4.	Investments in Unconsolidated Real Estate Entities

The following table sets forth our investments in the Unconsolidated Real Estate Entities at December 31, 2011 and 2010, and our equity in earnings of the Unconsolidated Real Estate Entities for each of the three years ended December 31, 2011 (amounts in thousands):


	Investments in Unconsolidated Real Estate Entities at December 31,				Equity in Earnings of Unconsolidated Real Estate Entities for the Year Ended December 31,
	2011		2010		2011		2010		2009
PSB	$	328,508	$	323,795	$	27,781	$	20,719	$	35,108
Shurgard Europe		375,467		264,681		29,152		15,872		16,269
Other Investments		10,652		13,093		1,771		1,761		1,867
Total	$	714,627	$	601,569	$	58,704	$	38,352	$	53,244

During the years ended December 31, 2011, 2010 and 2009, we received cash distributions from our investments in the Unconsolidated Real Estate Entities totaling $53.5 million, $49.9 million and $49.4 million, respectively.

Investment in PSB

PSB is a REIT traded on the New York Stock Exchange, which controls an operating partnership. We have a 42% common equity interest in PSB as of December 31, 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 December 31, 2011 ($55.43 per share of PSB common stock), the shares and units we owned had a market value of approximately $726.5 million, as compared to our carrying value of $328.5 million.

During the year ended December 31, 2009, PSB sold 3,450,000 shares of its common stock in a public offering for net proceeds of $153.6 million. In accordance with FASB ASC Topic 323, "Investments – Equity Method and Joint Ventures", we recognized a gain totaling $30.3 million on the share issuance by PSB, as if we had sold a proportionate share of our investment in PSB. Concurrent with this public offering, we purchased 383,333 shares of PSB common stock from PSB at the same price per share as the public offering for a total cost of $17.8 million.

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


	2011			2010			2009
	(Amounts in thousands)
For the year ended December 31,
Total revenue	$	298,503		$	277,324		$	269,710
Costs of operations		(100,148	)		(89,630	)		(85,039	)
Depreciation and amortization		(84,542	)		(78,441	)		(84,011	)
General and administrative		(9,036	)		(9,651	)		(6,202	)
Other items		(2,137	)		2,420			(119	)
Net income		102,640			102,022			94,339
Net income allocated to preferred unitholders, preferred shareholders and restricted stock unitholders		(34,935	)		(51,469	)		(15,196	)
Net income allocated to common shareholders and common unitholders	$	67,705		$	50,553		$	79,143

As of December 31,
Total assets (primarily real estate)	$	2,138,619		$	1,621,057
Debt		717,084			144,511
Other liabilities		60,940			53,421
Preferred stock and units		604,129			651,964
Common equity and units		756,466			771,161

Investment in Shurgard Europe

At December 31, 2011 and 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 owned by joint ventures 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 the assumption of €159.0 million of debt (representing 80% of the joint ventures' debt), 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 2011, our investment in Shurgard Europe increased by approximately $116.6 million due to the effective exchange of a loan receivable from Shurgard Europe for an equity interest in Shurgard Europe. The impact of changes in foreign currency exchange rates caused our investment in Shurgard Europe to decrease approximately $7.0 million in 2011 and increase approximately $0.8 million and $15.8 million during 2010 and 2009, respectively.

For the years ended December 31, 2011, 2010 and 2009, 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 of unconsolidated real estate entities, and the remaining 51% as interest and other income, as set forth in the following table:


	2011		2010			2009
	(Amounts in thousands)
For the year ended December 31,
Our 49% equity share of Shurgard Europe's net income (loss)	$	3,473	$	(8,262	)	$	(7,589	)
Add our 49% equity share of amounts received from Shurgard Europe:
Interest on loans due from Shurgard Europe		24,463		23,316			23,071
Trademark license fee		1,216		818			787

Total equity in earnings of Shurgard Europe	$	29,152	$	15,872		$	16,269

The following table sets forth selected consolidated financial information of Shurgard Europe. These amounts are based upon all 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.


	2011			2010			2009
	(Amounts in thousands)
For the year ended December 31,
Self-storage and ancillary revenues	$	259,618		$	235,623		$	225,777
Interest and other income		816			120			515
Self-storage and ancillary cost of operations		(107,056	)		(98,690	)		(100,135	)
Trademark license fee payable to Public Storage		(2,481	)		(1,670	)		(1,606	)
Depreciation and amortization		(61,244	)		(64,064	)		(59,926	)
General and administrative		(12,458	)		(8,725	)		(9,966	)
Interest expense on third party debt		(16,299	)		(12,353	)		(15,557	)
Interest expense on debt due to Public Storage		(49,925	)		(47,583	)		(47,084	)
Income (expenses) from foreign currency exchange		(1,050	)		(835	)		744
Net income (loss)	$	9,921		$	1,823		$	(7,238	)

Net (income) loss allocated to permanent noncontrolling equity interests		(2,834	)		(18,684	)		(8,250	)
Net income (loss) allocated to Shurgard Europe	$	7,087		$	(16,861	)	$	(15,488	)


As of December 31,
Total assets (primarily self-storage facilities)	$	1,430,307		$	1,503,961
Total debt to third parties		280,065			279,174
Total debt to Public Storage		402,693			495,229
Other liabilities		85,917			73,027
Equity		661,632			656,531

Other Investments

At December 31, 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 $1.3 million in cash.

During 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 $3.1 million on the disposition of our existing investments, representing the difference between the aggregate fair values of the investments ($6.1 million) and the aggregate book values ($3.0 million).

The acquisition cost in consolidating these investments totaled $5.7 million, representing the $6.1 million fair value of our existing investment less $0.4 million in cash held by these limited partnerships presented, and was allocated to real estate facilities ($19.4 million), intangible assets ($4.0 million), and permanent noncontrolling interests ($17.7 million).

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


	2011			2010			2009
	(Amounts in thousands)
For the year ended December 31,
Total revenue	$	14,811		$	14,268		$	14,147
Cost of operations and other expenses		(5,592	)		(5,565	)		(5,399	)
Depreciation and amortization		(2,353	)		(2,298	)		(1,912	)
Net income	$	6,866		$	6,405		$	6,836

As of December 31,
Total assets (primarily self-storage facilities)	$	31,331		$	32,371
Total accrued and other liabilities		1,588			787
Total Partners' equity		29,743			31,584