, and 5,059,000 of options outstanding at
December 31, 2004, 2003 and 2002, had exercise prices less than $30. In
addition, 336,000 options outstanding at December 31, 2004 had weighted
average exercise prices greater than $45 (none at December 31, 2003 and
2002).
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").
F-34
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
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 we applied the recognition provisions of the
Fair Value Method to all stock options granted after the beginning of the
year in which we adopted 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: 2004 2003 2002
------------- ------------- ------------
Average estimated value per option granted, utilizing the
Black-Scholes method.............................................. $4.40 $1.95 $1.86
Assumptions used in valuing options with the Black-Scholes method:
Expected life of options in years 5 5 5
Risk-free interest rate....................................... 3.5% 3.0% 3.2%
Expected volatility........................................... 0.210 0.180 0.170
Expected dividend yield....................................... 7.0% 7.0% 7.0%
Net income information with respect to each year:
Net income, as reported........................................... $366,213 $336,653 $318,738
Add back: stock-based employee compensation expense included in net
income......................................................... 709 530 163
Less: stock-based employee compensation cost that would have been
included if the fair value method were applied for all awards.. (874) (3,311) (3,595)
------------- ------------- ------------
Net income, assuming consistent application of the fair value method $366,048 $333,872 $315,306
============= ============= ============
Earnings per share, as reported:
Basic ......................................................... $1.39 $1.29 $1.15
Diluted........................................................ $1.38 $1.28 $1.14
Earnings per share, assuming consistent application of the fair value
method
Basic ......................................................... $1.39 $1.27 $1.12
Diluted........................................................ $1.38 $1.26 $1.11
Restricted Stock Units
----------------------
Outstanding restricted stock units vest over a five-year period
from the date of grant at the rate of one-fifth per year. The employee
receives additional compensation equal to the per-share dividends received
by common shareholders with respect to restricted stock units outstanding.
Upon vesting, the employee receives common shares equal to the number of
vested restricted stock units in exchange for the units. The total value of
each restricted stock unit grant, based upon the market price of our 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. Outstanding restricted stock
units are included on a one-for-one basis in our 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.
F-35
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
During the year ended December 31, 2003, we granted 249,000
restricted stock units to employees of the Company with an aggregate fair
value on the date of grant of approximately $10,180,000. During the year
ended December 31, 2004, 94,500 restricted stock units were granted with an
aggregate fair value on the date of grant of $4,649,000, 48,650 restricted
stock units were forfeited, and 42,810 restricted stock units vested. This
vesting resulted in the issuance of 27,509 shares of common stock. In
addition, cash compensation was paid to employees in lieu of 15,301 shares
of common stock based upon the market value of the stock at the date of
vesting, and used to settle the employees' tax liability generated by the
vesting.
At December 31, 2004, approximately 252,040 restricted stock
units were outstanding (249,000 at December 31, 2003). A total of
$2,254,000 and $970,000 in restricted stock expense was recorded for the
years ended December 31, 2004 and 2003, respectively, which includes
amortization of the fair value of the grant reflected as an increase to
paid-in capital, as well as accrued estimated burden to be incurred upon
vesting.
14. 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 operations reflect a
business segment that 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 on
sales of real estate assets are not allocated to segments because
management does not utilize them to evaluate the results of operations of
each segment.
Measurement of Segment Assets
-----------------------------
No segment data relative to assets or liabilities is presented,
because we do not consider the historical cost of our 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.
F-36
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
Presentation of Segment Information
-----------------------------------
Our income statement provides most of the information required in
order to determine the performance of each of our four 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,
- ------------------------------------- ----------------------------------------------------------------------------------------
2004 2003 Change 2003 2002 Change
------------ ------------- ------------- ------------- ------------ -----------
(amounts in thousands)
Self-storage facility rentals....... $ 863,463 $ 798,584 $ 64,879 $ 798,584 $ 761,446 $ 37,138
Commercial property rentals......... 10,750 11,001 (251) 11,001 11,304 (303)
Containerized storage rentals....... 19,355 23,991 (4,636) 23,991 22,355 1,636
Tenant re-insurance premiums........ 24,243 22,464 1,779 22,464 19,947 2,517
Interest and other income (not
allocated to segments)............ 10,165 8,628 1,537 8,628 8,661 (33)
------------ ------------- ------------- ------------- ------------ -----------
Total revenues.................. $ 927,976 $ 864,668 $ 63,308 $ 864,668 $ 823,713 $ 40,955
============ ============= ============= ============= ============= ===========
F-37
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
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,
------------------------ -------------------------
2004 2003 Change 2003 2002 Change
------------- ---------- ----------- ------------ ---------- ---------
(Dollar amounts in thousands)
Reconciliation of Net Income by Segment:
---------------------------------------
Self-storage
Self-storage net operating income......... $562,542 $517,679 $44,863 $517,679 $511,231 $6,448
Self-storage depreciation................. (176,488) (176,929) 441 (176,929) (170,887) (6,042)
Equity in earnings - storage property
operations............................. 6,610 6,288 322 6,288 5,992 296
Equity in earnings - depreciation
(self-storage) ........................ (1,657) (1,705) 48 (1,705) (1,619) (86)
Discontinued self-storage operations...... - 6,014 (6,014) 6,014 571 5,443
------------- ---------- ----------- ------------ ---------- ---------
Total self-storage segment net income. 391,007 351,347 39,660 351,347 345,288 6,059
------------- ---------- ----------- ------------ ---------- ---------
Commercial properties
Commercial properties..................... 6,422 6,418 4 6,418 7,045 (627)
Depreciation and amortization - commercial
properties............................. (2,114) (2,436) 322 (2,436) (2,436) -
Equity in earnings - commercial property
operations............................. 68,545 64,242 4,303 64,242 65,212 (970)
Equity in earnings - depreciation
(commercial properties) ............... (32,063) (26,048) (6,015) (26,048) (25,459) (589)
Discontinued operations (Note 4) ......... 1,122 237 885 237 243 (6)
------------- ---------- ----------- ------------ ---------- ---------
Total commercial property segment net
income............................... 41,912 42,413 (501) 42,413 44,605 (2,192)
------------- ---------- ----------- ------------ ---------- ---------
Containerized storage
Containerized storage net operating income 7,581 10,052 (2,471) 10,052 4,743 5,309
Containerized storage depreciation........ (4,546) (4,780) 234 (4,780) (2,511) (2,269)
Discontinued operations (Note 4) ......... (2,351) (2,729) 378 (2,729) (12,290) 9,561
------------- ---------- ----------- ------------ ---------- ---------
Total containerized storage segment
net income/(loss).................. 684 2,543 (1,859) 2,543 (10,058) 12,601
------------- ---------- ----------- ------------ ---------- ---------
Tenant Reinsurance
Tenant reinsurance operating income.... 10,735 10,477 258 10,477 10,536 (59)
------------- ---------- ----------- ------------ ---------- ---------
Other items not allocated to segments
-------------------------------------
Equity in earnings - general and
administrative and other............... (18,871) (17,811) (1,060) (17,811) (14,238) (3,573)
Interest and other income................. 10,165 8,628 1,537 8,628 8,661 (33)
General and administrative ............... (18,813) (17,127) (1,686) (17,127) (15,619) (1,508)
Interest expense.......................... (760) (1,121) 361 (1,121) (3,809) 2,688
Minority interest in income .............. (49,913) (43,703) (6,210) (43,703) (44,087) 384
Gain/(loss) on disposition of real estate
and casualty loss...................... 67 1,007 (940) 1,007 (2,541) 3,548
------------- ---------- ----------- ------------ ---------- ---------
Total other items not allocated to segments (78,125) (70,127) (7,998) (70,127) (71,633) 1,506
------------- ---------- ----------- ------------ ---------- ---------
Total consolidated company net income $366,213 $336,653 $29,560 $336,653 $318,738 $17,915
============= ========== =========== ============ ========== =========
F-38
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
15. Events Subsequent to December 31, 2004 (unaudited)
--------------------------------------------------
On December 22, 2004, we called for redemption all of the
outstanding shares (total liquidation value of $54,875,000) of our 10.00%
Cumulative Preferred Stock, Series E, at $25 per share, plus accrued
dividends. These shares were subsequently redeemed on January 31, 2005.
On January 18, 2005, we acquired an additional interest in one of
the Consolidated Entities for cash totaling $4,368,000.
In January 2005, we acquired six self-storage facilities from
third parties with total net rentable square feet of 304,000, at an
aggregate cost of approximately $23.6 million in cash. These property
acquisitions were funded entirely by the Company.
During February 2005, we called for redemption our 9.50% Series N
Preferred Units (liquidation value of $40,000,000) and our 9.125% Series O
Preferred Units (liquidation value of $45,000,000). Each of these
securities will be redeemed for cash in March 2005.
On February 15, 2005, we priced a public offering of 5,400,000
depositary shares representing 1/1000 of a share of 6.18% Cumulative
Preferred Stock, Series D. The offering resulted in approximately
$130,548,000 of net proceeds and closed on February 28, 2005.
In January 2005, the Acquisition Joint Venture acquired a
significant interest in three additional self-storage facilities that were
originally acquired by us in 2004 for an aggregate of $27.4 million in
cash. As described in Note 9, our joint venture partner's interest in these
acquisitions of approximately $19.2 million will be accounted for as "Debt
to Joint Venture Partner" on our balance sheet.
16. 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 mandatorily
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 SFAS
150 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.
FASB Interpretation No. 46 - Consolidation of Variable Interest Entities
------------------------------------------------------------------------
In January 2003, the FASB 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. We adopted this statement on January
1, 2004 and the adoption had no impact on our financial statements.
F-39
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
FASB Statement 123R-Share Based Payment
---------------------------------------
On December 2004, the FASB issued Statement of Financial Accounting
Standards No. 123R-"Share Based Payments" ("SFAS 123R"). The most notable
change in accounting standards as a result of this statement is that
Companies are required to expense stock option grants to employees over the
vesting period. Because we have already elected to do so under the
predecessor statement, the adoption of SFAS 123R will have no impact on our
results of operations.
17. 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)
-------------------------------------
In February 2005, the plaintiffs caused these actions, which were
described in the Company's prior reports, to be dismissed.
Gustavson, et al v. Public Storage, Inc. (filed June 2003) (Superior Court
---------------------------------------------------------------------------
- Los Angeles County); Potter, at al v. Hughes, et al. (filed December
---------------------------------------------------------------------------
2004) (United States District Court - Central District of California)
---------------------------------------------------------------------
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-40
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
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 (Gustavson, et
al. v Public Storage, Inc.) 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, Justice Malcolm Lucas, a former chief
justice of the California Supreme Court, was appointed to try the case.
Justice Lucas has set this matter for trial at the end of March, 2005. We
believe 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).
At the end of December 2004, the same shareholder referred to
above and a second shareholder filed a shareholder's derivative complaint
(Potter, et al. v Hughes, et al.) naming as defendants the Company's
directors (and two former directors) and certain officers of the Company.
The matters alleged in the Potter complaint relate to PSIC, the Hughes
family's Canadian mini-warehouse operations and the Company's 1995
reorganization. The Company is currently in the process of evaluating the
Potter complaint and believes the litigation will not have any financially
adverse effect on the Company (other than the costs and other expenses
relating to the lawsuit).
Other Items
-----------
We are 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
our operations or financial position.
F-41
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
INSURANCE AND LOSS EXPOSURE
Our facilities have historically carried comprehensive insurance,
including fire, earthquake, liability and extended coverage through STOR-Re
and PSIC-H, our captive insurance programs, and insure portions of these
risks through nationally recognized insurance carriers. Our captive
insurance programs also insure affiliates of the Company.
The Company, STOR-Re, PSIC-H 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 $35 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.
Our tenant insurance program, operating through PSIC through March
31, 2004, and through PSIC-H beginning April 1, 2004, reinsures policies
against claims for losses to goods stored by tenants at our self-storage
facilities. We reinsure our 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 AND ACQUISITION OF REAL ESTATE FACILITIES
We currently have 47 projects in our development pipeline,
including newly developed facilities and expansions and enhancements to
existing self-storage facilities. The total estimated cost of these
facilities (unaudited) is $210,657,000, of which $47,277,000 has been spent
at December 31, 2004. Development of these projects is subject to
contingencies.
In January 2005, we acquired six additional self-storage
facilities from third parties at an aggregate cost of approximately $23.6
million in cash, which we had contracted to purchase at December 31, 2004.
As of March 14, 2005 we are under contract to purchase six
self-storage facilities (total approximate net rentable square feet of
448,000) at an aggregate cost of approximately $48.1 million. We anticipate
that these acquisitions will be funded entirely by us. Each of these
contracts is subject to significant contingencies, and there is no
assurance that any of these facilities will be aqcuired.
F-42
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
18. Supplementary quarterly financial data (unaudited)
--------------------------------------------------
Three Months Ended
-------------------------------------------------------------
March 31, June 30, September 30, December 31,
2004 2004 2004 2004
------------ ------------ -------------- -------------
(in thousands, except per share data)
Revenues (a)..................... $ 220,799 $ 229,722 $ 237,173 $ 240,282
============ ============ ============== =============
Cost of operations (a)........... $ 82,599 $ 82,167 $ 82,383 $ 83,382
============ ============ ============== =============
Net income....................... $ 69,067 $ 92,360 $ 97,515 $ 107,271
============ ============ ============== =============
Per Common Share (Note 2):
Net income - Basic........... $ 0.17 $ 0.38 $ 0.38 $ 0.46
============ ============ ============== =============
Net income - Diluted......... $ 0.17 $ 0.37 $ 0.38 $ 0.46
============ ============ ============== =============
Three Months Ended
-------------------------------------------------------------
March 31, June 30, September 30, December 31,
2003 2003 2003 2003
------------ ------------ -------------- -------------
(in thousands, except per share data)
Revenues (a)..................... $ 204,913 $ 214,360 $ 224,842 $ 220,553
============ ============ ============== =============
Cost of operations (a)........... $ 72,499 $ 77,964 $ 78,951 $ 82,000
============ ============ ============== =============
Net income....................... $ 76,639 $ 84,297 $ 89,747 $ 85,970
============ ============ ============== =============
Per Common Share (Note 2):
Net income - Basic............ $ 0.26 $ 0.34 $ 0.39 $ 0.31
============ ============ ============== =============
Net income - Diluted.......... $ 0.26 $ 0.33 $ 0.39 $ 0.30
============ ============ ============== =============
(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 2004, as described in Note 4.
F-43
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
Self-storage properties
1/1/81 Newport News / Jefferson Avenue $- $108 $1,071 $629 $-
1/1/81 Virginia Beach / Diamond Springs - 186 1,094 737 -
8/1/81 San Jose / Snell - 312 1,815 412 -
10/1/81 Tampa / Lazy Lane - 282 1,899 650 -
6/1/82 San Jose / Tully - 645 1,579 10,656 -
6/1/82 San Carlos / Storage - 780 1,387 592 -
6/1/82 Mountain View - 1,180 1,182 255 -
6/1/82 Cupertino / Storage - 572 1,270 540 -
10/1/82 Sorrento Valley - 1,002 1,343 (804) -
10/1/82 Northwood - 1,034 1,522 365 -
12/1/82 Port/Halsey - 357 1,150 (393) 326
12/1/82 Sacto/Folsom - 396 329 675 323
1/1/83 Platte - 409 953 547 428
1/1/83 Semoran - 442 1,882 6,088 720
1/1/83 Raleigh/Yonkers - 203 914 485 425
3/1/83 Blackwood - 213 1,559 331 595
4/1/83 Vailsgate - 103 990 839 505
5/1/83 Delta Drive - 67 481 324 241
6/1/83 Ventura - 658 1,734 339 583
9/1/83 Southington - 124 1,233 382 546
9/1/83 Southhampton - 331 1,738 686 806
9/1/83 Webster/Keystone - 449 1,688 737 813
9/1/83 Dover - 107 1,462 507 627
9/1/83 Newcastle - 227 2,163 484 817
9/1/83 Newark - 208 2,031 380 746
9/1/83 Langhorne - 263 3,549 534 1,445
9/1/83 Hobart - 215 1,491 727 838
9/1/83 Ft. Wayne/W. Coliseum - 160 1,395 475 535
9/1/83 Ft. Wayne/Bluffton - 88 675 303 285
10/1/83 Orlando J. Y. Parkway - 383 1,512 437 622
11/1/83 Aurora - 505 758 365 341
11/1/83 Campbell - 1,379 1,849 (466) 474
11/1/83 Col Springs/Ed - 471 1,640 224 554
11/1/83 Col Springs/Mv - 320 1,036 303 441
11/1/83 Thorton - 418 1,400 184 536
11/1/83 Oklahoma City - 454 1,030 921 620
11/1/83 Tucson - 343 778 672 420
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
Miniwarehouses
1/1/81 Newport News / Jefferson Avenue $108 $1,700 $1,808 $1,515
1/1/81 Virginia Beach / Diamond Springs 186 1,831 2,017 1,598
8/1/81 San Jose / Snell 312 2,227 2,539 1,986
10/1/81 Tampa / Lazy Lane 282 2,549 2,831 2,257
6/1/82 San Jose / Tully 2,990 9,890 12,880 2,836
6/1/82 San Carlos / Storage 780 1,979 2,759 1,710
6/1/82 Mountain View 1,046 1,571 2,617 1,364
6/1/82 Cupertino / Storage 572 1,810 2,382 1,510
10/1/82 Sorrento Valley 651 890 1,541 752
10/1/82 Northwood 1,034 1,887 2,921 1,568
12/1/82 Port/Halsey 357 1,083 1,440 765
12/1/82 Sacto/Folsom 396 1,327 1,723 950
1/1/83 Platte 409 1,928 2,337 1,263
1/1/83 Semoran 442 8,690 9,132 2,730
1/1/83 Raleigh/Yonkers 203 1,824 2,027 1,313
3/1/83 Blackwood 213 2,485 2,698 1,693
4/1/83 Vailsgate 103 2,334 2,437 1,400
5/1/83 Delta Drive 68 1,045 1,113 670
6/1/83 Ventura 658 2,656 3,314 1,737
9/1/83 Southington 123 2,162 2,285 1,428
9/1/83 Southhampton 331 3,230 3,561 2,217
9/1/83 Webster/Keystone 449 3,238 3,687 2,251
9/1/83 Dover 107 2,596 2,703 1,752
9/1/83 Newcastle 227 3,464 3,691 2,321
9/1/83 Newark 208 3,157 3,365 2,109
9/1/83 Langhorne 263 5,528 5,791 3,752
9/1/83 Hobart 215 3,056 3,271 2,045
9/1/83 Ft. Wayne/W. Coliseum 160 2,405 2,565 1,524
9/1/83 Ft. Wayne/Bluffton 88 1,263 1,351 788
10/1/83 Orlando J. Y. Parkway 383 2,571 2,954 1,717
11/1/83 Aurora 505 1,464 1,969 967
11/1/83 Campbell 1,379 1,857 3,236 1,259
11/1/83 Col Springs/Ed 471 2,418 2,889 1,632
11/1/83 Col Springs/Mv 320 1,780 2,100 1,191
11/1/83 Thorton 418 2,120 2,538 1,424
11/1/83 Oklahoma City 454 2,571 3,025 1,717
11/1/83 Tucson 343 1,870 2,213 1,222
F-44
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
11/1/83 Webster/Nasa - 1,570 2,457 1,089 1,372
12/1/83 Charlotte - 165 1,274 480 442
12/1/83 Greensboro/Market - 214 1,653 740 794
12/1/83 Greensboro/Electra - 112 869 390 382
12/1/83 Columbia - 171 1,318 519 492
12/1/83 Richmond - 176 1,360 573 468
12/1/83 Augusta - 97 747 361 324
12/1/83 Tacoma - 553 1,173 462 487
1/1/84 Fremont/Albrae - 636 1,659 507 532
1/1/84 Belton - 175 858 768 378
1/1/84 Gladstone - 275 1,799 570 640
1/1/84 Hickman/112 - 257 1,848 537 618
1/1/84 Holmes - 289 1,333 447 455
1/1/84 Independence - 221 1,848 394 609
1/1/84 Merriam - 255 1,469 447 480
1/1/84 Olathe - 107 992 379 361
1/1/84 Shawnee - 205 1,420 498 502
1/1/84 Topeka - 75 1,049 291 356
3/1/84 Marrietta/Cobb - 73 542 358 259
3/1/84 Manassas - 320 1,556 460 553
3/1/84 Pico Rivera - 743 807 364 321
4/1/84 Providence - 92 1,087 476 423
4/1/84 Milwaukie/Oregon - 289 584 299 311
5/1/84 Raleigh/Departure - 302 2,484 577 788
5/1/84 Virginia Beach - 509 2,121 807 776
5/1/84 Philadelphia/Grant - 1,041 3,262 683 971
5/1/84 Garland - 356 844 262 360
6/1/84 Lorton - 435 2,040 764 682
6/1/84 Baltimore - 382 1,793 927 634
6/1/84 Laurel - 501 2,349 811 824
6/1/84 Delran - 279 1,472 394 573
6/1/84 Orange Blossom - 226 924 260 398
6/1/84 Cincinnati - 402 1,573 659 672
6/1/84 Florence - 185 740 514 376
7/1/84 Trevose/Old Lincoln - 421 1,749 466 582
8/1/84 Medley - 584 1,016 441 464
8/1/84 Oklahoma City - 340 1,310 622 652
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- -----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------
11/1/83 Webster/Nasa 1,571 4,917 6,488 3,412
12/1/83 Charlotte 165 2,196 2,361 1,569
12/1/83 Greensboro/Market 214 3,187 3,401 2,279
12/1/83 Greensboro/Electra 112 1,641 1,753 1,169
12/1/83 Columbia 171 2,329 2,500 1,683
12/1/83 Richmond 176 2,401 2,577 1,619
12/1/83 Augusta 97 1,432 1,529 1,024
12/1/83 Tacoma 553 2,122 2,675 1,527
1/1/84 Fremont/Albrae 636 2,698 3,334 1,946
1/1/84 Belton 175 2,004 2,179 1,376
1/1/84 Gladstone 275 3,009 3,284 2,112
1/1/84 Hickman/112 257 3,003 3,260 2,116
1/1/84 Holmes 289 2,235 2,524 1,558
1/1/84 Independence 221 2,851 3,072 2,027
1/1/84 Merriam 255 2,396 2,651 1,699
1/1/84 Olathe 107 1,732 1,839 1,222
1/1/84 Shawnee 205 2,420 2,625 1,702
1/1/84 Topeka 75 1,696 1,771 1,193
3/1/84 Marrietta/Cobb 73 1,159 1,232 826
3/1/84 Manassas 320 2,569 2,889 1,792
3/1/84 Pico Rivera 743 1,492 2,235 1,093
4/1/84 Providence 92 1,986 2,078 1,386
4/1/84 Milwaukie/Oregon 289 1,194 1,483 844
5/1/84 Raleigh/Departure 302 3,849 4,151 2,684
5/1/84 Virginia Beach 499 3,714 4,213 2,545
5/1/84 Philadelphia/Grant 1,040 4,917 5,957 3,371
5/1/84 Garland 356 1,466 1,822 986
6/1/84 Lorton 435 3,486 3,921 2,322
6/1/84 Baltimore 382 3,354 3,736 2,279
6/1/84 Laurel 501 3,984 4,485 2,733
6/1/84 Delran 279 2,439 2,718 1,592
6/1/84 Orange Blossom 226 1,582 1,808 1,060
6/1/84 Cincinnati 402 2,904 3,306 1,935
6/1/84 Florence 185 1,630 1,815 1,066
7/1/84 Trevose/Old Lincoln 421 2,797 3,218 1,949
8/1/84 Medley 584 1,921 2,505 1,260
8/1/84 Oklahoma City 340 2,584 2,924 1,708
F-45
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
8/1/84 Newport News - 356 2,395 792 1,013
8/1/84 Kaplan/Walnut Hill - 971 2,359 959 1,041
8/1/84 Kaplan/Irving - 677 1,592 4,659 639
9/1/84 Cockrell Hill - 380 913 1,160 675
11/1/84 Omaha - 109 806 535 399
11/1/84 Hialeah - 886 1,784 421 672
12/1/84 Austin/Lamar - 643 947 564 443
12/1/84 Pompano - 399 1,386 686 698
12/1/84 Fort Worth - 122 928 65 303
12/1/84 Montgomeryville - 215 2,085 462 776
1/1/85 Cranston - 175 722 375 267
1/1/85 Bossier City - 184 1,542 569 656
2/1/85 Simi Valley - 737 1,389 384 520
2/1/85 Hurst - 231 1,220 260 480
3/1/85 Chattanooga - 202 1,573 565 683
3/1/85 Portland - 285 941 362 438
3/1/85 Fern Park - 144 1,107 248 432
3/1/85 Fairfield - 338 1,187 530 527
3/1/85 Houston / Westheimer - 850 1,179 804 -
4/1/85 Austin/ S. First - 778 1,282 382 711
4/1/85 Cincinnati/ E. Kemper - 232 1,573 329 853
4/1/85 Cincinnati/ Colerain - 253 1,717 422 932
4/1/85 Florence/ Tanner Lane - 218 1,477 413 835
4/1/85 Laguna Hills - 1,224 3,303 499 1,213
5/1/85 Tacoma/ Phillips Rd. - 396 1,204 324 669
5/1/85 Milwaukie/ Mcloughlin - 458 742 428 620
5/1/85 Manchester/ S. Willow - 371 2,129 (73) 854
5/1/85 Longwood - 355 1,645 359 669
5/1/85 Columbus/Busch Blvd. - 202 1,559 457 592
5/1/85 Columbus/Kinnear Rd. - 241 1,865 430 771
5/1/85 Worthington - 221 1,824 578 709
5/1/85 Arlington - 201 1,497 581 618
6/1/85 N. Hollywood/ Raymer - 967 848 271 515
6/1/85 Grove City/ Marlane Drive - 150 1,157 518 471
6/1/85 Reynoldsburg - 204 1,568 576 598
7/1/85 San Diego/ Kearny Mesa Rd - 783 1,750 364 962
7/1/85 Scottsdale/ 70th St - 632 1,368 378 742
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
8/1/84 Newport News 356 4,200 4,556 2,764
8/1/84 Kaplan/Walnut Hill 971 4,359 5,330 2,880
8/1/84 Kaplan/Irving 678 6,889 7,567 2,295
9/1/84 Cockrell Hill 380 2,748 3,128 1,836
11/1/84 Omaha 109 1,740 1,849 1,158
11/1/84 Hialeah 886 2,877 3,763 1,885
12/1/84 Austin/Lamar 643 1,954 2,597 1,253
12/1/84 Pompano 399 2,770 3,169 1,836
12/1/84 Fort Worth 122 1,296 1,418 850
12/1/84 Montgomeryville 215 3,323 3,538 2,130
1/1/85 Cranston 175 1,364 1,539 922
1/1/85 Bossier City 184 2,767 2,951 1,811
2/1/85 Simi Valley 737 2,293 3,030 1,477
2/1/85 Hurst 231 1,960 2,191 1,279
3/1/85 Chattanooga 202 2,821 3,023 1,799
3/1/85 Portland 285 1,741 2,026 1,113
3/1/85 Fern Park 144 1,787 1,931 1,164
3/1/85 Fairfield 338 2,244 2,582 1,421
3/1/85 Houston / Westheimer 850 1,983 2,833 1,600
4/1/85 Austin/ S. First 778 2,375 3,153 1,429
4/1/85 Cincinnati/ E. Kemper 232 2,755 2,987 1,620
4/1/85 Cincinnati/ Colerain 253 3,071 3,324 1,803
4/1/85 Florence/ Tanner Lane 218 2,725 2,943 1,600
4/1/85 Laguna Hills 1,225 5,014 6,239 3,225
5/1/85 Tacoma/ Phillips Rd. 396 2,197 2,593 1,287
5/1/85 Milwaukie/ Mcloughlin 458 1,790 2,248 1,057
5/1/85 Manchester/ S. Willow 371 2,910 3,281 1,690
5/1/85 Longwood 355 2,673 3,028 1,712
5/1/85 Columbus/Busch Blvd. 202 2,608 2,810 1,648
5/1/85 Columbus/Kinnear Rd. 241 3,066 3,307 1,955
5/1/85 Worthington 221 3,111 3,332 1,901
5/1/85 Arlington 201 2,696 2,897 1,670
6/1/85 N. Hollywood/ Raymer 967 1,634 2,601 984
6/1/85 Grove City/ Marlane Drive 150 2,146 2,296 1,306
6/1/85 Reynoldsburg 204 2,742 2,946 1,684
7/1/85 San Diego/ Kearny Mesa Rd 783 3,076 3,859 1,830
7/1/85 Scottsdale/ 70th St 632 2,488 3,120 1,422
F-46
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
7/1/85 Concord/ Hwy 29 - 150 750 453 587
7/1/85 Columbus/Morse Rd. - 195 1,510 450 670
7/1/85 Columbus/Kenney Rd. - 199 1,531 553 598
7/1/85 Westerville - 199 1,517 657 620
7/1/85 Springfield - 90 699 411 332
7/1/85 Dayton/Needmore Road - 144 1,108 522 460
7/1/85 Dayton/Executive Blvd. - 160 1,207 478 569
7/1/85 Lilburn - 331 969 263 424
9/1/85 Madison/ Copps Ave. - 450 1,150 468 665
9/1/85 Columbus/ Sinclair - 307 893 367 519
9/1/85 Philadelphia/ Tacony St - 118 1,782 304 856
10/1/85 N. Hollywood/ Whitsett - 1,524 2,576 399 1,302
10/1/85 Portland/ SE 82nd St - 354 496 376 380
10/1/85 Columbus/ Ambleside - 124 1,526 137 644
10/1/85 Indianapolis/ Pike Place - 229 1,531 571 856
10/1/85 Indianapolis/ Beach Grove - 198 1,342 282 709
10/1/85 Hartford/ Roberts - 219 1,481 445 966
10/1/85 Wichita/ S. Rock Rd. - 501 1,478 292 657
10/1/85 Wichita/ E. Harry - 313 1,050 180 468
10/1/85 Wichita/ S. Woodlawn - 263 905 164 437
10/1/85 Wichita/ E. Kellogg - 185 658 (6) 261
10/1/85 Wichita/ S. Tyler - 294 1,004 145 530
10/1/85 Wichita/ W. Maple - 234 805 (23) 313
10/1/85 Wichita/ Carey Lane - 192 674 52 296
10/1/85 Wichita/ E. Macarthur - 220 775 (70) 323
10/1/85 Joplin/ S. Range Line - 264 904 225 465
10/1/85 San Antonio/ Wetmore Rd. - 306 1,079 560 638
10/1/85 San Antonio/ Callaghan - 288 1,016 452 543
10/1/85 San Antonio/ Zarzamora - 364 1,281 642 674
10/1/85 San Antonio/ Hackberry - 388 1,367 2,531 1,001
10/1/85 San Antonio/ Fredericksburg - 287 1,009 548 597
10/1/85 Dallas/ S. Westmoreland - 474 1,670 217 734
10/1/85 Dallas/ Alvin St. - 359 1,266 191 559
10/1/85 Fort Worth/ W. Beach St. - 356 1,252 212 531
10/1/85 Fort Worth/ E. Seminary - 382 1,346 224 552
10/1/85 Fort Worth/ Cockrell St. - 323 1,136 219 515
11/1/85 Everett/ Evergreen - 706 2,294 597 1,076
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- -----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
7/1/85 Concord/ Hwy 29 150 1,790 1,940 1,069
7/1/85 Columbus/Morse Rd. 195 2,630 2,825 1,695
7/1/85 Columbus/Kenney Rd. 199 2,682 2,881 1,669
7/1/85 Westerville 199 2,794 2,993 1,698
7/1/85 Springfield 90 1,442 1,532 899
7/1/85 Dayton/Needmore Road 144 2,090 2,234 1,278
7/1/85 Dayton/Executive Blvd. 159 2,255 2,414 1,447
7/1/85 Lilburn 330 1,657 1,987 1,063
9/1/85 Madison/ Copps Ave. 450 2,283 2,733 1,303
9/1/85 Columbus/ Sinclair 307 1,779 2,086 1,036
9/1/85 Philadelphia/ Tacony St 118 2,942 3,060 1,719
10/1/85 N. Hollywood/ Whitsett 1,524 4,277 5,801 2,505
10/1/85 Portland/ SE 82nd St 354 1,252 1,606 733
10/1/85 Columbus/ Ambleside 124 2,307 2,431 1,276
10/1/85 Indianapolis/ Pike Place 229 2,958 3,187 1,537
10/1/85 Indianapolis/ Beach Grove 198 2,333 2,531 1,347
10/1/85 Hartford/ Roberts 219 2,892 3,111 1,620
10/1/85 Wichita/ S. Rock Rd. 642 2,286 2,928 1,310
10/1/85 Wichita/ E. Harry 285 1,726 2,011 1,008
10/1/85 Wichita/ S. Woodlawn 263 1,506 1,769 871
10/1/85 Wichita/ E. Kellogg 185 913 1,098 541
10/1/85 Wichita/ S. Tyler 294 1,679 1,973 1,011
10/1/85 Wichita/ W. Maple 234 1,095 1,329 652
10/1/85 Wichita/ Carey Lane 192 1,022 1,214 609
10/1/85 Wichita/ E. Macarthur 220 1,028 1,248 602
10/1/85 Joplin/ S. Range Line 264 1,594 1,858 933
10/1/85 San Antonio/ Wetmore Rd. 306 2,277 2,583 1,324
10/1/85 San Antonio/ Callaghan 288 2,011 2,299 1,194
10/1/85 San Antonio/ Zarzamora 364 2,597 2,961 1,502
10/1/85 San Antonio/ Hackberry 389 4,898 5,287 1,782
10/1/85 San Antonio/ Fredericksburg 287 2,154 2,441 1,261
10/1/85 Dallas/ S. Westmoreland 474 2,621 3,095 1,579
10/1/85 Dallas/ Alvin St. 359 2,016 2,375 1,231
10/1/85 Fort Worth/ W. Beach St. 356 1,995 2,351 1,204
10/1/85 Fort Worth/ E. Seminary 382 2,122 2,504 1,289
10/1/85 Fort Worth/ Cockrell St. 323 1,870 2,193 1,126
11/1/85 Everett/ Evergreen 706 3,967 4,673 2,420
F-47
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
11/1/85 Seattle/ Empire Way - 1,652 5,348 740 2,198
12/1/85 Milpitas - 1,623 1,577 336 913
12/1/85 Pleasanton/ Santa Rita - 1,226 2,078 423 1,160
12/1/85 Amherst/ Niagra Falls - 132 701 298 400
12/1/85 West Sams Blvd. - 164 1,159 (235) 383
12/1/85 MacArthur Rd. - 204 1,628 237 638
12/1/85 Brockton/ Main - 153 2,020 (171) 678
12/1/85 Eatontown/ Hwy 35 - 308 4,067 635 1,648
12/1/85 Denver/ Leetsdale - 603 847 266 408
1/1/86 Mapleshade/ Rudderow - 362 1,811 380 825
1/1/86 Bordentown/ Groveville - 196 981 192 471
1/1/86 Sun Valley/ Sheldon - 544 1,836 389 793
1/1/86 Las Vegas/ Highland - 432 848 314 420
2/1/86 Costa Mesa/ Pomona - 1,405 1,520 405 693
2/1/86 Brea/ Imperial Hwy - 1,069 2,165 420 954
2/1/86 Skokie/ McCormick - 638 1,912 325 779
2/1/86 Colorado Springs/ Sinton - 535 1,115 430 631
2/1/86 Oklahoma City/ Penn - 146 829 172 406
2/1/86 Oklahoma City/ 39th - 238 812 350 477
3/1/86 Jacksonville/ Wiley - 140 510 303 331
3/1/86 St. Louis/ Forder - 517 1,133 342 534
3/3/86 Tampa / 56th - 450 1,360 583 -
4/1/86 Reno/ Telegraph - 649 1,051 527 682
4/1/86 St. Louis/Kirkham - 199 1,001 238 401
4/1/86 St. Louis/Reavis - 192 958 256 384
4/1/86 Fort Worth/East Loop - 196 804 270 369
5/1/86 Westlake Village - 1,205 995 255 429
5/1/86 Sacramento/Franklin Blvd. - 872 978 3,271 389
6/1/86 Richland Hills - 543 857 464 404
6/1/86 West Valley/So. 3600 - 208 1,552 466 413
7/1/86 Colorado Springs/ Hollow Tree - 574 726 330 426
7/1/86 West LA/Purdue Ave. - 2,415 3,585 260 1,212
7/1/86 Capital Heights/Central Ave. - 649 3,851 445 1,277
7/1/86 Pontiac/Dixie Hwy. - 259 2,091 180 756
7/1/86 Portland/Johns Landing Area - 663 1,637 (19) 538
8/1/86 Laurel/Ft. Meade Rd. - 475 1,475 351 630
8/1/86 Hammond / Calumet - 97 751 549 366
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
11/1/85 Seattle/ Empire Way 1,652 8,286 9,938 5,008
12/1/85 Milpitas 1,623 2,826 4,449 1,607
12/1/85 Pleasanton/ Santa Rita 1,226 3,661 4,887 2,086
12/1/85 Amherst/ Niagra Falls 132 1,399 1,531 840
12/1/85 West Sams Blvd. 164 1,307 1,471 800
12/1/85 MacArthur Rd. 204 2,503 2,707 1,486
12/1/85 Brockton/ Main 153 2,527 2,680 1,526
12/1/85 Eatontown/ Hwy 35 308 6,350 6,658 3,760
12/1/85 Denver/ Leetsdale 603 1,521 2,124 904
1/1/86 Mapleshade/ Rudderow 362 3,016 3,378 1,778
1/1/86 Bordentown/ Groveville 196 1,644 1,840 976
1/1/86 Sun Valley/ Sheldon 544 3,018 3,562 1,820
1/1/86 Las Vegas/ Highland 432 1,582 2,014 937
2/1/86 Costa Mesa/ Pomona 1,405 2,618 4,023 1,575
2/1/86 Brea/ Imperial Hwy 1,069 3,539 4,608 2,126
2/1/86 Skokie/ McCormick 638 3,016 3,654 1,778
2/1/86 Colorado Springs/ Sinton 535 2,176 2,711 1,222
2/1/86 Oklahoma City/ Penn 146 1,407 1,553 845
2/1/86 Oklahoma City/ 39th 238 1,639 1,877 988
3/1/86 Jacksonville/ Wiley 140 1,144 1,284 690
3/1/86 St. Louis/ Forder 517 2,009 2,526 1,189
3/3/86 Tampa / 56th 450 1,943 2,393 1,429
4/1/86 Reno/ Telegraph 649 2,260 2,909 1,374
4/1/86 St. Louis/Kirkham 199 1,640 1,839 1,010
4/1/86 St. Louis/Reavis 192 1,598 1,790 971
4/1/86 Fort Worth/East Loop 196 1,443 1,639 899
5/1/86 Westlake Village 1,205 1,679 2,884 974
5/1/86 Sacramento/Franklin Blvd. 1,139 4,371 5,510 1,505
6/1/86 Richland Hills 543 1,725 2,268 1,080
6/1/86 West Valley/So. 3600 208 2,431 2,639 1,451
7/1/86 Colorado Springs/ Hollow Tree 574 1,482 2,056 852
7/1/86 West LA/Purdue Ave. 2,416 5,056 7,472 3,037
7/1/86 Capital Heights/Central Ave. 649 5,573 6,222 3,322
7/1/86 Pontiac/Dixie Hwy. 259 3,027 3,286 1,798
7/1/86 Portland/Johns Landing Area 663 2,156 2,819 1,345
8/1/86 Laurel/Ft. Meade Rd. 475 2,456 2,931 1,444
8/1/86 Hammond / Calumet 97 1,666 1,763 1,016
F-48
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
9/1/86 Kansas City/S. 44th. - 509 1,906 571 737
9/1/86 Lakewood / Wadsworth - 6th - 1,070 3,155 739 1,027
10/1/86 Peralta/Fremont - 851 1,074 334 456
10/1/86 Birmingham/Highland - 89 786 251 398
10/1/86 Birmingham/Riverchase - 262 1,338 462 645
10/1/86 Birmingham/Eastwood - 166 1,184 346 612
10/1/86 Birmingham/Forestdale - 152 948 287 519
10/1/86 Birmingham/Centerpoint - 265 1,305 383 525
10/1/86 Birmingham/Roebuck Plaza - 101 399 314 425
10/1/86 Birmingham/Greensprings - 347 1,173 364 281
10/1/86 Birmingham/Hoover-Lorna - 372 1,128 404 431
10/1/86 Midfield/Bessemer - 170 355 360 112
10/1/86 Huntsville/Leeman Ferry Rd. - 158 992 308 558
10/1/86 Huntsville/Drake - 253 1,172 308 538
10/1/86 Anniston/Whiteside - 59 566 211 329
10/1/86 Houston/Glenvista - 595 1,043 698 494
10/1/86 Houston/I-45 - 704 1,146 846 604
10/1/86 Houston/Rogerdale - 1,631 2,792 709 1,232
10/1/86 Houston/Gessner - 1,032 1,693 1,049 746
10/1/86 Houston/Richmond-Fairdale - 1,502 2,506 1,197 1,160
10/1/86 Houston/Gulfton - 1,732 3,036 1,159 1,398
10/1/86 Houston/Westpark - 503 854 229 435
10/1/86 Jonesboro - 157 718 257 370
10/1/86 Houston / South Loop West - 1,299 3,491 1,269 1,366
10/1/86 Houston / Plainfield Road - 904 2,319 862 920
10/1/86 Houston / North Freeway - 719 1,987 128 609
10/1/86 Houston / Old Katy Road - 1,365 3,431 1,065 1,274
10/1/86 Houston / Long Point - 451 1,187 647 563
10/1/86 Austin / Research Blvd - 1,390 1,710 588 672
11/1/86 Arleta / Osborne Street - 987 663 290 290
12/1/86 Lynnwood / 196th Street - 1,063 1,602 7,256 571
12/1/86 N. Auburn / Auburn Way N - 606 1,144 454 533
12/1/86 Gresham / Burnside & 202nd - 351 1,056 427 482
12/1/86 Denver / Sheridan Boulevard - 1,033 2,792 971 1,007
12/1/86 Marietta / Cobb Parkway - 536 2,764 821 1,016
12/1/86 Hillsboro / T.V. Highway - 461 574 270 414
12/1/86 San Antonio / West Sunset Road - 1,206 1,594 579 649
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
9/1/86 Kansas City/S. 44th. 509 3,214 3,723 1,941
9/1/86 Lakewood / Wadsworth - 6th 1,070 4,921 5,991 3,104
10/1/86 Peralta/Fremont 851 1,864 2,715 1,108
10/1/86 Birmingham/Highland 150 1,374 1,524 855
10/1/86 Birmingham/Riverchase 278 2,429 2,707 1,482
10/1/86 Birmingham/Eastwood 232 2,076 2,308 1,245
10/1/86 Birmingham/Forestdale 190 1,716 1,906 1,027
10/1/86 Birmingham/Centerpoint 273 2,205 2,478 1,287
10/1/86 Birmingham/Roebuck Plaza 340 899 1,239 543
10/1/86 Birmingham/Greensprings 16 2,149 2,165 1,284
10/1/86 Birmingham/Hoover-Lorna 266 2,069 2,335 1,232
10/1/86 Midfield/Bessemer 95 902 997 532
10/1/86 Huntsville/Leeman Ferry Rd. 198 1,818 2,016 1,117
10/1/86 Huntsville/Drake 248 2,023 2,271 1,196
10/1/86 Anniston/Whiteside 107 1,058 1,165 663
10/1/86 Houston/Glenvista 595 2,235 2,830 1,325
10/1/86 Houston/I-45 704 2,596 3,300 1,669
10/1/86 Houston/Rogerdale 1,631 4,733 6,364 2,786
10/1/86 Houston/Gessner 1,032 3,488 4,520 2,146
10/1/86 Houston/Richmond-Fairdale 1,502 4,863 6,365 2,931
10/1/86 Houston/Gulfton 1,732 5,593 7,325 3,363
10/1/86 Houston/Westpark 503 1,518 2,021 904
10/1/86 Jonesboro 157 1,345 1,502 820
10/1/86 Houston / South Loop West 1,299 6,126 7,425 3,947
10/1/86 Houston / Plainfield Road 904 4,101 5,005 2,623
10/1/86 Houston / North Freeway 661 2,782 3,443 1,796
10/1/86 Houston / Old Katy Road 1,365 5,770 7,135 3,755
10/1/86 Houston / Long Point 451 2,397 2,848 1,598
10/1/86 Austin / Research Blvd 1,390 2,970 4,360 1,898
11/1/86 Arleta / Osborne Street 987 1,243 2,230 799
12/1/86 Lynnwood / 196th Street 1,405 9,087 10,492 2,374
12/1/86 N. Auburn / Auburn Way N 606 2,131 2,737 1,368
12/1/86 Gresham / Burnside & 202nd 351 1,965 2,316 1,247
12/1/86 Denver / Sheridan Boulevard 1,033 4,770 5,803 2,964
12/1/86 Marietta / Cobb Parkway 536 4,601 5,137 2,894
12/1/86 Hillsboro / T.V. Highway 461 1,258 1,719 911
12/1/86 San Antonio / West Sunset Road 1,207 2,821 4,028 1,789
F-49
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
12/31/86 Monrovia / Myrtle Avenue - 1,149 2,446 218 -
12/31/86 Chatsworth / Topanga - 1,447 1,243 3,319 -
12/31/86 Houston / Larkwood - 247 602 399 -
12/31/86 Northridge - 3,624 1,922 2,497 -
12/31/86 Santa Clara / Duane - 1,950 1,004 413 -
12/31/86 Oyster Point - 1,569 1,490 461 -
12/31/86 Walnut - 767 613 3,600 -
3/1/87 Annandale / Ravensworth - 679 1,621 336 596
4/1/87 City Of Industry / Amar - 748 2,052 514 702
5/1/87 Oklahoma City / W. Hefner - 459 941 359 417
7/1/87 Oakbrook Terrace - 912 2,688 175 399
8/1/87 San Antonio/Austin Hwy. - 400 850 (4) 164
10/1/87 Plantation/S. State Rd. - 924 1,801 (213) 298
10/1/87 Rockville/Fredrick Rd. - 1,695 3,305 (107) 519
2/1/88 Anaheim/Lakeview - 995 1,505 45 256
6/7/88 Mesquite / Sorrento Drive - 928 1,011 3,482 -
7/1/88 Fort Wayne - 101 1,524 138 663
1/1/92 Costa Mesa - 533 980 708 -
3/1/92 Dallas / Walnut St. - 537 1,008 312 -
5/1/92 Camp Creek - 576 1,075 327 -
9/1/92 Orlando/W. Colonial - 368 713 218 -
9/1/92 Jacksonville/Arlington - 554 1,065 285 -
10/1/92 Stockton/Mariners - 381 730 225 -
11/18/92 Virginia Beach/General Booth Blvd - 599 1,119 437 -
1/1/93 Redwood City/Storage - 907 1,684 255 -
1/1/93 City Of Industry - 1,611 2,991 348 -
1/1/93 San Jose/Felipe - 1,124 2,088 455 -
1/1/93 Baldwin Park/Garvey Ave - 840 1,561 420 -
3/19/93 Westminister / W. 80th - 840 1,586 324 -
4/26/93 Costa Mesa / Newport 883 2,141 3,989 5,171 -
5/13/93 Austin /N. Lamar - 919 1,695 8,284 -
5/28/93 Jacksonville/Phillips Hwy. - 406 771 233 -
5/28/93 Tampa/Nebraska Avenue - 550 1,043 192 -
6/9/93 Calabasas / Ventura Blvd. - 1,762 3,269 220 -
6/9/93 Carmichael / Fair Oaks - 573 1,052 260 -
6/9/93 Santa Clara / Duane - 454 834 128 -
6/10/93 Citrus Heights / Sylvan Road - 438 822 213 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
12/31/86 Monrovia / Myrtle Avenue 1,149 2,664 3,813 1,877
12/31/86 Chatsworth / Topanga 1,448 4,561 6,009 1,218
12/31/86 Houston / Larkwood 247 1,001 1,248 677
12/31/86 Northridge 3,624 4,419 8,043 2,024
12/31/86 Santa Clara / Duane 1,950 1,417 3,367 979
12/31/86 Oyster Point 1,569 1,951 3,520 1,301
12/31/86 Walnut 769 4,211 4,980 1,195
3/1/87 Annandale / Ravensworth 679 2,553 3,232 1,580
4/1/87 City Of Industry / Amar 748 3,268 4,016 1,339
5/1/87 Oklahoma City / W. Hefner 459 1,717 2,176 1,038
7/1/87 Oakbrook Terrace 912 3,262 4,174 2,653
8/1/87 San Antonio/Austin Hwy. 400 1,010 1,410 835
10/1/87 Plantation/S. State Rd. 924 1,886 2,810 1,538
10/1/87 Rockville/Fredrick Rd. 1,695 3,717 5,412 2,954
2/1/88 Anaheim/Lakeview 995 1,806 2,801 1,415
6/7/88 Mesquite / Sorrento Drive 1,045 4,376 5,421 1,717
7/1/88 Fort Wayne 101 2,325 2,426 1,149
1/1/92 Costa Mesa 535 1,686 2,221 1,291
3/1/92 Dallas / Walnut St. 537 1,320 1,857 1,278
5/1/92 Camp Creek 576 1,402 1,978 813
9/1/92 Orlando/W. Colonial 368 931 1,299 505
9/1/92 Jacksonville/Arlington 554 1,350 1,904 739
10/1/92 Stockton/Mariners 381 955 1,336 538
11/18/92 Virginia Beach/General Booth Blvd 599 1,556 2,155 845
1/1/93 Redwood City/Storage 907 1,939 2,846 1,001
1/1/93 City Of Industry 1,611 3,339 4,950 1,643
1/1/93 San Jose/Felipe 1,124 2,543 3,667 1,271
1/1/93 Baldwin Park/Garvey Ave 840 1,981 2,821 1,060
3/19/93 Westminister / W. 80th 840 1,910 2,750 975
4/26/93 Costa Mesa / Newport 3,730 7,571 11,301 2,256
5/13/93 Austin /N. Lamar 1,421 9,477 10,898 2,081
5/28/93 Jacksonville/Phillips Hwy. 406 1,004 1,410 550
5/28/93 Tampa/Nebraska Avenue 550 1,235 1,785 635
6/9/93 Calabasas / Ventura Blvd. 1,762 3,489 5,251 1,697
6/9/93 Carmichael / Fair Oaks 573 1,312 1,885 712
6/9/93 Santa Clara / Duane 454 962 1,416 494
6/10/93 Citrus Heights / Sylvan Road 438 1,035 1,473 560
F-50
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
6/25/93 Trenton / Allen Road - 623 1,166 252 -
6/30/93 Los Angeles/W.Jefferson Blvd - 1,085 2,017 218 -
7/16/93 Austin / So. Congress Ave - 777 1,445 369 -
8/1/93 Gaithersburg / E. Diamond - 602 1,139 187 -
8/11/93 Atlanta / Northside - 1,150 2,149 367 -
8/11/93 Smyrna/ Rosswill Rd - 446 842 257 -
8/13/93 So. Brunswick/Highway - 1,076 2,033 361 -
10/1/93 Denver / Federal Blvd - 875 1,633 254 -
10/1/93 Citrus Heights - 527 987 134 -
10/1/93 Lakewood / 6th Ave - 798 1,489 47 -
10/27/93 Houston / S Shaver St - 481 896 232 -
11/3/93 Upland/S. Euclid Ave. - 431 807 434 -
11/16/93 Norcross / Jimmy Carter - 627 1,167 208 -
11/16/93 Seattle / 13th - 1,085 2,015 651 -
12/9/93 Salt Lake City - 765 1,422 34 -
12/16/93 West Valley City - 683 1,276 256 -
12/21/93 Pinellas Park / 34th St. W - 607 1,134 255 -
12/28/93 New Orleans / S. Carrollton Ave - 1,575 2,941 595 -
12/29/93 Orange / Main - 1,238 2,317 1,471 -
12/29/93 Sunnyvale / Wedell - 554 1,037 783 -
12/29/93 El Cajon / Magnolia - 421 791 598 -
12/29/93 Orlando / S. Semoran Blvd. - 462 872 640 -
12/29/93 Tampa / W. Hillsborough Ave - 352 665 441 -
12/29/93 Irving / West Loop 12 - 341 643 213 -
12/29/93 Fullerton / W. Commonwealth - 904 1,687 1,100 -
12/29/93 N. Lauderdale / Mcnab Rd - 628 1,182 736 -
12/29/93 Los Alimitos / Cerritos - 695 1,299 716 -
12/29/93 Frederick / Prospect Blvd. - 573 1,082 635 -
12/29/93 Indianapolis / E. Washington - 403 775 536 -
12/29/93 Gardena / Western Ave. - 552 1,035 613 -
12/29/93 Palm Bay / Bobcock Street - 409 775 555 -
1/10/94 Hialeah / W. 20Th Ave. - 1,855 3,497 265 -
1/12/94 Sunnyvale / N. Fair Oaks Ave - 689 1,285 344 -
1/12/94 Honolulu / Iwaena - - 3,382 739 -
1/12/94 Miami / Golden Glades - 579 1,081 498 -
1/21/94 Herndon / Centreville Road - 1,584 2,981 519 -
2/8/94 Las Vegas/S. MLK Blvd. - 1,383 2,592 1,096 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
6/25/93 Trenton / Allen Road 623 1,418 2,041 701
6/30/93 Los Angeles/W.Jefferson Blvd 1,085 2,235 3,320 1,090
7/16/93 Austin / So. Congress Ave 777 1,814 2,591 974
8/1/93 Gaithersburg / E. Diamond 602 1,326 1,928 649
8/11/93 Atlanta / Northside 1,150 2,516 3,666 1,274
8/11/93 Smyrna/ Rosswill Rd 446 1,099 1,545 589
8/13/93 So. Brunswick/Highway 1,076 2,394 3,470 1,196
10/1/93 Denver / Federal Blvd 875 1,887 2,762 911
10/1/93 Citrus Heights 527 1,121 1,648 554
10/1/93 Lakewood / 6th Ave 685 1,649 2,334 775
10/27/93 Houston / S Shaver St 481 1,128 1,609 577
11/3/93 Upland/S. Euclid Ave. 508 1,164 1,672 582
11/16/93 Norcross / Jimmy Carter 627 1,375 2,002 696
11/16/93 Seattle / 13th 1,085 2,666 3,751 1,439
12/9/93 Salt Lake City 633 1,588 2,221 394
12/16/93 West Valley City 683 1,532 2,215 737
12/21/93 Pinellas Park / 34th St. W 607 1,389 1,996 707
12/28/93 New Orleans / S. Carrollton Ave 1,575 3,536 5,111 1,682
12/29/93 Orange / Main 1,593 3,433 5,026 1,553
12/29/93 Sunnyvale / Wedell 725 1,649 2,374 784
12/29/93 El Cajon / Magnolia 542 1,268 1,810 582
12/29/93 Orlando / S. Semoran Blvd. 601 1,373 1,974 683
12/29/93 Tampa / W. Hillsborough Ave 436 1,022 1,458 497
12/29/93 Irving / West Loop 12 355 842 1,197 439
12/29/93 Fullerton / W. Commonwealth 1,160 2,531 3,691 1,141
12/29/93 N. Lauderdale / Mcnab Rd 798 1,748 2,546 797
12/29/93 Los Alimitos / Cerritos 874 1,836 2,710 828
12/29/93 Frederick / Prospect Blvd. 692 1,598 2,290 742
12/29/93 Indianapolis / E. Washington 505 1,209 1,714 576
12/29/93 Gardena / Western Ave. 695 1,505 2,200 689
12/29/93 Palm Bay / Bobcock Street 525 1,214 1,739 581
1/10/94 Hialeah / W. 20Th Ave. 1,590 4,027 5,617 1,846
1/12/94 Sunnyvale / N. Fair Oaks Ave 657 1,661 2,318 757
1/12/94 Honolulu / Iwaena - 4,121 4,121 1,836
1/12/94 Miami / Golden Glades 557 1,601 2,158 749
1/21/94 Herndon / Centreville Road 1,358 3,726 5,084 1,542
2/8/94 Las Vegas/S. MLK Blvd. 1,436 3,635 5,071 1,650
F-51
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
2/28/94 Arlingtn/Old Jeffersn Davishwy - 735 1,399 619 -
3/8/94 Beaverton / Sw Barnes Road - 942 1,810 216 -
3/21/94 Austin / Arboretum - 473 897 2,774 -
3/25/94 Tinton Falls / Shrewsbury Ave - 1,074 2,033 262 -
3/25/94 East Brunswick / Milltown Road - 1,282 2,411 445 -
3/25/94 Mercerville / Quakerbridge Road - 1,109 2,111 299 -
3/31/94 Hypoluxo - 735 1,404 1,936 -
4/26/94 No. Highlands / Roseville Road - 980 1,835 410 -
5/12/94 Fort Pierce/Okeechobee Road - 438 842 168 -
5/24/94 Hempstead/Peninsula Blvd. - 2,053 3,832 336 -
5/24/94 La/Huntington - 483 905 210 -
6/9/94 Chattanooga / Brainerd Road - 613 1,170 271 -
6/9/94 Chattanooga / Ringgold Road - 761 1,433 442 -
6/18/94 Las Vegas / S. Valley View Blvd - 837 1,571 177 -
6/23/94 Las Vegas / Tropicana - 750 1,408 286 -
6/23/94 Henderson / Green Valley Pkwy - 1,047 1,960 200 -
6/24/94 Las Vegas / N. Lamb Blvd. - 869 1,629 99 -
6/30/94 Birmingham / W. Oxmoor Road - 532 1,004 462 -
7/20/94 Milpitas / Dempsey Road - 1,260 2,358 238 -
8/17/94 New Orleans/I-10 - 784 1,470 229 -
8/17/94 Beaverton / S.W. Denny Road - 663 1,245 133 -
8/17/94 Irwindale / Central Ave. - 674 1,263 140 -
8/17/94 Suitland / St. Barnabas Rd - 1,530 2,913 371 -
8/17/94 North Brunswick / How Lane - 1,238 2,323 133 -
8/17/94 Lombard / 64th - 847 1,583 192 -
8/17/94 Alsip / 27th - 406 765 161 -
9/15/94 Huntsville / Old Monrovia Road - 613 1,157 252 -
9/27/94 West Haven / Bull Hill Lane - 455 873 5,332 -
9/30/94 San Francisco / Marin St. - 1,227 2,339 1,245 -
9/30/94 Baltimore / Hillen Street - 580 1,095 277 -
9/30/94 San Francisco /10th & Howard - 1,423 2,668 284 -
9/30/94 Montebello / E. Whittier - 383 732 212 -
9/30/94 Arlington / Collins - 228 435 280 -
9/30/94 Miami / S.W. 119th Ave - 656 1,221 78 -
9/30/94 Blackwood / Erial Road - 774 1,437 143 -
9/30/94 Concord / Monument - 1,092 2,027 427 -
9/30/94 Rochester / Lee Road - 469 871 321 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
2/28/94 Arlingtn/Old Jeffersn Davishwy 630 2,123 2,753 919
3/8/94 Beaverton / Sw Barnes Road 807 2,161 2,968 1,041
3/21/94 Austin / Arboretum 1,554 2,590 4,144 911
3/25/94 Tinton Falls / Shrewsbury Ave 921 2,448 3,369 1,165
3/25/94 East Brunswick / Milltown Road 1,099 3,039 4,138 1,422
3/25/94 Mercerville / Quakerbridge Road 950 2,569 3,519 1,240
3/31/94 Hypoluxo 630 3,445 4,075 2,522
4/26/94 No. Highlands / Roseville Road 840 2,385 3,225 1,154
5/12/94 Fort Pierce/Okeechobee Road 375 1,073 1,448 638
5/24/94 Hempstead/Peninsula Blvd. 1,763 4,458 6,221 2,013
5/24/94 La/Huntington 414 1,184 1,598 559
6/9/94 Chattanooga / Brainerd Road 525 1,529 2,054 750
6/9/94 Chattanooga / Ringgold Road 653 1,983 2,636 1,016
6/18/94 Las Vegas / S. Valley View Blvd 718 1,867 2,585 858
6/23/94 Las Vegas / Tropicana 643 1,801 2,444 841
6/23/94 Henderson / Green Valley Pkwy 898 2,309 3,207 1,058
6/24/94 Las Vegas / N. Lamb Blvd. 669 1,928 2,597 615
6/30/94 Birmingham / W. Oxmoor Road 456 1,542 1,998 828
7/20/94 Milpitas / Dempsey Road 1,080 2,776 3,856 1,252
8/17/94 New Orleans/I-10 672 1,811 2,483 840
8/17/94 Beaverton / S.W. Denny Road 568 1,473 2,041 679
8/17/94 Irwindale / Central Ave. 578 1,499 2,077 653
8/17/94 Suitland / St. Barnabas Rd 1,312 3,502 4,814 1,566
8/17/94 North Brunswick / How Lane 1,062 2,632 3,694 1,147
8/17/94 Lombard / 64th 726 1,896 2,622 841
8/17/94 Alsip / 27th 348 984 1,332 447
9/15/94 Huntsville / Old Monrovia Road 525 1,497 2,022 735
9/27/94 West Haven / Bull Hill Lane 1,964 4,696 6,660 1,249
9/30/94 San Francisco / Marin St. 1,371 3,440 4,811 1,495
9/30/94 Baltimore / Hillen Street 497 1,455 1,952 716
9/30/94 San Francisco /10th & Howard 1,221 3,154 4,375 1,402
9/30/94 Montebello / E. Whittier 329 998 1,327 460
9/30/94 Arlington / Collins 195 748 943 441
9/30/94 Miami / S.W. 119th Ave 563 1,392 1,955 610
9/30/94 Blackwood / Erial Road 663 1,691 2,354 749
9/30/94 Concord / Monument 936 2,610 3,546 1,213
9/30/94 Rochester / Lee Road 402 1,259 1,661 591
F-52
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
9/30/94 Houston / Bellaire - 623 1,157 300 -
9/30/94 Austin / Lamar Blvd - 781 1,452 174 -
9/30/94 Milwaukee / Lovers Lane Rd - 469 871 274 -
9/30/94 Monterey / Del Rey Oaks - 1,093 1,897 130 -
9/30/94 St. Petersburg / 66Th St. - 427 793 211 -
9/30/94 Dayton Bch / N. Nova Road - 396 735 127 -
9/30/94 Maple Shade / Route 38 - 994 1,846 245 -
9/30/94 Marlton / Route 73 N. - 938 1,742 281 -
9/30/94 Naperville / E. Ogden Ave - 683 1,268 167 -
9/30/94 Long Beach / South Street - 1,778 3,307 411 -
9/30/94 Aloha / S.W. Shaw - 805 1,495 147 -
9/30/94 Alexandria / S. Pickett - 1,550 2,879 305 -
9/30/94 Houston / Highway 6 North - 1,120 2,083 264 -
9/30/94 San Antonio/Nacogdoches Rd - 571 1,060 254 -
9/30/94 San Ramon/San Ramon Valley - 1,530 2,840 486 -
9/30/94 San Rafael / Merrydale Rd - 1,705 3,165 223 -
9/30/94 San Antonio / Austin Hwy - 592 1,098 206 -
9/30/94 Sharonville / E. Kemper - 574 1,070 270 -
10/13/94 Davie / State Road 84 - 744 1,467 929 -
10/13/94 Carrollton / Marsh Lane - 770 1,437 1,418 -
10/31/94 Sherman Oaks / Van Nuys Blvd - 1,278 2,461 944 -
12/19/94 Salt Lake City/West North Temple - 490 917 (48) -
12/28/94 Milpitas / Watson - 1,575 2,925 308 -
12/28/94 Las Vegas / Jones Blvd - 1,208 2,243 186 -
12/28/94 Venice / Guthrie - 578 1,073 145 -
12/30/94 Apple Valley / Foliage Ave - 910 1,695 256 -
1/4/95 Chula Vista / Main Street - 735 1,802 203 -
1/5/95 Pantego / West Park - 315 735 167 -
1/12/95 Roswell / Alpharetta - 423 993 400 -
1/23/95 North Bergen / Tonne - 1,564 3,772 373 -
1/23/95 San Leandro / Hesperian - 734 1,726 153 -
1/24/95 Nashville / Elm Hill - 338 791 393 -
2/3/95 Reno / S. Mccarron Blvd - 1,080 2,537 206 -
2/15/95 Schiller Park - 1,688 3,939 401 -
2/15/95 Lansing - 1,514 3,534 228 -
2/15/95 Pleasanton - 1,257 2,932 128 -
2/15/95 LA/Sepulveda - 1,453 3,390 130 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
9/30/94 Houston / Bellaire 534 1,546 2,080 707
9/30/94 Austin / Lamar Blvd 669 1,738 2,407 787
9/30/94 Milwaukee / Lovers Lane Rd 402 1,212 1,614 523
9/30/94 Monterey / Del Rey Oaks 903 2,217 3,120 1,008
9/30/94 St. Petersburg / 66Th St. 366 1,065 1,431 521
9/30/94 Dayton Bch / N. Nova Road 339 919 1,258 459
9/30/94 Maple Shade / Route 38 852 2,233 3,085 980
9/30/94 Marlton / Route 73 N. 804 2,157 2,961 863
9/30/94 Naperville / E. Ogden Ave 585 1,533 2,118 673
9/30/94 Long Beach / South Street 1,524 3,972 5,496 1,703
9/30/94 Aloha / S.W. Shaw 690 1,757 2,447 791
9/30/94 Alexandria / S. Pickett 1,329 3,405 4,734 1,474
9/30/94 Houston / Highway 6 North 960 2,507 3,467 1,142
9/30/94 San Antonio/Nacogdoches Rd 489 1,396 1,885 647
9/30/94 San Ramon/San Ramon Valley 1,311 3,545 4,856 1,571
9/30/94 San Rafael / Merrydale Rd 1,461 3,632 5,093 1,598
9/30/94 San Antonio / Austin Hwy 507 1,389 1,896 663
9/30/94 Sharonville / E. Kemper 492 1,422 1,914 665
10/13/94 Davie / State Road 84 638 2,502 3,140 1,127
10/13/94 Carrollton / Marsh Lane 1,022 2,603 3,625 1,100
10/31/94 Sherman Oaks / Van Nuys Blvd 1,423 3,260 4,683 1,438
12/19/94 Salt Lake City/West North Temple 385 974 1,359 254
12/28/94 Milpitas / Watson 1,350 3,458 4,808 1,469
12/28/94 Las Vegas / Jones Blvd 1,035 2,602 3,637 1,114
12/28/94 Venice / Guthrie 495 1,301 1,796 579
12/30/94 Apple Valley / Foliage Ave 780 2,081 2,861 935
1/4/95 Chula Vista / Main Street 735 2,005 2,740 945
1/5/95 Pantego / West Park 315 902 1,217 450
1/12/95 Roswell / Alpharetta 423 1,393 1,816 672
1/23/95 North Bergen / Tonne 1,551 4,158 5,709 1,766
1/23/95 San Leandro / Hesperian 734 1,879 2,613 791
1/24/95 Nashville / Elm Hill 338 1,184 1,522 673
2/3/95 Reno / S. Mccarron Blvd 1,080 2,743 3,823 1,172
2/15/95 Schiller Park 1,688 4,340 6,028 1,591
2/15/95 Lansing 1,514 3,762 5,276 1,352
2/15/95 Pleasanton 1,257 3,060 4,317 1,086
2/15/95 LA/Sepulveda 1,453 3,520 4,973 1,269
F-53
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
2/28/95 Decatur / Flat Shoal - 970 2,288 499 -
2/28/95 Smyrna / S. Cobb - 663 1,559 282 -
2/28/95 Downey / Bellflower - 916 2,158 179 -
2/28/95 Vallejo / Lincoln - 445 1,052 227 -
2/28/95 Lynnwood / 180th St - 516 1,205 258 -
2/28/95 Kent / Pacific Hwy - 728 1,711 164 -
2/28/95 Kirkland - 1,254 2,932 264 -
2/28/95 Federal Way/Pacific - 785 1,832 278 -
2/28/95 Tampa / S. Dale - 791 1,852 308 -
2/28/95 Burlingame/Adrian Rd - 2,280 5,349 343 -
2/28/95 Miami / Cloverleaf - 606 1,426 311 -
2/28/95 Pinole / San Pablo - 639 1,502 262 -
2/28/95 South Gate / Firesto - 1,442 3,449 437 -
2/28/95 San Jose / Mabury - 892 2,088 163 -
2/28/95 La Puente / Valley Blvd - 591 1,390 263 -
2/28/95 San Jose / Capitol E - 1,215 2,852 153 -
2/28/95 Milwaukie / 40th Street - 576 1,388 131 -
2/28/95 Portland / N. Lombard - 812 1,900 228 -
2/28/95 Miami / Biscayne - 1,313 3,076 511 -
2/28/95 Chicago / Clark Street - 442 1,031 358 -
2/28/95 Palatine / Dundee - 698 1,643 399 -
2/28/95 Williamsville/Transit - 284 670 286 -
2/28/95 Amherst / Sheridan - 484 1,151 203 -
3/2/95 Everett / Highway 99 - 859 2,022 287 -
3/2/95 Burien / 1St Ave South - 763 1,783 324 -
3/2/95 Kent / South 238th Street - 763 1,783 277 -
3/31/95 Cheverly / Central Ave - 911 2,164 232 -
5/1/95 Sandy / S. State Street - 1,043 2,442 (267) -
5/3/95 Largo / Ulmerton Roa - 263 654 158 -
5/8/95 Fairfield/Western Street - 439 1,030 98 -
5/8/95 Dallas / W. Mockingbird - 1,440 3,371 173 -
5/8/95 East Point / Lakewood - 884 2,071 361 -
5/25/95 Falls Church / Gallows Rd - 350 835 216 -
6/12/95 Baltimore / Old Waterloo - 769 1,850 215 -
6/12/95 Pleasant Hill / Hookston - 766 1,848 136 -
6/12/95 Mountain View/Old Middlefield - 2,095 4,913 148 -
6/30/95 San Jose / Blossom Hill - 1,467 3,444 222 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
2/28/95 Decatur / Flat Shoal 970 2,787 3,757 1,307
2/28/95 Smyrna / S. Cobb 663 1,841 2,504 848
2/28/95 Downey / Bellflower 916 2,337 3,253 977
2/28/95 Vallejo / Lincoln 445 1,279 1,724 593
2/28/95 Lynnwood / 180th St 516 1,463 1,979 666
2/28/95 Kent / Pacific Hwy 728 1,875 2,603 811
2/28/95 Kirkland 1,254 3,196 4,450 1,352
2/28/95 Federal Way/Pacific 785 2,110 2,895 979
2/28/95 Tampa / S. Dale 791 2,160 2,951 946
2/28/95 Burlingame/Adrian Rd 2,280 5,692 7,972 2,411
2/28/95 Miami / Cloverleaf 606 1,737 2,343 794
2/28/95 Pinole / San Pablo 639 1,764 2,403 824
2/28/95 South Gate / Firesto 1,442 3,886 5,328 1,721
2/28/95 San Jose / Mabury 892 2,251 3,143 937
2/28/95 La Puente / Valley Blvd 591 1,653 2,244 767
2/28/95 San Jose / Capitol E 1,215 3,005 4,220 1,266
2/28/95 Milwaukie / 40th Street 579 1,516 2,095 674
2/28/95 Portland / N. Lombard 812 2,128 2,940 940
2/28/95 Miami / Biscayne 1,313 3,587 4,900 1,352
2/28/95 Chicago / Clark Street 442 1,389 1,831 699
2/28/95 Palatine / Dundee 698 2,042 2,740 856
2/28/95 Williamsville/Transit 284 956 1,240 443
2/28/95 Amherst / Sheridan 484 1,354 1,838 622
3/2/95 Everett / Highway 99 859 2,309 3,168 1,014
3/2/95 Burien / 1St Ave South 763 2,107 2,870 957
3/2/95 Kent / South 238th Street 763 2,060 2,823 956
3/31/95 Cheverly / Central Ave 911 2,396 3,307 994
5/1/95 Sandy / S. State Street 923 2,295 3,218 571
5/3/95 Largo / Ulmerton Roa 263 812 1,075 402
5/8/95 Fairfield/Western Street 439 1,128 1,567 478
5/8/95 Dallas / W. Mockingbird 1,440 3,544 4,984 1,447
5/8/95 East Point / Lakewood 884 2,432 3,316 1,109
5/25/95 Falls Church / Gallows Rd 350 1,051 1,401 475
6/12/95 Baltimore / Old Waterloo 769 2,065 2,834 833
6/12/95 Pleasant Hill / Hookston 742 2,008 2,750 831
6/12/95 Mountain View/Old Middlefield 2,095 5,061 7,156 1,980
6/30/95 San Jose / Blossom Hill 1,467 3,666 5,133 1,484
F-54
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
6/30/95 Fairfield / Kings Highway - 1,811 4,273 240 -
6/30/95 Pacoima / Paxton Street 746 840 1,976 203 -
6/30/95 Portland / Prescott - 647 1,509 222 -
6/30/95 St. Petersburg - 352 827 259 -
6/30/95 Dallas / Audelia Road - 1,166 2,725 872 -
6/30/95 Miami Gardens - 823 1,929 234 -
6/30/95 Grand Prairie / 19th - 566 1,329 163 -
6/30/95 Joliet / Jefferson Street - 501 1,181 223 -
6/30/95 Bridgeton / Pennridge - 283 661 212 -
6/30/95 Portland / S.E.92nd - 638 1,497 220 -
6/30/95 Houston / S.W. Freeway - 537 1,254 6,844 -
6/30/95 Milwaukee / Brown - 358 849 264 -
6/30/95 Orlando / W. Oak Ridge - 698 1,642 277 -
6/30/95 Lauderhill / State Road - 644 1,508 238 -
6/30/95 Orange Park /Blanding Blvd - 394 918 239 -
6/30/95 St. Petersburg /Joe'S Creek - 704 1,642 207 -
6/30/95 St. Louis / Page Service Drive - 531 1,241 201 -
6/30/95 Independence /E. 42nd - 438 1,023 183 -
6/30/95 Cherry Hill / Dobbs Lane - 716 1,676 191 -
6/30/95 Edgewater Park / Route 130 - 683 1,593 139 -
6/30/95 Beaverton / S.W. 110 - 572 1,342 206 -
6/30/95 Markham / W. 159Th Place - 230 539 188 -
6/30/95 Houston / N.W. Freeway - 447 1,066 155 -
6/30/95 Portland / Gantenbein - 537 1,262 235 -
6/30/95 Upper Chichester/Market St. - 569 1,329 169 -
6/30/95 Fort Worth / Hwy 80 - 379 891 139 -
6/30/95 Greenfield/ S. 108th - 728 1,707 296 -
6/30/95 Altamonte Springs - 566 1,326 161 -
6/30/95 Seattle / Delridge Way - 760 1,779 275 -
6/30/95 Elmhurst / Lake Frontage Rd - 748 1,758 211 -
6/30/95 Los Angeles / Beverly Blvd - 787 1,886 410 -
6/30/95 Lawrenceville / Brunswick - 841 1,961 181 -
6/30/95 Richmond / Carlson - 865 2,025 321 -
6/30/95 Liverpool / Oswego Road - 545 1,279 330 -
6/30/95 Rochester / East Ave - 578 1,375 310 -
6/30/95 Pasadena / E. Beltway - 757 1,767 165 -
7/13/95 Tarzana / Burbank Blvd - 2,895 6,823 409 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- -----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------
6/30/95 Fairfield / Kings Highway 1,811 4,513 6,324 1,845
6/30/95 Pacoima / Paxton Street 840 2,179 3,019 889
6/30/95 Portland / Prescott 647 1,731 2,378 741
6/30/95 St. Petersburg 352 1,086 1,438 499
6/30/95 Dallas / Audelia Road 1,166 3,597 4,763 1,750
6/30/95 Miami Gardens 823 2,163 2,986 897
6/30/95 Grand Prairie / 19th 566 1,492 2,058 641
6/30/95 Joliet / Jefferson Street 501 1,404 1,905 610
6/30/95 Bridgeton / Pennridge 283 873 1,156 417
6/30/95 Portland / S.E.92nd 638 1,717 2,355 738
6/30/95 Houston / S.W. Freeway 1,140 7,495 8,635 1,189
6/30/95 Milwaukee / Brown 358 1,113 1,471 490
6/30/95 Orlando / W. Oak Ridge 698 1,919 2,617 825
6/30/95 Lauderhill / State Road 644 1,746 2,390 716
6/30/95 Orange Park /Blanding Blvd 394 1,157 1,551 538
6/30/95 St. Petersburg /Joe'S Creek 704 1,849 2,553 782
6/30/95 St. Louis / Page Service Drive 531 1,442 1,973 627
6/30/95 Independence /E. 42nd 438 1,206 1,644 546
6/30/95 Cherry Hill / Dobbs Lane 715 1,868 2,583 751
6/30/95 Edgewater Park / Route 130 683 1,732 2,415 703
6/30/95 Beaverton / S.W. 110 572 1,548 2,120 657
6/30/95 Markham / W. 159Th Place 229 728 957 333
6/30/95 Houston / N.W. Freeway 447 1,221 1,668 545
6/30/95 Portland / Gantenbein 537 1,497 2,034 635
6/30/95 Upper Chichester/Market St. 569 1,498 2,067 620
6/30/95 Fort Worth / Hwy 80 379 1,030 1,409 464
6/30/95 Greenfield/ S. 108th 728 2,003 2,731 851
6/30/95 Altamonte Springs 566 1,487 2,053 617
6/30/95 Seattle / Delridge Way 760 2,054 2,814 845
6/30/95 Elmhurst / Lake Frontage Rd 748 1,969 2,717 821
6/30/95 Los Angeles / Beverly Blvd 787 2,296 3,083 1,055
6/30/95 Lawrenceville / Brunswick 841 2,142 2,983 848
6/30/95 Richmond / Carlson 865 2,346 3,211 1,017
6/30/95 Liverpool / Oswego Road 545 1,609 2,154 705
6/30/95 Rochester / East Ave 578 1,685 2,263 690
6/30/95 Pasadena / E. Beltway 757 1,932 2,689 798
7/13/95 Tarzana / Burbank Blvd 2,895 7,232 10,127 2,992
F-55
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
7/31/95 Orlando / Lakehurst - 450 1,063 176 -
7/31/95 Livermore / Portola - 921 2,157 215 -
7/31/95 San Jose / Tully - 912 2,137 353 -
7/31/95 Mission Bay - 1,617 3,785 556 -
7/31/95 Las Vegas / Decatur - 1,147 2,697 352 -
7/31/95 Pleasanton / Stanley - 1,624 3,811 240 -
7/31/95 Castro Valley / Grove - 757 1,772 107 -
7/31/95 Honolulu / Kaneohe - 1,215 2,846 2,109 -
7/31/95 Chicago / Wabash Ave - 645 1,535 686 -
7/31/95 Springfield / Parker - 765 1,834 201 -
7/31/95 Huntington Bch/Gotham - 765 1,808 190 -
7/31/95 Tucker / Lawrenceville - 630 1,480 225 -
7/31/95 Marietta / Canton Road - 600 1,423 284 -
7/31/95 Wheeling / Hintz - 450 1,054 172 -
8/1/95 Gresham / Division - 607 1,428 115 -
8/1/95 Tucker / Lawrenceville - 600 1,405 335 -
8/1/95 Decatur / Covington - 720 1,694 242 -
8/11/95 Studio City/Ventura - 1,285 3,015 206 -
8/12/95 Smyrna / Hargrove Road - 1,020 3,038 438 -
9/1/95 Hayward / Mission Blvd - 1,020 2,383 189 -
9/1/95 Park City / Belvider - 600 1,405 140 -
9/1/95 New Castle/Dupont Parkway - 990 2,369 196 -
9/1/95 Las Vegas / Rainbow - 1,050 2,459 120 -
9/1/95 Mountain View / Reng - 945 2,216 160 -
9/1/95 Venice / Cadillac - 930 2,182 260 -
9/1/95 Simi Valley /Los Angeles - 1,590 3,724 294 -
9/1/95 Spring Valley/Foreman - 1,095 2,572 178 -
9/6/95 Darien / Frontage Road - 975 2,321 132 -
9/30/95 Whittier - 215 384 208 781
9/30/95 Van Nuys/Balboa - 295 657 66 1,148
9/30/95 Huntington Beach - 176 321 135 738
9/30/95 Monterey Park - 124 346 (32) 782
9/30/95 Downey - 191 317 122 825
9/30/95 Del Amo - 474 742 418 922
9/30/95 Carson - 375 735 405 428
9/30/95 Van Nuys/Balboa Blvd - 1,920 4,504 457 -
10/31/95 San Lorenzo /Hesperian - 1,590 3,716 388 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
7/31/95 Orlando / Lakehurst 450 1,239 1,689 533
7/31/95 Livermore / Portola 921 2,372 3,293 979
7/31/95 San Jose / Tully 912 2,490 3,402 1,052
7/31/95 Mission Bay 1,617 4,341 5,958 1,841
7/31/95 Las Vegas / Decatur 1,147 3,049 4,196 1,278
7/31/95 Pleasanton / Stanley 1,624 4,051 5,675 1,628
7/31/95 Castro Valley / Grove 757 1,879 2,636 760
7/31/95 Honolulu / Kaneohe 2,133 4,037 6,170 1,454
7/31/95 Chicago / Wabash Ave 645 2,221 2,866 1,188
7/31/95 Springfield / Parker 765 2,035 2,800 839
7/31/95 Huntington Bch/Gotham 765 1,998 2,763 845
7/31/95 Tucker / Lawrenceville 630 1,705 2,335 740
7/31/95 Marietta / Canton Road 600 1,707 2,307 765
7/31/95 Wheeling / Hintz 450 1,226 1,676 519
8/1/95 Gresham / Division 607 1,543 2,150 641
8/1/95 Tucker / Lawrenceville 600 1,740 2,340 781
8/1/95 Decatur / Covington 720 1,936 2,656 841
8/11/95 Studio City/Ventura 1,285 3,221 4,506 1,274
8/12/95 Smyrna / Hargrove Road 1,020 3,476 4,496 1,355
9/1/95 Hayward / Mission Blvd 1,020 2,572 3,592 1,031
9/1/95 Park City / Belvider 600 1,545 2,145 619
9/1/95 New Castle/Dupont Parkway 990 2,565 3,555 1,027
9/1/95 Las Vegas / Rainbow 1,050 2,579 3,629 1,024
9/1/95 Mountain View / Reng 945 2,376 3,321 949
9/1/95 Venice / Cadillac 930 2,442 3,372 1,026
9/1/95 Simi Valley /Los Angeles 1,590 4,018 5,608 1,575
9/1/95 Spring Valley/Foreman 1,095 2,750 3,845 1,100
9/6/95 Darien / Frontage Road 975 2,453 3,428 988
9/30/95 Whittier 215 1,373 1,588 587
9/30/95 Van Nuys/Balboa 295 1,871 2,166 876
9/30/95 Huntington Beach 176 1,194 1,370 538
9/30/95 Monterey Park 124 1,096 1,220 574
9/30/95 Downey 191 1,264 1,455 574
9/30/95 Del Amo 474 2,082 2,556 991
9/30/95 Carson 375 1,568 1,943 545
9/30/95 Van Nuys/Balboa Blvd 1,920 4,961 6,881 1,714
10/31/95 San Lorenzo /Hesperian 1,590 4,104 5,694 1,437
F-56
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
10/31/95 Chicago / W. 47th Street - 300 708 267 -
10/31/95 Los Angeles / Eastern - 455 1,070 184 -
11/15/95 Costa Mesa - 522 1,218 77 -
11/15/95 Plano / E. 14th - 705 1,646 102 -
11/15/95 Citrus Heights/Sunrise - 520 1,213 158 -
11/15/95 Modesto/Briggsmore Ave - 470 1,097 130 -
11/15/95 So San Francisco/Spruce - 1,905 4,444 399 -
11/15/95 Pacheco/Buchanan Circle - 1,681 3,951 321 -
11/16/95 Palm Beach Gardens - 657 1,540 145 -
11/16/95 Delray Beach - 600 1,407 177 -
1/1/96 Bensenville/York Rd - 667 1,602 249 895
1/1/96 Louisville/Preston - 211 1,060 88 594
1/1/96 San Jose/Aborn Road - 615 1,342 102 759
1/1/96 Englewood/Federal - 481 1,395 145 777
1/1/96 W. Hollywood/Santa Monica - 3,415 4,577 238 2,552
1/1/96 Orland Hills/W. 159th - 917 2,392 340 1,342
1/1/96 Merrionette Park - 818 2,020 116 1,122
1/1/96 Denver/S Quebec - 1,849 1,941 198 1,086
1/1/96 Tigard/S.W. Pacific - 633 1,206 141 705
1/1/96 Coram/Middle Count - 507 1,421 145 792
1/1/96 Houston/FM 1960 - 635 1,294 235 783
1/1/96 Kent/Military Trail - 409 1,670 195 956
1/1/96 Turnersville/Black - 165 1,360 143 758
1/1/96 Sewell/Rts. 553 - 323 1,138 141 658
1/1/96 Maple Shade/Fellowship - 331 1,421 147 803
1/1/96 Hyattsville/Kenilworth - 509 1,757 163 1,000
1/1/96 Waterbury/Captain - 434 2,089 206 1,162
1/1/96 Bedford Hts/Miles - 835 1,577 305 929
1/1/96 Livonia/Newburgh - 635 1,407 124 783
1/1/96 Sunland/Sunland Blvd. - 631 1,965 130 1,090
1/1/96 Des Moines - 448 1,350 120 768
1/1/96 Oxonhill/Indianhead - 772 2,017 329 1,141
1/1/96 Sacramento/N. 16th - 582 2,610 174 1,466
1/1/96 Houston/Westheimer - 1,508 2,274 274 1,304
1/1/96 San Pablo/San Pablo - 565 1,232 162 713
1/1/96 Bowie/Woodcliff - 718 2,336 165 1,292
1/1/96 Milwaukee/S. 84th - 444 1,868 332 1,091
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
10/31/95 Chicago / W. 47th Street 300 975 1,275 393
10/31/95 Los Angeles / Eastern 455 1,254 1,709 468
11/15/95 Costa Mesa 522 1,295 1,817 494
11/15/95 Plano / E. 14th 705 1,748 2,453 668
11/15/95 Citrus Heights/Sunrise 520 1,371 1,891 554
11/15/95 Modesto/Briggsmore Ave 470 1,227 1,697 486
11/15/95 So San Francisco/Spruce 1,905 4,843 6,748 1,829
11/15/95 Pacheco/Buchanan Circle 1,681 4,272 5,953 1,599
11/16/95 Palm Beach Gardens 657 1,685 2,342 677
11/16/95 Delray Beach 600 1,584 2,184 659
1/1/96 Bensenville/York Rd 667 2,746 3,413 936
1/1/96 Louisville/Preston 211 1,742 1,953 582
1/1/96 San Jose/Aborn Road 615 2,203 2,818 760
1/1/96 Englewood/Federal 481 2,317 2,798 807
1/1/96 W. Hollywood/Santa Monica 3,415 7,367 10,782 2,396
1/1/96 Orland Hills/W. 159th 917 4,074 4,991 1,356
1/1/96 Merrionette Park 818 3,258 4,076 1,087
1/1/96 Denver/S Quebec 1,849 3,225 5,074 1,082
1/1/96 Tigard/S.W. Pacific 633 2,052 2,685 699
1/1/96 Coram/Middle Count 507 2,358 2,865 757
1/1/96 Houston/FM 1960 635 2,312 2,947 818
1/1/96 Kent/Military Trail 409 2,821 3,230 924
1/1/96 Turnersville/Black 165 2,261 2,426 749
1/1/96 Sewell/Rts. 553 323 1,937 2,260 654
1/1/96 Maple Shade/Fellowship 331 2,371 2,702 763
1/1/96 Hyattsville/Kenilworth 509 2,920 3,429 944
1/1/96 Waterbury/Captain 434 3,457 3,891 977
1/1/96 Bedford Hts/Miles 835 2,811 3,646 959
1/1/96 Livonia/Newburgh 635 2,314 2,949 749
1/1/96 Sunland/Sunland Blvd. 631 3,185 3,816 975
1/1/96 Des Moines 448 2,238 2,686 749
1/1/96 Oxonhill/Indianhead 772 3,487 4,259 1,105
1/1/96 Sacramento/N. 16th 582 4,250 4,832 1,145
1/1/96 Houston/Westheimer 1,508 3,852 5,360 1,271
1/1/96 San Pablo/San Pablo 565 2,107 2,672 682
1/1/96 Bowie/Woodcliff 718 3,793 4,511 1,112
1/1/96 Milwaukee/S. 84th 444 3,291 3,735 1,031
F-57
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
1/1/96 Clinton/Malcolm Road - 593 2,123 254 1,187
1/3/96 San Gabriel - 1,005 2,345 251 -
1/5/96 San Francisco, Second St. - 2,880 6,814 192 -
1/12/96 San Antonio, TX - 912 2,170 96 -
2/29/96 Naples, FL/Old US 41 - 849 2,016 247 -
2/29/96 Lake Worth, FL/S. Military Tr. - 1,782 4,723 157 -
2/29/96 Brandon, FL/W Brandon Blvd. - 1,928 4,523 916 -
2/29/96 Coral Springs FL/W Sample Rd. - 3,480 8,148 277 -
2/29/96 Delray Beach FL/S Military Tr. - 941 2,222 193 -
2/29/96 Jupiter FL/Military Trail - 2,280 5,347 259 -
2/29/96 Lakeworth FL/Lake Worth Rd - 737 1,742 165 -
2/29/96 New Port Richey/State Rd 54 - 857 2,025 241 -
2/29/96 Sanford FL/S Orlando Dr - 734 1,749 1,949 -
3/8/96 Atlanta/Roswell - 898 3,649 110 -
3/31/96 Oakland - 1,065 2,764 285 -
3/31/96 Saratoga - 2,339 6,081 189 -
3/31/96 Randallstown - 1,359 3,527 301 -
3/31/96 Plano - 650 1,682 131 -
3/31/96 Houston - 543 1,402 140 -
3/31/96 Irvine - 1,920 4,975 616 -
3/31/96 Milwaukee - 542 1,402 153 -
3/31/96 Carrollton - 578 1,495 114 -
3/31/96 Torrance - 1,415 3,675 174 -
3/31/96 Jacksonville - 713 1,845 231 -
3/31/96 Dallas - 315 810 1,747 -
3/31/96 Houston - 669 1,724 532 -
3/31/96 Baltimore - 842 2,180 248 -
3/31/96 New Haven - 740 1,907 (160) -
4/1/96 Chicago/Pulaski - 764 1,869 198 -
4/1/96 Las Vegas/Desert Inn - 1,115 2,729 175 -
4/1/96 Torrance/Crenshaw - 916 2,243 136 -
4/1/96 Weymouth - 485 1,187 176 -
4/1/96 St. Louis/Barrett Station Road - 630 1,542 118 -
4/1/96 Rockville/Randolph - 1,153 2,823 208 -
4/1/96 Simi Valley/East Street - 970 2,374 71 -
4/1/96 Houston/Westheimer - 1,390 3,402 6,190 -
4/3/96 Naples - 1,187 2,809 265 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- -----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------
1/1/96 Clinton/Malcolm Road 593 3,564 4,157 1,062
1/3/96 San Gabriel 1,005 2,596 3,601 1,060
1/5/96 San Francisco, Second St. 2,880 7,006 9,886 2,615
1/12/96 San Antonio, TX 912 2,266 3,178 850
2/29/96 Naples, FL/Old US 41 849 2,263 3,112 851
2/29/96 Lake Worth, FL/S. Military Tr. 1,782 4,880 6,662 1,790
2/29/96 Brandon, FL/W Brandon Blvd. 1,928 5,439 7,367 2,475
2/29/96 Coral Springs FL/W Sample Rd. 3,480 8,425 11,905 3,048
2/29/96 Delray Beach FL/S Military Tr. 941 2,415 3,356 946
2/29/96 Jupiter FL/Military Trail 2,280 5,606 7,886 2,067
2/29/96 Lakeworth FL/Lake Worth Rd 737 1,907 2,644 759
2/29/96 New Port Richey/State Rd 54 857 2,266 3,123 852
2/29/96 Sanford FL/S Orlando Dr 975 3,457 4,432 1,292
3/8/96 Atlanta/Roswell 898 3,759 4,657 1,372
3/31/96 Oakland 1,065 3,049 4,114 1,191
3/31/96 Saratoga 2,339 6,270 8,609 2,228
3/31/96 Randallstown 1,359 3,828 5,187 1,429
3/31/96 Plano 650 1,813 2,463 713
3/31/96 Houston 543 1,542 2,085 600
3/31/96 Irvine 1,920 5,591 7,511 2,044
3/31/96 Milwaukee 542 1,555 2,097 596
3/31/96 Carrollton 578 1,609 2,187 617
3/31/96 Torrance 1,415 3,849 5,264 1,409
3/31/96 Jacksonville 713 2,076 2,789 820
3/31/96 Dallas 315 2,557 2,872 616
3/31/96 Houston 669 2,256 2,925 914
3/31/96 Baltimore 842 2,428 3,270 921
3/31/96 New Haven 668 1,819 2,487 701
4/1/96 Chicago/Pulaski 764 2,067 2,831 709
4/1/96 Las Vegas/Desert Inn 1,115 2,904 4,019 994
4/1/96 Torrance/Crenshaw 916 2,379 3,295 793
4/1/96 Weymouth 485 1,363 1,848 442
4/1/96 St. Louis/Barrett Station Road 630 1,660 2,290 566
4/1/96 Rockville/Randolph 1,153 3,031 4,184 1,015
4/1/96 Simi Valley/East Street 970 2,445 3,415 813
4/1/96 Houston/Westheimer 1,390 9,592 10,982 2,620
4/3/96 Naples 1,187 3,074 4,261 1,189
F-58
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
6/26/96 Boca Raton - 3,180 7,468 1,243 -
6/28/96 Venice - 669 1,575 166 -
6/30/96 Las Vegas - 921 2,155 287 -
6/30/96 Bedford Park - 606 1,419 255 -
6/30/96 Los Angeles - 692 1,616 128 -
6/30/96 Silver Spring - 1,513 3,535 260 -
6/30/96 Newark - 1,051 2,458 120 -
6/30/96 Brooklyn - 783 1,830 500 -
7/2/96 Glen Burnie/Furnace Br Rd - 1,755 4,150 277 -
7/22/96 Lakewood/W Hampton - 717 2,092 89 -
8/13/96 Norcross/Holcomb Bridge Rd - 955 3,117 143 -
9/5/96 Spring Valley/S Pascack rd - 1,260 2,966 537 -
9/16/96 Dallas/Royal Lane - 1,008 2,426 218 -
9/16/96 Colorado Springs/Tomah Drive - 731 1,759 128 -
9/16/96 Lewisville/S. Stemmons - 603 1,451 146 -
9/16/96 Las Vegas/Boulder Hwy. - 947 2,279 393 -
9/16/96 Sarasota/S. Tamiami Trail - 584 1,407 3,353 -
9/16/96 Willow Grove/Maryland Road - 673 1,620 134 -
9/16/96 Houston/W. Montgomery Rd. - 524 1,261 211 -
9/16/96 Denver/W. Hampden - 1,084 2,609 209 -
9/16/96 Littleton/Southpark Way - 922 2,221 338 -
9/16/96 Petaluma/Baywood Drive - 861 2,074 177 -
9/16/96 Canoga Park/Sherman Way - 1,543 3,716 555 -
9/16/96 Jacksonville/South Lane Ave. - 554 1,334 236 -
9/16/96 Newport News/Warwick Blvd. - 575 1,385 196 -
9/16/96 Greenbrook/Route 22 - 1,227 2,954 591 -
9/16/96 Monsey/Route 59 - 1,068 2,572 153 -
9/16/96 Santa Rosa/Santa Rosa Ave. - 575 1,385 138 -
9/16/96 Fort Worth/Brentwood - 823 2,016 140 -
9/16/96 Glendale/San Fernando Road - 2,500 6,124 184 -
9/16/96 Houston/Harwin - 549 1,344 180 -
9/16/96 Irvine/Cowan Street - 1,890 4,631 232 -
9/16/96 Fairfield/Dixie Highway - 427 1,046 122 -
9/16/96 Mesa/Country Club Drive - 701 1,718 246 -
9/16/96 San Francisco/Geary Blvd. - 2,957 7,244 367 -
9/16/96 Houston/Gulf Freeway - 701 1,718 4,945 -
9/16/96 Las Vegas/S. Decatur Blvd. - 1,037 2,539 178 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- -----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------
6/26/96 Boca Raton 3,180 8,711 11,891 3,171
6/28/96 Venice 669 1,741 2,410 684
6/30/96 Las Vegas 921 2,442 3,363 893
6/30/96 Bedford Park 606 1,674 2,280 656
6/30/96 Los Angeles 692 1,744 2,436 646
6/30/96 Silver Spring 1,513 3,795 5,308 1,414
6/30/96 Newark 1,051 2,578 3,629 930
6/30/96 Brooklyn 783 2,330 3,113 991
7/2/96 Glen Burnie/Furnace Br Rd 1,755 4,427 6,182 1,544
7/22/96 Lakewood/W Hampton 716 2,182 2,898 758
8/13/96 Norcross/Holcomb Bridge Rd 955 3,260 4,215 1,142
9/5/96 Spring Valley/S Pascack rd 1,260 3,503 4,763 1,257
9/16/96 Dallas/Royal Lane 1,008 2,644 3,652 964
9/16/96 Colorado Springs/Tomah Drive 731 1,887 2,618 673
9/16/96 Lewisville/S. Stemmons 603 1,597 2,200 595
9/16/96 Las Vegas/Boulder Hwy. 947 2,672 3,619 935
9/16/96 Sarasota/S. Tamiami Trail 584 4,760 5,344 639
9/16/96 Willow Grove/Maryland Road 673 1,754 2,427 605
9/16/96 Houston/W. Montgomery Rd. 524 1,472 1,996 560
9/16/96 Denver/W. Hampden 1,084 2,818 3,902 966
9/16/96 Littleton/Southpark Way 922 2,559 3,481 924
9/16/96 Petaluma/Baywood Drive 861 2,251 3,112 804
9/16/96 Canoga Park/Sherman Way 1,543 4,271 5,814 1,524
9/16/96 Jacksonville/South Lane Ave. 554 1,570 2,124 602
9/16/96 Newport News/Warwick Blvd. 575 1,581 2,156 580
9/16/96 Greenbrook/Route 22 1,227 3,545 4,772 1,174
9/16/96 Monsey/Route 59 1,068 2,725 3,793 942
9/16/96 Santa Rosa/Santa Rosa Ave. 575 1,523 2,098 537
9/16/96 Fort Worth/Brentwood 823 2,156 2,979 783
9/16/96 Glendale/San Fernando Road 2,500 6,308 8,808 2,108
9/16/96 Houston/Harwin 549 1,524 2,073 570
9/16/96 Irvine/Cowan Street 1,890 4,863 6,753 1,681
9/16/96 Fairfield/Dixie Highway 427 1,168 1,595 423
9/16/96 Mesa/Country Club Drive 701 1,964 2,665 703
9/16/96 San Francisco/Geary Blvd. 2,957 7,611 10,568 2,560
9/16/96 Houston/Gulf Freeway 701 6,663 7,364 1,152
9/16/96 Las Vegas/S. Decatur Blvd. 1,037 2,717 3,754 943
F-59
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
9/16/96 Tempe/McKellips Road - 823 1,972 272 -
9/16/96 Richland Hills/Airport Fwy. - 473 1,158 208 -
10/11/96 Hampton/Pembroke Road - 1,080 2,346 (180) -
10/11/96 Norfolk/Widgeon Road - 1,110 2,405 (324) -
10/11/96 Richmond/Bloom Lane - 1,188 2,512 (154) -
10/11/96 Virginia Beach/Southern Blvd - 282 610 250 -
10/11/96 Chesapeake/Military Hwy - 912 1,974 424 -
10/11/96 Richmond/Midlothian Park - 762 1,588 534 -
10/11/96 Roanoke/Peters Creek Road - 819 1,776 283 -
10/11/96 Orlando/E Oakridge Rd - 927 2,020 265 -
10/11/96 Orlando/South Hwy 17-92 - 1,170 2,549 198 -
10/25/96 Austin/Renelli - 1,710 3,990 256 -
10/25/96 Austin/Santiago - 900 2,100 213 -
10/25/96 Dallas/East N.W. Highway - 698 1,628 198 -
10/25/96 Dallas/Denton Drive - 900 2,100 146 -
10/25/96 Houston/Hempstead - 518 1,207 324 -
10/25/96 Pasadena/So. Shaver - 420 980 275 -
10/31/96 Houston/Joel Wheaton Rd - 465 1,085 214 -
10/31/96 Mt Holly/541 Bypass - 360 840 297 -
11/13/96 Town East/Mesquite - 330 770 186 -
11/14/96 Bossier City LA - 633 1,488 (135) -
12/5/96 Lake Forest/Bake Parkway - 971 2,173 576 -
12/16/96 Cherry Hill/Old Cuthbert - 645 1,505 647 -
12/16/96 Oklahoma City/SW 74th - 375 875 120 -
12/16/96 Oklahoma City/S Santa Fe - 360 840 179 -
12/16/96 Oklahoma City/S. May - 360 840 155 -
12/16/96 Arlington/S. Watson Rd. - 930 2,170 460 -
12/16/96 Richardson/E. Arapaho - 1,290 3,010 423 -
12/23/96 Eagle Rock/Colorado - 330 813 410 -
12/23/96 Upper Darby/Lansdowne - 899 2,272 262 -
12/23/96 Plymouth Meeting /Chemical - 1,109 2,802 206 -
12/23/96 Philadelphia/Byberry - 1,019 2,575 186 -
12/23/96 Ft. Lauderdale/State Road - 1,199 3,030 283 -
12/23/96 Englewood/Costilla - 1,739 4,393 163 -
12/23/96 Lilburn/Beaver Ruin Road - 600 1,515 178 -
12/23/96 Carmichael/Fair Oaks - 809 2,045 216 -
12/23/96 Portland/Division Street - 989 2,499 167 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
9/16/96 Tempe/McKellips Road 823 2,244 3,067 815
9/16/96 Richland Hills/Airport Fwy. 473 1,366 1,839 534
10/11/96 Hampton/Pembroke Road 914 2,332 3,246 588
10/11/96 Norfolk/Widgeon Road 908 2,283 3,191 594
10/11/96 Richmond/Bloom Lane 995 2,551 3,546 676
10/11/96 Virginia Beach/Southern Blvd 282 860 1,142 412
10/11/96 Chesapeake/Military Hwy 912 2,398 3,310 974
10/11/96 Richmond/Midlothian Park 762 2,122 2,884 932
10/11/96 Roanoke/Peters Creek Road 819 2,059 2,878 787
10/11/96 Orlando/E Oakridge Rd 927 2,285 3,212 824
10/11/96 Orlando/South Hwy 17-92 1,170 2,747 3,917 979
10/25/96 Austin/Renelli 1,710 4,246 5,956 1,497
10/25/96 Austin/Santiago 900 2,313 3,213 856
10/25/96 Dallas/East N.W. Highway 698 1,826 2,524 683
10/25/96 Dallas/Denton Drive 900 2,246 3,146 810
10/25/96 Houston/Hempstead 518 1,531 2,049 598
10/25/96 Pasadena/So. Shaver 420 1,255 1,675 482
10/31/96 Houston/Joel Wheaton Rd 465 1,299 1,764 504
10/31/96 Mt Holly/541 Bypass 360 1,137 1,497 430
11/13/96 Town East/Mesquite 330 956 1,286 352
11/14/96 Bossier City LA 557 1,429 1,986 395
12/5/96 Lake Forest/Bake Parkway 973 2,747 3,720 827
12/16/96 Cherry Hill/Old Cuthbert 645 2,152 2,797 781
12/16/96 Oklahoma City/SW 74th 375 995 1,370 380
12/16/96 Oklahoma City/S Santa Fe 360 1,019 1,379 402
12/16/96 Oklahoma City/S. May 360 995 1,355 394
12/16/96 Arlington/S. Watson Rd. 930 2,630 3,560 1,043
12/16/96 Richardson/E. Arapaho 1,290 3,433 4,723 1,168
12/23/96 Eagle Rock/Colorado 444 1,109 1,553 273
12/23/96 Upper Darby/Lansdowne 899 2,534 3,433 873
12/23/96 Plymouth Meeting /Chemical 1,109 3,008 4,117 659
12/23/96 Philadelphia/Byberry 1,019 2,761 3,780 956
12/23/96 Ft. Lauderdale/State Road 1,199 3,313 4,512 1,129
12/23/96 Englewood/Costilla 1,739 4,556 6,295 1,514
12/23/96 Lilburn/Beaver Ruin Road 600 1,693 2,293 625
12/23/96 Carmichael/Fair Oaks 809 2,261 3,070 814
12/23/96 Portland/Division Street 989 2,666 3,655 921
F-60
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
12/23/96 Napa/Industrial - 660 1,666 166 -
12/23/96 Wheatridge/W. 44th Avenue - 1,439 3,636 171 -
12/23/96 Las Vegas/Charleston - 1,049 2,651 180 -
12/23/96 Las Vegas/South Arvill - 929 2,348 150 -
12/23/96 Los Angeles/Santa Monica - 3,328 8,407 238 -
12/23/96 Warren/Schoenherr Rd. - 749 1,894 186 -
12/23/96 Portland/N.E. 71st Avenue - 869 2,196 256 -
12/23/96 Seattle/Pacific Hwy. South - 689 1,742 200 -
12/23/96 Broadview/S. 25th Avenue - 1,289 3,257 336 -
12/23/96 Winter Springs/W. St. Rte 434 - 689 1,742 137 -
12/23/96 Tampa/15th Street - 420 1,060 307 -
12/23/96 Pompano Beach/S. Dixie Hwy. - 930 2,292 376 -
12/23/96 Overland Park/Mastin - 990 2,440 3,249 -
12/23/96 Auburn/R Street - 690 1,700 221 -
12/23/96 Federal Heights/W. 48th Ave. - 720 1,774 178 -
12/23/96 Decatur/Covington - 930 2,292 246 -
12/23/96 Forest Park/Jonesboro Rd. - 540 1,331 172 -
12/23/96 Mangonia Park/Australian Ave. - 840 2,070 165 -
12/23/96 Whittier/Colima - 540 1,331 111 -
12/23/96 Kent/Pacific Hwy South - 930 2,292 197 -
12/23/96 Topeka/8th Street - 150 370 164 -
12/23/96 Denver East Evans - 1,740 4,288 206 -
12/23/96 Pittsburgh/California Ave. - 630 1,552 127 -
12/23/96 Ft. Lauderdale/Powerline - 660 1,626 341 -
12/23/96 Philadelphia/Oxford - 900 2,218 207 -
12/23/96 Dallas/Lemmon Ave. - 1,710 4,214 160 -
12/23/96 Alsip/115th Street - 750 1,848 1,958 -
12/23/96 Green Acres/Jog Road - 600 1,479 132 -
12/23/96 Pompano Beach/Sample Road - 1,320 3,253 178 -
12/23/96 Wyndmoor/Ivy Hill - 2,160 5,323 264 -
12/23/96 W. Palm Beach/Belvedere - 960 2,366 228 -
12/23/96 Renton 174th St. - 960 2,366 235 -
12/23/96 Sacramento/Northgate - 1,021 2,647 152 -
12/23/96 Phoenix/19th Avenue - 991 2,569 233 -
12/23/96 Bedford Park/Cicero - 1,321 3,426 306 -
12/23/96 Lake Worth/Lk Worth - 1,111 2,880 229 -
12/23/96 Arlington/Algonquin - 991 2,569 637 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
12/23/96 Napa/Industrial 660 1,832 2,492 662
12/23/96 Wheatridge/W. 44th Avenue 1,439 3,807 5,246 1,285
12/23/96 Las Vegas/Charleston 1,049 2,831 3,880 954
12/23/96 Las Vegas/South Arvill 929 2,498 3,427 854
12/23/96 Los Angeles/Santa Monica 3,328 8,645 11,973 2,868
12/23/96 Warren/Schoenherr Rd. 749 2,080 2,829 744
12/23/96 Portland/N.E. 71st Avenue 869 2,452 3,321 892
12/23/96 Seattle/Pacific Hwy. South 689 1,942 2,631 729
12/23/96 Broadview/S. 25th Avenue 1,289 3,593 4,882 1,241
12/23/96 Winter Springs/W. St. Rte 434 689 1,879 2,568 646
12/23/96 Tampa/15th Street 420 1,367 1,787 542
12/23/96 Pompano Beach/S. Dixie Hwy. 930 2,668 3,598 984
12/23/96 Overland Park/Mastin 1,306 5,373 6,679 1,229
12/23/96 Auburn/R Street 690 1,921 2,611 704
12/23/96 Federal Heights/W. 48th Ave. 720 1,952 2,672 647
12/23/96 Decatur/Covington 930 2,538 3,468 884
12/23/96 Forest Park/Jonesboro Rd. 540 1,503 2,043 565
12/23/96 Mangonia Park/Australian Ave. 840 2,235 3,075 787
12/23/96 Whittier/Colima 540 1,442 1,982 517
12/23/96 Kent/Pacific Hwy South 930 2,489 3,419 872
12/23/96 Topeka/8th Street 150 534 684 243
12/23/96 Denver East Evans 1,740 4,494 6,234 1,524
12/23/96 Pittsburgh/California Ave. 630 1,679 2,309 602
12/23/96 Ft. Lauderdale/Powerline 660 1,967 2,627 762
12/23/96 Philadelphia/Oxford 900 2,425 3,325 842
12/23/96 Dallas/Lemmon Ave. 1,710 4,374 6,084 1,480
12/23/96 Alsip/115th Street 750 3,806 4,556 1,004
12/23/96 Green Acres/Jog Road 600 1,611 2,211 586
12/23/96 Pompano Beach/Sample Road 1,320 3,431 4,751 1,178
12/23/96 Wyndmoor/Ivy Hill 2,160 5,587 7,747 1,875
12/23/96 W. Palm Beach/Belvedere 960 2,594 3,554 917
12/23/96 Renton 174th St. 960 2,601 3,561 938
12/23/96 Sacramento/Northgate 1,021 2,799 3,820 972
12/23/96 Phoenix/19th Avenue 991 2,802 3,793 980
12/23/96 Bedford Park/Cicero 1,321 3,732 5,053 1,308
12/23/96 Lake Worth/Lk Worth 1,111 3,109 4,220 1,083
12/23/96 Arlington/Algonquin 991 3,206 4,197 1,096
F-61
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
12/23/96 Seattle/15th Avenue - 781 2,024 168 -
12/23/96 Southington/Spring - 811 2,102 183 -
12/23/96 Clifton/Broad Street - 1,411 3,659 173 -
12/23/96 Hillside/Glenwood - 563 4,051 329 -
12/23/96 Nashville/Dickerson Pike - 990 2,440 181 -
12/23/96 Madison/Gallatin Road - 780 1,922 241 -
12/30/96 Concorde/Treat - 1,396 3,258 145 -
12/30/96 Virginia Beach - 535 1,248 165 -
12/30/96 San Mateo - 2,408 5,619 206 -
1/22/97 Austin, 1033 E. 41 Street - 257 3,633 95 -
4/12/97 Annandale / Backlick - 955 2,229 379 -
4/12/97 Ft. Worth / West Freeway - 667 1,556 256 -
4/12/97 Campbell / S. Curtner - 2,550 5,950 680 -
4/12/97 Aurora / S. Idalia - 1,002 2,338 558 -
4/12/97 Santa Cruz / Capitola - 1,037 2,420 333 -
4/12/97 Indianapolis / Lafayette Road - 682 1,590 301 -
4/12/97 Indianapolis / Route 31 - 619 1,444 343 -
4/12/97 Farmingdale / Broad Hollow Rd. - 1,568 3,658 726 -
4/12/97 Tyson's Corner / Springhill Rd. - 3,861 9,010 1,258 -
4/12/97 Fountain Valley / Newhope - 1,137 2,653 340 -
4/12/97 Dallas / Winsted - 1,375 3,209 453 -
4/12/97 Columbia / Broad River Rd. - 121 282 170 -
4/12/97 Livermore / S. Front Road - 876 2,044 199 -
4/12/97 Garland / Plano - 889 2,073 242 -
4/12/97 San Jose / Story Road - 1,352 3,156 357 -
4/12/97 Aurora / Abilene - 1,406 3,280 431 -
4/12/97 Antioch / Sunset Drive - 1,035 2,416 222 -
4/12/97 Rancho Cordova / Sunrise - 1,048 2,445 393 -
4/12/97 Berlin / Wilbur Cross - 756 1,764 264 -
4/12/97 Whittier / Whittier Blvd. - 648 1,513 179 -
4/12/97 Peabody / Newbury Street - 1,159 2,704 521 -
4/12/97 Denver / Blake - 602 1,405 212 -
4/12/97 Evansville / Green River Road - 470 1,096 196 -
4/12/97 Burien / First Ave. So. - 792 1,847 260 -
4/12/97 Rancho Cordova / Mather Field - 494 1,153 187 -
4/12/97 Sugar Land / Eldridge - 705 1,644 231 -
4/12/97 Columbus / Eastland Drive - 602 1,405 316 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
12/23/96 Seattle/15th Avenue 781 2,192 2,973 790
12/23/96 Southington/Spring 811 2,285 3,096 793
12/23/96 Clifton/Broad Street 1,411 3,832 5,243 1,289
12/23/96 Hillside/Glenwood 563 4,380 4,943 1,548
12/23/96 Nashville/Dickerson Pike 990 2,621 3,611 959
12/23/96 Madison/Gallatin Road 780 2,163 2,943 812
12/30/96 Concorde/Treat 1,396 3,403 4,799 1,151
12/30/96 Virginia Beach 535 1,413 1,948 505
12/30/96 San Mateo 2,408 5,825 8,233 1,913
1/22/97 Austin, 1033 E. 41 Street 257 3,728 3,985 1,183
4/12/97 Annandale / Backlick 955 2,608 3,563 855
4/12/97 Ft. Worth / West Freeway 667 1,812 2,479 622
4/12/97 Campbell / S. Curtner 2,550 6,630 9,180 2,109
4/12/97 Aurora / S. Idalia 1,002 2,896 3,898 938
4/12/97 Santa Cruz / Capitola 1,037 2,753 3,790 888
4/12/97 Indianapolis / Lafayette Road 682 1,891 2,573 658
4/12/97 Indianapolis / Route 31 619 1,787 2,406 614
4/12/97 Farmingdale / Broad Hollow Rd. 1,568 4,384 5,952 1,419
4/12/97 Tyson's Corner / Springhill Rd. 3,861 10,268 14,129 3,340
4/12/97 Fountain Valley / Newhope 1,137 2,993 4,130 955
4/12/97 Dallas / Winsted 1,375 3,662 5,037 1,220
4/12/97 Columbia / Broad River Rd. 121 452 573 216
4/12/97 Livermore / S. Front Road 876 2,243 3,119 730
4/12/97 Garland / Plano 889 2,315 3,204 773
4/12/97 San Jose / Story Road 1,352 3,513 4,865 1,165
4/12/97 Aurora / Abilene 1,406 3,711 5,117 1,211
4/12/97 Antioch / Sunset Drive 1,035 2,638 3,673 857
4/12/97 Rancho Cordova / Sunrise 1,048 2,838 3,886 986
4/12/97 Berlin / Wilbur Cross 756 2,028 2,784 705
4/12/97 Whittier / Whittier Blvd. 648 1,692 2,340 548
4/12/97 Peabody / Newbury Street 1,159 3,225 4,384 1,079
4/12/97 Denver / Blake 602 1,617 2,219 540
4/12/97 Evansville / Green River Road 470 1,292 1,762 441
4/12/97 Burien / First Ave. So. 792 2,107 2,899 713
4/12/97 Rancho Cordova / Mather Field 494 1,340 1,834 466
4/12/97 Sugar Land / Eldridge 705 1,875 2,580 643
4/12/97 Columbus / Eastland Drive 602 1,721 2,323 582
F-62
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
4/12/97 Slickerville / Black Horse Pike - 539 1,258 213 -
4/12/97 Seattle / Aurora - 1,145 2,671 295 -
4/12/97 Gaithersburg / Christopher Ave. - 972 2,268 281 -
4/12/97 Manchester / Tolland Turnpike - 807 1,883 235 -
6/25/97 L.A./Venice Blvd. - 523 1,221 1,791 -
6/25/97 Kirkland-Totem - 2,131 4,972 229 -
6/25/97 Idianapolis - 471 1,098 115 -
6/25/97 Dallas - 699 1,631 74 -
6/25/97 Atlanta - 1,183 2,761 132 -
6/25/97 Bensalem - 1,159 2,705 101 -
6/25/97 Evansville - 429 1,000 71 -
6/25/97 Austin - 813 1,897 84 -
6/25/97 Harbor City - 1,244 2,904 266 -
6/25/97 Birmingham - 539 1,258 119 -
6/25/97 Sacramento - 489 1,396 (182) -
6/25/97 Carrollton - 441 1,029 53 -
6/25/97 La Habra - 822 1,918 68 -
6/25/97 Lombard - 1,527 3,564 1,739 -
6/25/97 Fairfield - 740 1,727 86 -
6/25/97 Seattle - 1,498 3,494 289 -
6/25/97 Bellevue - 1,653 3,858 78 -
6/25/97 Citrus Heights - 642 1,244 536 -
6/25/97 San Jose - 1,273 2,971 23 -
6/25/97 Stanton - 948 2,212 68 -
6/25/97 Garland - 486 1,135 69 -
6/25/97 Westford - 857 1,999 165 -
6/25/97 Dallas - 1,627 3,797 661 -
6/25/97 Wheat Ridge - 1,054 2,459 403 -
6/25/97 Berlin - 825 1,925 314 -
6/25/97 Gretna - 1,069 2,494 441 -
6/25/97 Spring - 461 1,077 221 -
6/25/97 Sacramento - 592 1,380 911 -
6/25/97 Houston/South Dairyashford - 856 1,997 346 -
6/25/97 Naperville - 1,108 2,585 392 -
6/25/97 Carrollton - 1,158 2,702 524 -
6/25/97 Waipahu - 1,620 3,780 544 -
6/25/97 Davis - 628 1,465 232 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
4/12/97 Slickerville / Black Horse Pike 539 1,471 2,010 543
4/12/97 Seattle / Aurora 1,145 2,966 4,111 974
4/12/97 Gaithersburg / Christopher Ave. 972 2,549 3,521 861
4/12/97 Manchester / Tolland Turnpike 807 2,118 2,925 702
6/25/97 L.A./Venice Blvd. 1,044 2,491 3,535 605
6/25/97 Kirkland-Totem 2,131 5,201 7,332 1,718
6/25/97 Idianapolis 471 1,213 1,684 427
6/25/97 Dallas 699 1,705 2,404 578
6/25/97 Atlanta 1,183 2,893 4,076 947
6/25/97 Bensalem 1,159 2,806 3,965 903
6/25/97 Evansville 401 1,099 1,500 372
6/25/97 Austin 813 1,981 2,794 656
6/25/97 Harbor City 1,244 3,170 4,414 1,084
6/25/97 Birmingham 539 1,377 1,916 471
6/25/97 Sacramento 489 1,214 1,703 413
6/25/97 Carrollton 441 1,082 1,523 359
6/25/97 La Habra 822 1,986 2,808 653
6/25/97 Lombard 2,047 4,783 6,830 1,432
6/25/97 Fairfield 740 1,813 2,553 577
6/25/97 Seattle 1,498 3,783 5,281 1,349
6/25/97 Bellevue 1,653 3,936 5,589 1,283
6/25/97 Citrus Heights 642 1,780 2,422 661
6/25/97 San Jose 1,273 2,994 4,267 955
6/25/97 Stanton 948 2,280 3,228 732
6/25/97 Garland 486 1,204 1,690 407
6/25/97 Westford 857 2,164 3,021 700
6/25/97 Dallas 1,627 4,458 6,085 1,466
6/25/97 Wheat Ridge 1,054 2,862 3,916 885
6/25/97 Berlin 825 2,239 3,064 699
6/25/97 Gretna 1,069 2,935 4,004 1,024
6/25/97 Spring 461 1,298 1,759 441
6/25/97 Sacramento 720 2,163 2,883 661
6/25/97 Houston/South Dairyashford 856 2,343 3,199 745
6/25/97 Naperville 1,108 2,977 4,085 939
6/25/97 Carrollton 1,158 3,226 4,384 1,041
6/25/97 Waipahu 1,620 4,324 5,944 1,373
6/25/97 Davis 628 1,697 2,325 564
F-63
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
6/25/97 Decatur - 951 2,220 405 -
6/25/97 Jacksonville - 653 1,525 298 -
6/25/97 Chicoppe - 663 1,546 340 -
6/25/97 Alexandria - 1,533 3,576 507 -
6/25/97 Houston/Veterans Memorial Dr. - 458 1,070 189 -
6/25/97 Los Angeles/Olympic - 4,392 10,247 1,215 -
6/25/97 Littleton - 1,340 3,126 560 -
6/25/97 Metairie - 1,229 2,868 483 -
6/25/97 Louisville - 717 1,672 310 -
6/25/97 East Hazel Crest - 753 1,757 2,199 -
6/25/97 Edmonds - 1,187 2,770 412 -
6/25/97 Foster City - 1,064 2,483 345 -
6/25/97 Chicago - 1,160 2,708 530 -
6/25/97 Philadelphia - 924 2,155 408 -
6/25/97 Dallas/Vilbig Rd. - 508 1,184 232 -
6/25/97 Staten Island - 1,676 3,910 557 -
6/25/97 Pelham Manor - 1,209 2,820 701 -
6/25/97 Irving - 469 1,093 217 -
6/25/97 Elk Grove - 642 1,497 287 -
6/25/97 LAX - 1,312 3,062 542 -
6/25/97 Denver - 1,316 3,071 580 -
6/25/97 Plano - 1,369 3,193 473 -
6/25/97 Lynnwood - 839 1,959 364 -
6/25/97 Lilburn - 507 1,182 348 -
6/25/97 Parma - 881 2,055 505 -
6/25/97 Davie - 1,086 2,533 652 -
6/25/97 Allen Park - 953 2,223 533 -
6/25/97 Aurora - 808 1,886 457 -
6/25/97 San Diego/16th Street - 932 2,175 613 -
6/25/97 Sterling Heights - 766 1,787 461 -
6/25/97 East L.A./Boyle Heights - 957 2,232 501 -
6/25/97 Springfield/Alban Station - 1,317 3,074 663 -
6/25/97 Littleton - 868 2,026 499 -
6/25/97 Sacramento/57th Street - 869 2,029 493 -
6/25/97 Miami - 1,762 4,111 971 -
8/13/97 Santa Monica / Wilshire Blvd. - 2,040 4,760 275 -
10/1/97 Marietta /Austell Rd - 398 1,326 302 462
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- -----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------
6/25/97 Decatur 951 2,625 3,576 866
6/25/97 Jacksonville 653 1,823 2,476 622
6/25/97 Chicoppe 663 1,886 2,549 647
6/25/97 Alexandria 1,533 4,083 5,616 1,280
6/25/97 Houston/Veterans Memorial Dr. 458 1,259 1,717 420
6/25/97 Los Angeles/Olympic 4,392 11,462 15,854 3,541
6/25/97 Littleton 1,340 3,686 5,026 1,166
6/25/97 Metairie 1,229 3,351 4,580 1,082
6/25/97 Louisville 717 1,982 2,699 650
6/25/97 East Hazel Crest 1,236 3,473 4,709 1,272
6/25/97 Edmonds 1,187 3,182 4,369 1,026
6/25/97 Foster City 1,064 2,828 3,892 881
6/25/97 Chicago 1,160 3,238 4,398 1,040
6/25/97 Philadelphia 924 2,563 3,487 804
6/25/97 Dallas/Vilbig Rd. 508 1,416 1,924 480
6/25/97 Staten Island 1,676 4,467 6,143 1,420
6/25/97 Pelham Manor 1,209 3,521 4,730 1,135
6/25/97 Irving 469 1,310 1,779 446
6/25/97 Elk Grove 642 1,784 2,426 578
6/25/97 LAX 1,312 3,604 4,916 1,168
6/25/97 Denver 1,316 3,651 4,967 1,151
6/25/97 Plano 1,369 3,666 5,035 1,133
6/25/97 Lynnwood 839 2,323 3,162 775
6/25/97 Lilburn 507 1,530 2,037 530
6/25/97 Parma 881 2,560 3,441 833
6/25/97 Davie 1,086 3,185 4,271 1,033
6/25/97 Allen Park 953 2,756 3,709 888
6/25/97 Aurora 808 2,343 3,151 734
6/25/97 San Diego/16th Street 932 2,788 3,720 957
6/25/97 Sterling Heights 766 2,248 3,014 732
6/25/97 East L.A./Boyle Heights 957 2,733 3,690 872
6/25/97 Springfield/Alban Station 1,317 3,737 5,054 1,185
6/25/97 Littleton 868 2,525 3,393 793
6/25/97 Sacramento/57th Street 869 2,522 3,391 825
6/25/97 Miami 1,762 5,082 6,844 1,564
8/13/97 Santa Monica / Wilshire Blvd. 2,040 5,035 7,075 1,663
10/1/97 Marietta /Austell Rd 398 2,090 2,488 710
F-64
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
10/1/97 Denver / Leetsdale - 1,407 1,682 245 588
10/1/97 Baltimore / York Road - 1,538 1,952 629 708
10/1/97 Bolingbrook - 737 1,776 232 617
10/1/97 Kent / Central - 483 1,321 197 463
10/1/97 Geneva / Roosevelt - 355 1,302 219 461
10/1/97 Denver / Sheridan - 429 1,105 163 401
10/1/97 Mountlake Terrace - 1,017 1,783 223 605
10/1/97 Carol Stream/ St.Charles - 185 1,187 182 418
10/1/97 Marietta / Cobb Park - 420 1,131 315 426
10/1/97 Venice / Rose - 5,468 5,478 664 1,814
10/1/97 Ventura / Ventura Blvd - 911 2,227 256 762
10/1/97 Studio City/ Ventura - 2,421 1,610 191 537
10/1/97 Madison Heights - 428 1,686 2,576 565
10/1/97 Lax / Imperial - 1,662 2,079 180 715
10/1/97 Justice / Industrial - 233 1,181 179 412
10/1/97 Burbank / San Fernando - 1,825 2,210 196 745
10/1/97 Pinole / Appian Way - 728 1,827 207 624
10/1/97 Denver / Tamarac Park - 2,545 1,692 417 662
10/1/97 Gresham / Powell - 322 1,298 217 439
10/1/97 Warren / Mound Road - 268 1,025 206 363
10/1/97 Woodside/Brooklyn - 5,016 3,950 572 2,107
10/1/97 Enfield / Elm Street - 399 1,900 286 645
10/1/97 Roselle / Lake Street - 312 1,411 215 493
10/1/97 Milwaukee / Appleton - 324 1,385 276 488
10/1/97 Emeryville / Bay St - 1,602 1,830 164 627
10/1/97 Monterey / Del Rey - 257 1,048 229 360
10/1/97 San Leandro / Washington - 660 1,142 169 395
10/1/97 Boca Raton / N.W. 20 - 1,140 2,256 457 774
10/1/97 Washington Dc/So Capital - 1,437 4,489 459 1,528
10/1/97 Lynn / Lynnway - 463 3,059 428 1,067
10/1/97 Pompano Beach - 1,077 1,527 680 534
10/1/97 Lake Oswego/ N.State - 465 1,956 275 660
10/1/97 Daly City / Mission - 389 2,921 211 980
10/1/97 Odenton / Route 175 - 456 2,104 247 724
10/1/97 Novato / Landing - 2,416 3,496 235 824
10/1/97 St. Louis / Lindberg - 584 1,508 339 315
10/1/97 Oakland/International - 358 1,568 253 296
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
10/1/97 Denver / Leetsdale 1,407 2,515 3,922 892
10/1/97 Baltimore / York Road 1,538 3,289 4,827 1,054
10/1/97 Bolingbrook 737 2,625 3,362 919
10/1/97 Kent / Central 483 1,981 2,464 703
10/1/97 Geneva / Roosevelt 355 1,982 2,337 700
10/1/97 Denver / Sheridan 429 1,669 2,098 603
10/1/97 Mountlake Terrace 1,017 2,611 3,628 890
10/1/97 Carol Stream/ St.Charles 185 1,787 1,972 617
10/1/97 Marietta / Cobb Park 420 1,872 2,292 658
10/1/97 Venice / Rose 5,468 7,956 13,424 2,513
10/1/97 Ventura / Ventura Blvd 911 3,245 4,156 1,106
10/1/97 Studio City/ Ventura 2,421 2,338 4,759 800
10/1/97 Madison Heights 428 4,827 5,255 797
10/1/97 Lax / Imperial 1,662 2,974 4,636 1,039
10/1/97 Justice / Industrial 233 1,772 2,005 611
10/1/97 Burbank / San Fernando 1,825 3,151 4,976 1,080
10/1/97 Pinole / Appian Way 728 2,658 3,386 910
10/1/97 Denver / Tamarac Park 2,545 2,771 5,316 1,035
10/1/97 Gresham / Powell 322 1,954 2,276 650
10/1/97 Warren / Mound Road 268 1,594 1,862 523
10/1/97 Woodside/Brooklyn 5,016 6,629 11,645 1,766
10/1/97 Enfield / Elm Street 399 2,831 3,230 899
10/1/97 Roselle / Lake Street 312 2,119 2,431 716
10/1/97 Milwaukee / Appleton 324 2,149 2,473 686
10/1/97 Emeryville / Bay St 1,602 2,621 4,223 889
10/1/97 Monterey / Del Rey 257 1,637 1,894 510
10/1/97 San Leandro / Washington 660 1,706 2,366 574
10/1/97 Boca Raton / N.W. 20 1,140 3,487 4,627 1,092
10/1/97 Washington Dc/So Capital 1,437 6,476 7,913 1,837
10/1/97 Lynn / Lynnway 463 4,554 5,017 1,447
10/1/97 Pompano Beach 1,077 2,741 3,818 772
10/1/97 Lake Oswego/ N.State 465 2,891 3,356 912
10/1/97 Daly City / Mission 389 4,112 4,501 1,309
10/1/97 Odenton / Route 175 456 3,075 3,531 882
10/1/97 Novato / Landing 2,587 4,384 6,971 1,505
10/1/97 St. Louis / Lindberg 625 2,121 2,746 694
10/1/97 Oakland/International 383 2,092 2,475 704
F-65
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
10/1/97 Stockton / March Lane - 663 1,398 157 279
10/1/97 Des Plaines / Golf Rd - 1,363 3,093 251 595
10/1/97 Morton Grove / Wauke - 2,658 3,232 3,688 149
10/1/97 Los Angeles / Jefferson - 1,090 1,580 256 351
10/1/97 Los Angeles / Martin - 869 1,152 121 253
10/1/97 San Leandro / E. 14th - 627 1,289 118 254
10/1/97 Tucson / Tanque Verde - 345 1,709 274 321
10/1/97 Randolph / Warren St - 2,330 1,914 524 529
10/1/97 Forrestville / Penn. - 1,056 2,347 309 472
10/1/97 Bridgeport - 4,877 2,739 655 852
10/1/97 North Hollywood/Vine - 906 2,379 229 452
10/1/97 Santa Cruz / Portola - 535 1,526 184 293
10/1/97 Hyde Park / River St - 626 1,748 290 347
10/1/97 Dublin / San Ramon Rd - 942 1,999 172 394
10/1/97 Vallejo / Humboldt - 473 1,651 162 302
10/1/97 Fremont/Warm Springs - 848 2,885 242 526
10/1/97 Seattle / Stone Way - 829 2,180 321 432
10/1/97 W. Olympia - 149 1,096 303 220
10/1/97 Mercer/Parkside Ave - 359 1,763 260 326
10/1/97 Bridge Water / Main - 445 2,054 289 381
10/1/97 Norwalk / Hoyt Street - 2,369 3,049 563 704
11/2/97 Lansing - 758 1,768 (96) -
11/7/97 Phoenix - 1,197 2,793 138 -
11/13/97 Tinley Park - 1,422 3,319 76 -
3/17/98 Houston/De Soto Dr. - 659 1,537 154 -
3/17/98 Houston / East Freeway - 593 1,384 180 -
3/17/98 Austin/Ben White - 692 1,614 74 -
3/17/98 Arlington/E.Pioneer - 922 2,152 250 -
3/17/98 Las Vegas/Tropicana - 1,285 2,998 161 -
3/17/98 Branford / Summit Place - 728 1,698 180 -
3/17/98 Las Vegas / Charleston - 791 1,845 129 -
3/17/98 So. San Francisco - 1,550 3,617 97 -
3/17/98 Pasadena / Arroyo Prkwy - 3,005 7,012 223 -
3/17/98 Tempe / E. Broadway - 633 1,476 194 -
3/17/98 Phoenix / N. 43rd Ave - 443 1,033 178 -
3/17/98 Phoenix/No. 43rd - 380 886 424 -
3/17/98 Phoenix / Black Canyon - 380 886 163 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
10/1/97 Stockton / March Lane 710 1,787 2,497 601
10/1/97 Des Plaines / Golf Rd 1,460 3,842 5,302 1,314
10/1/97 Morton Grove / Wauke 2,846 6,881 9,727 1,899
10/1/97 Los Angeles / Jefferson 1,167 2,110 3,277 692
10/1/97 Los Angeles / Martin 931 1,464 2,395 498
10/1/97 San Leandro / E. 14th 671 1,617 2,288 547
10/1/97 Tucson / Tanque Verde 370 2,279 2,649 686
10/1/97 Randolph / Warren St 2,495 2,802 5,297 802
10/1/97 Forrestville / Penn. 1,131 3,053 4,184 1,017
10/1/97 Bridgeport 5,222 3,901 9,123 1,255
10/1/97 North Hollywood/Vine 970 2,996 3,966 930
10/1/97 Santa Cruz / Portola 573 1,965 2,538 631
10/1/97 Hyde Park / River St 670 2,341 3,011 712
10/1/97 Dublin / San Ramon Rd 1,008 2,499 3,507 863
10/1/97 Vallejo / Humboldt 506 2,082 2,588 665
10/1/97 Fremont/Warm Springs 908 3,593 4,501 1,099
10/1/97 Seattle / Stone Way 887 2,875 3,762 836
10/1/97 W. Olympia 160 1,608 1,768 469
10/1/97 Mercer/Parkside Ave 384 2,324 2,708 708
10/1/97 Bridge Water / Main 477 2,692 3,169 791
10/1/97 Norwalk / Hoyt Street 2,536 4,149 6,685 1,239
11/2/97 Lansing 730 1,700 2,430 573
11/7/97 Phoenix 1,197 2,931 4,128 918
11/13/97 Tinley Park 1,422 3,395 4,817 982
3/17/98 Houston/De Soto Dr. 659 1,691 2,350 508
3/17/98 Houston / East Freeway 593 1,564 2,157 502
3/17/98 Austin/Ben White 682 1,698 2,380 503
3/17/98 Arlington/E.Pioneer 922 2,402 3,324 712
3/17/98 Las Vegas/Tropicana 1,285 3,159 4,444 916
3/17/98 Branford / Summit Place 728 1,878 2,606 558
3/17/98 Las Vegas / Charleston 791 1,974 2,765 582
3/17/98 So. San Francisco 1,550 3,714 5,264 1,046
3/17/98 Pasadena / Arroyo Prkwy 3,005 7,235 10,240 2,019
3/17/98 Tempe / E. Broadway 633 1,670 2,303 506
3/17/98 Phoenix / N. 43rd Ave 443 1,211 1,654 396
3/17/98 Phoenix/No. 43rd 380 1,310 1,690 349
3/17/98 Phoenix / Black Canyon 380 1,049 1,429 349
F-66
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
3/17/98 Phoenix/Black Canyon - 136 317 192 -
3/17/98 Nesconset / Southern - 1,423 3,321 131 -
4/1/98 St. Louis / Hwy. 141 - 659 1,628 4,496 -
4/1/98 Island Park / Austin - 2,313 3,015 (673) -
4/1/98 Akron / Brittain Rd. - 275 2,248 (194) -
4/1/98 Patchogue/W.Sunrise - 936 2,184 159 -
4/1/98 Havertown/West Chester - 1,254 2,926 132 -
4/1/98 Schiller Park/River - 568 1,390 114 -
4/1/98 Chicago / Cuyler - 1,400 2,695 219 -
4/1/98 Chicago Heights/West - 468 1,804 176 -
4/1/98 Arlington Hts/University - 670 3,004 97 -
4/1/98 Cicero / Ogden - 1,678 2,266 315 -
4/1/98 Chicago/W. Howard St. - 974 2,875 163 -
4/1/98 Chicago/N. Western Ave - 1,453 3,205 160 -
4/1/98 Chicago/Northwest Hwy - 925 2,412 86 -
4/1/98 Chicago/N. Wells St. - 1,446 2,828 97 -
4/1/98 Chicago / Pulaski Rd. - 1,276 2,858 83 -
4/1/98 Artesia / Artesia - 625 1,419 99 -
4/1/98 Arcadia / Lower Azusa - 821 1,369 214 -
4/1/98 Manassas / Centreville - 405 2,137 299 -
4/1/98 La Downtwn/10 Fwy - 1,608 3,358 226 -
4/1/98 Bellevue / Northup - 1,232 3,306 272 -
4/1/98 Hollywood/Cole & Wilshire - 1,590 1,785 119 -
4/1/98 Atlanta/John Wesley - 1,233 1,665 211 -
4/1/98 Montebello/S. Maple - 1,274 2,299 136 -
4/1/98 Lake City/Forest Park - 248 1,445 130 -
4/1/98 Baltimore / W. Patap - 403 2,650 164 -
4/1/98 Fraser/Groesbeck Hwy - 368 1,796 86 -
4/1/98 Vallejo / Mini Drive - 560 1,803 90 -
4/1/98 San Diego/54th & Euclid - 952 2,550 125 -
4/1/98 Miami / 5th Street - 2,327 3,234 128 -
4/1/98 Silver Spring/Hill - 922 2,080 158 -
4/1/98 Chicago/E. 95th St. - 397 2,357 173 -
4/1/98 Chicago / S. Harlem - 791 1,424 121 -
4/1/98 St. Charles /Highway - 623 1,501 134 -
4/1/98 Chicago/Burr Ridge Rd. - 421 2,165 83 -
4/1/98 Yonkers / Route 9a - 1,722 3,823 280 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
3/17/98 Phoenix/Black Canyon 136 509 645 214
3/17/98 Nesconset / Southern 1,423 3,452 4,875 983
4/1/98 St. Louis / Hwy. 141 1,344 5,439 6,783 1,075
4/1/98 Island Park / Austin 1,374 3,281 4,655 890
4/1/98 Akron / Brittain Rd. 669 1,660 2,329 426
4/1/98 Patchogue/W.Sunrise 936 2,343 3,279 699
4/1/98 Havertown/West Chester 1,249 3,063 4,312 891
4/1/98 Schiller Park/River 568 1,504 2,072 456
4/1/98 Chicago / Cuyler 1,400 2,914 4,314 865
4/1/98 Chicago Heights/West 468 1,980 2,448 599
4/1/98 Arlington Hts/University 670 3,101 3,771 940
4/1/98 Cicero / Ogden 1,678 2,581 4,259 873
4/1/98 Chicago/W. Howard St. 974 3,038 4,012 955
4/1/98 Chicago/N. Western Ave 1,453 3,365 4,818 1,032
4/1/98 Chicago/Northwest Hwy 925 2,498 3,423 758
4/1/98 Chicago/N. Wells St. 1,446 2,925 4,371 893
4/1/98 Chicago / Pulaski Rd. 1,276 2,941 4,217 872
4/1/98 Artesia / Artesia 625 1,518 2,143 572
4/1/98 Arcadia / Lower Azusa 821 1,583 2,404 577
4/1/98 Manassas / Centreville 405 2,436 2,841 902
4/1/98 La Downtwn/10 Fwy 1,608 3,584 5,192 1,288
4/1/98 Bellevue / Northup 1,232 3,578 4,810 1,333
4/1/98 Hollywood/Cole & Wilshire 1,590 1,904 3,494 687
4/1/98 Atlanta/John Wesley 1,233 1,876 3,109 769
4/1/98 Montebello/S. Maple 1,274 2,435 3,709 868
4/1/98 Lake City/Forest Park 248 1,575 1,823 588
4/1/98 Baltimore / W. Patap 403 2,814 3,217 1,000
4/1/98 Fraser/Groesbeck Hwy 368 1,882 2,250 677
4/1/98 Vallejo / Mini Drive 560 1,893 2,453 688
4/1/98 San Diego/54th & Euclid 952 2,675 3,627 1,047
4/1/98 Miami / 5th Street 2,327 3,362 5,689 1,291
4/1/98 Silver Spring/Hill 922 2,238 3,160 897
4/1/98 Chicago/E. 95th St. 397 2,530 2,927 983
4/1/98 Chicago / S. Harlem 791 1,545 2,336 617
4/1/98 St. Charles /Highway 623 1,635 2,258 669
4/1/98 Chicago/Burr Ridge Rd. 421 2,248 2,669 894
4/1/98 Yonkers / Route 9a 1,722 4,103 5,825 1,526
F-67
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
4/1/98 Silverlake/Glendale - 2,314 5,481 213 -
4/1/98 Chicago/Harlem Ave - 1,430 3,038 141 -
4/1/98 Bethesda / Butler Rd - 1,146 2,509 73 -
4/1/98 Dundalk / Wise Ave - 447 2,005 143 -
4/1/98 St. Louis / Hwy. 141 - 659 1,628 74 -
4/1/98 Island Park / Austin - 2,313 3,015 104 -
4/1/98 Dallas / Kingsly - 1,095 1,712 107 -
5/1/98 Berkeley / 2nd St. - 1,914 4,466 (88) -
5/8/98 Cleveland / W. 117th - 930 2,277 208 -
5/8/98 La /Venice Blvd - 1,470 3,599 131 -
5/8/98 Aurora / Farnsworth - 960 2,350 106 -
5/8/98 Santa Rosa / Hopper - 1,020 2,497 123 -
5/8/98 Golden Valley / Winn - 630 1,542 139 -
5/8/98 St. Louis / Benham - 810 1,983 154 -
5/8/98 Chicago / S. Chicago - 840 2,057 97 -
10/1/98 El Segundo / Sepulveda - 6,586 5,795 202 -
10/1/98 Atlanta / Memorial Dr. - 414 2,239 180 -
10/1/98 Chicago / W. 79th St - 861 2,789 266 -
10/1/98 Chicago / N. Broadway - 1,918 3,824 190 -
10/1/98 Dallas / Greenville - 1,933 2,892 115 -
10/1/98 Tacoma / Orchard - 358 1,987 105 -
10/1/98 St. Louis / Gravois - 312 2,327 143 -
10/1/98 White Bear Lake - 578 2,079 190 -
10/1/98 Santa Cruz / Soquel - 832 2,385 119 -
10/1/98 Coon Rapids / Hwy 10 - 330 1,646 124 -
10/1/98 Oxnard / Hueneme Rd - 923 3,925 166 -
10/1/98 Vancouver/ Millplain - 343 2,000 95 -
10/1/98 Tigard / Mc Ewan - 597 1,652 85 -
10/1/98 Griffith / Cline - 299 2,118 88 -
10/1/98 Miami / Sunset Drive - 1,656 2,321 1,972 -
10/1/98 Farmington / 9 Mile - 580 2,526 98 -
10/1/98 Los Gatos / University - 2,234 3,890 (228) -
10/1/98 N. Hollywood - 1,484 3,143 88 -
10/1/98 Petaluma / Transport - 460 1,840 4,877 -
10/1/98 Chicago / 111th - 341 2,898 2,266 -
10/1/98 Upper Darby / Market - 808 5,011 176 -
10/1/98 San Jose / Santa - 966 3,870 102 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
4/1/98 Silverlake/Glendale 2,314 5,694 8,008 2,138
4/1/98 Chicago/Harlem Ave 1,430 3,179 4,609 1,221
4/1/98 Bethesda / Butler Rd 1,146 2,582 3,728 970
4/1/98 Dundalk / Wise Ave 447 2,148 2,595 782
4/1/98 St. Louis / Hwy. 141 659 1,702 2,361 725
4/1/98 Island Park / Austin 2,313 3,119 5,432 1,307
4/1/98 Dallas / Kingsly 1,095 1,819 2,914 679
5/1/98 Berkeley / 2nd St. 1,837 4,455 6,292 1,281
5/8/98 Cleveland / W. 117th 930 2,485 3,415 750
5/8/98 La /Venice Blvd 1,470 3,730 5,200 1,008
5/8/98 Aurora / Farnsworth 960 2,456 3,416 677
5/8/98 Santa Rosa / Hopper 1,020 2,620 3,640 726
5/8/98 Golden Valley / Winn 630 1,681 2,311 488
5/8/98 St. Louis / Benham 810 2,137 2,947 641
5/8/98 Chicago / S. Chicago 840 2,154 2,994 584
10/1/98 El Segundo / Sepulveda 6,586 5,997 12,583 1,596
10/1/98 Atlanta / Memorial Dr. 414 2,419 2,833 716
10/1/98 Chicago / W. 79th St 861 3,055 3,916 934
10/1/98 Chicago / N. Broadway 1,918 4,014 5,932 1,124
10/1/98 Dallas / Greenville 1,933 3,007 4,940 825
10/1/98 Tacoma / Orchard 358 2,092 2,450 599
10/1/98 St. Louis / Gravois 312 2,470 2,782 718
10/1/98 White Bear Lake 578 2,269 2,847 620
10/1/98 Santa Cruz / Soquel 832 2,504 3,336 704
10/1/98 Coon Rapids / Hwy 10 330 1,770 2,100 497
10/1/98 Oxnard / Hueneme Rd 923 4,091 5,014 1,117
10/1/98 Vancouver/ Millplain 343 2,095 2,438 594
10/1/98 Tigard / Mc Ewan 597 1,737 2,334 508
10/1/98 Griffith / Cline 299 2,206 2,505 595
10/1/98 Miami / Sunset Drive 2,267 3,682 5,949 849
10/1/98 Farmington / 9 Mile 580 2,624 3,204 723
10/1/98 Los Gatos / University 2,234 3,662 5,896 999
10/1/98 N. Hollywood 1,484 3,231 4,715 868
10/1/98 Petaluma / Transport 857 6,320 7,177 1,072
10/1/98 Chicago / 111th 432 5,073 5,505 987
10/1/98 Upper Darby / Market 808 5,187 5,995 1,403
10/1/98 San Jose / Santa 966 3,972 4,938 1,081
F-68
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
10/1/98 San Diego / Morena - 3,173 5,469 131 -
10/1/98 Brooklyn /Rockaway Ave - 6,272 9,691 458 -
10/1/98 Revere / Charger St - 1,997 3,727 236 -
10/1/98 Las Vegas / E. Charles - 602 2,545 260 -
10/1/98 Laurel / Baltimore Ave - 1,899 4,498 158 -
10/1/98 East La/Figueroa & 4th - 1,213 2,689 68 -
10/1/98 Oldsmar / Tampa Road - 760 2,154 2,725 -
10/1/98 Ft. Lauderdale /S.W. - 1,046 2,928 153 -
10/1/98 Miami / Nw 73rd St - 1,050 3,064 120 -
12/9/98 Miami / Nw 115th Ave - 1,095 2,349 212 -
1/1/99 New Orleans/St.Charles - 1,463 2,634 (301) -
1/6/99 Brandon / E. Brandon Blvd - 1,560 3,695 54 -
3/12/99 St. Louis / N. Lindbergh Blvd. - 1,688 3,939 336 -
3/12/99 St. Louis /Vandeventer Midtown - 699 1,631 151 -
3/12/99 St. Ann / Maryland Heights - 1,035 2,414 287 -
3/12/99 Florissant / N. Hwy 67 - 971 2,265 277 -
3/12/99 Ferguson Area-W.Florissant - 1,194 2,732 422 -
3/12/99 Florissant / New Halls Ferry Rd - 1,144 2,670 313 -
3/12/99 St. Louis / Airport - 785 1,833 172 -
3/12/99 St. Louis/ S.Third St - 1,096 2,557 113 -
3/12/99 Kansas City / E. 47th St. - 610 1,424 155 -
3/12/99 Kansas City /E. 67th Terrace - 1,136 2,643 90 -
3/12/99 Kansas City / James A. Reed Rd - 749 1,748 98 -
3/12/99 Independence / 291 - 871 2,032 151 -
3/12/99 Raytown / Woodson Rd - 915 2,134 99 -
3/12/99 Kansas City / 34th Main Street - 114 2,599 597 -
3/12/99 Columbia / River Dr - 671 1,566 177 -
3/12/99 Columbia / Buckner Rd - 714 1,665 295 -
3/12/99 Columbia / Decker Park Rd - 605 1,412 125 -
3/12/99 Columbia / Rosewood Dr - 777 1,814 102 -
3/12/99 W. Columbia / Orchard Dr. - 272 634 145 -
3/12/99 W. Columbia / Airport Blvd - 493 1,151 133 -
3/12/99 Greenville / Whitehorse Rd - 882 2,058 117 -
3/12/99 Greenville / Woods Lake Rd - 364 849 127 -
3/12/99 Mauldin / N. Main Street - 571 1,333 147 -
3/12/99 Simpsonville / Grand View Dr - 582 1,358 133 -
3/12/99 Taylors / Wade Hampton Blvd - 650 1,517 133 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
10/1/98 San Diego / Morena 3,173 5,600 8,773 1,496
10/1/98 Brooklyn /Rockaway Ave 6,272 10,149 16,421 2,750
10/1/98 Revere / Charger St 1,997 3,963 5,960 1,121
10/1/98 Las Vegas / E. Charles 602 2,805 3,407 786
10/1/98 Laurel / Baltimore Ave 1,899 4,656 6,555 1,285
10/1/98 East La/Figueroa & 4th 1,213 2,757 3,970 748
10/1/98 Oldsmar / Tampa Road 1,049 4,590 5,639 991
10/1/98 Ft. Lauderdale /S.W. 1,046 3,081 4,127 820
10/1/98 Miami / Nw 73rd St 1,050 3,184 4,234 881
12/9/98 Miami / Nw 115th Ave 1,102 2,554 3,656 590
1/1/99 New Orleans/St.Charles 1,039 2,757 3,796 672
1/6/99 Brandon / E. Brandon Blvd 1,560 3,749 5,309 821
3/12/99 St. Louis / N. Lindbergh Blvd. 1,688 4,275 5,963 1,040
3/12/99 St. Louis /Vandeventer Midtown 699 1,782 2,481 461
3/12/99 St. Ann / Maryland Heights 1,035 2,701 3,736 652
3/12/99 Florissant / N. Hwy 67 971 2,542 3,513 632
3/12/99 Ferguson Area-W.Florissant 1,178 3,170 4,348 818
3/12/99 Florissant / New Halls Ferry Rd 1,144 2,983 4,127 772
3/12/99 St. Louis / Airport 785 2,005 2,790 499
3/12/99 St. Louis/ S.Third St 1,096 2,670 3,766 652
3/12/99 Kansas City / E. 47th St. 610 1,579 2,189 421
3/12/99 Kansas City /E. 67th Terrace 1,134 2,735 3,869 679
3/12/99 Kansas City / James A. Reed Rd 749 1,846 2,595 474
3/12/99 Independence / 291 871 2,183 3,054 544
3/12/99 Raytown / Woodson Rd 915 2,233 3,148 563
3/12/99 Kansas City / 34th Main Street 114 3,196 3,310 930
3/12/99 Columbia / River Dr 671 1,743 2,414 495
3/12/99 Columbia / Buckner Rd 714 1,960 2,674 623
3/12/99 Columbia / Decker Park Rd 605 1,537 2,142 426
3/12/99 Columbia / Rosewood Dr 777 1,916 2,693 505
3/12/99 W. Columbia / Orchard Dr. 272 779 1,051 250
3/12/99 W. Columbia / Airport Blvd 493 1,284 1,777 343
3/12/99 Greenville / Whitehorse Rd 882 2,175 3,057 556
3/12/99 Greenville / Woods Lake Rd 364 976 1,340 284
3/12/99 Mauldin / N. Main Street 571 1,480 2,051 419
3/12/99 Simpsonville / Grand View Dr 574 1,499 2,073 414
3/12/99 Taylors / Wade Hampton Blvd 650 1,650 2,300 450
F-69
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
3/12/99 Charleston/Ashley Phosphate - 839 1,950 179 -
3/12/99 N. Charleston / Dorchester Rd - 380 886 135 -
3/12/99 N. Charleston / Dorchester - 487 1,137 158 -
3/12/99 Charleston / Sam Rittenberg Blvd - 555 1,296 109 -
3/12/99 Hilton Head / Office Park Rd - 1,279 2,985 136 -
3/12/99 Columbia / Plumbers Rd - 368 858 153 -
3/12/99 Greenville / Pineknoll Rd - 927 2,163 203 -
3/12/99 Hilton Head / Yacht Cove Dr - 1,182 2,753 189 -
3/12/99 Spartanburg / Chesnee Hwy - 533 1,244 294 -
3/12/99 Charleston / Ashley River Rd - 1,114 2,581 160 -
3/12/99 Columbia / Broad River - 1,463 3,413 273 -
3/12/99 Charlotte / East Wt Harris Blvd - 736 1,718 120 -
3/12/99 Charlotte / North Tryon St. - 708 1,653 260 -
3/12/99 Charlotte / South Blvd - 641 1,496 152 -
3/12/99 Kannapolis / Oregon St - 463 1,081 115 -
3/12/99 Durham / E. Club Blvd - 947 2,209 153 -
3/12/99 Durham / N. Duke St. - 769 1,794 134 -
3/12/99 Raleigh / Maitland Dr - 679 1,585 149 -
3/12/99 Greensboro / O'henry Blvd - 577 1,345 214 -
3/12/99 Gastonia / S. York Rd - 467 1,089 131 -
3/12/99 Durham / Kangaroo Dr. - 1,102 2,572 292 -
3/12/99 Pensacola / Brent Lane - 402 938 24 -
3/12/99 Pensacola / Creighton Road - 454 1,060 62 -
3/12/99 Jacksonville / Park Avenue - 905 2,113 151 -
3/12/99 Jacksonville / Phillips Hwy - 665 1,545 204 -
3/12/99 Clearwater / Highland Ave - 724 1,690 188 -
3/12/99 Tarpon Springs / Us Highway 19 - 892 2,081 190 -
3/12/99 Orlando /S. Orange Blossom Trail - 1,229 2,867 136 -
3/12/99 Casselberry Ii - 1,160 2,708 171 -
3/12/99 Miami / Nw 14th Street - 1,739 4,058 152 -
3/12/99 Tarpon Springs / Highway 19 - 1,179 2,751 152 -
3/12/99 Ft. Myers / Tamiami Trail South - 834 1,945 (262) -
3/12/99 Jacksonville / Ft. Caroline Rd. - 1,037 2,420 177 -
3/12/99 Orlando / South Semoran - 565 1,319 39 -
3/12/99 Jacksonville / Southside Blvd. - 1,278 2,982 236 -
3/12/99 Miami / Nw 7th Ave - 783 1,827 186 -
3/12/99 Vero Beach / Us Hwy 1 - 678 1,583 82 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
3/12/99 Charleston/Ashley Phosphate 823 2,145 2,968 600
3/12/99 N. Charleston / Dorchester Rd 380 1,021 1,401 283
3/12/99 N. Charleston / Dorchester 487 1,295 1,782 367
3/12/99 Charleston / Sam Rittenberg Blvd 555 1,405 1,960 390
3/12/99 Hilton Head / Office Park Rd 1,279 3,121 4,400 766
3/12/99 Columbia / Plumbers Rd 368 1,011 1,379 292
3/12/99 Greenville / Pineknoll Rd 927 2,366 3,293 632
3/12/99 Hilton Head / Yacht Cove Dr 1,181 2,943 4,124 760
3/12/99 Spartanburg / Chesnee Hwy 533 1,538 2,071 468
3/12/99 Charleston / Ashley River Rd 1,108 2,747 3,855 685
3/12/99 Columbia / Broad River 1,463 3,686 5,149 979
3/12/99 Charlotte / East Wt Harris Blvd 736 1,838 2,574 488
3/12/99 Charlotte / North Tryon St. 708 1,913 2,621 526
3/12/99 Charlotte / South Blvd 641 1,648 2,289 446
3/12/99 Kannapolis / Oregon St 463 1,196 1,659 334
3/12/99 Durham / E. Club Blvd 947 2,362 3,309 596
3/12/99 Durham / N. Duke St. 769 1,928 2,697 504
3/12/99 Raleigh / Maitland Dr 679 1,734 2,413 468
3/12/99 Greensboro / O'henry Blvd 577 1,559 2,136 468
3/12/99 Gastonia / S. York Rd 467 1,220 1,687 360
3/12/99 Durham / Kangaroo Dr. 1,102 2,864 3,966 772
3/12/99 Pensacola / Brent Lane 402 962 1,364 253
3/12/99 Pensacola / Creighton Road 454 1,122 1,576 313
3/12/99 Jacksonville / Park Avenue 905 2,264 3,169 596
3/12/99 Jacksonville / Phillips Hwy 663 1,751 2,414 483
3/12/99 Clearwater / Highland Ave 724 1,878 2,602 489
3/12/99 Tarpon Springs / Us Highway 19 892 2,271 3,163 604
3/12/99 Orlando /S. Orange Blossom Trail 1,229 3,003 4,232 766
3/12/99 Casselberry Ii 1,160 2,879 4,039 719
3/12/99 Miami / Nw 14th Street 1,739 4,210 5,949 1,039
3/12/99 Tarpon Springs / Highway 19 1,179 2,903 4,082 721
3/12/99 Ft. Myers / Tamiami Trail South 834 1,683 2,517 330
3/12/99 Jacksonville / Ft. Caroline Rd. 1,037 2,597 3,634 690
3/12/99 Orlando / South Semoran 565 1,358 1,923 337
3/12/99 Jacksonville / Southside Blvd. 1,278 3,218 4,496 826
3/12/99 Miami / Nw 7th Ave 783 2,013 2,796 550
3/12/99 Vero Beach / Us Hwy 1 678 1,665 2,343 414
F-70
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
3/12/99 Ponte Vedra / Palm Valley Rd. - 745 2,749 473 -
3/12/99 Miami Lakes / Nw 153rd St. - 425 992 75 -
3/12/99 Deerfield Beach / Sw 10th St. - 1,844 4,302 96 -
3/12/99 Apopka / S. Orange Blossom - 307 717 138 -
3/12/99 Davie / University - 313 4,379 205 -
3/12/99 Arlington / Division - 998 2,328 84 -
3/12/99 Duncanville/S.Cedar Ridge - 1,477 3,447 211 -
3/12/99 Carrollton / Trinity Mills West - 530 1,237 98 -
3/12/99 Houston / Wallisville Rd. - 744 1,736 82 -
3/12/99 Houston / Fondren South - 647 1,510 137 -
3/12/99 Houston / Addicks Satsuma - 409 954 136 -
3/12/99 Addison / Inwood Road - 1,204 2,808 64 -
3/12/99 Garland / Jackson Drive - 755 1,761 83 -
3/12/99 Garland / Buckingham Road - 492 1,149 121 -
3/12/99 Houston / South Main - 1,461 3,409 115 -
3/12/99 Plano / Parker Road-Avenue K - 1,517 3,539 152 -
3/12/99 Houston / Bingle Road - 576 1,345 134 -
3/12/99 Houston / Mangum Road - 737 1,719 250 -
3/12/99 Houston / Hayes Road - 916 2,138 126 -
3/12/99 Katy / Dominion Drive - 995 2,321 55 -
3/12/99 Houston / Fm 1960 West - 513 1,198 138 -
3/12/99 Webster / Fm 528 Road - 756 1,764 89 -
3/12/99 Houston / Loch Katrine Lane - 580 1,352 82 -
3/12/99 Houston / Milwee St. - 779 1,815 176 -
3/12/99 Lewisville / Highway 121 - 688 1,605 99 -
3/12/99 Richardson / Central Expressway - 465 1,085 109 -
3/12/99 Houston / Hwy 6 South - 569 1,328 72 -
3/12/99 Houston / Westheimer West - 1,075 2,508 51 -
3/12/99 Ft. Worth / Granbury Road - 763 1,781 70 -
3/12/99 Houston / New Castle - 2,346 5,473 1,242 -
3/12/99 Dallas / Inwood Road - 1,478 3,448 102 -
3/12/99 Fort Worth / Loop 820 North - 729 1,702 119 -
3/12/99 Arlington / Cooper St - 779 1,818 85 -
3/12/99 Webster / Highway 3 - 677 1,580 79 -
3/12/99 Augusta / Peach Orchard Rd - 860 2,007 294 -
3/12/99 Martinez / Old Petersburg Rd - 407 950 157 -
3/12/99 Jonesboro / Tara Blvd - 785 1,827 263 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
3/12/99 Ponte Vedra / Palm Valley Rd. 745 3,222 3,967 882
3/12/99 Miami Lakes / Nw 153rd St. 425 1,067 1,492 292
3/12/99 Deerfield Beach / Sw 10th St. 1,844 4,398 6,242 1,055
3/12/99 Apopka / S. Orange Blossom 307 855 1,162 254
3/12/99 Davie / University 313 4,584 4,897 1,105
3/12/99 Arlington / Division 998 2,412 3,410 593
3/12/99 Duncanville/S.Cedar Ridge 1,477 3,658 5,135 937
3/12/99 Carrollton / Trinity Mills West 530 1,335 1,865 362
3/12/99 Houston / Wallisville Rd. 744 1,818 2,562 468
3/12/99 Houston / Fondren South 647 1,647 2,294 411
3/12/99 Houston / Addicks Satsuma 409 1,090 1,499 297
3/12/99 Addison / Inwood Road 1,204 2,872 4,076 696
3/12/99 Garland / Jackson Drive 755 1,844 2,599 468
3/12/99 Garland / Buckingham Road 492 1,270 1,762 367
3/12/99 Houston / South Main 1,461 3,524 4,985 871
3/12/99 Plano / Parker Road-Avenue K 1,517 3,691 5,208 923
3/12/99 Houston / Bingle Road 576 1,479 2,055 400
3/12/99 Houston / Mangum Road 737 1,969 2,706 504
3/12/99 Houston / Hayes Road 916 2,264 3,180 555
3/12/99 Katy / Dominion Drive 995 2,376 3,371 584
3/12/99 Houston / Fm 1960 West 513 1,336 1,849 356
3/12/99 Webster / Fm 528 Road 756 1,853 2,609 477
3/12/99 Houston / Loch Katrine Lane 580 1,434 2,014 380
3/12/99 Houston / Milwee St. 778 1,992 2,770 529
3/12/99 Lewisville / Highway 121 688 1,704 2,392 446
3/12/99 Richardson / Central Expressway 465 1,194 1,659 328
3/12/99 Houston / Hwy 6 South 569 1,400 1,969 355
3/12/99 Houston / Westheimer West 1,075 2,559 3,634 627
3/12/99 Ft. Worth / Granbury Road 763 1,851 2,614 465
3/12/99 Houston / New Castle 2,346 6,715 9,061 1,481
3/12/99 Dallas / Inwood Road 1,478 3,550 5,028 848
3/12/99 Fort Worth / Loop 820 North 729 1,821 2,550 472
3/12/99 Arlington / Cooper St 779 1,903 2,682 471
3/12/99 Webster / Highway 3 677 1,659 2,336 429
3/12/99 Augusta / Peach Orchard Rd 860 2,301 3,161 707
3/12/99 Martinez / Old Petersburg Rd 407 1,107 1,514 314
3/12/99 Jonesboro / Tara Blvd 784 2,091 2,875 575
F-71
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
3/12/99 Atlanta / Briarcliff Rd - 2,171 5,066 241 -
3/12/99 Decatur / N Decatur Rd - 933 2,177 147 -
3/12/99 Douglasville / Westmoreland - 453 1,056 224 -
3/12/99 Doraville / Mcelroy Rd - 827 1,931 245 -
3/12/99 Roswell / Alpharetta - 1,772 4,135 186 -
3/12/99 Douglasville / Duralee Lane - 533 1,244 158 -
3/12/99 Douglasville / Highway 5 - 804 1,875 456 -
3/12/99 Forest Park / Jonesboro - 659 1,537 198 -
3/12/99 Marietta / Whitlock - 1,016 2,370 198 -
3/12/99 Marietta / Cobb - 727 1,696 255 -
3/12/99 Norcross / Jones Mill Rd - 1,142 2,670 186 -
3/12/99 Norcross / Dawson Blvd - 1,232 2,874 263 -
3/12/99 Forest Park / Old Dixie Hwy - 895 2,070 337 -
3/12/99 Decatur / Covington - 1,764 4,116 108 -
3/12/99 Alpharetta / Maxwell Rd - 1,075 2,509 125 -
3/12/99 Alpharetta / N. Main St - 1,240 2,893 103 -
3/12/99 Atlanta / Bolton Rd - 866 2,019 178 -
3/12/99 Riverdale / Georgia Hwy 85 - 1,075 2,508 151 -
3/12/99 Kennesaw / Rutledge Road - 803 1,874 243 -
3/12/99 Lawrenceville / Buford Dr. - 256 597 91 -
3/12/99 Hanover Park / W. Lake Street - 1,320 3,081 146 -
3/12/99 Chicago / W. Jarvis Ave - 313 731 91 -
3/12/99 Chicago / N. Broadway St - 535 1,249 230 -
3/12/99 Carol Stream / Phillips Court - 829 1,780 96 -
3/12/99 Winfield / Roosevelt Road - 1,109 2,587 118 -
3/12/99 Schaumburg / S. Roselle Road - 659 1,537 107 -
3/12/99 Tinley Park / Brennan Hwy - 771 1,799 173 -
3/12/99 Schaumburg / Palmer Drive - 1,333 3,111 137 -
3/12/99 Mobile / Hillcrest Road - 554 1,293 155 -
3/12/99 Mobile / Azalea Road - 517 1,206 166 -
3/12/99 Mobile / Moffat Road - 537 1,254 134 -
3/12/99 Mobile / Grelot Road - 804 1,877 139 -
3/12/99 Mobile / Government Blvd - 407 950 131 -
3/12/99 New Orleans / Tchoupitoulas - 1,092 2,548 239 -
3/12/99 Louisville / Breckenridge Lane - 581 1,356 87 -
3/12/99 Louisville - 554 1,292 140 -
3/12/99 Louisville / Poplar Level - 463 1,080 157 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
3/12/99 Atlanta / Briarcliff Rd 2,171 5,307 7,478 1,326
3/12/99 Decatur / N Decatur Rd 933 2,324 3,257 624
3/12/99 Douglasville / Westmoreland 453 1,280 1,733 390
3/12/99 Doraville / Mcelroy Rd 827 2,176 3,003 610
3/12/99 Roswell / Alpharetta 1,772 4,321 6,093 1,049
3/12/99 Douglasville / Duralee Lane 533 1,402 1,935 379
3/12/99 Douglasville / Highway 5 804 2,331 3,135 734
3/12/99 Forest Park / Jonesboro 659 1,735 2,394 493
3/12/99 Marietta / Whitlock 1,016 2,568 3,584 655
3/12/99 Marietta / Cobb 727 1,951 2,678 564
3/12/99 Norcross / Jones Mill Rd 1,142 2,856 3,998 739
3/12/99 Norcross / Dawson Blvd 1,232 3,137 4,369 808
3/12/99 Forest Park / Old Dixie Hwy 889 2,413 3,302 642
3/12/99 Decatur / Covington 1,764 4,224 5,988 1,045
3/12/99 Alpharetta / Maxwell Rd 1,075 2,634 3,709 647
3/12/99 Alpharetta / N. Main St 1,240 2,996 4,236 730
3/12/99 Atlanta / Bolton Rd 865 2,198 3,063 570
3/12/99 Riverdale / Georgia Hwy 85 1,075 2,659 3,734 658
3/12/99 Kennesaw / Rutledge Road 803 2,117 2,920 578
3/12/99 Lawrenceville / Buford Dr. 256 688 944 207
3/12/99 Hanover Park / W. Lake Street 1,320 3,227 4,547 800
3/12/99 Chicago / W. Jarvis Ave 313 822 1,135 250
3/12/99 Chicago / N. Broadway St 535 1,479 2,014 446
3/12/99 Carol Stream / Phillips Court 783 1,922 2,705 459
3/12/99 Winfield / Roosevelt Road 1,109 2,705 3,814 678
3/12/99 Schaumburg / S. Roselle Road 659 1,644 2,303 433
3/12/99 Tinley Park / Brennan Hwy 771 1,972 2,743 519
3/12/99 Schaumburg / Palmer Drive 1,333 3,248 4,581 802
3/12/99 Mobile / Hillcrest Road 554 1,448 2,002 402
3/12/99 Mobile / Azalea Road 517 1,372 1,889 376
3/12/99 Mobile / Moffat Road 537 1,388 1,925 388
3/12/99 Mobile / Grelot Road 804 2,016 2,820 526
3/12/99 Mobile / Government Blvd 407 1,081 1,488 297
3/12/99 New Orleans / Tchoupitoulas 1,092 2,787 3,879 750
3/12/99 Louisville / Breckenridge Lane 581 1,443 2,024 385
3/12/99 Louisville 554 1,432 1,986 397
3/12/99 Louisville / Poplar Level 463 1,237 1,700 351
F-72
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
3/12/99 Chesapeake / Western Branch - 1,274 2,973 192 -
3/12/99 Centreville / Lee Hwy - 1,650 3,851 175 -
3/12/99 Sterling / S. Sterling Blvd - 1,282 2,992 185 -
3/12/99 Manassas / Sudley Road - 776 1,810 209 -
3/12/99 Longmont / Wedgewood Ave - 717 1,673 97 -
3/12/99 Fort Collins / So.College Ave - 745 1,739 149 -
3/12/99 Colo Sprngs / Parkmoor Village - 620 1,446 185 -
3/12/99 Colo Sprngs / Van Teylingen - 1,216 2,837 191 -
3/12/99 Denver / So. Clinton St. - 462 1,609 100 -
3/12/99 Denver / Washington St. - 795 1,846 364 -
3/12/99 Colo Sprngs / Centennial Blvd - 1,352 3,155 93 -
3/12/99 Colo Sprngs / Astrozon Court - 810 1,889 148 -
3/12/99 Arvada / 64th Ave - 671 1,566 104 -
3/12/99 Golden / Simms Street - 918 2,143 330 -
3/12/99 Lawrence / Haskell Ave - 636 1,484 142 -
3/12/99 Overland Park / Hemlock St - 1,168 2,725 120 -
3/12/99 Lenexa / Long St. - 720 1,644 50 -
3/12/99 Shawnee / Hedge Lane Terrace - 570 1,331 158 -
3/12/99 Mission / Foxridge Dr - 1,657 3,864 163 -
3/12/99 Milwaukee / W. Dean Road - 1,362 3,163 525 -
3/12/99 Columbus / Morse Road - 1,415 3,302 523 -
3/12/99 Milford / Branch Hill - 527 1,229 2,412 -
3/12/99 Fairfield / Dixie - 519 1,211 91 -
3/12/99 Cincinnati / Western Hills - 758 1,769 200 -
3/12/99 Austin / N. Mopac Expressway - 865 2,791 71 -
3/12/99 Atlanta / Dunwoody Place - 1,410 3,296 207 -
3/12/99 Kennedale/Bowman Sprgs - 425 991 78 -
3/12/99 Colo Sprngs/N.Powers - 1,124 2,622 206 -
3/12/99 St. Louis/S. Third St - 206 480 29 -
3/12/99 Orlando / L.B. Mcleod Road - 521 1,217 61 -
3/12/99 Jacksonville / Roosevelt Blvd. - 851 1,986 305 -
3/12/99 Miami-Kendall / Sw 84th Street - 935 2,180 163 -
3/12/99 North Miami Beach / 69th St - 1,594 3,720 187 -
3/12/99 Miami Beach / Dade Blvd - 962 2,245 295 -
3/12/99 Chicago / N. Natchez Ave - 1,684 3,930 211 -
3/12/99 Chicago / W. Cermak Road - 1,294 3,019 516 -
3/12/99 Kansas City / State Ave - 645 1,505 212 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
3/12/99 Chesapeake / Western Branch 1,274 3,165 4,439 791
3/12/99 Centreville / Lee Hwy 1,636 4,040 5,676 999
3/12/99 Sterling / S. Sterling Blvd 1,282 3,177 4,459 789
3/12/99 Manassas / Sudley Road 776 2,019 2,795 523
3/12/99 Longmont / Wedgewood Ave 717 1,770 2,487 442
3/12/99 Fort Collins / So.College Ave 745 1,888 2,633 486
3/12/99 Colo Sprngs / Parkmoor Village 620 1,631 2,251 405
3/12/99 Colo Sprngs / Van Teylingen 1,216 3,028 4,244 750
3/12/99 Denver / So. Clinton St. 462 1,709 2,171 426
3/12/99 Denver / Washington St. 792 2,213 3,005 554
3/12/99 Colo Sprngs / Centennial Blvd 1,352 3,248 4,600 779
3/12/99 Colo Sprngs / Astrozon Court 810 2,037 2,847 540
3/12/99 Arvada / 64th Ave 671 1,670 2,341 433
3/12/99 Golden / Simms Street 918 2,473 3,391 645
3/12/99 Lawrence / Haskell Ave 636 1,626 2,262 424
3/12/99 Overland Park / Hemlock St 1,168 2,845 4,013 700
3/12/99 Lenexa / Long St. 709 1,705 2,414 419
3/12/99 Shawnee / Hedge Lane Terrace 570 1,489 2,059 384
3/12/99 Mission / Foxridge Dr 1,656 4,028 5,684 987
3/12/99 Milwaukee / W. Dean Road 1,357 3,693 5,050 986
3/12/99 Columbus / Morse Road 1,415 3,825 5,240 965
3/12/99 Milford / Branch Hill 527 3,641 4,168 657
3/12/99 Fairfield / Dixie 519 1,302 1,821 348
3/12/99 Cincinnati / Western Hills 758 1,969 2,727 538
3/12/99 Austin / N. Mopac Expressway 865 2,862 3,727 646
3/12/99 Atlanta / Dunwoody Place 1,390 3,523 4,913 893
3/12/99 Kennedale/Bowman Sprgs 425 1,069 1,494 285
3/12/99 Colo Sprngs/N.Powers 1,124 2,828 3,952 732
3/12/99 St. Louis/S. Third St 206 509 715 139
3/12/99 Orlando / L.B. Mcleod Road 521 1,278 1,799 330
3/12/99 Jacksonville / Roosevelt Blvd. 851 2,291 3,142 665
3/12/99 Miami-Kendall / Sw 84th Street 935 2,343 3,278 619
3/12/99 North Miami Beach / 69th St 1,594 3,907 5,501 989
3/12/99 Miami Beach / Dade Blvd 962 2,540 3,502 662
3/12/99 Chicago / N. Natchez Ave 1,684 4,141 5,825 1,014
3/12/99 Chicago / W. Cermak Road 1,294 3,535 4,829 1,080
3/12/99 Kansas City / State Ave 645 1,717 2,362 469
F-73
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
3/12/99 Lenexa / Santa Fe Trail Road - 713 1,663 184 -
3/12/99 Waukesha / Foster Court - 765 1,785 173 -
3/12/99 River Grove / N. 5th Ave. - 1,094 2,552 27 -
3/12/99 St. Charles / E. Main St. - 951 2,220 (286) -
3/12/99 Chicago / West 47th St. - 705 1,645 77 -
3/12/99 Carol Stream / S. Main Place - 1,320 3,079 174 -
3/12/99 Carpentersville /N. Western Ave - 911 2,120 148 -
3/12/99 Elgin / E. Chicago St. - 570 2,163 102 -
3/12/99 Elgin / Big Timber Road - 1,347 3,253 250 -
3/12/99 Chicago / S. Pulaski Road - 458 2,118 303 -
3/12/99 Aurora / Business 30 - 900 2,097 158 -
3/12/99 Streamwood / Old Church Road - 855 1,991 78 -
3/12/99 Mt. Prospect / Central Road - 802 1,847 182 -
3/12/99 Geneva / Gary Ave - 1,072 2,501 76 -
3/12/99 Naperville / Lasalle Ave - 1,501 3,502 113 -
3/31/99 Forest Park - 270 3,378 1,031 -
4/1/99 Fresno - 44 206 (238) 804
5/1/99 Stockton - 151 402 (250) 2,017
6/30/99 Winter Park/N. Semor - 342 638 334 728
6/30/99 N. Richland Hills - 455 769 253 832
6/30/99 Rolling Meadows/Lois - 441 849 378 898
6/30/99 Gresham/Burnside - 354 544 218 627
6/30/99 Jacksonville/University - 211 741 250 700
6/30/99 Irving/W. Airport - 419 960 203 857
6/30/99 Houston/Highway 6 So. - 751 1,006 1,002 1,057
6/30/99 Concord/Arnold - 827 1,553 431 1,874
6/30/99 Rockville/Gude Drive - 602 768 388 880
6/30/99 Bradenton/Cortez Road - 476 885 387 906
6/30/99 San Antonio/Nw Loop - 511 786 210 855
6/30/99 Anaheim / La Palma - 1,378 851 218 1,221
6/30/99 Spring Valley/Sweetwater - 271 380 6,125 416
6/30/99 Ft. Myers/Tamiami - 948 962 311 1,208
6/30/99 Littleton/Centennial - 421 804 292 812
6/30/99 Newark/Cedar Blvd - 729 971 245 1,067
6/30/99 Falls Church/Columbia - 901 975 330 1,141
6/30/99 Fairfax / Lee Highway - 586 1,078 324 1,106
6/30/99 Wheat Ridge / W. 44th - 480 789 274 831
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
3/12/99 Lenexa / Santa Fe Trail Road 713 1,847 2,560 468
3/12/99 Waukesha / Foster Court 765 1,958 2,723 490
3/12/99 River Grove / N. 5th Ave. 1,034 2,639 3,673 884
3/12/99 St. Charles / E. Main St. 802 2,083 2,885 758
3/12/99 Chicago / West 47th St. 705 1,722 2,427 430
3/12/99 Carol Stream / S. Main Place 1,320 3,253 4,573 849
3/12/99 Carpentersville /N. Western Ave 909 2,270 3,179 578
3/12/99 Elgin / E. Chicago St. 570 2,265 2,835 547
3/12/99 Elgin / Big Timber Road 1,347 3,503 4,850 943
3/12/99 Chicago / S. Pulaski Road 458 2,421 2,879 560
3/12/99 Aurora / Business 30 899 2,256 3,155 581
3/12/99 Streamwood / Old Church Road 854 2,070 2,924 508
3/12/99 Mt. Prospect / Central Road 795 2,036 2,831 561
3/12/99 Geneva / Gary Ave 1,072 2,577 3,649 640
3/12/99 Naperville / Lasalle Ave 1,501 3,615 5,116 903
3/31/99 Forest Park 270 4,409 4,679 2,152
4/1/99 Fresno 193 623 816 155
5/1/99 Stockton 590 1,730 2,320 430
6/30/99 Winter Park/N. Semor 427 1,615 2,042 427
6/30/99 N. Richland Hills 569 1,740 2,309 439
6/30/99 Rolling Meadows/Lois 551 2,015 2,566 510
6/30/99 Gresham/Burnside 442 1,301 1,743 327
6/30/99 Jacksonville/University 263 1,639 1,902 421
6/30/99 Irving/W. Airport 524 1,915 2,439 474
6/30/99 Houston/Highway 6 So. 937 2,879 3,816 722
6/30/99 Concord/Arnold 1,032 3,653 4,685 971
6/30/99 Rockville/Gude Drive 751 1,887 2,638 478
6/30/99 Bradenton/Cortez Road 594 2,060 2,654 514
6/30/99 San Antonio/Nw Loop 638 1,724 2,362 407
6/30/99 Anaheim / La Palma 1,721 1,947 3,668 449
6/30/99 Spring Valley/Sweetwater 338 6,854 7,192 344
6/30/99 Ft. Myers/Tamiami 1,184 2,245 3,429 516
6/30/99 Littleton/Centennial 526 1,803 2,329 438
6/30/99 Newark/Cedar Blvd 910 2,102 3,012 492
6/30/99 Falls Church/Columbia 1,126 2,221 3,347 530
6/30/99 Fairfax / Lee Highway 732 2,362 3,094 583
6/30/99 Wheat Ridge / W. 44th 599 1,775 2,374 448
F-74
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
6/30/99 Huntington Bch/Gotham - 952 890 327 1,130
6/30/99 Fort Worth/McCart - 372 942 189 703
6/30/99 San Diego/Clairemont - 1,601 2,035 389 2,034
6/30/99 Houston/Millridge N. - 1,160 1,983 266 2,433
6/30/99 Woodbridge/Jefferson - 840 1,689 284 1,446
6/30/99 Mountainside - 1,260 1,237 338 1,523
6/30/99 Woodbridge / Davis - 1,796 1,623 465 1,996
6/30/99 Huntington Beach - 1,026 1,437 147 1,450
6/30/99 Edison / Old Post Rd - 498 1,267 323 1,175
6/30/99 Northridge/Parthenia - 1,848 1,486 192 1,839
6/30/99 Brick Township/Brick - 590 1,431 292 1,364
6/30/99 Stone Mountain/Rock - 1,233 288 328 852
6/30/99 Hyattsville - 768 2,186 276 1,919
6/30/99 Union City / Alvarado - 992 1,776 217 1,690
6/30/99 Oak Park / Greenfield - 621 1,735 208 1,490
6/30/99 Tujunga/Foothill Blvd - 1,746 2,383 235 2,370
7/1/99 Pantego/W. Pioneer Pkwy - 432 1,228 71 -
7/1/99 Nashville/Lafayette St - 486 1,135 171 -
7/1/99 Nashville/Metroplex Dr - 380 886 155 -
7/1/99 Madison / Myatt Dr - 441 1,028 118 -
7/1/99 Hixson / Highway 153 - 488 1,138 198 -
7/1/99 Hixson / Gadd Rd - 207 484 327 -
7/1/99 Red Bank / Harding Rd - 452 1,056 189 -
7/1/99 Nashville/Welshwood Dr - 934 2,179 186 -
7/1/99 Madison/Williams Ave - 1,318 3,076 355 -
7/1/99 Nashville/Mcnally Dr - 884 2,062 419 -
7/1/99 Hermitage/Central Ct - 646 1,508 179 -
7/1/99 Antioch/Cane Ridge Rd - 353 823 186 -
9/1/99 Charlotte / Ashley Road - 664 1,551 33 -
9/1/99 Raleigh / Capital Blvd - 927 2,166 21 -
9/1/99 Charlotte / South Blvd. - 734 1,715 46 -
9/1/99 Greensboro/W.Market St. - 603 1,409 53 -
10/8/99 Belmont / O'neill Ave - 869 4,659 155 -
10/11/99 Matthews - 937 3,165 245 -
11/15/99 Poplar, Memphis - 1,631 3,093 274 -
12/17/99 Dallas / Swiss Ave - 1,862 4,344 137 -
12/30/99 Oak Park/Greenfield Rd - 1,184 3,685 (101) -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
6/30/99 Huntington Bch/Gotham 1,189 2,110 3,299 512
6/30/99 Fort Worth/McCart 464 1,742 2,206 382
6/30/99 San Diego/Clairemont 1,999 4,060 6,059 948
6/30/99 Houston/Millridge N. 1,449 4,393 5,842 1,010
6/30/99 Woodbridge/Jefferson 1,048 3,211 4,259 647
6/30/99 Mountainside 1,574 2,784 4,358 624
6/30/99 Woodbridge / Davis 2,243 3,637 5,880 849
6/30/99 Huntington Beach 1,282 2,778 4,060 607
6/30/99 Edison / Old Post Rd 622 2,641 3,263 614
6/30/99 Northridge/Parthenia 2,308 3,057 5,365 642
6/30/99 Brick Township/Brick 736 2,941 3,677 623
6/30/99 Stone Mountain/Rock 1,540 1,161 2,701 265
6/30/99 Hyattsville 959 4,190 5,149 902
6/30/99 Union City / Alvarado 1,239 3,436 4,675 736
6/30/99 Oak Park / Greenfield 775 3,279 4,054 719
6/30/99 Tujunga/Foothill Blvd 2,180 4,554 6,734 876
7/1/99 Pantego/W. Pioneer Pkwy 432 1,299 1,731 184
7/1/99 Nashville/Lafayette St 486 1,306 1,792 392
7/1/99 Nashville/Metroplex Dr 380 1,041 1,421 314
7/1/99 Madison / Myatt Dr 441 1,146 1,587 319
7/1/99 Hixson / Highway 153 488 1,336 1,824 401
7/1/99 Hixson / Gadd Rd 207 811 1,018 304
7/1/99 Red Bank / Harding Rd 452 1,245 1,697 378
7/1/99 Nashville/Welshwood Dr 934 2,365 3,299 643
7/1/99 Madison/Williams Ave 1,318 3,431 4,749 911
7/1/99 Nashville/Mcnally Dr 884 2,481 3,365 760
7/1/99 Hermitage/Central Ct 646 1,687 2,333 465
7/1/99 Antioch/Cane Ridge Rd 353 1,009 1,362 302
9/1/99 Charlotte / Ashley Road 651 1,597 2,248 404
9/1/99 Raleigh / Capital Blvd 909 2,205 3,114 531
9/1/99 Charlotte / South Blvd. 719 1,776 2,495 448
9/1/99 Greensboro/W.Market St. 591 1,474 2,065 375
10/8/99 Belmont / O'neill Ave 878 4,805 5,683 1,126
10/11/99 Matthews 994 3,353 4,347 654
11/15/99 Poplar, Memphis 1,731 3,267 4,998 657
12/17/99 Dallas / Swiss Ave 1,878 4,465 6,343 1,076
12/30/99 Oak Park/Greenfield Rd 1,196 3,572 4,768 791
F-75
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
12/30/99 Santa Anna - 2,657 3,293 375 -
1/21/00 Hanover Park - 262 3,104 68 -
1/25/00 Memphis / N.Germantwn Pkwy - 884 3,024 221 -
1/31/00 Rowland Heights/Walnut - 681 1,589 122 -
2/8/00 Lewisville / Justin Rd - 529 2,919 207 -
2/28/00 Plano / Avenue K - 2,064 10,407 1,684 -
4/1/00 Hyattsville/Edmonson - 1,036 2,657 52 -
4/29/00 St.Louis/Ellisville Twn Centre - 765 4,377 332 -
5/2/00 Mill Valley - 1,412 3,294 (368) -
5/2/00 Culver City - 2,439 5,689 (676) -
5/26/00 Phoenix/N. 35th Ave - 868 2,967 54 -
6/5/00 Mount Sinai / Route 25a - 950 3,338 251 -
6/15/00 Pinellas Park - 526 2,247 270 -
6/30/00 San Antonio/Broadway St - 1,131 4,558 1,195 -
7/13/00 Lincolnwood - 1,598 3,727 336 -
7/17/00 La Palco/New Orleans - 1,023 3,204 126 -
7/29/00 Tracy/1615& 1650 W.11th S - 1,745 4,530 305 -
8/1/00 Pineville - 2,197 3,417 351 -
8/23/00 Morris Plains - 1,501 4,300 313 -
8/31/00 Florissant/New Halls Fry - 800 4,225 78 -
8/31/00 Orange, CA - 661 1,542 60 -
9/1/00 Bayshore, NY - 1,277 2,980 974 -
9/1/00 Los Angeles, CA - 590 1,376 522 -
9/13/00 Merrillville - 343 2,474 167 -
9/15/00 Gardena / W. El Segundo - 1,532 3,424 121 -
9/15/00 Chicago / Ashland Avenue - 850 4,880 326 -
9/15/00 Oakland / Macarthur - 678 2,751 152 -
9/15/00 Alexandria / Pickett Ii - 2,743 6,198 277 -
9/15/00 Royal Oak / Coolidge Highway - 1,062 2,576 155 -
9/15/00 Hawthorne / Crenshaw Blvd. - 1,079 2,913 147 -
9/15/00 Rockaway / U.S. Route 46 - 2,424 4,945 244 -
9/15/00 Evanston / Greenbay - 846 4,436 177 -
9/15/00 Los Angeles / Coliseum - 3,109 4,013 167 -
9/15/00 Bethpage / Hempstead Turnpike - 2,899 5,457 817 -
9/15/00 Northport / Fort Salonga Road - 2,999 5,698 238 -
9/15/00 Brooklyn / St. Johns Place - 3,492 6,026 240 -
9/15/00 Lake Ronkonkoma / Portion Rd. - 937 4,199 156 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
12/30/99 Santa Anna 2,820 3,505 6,325 677
1/21/00 Hanover Park 256 3,178 3,434 586
1/25/00 Memphis / N.Germantwn Pkwy 937 3,192 4,129 632
1/31/00 Rowland Heights/Walnut 688 1,704 2,392 412
2/8/00 Lewisville / Justin Rd 562 3,093 3,655 614
2/28/00 Plano / Avenue K 1,221 12,934 14,155 5,161
4/1/00 Hyattsville/Edmonson 1,036 2,709 3,745 563
4/29/00 St.Louis/Ellisville Twn Centre 812 4,662 5,474 854
5/2/00 Mill Valley 1,283 3,055 4,338 650
5/2/00 Culver City 2,217 5,235 7,452 1,098
5/26/00 Phoenix/N. 35th Ave 868 3,021 3,889 591
6/5/00 Mount Sinai / Route 25a 1,008 3,531 4,539 639
6/15/00 Pinellas Park 547 2,496 3,043 362
6/30/00 San Antonio/Broadway St 1,131 5,753 6,884 950
7/13/00 Lincolnwood 1,613 4,048 5,661 874
7/17/00 La Palco/New Orleans 1,094 3,259 4,353 456
7/29/00 Tracy/1615& 1650 W.11th S 1,762 4,818 6,580 1,000
8/1/00 Pineville 2,332 3,633 5,965 674
8/23/00 Morris Plains 1,594 4,520 6,114 762
8/31/00 Florissant/New Halls Fry 807 4,296 5,103 892
8/31/00 Orange, CA 667 1,596 2,263 338
9/1/00 Bayshore, NY 1,533 3,698 5,231 862
9/1/00 Los Angeles, CA 708 1,780 2,488 412
9/13/00 Merrillville 364 2,620 2,984 446
9/15/00 Gardena / W. El Segundo 1,532 3,545 5,077 604
9/15/00 Chicago / Ashland Avenue 850 5,206 6,056 907
9/15/00 Oakland / Macarthur 678 2,903 3,581 510
9/15/00 Alexandria / Pickett Ii 2,743 6,475 9,218 1,068
9/15/00 Royal Oak / Coolidge Highway 1,062 2,731 3,793 471
9/15/00 Hawthorne / Crenshaw Blvd. 1,079 3,060 4,139 523
9/15/00 Rockaway / U.S. Route 46 2,424 5,189 7,613 874
9/15/00 Evanston / Greenbay 846 4,613 5,459 756
9/15/00 Los Angeles / Coliseum 3,109 4,180 7,289 661
9/15/00 Bethpage / Hempstead Turnpike 2,899 6,274 9,173 988
9/15/00 Northport / Fort Salonga Road 2,999 5,936 8,935 964
9/15/00 Brooklyn / St. Johns Place 3,492 6,266 9,758 980
9/15/00 Lake Ronkonkoma / Portion Rd. 937 4,355 5,292 695
F-76
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
9/15/00 Tampa/Gunn Hwy - 1,843 4,300 74 -
9/18/00 Tampa/N. Del Mabry - 2,204 2,447 7,475 -
9/30/00 Marietta/Kennestone& Hwy5 - 622 3,388 1,390 -
9/30/00 Lilburn/Indian Trail - 1,695 5,170 1,587 -
11/15/00 Largo/Missouri - 1,092 4,270 248 -
11/21/00 St. Louis/Wilson - 1,608 3,913 1,908 -
12/21/00 Houston/7715 Katy Frwy - 2,274 5,307 98 -
12/21/00 Houston/10801 Katy Frwy - 1,664 3,884 84 -
12/21/00 Houston/Main St - 1,681 3,924 95 -
12/21/00 Houston/W. Loop/S. Frwy - 2,036 4,749 104 -
12/29/00 Chicago - 1,946 6,002 20 -
12/30/00 Raleigh/Glenwood - 1,545 3,628 111 -
12/30/00 Frazier - 800 3,324 40 -
1/5/01 Troy/E. Big Beaver Rd - 2,195 4,221 349 -
1/11/01 Ft Lauderdale - 954 3,972 342 -
1/16/01 No Hollywood/Sherman Way - 2,173 5,442 32 -
1/18/01 Tuscon/E. Speedway - 735 2,895 192 -
1/25/01 Lombard/Finley - 851 3,806 364 -
3/15/01 Los Angeles/West Pico - 8,579 8,630 984 -
4/1/01 Lakewood/Cedar Dr. - 1,329 9,356 2,944 -
4/7/01 Farmingdale/Rte 110 - 2,364 5,807 (21) -
4/17/01 Philadelphia/Aramingo - 968 4,539 11 -
4/18/01 Largo/Walsingham Road - 1,000 3,545 (246) -
6/17/01 Port Washington/Seaview &W.Sh - 2,381 4,608 115 -
6/18/01 Silver Springs/Prosperity - 1,065 5,391 17 -
6/19/01 Tampa/W. Waters Ave & Wilsky - 953 3,785 16 -
6/26/01 Middletown - 1,535 4,258 316 -
7/29/01 Miami/Sw 85th Ave - 2,755 4,951 17 -
8/28/01 Hoover/John Hawkins Pkwy - 1,050 2,453 42 -
9/30/01 Syosset - 2,461 5,312 373 -
12/27/01 Los Angeles/W.Jefferson - 8,285 9,429 800 -
12/27/01 Howell/Hgwy 9 - 941 4,070 229 -
12/29/01 Catonsville/Kent - 1,378 5,289 636 -
12/29/01 Old Bridge/Rte 9 - 1,244 4,960 (35) -
12/29/01 Sacremento/Roseville - 876 5,344 1,907 -
12/31/01 Santa Ana/E.Mcfadden - 7,587 8,612 905 -
1/1/02 Concord - 650 1,332 90 (44)
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
9/15/00 Tampa/Gunn Hwy 1,843 4,374 6,217 779
9/18/00 Tampa/N. Del Mabry 2,225 9,901 12,126 3,130
9/30/00 Marietta/Kennestone& Hwy5 628 4,772 5,400 823
9/30/00 Lilburn/Indian Trail 1,712 6,740 8,452 1,044
11/15/00 Largo/Missouri 1,157 4,453 5,610 716
11/21/00 St. Louis/Wilson 1,628 5,801 7,429 930
12/21/00 Houston/7715 Katy Frwy 2,277 5,402 7,679 715
12/21/00 Houston/10801 Katy Frwy 1,667 3,965 5,632 543
12/21/00 Houston/Main St 1,684 4,016 5,700 550
12/21/00 Houston/W. Loop/S. Frwy 2,038 4,851 6,889 661
12/29/00 Chicago 1,949 6,019 7,968 962
12/30/00 Raleigh/Glenwood 1,560 3,724 5,284 691
12/30/00 Frazier 800 3,364 4,164 434
1/5/01 Troy/E. Big Beaver Rd 2,329 4,436 6,765 682
1/11/01 Ft Lauderdale 1,070 4,198 5,268 660
1/16/01 No Hollywood/Sherman Way 2,175 5,472 7,647 995
1/18/01 Tuscon/E. Speedway 780 3,042 3,822 479
1/25/01 Lombard/Finley 903 4,118 5,021 631
3/15/01 Los Angeles/West Pico 8,595 9,598 18,193 1,709
4/1/01 Lakewood/Cedar Dr. 1,332 12,297 13,629 1,740
4/7/01 Farmingdale/Rte 110 2,378 5,772 8,150 928
4/17/01 Philadelphia/Aramingo 968 4,550 5,518 684
4/18/01 Largo/Walsingham Road 800 3,499 4,299 534
6/17/01 Port Washington/Seaview &W.Sh 2,358 4,746 7,104 662
6/18/01 Silver Springs/Prosperity 1,065 5,408 6,473 829
6/19/01 Tampa/W. Waters Ave & Wilsky 954 3,800 4,754 549
6/26/01 Middletown 1,630 4,479 6,109 620
7/29/01 Miami/Sw 85th Ave 2,757 4,966 7,723 693
8/28/01 Hoover/John Hawkins Pkwy 1,051 2,494 3,545 358
9/30/01 Syosset 2,612 5,534 8,146 682
12/27/01 Los Angeles/W.Jefferson 8,301 10,213 18,514 1,227
12/27/01 Howell/Hgwy 9 999 4,241 5,240 533
12/29/01 Catonsville/Kent 1,378 5,925 7,303 748
12/29/01 Old Bridge/Rte 9 1,246 4,923 6,169 602
12/29/01 Sacremento/Roseville 526 7,601 8,127 813
12/31/01 Santa Ana/E.Mcfadden 7,602 9,502 17,104 1,147
1/1/02 Concord 649 1,379 2,028 323
F-77
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
1/1/02 Tustin - 962 1,465 30 (53)
1/1/02 Pasadena/Sierra Madre - 706 872 70 (28)
1/1/02 Azusa - 933 1,659 25 4,926
1/1/02 Redlands - 423 1,202 197 (34)
1/1/02 Airport I - 346 861 78 (32)
1/1/02 Miami / Marlin Road - 562 1,345 71 (49)
1/1/02 Riverside - 95 1,106 37 (41)
1/1/02 Oakland / San Leandro - 330 1,116 90 (34)
1/1/02 Richmond / Jacuzzi - 419 1,224 42 (44)
1/1/02 Santa Clara / Laurel - 1,178 1,789 120 (62)
1/1/02 Pembroke Park - 475 1,259 29 (47)
1/1/02 Ft. Lauderdale / Sun - 452 1,254 42 (48)
1/1/02 San Carlos / Shorewa - 737 1,360 14 (52)
1/1/02 Ft. Lauderdale / Sun - 532 1,444 74 (56)
1/1/02 Sacramento / Howe - 361 1,181 25 (45)
1/1/02 Sacramento / Capitol - 186 1,284 19 (49)
1/1/02 Miami / Airport - 517 915 63 2
1/1/02 Marietta / Cobb Park - 419 1,571 54 (2)
1/1/02 Sacramento / Florin - 624 1,710 82 3
1/1/02 Belmont / Dairy Lane - 915 1,252 77 -
1/1/02 So. San Francisco - 1,018 2,464 75 39
1/1/02 Palmdale / P Street - 218 1,287 41 3
1/1/02 Tucker / Montreal Rd - 760 1,485 70 (3)
1/1/02 Pasadena / S Fair Oaks - 1,313 1,905 95 (2)
1/1/02 Carmichael/Fair Oaks - 584 1,431 30 (2)
1/1/02 Carson / Carson St - 507 877 109 1
1/1/02 San Jose / Felipe Ave - 517 1,482 50 (3)
1/1/02 Miami / 27th Ave - 272 1,572 81 1
1/1/02 San Jose / Capitol - 400 1,183 25 1
1/1/02 Tucker / Mountain - 519 1,385 67 -
1/3/02 St Charles/Veterans Memorial - 687 1,602 147 -
1/7/02 Bothell/ N. Bothell Way - 1,063 4,995 137 -
1/15/02 Houston / N.Loop - 2,045 6,178 (2) -
1/16/02 Orlando / S. Kirkman - 889 3,180 39 -
1/16/02 Austin / Us Hwy 183 - 608 3,856 17 -
1/16/02 Rochelle Park / 168 - 744 4,430 18 -
1/16/02 Honolulu / Waialae - 10,631 10,783 58 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
1/1/02 Tustin 963 1,441 2,404 374
1/1/02 Pasadena/Sierra Madre 706 914 1,620 214
1/1/02 Azusa 932 6,611 7,543 625
1/1/02 Redlands 422 1,366 1,788 302
1/1/02 Airport I 347 906 1,253 225
1/1/02 Miami / Marlin Road 562 1,367 1,929 341
1/1/02 Riverside 94 1,103 1,197 282
1/1/02 Oakland / San Leandro 330 1,172 1,502 292
1/1/02 Richmond / Jacuzzi 420 1,221 1,641 307
1/1/02 Santa Clara / Laurel 1,179 1,846 3,025 443
1/1/02 Pembroke Park 475 1,241 1,716 322
1/1/02 Ft. Lauderdale / Sun 452 1,248 1,700 315
1/1/02 San Carlos / Shorewa 736 1,323 2,059 349
1/1/02 Ft. Lauderdale / Sun 533 1,461 1,994 366
1/1/02 Sacramento / Howe 361 1,161 1,522 301
1/1/02 Sacramento / Capitol 185 1,255 1,440 324
1/1/02 Miami / Airport 517 980 1,497 270
1/1/02 Marietta / Cobb Park 420 1,622 2,042 437
1/1/02 Sacramento / Florin 623 1,796 2,419 481
1/1/02 Belmont / Dairy Lane 914 1,330 2,244 366
1/1/02 So. San Francisco 1,019 2,577 3,596 663
1/1/02 Palmdale / P Street 218 1,331 1,549 378
1/1/02 Tucker / Montreal Rd 759 1,553 2,312 408
1/1/02 Pasadena / S Fair Oaks 1,313 1,998 3,311 527
1/1/02 Carmichael/Fair Oaks 584 1,459 2,043 386
1/1/02 Carson / Carson St 506 988 1,494 254
1/1/02 San Jose / Felipe Ave 516 1,530 2,046 403
1/1/02 Miami / 27th Ave 271 1,655 1,926 440
1/1/02 San Jose / Capitol 401 1,208 1,609 331
1/1/02 Tucker / Mountain 520 1,451 1,971 384
1/3/02 St Charles/Veterans Memorial 687 1,749 2,436 252
1/7/02 Bothell/ N. Bothell Way 1,063 5,132 6,195 612
1/15/02 Houston / N.Loop 2,045 6,176 8,221 710
1/16/02 Orlando / S. Kirkman 889 3,219 4,108 394
1/16/02 Austin / Us Hwy 183 608 3,873 4,481 485
1/16/02 Rochelle Park / 168 744 4,448 5,192 544
1/16/02 Honolulu / Waialae 10,631 10,841 21,472 1,299
F-78
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
1/16/02 Sunny Isles Bch - 931 2,845 19 -
1/16/02 San Ramon / San Ramo - 1,522 3,510 1 -
1/16/02 Austin / W. 6th St - 2,399 4,493 201 -
1/16/02 Schaumburg / W. Wise - 1,158 2,598 25 -
1/16/02 Laguna Hills / Moulton - 2,319 5,200 132 -
1/16/02 Annapolis / West St - 955 3,669 24 -
1/16/02 Birmingham / Commons - 1,125 3,938 36 -
1/16/02 Crestwood / Watson Rd - 1,232 3,093 - -
1/16/02 Northglenn /Huron St - 688 2,075 25 -
1/16/02 Skokie / Skokie Blvd - 716 5,285 12 -
1/16/02 Garden City / Stewart - 1,489 4,039 9 -
1/16/02 Millersville / Veterans - 1,036 4,229 7 -
1/16/02 W. Babylon / Sunrise - 1,609 3,959 21 -
1/16/02 Memphis / Summer Ave - 1,103 2,772 3 -
1/16/02 Santa Clara/Lafayette - 1,393 4,626 (2) -
1/16/02 Naperville / Washington - 2,712 2,225 443 -
1/16/02 Phoenix/W Union Hills - 1,071 2,934 20 -
1/16/02 Woodlawn / Whitehead - 2,682 3,355 23 -
1/16/02 Issaquah / Pickering - 1,138 3,704 10 -
1/16/02 West La /W Olympic - 6,532 5,975 28 -
1/16/02 New Orleans/I-10 - 1,286 3,380 13 -
1/16/02 Pasadena / E. Colorado - 1,125 5,160 8 -
1/16/02 Memphis / Covington - 620 3,076 (3) -
1/16/02 Hiawassee / N.Hiawassee - 1,622 1,892 47 -
1/16/02 Longwood / State Rd - 2,123 3,083 86 -
1/16/02 Casselberry / State - 1,628 3,308 15 -
1/16/02 Honolulu/Kahala - 3,722 8,525 17 -
1/16/02 Waukegan / Greenbay - 933 3,826 4 -
1/16/02 Southfield / Telegraph - 2,869 5,507 (7) -
1/16/02 San Mateo / S. Delaware - 1,921 4,602 22 -
1/16/02 Scottsdale/N.Hayden - 2,111 3,564 20 -
1/16/02 Gilbert/W Park Ave - 497 3,534 (2) -
1/16/02 W.Palm Beach/Okeechobee - 2,149 4,650 (508) -
1/16/02 Indianapolis / W.86th - 812 2,421 4 -
1/16/02 Indianapolis / Madison - 716 2,655 23 -
1/16/02 Indianapolis / Rockville - 704 2,704 3 -
1/16/02 Santa Cruz / River - 2,148 6,584 32 -
Gross Carrying Amount
At December 31, 2004
Date --------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ---------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------
1/16/02 Sunny Isles Bch 931 2,864 3,795 363
1/16/02 San Ramon / San Ramo 1,522 3,511 5,033 444
1/16/02 Austin / W. 6th St 2,399 4,694 7,093 587
1/16/02 Schaumburg / W. Wise 1,158 2,623 3,781 332
1/16/02 Laguna Hills / Moulton 2,319 5,332 7,651 698
1/16/02 Annapolis / West St 955 3,693 4,648 463
1/16/02 Birmingham / Commons 1,125 3,974 5,099 498
1/16/02 Crestwood / Watson Rd 1,232 3,093 4,325 389
1/16/02 Northglenn /Huron St 688 2,100 2,788 277
1/16/02 Skokie / Skokie Blvd 716 5,297 6,013 675
1/16/02 Garden City / Stewart 1,489 4,048 5,537 501
1/16/02 Millersville / Veterans 1,036 4,236 5,272 557
1/16/02 W. Babylon / Sunrise 1,609 3,980 5,589 497
1/16/02 Memphis / Summer Ave 1,103 2,775 3,878 353
1/16/02 Santa Clara/Lafayette 1,393 4,624 6,017 577
1/16/02 Naperville / Washington 2,712 2,668 5,380 311
1/16/02 Phoenix/W Union Hills 1,066 2,959 4,025 382
1/16/02 Woodlawn / Whitehead 2,682 3,378 6,060 451
1/16/02 Issaquah / Pickering 1,138 3,714 4,852 466
1/16/02 West La /W Olympic 6,532 6,003 12,535 748
1/16/02 New Orleans/I-10 1,292 3,387 4,679 427
1/16/02 Pasadena / E. Colorado 1,125 5,168 6,293 639
1/16/02 Memphis / Covington 620 3,073 3,693 394
1/16/02 Hiawassee / N.Hiawassee 1,622 1,939 3,561 250
1/16/02 Longwood / State Rd 2,123 3,169 5,292 405
1/16/02 Casselberry / State 1,628 3,323 4,951 416
1/16/02 Honolulu/Kahala 3,722 8,542 12,264 1,032
1/16/02 Waukegan / Greenbay 933 3,830 4,763 480
1/16/02 Southfield / Telegraph 2,869 5,500 8,369 680
1/16/02 San Mateo / S. Delaware 1,921 4,624 6,545 569
1/16/02 Scottsdale/N.Hayden 2,113 3,582 5,695 460
1/16/02 Gilbert/W Park Ave 497 3,532 4,029 448
1/16/02 W.Palm Beach/Okeechobee 2,149 4,142 6,291 425
1/16/02 Indianapolis / W.86th 812 2,425 3,237 313
1/16/02 Indianapolis / Madison 716 2,678 3,394 340
1/16/02 Indianapolis / Rockville 704 2,707 3,411 347
1/16/02 Santa Cruz / River 2,148 6,616 8,764 804
F-79
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
1/16/02 Novato / Rush Landing - 1,858 2,574 7 -
1/16/02 Martinez / Arnold Dr - 847 5,422 (5) -
1/16/02 Charlotte/Cambridge - 836 3,908 (1) -
1/16/02 Rancho Cucamonga - 579 3,222 31 -
1/16/02 Renton / Kent - 768 4,078 29 -
1/16/02 Hawthorne / Goffle Rd - 2,414 4,918 (8) -
2/2/02 Nashua / Southwood Dr - 2,493 4,326 155 -
2/15/02 Houston/Fm 1960 East - 859 2,004 55 -
3/7/02 Baltimore / Russell Street - 1,763 5,821 166 -
3/11/02 Weymouth / Main St - 1,440 4,433 134 -
3/28/02 Clinton / Branch Ave & Schultz - 1,257 4,108 288 -
4/17/02 La Mirada/Alondra - 1,749 5,044 359 -
5/1/02 N.Richlnd Hls/Rufe Snow Dr - 632 6,337 1,939 -
5/2/02 Parkville/E.Joppa - 898 4,306 124 -
6/17/02 Waltham / Lexington St - 3,183 5,733 126 -
6/30/02 Nashville / Charlotte - 876 2,004 89 -
7/2/02 Mt Juliet / Lebonan Rd - 516 1,203 79 -
7/14/02 Yorktown / George Washington - 707 1,684 43 -
7/22/02 Brea/E. Lambert & Clifwood Pk - 2,114 3,555 140 -
8/1/02 Bricktown/Route 70 - 1,292 3,690 69 -
8/1/02 Danvers / Newbury St. - 1,311 4,140 243 -
8/15/02 Montclair / Holt Blvd. - 889 2,074 190 -
8/21/02 Rockville Centre/Merrick Rd - 3,693 6,990 262 -
9/13/02 Lacey / Martin Way - 1,379 3,217 49 -
9/13/02 Lakewood / Bridgeport - 1,286 3,000 75 -
9/13/02 Kent / Pacific Highway - 1,839 4,291 115 -
11/4/02 Scotch Plains /Route 22 - 2,124 5,072 26 -
12/23/02 Snta Clarita/Viaprincssa - 2,508 3,008 3,275 -
2/13/03 Pasadena / Ritchie Hwy - 2,253 4,218 (5) -
2/13/03 Malden / Eastern Ave - 3,212 2,739 26 -
2/24/03 Miami / SW 137th Ave - 1,600 4,684 (303) -
3/3/03 Chantilly / Dulles South Court - 2,190 4,314 (3) -
3/6/03 Medford / Mystic Ave - 3,886 4,982 (5) -
5/27/03 Castro Valley / Grove Way - 2,247 5,881 882 -
8/2/03 Sacramento / E.Stockton Blvd - 554 4,175 9 -
8/13/03 Timonium / W. Padonia Road - 1,932 3,681 10 -
8/21/03 Van Nuys / Sepulveda - 1,698 3,886 444 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
1/16/02 Novato / Rush Landing 1,858 2,581 4,439 332
1/16/02 Martinez / Arnold Dr 847 5,417 6,264 663
1/16/02 Charlotte/Cambridge 836 3,907 4,743 494
1/16/02 Rancho Cucamonga 579 3,253 3,832 416
1/16/02 Renton / Kent 768 4,107 4,875 513
1/16/02 Hawthorne / Goffle Rd 2,414 4,910 7,324 594
2/2/02 Nashua / Southwood Dr 2,493 4,481 6,974 524
2/15/02 Houston/Fm 1960 East 859 2,059 2,918 252
3/7/02 Baltimore / Russell Street 1,763 5,987 7,750 684
3/11/02 Weymouth / Main St 1,440 4,567 6,007 525
3/28/02 Clinton / Branch Ave & Schultz 1,334 4,319 5,653 478
4/17/02 La Mirada/Alondra 1,856 5,296 7,152 547
5/1/02 N.Richlnd Hls/Rufe Snow Dr 632 8,276 8,908 733
5/2/02 Parkville/E.Joppa 898 4,430 5,328 478
6/17/02 Waltham / Lexington St 3,183 5,859 9,042 607
6/30/02 Nashville / Charlotte 876 2,093 2,969 232
7/2/02 Mt Juliet / Lebonan Rd 516 1,282 1,798 149
7/14/02 Yorktown / George Washington 707 1,727 2,434 192
7/22/02 Brea/E. Lambert & Clifwood Pk 2,114 3,695 5,809 373
8/1/02 Bricktown/Route 70 1,293 3,758 5,051 386
8/1/02 Danvers / Newbury St. 1,312 4,382 5,694 435
8/15/02 Montclair / Holt Blvd. 889 2,264 3,153 267
8/21/02 Rockville Centre/Merrick Rd 3,693 7,252 10,945 694
9/13/02 Lacey / Martin Way 1,379 3,266 4,645 89
9/13/02 Lakewood / Bridgeport 1,286 3,075 4,361 91
9/13/02 Kent / Pacific Highway 1,839 4,406 6,245 126
11/4/02 Scotch Plains /Route 22 2,126 5,096 7,222 494
12/23/02 Snta Clarita/Viaprincssa 2,508 6,283 8,791 377
2/13/03 Pasadena / Ritchie Hwy 2,253 4,213 6,466 324
2/13/03 Malden / Eastern Ave 3,212 2,765 5,977 202
2/24/03 Miami / SW 137th Ave 1,600 4,381 5,981 329
3/3/03 Chantilly / Dulles South Court 2,190 4,311 6,501 293
3/6/03 Medford / Mystic Ave 3,886 4,977 8,863 334
5/27/03 Castro Valley / Grove Way 2,307 6,703 9,010 403
8/2/03 Sacramento / E.Stockton Blvd 554 4,184 4,738 294
8/13/03 Timonium / W. Padonia Road 1,932 3,691 5,623 225
8/21/03 Van Nuys / Sepulveda 1,699 4,329 6,028 153
F-80
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
9/9/03 Westwood / East St - 3,267 5,013 236 -
10/21/03 San Diego / Miramar Road - 2,244 6,653 624 -
11/3/03 El Sobrante/San Pablo - 1,255 4,990 536 -
11/6/03 Pearl City / Kamehameha Hwy - 4,428 4,839 558 -
12/23/03 Boston / Southampton Street - 5,334 7,511 740 -
1/9/04 Farmingville / Horseblock Road - 1,919 4,420 1 -
2/27/04 Salem / Goodhue St. - 1,544 6,160 2 -
3/18/04 Seven Corners / Arlington Blvd. - 6,087 7,553 1 -
6/30/04 Marlton / Route 73 - 1,753 5,195 2 -
7/1/04 Long Island City/Northern Blvd. - 4,876 7,610 1 -
7/9/04 West Valley Cty/Redwood - 876 2,067 3 -
7/12/04 Hicksville/E. Old Country Rd. - 1,693 3,910 2 -
7/15/04 Harwood/Ronald - 1,619 3,778 4 -
9/24/04 E. Hanover/State Rt - 3,895 4,943 1 -
10/14/04 Apple Valley/148th St 830 591 1,375 2 -
10/14/04 Blaine / Hwy 65 NE 1,107 789 1,833 2 -
10/14/04 Brooklyn Park / Lakeland Ave 1,980 1,411 3,278 3 -
10/14/04 Brooklyn Park / Xylon Ave 1,571 1,120 2,601 3 -
10/14/04 St Paul(Eagan)/Sibley Mem'l Hwy 864 615 1,431 2 -
10/14/04 Maple Grove / Zachary Lane 1,875 1,337 3,105 3 -
10/14/04 Minneapolis / Hiawatha Ave 2,076 1,480 3,437 4 -
10/14/04 New Hope / 36th Ave 1,869 1,332 3,094 3 -
10/14/04 Rosemount / Chippendale Ave 1,213 864 2,008 3 -
10/14/04 St Cloud/Franklin 808 575 1,338 2 -
10/14/04 Savage / W 128th St 2,135 1,522 3,535 3 -
10/14/04 Spring Lake Park/Hwy 65 NE 2,151 1,534 3,562 3 -
10/14/04 St Paul / Terrace Court 1,574 1,122 2,606 3 -
10/14/04 St Paul / Eaton St 1,629 1,161 2,698 3 -
10/14/04 St Paul-Hartzell / Wabash Ave - 1,207 2,816 3 -
10/14/04 West St Paul / Marie Ave 2,030 1,447 3,361 4 -
10/14/04 Stillwater / Memorial Ave 2,341 1,669 3,876 4 -
10/14/04 St Paul(VadnaisHts/Birch Lake Rd 1,302 928 2,157 2 -
10/14/04 Woodbury / Hudson Road 2,613 1,863 4,327 3 -
10/14/04 Brown Deer / N Green Bay Rd 1,486 1,059 2,461 3 -
10/14/04 Germantown / Spaten Court 852 607 1,411 2 -
10/14/04 Milwaukee/ N 77th St 1,741 1,241 2,882 3 -
10/14/04 Milwaukee/ S 13th St 2,082 1,484 3,446 4 -
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
9/9/03 Westwood / East St 3,278 5,238 8,516 316
10/21/03 San Diego / Miramar Road 2,244 7,277 9,521 384
11/3/03 El Sobrante/San Pablo 1,257 5,524 6,781 275
11/6/03 Pearl City / Kamehameha Hwy 4,534 5,291 9,825 266
12/23/03 Boston / Southampton Street 5,345 8,240 13,585 333
1/9/04 Farmingville / Horseblock Road 1,919 4,421 6,340 173
2/27/04 Salem / Goodhue St. 1,544 6,162 7,706 202
3/18/04 Seven Corners / Arlington Blvd. 6,087 7,554 13,641 209
6/30/04 Marlton / Route 73 1,753 5,197 6,950 108
7/1/04 Long Island City/Northern Blvd. 4,876 7,611 12,487 169
7/9/04 West Valley Cty/Redwood 876 2,070 2,946 35
7/12/04 Hicksville/E. Old Country Rd. 1,693 3,912 5,605 65
7/15/04 Harwood/Ronald 1,619 3,782 5,401 64
9/24/04 E. Hanover/State Rt 3,895 4,944 8,839 46
10/14/04 Apple Valley/148th St 591 1,377 1,968 9
10/14/04 Blaine / Hwy 65 NE 789 1,835 2,624 12
10/14/04 Brooklyn Park / Lakeland Ave 1,411 3,281 4,692 22
10/14/04 Brooklyn Park / Xylon Ave 1,120 2,604 3,724 17
10/14/04 St Paul(Eagan)/Sibley Mem'l Hwy 615 1,433 2,048 10
10/14/04 Maple Grove / Zachary Lane 1,337 3,108 4,445 21
10/14/04 Minneapolis / Hiawatha Ave 1,480 3,441 4,921 23
10/14/04 New Hope / 36th Ave 1,332 3,097 4,429 21
10/14/04 Rosemount / Chippendale Ave 864 2,011 2,875 14
10/14/04 St Cloud/Franklin 575 1,340 1,915 9
10/14/04 Savage / W 128th St 1,522 3,538 5,060 24
10/14/04 Spring Lake Park/Hwy 65 NE 1,534 3,565 5,099 24
10/14/04 St Paul / Terrace Court 1,122 2,609 3,731 17
10/14/04 St Paul / Eaton St 1,161 2,701 3,862 18
10/14/04 St Paul-Hartzell / Wabash Ave 1,207 2,819 4,026 19
10/14/04 West St Paul / Marie Ave 1,447 3,365 4,812 22
10/14/04 Stillwater / Memorial Ave 1,669 3,880 5,549 26
10/14/04 St Paul(VadnaisHts/Birch Lake Rd 928 2,159 3,087 15
10/14/04 Woodbury / Hudson Road 1,863 4,330 6,193 29
10/14/04 Brown Deer / N Green Bay Rd 1,059 2,464 3,523 17
10/14/04 Germantown / Spaten Court 607 1,413 2,020 10
10/14/04 Milwaukee/ N 77th St 1,241 2,885 4,126 19
10/14/04 Milwaukee/ S 13th St 1,484 3,450 4,934 23
F-81
Adjustments
Initial Cost Resulting from
------------------------- Costs the Acquisition
Date Encumb- Buildings & Subsequent of Minority
Acquired Description rances Land Improvements to Acquisition interests
- ---------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------
10/14/04 Oak Creek / S 27th St 1,054 751 1,746 2 -
10/14/04 Waukesha / Arcadian Ave 2,336 1,665 3,868 3 -
10/14/04 West Allis / W Lincoln Ave 1,950 1,390 3,227 4 -
10/14/04 Garland / O'Banion Rd - 606 1,414 3 -
10/14/04 Grand Prairie/ Hwy360 - 942 2,198 2 -
10/14/04 Duncanville/N Duncnvill - 1,524 3,556 2 -
10/14/04 Lancaster/ W Pleasant - 993 2,317 3 -
10/14/04 Mesquite / Oates Dr - 937 2,186 2 -
10/14/04 Dallas / E NW Hwy - 942 2,198 3 -
11/24/04 Pompano Beach/E. Sample 4,690 1,608 3,754 3 -
11/24/04 Davie / SW 41st St. 6,110 2,467 5,758 3 -
11/24/04 North Bay Village/Kennedy 6,846 3,275 7,644 2 -
11/24/04 Miami / Biscayne Blvd 6,825 3,538 8,258 2 -
11/24/04 Miami Gardens/NW 57th St 6,679 2,706 6,316 4 -
11/24/04 Tamarac/ N University Dr 6,473 2,580 6,022 4 -
11/24/04 Miami / SW 31st Ave 15,197 11,574 27,009 3 -
11/24/04 Hialeah / W 20th Ave - 2,224 5,192 3 -
11/24/04 Miami / SW 42nd St - 2,955 6,897 3 -
11/24/04 Miami / SW 40th St - 2,933 6,844 4 -
11/25/04 Carlsbad/CorteDelAbeto - 2,861 6,676 3 -
Other Properties
Glendale/Western Avenue - 1,622 3,771 12,799 -
12/13/99 Burlingame (Commercial & PUD) - 4,043 9,434 209 -
4/28/00 San Diego/Sorrento - 1,282 3,016 138 -
6/1/98 Renton / Sw 39th St. - 725 2,196 24 -
6/29/98 Pompano Bch/Center Port Circle - 795 2,312 180 -
12/30/99 Tamarac Parkway - 1,902 4,467 1,336 -
12/29/00 Gardena - 1,737 5,456 17 -
4/2/02 Long Beach - 887 6,251 - -
Construction in Progress - - - 47,277 -
Land held for development - - - 8,883 -
------------------------------------------------------------------
$95,919 $1,415,762 $3,315,302 $582,107 $253,739
==================================================================
Gross Carrying Amount
At December 31, 2004
Date ---------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
- ----------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------
10/14/04 Oak Creek / S 27th St 751 1,748 2,499 12
10/14/04 Waukesha / Arcadian Ave 1,665 3,871 5,536 26
10/14/04 West Allis / W Lincoln Ave 1,390 3,231 4,621 22
10/14/04 Garland / O'Banion Rd 606 1,417 2,023 9
10/14/04 Grand Prairie/ Hwy360 942 2,200 3,142 15
10/14/04 Duncanville/N Duncnvill 1,524 3,558 5,082 24
10/14/04 Lancaster/ W Pleasant 993 2,320 3,313 15
10/14/04 Mesquite / Oates Dr 937 2,188 3,125 15
10/14/04 Dallas / E NW Hwy 942 2,201 3,143 15
11/24/04 Pompano Beach/E. Sample 1,608 3,757 5,365 12
11/24/04 Davie / SW 41st St. 2,467 5,761 8,228 19
11/24/04 North Bay Village/Kennedy 3,275 7,646 10,921 25
11/24/04 Miami / Biscayne Blvd 3,538 8,260 11,798 27
11/24/04 Miami Gardens/NW 57th St 2,706 6,320 9,026 21
11/24/04 Tamarac/ N University Dr 2,580 6,026 8,606 20
11/24/04 Miami / SW 31st Ave 11,574 27,012 38,586 88
11/24/04 Hialeah / W 20th Ave 2,224 5,195 7,419 18
11/24/04 Miami / SW 42nd St 2,955 6,900 9,855 23
11/24/04 Miami / SW 40th St 2,933 6,848 9,781 23
11/25/04 Carlsbad/CorteDelAbeto 2,861 6,679 9,540 23
Other Properties
Glendale/Western Avenue 1,615 16,577 18,192 16,020
12/13/99 Burlingame (Commercial & PUD) 4,043 9,643 13,686 2,046
4/28/00 San Diego/Sorrento 1,024 3,412 4,436 778
6/1/98 Renton / Sw 39th St. 725 2,220 2,945 643
6/29/98 Pompano Bch/Center Port Circle 795 2,492 3,287 767
12/30/99 Tamarac Parkway 1,890 5,815 7,705 888
12/29/00 Gardena 1,737 5,473 7,210 960
4/2/02 Long Beach 887 6,251 7,138 1,389
Construction in Progress - 47,277 47,277 -
Land held for development 8,883 - 8,883 -
-------------------------------------------------
$1,440,031 $4,126,879 $5,566,910 $1,320,200
=================================================
F-82