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Public Storage Reports Results for the Fourth Quarter and Year Ended December 31, 2014

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Public Storage (NYSE:PSA) announced today operating results for the quarter and year ended December 31, 2014.

Operating Results for the Three Months Ended December 31, 2014

For the three months ended December 31, 2014, net income allocable to our common shareholders was $284.0 million or $1.64 per diluted common share, compared to $243.7 million or $1.41 per diluted common share for the same period in 2013 representing an increase of $40.3 million or $0.23 per diluted common share. The increase is due to (i) a $41.3 million increase in self-storage net operating income and (ii) our $36.5 million equity share of PS Business Parks’ (“PSB”) gain on sale of real estate included in our equity in earnings of real estate entities, offset partially by (iii) a $9.8 million increase in earnings allocated to preferred shareholders due to the issuance of additional preferred shares and (iv) a $7.8 million reduction associated with foreign currency exchange gains and losses.

The $41.3 million increase in our self-storage net operating income is a result of a $23.2 million increase for our Same Store Facilities and an $18.1 million increase for our non-Same Store Facilities. Revenues for the Same Store Facilities increased 5.6% or $24.9 million in the quarter ended December 31, 2014 as compared to the same period in 2013, due primarily to higher realized annual rent per occupied square foot. Cost of operations for the Same Store Facilities increased by 1.6% or $1.7 million in the quarter ended December 31, 2014 as compared to the same period in 2013, due primarily to increases in advertising and selling expense. The increase in net operating income for the non-Same Store Facilities is due primarily to the impact of the acquisition of 165 self-storage facilities since January 2013.

Operating Results for the Year Ended December 31, 2014

For the year ended December 31, 2014, net income allocable to our common shareholders was $908.2 million or $5.25 per diluted common share, compared to $844.7 million or $4.89 per diluted common share for the same period in 2013, representing an increase of $63.5 million or $0.36 per diluted common share. This increase is due primarily to (i) a $157.2 million increase in self-storage net operating income and (ii) our $36.5 million equity share of PSB’s gain on sale of real estate included in our equity in earnings of real estate entities, offset partially by (iii) a $49.7 million increase in depreciation and amortization expense associated with acquired facilities, (iv) a $24.1 million reduction associated with foreign currency exchange gains and losses, (v) an $28.3 million increase in earnings allocated to preferred shareholders due to the issuance of additional preferred shares and (vi) a $17.7 million decrease in interest and other income due primarily to the disposition of 51% of our loan receivable from Shurgard Europe.

The $157.2 million increase in our self-storage net operating income is a result of an $84.0 million increase for our Same Store Facilities and a $73.2 million increase for our non-Same Store Facilities. Revenues for the Same Store Facilities increased 5.4% or $93.5 million in the year ended December 31, 2014 as compared to the same period in 2013, due primarily to higher realized annual rent per occupied square foot. Cost of operations for the Same Store Facilities increased by 1.9% or $9.5 million in the year ended December 31, 2014 as compared to the same period in 2013, due primarily to increases in property tax expense and snow removal costs, offset partially by lower on-site property manager payroll expense. The increase in net operating income for the non-Same Store Facilities is due primarily to the impact of the acquisition of 165 self-storage facilities since January 2013.

Funds from Operations

For the three months ended December 31, 2014, funds from operations (“FFO”) was $2.17 per diluted common share, as compared to $2.13 for the same period in 2013, representing an increase of $0.04 per share. 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, 2014, FFO was $7.98 per diluted common share, as compared to $7.53 for the same period in 2013, representing an increase of $0.45 per share.

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 and (ii) certain other items such as legal settlements, recognition of deferred tax assets, costs associated with the acquisition of real estate facilities and facility closure charges. We believe Core FFO per share is a helpful measure used by investors and REIT analysts to understand our performance. 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
2014 2013 Change 2014 2013 Change
FFO per share $ 2.17 $ 2.13 1.9 % $ 7.98 $ 7.53 6.0 %
Eliminate the per share impact of items excluded from Core FFO:
Foreign currency exchange loss (gain) (0.05 ) 0.04 (0.10 )
Other items 0.03 0.07 0.01
Core FFO per share $ 2.20 $ 2.08 5.8 % $ 8.09 $ 7.44 8.7 %

Property Operations – Same Store Facilities

The Same Store Facilities represent those facilities that have been owned and operated on a stabilized basis since January 1, 2012 and therefore provide meaningful comparisons for 2013 and 2014. The following table summarizes the historical operating results of these 1,982 facilities (125.4 million net rentable square feet) that represent approximately 87% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at December 31, 2014.

Selected Operating Data for the Same

Store Facilities (1,982 facilities)

(unaudited):

Three Months Ended December 31, Year Ended December 31,
Percentage Percentage
2014 2013 Change 2014 2013 Change
(Dollar amounts in thousands, except for weighted average data)
Revenues:
Rental income $ 445,814 $ 421,395 5.8% $ 1,748,211 $ 1,657,412 5.5%
Late charges and administrative fees 21,914 21,435 2.2% 88,465 85,770 3.1%
Total revenues (a) 467,728 442,830 5.6% 1,836,676 1,743,182 5.4%
Cost of operations:
Property taxes 27,678 27,765 (0.3)% 168,297 162,903 3.3%
On-site property manager payroll 21,671 22,318 (2.9)% 98,260 99,980 (1.7)%
Supervisory payroll 7,799 7,841 (0.5)% 33,986 34,491 (1.5)%
Repairs and maintenance 8,663 8,349 3.8% 35,478 34,804 1.9%
Snow removal 669 1,629 (58.9)% 7,920 5,336 48.4%
Utilities 9,132 8,758 4.3% 38,927 37,365 4.2%
Advertising and selling expense 6,388 4,955 28.9% 26,684 27,783 (4.0)%
Other direct property costs 12,476 12,291 1.5% 51,409 50,386 2.0%
Allocated overhead 9,237 8,157 13.2% 37,679 36,129 4.3%
Total cost of operations (a) 103,713 102,063 1.6% 498,640 489,177 1.9%
Net operating income (b) $ 364,015 $ 340,767 6.8% $ 1,338,036 $ 1,254,005 6.7%
Gross margin 77.8% 77.0% 1.0% 72.9% 71.9% 1.4%
Weighted average for the period:
Square foot occupancy 93.5% 93.0% 0.5% 93.9% 93.3% 0.6%
Realized annual rental income per (c):
Occupied square foot $ 15.20 $ 14.45 5.2% $ 14.84 $ 14.16 4.8%
Available square foot (“REVPAF”) $ 14.22 $ 13.44 5.8% $ 13.94 $ 13.21 5.5%
At December 31:
Square foot occupancy 92.5% 91.8% 0.8%
Annual contract rent per occupied
square foot (d) $ 15.79 $ 15.05 4.9%
(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 Same Store 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):

Three Months Ended
March 31 June 30 September 30 December 31 Full Year
(Amounts in thousands, except for per square foot amounts)
Total revenues:

2014

$ 440,404 $ 452,571 $ 475,973 $ 467,728 $ 1,836,676
2013 $ 419,094 $ 429,958 $ 451,300 $ 442,830 $ 1,743,182
Total cost of operations:
2014 $ 139,460 $ 126,722 $ 128,745 $ 103,713 $ 498,640
2013 $ 134,144 $ 125,279 $ 127,691 $ 102,063 $ 489,177
Property taxes:
2014 $ 47,583 $ 46,967 $ 46,069 $ 27,678 $ 168,297
2013 $ 45,613 $ 44,953 $ 44,572 $ 27,765 $ 162,903
Repairs and maintenance, including snow removal expenses:
2014 $ 14,734 $ 9,432 $ 9,900 $ 9,332 $ 43,398
2013 $ 11,022 $ 9,278 $ 9,862 $ 9,978 $ 40,140
Advertising and selling expense:
2014 $ 6,481 $ 6,043 $ 7,772 $ 6,388 $ 26,684
2013 $ 7,655 $ 6,577 $ 8,596 $ 4,955 $ 27,783
REVPAF:
2014 $ 13.34 $ 13.75 $ 14.44 $ 14.22 $ 13.94
2013 $ 12.69 $ 13.05 $ 13.67 $ 13.44 $ 13.21
Weighted average realized annual rent per occupied square foot:
2014 $ 14.40 $ 14.52 $ 15.25 $ 15.20 $ 14.84
2013 $ 13.81 $ 13.88 $ 14.48 $ 14.45 $ 14.16
Weighted average occupancy levels:
2014 92.6% 94.7% 94.7% 93.5% 93.9%
2013 91.9% 94.0% 94.4% 93.0% 93.3%

Investing and Capital Activities

During the three months ended December 31, 2014, we acquired 13 self-storage facilities (four located in Minnesota, two in Virginia and Texas and one each in North Carolina, South Carolina, Florida, California and Arizona), with an aggregate of 1.2 million net rentable square feet, for approximately $154 million. For the year ended December 31, 2014, we acquired 44 self-storage facilities with an aggregate of 3.4 million net rentable square feet for approximately $431 million. Subsequent to December 31, 2014, we acquired four self-storage facilities (one each in Florida, North Carolina, Washington and Texas), with an aggregate of 265,000 net rentable square feet, for approximately $32 million in cash.

During the three months ended December 31, 2014, we completed three newly developed facilities (0.2 million net rentable square feet of storage space) at an aggregate cost of $17 million, and various expansion projects with an aggregate cost of $21 million which added 0.2 million net rentable square feet of storage space. During the year ended December 31, 2014, we completed six newly developed facilities (0.5 million net rentable square feet of storage space) at an aggregate cost of $50 million, and various expansion projects with an aggregate cost of $48 million which added 0.6 million net rentable square feet of storage space. At December 31, 2014 we had projects for 25 newly developed facilities (3.0 million net rentable square feet of storage space) at an aggregate cost of $351 million, and various expansion projects at an aggregate cost of $60 million which will add 0.4 million net rentable square feet of storage space. A total of $105 million in costs were incurred through December 31, 2014 with respect to these development and expansion projects, with the remaining costs expected to be incurred primarily in 2015.

On December 31, 2014, Shurgard Europe acquired five self-storage facilities in Germany, with an aggregate of 327,000 net rentable square feet, for $82 million (EUR66 million), with the purchase price payable in the first quarter of 2015. They also acquired a building and ground lease on a managed property in the United Kingdom containing 83,000 square feet for $11 million. Cash on hand combined with borrowings on a new EUR40 million revolving credit facility from Wells Fargo will be used by Shurgard Europe to finance these acquisitions.

On December 2, 2014, we issued our 5.875% Series A Preferred Shares for gross proceeds of $190 million.

Distributions Declared

On February 19, 2015, our Board of Trustees declared a regular common quarterly dividend of $1.40 per common share. The Board also declared dividends with respect to our various series of preferred shares. All the dividends are payable on March 31, 2015 to shareholders of record as of March 16, 2015.

Fourth Quarter Conference Call

A conference call is scheduled for February 20, 2015 at 9:00 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 72899182). A simultaneous audio webcast may be accessed by using the link at www.publicstorage.com under “Company Info, Investor Relations, Upcoming Events.” A replay of the conference call may be accessed through March 6, 2015 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, Webcasts.” All forms of replay utilize conference ID number 72899182.

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, 2014, we had interests in 2,250 self-storage facilities located in 38 states with approximately 146 million net rentable square feet in the United States and 193 storage facilities located in seven Western European nations with approximately ten million net rentable square feet operated under the “Shurgard” brand. We also own a 42% common equity interest in PS Business Parks, Inc. (NYSE:PSB) which owned and operated approximately 29 million rentable square feet of commercial space at December 31, 2014.

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

Forward-Looking Statements

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 are described from time to time in our filings with the Securities and Exchange Commission, including in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013, our Form 10-K for the year ended December 31, 2014 expected to be filed on or before March 2, 2015, our other Quarterly Reports on Form 10-Q and current reports on Form 8-K. These risks include, but are not limited to, the following: general risks associated with the ownership and operation of real estate, including changes in demand for our storage facilities, potential liability for environmental contamination, adverse changes in tax, real estate and zoning laws and regulations and the impact of natural disasters; risks associated with downturns in the national and local economies in the markets in which we operate; 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 related to our participation in joint ventures; risks associated with international operations including, but not limited to, unfavorable foreign currency rate fluctuations that could adversely affect our earnings and cash flows; the impact of the regulatory environment as well as national, state and local laws and regulations including, without limitation, those governing REITs; risks associated with a possible failure by us to qualify as a REIT under the Internal Revenue Code of 1986, as amended; disruptions or shutdowns of our automated processes and systems; changes in federal tax laws related to the taxation of REITs, which could impact our status as a REIT; difficulties in raising capital at a reasonable cost; delays in the development process; and economic uncertainty due to the impact of war or terrorism. We 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.

PUBLIC STORAGE
SELECTED INCOME STATEMENT DATA
(Amounts in thousands, except per share data)
(Unaudited)

Three Months Ended Year Ended
December 31, December 31,
2014 2013 2014 2013
Operating revenues:
Self-storage facilities $ 529,221 $ 480,664 $ 2,049,882 $ 1,849,883
Ancillary operations 36,926 32,847 145,522 131,863
566,147 513,511 2,195,404 1,981,746
Operating expenses:
Self-storage cost of operations 121,424 114,205 566,898 524,086
Ancillary cost of operations 12,230 10,193 51,822 41,075
Depreciation and amortization 110,573 108,927 437,114 387,402
General and administrative 19,219 16,691 71,459 66,679
263,446 250,016 1,127,293 1,019,242
Operating income 302,701 263,495 1,068,111 962,504
Other income (expense):
Interest and other income 775 5,872 4,926 22,577
Interest expense (1,822 ) (6,781 ) (6,444 )
Equity in earnings of unconsolidated real estate
entities (a) 44,962 18,566 88,267 57,579
Gain on real estate sales 4,065 2,479 4,233
Foreign currency exchange (loss) gain (12 ) 7,801 (7,047 ) 17,082
Net income 348,426 297,977 1,149,955 1,057,531
Allocation to noncontrolling interests (1,711 ) (1,408 ) (5,751 ) (5,078 )
Net income allocable to Public Storage shareholders 346,715 296,569 1,144,204 1,052,453
Allocation of net income to:
Preferred shareholders (61,694 ) (51,908 ) (232,636 ) (204,312 )
Restricted share units (1,064 ) (912 ) (3,392 ) (3,410 )
Net income allocable to common shareholders $ 283,957 $ 243,749 $ 908,176 $ 844,731

Per common share:

Net income per common share – Basic $ 1.65 $ 1.42 $ 5.27 $ 4.92
Net income per common share – Diluted $ 1.64 $ 1.41 $ 5.25 $ 4.89
Weighted average common shares – Basic 172,434 171,768 172,251 171,640
Weighted average common shares – Diluted 173,258 172,798 173,138 172,688
(a) Equity in earnings of unconsolidated real estate entities for the three months and year ended December 31, 2014, includes our $36.5 million equity share of PSB’s gain on sale of real estate facilities.

PUBLIC STORAGE
SELECTED BALANCE SHEET DATA
(Amounts in thousands, except share and per share data)

December 31, 2014 December 31, 2013
ASSETS (Unaudited)
Cash and cash equivalents $ 187,712 $ 19,169
Operating real estate facilities:
Land and buildings, at cost 12,863,235 12,286,256
Accumulated depreciation (4,482,520 ) (4,098,814 )
8,380,715 8,187,442
Construction in process 104,573 52,336
Investments in unconsolidated real estate entities 813,740 856,182
Goodwill and other intangible assets, net 228,632 246,854
Loan receivable from Shurgard Europe 428,139
Other assets 103,304 86,144
Total assets $ 9,818,676 $ 9,876,266
LIABILITIES AND EQUITY
Borrowings on bank credit facility $ $ 50,100
Term loan 700,000
Notes payable 64,364 88,953
Accrued and other liabilities 247,141 218,358
Total liabilities 311,505 1,057,411
Equity:
Public Storage shareholders’ equity:
Cumulative Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 173,000 shares issued (in series) and outstanding (142,500 at December 31, 2013), at liquidation preference 4,325,000 3,562,500
Common Shares, $0.10 par value, 650,000,000 shares authorized, 172,445,554 shares issued and outstanding (171,776,291 shares at December 31, 2013) 17,245 17,178
Paid-in capital 5,561,530 5,531,034
Accumulated deficit (374,823 ) (318,482 )
Accumulated other comprehensive loss (48,156 ) (500 )
Total Public Storage shareholders’ equity 9,480,796 8,791,730
Noncontrolling interests 26,375 27,125
Total equity 9,507,171 8,818,855
Total liabilities and equity $ 9,818,676 $ 9,876,266

Shurgard Europe Same Store Selected Operating Data

The Shurgard Europe Same Store Pool represents Shurgard Europe’s 174 facilities (9.2 million net rentable square feet) that have been operated on a stabilized basis since January 1, 2012 and therefore provide meaningful comparisons for 2013 and 2014. These 174 facilities represent approximately 89% of the aggregate net rentable square feet of Shurgard Europe’s self-storage portfolio. Our pro-rata share of the operating results for these facilities is included in “equity in earnings of unconsolidated real estate entities” on our income statement.

Selected Operating Data for the

Shurgard Europe Same Store Pool (174

facilities) (unaudited):

Three Months Ended December 31, Year Ended December 31,
Percentage Percentage
2014 2013 Change 2014 2013 Change
(Dollar amounts in thousands, utilizing constant exchange rates (a))

Rental income, late charges and administrative fees

$ 50,268 $ 48,444 3.8% $ 209,035 $ 203,230 2.9%
Cost of operations 21,010 19,422 8.2% 88,618 86,255 2.7%
Net operating income $ 29,258 $ 29,022 0.8% $ 120,417 $ 116,975 2.9%
Gross margin 58.2% 59.9%

(2.8)%

57.6% 57.6% 0.0%
Weighted average for the period:
Square foot occupancy 88.9% 82.7% 7.5% 85.9% 80.9% 6.2%

Realized annual rent, prior to late charges and administrative fees, per (b):

Occupied square foot $ 24.06 $ 24.89

(3.3)%

$ 25.84 $ 26.69 (3.2)%
Available square foot (“REVPAF”) $ 21.39 $ 20.59 3.9% $ 22.20 $ 21.59 2.8%
At December 31:
Square foot occupancy 87.8% 82.3% 6.7%
Annual contract rent per occupied
square foot (b) $ 26.35 $ 27.84 (5.4)%

Average Euro to U.S. Dollar exchange rates (a):

Constant exchange rates used herein 1.249 1.249 1.329 1.329
Actual historical exchange rates 1.249 1.361 (8.2)% 1.329 1.328 0.1%
(a) In order to isolate changes in the underlying operations from the impact of exchange rates, the amounts in this table are presented on a constant exchange rate basis. The amounts for the three months and year ended December 31, 2013 have been restated using the actual exchange rates for the three months and year ended December 31, 2014.
(b) 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.

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,
2014 2013 2014 2013

Computation of FFO per Share:

Net income allocable to common shareholders $ 283,957 $ 243,749 $ 908,176 $ 844,731
Eliminate items excluded from FFO:
Depreciation and amortization 110,573 108,927 437,114 387,402
Depreciation from unconsolidated real estate
investments 18,992 19,689 79,413 75,458
Depreciation allocated to noncontrolling interests
and restricted share unitholders (808 ) (1,002 ) (3,638 ) (3,976 )
Gains on sale of real estate investments, including
our equity share from investments, and other (36,351 ) (3,937 ) (39,083 ) (4,104 )
FFO allocable to common shares (a) $ 376,363 $ 367,426 $ 1,381,982 $ 1,299,511
Diluted weighted average common shares 173,258 172,798 173,138 172,688
FFO per share (a) $ 2.17 $ 2.13 $ 7.98 $ 7.53

Reconciliation of Earnings per Share to FFO per Share:

Earnings per share – diluted $ 1.64 $ 1.41 $ 5.25 $ 4.89
Eliminate per share amounts excluded from FFO:

Depreciation and amortization, including amounts from investments and excluding amounts allocated to noncontrolling interests and restricted share unitholders

0.74 0.74 2.96 2.66

Gains on sale of real estate investments, including our equity share from investments, and other

(0.21 ) (0.02 ) (0.23 ) (0.02 )
FFO per share (a) $ 2.17 $ 2.13 $ 7.98 $ 7.53

Computation of Funds Available for Distribution (“FAD”):

FFO allocable to common shares $ 376,363 $ 367,426 $ 1,381,982 $ 1,299,511
Eliminate effect of items included in FFO but not FAD:
Non-cash share-based compensation expense 7,383 6,922 29,541 28,413
Foreign currency exchange loss (gain) 12 (7,801 ) 7,047 (17,082 )
Less: Capital expenditures to maintain real estate facilities (16,185 ) (15,387 ) (79,784 ) (71,270 )
FAD (a) $ 367,573 $ 351,160 $ 1,338,786 $ 1,239,572
Distributions paid to common shareholders $ 241,253 $ 240,484 $ 964,591 $ 884,183
Distribution payout ratio 65.6 % 68.5 % 72.0 % 71.3 %
Distributions per common share $ 1.40 $ 1.40 $ 5.60 $ 5.15
(a) FFO and FFO per share are non-GAAP measures defined by the National Association of Real Estate Investment Trusts and, along with 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. 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 Same Store Data and Self-Storage Net Operating Income to Operating Income
(Unaudited – amounts in thousands)

Three Months Ended Year Ended
December 31, December 31,
2014 2013 2014 2013
Self-storage revenues for:
Same Store Facilities $ 467,728 $ 442,830 $ 1,836,676 $ 1,743,182
Non-Same Store Facilities (a):
2014 acquisitions 8,532 15,347
2013 acquisitions 25,800 15,006 96,947 19,309
2012 acquisitions 7,605 6,278 28,275 22,452
Other 19,556 16,550 72,637 64,940
Self-storage revenues 529,221 480,664 2,049,882 1,849,883
Self-storage cost of operations for:
Same Store Facilities 103,713 102,063 498,640 489,177
Non-Same Store Facilities (a):
2014 acquisitions 2,448 4,566
2013 acquisitions 8,379 5,710 32,917 7,574
2012 acquisitions 2,503 2,373 9,591 8,562
Other 4,381 4,059 21,184 18,773
Self-storage cost of operations 121,424 114,205 566,898 524,086
Self-storage net operating income for:
Same Store Facilities 364,015 340,767 1,338,036 1,254,005
Non-Same Store Facilities (a):
2014 acquisitions 6,084 10,781
2013 acquisitions 17,421 9,296 64,030 11,735
2012 acquisitions 5,102 3,905 18,684 13,890
Other 15,175 12,491 51,453 46,167
Self-storage net operating income (b) 407,797 366,459 1,482,984 1,325,797
Ancillary operating revenues 36,926 32,847 145,522 131,863
Ancillary cost of operations (12,230 ) (10,193 ) (51,822 ) (41,075 )
Depreciation and amortization (110,573 ) (108,927 ) (437,114 ) (387,402 )
General and administrative expense (19,219 ) (16,691 ) (71,459 ) (66,679 )
Operating income on our income statement $ 302,701 $ 263,495 $ 1,068,111 $ 962,504
(a) We have 256 additional self-storage facilities that are not Same Store Facilities, including 44 facilities acquired in 2014, 121 facilities acquired in 2013 and 24 facilities acquired in 2012. The average square foot occupancy during the three months ended December 31, 2014, is 90% for the facilities acquired in 2014, 91% for the facilities acquired in 2013, 93% for the facilities acquired in 2012 and 85% for the remaining non-Same Store Facilities.
(b) Net operating income or “NOI” is a non-GAAP financial measure that excludes the impact of depreciation and amortization expense. We believe that NOI is a meaningful measure of operating performance, because we utilize NOI in making decisions with respect to capital allocations, in determining current property values, in evaluating property performance and in comparing period-to-period and market-to-market property operating results. In addition, we believe the investment community utilizes NOI in determining operating performance and real estate values, and does not consider depreciation expense because it is based upon historical cost. 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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