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Public Storage Reports Results for the Quarter Ended March 31, 2016 and Increases Quarterly Common Dividend to $1.80 Per Share

announced today operating results for the quarter ended March 31, 2016.

Operating Results for the Three Months Ended March 31, 2016

For the three months ended March 31, 2016, net income allocable to our common shareholders was $241.3 million or $1.39 per diluted common share, compared to $212.6 million or $1.23 in 2015 representing an increase of $28.7 million or $0.16. The increase is primarily due to (i) a $45.3 million increase in self-storage net operating income offset partially by (ii) an $11.0 million foreign exchange translation loss, associated with our euro denominated debt, incurred in the quarter ended March 31, 2016.

The $45.3 million increase in self-storage net operating income is a result of a $34.6 million increase in our Same Store Facilities and a $10.7 million increase in our Non Same Store Facilities. Revenues for the Same Store Facilities increased 6.5% or $30.8 million in the three months ended March 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 decreased by 2.6% or $3.8 million in the three months ended March 31, 2016 as compared to 2015, due primarily to decreased snow removal costs and advertising and selling expense, offset partially by higher property tax expense. The increase in net operating income for the Non Same Store Facilities is due primarily to the impact of 200 self-storage facilities acquired or developed since January 2013.

Funds from Operations

For the three months ended March 31, 2016, funds from operations (“FFO”) was $2.10 per diluted common share, as compared to $1.91 in 2015, representing an increase of $0.19 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.

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 and (iii) certain other items. 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 March 31,
Percentage
2016 2015 Change
FFO per share $ 2.10 $ 1.91 9.9 %

Eliminate the per share impact of items excluded from Core FFO:

Foreign currency exchange loss, net, including our equity share from investments

0.05

-
Application of EITF D-42 0.07 0.03
Other items

(0.01

) -
Core FFO per share $ 2.21 $ 1.94 13.9 %

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, 2014 and therefore provide meaningful comparisons for 2015 and 2016. The Same Store pool increased from the 1,990 facilities at December 31, 2015 to 2,007 facilities at March 31, 2016. The following table summarizes the historical operating results of these 2,007 facilities (127.8 million net rentable square feet) that represent approximately 86% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at March 31, 2016.

Selected Operating Data for the Same

Store Facilities (2,007 facilities)

(unaudited):

Three Months Ended March 31,
Percentage
2016 2015 Change
(Dollar amounts in thousands, except for per square foot amounts)
Revenues:
Rental income $ 483,138 $ 453,947 6.4 %
Late charges and administrative fees 23,763 22,198 7.1 %
Total revenues (a) 506,901 476,145 6.5 %
Cost of operations:
Property taxes 52,906 50,676 4.4 %
On-site property manager payroll 27,150 27,154 0.0 %
Supervisory payroll 9,156 9,095 0.7 %
Repairs and maintenance 8,300 8,038 3.3 %
Snow removal 2,849 8,200 (65.3 )%
Utilities 10,064 10,678 (5.8 )%
Advertising and selling expense 5,101 6,218 (18.0 )%
Other direct property costs 13,680 13,116 4.3 %
Allocated overhead 10,823 10,659 1.5 %
Total cost of operations (a) 140,029 143,834 (2.6 )%
Net operating income (b) $ 366,872 $ 332,311 10.4 %
Gross margin 72.4 % 69.8 % 3.7 %
Weighted average for the period:
Square foot occupancy 93.6 % 93.4 % 0.2 %
Realized annual rental income per (c):
Occupied square foot $ 16.15 $ 15.22 6.1 %
Available square foot (“REVPAF”) $ 15.12 $ 14.21 6.4 %
At March 31:
Square foot occupancy 93.9 % 93.9 % 0.0 %

Annual contract rent per occupied square foot (d)

$ 16.75 $ 15.82 5.9 %
(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 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 $ 506,901
2015 $ 476,145 $ 492,691 $ 517,701 $ 508,811 $ 1,995,348
Total cost of operations:
2016 $ 140,029
2015 $ 143,834 $ 130,752 $ 133,976 $ 107,568 $ 516,130
Property taxes:
2016 $ 52,906
2015 $ 50,676 $ 50,477 $ 50,129 $ 28,024 $ 179,306

Repairs and maintenance, including snow removal expenses:

2016 $ 11,149
2015 $ 16,238 $ 9,067 $ 10,214 $ 10,334 $ 45,853
Advertising and selling expense:
2016 $ 5,101
2015 $ 6,218 $ 5,564 $ 6,983 $ 6,461 $ 25,226
REVPAF:
2016 $ 15.12
2015 $ 14.21 $ 14.72 $ 15.43 $ 15.18 $ 14.89

Weighted average realized annual rent per occupied square foot:

2016 $ 16.15
2015 $ 15.22 $ 15.44 $ 16.19 $ 16.18 $ 15.76

Weighted average occupancy levels for the period:

2016 93.6%
2015 93.4% 95.4% 95.3% 93.9% 94.5%

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