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 Public Storage Reports Results for the Fourth Quarter and Year Ended December 31, 2016
   Wednesday, February 22, 2017 7:13:00 PM ET

Public Storage (PSA ) announced today operating results for the quarter and year ended December 31, 2016.

Operating Results for the Three Months Ended December 31, 2016

For the three months ended December 31, 2016, net income allocable to our common shareholders was $352.8 million or $2.03 per diluted common share, compared to $303.0 million or $1.74 per share in 2015 representing an increase of $49.8 million or $0.29 per share. The increase is due primarily to a $32.0 million increase in self-storage net operating income (described below) and a $23.3 million increase in foreign exchange translation gains associated with our euro denominated debt.



The $32.0 million increase in self-storage net operating income is a result of a $20.6 million increase in our Same Store Facilities (as defined below) and an $11.4 million increase in our Non Same Store Facilities (as defined below). Revenues for the Same Store Facilities increased 4.6% or $23.5 million in the three months ended December 31, 2016 as compared to 2015, due primarily to higher realized annual rent per occupied square foot. Cost of operations for the Same Store Facilities increased by 2.7% or $2.9 million in the three months ended December 31, 2016 as compared to 2015, due primarily to increased property taxes, repairs and maintenance and advertising and selling costs, offset partially by reduced allocated overhead costs. The increase in net operating income for the Non Same Store Facilities is due primarily to the impact of 337 self-storage facilities acquired, developed or expanded since January 2013.

Operating Results for the Year Ended December 31, 2016

For the year ended December 31, 2016, net income allocable to our common shareholders was $1,183.9 million or $6.81 per diluted common share, compared to $1,053.1 million or $6.07 per share in 2015 representing an increase of $130.8 million or $0.74 per share. The increase is primarily due to (i) a $139.1 million increase in self-storage net operating income and (ii) a $17.3 million increase in foreign exchange translation gains associated with our euro denominated debt offset partially by (iii) a $29.0 million reduction in gains on sales of real estate investments, including our equity share and (iv) a $20.0 million increase in EITF D-42 charges, including our equity share, as a result of preferred redemption activities.

The $139.1 million increase in self-storage net operating income is a result of a $96.9 million increase in our Same Store Facilities and a $42.2 million increase in our Non Same Store Facilities. Revenues for the Same Store Facilities increased 5.5% or $110.0 million in the year ended December 31, 2016 as compared to 2015, due primarily to higher realized annual rent per occupied square foot. Cost of operations for the Same Store Facilities increased by 2.5% or $13.1 million in the year ended December 31, 2016 as compared to 2015, due primarily to increased property taxes, on-site property manager payroll and repairs and maintenance, offset partially by lower snow removal costs. The increase in net operating income for the Non Same Store Facilities is due primarily to the impact of 337 self-storage facilities acquired, developed or expanded since January 2013.

Funds from Operations

For the three months ended December 31, 2016, funds from operations ("FFO") was $2.77 per diluted common share, as compared to $2.46 in 2015, representing an increase of 12.6%. FFO is a non-GAAP (generally accepted accounting principles) term defined by the National Association of Real Estate Investment Trusts and generally represents net income before depreciation, gains and losses and impairment charges with respect to real estate assets.

For the year ended December 31, 2016, FFO was $9.70 per diluted common share, as compared to $8.79 in 2015, representing an increase of 10.4%.

We also present "Core FFO per share," a non-GAAP measure that represents FFO per share excluding the impact of (i) foreign currency exchange gains and losses, (ii) EITF D-42 charges related to the redemption of preferred securities, (iii) general and administrative expenses associated with the acquisition of self-storage facilities and (iv) certain other non-cash and/or nonrecurring income or expense items. We review Core FFO per share to evaluate our ongoing operating performance, and we believe it is used by investors and REIT analysts in a similar manner. However, Core FFO per share is not a substitute for net income per share. Because other REITs may not compute Core FFO per share in the same manner as we do, may not use the same terminology or may not present such a measure, Core FFO per share may not be comparable among REITs.

The following table reconciles from FFO per share to Core FFO per share (unaudited):

 
                                                                                                                             Three Months Ended December 31,                                                                                                                      Year Ended December 31,
                                                                                     -----------------------------------------------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                         Percentage                                                                                                         Percentage
                                                                                                           2016                                                                 2015                                             Change                                              2016                                                      2015                                       Change
                                                                                     ------------------------------------------------                     ------------------------------------------------                     -----------                     ------------------------------------------------                     --------------------------                     ---------------------
                                                                                                                                                                                                                                                                                                                                                                                    
FFO per share                                                                                           $  2.77                                                              $  2.46                                            12.6 %                                            $  9.70                                                              $ 8.79                            10.4 %
Eliminate the per share impact of items excluded from Core FFO,
including our equity share from investments:
   Foreign currency exchange gain                                                                         (0.14 )                                                                  -                                                                                                (0.11 )                                                                 -
   Application of EITF D-42                                                                                0.02                                                                    -                                                                                                 0.17                                                                0.06
   Property acquisition costs                                                                                 -                                                                    -                                                                                                 0.01                                                                0.04
   Other items                                                                             -                          (0.01 )                                                                            0.02                          0.01
                                                                                     -------------------- ----- --------------------                      -------------------- ----- --------------------                                                      -------------------- ----- --------------------                      -------------------- ----
Core FFO per share                                                                                      $  2.65                                           $  2.45                          8.2 %                                            $  9.79                                           $ 8.90                            10.0 %
                                                                                     ==================== ===== ====================                      ==================== ===== ====================                                                      ==================== ===== ====================                      ==================== ====
 

Property Operations - Same Store Facilities

The Same Store Facilities represent those facilities that have been owned and operated on a stabilized level of occupancy, revenues and cost of operations since January 1, 2014. We review the operations of our Same Store Facilities, which excludes facilities whose operating trends are significantly affected by factors such as casualty events, as well as recently developed or acquired facilities, to more effectively evaluate the ongoing performance of our self-storage portfolio in 2014, 2015 and 2016. We believe the Same Store information is used by investors and analysts in a similar manner. The following table summarizes the historical operating results of these 2,000 facilities (127.2 million net rentable square feet) that represent approximately 83% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at December 31, 2016.

                                                                                                                                                                                                                                                                                                                            
Selected Operating Data for the Same
----------------------------------------------------------------------------------------
Store Facilities (2,000 facilities)
----------------------------------------------------------------------------------------
(unaudited):
----------------------------------------------------------------------------------------
                                                                                                                                                                            Three Months Ended December 31,                                                                                                                                                                Year Ended December 31,
                                                                                                              ----------------------------------------------------------------------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                             Percentage                                                                                                                                                                                   Percentage
                                                                                                                                     2016                                                                   2015                                               Change                                                2016                                                                     2015                                                          Change
                                                                                                              --------------------------------------------------                     --------------------------------------------------                     ------------                     ----------------------------------------------------                     ----------------------------------------------------                     --------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                              (Dollar amounts in thousands, except for per square foot amounts)
Revenues:
Rental income                                                                                                                    $ 506,335                                                              $ 483,230                                             4.8 %                                             $ 2,001,608                                                              $ 1,895,352                                                  5.6 %
Late charges and administrative fees                                                                             24,038                           23,639                          1.7 %                               96,088                             92,373                               4.0 %
                                                                                                              -------------------- ------- --------------------                      -------------------- ------- --------------------                      ----- -----                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      ---------- --------------------
      Total revenues (a)                                                                                        530,373                          506,869                          4.6 %                            2,097,696                          1,987,725                               5.5 %
                                                                                                              -------------------- ------- --------------------                      -------------------- ------- --------------------                      ----- -----                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                
Cost of operations:
   Property taxes                                                                                                                   29,073                                                                 27,845                                             4.4 %                                                 187,351                                                                  178,706                                                  4.8 %
   On-site property manager payroll                                                                                                 22,910                                                                 22,795                                             0.5 %                                                 104,120                                                                  100,661                                                  3.4 %
   Supervisory payroll                                                                                                               8,387                                                                  8,040                                             4.3 %                                                  36,217                                                                   35,092                                                  3.2 %
   Repairs and maintenance                                                                                                           9,998                                                                  9,096                                             9.9 %                                                  38,845                                                                   35,994                                                  7.9 %
   Snow removal                                                                                                                        803                                                                  1,204                                           (33.3 )%                                                  4,135                                                                    9,677                                                (57.3 )%
   Utilities                                                                                                                         8,807                                                                  8,914                                            (1.2 )%                                                 37,918                                                                   39,287                                                 (3.5 )%
   Advertising and selling expense                                                                                                   7,115                                                                  6,432                                            10.6 %                                                  25,320                                                                   25,119                                                  0.8 %
   Other direct property costs                                                                                                      13,720                                                                 12,910                                             6.3 %                                                  54,322                                                                   52,372                                                  3.7 %
   Allocated overhead                                                                                             9,194                            9,844                         (6.6 )%                              39,113                             37,329                               4.8 %
                                                                                                              -------------------- ------- --------------------                      -------------------- ------- --------------------                      ----- -----                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      ---------- --------------------
      Total cost of operations (a)                                                                              110,007                          107,080                          2.7 %                              527,341                            514,237                               2.5 %
                                                                                                              -------------------- ------- --------------------                      -------------------- ------- --------------------                      ----- -----                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      ---------- --------------------
Net operating income (b)                                                                                                         $ 420,366                                           $ 399,789                          5.1 %                                             $ 1,570,355                                           $ 1,473,488                               6.6 %
                                                                                                              ==================== ======= ====================                      ==================== ======= ====================                      ===== =====                      ==================== ========= ====================                      ==================== ========= ====================                      ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                
Gross margin                                                                                                                          79.3 %                                                                 78.9 %                                           0.5 %                                                    74.9 %                                                                   74.1 %                                                1.1 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                
Weighted average for the period:
   Square foot occupancy                                                                                                              93.7 %                                                                 93.9 %                                          (0.2 )%                                                   94.5 %                                                                   94.5 %                                                0.0 %
Realized annual rental income per (c):
   Occupied square foot                                                                                                          $   16.99                                                              $   16.19                                             4.9 %                                             $     16.65                                                              $     15.77                                                  5.6 %
   Available square foot ("REVPAF")                                         $   15.92                                                              $   15.19                                             4.8 %                                             $     15.73                                                              $     14.90                                                  5.6 %
At December 31:
   Square foot occupancy                                                                                                                                                                                                                                                                                               92.3 %                                                                   92.8 %                                               (0.5 )%
                                                                                                                                                                                                                                                                                                                $     17.55                                                              $     16.76                                                  4.7 %
   Annual contract rent per occupied square foot (d)
                                                                                                                                                                                                                                                                                                                                                                                                                                                           
(a)     Revenues and cost of operations do not include ancillary revenues
                                              and expenses generated at the facilities with respect to tenant
                                              reinsurance and retail sales.
(b)                                           See attached reconciliation of self-storage net operating income
                                              ("NOI") to operating income.
(c)                                           Realized annual rent per occupied square foot is computed by
                                              dividing annualized rental income, before late charges and
                                              administrative fees, by the weighted average occupied square feet
                                              for the period. Realized annual rent per available square foot
                                              ("REVPAF") is computed by dividing annualized rental income, before
                                              late charges and administrative fees, by the total available
                                              rentable square feet for the period. These measures exclude late
                                              charges and administrative fees in order to provide a better measure
                                              of our ongoing level of revenue. Late charges are dependent upon the
                                              level of delinquency and administrative fees are dependent upon the
                                              level of move-ins. In addition, the rates charged for late charges
                                              and administrative fees can vary independently from rental rates.
                                              These measures take into consideration promotional discounts, which
                                              reduce rental income.
(d)                                           Contract rent represents the applicable contractual monthly rent
                                              charged to our tenants, excluding the impact of promotional
                                              discounts, late charges and administrative fees.
                                               

The following table summarizes selected quarterly financial data with respect to the Same Store Facilities (unaudited):

                                                                                                                                           
                                                                                                                                           For the Quarter Ended
                                                                                     ---------------------------------------------------------------------------------------------------------------------------------
                                                                                         March 31                              June 30                            September 30                           December 31                                     Entire Year
                                                                                     ----------------                     ----------------                     ------------------                     ----------------                     --------------------------------------
                                                                                                                                                                                                                                            
                                                                                                                                                      (Amounts in thousands, except for per square foot amounts)
Total revenues:
             2016                                                   $ 504,952                            $ 520,099                             $ 542,272                             $ 530,373                               $ 2,097,696
                                2015                                                   $ 474,337                            $ 490,806                             $ 515,713                             $ 506,869                               $ 1,987,725
                                                                                                                                                                                                                                            
Total cost of operations:
                                2016                                                   $ 139,511                            $ 135,843                             $ 141,980                             $ 110,007                               $   527,341
                                2015                                                   $ 143,301                            $ 130,370                             $ 133,486                             $ 107,080                               $   514,237
                                                                                                                                                                                                                                            
Property taxes:
                                2016                                                   $  52,720                            $  52,929                             $  52,629                             $  29,073                               $   187,351
                                2015                                                   $  50,508                            $  50,407                             $  49,946                             $  27,845                               $   178,706
                                                                                                                                                                                                                                            
Repairs and maintenance, including snow removal expenses:
                                2016                                                   $  11,111                            $  10,308                             $  10,760                             $  10,801                               $    42,980
                                2015                                                   $  16,167                            $   9,025                             $  10,179                             $  10,300                               $    45,671
                                                                                                                                                                                                                                            
Advertising and selling expense:
                                2016                                                   $   5,080                            $   5,552                             $   7,573                             $   7,115                               $    25,320
                                2015                                                   $   6,192                            $   5,541                             $   6,954                             $   6,432                               $    25,119
                                                                                                                                                                                                                                            
REVPAF:
                                2016                                                   $   15.13                            $   15.63                             $   16.25                             $   15.92                               $     15.73
                                2015                                                   $   14.22                            $   14.73                             $   15.44                             $   15.19                               $     14.90
                                                                                                                                                                                                                                            
Weighted average realized annual rent per occupied square foot:
                                2016                                                   $   16.17                            $   16.39                             $   17.06                             $   16.99                               $     16.65
                                2015                                                   $   15.23                            $   15.45                             $   16.21                             $   16.19                               $     15.77
                                                                                                                                                                                                                                            
Weighted average occupancy levels for the period:
                                2016                                                        93.6 %                               95.4 %                                95.3 %                                93.7 %                                    94.5 %
                                2015                                                        93.4 %                               95.4 %                                95.3 %                                93.9 %                                    94.5 %
                                                                                                                                                                                                                                                             

Property Operations - Non Same Store Facilities

The Non Same Store Facilities at December 31, 2016 represent 337 facilities that were not stabilized with respect to occupancies or rental rates since January 1, 2014 or that we did not own as of January 1, 2014. The following table summarizes operating data with respect to the Non Same Store Facilities (unaudited):

                                                                                                                                                                                                                                                                                         
NON SAME STORE                                                                                                                                  Three Months Ended December 31,                                                                                                                                                                   Year Ended December 31,
                                                                                      ---------------------------------------------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
FACILITIES                                                                                        2016                                             2015                                                      Change                                                                  2016                                                                   2015                                                                 Change
                                                                                      ----------------------------                     ----------------------------                     -------------------------------------------------                     --------------------------------------------------                     --------------------------------------------------                     -------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                         (Dollar amounts in thousands, except for per square foot amounts)
Revenues:
   2016 acquisitions                                                                                     $  7,779                                         $      -                                         $  7,779                                                              $  18,174                                                              $       -                                                              $ 18,174
   2015 acquisitions                                                                                        4,126                                            2,752                                            1,374                                                                 15,574                                                                  6,255                                                                 9,319
   2014 acquisitions                                                                                       11,912                                           10,929                                              983                                                                 46,428                                                                 41,972                                                                 4,456
   2013 acquisitions                                                                                       25,353                                           23,765                                            1,588                                                                 99,390                                                                 91,481                                                                 7,909
   Developed facilities                                                                                     7,375                                            3,602                                            3,773                                                                 23,405                                                                  9,460                                                                13,945
   Other facilities                                                                     26,780                        24,967                         1,813                          105,161                           98,632                           6,529  
                                                                                      -------------------- ------                      -------------------- ------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------ --------------------
      Total revenues                                                                    83,325                        66,015                        17,310                          308,132                          247,800                          60,332  
                                                                                      -------------------- ------                      -------------------- ------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                             
Cost of operations before depreciation and amortization expense:
   2016 acquisitions                                                                                        2,793                                                -                                            2,793                                                                  6,455                                                                      -                                                                 6,455
   2015 acquisitions                                                                                        1,081                                              915                                              166                                                                  5,010                                                                  2,067                                                                 2,943
   2014 acquisitions                                                                                        3,254                                            3,001                                              253                                                                 12,845                                                                 12,304                                                                   541
   2013 acquisitions                                                                                        6,761                                            6,854                                              (93 )                                                               28,508                                                                 28,017                                                                   491
   Developed facilities                                                                                     3,510                                            1,234                                            2,276                                                                 10,932                                                                  3,934                                                                 6,998
   Other facilities                                                                      7,044                         6,534                           510                           26,814                           26,137                             677  
                                                                                      -------------------- ------                      -------------------- ------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------ --------------------
      Total cost of operations                                                          24,443                        18,538                         5,905                           90,564                           72,459                          18,105  
                                                                                      -------------------- ------                      -------------------- ------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                             
Net operating income:
   2016 acquisitions                                                                                        4,986                                                -                                            4,986                                                                 11,719                                                                      -                                                                11,719
   2015 acquisitions                                                                                        3,045                                            1,837                                            1,208                                                                 10,564                                                                  4,188                                                                 6,376
   2014 acquisitions                                                                                        8,658                                            7,928                                              730                                                                 33,583                                                                 29,668                                                                 3,915
   2013 acquisitions                                                                                       18,592                                           16,911                                            1,681                                                                 70,882                                                                 63,464                                                                 7,418
   Developed facilities                                                                                     3,865                                            2,368                                            1,497                                                                 12,473                                                                  5,526                                                                 6,947
   Other facilities                                                                     19,736                        18,433                         1,303                           78,347                           72,495                           5,852  
                                                                                      -------------------- ------                      -------------------- ------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------ --------------------
   Net operating income (a)                                                                              $ 58,882                                         $ 47,477                                         $ 11,405                                           $ 217,568                                           $ 175,341                                           $ 42,227  
                                                                                      ==================== ======                      ==================== ======                      ==================== ====== ====================                      ==================== ======= ====================                      ==================== ======= ====================                      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                                                                                                                             
At December 31:
----------------------------------------------------------------
   Square foot occupancy:
      2016 acquisitions                                                                                                                                                                                                                                                               82.9 %                                                                    -                                                                     -
      2015 acquisitions                                                                                                                                                                                                                                                               90.8 %                                                                 85.3 %                                                                 6.4 %
      2014 acquisitions                                                                                                                                                                                                                                                               92.0 %                                                                 91.1 %                                                                 1.0 %
      2013 acquisitions                                                                                                                                                                                                                                                               92.4 %                                                                 92.2 %                                                                 0.2 %
      Developed facilities                                                                                                                                                                                                                                                            58.6 %                                                                 70.0 %                                                               (16.3 )%
      Other facilities                                                                                                                                                                                                                                             88.2 %                                              88.2 %                                              0.0 %
                                                                                                                                                                                                                                                              -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                   84.6 %                                              88.2 %                                             (4.1 )%
                                                                                                                                                                                                                                                              ==================== ======= ====================                      ==================== ======= ====================                      ==================== ====== ====================
   Annual contract rent per occupied square foot:
      2016 acquisitions                                                                                                                                                                                                                                                          $    9.99                                                              $       -                                                                     -
      2015 acquisitions                                                                                                                                                                                                                                                              13.77                                                                  12.87                                                                   7.0 %
      2014 acquisitions                                                                                                                                                                                                                                                              14.47                                                                  13.51                                                                   7.1 %
      2013 acquisitions                                                                                                                                                                                                                                                              15.50                                                                  14.68                                                                   5.6 %
      Developed facilities                                                                                                                                                                                                                                                           12.96                                                                  12.45                                                                   4.1 %
      Other facilities                                                                                                                                                                                                                                            18.04                            16.82                             7.3 %
                                                                                                                                                                                                                                                              -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                 $   14.80                                           $   14.88                            (0.5 )%
                                                                                                                                                                                                                                                              ==================== ======= ====================                      ==================== ======= ====================                      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                                                                                                                                             
At December 31:
----------------------------------------------------------------
   Number of facilities:
      2016 acquisitions                                                                                                                                                                                                                                                                 55                                                                      -                                                                    55
      2015 acquisitions                                                                                                                                                                                                                                                                 17                                                                     17                                                                     -
      2014 acquisitions                                                                                                                                                                                                                                                                 44                                                                     44                                                                     -
      2013 acquisitions                                                                                                                                                                                                                                                                105                                                                    105                                                                     -
      Developed facilities                                                                                                                                                                                                                                                              36                                                                     20                                                                    16
      Other facilities                                                                                                                                                                                                                                               80                               80                               -  
                                                                                                                                                                                                                                                              -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                    337                              266                              71  
                                                                                                                                                                                                                                                              ==================== ======= ====================                      ==================== ======= ====================                      ==================== ====== ====================
   Net rentable square feet (in thousands):
     2016 acquisitions                                                                                                                                                                                                                                                               4,121                                                                      -                                                                 4,121
     2015 acquisitions                                                                                                                                                                                                                                                               1,285                                                                  1,285                                                                     -
     2014 acquisitions                                                                                                                                                                                                                                                               3,457                                                                  3,457                                                                     -
     2013 acquisitions                                                                                                                                                                                                                                                               6,906                                                                  6,906                                                                     -
     Developed facilities                                                                                                                                                                                                                                                            4,019                                                                  1,878                                                                 2,141
     Other facilities                                                                                                                                                                                                                                             6,748                            6,614                             134  
                                                                                                                                                                                                                                                              -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                 26,536                           20,140                           6,396  
                                                                                                                                                                                                                                                              ==================== ======= ====================                      ==================== ======= ====================                      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                                                                                                                             
(a)     See attached reconciliation of self-storage NOI to operating income.
                                               

Investing and Capital Markets Activities

During the three months ended December 31, 2016, we acquired 23 self-storage facilities (13 located in Oklahoma, four each in Ohio and Tennessee and one each in California and Texas) with 1.8 million net rentable square feet for $159 million. For the year ended December 31, 2016, we acquired 55 self-storage facilities with 4.1 million net rentable square feet for $429 million. Subsequent to December 31, 2016, we acquired or were under contract to acquire five self-storage facilities (two in Ohio and one each in Minnesota, New York and North Carolina) with 0.3 million net rentable square feet for $26 million.

During the three months ended December 31, 2016, we completed six newly developed facilities and various expansion projects (0.8 million net rentable square feet) costing $107 million. For the year ended December 31, 2016, we completed 16 newly developed facilities and various expansion projects (2.3 million net rentable square feet) costing an aggregate of $269 million. At December 31, 2016, we had various facilities in development (4.2 million net rentable square feet) estimated to cost $520 million and various expansion projects (1.1 million net rentable square feet) estimated to cost $140 million. The remaining $430 million of development costs for these projects is expected to be incurred primarily in the next 18 months.

On October 14, 2016, we issued our 4.90% Series E Preferred Shares for gross proceeds of $350 million.

During the year ended December 31, 2016, we issued four series of Preferred Shares for total gross proceeds of $1,175 million and an average coupon rate of 5.1%. During 2016, we also issued EUR100 million ($113.6 million) of Euro denominated Senior Unsecured Notes to an institutional investor, bearing interest at a fixed rate of 1.54% and maturing in eight years.

During 2016, we redeemed two series of Preferred Shares with an average coupon rate of 6.4% at par for a total of $862.5 million.

Distributions Declared

On February 22, 2017, our Board of Trustees declared a regular common quarterly dividend of $2.00 per common share. The Board also declared dividends with respect to our various series of preferred shares. All the dividends are payable on March 30, 2017 to shareholders of record as of March 15, 2017.

Fourth Quarter Conference Call

A conference call is scheduled for February 23, 2017 at 10:00 a.m. (PST) to discuss the fourth quarter earnings results. The domestic dial-in number is (866) 406-5408, and the international dial-in number is (973) 582-2770 (conference ID number for either domestic or international is 60310587). A simultaneous audio webcast may be accessed by using the link at www.publicstorage.com under "Company Info, Investor Relations, News and Events, Events Calendar." A replay of the conference call may be accessed through March 9, 2017 by calling (800) 585-8367 (domestic) or (404) 537-3406 (international) or by using the link at www.publicstorage.com under "Company Info, Investor Relations, News and Events, Events Calendar." All forms of replay utilize conference ID number 60310587.

About Public Storage

Public Storage, a member of the S&P 500 and FT Global 500, is a REIT that primarily acquires, develops, owns and operates self-storage facilities. The Company’s headquarters are located in Glendale, California. At December 31, 2016, we had interests in 2,348 self-storage facilities located in 38 states with approximately 154 million net rentable square feet in the United States and 219 storage facilities located in seven Western European nations with approximately 12 million net rentable square feet operated under the "Shurgard" brand. We also own a 42% common equity interest in PS Business Parks, Inc. (PSB ) which owned and operated approximately 28 million rentable square feet of commercial space at December 31, 2016.

Additional information about Public Storage is available on our website, www.publicstorage.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this press release, other than statements of historical fact, are forward-looking statements which may be identified by the use of the words "expects," "believes," "anticipates," "should," "estimates" and similar expressions. These forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance include, but are not limited to, those described in Part 1, Item 1A, "Risk Factors" in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on February 29, 2016 and in our other filings with the SEC and the following: general risks associated with the ownership and operation of real estate, including changes in demand, risk related to development of self-storage facilities, potential liability for environmental contamination, natural disasters and adverse changes in laws and regulations governing property tax, real estate and zoning; risks associated with downturns in the national and local economies in the markets in which we operate, including risks related to current economic conditions and the economic health of our customers; the impact of competition from new and existing self-storage and commercial facilities and other storage alternatives; difficulties in our ability to successfully evaluate, finance, integrate into our existing operations and manage acquired and developed properties; risks associated with international operations including, but not limited to, unfavorable foreign currency rate fluctuations, changes in tax laws, and local and global economic uncertainty that could adversely affect our earnings and cash flows; risks related to our participation in joint ventures; the impact of the regulatory environment as well as national, state and local laws and regulations including, without limitation, those governing environmental, taxes, our tenant reinsurance business and labor, and risks related to the impact of new laws and regulations; risks of increased tax expense associated either with a possible failure by us to qualify as a REIT, or with challenges to the determination of taxable income for our taxable REIT subsidiaries; changes in federal or state tax laws related to the taxation of REITs and other corporations; security breaches or a failure of our networks, systems or technology could adversely impact our business, customer and employee relationships; risks associated with the self-insurance of certain business risks, including property and casualty insurance, employee health insurance and workers compensation liabilities; difficulties in raising capital at a reasonable cost; delays in the development process; ongoing litigation and other legal and regulatory actions which may divert management’s time and attention, require us to pay damages and expenses or restrict the operation of our business; and economic uncertainty due to the impact of war or terrorism. These forward-looking statements speak only as of the date of this press release. All of our forward-looking statements, including those in this press release, are qualified in their entirety by this statement. We expressly disclaim any obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, new estimates, or other factors, events or circumstances after the date of this press release, except where expressly required by law. Given these risks and uncertainties, you should not rely on any forward-looking statements in this press release, or which management may make orally or in writing from time to time, as predictions of future events nor guarantees of future performance.

 
                                                                                                                                                                       PUBLIC STORAGE
                                                                                                                                                               SELECTED INCOME STATEMENT DATA
                                                                                                                                                        (Amounts in thousands, except per share data)
                                                                                                                                                                         (Unaudited)
 
                                                                                                                  Three Months Ended                                                                                                               Year Ended
                                                                                                                                        December 31,                                                                                                                                    December 31,
                                                                                  -------------------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------------
                                                                                                         2016                                                2015                                                                    2016                                                  2015
                                                                                  --------------------------------------------------                     --------------------------------------------------                     ----------------------------------------------------                     ----------------------------------------------------
                                                                                                                                                                                                                                                                                                          
Revenues:
   Self-storage facilities                                                                           $ 613,698                                                              $ 572,884                                                              $ 2,405,828                                                              $ 2,235,525
   Ancillary operations                                                              37,729                           36,446                            154,721                            146,171  
                                                                                  -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                    651,427                          609,330                          2,560,549                          2,381,696  
                                                                                  -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                          
Expenses:
   Self-storage cost of operations                                                                     134,450                                                                125,618                                                                  617,905                                                                  586,696
   Ancillary cost of operations                                                                         10,716                                                                 12,091                                                                   51,178                                                                   48,806
   Depreciation and amortization                                                                       111,741                                                                106,307                                                                  433,314                                                                  426,008
   General and administrative                                                        20,148                           19,456                             83,656                             88,177  
                                                                                  -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                    277,055                          263,472                          1,186,053                          1,149,687  
                                                                                  -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                          
Operating income                                                                                       374,372                                                                345,858                                                                1,374,496                                                                1,232,009
                                                                                                                                                                                                                                                                                                          
Other income (expense):
   Interest and other income                                                                             3,524                                                                  5,035                                                                   15,138                                                                   16,544
   Interest expense                                                                                       (900 )                                                                 (610 )                                                                 (4,210 )                                                                   (610 )
   Equity in earnings of unconsolidated real estate entities                                            15,128                                                                 14,670                                                                   56,756                                                                   50,937
   Gain on real estate investment sales                                                                      -                                                                      -                                                                      689                                                                   18,503
   Foreign currency exchange gain                                                    23,557                              306                             17,570                                306  
                                                                                  -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
Net income                                                                                             415,681                                                                365,259                                                                1,460,439                                                                1,317,689
   Allocation to noncontrolling interests                                            (1,942 )                                            (1,769 )                                              (6,863 )                                              (6,445 )
                                                                                  -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
Net income allocable to Public Storage shareholders                                                    413,739                                                                363,490                                                                1,453,576                                                                1,311,244
   Allocation of net income to:
      Preferred shareholders - distributions                                              (59,548 )                                                              (59,031 )                                                               (238,214 )                                                               (245,097 )
      Preferred shareholders - redemptions                                                      -                                                                      -                                                                  (26,873 )                                                                 (8,897 )
      Restricted share units                                                         (1,379 )                                            (1,456 )                                              (4,610 )                                              (4,200 )
                                                                                  -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
Net income allocable to common shareholders                                                          $ 352,812                                           $ 303,003                                           $ 1,183,879                                           $ 1,053,050  
                                                                                  ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                          
Per common share:
------------------------------------------------------------
   Net income per common share - Basic                                                  $    2.04                                           $    1.75                                           $      6.84                                           $      6.10  
                                                                                  ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
   Net income per common share - Diluted                                                $    2.03                                           $    1.74                                           $      6.81                                           $      6.07  
                                                                                  ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
   Weighted average common shares - Basic                              173,190                          172,877                            173,091                            172,699  
                                                                                  ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
   Weighted average common shares - Diluted                            173,812                          173,759                            173,878                            173,510  
                                                                                  ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                         
 
                                                                                                          PUBLIC STORAGE
                                                                                                    SELECTED BALANCE SHEET DATA
                                                                                      (Amounts in thousands, except share and per share data)
 
                                                                                                  December 31, 2016                                      December 31, 2015
                                                                                                   -----------------------------------------------------                     -----------------------------------------------------
ASSETS                                                                                                                  (Unaudited)
                                                                                                                                                                              
Cash and cash equivalents                                                                                             $    183,688                                                              $    104,285
                                                                                                                                                                              
Operating real estate facilities:
   Land and buildings, at cost                                                                                          13,963,229                                                                13,205,261
   Accumulated depreciation                                                                          (5,270,963 )                                           (4,866,738 )
                                                                                                   -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                         8,692,266                                                                 8,338,523
Construction in process                                                                                                    230,310                                                                   219,190
Investments in unconsolidated real estate entities                                                                         689,207                                                                   809,308
Goodwill and other intangible assets, net                                                                                  212,719                                                                   211,458
Other assets                                                                                            122,148                              95,468  
                                                                                                   -------------------- ---------- --------------------                      -------------------- ---------- --------------------
      Total assets                                                                                                    $ 10,130,338                                           $  9,778,232  
                                                                                                   ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
LIABILITIES AND EQUITY
                                                                                                                                                                              
Senior unsecured notes                                                                                                $    359,810                                                              $    263,940
Mortgage notes                                                                                                              30,939                                                                    55,076
Accrued and other liabilities                                                                           297,935                             261,578  
                                                                                                   -------------------- ---------- --------------------                      -------------------- ---------- --------------------
      Total liabilities                                                                                                    688,684                                                                   580,594
                                                                                                                                                                              
Equity:
   Public Storage shareholders’ equity:
                                                                                                                         4,367,500                                                                 4,055,000
      Cumulative Preferred Shares, $0.01 par value, 100,000,000 shares
      authorized, 174,700 shares issued (in series) and outstanding
      (162,200 at December 31, 2015), at liquidation preference
                                                                                                                            17,329                                                                    17,293
      Common Shares, $0.10 par value, 650,000,000 shares authorized,
      173,288,787 shares issued and outstanding, (172,921,241 shares at
      December 31, 2015)
      Paid-in capital                                                                                                    5,609,768                                                                 5,601,506
      Accumulated deficit                                                                                                 (487,581 )                                                                (434,610 )
      Accumulated other comprehensive loss                                                              (95,106 )                                              (68,548 )
                                                                                                   -------------------- ---------- --------------------                      -------------------- ---------- --------------------
         Total Public Storage shareholders’ equity                                            9,411,910                                                                 9,170,641
      Noncontrolling interests                                                                           29,744                              26,997  
                                                                                                   -------------------- ---------- --------------------                      -------------------- ---------- --------------------
         Total equity                                                                                 9,441,654                           9,197,638  
                                                                                                   -------------------- ---------- --------------------                      -------------------- ---------- --------------------
            Total liabilities and equity                                                                              $ 10,130,338                                           $  9,778,232  
                                                                                                   ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                              
 
                                                                                                                                                                             PUBLIC STORAGE
                                                                                                                                                                         SELECTED FINANCIAL DATA
 
                                                                                                                                                      Computation of Funds from Operations and Funds Available for
                                                                                                                                                                              Distribution
                                                                                                                                                 (Unaudited - amounts in thousands, except per share data)
 
                                                                                                                             Three Months Ended                                                                                                               Year Ended
                                                                                                                                                   December 31,                                                                                                                                    December 31,
                                                                                             -------------------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------------
                                                                                                                    2016                                                2015                                                                    2016                                                  2015
                                                                                             --------------------------------------------------                     --------------------------------------------------                     ----------------------------------------------------                     ----------------------------------------------------
                                                                                                                                                                                                                                                                                                                     
Computation of FFO per Share:
-----------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                     
Net income allocable to common shareholders                                                                     $ 352,812                                                              $ 303,003                                                              $ 1,183,879                                                              $ 1,053,050
   Eliminate items excluded from FFO:
      Depreciation and amortization                                                                               111,741                                                                106,307                                                                  433,314                                                                  426,008
      Depreciation from unconsolidated real estate investments                                                     17,088                                                                 19,893                                                                   74,407                                                                   78,985
                                                                                                                     (907 )                                                                 (887 )                                                                 (3,549 )                                                                 (3,519 )
      Depreciation allocated to noncontrolling interests and restricted
      share unitholders
                                                                                                    (1 )                                              (888 )                                                (768 )                                             (29,721 )
      Gains on sale of real estate investments, including our equity
      share from investments
                                                                                             -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
FFO allocable to common shares (a)                                                                              $ 480,733                                           $ 427,428                                           $ 1,687,283                                           $ 1,524,803  
                                                                                             ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
Diluted weighted average common shares                                                         173,812                          173,759                            173,878                            173,510  
                                                                                             ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
FFO per share (a)                                                                                               $    2.77                                           $    2.46                                           $      9.70                                           $      8.79  
                                                                                             ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                     
Reconciliation of Earnings per Share to
FFO per Share:
-----------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                     
Earnings per share - diluted                                                                                    $    2.03                                                              $    1.74                                                              $      6.81                                                              $      6.07
   Eliminate per share amounts excluded from FFO:
                                                                                                                     0.74                                                                   0.72                                                                     2.90                                                                     2.89
      Depreciation and amortization, including amounts from investments
      and excluding amounts allocated to noncontrolling interests and
      restricted share unitholders
                                                                                                     -                                -                              (0.01 )                                               (0.17 )
      Gains on sale of real estate investments, including our equity
      share from investments, and other
                                                                                             -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
FFO per share (a)                                                                                               $    2.77                                           $    2.46                                           $      9.70                                           $      8.79  
                                                                                             ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                     
Computation of Funds Available for
Distribution ("FAD"):
-----------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                     
FFO allocable to common shares                                                                                  $ 480,733                                                              $ 427,428                                                              $ 1,687,283                                                              $ 1,524,803
Eliminate effect of items included in FFO but not FAD:
   Non-cash share-based compensation expense                                                                        7,524                                                                  6,147                                                                   20,765                                                                   15,793
                                                                                                                  (23,557 )                                                               (1,773 )                                                                (18,511 )                                                                 (1,773 )
   Foreign currency exchange gain, including our equity share from
   investments
                                                                                                                    3,067                                                                      -                                                                   29,940                                                                    9,944
   Application of EITF D-42, including our equity share from
   investments
Less: Capital expenditures to maintain real estate facilities                                  (18,268 )                                           (10,194 )                                             (86,047 )                                             (63,069 )
                                                                                             -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                     
FAD (a)                                                                                                         $ 449,499                                           $ 421,608                                           $ 1,633,430                                           $ 1,485,698  
                                                                                             ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                     
Distributions paid to common shareholders and restricted share units                                            $ 347,447                                           $ 294,674                                           $ 1,267,544                                           $ 1,125,934  
                                                                                             ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                     
Distribution payout ratio                                                                         77.3 %                                              69.9 %                                                77.6 %                                                75.8 %
                                                                                             ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                     
Distributions per common share                                                                                  $    2.00                                           $    1.70                                           $      7.30                                           $      6.50  
                                                                                             ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                     
(a)     FFO and FFO per share are non-GAAP measures defined by the National
                                              Association of Real Estate Investment Trusts and, along with the
                                              non-GAAP measure FAD, are considered helpful measures of REIT
                                              performance by REITs and many REIT analysts. FFO represents net
                                              income before real estate depreciation, gains or losses and
                                              impairment charges, which are excluded because they are based upon
                                              historical real estate costs and assume that building values
                                              diminish ratably over time, while we believe that real estate values
                                              fluctuate due to market conditions. FAD represents FFO adjusted to
                                              exclude certain non-cash charges and to deduct capital expenditures.
                                              We utilize FAD in evaluating our ongoing cash flow available for
                                              investment, debt repayment, and common distributions. We believe
                                              investors and analysts utilize FAD in a similar manner. FFO and FFO
                                              per share are not a substitute for net income or earnings per share.
                                              FFO and FAD are not substitutes for GAAP net cash flow in evaluating
                                              our liquidity or ability to pay dividends, because they exclude
                                              investing and financing activities presented on our statements of
                                              cash flows. In addition, other REITs may compute these measures
                                              differently, so comparisons among REITs may not be helpful.
                                               
 
                                                                                                                                                                PUBLIC STORAGE
                                                                                                                                                            SELECTED FINANCIAL DATA
 
                                                                                                                                            Reconciliation of Self-Storage Net Operating Income to
                                                                                                                                                               Operating Income
                                                                                                                                                (Unaudited - amounts in thousands)
 
                                                                                                  Three Months Ended                                                                                                                Year Ended
                                                                                                                        December 31,                                                                                                                                     December 31,
                                                                 ---------------------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------------
                                                                                        2016                                                 2015                                                                     2016                                                  2015
                                                                 ---------------------------------------------------                     ---------------------------------------------------                     ----------------------------------------------------                     ----------------------------------------------------
                                                                                                                                                                                                                                                                                           
Self-storage revenues for:
   Same Store Facilities                                                            $  530,373                                                              $  506,869                                                              $ 2,097,696                                                              $ 1,987,725
   Non Same Store Facilities                                         83,325                            66,015                            308,132                            247,800  
                                                                 -------------------- -------- --------------------                      -------------------- -------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
Self-storage revenues                                                                  613,698                                                                 572,884                                                                2,405,828                                                                2,235,525
                                                                                                                                                                                                                                                                                           
Self-storage cost of operations for:
   Same Store Facilities                                                               110,007                                                                 107,080                                                                  527,341                                                                  514,237
   Non Same Store Facilities                                         24,443                            18,538                             90,564                             72,459  
                                                                 -------------------- -------- --------------------                      -------------------- -------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
Self-storage cost of operations                                                        134,450                                                                 125,618                                                                  617,905                                                                  586,696
                                                                                                                                                                                                                                                                                           
Self-storage net operating income for:
   Same Store Facilities                                                               420,366                                                                 399,789                                                                1,570,355                                                                1,473,488
   Non Same Store Facilities                                         58,882                            47,477                            217,568                            175,341  
                                                                 -------------------- -------- --------------------                      -------------------- -------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
Self-storage net operating income (a)                                                  479,248                                                                 447,266                                                                1,787,923                                                                1,648,829
Ancillary operating revenues                                                            37,729                                                                  36,446                                                                  154,721                                                                  146,171
Ancillary cost of operations                                                           (10,716 )                                                               (12,091 )                                                                (51,178 )                                                                (48,806 )
Depreciation and amortization                                                         (111,741 )                                                              (106,307 )                                                               (433,314 )                                                               (426,008 )
General and administrative expense                                  (20,148 )                                            (19,456 )                                             (83,656 )                                             (88,177 )
                                                                 -------------------- -------- --------------------                      -------------------- -------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
   Operating income on our income statement                                         $  374,372                                           $  345,858                                           $ 1,374,496                                           $ 1,232,009  
                                                                 ==================== ======== ====================                      ==================== ======== ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                           
(a)     Net operating income or "NOI" is a non-GAAP financial measure that
                                              excludes the impact of depreciation and amortization expense, which
                                              is based upon historical real estate costs and assumes that building
                                              values diminish ratably over time, while we believe that real estate
                                              values fluctuate due to market conditions. We utilize NOI in
                                              determining current property values, evaluating property
                                              performance, and in evaluating operating trends. We believe that
                                              investors and analysts utilize NOI in a similar manner. NOI is not a
                                              substitute for net income, net operating cash flow, or other related
                                              GAAP financial measures, in evaluating our operating results. This
                                              table reconciles from NOI for our self-storage facilities to the
                                              operating income presented on our income statement.
                                               

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SOURCE: Public Storage

Public Storage 
Clemente Teng 
(818) 244-8080, Ext. 1141


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