News Release

Public Storage

701 Western Avenue

Glendale, CA 91201-2349

www.publicstorage.com

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

GLENDALE,  California – 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):

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.    

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

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 (€66 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 €40 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.

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.