Investments In Real Estate Entities

9 Months Ended

Sep. 30, 2011

Investments In Real Estate Entities [Abstract]

Investments In Real Estate Entities

4. Investments in Real Estate Entities

The following table sets forth our investments in the Real Estate Entities at September 30, 2011 and December 31, 2010, and our equity in earnings of real estate entities for the three and nine months ended September 30, 2011 and 2010:

	Investments in Real Estate Entities at
	September 30, 2011		December 31, 2010
	(Amounts in thousands)
PSB	$	329,476	$	323,795
Shurgard Europe		376,348		264,681
Other Investments		10,763		13,093
Total	$	716,587	$	601,569

	Equity in Earnings of Real Estate Entities
	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2011		2010		2011		2010
	(Amounts in thousands)
PSB	$	8,117	$	5,091	$	22,982	$	16,279
Shurgard Europe		6,702		3,485		17,471		10,254
Other Investments		450		467		1,302		1,259
Total	$	15,269	$	9,043	$	41,755	$	27,792

During the nine months ended September 30, 2011 and 2010, we received cash distributions from our investments in real estate entities totaling $41,852,000 and $37,377,000, respectively.

Investment in PSB

PSB is a REIT traded on the New York Stock Exchange, which controls an operating partnership (collectively, the REIT and the operating partnership are referred to as "PSB").  We have a 42% common equity interest in PSB as of September 30, 2011 (41% at December 31, 2010), comprised of our ownership of 5,801,606 shares of PSB's common stock and 7,305,355 limited partnership units in the operating partnership.  The limited partnership units are convertible at our option, subject to certain conditions, on a one-for-one basis into PSB common stock.  Based upon the closing price at September 30, 2011 ($49.54 per share of PSB common stock), the shares and units we owned had a market value of approximately $649.3 million, as compared to our carrying value of $329.5 million.

The following table sets forth selected financial information of PSB; the amounts represent 100% of PSB's balances and not our pro-rata share.

	2011			2010
	(Amounts in thousands)
For the nine months ended September 30,
Total revenue	$	223,644		$	206,354
Costs of operations		(74,805	)		(66,960	)
Depreciation and amortization		(63,200	)		(57,731	)
General and administrative		(4,683	)		(6,980	)
Other items		(350	)		3,207
Net income	$	80,606		$	77,890
	At September 30, 2011			At December 31, 2010
	(Amounts in thousands)
Total assets (primarily real estate)	$	1,611,697		$	1,621,057
Debt		193,850			144,511
Other liabilities		55,630			53,421
Preferred stock and units		604,129			651,964
Common equity and units		758,088			771,161

Investment in Shurgard Europe

At September 30, 2011 and December 31, 2010, we had a 49% equity investment in Shurgard Europe. At December 31, 2010, Shurgard Europe owned 116 facilities directly and had a 20% interest in 72 self-storage facilities located in Europe which operate under the "Shurgard" name.  On March 2, 2011, Shurgard Europe acquired the 80% interests in the joint ventures it did not own for €172.0 million, and as a result, wholly-owns all 188 facilities.  We provided the funding for this acquisition through a loan to Shurgard Europe totaling $237.9 million.  This loan was extinguished in June 2011 (Note 5).

During the three and nine months ended September 30, 2011,  our investment in Shurgard Europe increased by approximately $116,560,000 due to the effective exchange of a loan receivable from Shurgard Europe for an equity interest in Shurgard Europe.  During the nine months ended September 30, 2011 and 2010, our investment in Shurgard Europe increased by approximately $269,000 and $4,326,000, respectively, due to the impact of changes in foreign currency exchange rates.

For the three and nine months ended September 30, 2011, we also received interest on the loans due from Shurgard Europe, and trademark license fees.  For financial statement purposes, 49% of the interest and license fees have been classified as equity in earnings, and the remaining 51% as interest and other income, as set forth in the following table:

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2011		2010			2011			2010
	(Amounts in thousands)
Our 49% equity share of Shurgard Europe's net income (loss)	$	735	$	(2,435	)	$	(2,874	)	$	(7,843	)
Add our 49% equity share of amounts received from Shurgard Europe:
Interest on loans due from Shurgard Europe		5,635		5,712			19,441			17,495
Trademark license fee		332		208			904			602
Total equity in earnings of Shurgard Europe	$	6,702	$	3,485		$	17,471		$	10,254

The following table sets forth selected consolidated financial information of Shurgard Europe.  These amounts are based upon 100% of Shurgard Europe's balances for all periods (including the consolidated operations of 72 self-storage facilities formerly owned by the joint ventures), rather than our pro rata share, and are based upon our historical acquired book basis.

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2011			2010			2011			2010
	(Amounts in thousands)
Self-storage and ancillary revenues	$	67,732		$	59,079		$	196,004		$	173,146
Interest and other income (expense)		89			66			292			(145	)
Self-storage and ancillary cost of operations		(28,089	)		(25,020	)		(82,051	)		(73,732	)
Trademark license fee payable to Public Storage		(678	)		(423	)		(1,844	)		(1,228	)
Depreciation and amortization		(17,954	)		(17,880	)		(54,655	)		(54,019	)
General and administrative		(3,571	)		(2,247	)		(9,191	)		(5,903	)
Interest expense on third party debt		(3,728	)		(3,245	)		(11,020	)		(8,696	)
Interest expense on debt due to Public Storage		(11,499	)		(11,659	)		(39,675	)		(35,704	)
Expenses from foreign currency exchange		(803	)		(415	)		(909	)		(845	)
Net income (loss)	$	1,499		$	(1,744	)	$	(3,049	)	$	(7,126	)
Net  income allocated to permanent noncontrolling equity interests		-			(3,225	)		(2,816	)		(8,880	)
Net income (loss) allocated to Shurgard Europe	$	1,499		$	(4,969	)	$	(5,865	)	$	(16,006	)

	September 30,		December 31,
	2011		2010
	(Amounts in thousands)
Total assets (primarily self-storage facilities)	$	1,470,085	$	1,503,961
Total debt to third parties		260,276		279,174
Total debt to Public Storage		466,349		495,229
Other liabilities		90,884		73,027
Equity		652,576		656,531

Other Investments

At September 30, 2011, the "Other Investments" include an aggregate common equity ownership of approximately 26% in entities that collectively own 17 self-storage facilities, and have no debt.

On June 30, 2011, we acquired interests owned by Mr. Hughes (the Company's then Chairman of the Board of Trustees), and his family and entities that are wholly owned or controlled by them (collectively, the "Hughes Family"), in three limited partnerships for approximately $1,274,000 in cash.

During the three months ended September 30, 2011, we began to consolidate two of the aforementioned limited partnerships due to a change of control.  As a result, we recorded a gain of $3,138,000 on the disposition of our existing investments, representing the difference between the aggregate fair values of the investments ($6,126,000) and the aggregate book values ($2,988,000).

The acquisition cost in consolidating these investments totaled $5,737,000, representing the $6,126,000 fair value of our existing investment less $389,000 in cash held by these limited partnerships, and was allocated to real estate facilities ($19,415,000), intangible assets ($3,985,000), and permanent noncontrolling interests ($17,663,000).

The following table sets forth certain condensed financial information (representing 100% of these entities' balances and not our pro-rata share) with respect to the Other Investments' 17 facilities:

	2011			2010
	(Amounts in thousands)
For the nine months ended September 30,
Total revenue	$	11,041		$	10,643
Cost of operations and other expenses		(4,381	)		(4,336	)
Depreciation and amortization		(1,782	)		(1,713	)
Net income	$	4,878		$	4,594
	September 30,			December 31,
		2011			2010
	(Amounts in thousands)
Total assets (primarily self-storage facilities)	$	32,090		$	32,371
Total accrued and other liabilities		2,216			787
Total Partners' equity		29,874			31,584