Item 15. Exhibits and Financial Statement Schedules

a.	1.	Financial Statements
				The financial statements listed in the accompanying Index to Financial Statements and Schedules hereof are filed as part of this report.
	2.	Financial Statement Schedules
				The financial statements schedules listed in the accompanying Index to Financial Statements and Schedules are filed as part of this report.
	3.	Exhibits
					See Index to Exhibits contained herein.
b.	Exhibits:
		See Index to Exhibits contained herein.
c.	Financial Statement Schedules
		Not applicable.

	PUBLIC STORAGE
	INDEX TO EXHIBITS (1)
	(Items 15(a)(3) and 15(c))
3.1	Articles of Amendment and Restatement of Declaration of Trust of Public Storage, a Maryland real estate investment trust, filed with the Maryland State Department of Assessments and Taxation on May 4, 2018. Filed with the Registrant’s Current Report on Form 8-K dated May 8, 2018 and incorporated by reference herein.
3.2	Amended and Restated Bylaws of Public Storage, a Maryland real estate investment trust, dated May 4, 2018. Filed with the Registrant’s Current Report on Form 8-K dated May 8, 2018 and incorporated by reference herein.
3.3	Articles Supplementary for Public Storage 5.625% Cumulative Preferred Shares, Series U. Filed with the Registrant’s Current Report on Form 8-K dated June 6, 2012 and incorporated by reference herein.
3.4	Articles Supplementary for Public Storage 5.375% Cumulative Preferred Shares, Series V. Filed with the Registrant’s Current Report on Form 8-K dated September 11, 2012 and incorporated by reference herein.
3.5	Articles Supplementary for Public Storage 5.20% Cumulative Preferred Shares, Series W. Filed with the Registrant’s Current Report on Form 8-K dated January 7, 2013 and incorporated by reference herein.
3.6	Articles Supplementary for Public Storage 5.20% Cumulative Preferred Shares, Series X. Filed with the Registrant’s Current Report on Form 8-K dated March 4, 2013 and incorporated by reference herein.
3.7	Articles Supplementary for Public Storage 6.375% Cumulative Preferred Shares, Series Y. Filed with the Registrant’s Current Report on Form 8-K dated March 10, 2014 and incorporated by reference herein.
3.8	Articles Supplementary for Public Storage 6.375% Cumulative Preferred Shares, Series Y. Filed with the Registrant’s Current Report on Form 8-K dated April 9, 2014 and incorporated by reference herein.
3.9	Articles Supplementary for Public Storage 6.00% Cumulative Preferred Shares, Series Z. Filed with the Registrant’s Current Report on Form 8-K dated May 28, 2014 and incorporated by reference herein.
3.10	Articles Supplementary for Public Storage 5.875% Cumulative Preferred Shares, Series A. Filed with the Registrant’s Current Report on Form 8-K/A dated November 24, 2014 and incorporated by reference herein.
3.11	Articles Supplementary for Public Storage 5.400% Cumulative Preferred Shares, Series B. Filed with the Registrant’s Current Report on Form 8-K dated January 12, 2016 and incorporated by reference herein.
3.12	Articles Supplementary for Public Storage 5.125% Cumulative Preferred Shares, Series C. Filed with the Registrant’s Current Report on Form 8-K dated May 10, 2016 and incorporated by reference herein.
3.13	Articles Supplementary for Public Storage 4.950% Cumulative Preferred Shares, Series D. Filed with the Registrant’s Current Report on Form 8-K dated July 13, 2016 and incorporated by reference herein.

3.14	Articles Supplementary for Public Storage 4.900% Cumulative Preferred Shares, Series E. Filed with the Registrant’s Current Report on Form 8-K dated October 6, 2016 and incorporated by reference herein.
3.15	Articles Supplementary for Public Storage 5.150% Cumulative Preferred Shares, Series F. Filed with the Registrant’s Current Report on Form 8-K dated May 23, 2017 and incorporated by reference herein.
3.16	Articles Supplementary for Public Storage 5.05% Cumulative Preferred Shares, Series G. Filed with the Registrant’s Current Report on Form 8-K dated July 31, 2017 and incorporated by reference herein.
4.1	Master Deposit Agreement, dated as of May 31, 2007. Filed with the Registrant’s Current Report on Form 8-K dated June 6, 2007 and incorporated by reference herein.
10.1	Amended Management Agreement between Registrant and Public Storage Commercial Properties Group, Inc. dated as of February 21, 1995. Filed with Public Storage Inc.’s (“PSI”) Annual Report on Form 10-K for the year ended December 31, 1994 (SEC File No. 001-0839) and incorporated herein by reference.
10.2	Second Amended and Restated Management Agreement by and among Registrant and the entities listed therein dated as of November 16, 1995. Filed with PS Partners, Ltd.’s Annual Report on Form 10-K for the year ended December 31, 1996 (SEC File No. 001-11186) and incorporated herein by reference.
10.3	Agreement of Limited Partnership of PS Business Parks, L.P. Filed with PS Business Parks, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998 (SEC File No. 001-10709) and incorporated herein by reference.
10.4	Amended and Restated Agreement of Limited Partnership of Storage Trust Properties, L.P. (March 12, 1999). Filed with PSI’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (SEC File No. 001-0839) and incorporated herein by reference.
10.5	Amended and Restated Credit Agreement by and among Registrant, Wells Fargo Securities, LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated as joint lead arrangers, Wells Fargo Bank, National Association, as administrative agent, and the other financial institutions party thereto, dated as of March 21, 2012. Filed with PSI’s Current Report on Form 8-K on March 27, 2012 (SEC File No. 001-0839) and incorporated herein by reference.
10.5.1	Second Amendment to Amended and Restated Credit Agreement, dated as of July 17, 2013, by and among Public Storage, the Lenders party thereto and Wells Fargo Bank, National Association. Filed with the Registrant’s Current Report on Form 8-K on July 18, 2013 and incorporated herein by reference.
10.5.2	Third Amendment to the Amended and Restated Credit Agreement, dated as of March 31, 2015, among Public Storage, the lenders party thereto and Wells Fargo Bank, National Association, as agent. Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on April 2, 2015 (“April 2015 8-K”) and incorporated herein by reference.
10.5.3	Copy of the Amended and Restated Credit Agreement dated as of March 21, 2012, consolidating all amendments made by the Letter Agreement, dated as of April 12, 2012, the Second Amendment to Amended and Restated Credit Agreement, dated as of July 17, 2013, and the Third Amendment to Amended and Restated Credit Agreement, dated as of March 31, 2015. This conformed copy was filed as Exhibit 10.2 to the April 2015 8-K for ease of reference and was qualified in its entirety by reference to the Third Amendment and incorporated herein by reference.
10.5.4	Fourth Amendment to the Amended and Restated Credit Agreement, dated as of December 22, 2015, among Public Storage, the lenders party thereto and Wells Fargo Bank, National Association, as agent. Filed as Exhibit 10.5.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and incorporated herein by reference.

10.6*	Shurgard Storage Centers, Inc. 2004 Long Term Incentive Compensation Plan. Filed as Appendix A of Definitive Proxy Statement dated June 7, 2004 filed by Shurgard (SEC File No. 001-11455) and incorporated herein by reference.
10.7*	Public Storage, Inc. 2001 Stock Option and Incentive Plan (the “2001 Plan”). Filed with PSI’s Registration Statement on Form S-8 (SEC File No. 333-59218) and incorporated herein by reference.
10.8*	Form of 2007 Plan Restricted Stock Unit Agreement. Filed as Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and incorporated herein by reference.
10.9*	Form of 2007 Plan Restricted Stock Unit Agreement – deferral of receipt of shares. Filed as Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and incorporated herein by reference.
10.10*	Form of 2007 Plan Stock Option Agreement. Filed as Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and incorporated herein by reference.
10.11*	Form of 2007 Plan Trustee Stock Option Agreement. Filed as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and incorporated herein by reference.
10.12*	Form of 2016 Plan Restricted Stock Unit Agreement. Filed as Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated herein by reference.
10.13*	Form of 2016 Plan Restricted Stock Unit Agreement – deferral of receipt of shares. Filed as Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated herein by reference.
10.14*	Form of 2016 Plan Non-Qualified Stock Option Agreement. Filed as Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated herein by reference.
10.15*	Form of 2016 Plan Trustee Non-Qualified Stock Option Agreement. Filed as Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated herein by reference.
10.16	Form of Trustee and Officer Indemnification Agreement. Filed as Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated herein by reference.

10.17	Term Loan Agreement, by and among Public Storage, Wells Fargo Securities, LLC as Lead Arranger and Wells Fargo National Bank N.A. as Administrative Agent, dated as of December 2, 2013. Filed with Registrant’s Current Report on Form 8-K dated December 2, 2013 and incorporated herein by reference.
10.18*	Public Storage 2007 Equity and Performance-Based Incentive Compensation Plan, as Amended. Filed with Registrant’s Current Report on Form 8-K dated May 1, 2014 and incorporated herein by reference.
10.19*	Public Storage 2016 Equity and Performance-Based Incentive Compensation Plan. Filed as Appendix A to the Company’s 2016 Proxy Statement dated March 16, 2016 and incorporated herein by reference.
10.20	Note Purchase Agreement, dated as of November 3, 2015, by and among Public Storage and the signatories thereto. Filed with Registrant’s Current Report on Form 8-K dated November 3, 2015 and incorporated herein by reference.
10.21	Note Purchase Agreement, dated as of April 12, 2016, by and among Public Storage and the signatories thereto. Filed with Registrant’s Current Report on Form 8-K dated April 12, 2016 and incorporated herein by reference.
10.22	Indenture, dated as of September 18, 2017, between Public Storage and Wells Fargo Bank, National Association, as trustee. Filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated September 18, 2017 and incorporated herein by reference.
10.23	First Supplemental Indenture, dated as of September 18, 2017, between Public Storage and Wells Fargo Bank, National Association, as trustee, including the form of Global Note representing the 2022 Notes and the form of Global Note representing the 2027 Notes. Filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated September 18, 2017 and incorporated herein by reference.
10.24	Amendment to Amended Agreement of Limited Partnership of PS Business Parks, L.P. to Authorize Special Allocations, dated as of January 1, 2017. Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 (SEC File No. 001-33519) and incorporated herein by reference.
10.25*	Form of 2016 Plan Restricted Stock Unit Agreement (2018). Filed herewith.
10.26*	Form of 2016 Plan Restricted Stock Unit Agreement – deferral of receipt of shares (2018). Filed herewith.
10.27*	Form of 2016 Plan Non-Qualified Stock Option Agreement (2018). Filed herewith.
10.28*	Form of 2016 Plan Trustee Non-Qualified Stock Option Agreement (2018). Filed herewith.
10.29*	Form of 2016 Plan Trustee Deferred Stock Unit Agreement (2018). Filed herewith.
10.30*	Form of 2016 Plan Executive Restricted Stock Unit Agreement (2018). Filed herewith.
21	Listing of Subsidiaries. Filed herewith.
23.1	Consent of Ernst & Young LLP. Filed herewith.
31.1	Rule 13a – 14(a) Certification. Filed herewith.

31.2	Rule 13a – 14(a) Certification. Filed herewith.
32	Section 1350 Certifications. Filed herewith.
101 .INS	XBRL Instance Document. Filed herewith.
101 .SCH	XBRL Taxonomy Extension Schema. Filed herewith.
101 .CAL	XBRL Taxonomy Extension Calculation Linkbase. Filed herewith.
101 .DEF	XBRL Taxonomy Extension Definition Linkbase. Filed herewith.
101 .LAB	XBRL Taxonomy Extension Label Linkbase. Filed herewith.
101 .PRE	XBRL Taxonomy Extension Presentation Link. Filed herewith.

_	(1)	SEC File No. 001-33519 unless otherwise indicated.

*	Denotes management compensatory plan agreement or arrangement.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

4
	PUBLIC STORAGE
Date: February 27, 2019	By:/s/ Joseph D. Russell, Jr.
	Joseph D. Russell, Jr., Chief Executive Officer, President and Trustee

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Joseph D. Russell, Jr.	Chief Executive Officer, President and Trustee (principal executive officer)	February 27, 2019
Joseph D. Russell, Jr.
/s/ H. Thomas Boyle	Chief Financial Officer (principal financial officer)	February 27, 2019
H. Thomas Boyle
/s/ Ronald L. Havner, Jr.	Chairman of the Board	February 27, 2019
Ronald L. Havner, Jr.
/s/ Tamara Hughes Gustavson	Trustee	February 27, 2019
Tamara Hughes Gustavson
/s/ Uri P. Harkham	Trustee	February 27, 2019
Uri P. Harkham
/s/ Leslie Stone Heisz	Trustee	February 27, 2019
Leslie Stone Heisz
/s/ B. Wayne Hughes, Jr.	Trustee	February 27, 2019
B. Wayne Hughes, Jr.
/s/ Avedick B. Poladian	Trustee	February 27, 2019
Avedick B. Poladian
/s/ Gary E. Pruitt	Trustee	February 27, 2019
Gary E. Pruitt

Signature	Title	Date
/s/ John Reyes	Trustee	February 27, 2019
John Reyes
/s/ Ronald P. Spogli	Trustee	February 27, 2019
Ronald P. Spogli
/s/ Daniel C. Staton	Trustee	February 27, 2019
Daniel C. Staton

PUBLIC STORAGE

INDEX TO FINANCIAL STATEMENTS

AND SCHEDULES

(Item 15 (a))

	Page References
Report of Independent Registered Public Accounting Firm...........................................................................	F-1
Balance sheets as of December 31, 2018 and 2017.....................................................................................	F-2
For the years ended December 31, 2018, 2017 and 2016:
Statements of income.............................................................................................................................	F-3
Statements of comprehensive income.......................................................................................................	F-4
Statements of equity .............................................................................................................................	F-5 – F-6
Statements of cash flows.......................................................................................................................	F-7 – F-8
Notes to financial statements...................................................................................................................	F-9 – F-33
Schedule:
III – Real estate and accumulated depreciation...........................................................................................	F-34 – F-36

All other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements or notes thereto.

Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of Public Storage
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Public Storage (the Company) as of December 31, 2018 and 2017, and the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2018 and 2017, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2019 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Security and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP We have served as the Company’s auditor since 1980. Los Angeles, California February 27, 2019

F-1

PUBLIC STORAGE

BALANCE SHEETS

(Amounts in thousands, except share data)

	December 31,			December 31,
	2018			2017
ASSETS
Cash and equivalents	$	361,218		$	433,376
Real estate facilities, at cost:
Land		4,047,982			3,947,123
Buildings		11,248,862			10,718,866
		15,296,844			14,665,989
Accumulated depreciation		(6,140,072)			(5,700,331)
		9,156,772			8,965,658
Construction in process		285,339			264,441
		9,442,111			9,230,099
Investments in unconsolidated real estate entities		783,988			724,173
Goodwill and other intangible assets, net		209,856			214,957
Other assets		131,097			130,287
Total assets	$	10,928,270		$	10,732,892
LIABILITIES AND EQUITY
Notes payable	$	1,412,283		$	1,431,322
Accrued and other liabilities		371,259			337,201
Total liabilities		1,783,542			1,768,523
Commitments and contingencies (Note 13)
Equity:
Public Storage shareholders’ equity:
Preferred Shares, $0.01 par value, 100,000,000 shares authorized,
161,000 shares issued (in series) and outstanding, (161,000 at
December 31, 2017), at liquidation preference		4,025,000			4,025,000
Common Shares, $0.10 par value, 650,000,000 shares authorized,
174,130,881 shares issued and outstanding (173,853,370 shares at
December 31, 2017)		17,413			17,385
Paid-in capital		5,718,485			5,648,399
Accumulated deficit		(577,360)			(675,711)
Accumulated other comprehensive loss		(64,060)			(75,064)
Total Public Storage shareholders’ equity		9,119,478			8,940,009
Noncontrolling interests		25,250			24,360
Total equity		9,144,728			8,964,369
Total liabilities and equity	$	10,928,270		$	10,732,892

See accompanying notes.

F-2

PUBLIC STORAGE

STATEMENTS OF INCOME

(Amounts in thousands, except per share amounts)

	For the Years Ended December 31,
	2018			2017			2016
Revenues:
Self-storage facilities	$	2,597,607		$	2,512,433		$	2,405,828
Ancillary operations		156,673			156,095			154,721
		2,754,280			2,668,528			2,560,549
Expenses:
Self-storage cost of operations		695,731			657,633			617,905
Ancillary cost of operations		43,991			50,345			51,178
Depreciation and amortization		483,646			454,526			433,314
General and administrative		118,720			82,882			83,656
Interest expense		32,542			12,690			4,210
		1,374,630			1,258,076			1,190,263
Other increase (decrease) to net income:
Interest and other income		26,442			18,771			15,138
Equity in earnings of unconsolidated real estate entities		103,495			75,655			56,756
Foreign currency exchange gain (loss)		18,117			(50,045)			17,570
Casualty loss		-			(7,789)			-
Gain on sale of real estate		37,903			1,421			689
Gain due to Shurgard Europe public offering		151,616			-			-
Net income		1,717,223			1,448,465			1,460,439
Allocation to noncontrolling interests		(6,192)			(6,248)			(6,863)
Net income allocable to Public Storage shareholders		1,711,031			1,442,217			1,453,576
Allocation of net income to:
Preferred shareholders - distributions		(216,316)			(236,535)			(238,214)
Preferred shareholders - redemptions (Note 8)		-			(29,330)			(26,873)
Restricted share units		(5,815)			(4,743)			(4,610)
Net income allocable to common shareholders	$	1,488,900		$	1,171,609		$	1,183,879
Net income per common share:
Basic	$	8.56		$	6.75		$	6.84
Diluted	$	8.54		$	6.73		$	6.81
Basic weighted average common shares outstanding		173,969			173,613			173,091
Diluted weighted average common shares outstanding		174,297			174,151			173,878

See accompanying notes.

F-3

PUBLIC STORAGE

STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

	For the Years Ended December 31,
	2018			2017			2016
Net income	$	1,717,223		$	1,448,465		$	1,460,439
Other comprehensive income (loss):
Aggregate foreign currency exchange gain (loss)		1,914			(30,003)			(8,047)
Adjust for aggregate foreign currency exchange
gain in equity in earnings of unconsolidated
real estate entities		-			-			(941)
Adjust for foreign currency exchange loss reflected in
gain on sale of real estate and gain on Shurgard Europe
public offering		27,207			-			-
Adjust for aggregate foreign currency exchange
(gain) loss included in net income		(18,117)			50,045			(17,570)
Other comprehensive income (loss)		11,004			20,042			(26,558)
Total comprehensive income		1,728,227			1,468,507			1,433,881
Allocation to noncontrolling interests		(6,192)			(6,248)			(6,863)
Comprehensive income allocable to
Public Storage shareholders	$	1,722,035		$	1,462,259		$	1,427,018

See accompanying notes.

F-4

PUBLIC STORAGE

STATEMENTS OF EQUITY

(Amounts in thousands, except share and per share amounts)

													Accumulated			Total
	Cumulative												Other			Public Storage
	Preferred			Common			Paid-in			Accumulated			Comprehensive			Shareholders’			Noncontrolling			Total
	Shares			Shares			Capital			Deficit			Loss			Equity			Interests			Equity
Balances at December 31, 2015	$	4,055,000		$	17,293		$	5,601,506		$	(434,610)		$	(68,548)		$	9,170,641		$	26,997		$	9,197,638
Cumulative effect of a change in accounting
principle (Note 10)		-			-			789			(789)			-			-			-			-
Balances at December 31, 2015, as adjusted	$	4,055,000		$	17,293		$	5,602,295		$	(435,399)		$	(68,548)		$	9,170,641		$	26,997		$	9,197,638
Issuance of 47,000 preferred shares (Note 8)		1,175,000			-			(38,797)			-			-			1,136,203			-			1,136,203
Redemption of 34,500 preferred shares (Note 8)		(862,500)			-			-			-			-			(862,500)			-			(862,500)
Issuance of common shares in connection with
share-based compensation (367,546 shares) (Note 10)		-			36			25,505			-			-			25,541			-			25,541
Share-based compensation expense, net of cash
paid in lieu of common shares (Note 10)		-			-			20,765			-			-			20,765			-			20,765
Contributions by noncontrolling interests		-			-			-			-			-			-			3,470			3,470
Net income		-			-			-			1,460,439			-			1,460,439			-			1,460,439
Net income allocated to noncontrolling interests		-			-			-			(6,863)			-			(6,863)			6,863			-
Distributions to equity holders:
Preferred shares (Note 8)		-			-			-			(238,214)			-			(238,214)			-			(238,214)
Noncontrolling interests		-			-			-			-			-			-			(7,586)			(7,586)
Common shares and restricted share units
($7.30 per share)		-			-			-			(1,267,544)			-			(1,267,544)			-			(1,267,544)
Other comprehensive loss (Note 2)		-			-			-			-			(26,558)			(26,558)			-			(26,558)
Balances at December 31, 2016	$	4,367,500		$	17,329		$	5,609,768		$	(487,581)		$	(95,106)		$	9,411,910		$	29,744		$	9,441,654
Issuance of 23,200 preferred shares (Note 8)		580,000			-			(18,823)			-			-			561,177			-			561,177
Redemption of 36,900 preferred shares (Note 8)		(922,500)			-			-			-			-			(922,500)			-			(922,500)
Issuance of common shares in connection with
share-based compensation (564,583 shares) (Note 10)		-			56			42,444			-			-			42,500			-			42,500
Share-based compensation expense, net of cash
paid in lieu of common shares (Note 10)		-			-			22,711			-			-			22,711			-			22,711
Acquisition of noncontrolling interests		-			-			(7,701)			-			-			(7,701)			(6,724)			(14,425)
Contributions by noncontrolling interests		-			-			-			-			-			-			2,484			2,484
Net income		-			-			-			1,448,465			-			1,448,465			-			1,448,465
Net income allocated to noncontrolling interests		-			-			-			(6,248)			-			(6,248)			6,248			-

See accompanying notes.

F-5

PUBLIC STORAGE

STATEMENTS OF EQUITY

(Amounts in thousands, except share and per share amounts)

													Accumulated			Total
	Cumulative												Other			Public Storage
	Preferred			Common			Paid-in			Accumulated			Comprehensive			Shareholders’			Noncontrolling			Total
	Shares			Shares			Capital			Deficit			Loss			Equity			Interests			Equity
Distributions to equity holders:
Preferred shares (Note 8)		-			-			-			(236,535)			-			(236,535)			-			(236,535)
Noncontrolling interests		-			-			-			-			-			-			(7,392)			(7,392)
Common shares and restricted share units
($8.00 per share)		-			-			-			(1,393,812)			-			(1,393,812)			-			(1,393,812)
Other comprehensive income (Note 2)		-			-			-			-			20,042			20,042			-			20,042
Balances at December 31, 2017	$	4,025,000		$	17,385		$	5,648,399		$	(675,711)		$	(75,064)		$	8,940,009		$	24,360		$	8,964,369
Issuance of common shares in connection with
share-based compensation (277,511 shares) (Note 10)		-			28			12,497			-			-			12,525			-			12,525
Share-based compensation expense, net of cash
paid in lieu of common shares (Note 10)		-			-			57,589			-			-			57,589			-			57,589
Contributions by noncontrolling interests		-			-			-			-			-			-			1,720			1,720
Net income		-			-			-			1,717,223			-			1,717,223			-			1,717,223
Net income allocated to noncontrolling interests		-			-			-			(6,192)			-			(6,192)			6,192			-
Distributions to equity holders:
Preferred shares (Note 8)		-			-			-			(216,316)			-			(216,316)			-			(216,316)
Noncontrolling interests		-			-			-			-			-			-			(7,022)			(7,022)
Common shares and restricted share units
($8.00 per share)		-			-			-			(1,396,364)			-			(1,396,364)			-			(1,396,364)
Other comprehensive income (Note 2)		-			-			-			-			11,004			11,004			-			11,004
Balances at December 31, 2018	$	4,025,000		$	17,413		$	5,718,485		$	(577,360)		$	(64,060)		$	9,119,478		$	25,250		$	9,144,728

See accompanying notes.

F-6

PUBLIC STORAGE

STATEMENTS OF CASH FLOWS

(Amounts in thousands)

	For the Years Ended December 31,
	2018			2017			2016
Cash flows from operating activities:
Net income	$	1,717,223		$	1,448,465		$	1,460,439
Adjustments to reconcile net income to net cash flows
from operating activities:
Gain due to Shurgard Europe public offering		(151,616)			-			-
Gain on real estate investment sales		(37,903)			(1,421)			(689)
Assets damaged due to hurricanes		-			3,286			-
Depreciation and amortization		483,646			454,526			433,314
Equity in earnings of unconsolidated real estate entities		(103,495)			(75,655)			(56,756)
Distributions from retained earnings of unconsolidated
real estate entities		109,754			53,749			84,397
Foreign currency exchange (gain) loss		(18,117)			50,045			(17,570)
Share-based compensation expense		69,936			37,548			37,483
Other		(7,925)			5,136			4,718
Total adjustments		344,280			527,214			484,897
Net cash flows from operating activities		2,061,503			1,975,679			1,945,336
Cash flows from investing activities:
Capital expenditures to maintain real estate facilities		(140,067)			(122,199)			(81,435)
Construction in process		(338,802)			(338,479)			(269,916)
Acquisition of real estate facilities and intangible assets		(181,020)			(285,279)			(416,178)
Distributions in excess of retained earnings from
unconsolidated real estate entities		91,927			-			67,420
Proceeds from sale of real estate investments		54,184			6,103			998
Net cash flows from investing activities		(513,778)			(739,854)			(699,111)
Cash flows from financing activities:
Repayments on notes payable		(1,784)			(1,701)			(36,459)
Issuance of notes payable		-			992,077			113,620
Issuance of preferred shares		-			561,177			1,136,203
Issuance of common shares		12,525			42,500			25,541
Redemption of preferred shares		-			(922,500)			(862,500)
Cash paid upon vesting of restricted share units		(12,347)			(14,092)			(15,357)
Acquisition of noncontrolling interests		-			(14,425)			-
Contributions by noncontrolling interests		1,720			2,484			3,470
Distributions paid to Public Storage shareholders		(1,612,680)			(1,630,347)			(1,505,758)
Distributions paid to noncontrolling interests		(7,022)			(7,392)			(7,586)
Net cash flows from financing activities		(1,619,588)			(992,219)			(1,148,826)
Net cash flows from operating, investing, and financing activities		(71,863)			243,606			97,399
Net effect of foreign exchange translation		(171)			(126)			(381)
(Decrease) increase in cash, equivalents, and restricted cash	$	(72,034)		$	243,480		$	97,018

See accompanying notes.

F-7

PUBLIC STORAGE

STATEMENTS OF CASH FLOWS

(Amounts in thousands)

	For the Years Ended December 31,
	2018			2017			2016
Cash, equivalents, and restricted cash at beginning of the period:
Cash and equivalents	$	433,376		$	183,688		$	104,285
Restricted cash included in other assets		22,677			28,885			11,270
	$	456,053		$	212,573		$	115,555
Cash, equivalents, and restricted cash at end of the period:
Cash and equivalents	$	361,218		$	433,376		$	183,688
Restricted cash included in other assets		22,801			22,677			28,885
	$	384,019		$	456,053		$	212,573
Supplemental schedule of non-cash investing and
financing activities:
Foreign currency translation adjustment:
Real estate facilities, net of accumulated depreciation	$	203		$	(659)		$	1,317
Investments in unconsolidated real estate entities		15,997			(19,370)			24,099
Notes payable		(18,285)			49,906			(17,750)
Accumulated other comprehensive gain (loss)		1,914			(30,003)			(8,047)
Reclassification of existing investment to real estate in connection
with property acquisition (Note 3):
Real estate facilities		-			(6,310)			-
Investments in unconsolidated real estate entities		-			6,310			-
Real estate acquired in exchange for assumption of notes payable		-			-			(12,945)
Notes payable assumed in connection with acquisition of real estate		-			-			12,945
Accrued development costs and capital expenditures:
Capital expenditures to maintain real estate facilities		670			(2,581)			(4,612)
Construction in process		(23,595)			(11,233)			(18,238)
Accrued and other liabilities		22,925			13,814			22,850

See accompanying notes.

F-8

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

1.Description of the Business

Public Storage (referred to herein as “the Company,” “we,” “us,” or “our”), a Maryland real estate investment trust (“REIT”), was organized in 1980. Our principal business activities include the ownership and operation of self-storage facilities which offer storage spaces for lease, generally on a month-to-month basis, for personal and business use, ancillary activities such as merchandise sales and tenant reinsurance to the tenants at our self-storage facilities, as well as the acquisition and development of additional self-storage space.

At December 31, 2018, we have direct and indirect equity interests in 2,429 self-storage facilities (with approximately 162 million net rentable square feet) located in 38 states in the United States (“U.S.”) operating under the “Public Storage” name. We also have a 35.2% interest in Shurgard Self Storage SA (“Shurgard Europe”), which owns 232 self-storage facilities (with approximately 13 million net rentable square feet) located in seven Western European countries, all operating under the “Shurgard” name. We also have direct and indirect equity interests in approximately 29 million net rentable square feet of commercial space located in seven states in the U.S. primarily owned and operated by PS Business Parks, Inc. (“PSB”) under the “PS Business Parks” name. At December 31, 2018, we have an approximate 42% common equity interest in PSB.

Disclosures of the number and square footage of facilities, as well as the number and coverage of tenant reinsurance policies (Note 13) are unaudited and outside the scope of our independent registered public accounting firm’s review of our financial statements in accordance with the standards of the Public Company Accounting Oversight Board (U.S.).

2.Summary of Significant Accounting Policies

Basis of Presentation

The financial statements are presented on an accrual basis in accordance with U.S. generally accepted accounting principles (“GAAP”) as defined in the Financial Accounting Standards Board Accounting Standards Codification (the “Codification”).

Consolidation and Equity Method of Accounting

We consider entities to be Variable Interest Entities (“VIEs”) when they have insufficient equity to finance their activities without additional subordinated financial support provided by other parties, or the equity holders as a group do not have a controlling financial interest. We consolidate VIEs when we have (i) the power to direct the activities most significantly impacting economic performance, and (ii) either the obligation to absorb losses or the right to receive benefits from the VIE. We have no involvement with any material VIEs. We consolidate all other entities when we control them through voting shares or contractual rights. The entities we consolidate, for the period in which the reference applies, are referred to collectively as the “Subsidiaries,” and we eliminate intercompany transactions and balances.

We account for our investments in entities that we do not consolidate but have significant influence over using the equity method of accounting. These entities, for the periods in which the reference applies, are referred to collectively as the “Unconsolidated Real Estate Entities”, eliminating intra-entity profits and losses and amortizing any differences between the cost of our investment and the underlying equity in net assets against equity in earnings as if the Unconsolidated Real Estate Entity were a consolidated subsidiary. Equity in earnings of unconsolidated real estate entities represents our pro-rata share of the earnings of the Unconsolidated Real Estate Entities.

F-9

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

When we begin consolidating an entity, we reflect our preexisting equity interest at book value. All changes in consolidation status are reflected prospectively.

Collectively, at December 31, 2018, the Company and the Subsidiaries own 2,429 self-storage facilities and three commercial facilities in the U.S. At December 31, 2018, the Unconsolidated Real Estate Entities are comprised of PSB and Shurgard Europe.

Use of Estimates

The financial statements and accompanying notes reflect our estimates and assumptions. Actual results could differ from those estimates and assumptions.

Income Taxes

We have elected to be treated as a REIT, as defined in the Internal Revenue Code of 1986, as amended (the “Code”). As a REIT, we do not incur federal income tax if we distribute 100% of our REIT taxable income each year, and if we meet certain organizational and operational rules. We believe we have met these REIT requirements for all periods presented herein. Accordingly, we have recorded no federal income tax expense related to our REIT taxable income.

Our merchandise and tenant reinsurance operations are subject to corporate income tax and such taxes are included in ancillary cost of operations. We also incur income and other taxes in certain states, which are included in general and administrative expense.

We recognize tax benefits of uncertain income tax positions that are subject to audit only if we believe it is more likely than not that the position would ultimately be sustained assuming the relevant taxing authorities had full knowledge of the relevant facts and circumstances of our positions. As of December 31, 2018, we had no tax benefits that were not recognized.

Real Estate Facilities

Real estate facilities are recorded at cost. We capitalize all costs incurred to acquire, develop, construct, renovate and improve facilities, including interest and property taxes incurred during the construction period and, effective October 1, 2016, the external transaction costs associated with acquisitions of real estate. Prior to October 1, 2016, transaction costs for acquisitions were included in general and administrative expense on our income statements. This change was made due to a change in GAAP, which results in real estate facility acquisitions generally being considered acquisitions of assets rather than business combinations. We allocate the net acquisition cost of acquired real estate facilities to the underlying land, buildings, and identified intangible assets based upon their respective individual estimated fair values.

Costs associated with dispositions of real estate, as well as repairs and maintenance costs, are expensed as incurred. We depreciate buildings and improvements on a straight-line basis over estimated useful lives ranging generally between 5 to 25 years.

When we sell a full or partial interest in a real estate facility without retaining a controlling interest following sale, we recognize a gain or loss on sale as if 100% of the property was sold at fair value. If we retain a controlling interest following the sale, we record a gain or loss on a pro-rata basis based upon the interest sold.

F-10

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

Other Assets

Other assets primarily consist of rents receivable from our tenants, prepaid expenses and restricted cash.

Accrued and Other Liabilities

Accrued and other liabilities consist primarily of rents prepaid by our tenants, trade payables, property tax accruals, accrued payroll, accrued tenant reinsurance losses, and contingent loss accruals when probable and estimable. We believe the fair value of our accrued and other liabilities approximates book value, due to the short period until repayment. We disclose the nature of significant unaccrued losses that are reasonably possible of occurring and, if estimable, a range of exposure.

Cash Equivalents, Restricted Cash, Marketable Securities and Other Financial Instruments

Cash equivalents represent highly liquid financial instruments such as money market funds with daily liquidity or short-term commercial paper or treasury securities maturing within three months of acquisition. Cash and equivalents which are restricted from general corporate use are included in other assets. We believe that the book value of all such financial instruments for all periods presented approximates fair value, due to the short period to maturity.

Fair Value

As used herein, the term “fair value” is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Our estimates of fair value involve considerable judgment and are not necessarily indicative of the amounts that could be realized in current market exchanges.

We estimate the fair value of our cash and equivalents, marketable securities, other assets, debt, and other liabilities by discounting the related future cash flows at a rate based upon quoted interest rates for securities that have similar characteristics such as credit quality and time to maturity. Such quoted interest rates are referred to generally as “Level 2” inputs.

We use significant judgment to estimate fair values of investments in real estate, goodwill, and other intangible assets. In estimating their values, we consider significant unobservable inputs such as market prices of land, market capitalization rates, expected returns, earnings multiples, projected levels of earnings, costs of construction, and functional depreciation. These inputs are referred to generally as “Level 3” inputs.

Currency and Credit Risk

Financial instruments that are exposed to credit risk consist primarily of cash and equivalents, certain portions of other assets including rents receivable from our tenants and restricted cash. Cash equivalents we invest in are either money market funds with a rating of at least AAA by Standard & Poor’s, commercial paper that is rated A1 by Standard & Poor’s or deposits with highly rated commercial banks.

At December 31, 2018, due primarily to our investment in Shurgard Europe (Note 4) and our notes payable denominated in Euros (Note 6), our operating results and financial position are affected by fluctuations in currency exchange rates between the Euro, and to a lesser extent, other European currencies, against the U.S. Dollar.

F-11

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

Goodwill and Other Intangible Assets

Intangible assets are comprised of goodwill, the “Shurgard” trade name, acquired customers in place, and leasehold interests in land.

Goodwill totaled $174.6 million at December 31, 2018 and 2017. The “Shurgard” trade name, which is used by Shurgard Europe pursuant to a fee-based licensing agreement, has a book value of $18.8 million at December 31, 2018 and 2017. Goodwill and the “Shurgard” trade name have indefinite lives and are not amortized.

Acquired customers in place and leasehold interests in land are finite-lived assets and are amortized relative to the benefit of the customers in place or the benefit to land lease expense to each period. At December 31, 2018, these intangibles had a net book value of $16.5 million ($21.5 million at December 31, 2017). Accumulated amortization totaled $29.6 million at December 31, 2018 ($31.0 million at December 31, 2017), and amortization expense of $16.6 million, $15.0 million and $21.7 million was recorded in 2018, 2017 and 2016, respectively. The estimated future amortization expense for our finite-lived intangible assets at December 31, 2018 is approximately $9.2 million in 2019, $2.5 million in 2020 and $4.8 million thereafter. During 2018, 2017 and 2016, intangibles increased $11.6 million, $17.2 million and $23.0 million, respectively, in connection with the acquisition of self-storage facilities (Note 3).

Evaluation of Asset Impairment

We evaluate our real estate and finite-lived intangible assets for impairment each quarter. If there are indicators of impairment and we determine that the asset is not recoverable from future undiscounted cash flows to be received through the asset’s remaining life (or, if earlier, the expected disposal date), we record an impairment charge to the extent the carrying amount exceeds the asset’s estimated fair value or net proceeds from expected disposal.

We evaluate our investments in unconsolidated real estate entities for impairment on a quarterly basis. We record an impairment charge to the extent the carrying amount exceeds estimated fair value, when we believe any such shortfall is other than temporary.

We evaluate goodwill for impairment annually and whenever relevant events, circumstances and other related factors indicate that fair value of the related reporting unit may be less than the carrying amount. If we determine that the fair value of the reporting unit exceeds the aggregate carrying amount, no impairment charge is recorded. Otherwise, we record an impairment charge to the extent the carrying amount of the goodwill exceeds the amount that would be allocated to goodwill if the reporting unit were acquired for estimated fair value.

We evaluate other indefinite-lived intangible assets, such as the “Shurgard” trade name for impairment at least annually and whenever relevant events, circumstances and other related factors indicate that the fair value is less than the carrying amount. When we conclude that it is likely that the asset is not impaired, we do not record an impairment charge and no further analysis is performed. Otherwise, we record an impairment charge to the extent the carrying amount exceeds the asset’s estimated fair value.

No impairments were recorded in any of our evaluations for any period presented herein.

Casualty Loss

We record casualty losses for a) the book value of assets destroyed and b) incremental repair, clean-up, and other costs associated with the casualty. Insurance proceeds are recorded as a reduction in casualty loss when

F-12

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

all uncertainties of collection are satisfied. During 2017, we incurred casualty losses totaling $7.8 million, comprised of $3.3 million in book value of assets damaged and $4.5 million in repairs and maintenance incurred in connection with Hurricanes Harvey and Irma.

Revenue and Expense Recognition

Revenues from self-storage facilities, which are primarily composed of rental income earned pursuant to month-to-month leases, as well as associated late charges and administrative fees, are recognized as earned. Promotional discounts reduce rental income over the promotional period, which is generally one month. Ancillary revenues and interest and other income are recognized when earned.

We accrue for property tax expense based upon actual amounts billed and, in some circumstances, estimates when bills or assessments have not been received from the taxing authorities. If these estimates are incorrect, the timing and amount of expense recognition could be incorrect. Cost of operations (including advertising expenditures), general and administrative expense, and interest expense are expensed as incurred.

Foreign Currency Exchange Translation

The local currency (primarily the Euro) is the functional currency for our interests in foreign operations. The related balance sheet amounts are translated into U.S. Dollars at the exchange rates at the respective financial statement date, while amounts on our statements of income are translated at the average exchange rates during the respective period. When financial instruments denominated in a currency other than the U.S. Dollar are expected to be settled in cash in the foreseeable future, the impact of changes in the U.S. Dollar equivalent are reflected in current earnings. The Euro was translated at exchange rates of approximately 1.144 U.S. Dollars per Euro at December 31, 2018 (1.198 at December 31, 2017), and average exchange rates of 1.181, 1.129 and 1.107 for the years ended December 31, 2018, 2017 and 2016, respectively. Cumulative translation adjustments, to the extent not included in cumulative net income, are included in equity as a component of accumulated other comprehensive income (loss).

Comprehensive Income

Total comprehensive income represents net income, adjusted for changes in other comprehensive income (loss) for the applicable period. The aggregate foreign currency exchange gains and losses reflected on our statements of comprehensive income are comprised primarily of foreign currency exchange gains and losses on our investment in Shurgard Europe and our unsecured notes denominated in Euros.

Net Income per Common Share

Net income is allocated to (i) noncontrolling interests based upon their share of the net income of the Subsidiaries, (ii) preferred shareholders, to the extent redemption cost exceeds the related original net issuance proceeds (an “EITF D-42 allocation”), and (iii) the remaining net income is allocated to each of our equity securities based upon the dividends declared or accumulated during the period, combined with participation rights in undistributed earnings.

Basic and diluted net income per common share are each calculated based upon net income allocable to common shareholders presented on the face of our income statement, divided by (i) in the case of basic net income per common share, weighted average common shares, and (ii) in the case of diluted income per share, weighted average common shares adjusted for the impact, if dilutive, of stock options outstanding (Note 10). The following table reconciles from basic to diluted common shares outstanding (amounts in thousands):

F-13

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

		For the Years Ended December 31,
		2018			2017				2016
	Weighted average common shares and equivalents
	outstanding:
	Basic weighted average common
	shares outstanding		173,969			173,613			173,091
	Net effect of dilutive stock options -
	based on treasury stock method		328			538			787
	Diluted weighted average common
	shares outstanding		174,297			174,151			173,878

3.Real Estate Facilities

Activity in real estate facilities during 2018, 2017 and 2016 is as follows:

		For the Years Ended December 31,
		2018			2017			2016
		(Amounts in thousands)
	Operating facilities, at cost:
	Beginning balance	$	14,665,989		$	13,963,229		$	13,205,261
	Capital expenditures to maintain real estate facilities		139,397			124,780			86,047
	Acquisitions		169,436			274,115			406,154
	Dispositions		(25,633)			(1,092)			-
	Assets damaged due to hurricanes		-			(8,226)			-
	Developed or redeveloped facilities opened for operation		348,270			311,559			268,905
	Impact of foreign exchange rate changes		(615)			1,624			(3,138)
	Ending balance		15,296,844			14,665,989			13,963,229
	Accumulated depreciation:
	Beginning balance		(5,700,331)			(5,270,963)			(4,866,738)
	Depreciation expense		(457,029)			(433,466)			(406,046)
	Dispositions		16,876			123			-
	Assets damaged due to hurricanes		-			4,940			-
	Impact of foreign exchange rate changes		412			(965)			1,821
	Ending balance		(6,140,072)			(5,700,331)			(5,270,963)
	Construction in process:
	Beginning balance		264,441			230,310			219,190
	Current development		362,397			349,712			288,154
	Developed or redeveloped facilities opened for operation		(348,270)			(311,559)			(268,905)
	Dispositions		(2,698)			(4,022)			-
	Transfer from (to) other assets		9,469			-			(8,129)
	Ending balance		285,339			264,441			230,310
	Total real estate facilities at December 31,	$	9,442,111		$	9,230,099		$	8,922,576

During 2018, we acquired 25 self-storage facilities (1.6 million net rentable square feet), for a total cost of $181.0 million in cash, of which $11.6 million was allocated to intangible assets. We completed development and redevelopment activities costing $348.3 million during 2018, adding 3.0 million net rentable square feet of self-storage space. Construction in process at December 31, 2018 consists of projects to develop new self-storage

F-14

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

facilities and redevelop existing self-storage facilities. On October 18, 2018, we sold our property in West London to Shurgard Europe for $42.1 million and recorded a related gain on sale of real estate of approximately $31.5 million. This gain was net of the recognition of a cumulative other comprehensive loss totaling $4.8 million with respect to foreign currency translation. On October 25, 2018, we sold a former commercial facility for $8.7 million and recorded a related gain on sale of real estate of approximately $4.6 million. During 2018, we also sold portions of real estate facilities in connection with eminent domain proceedings for $3.4 million in cash proceeds and recorded a related gain on sale of real estate of approximately $1.8 million. During 2018, we also transferred $9.5 million of accumulated construction costs from other assets to construction in process.

During 2017, we acquired 22 self-storage facilities from third parties (1,365,000 net rentable square feet), for a total cost of $149.8 million, in cash. Approximately $8.2 million of the total cost was allocated to intangible assets. On December 31, 2017, we acquired the remaining 74.25% of the interests which we did not own in one of the unconsolidated entities that owned 12 self-storage facilities (749,000 net rentable square feet) for a total cost of $135.5 million in cash. Approximately $9.0 million of the $141.8 million acquisition cost (which includes the $6.3 million book value of our existing investment) was allocated to intangible assets and $0.3 million was allocated to other assets.

We completed development and redevelopment activities during 2017, adding 2.7 million net rentable square feet of self-storage space, at an aggregate cost of $311.6 million. During 2017, we sold real estate for a total of approximately $6.4 million in cash proceeds, of which $0.3 million was collected in 2016, and recorded a related gain on real estate investment sales of approximately $1.4 million in 2017.

During 2016, we acquired 55 self-storage facilities (4,121,000 net rentable square feet), for a total cost of $429.1 million, consisting of $416.2 million in cash and the assumption of $12.9 million in mortgage notes. Approximately $23.0 million of the total cost was allocated to intangible assets. We completed development and redevelopment activities during 2016, adding 2,275,000 net rentable square feet of self-storage space, at an aggregate cost of $268.9 million. During 2016, we also transferred $8.1 million of accumulated construction costs to other assets, with respect to a development project that was suspended.

At December 31, 2018, the adjusted basis of real estate facilities for U.S. federal tax purposes was approximately $10.0 billion (unaudited).

4.Investments in Unconsolidated Real Estate Entities

The following table sets forth our investments in, and equity in earnings of, the Unconsolidated Real Estate Entities (amounts in thousands):

		Investments in Unconsolidated Real Estate						Equity in Earnings of Unconsolidated Real Estate
		Entities at December 31,						Entities for the Year Ended December 31,
		2018			2017			2018			2017			2016
	PSB	$	434,533		$	400,133		$	89,362		$	46,544		$	31,707
	Shurgard Europe		349,455			324,040			14,133			25,948			22,324
	Other Investments		-			-			-			3,163			2,725
	Total	$	783,988		$	724,173		$	103,495		$	75,655		$	56,756

F-15

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

Investment in PSB

PSB is a REIT traded on the New York Stock Exchange. We have an approximate 42% common equity interest in PSB as of December 31, 2018 and 2017, comprised of our ownership of 7,158,354 shares of PSB’s common stock and 7,305,355 limited partnership units (“LP Units”) in an operating partnership controlled by PSB. The LP 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, 2018 ($131.00 per share of PSB common stock), the shares and units we owned had a market value of approximately $1.9 billion. At December 31, 2018, the adjusted tax basis of our investment in PSB approximates book value (unaudited).

During 2018, 2017, and 2016, we received cash distributions from PSB totaling $55.0 million, $49.2 million, and $43.4 million, respectively.

At December 31, 2018, our pro-rata investment in PSB’s real estate assets included in investment in real estate entities exceeds our pro-rata share of the underlying amounts on PSB’s balance sheet presented below by approximately $7.4 million ($10.9 million at December 31, 2017). This differential (the “PSB Basis Differential”) is being amortized as a reduction to equity in earnings of the Unconsolidated Real Estate Entities. Such amortization totaled approximately $1.8 million, $1.3 million, and $1.8 million during 2018, 2017, and 2016, respectively.

Our equity in earnings of PSB is comprised of our equity interest in PSB’s earnings as reflected in the table below, less amortization of the PSB Basis Differential.

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

	2018			2017			2016
	(Amounts in thousands)
For the year ended December 31,
Revenues	$	413,516		$	402,179		$	386,871
Costs of operations		(126,547)			(125,340)			(123,108)
Depreciation and amortization		(99,242)			(94,270)			(99,486)
General and administrative		(10,155)			(9,679)			(14,862)
Other items		1,875			(1,148)			(4,431)
Gains on sale of real estate		93,484			7,574			-
Net income before allocation to preferred
shareholders and restricted share unitholders		272,931			179,316			144,984
Allocations to preferred shareholders and
restricted share unitholders		(53,803)			(64,612)			(65,157)
Net income allocated to common shareholders
and LP Unitholders	$	219,128		$	114,704		$	79,827

Total assets (primarily real estate)	$	2,068,594		$	2,100,159		$	2,119,371
Preferred stock called for redemption		-			130,000			230,000
Other liabilities		85,141			80,223			78,657
Equity:
Preferred stock		959,750			959,750			879,750
Common equity and LP units		1,023,703			930,186			930,964

F-16

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

Investment in Shurgard Europe

On October 15, 2018, Shurgard Europe completed an initial global offering (the “Offering”) of its common shares, and its shares commenced trading on Euronext Brussels under the “SHUR” symbol. In the Offering, Shurgard Europe issued 25,000,000 of its shares to third parties at a price of €23 per share. Our equity interest, comprised of a direct and indirect pro-rata ownership interest in 31,268,459 shares, decreased from 49% to 35.2% as a result of the Offering. While we did not sell any of our shares in the Offering, we recorded a gain of $151.6 million reflected as “Gain due to Shurgard Europe Public Offering” on our income statement, as if we had sold a proportionate share of our investment in Shurgard Europe. The gain resulted in a $174.0 million increase in our investment in Shurgard Europe and a $22.4 million reduction in other comprehensive loss with respect to cumulative foreign currency translation losses for Shurgard Europe.

Based upon the closing price at December 31, 2018 (€24.25 per share of SHUR common stock, at 1.144 exchange rate of US Dollars to the Euro), the shares we owned had a market value of approximately $867.4 million.

Our equity in earnings of Shurgard Europe is comprised of our equity share of Shurgard Europe’s net income included in the tables below and our equity share of the trademark license fees that Shurgard Europe pays to us for the use of the “Shurgard” trademark. The remaining license fees we receive from Shurgard Europe are classified as interest and other income on our income statement.

We received cash distributions from Shurgard Europe totaling $146.7 million, $1.3 million, and $105.6 million in 2018, 2017, and 2016, respectively. Included in these amounts is our share of a distribution paid to Shurgard’s equity shareholders totaling $145.4 million in 2018 and $104.4 million in 2016. The remaining amounts represent our equity share of trademark license fees we received, which are presented as distributions from Shurgard Europe. For 2018 and 2016, $91.9 million and $67.4 million, respectively, of the distributions received exceeded our cumulative retained earnings from Shurgard Europe and are presented as an investing activity on our statements of cash flows for each of the respective periods.

Changes in foreign currency exchange rates decreased our investment in Shurgard Europe by approximately $16.0 million in 2018, increased it by $19.4 million in 2017 and decreased it by $24.1 million in 2016. Included in our equity in earnings of Shurgard Europe for 2016 is a $941,000 increase for the recognition of accumulated comprehensive income, representing a decrease to equity rather than an increase to investments in Unconsolidated Real Estate Entities.

The following table sets forth selected consolidated financial information of Shurgard Europe based upon all of Shurgard Europe’s balances for all periods, rather than our pro rata share. Such amounts are based upon our historical acquired book basis.

F-17

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

		2018			2017			2016
		(Amounts in thousands)
For the year ended December 31,
Self-storage and ancillary revenues		$	284,992		$	265,088		$	252,321
Self-storage and ancillary cost of operations			(104,376)			(98,510)			(97,099)
Depreciation and amortization			(82,655)			(63,282)			(62,829)
General and administrative			(11,755)			(12,465)			(13,199)
Interest expense on third party debt			(22,749)			(20,759)			(20,617)
Trademark license fee payable to Public Storage			(2,852)			(2,647)			(2,531)
Income tax expense			(22,775)			(17,601)			(10,669)
Gain on real estate investment sale			1,969			-			-
Other, net (a)			(14,726)			484			(2,348)
Net income		$	25,073		$	50,308		$	43,029
Average exchange rates of Euro to the U.S. Dollar			1.181			1.129			1.107
(a) Amounts for the year ended December 31, 2018 include $5.5 million in costs
incurred with respect to Shurgard Europe's initial global offering and a $7.3 million
casualty loss with respect to a fire at one of Shurgard Europe's facilities.

		2018			2017			2016
		(Amounts in thousands)
As of December 31,
Total assets (primarily self-storage facilities and cash)		$	1,736,654		$	1,416,477		$	1,261,912
Total debt to third parties			693,704			726,617			666,926
Other liabilities			143,963			143,638			106,916
Equity			898,987			546,222			488,070
Exchange rate of Euro to U.S. Dollar			1.144			1.198			1.052

Other Investments

On December 31, 2017, we acquired the remaining 74.25% equity interest we did not own in the Other Investments for $135.5 million, in cash, and began to consolidate the 12 self-storage facilities owned by the Other Investments.

5.Credit Facility

We have a revolving credit agreement (the “Credit Facility”) with a $500 million borrowing limit, which expires on March 31, 2020. Amounts drawn on the Credit Facility bear annual interest at rates ranging from LIBOR plus 0.850% to LIBOR plus 1.450% depending upon the ratio of our Total Indebtedness to Gross Asset Value (as defined in the Credit Facility) (LIBOR plus 0.850% at December 31, 2018). We are also required to pay a quarterly facility fee ranging from 0.080% per annum to 0.250% per annum depending upon the ratio of our Total Indebtedness to our Gross Asset Value (0.080% per annum at December 31, 2018). At December 31, 2018 and February 27, 2019, we had no outstanding borrowings under this Credit Facility. We had undrawn standby letters of credit, which reduce our borrowing capacity, totaling $16.2 million at December 31, 2018 ($16.1 million at December 31, 2017). The Credit Facility has various customary restrictive covenants, all of which we were in compliance with at December 31, 2018.

F-18

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

6.Notes Payable

Our notes payable at December 31, 2018 and 2017 are set forth in the table below:

					Amounts at December 31, 2018
	Coupon		Effective						Unamortized			Book			Fair			Book Value at
	Rate		Rate			Principal		Costs				Value			Value			December 31, 2017
					($ amounts in thousands)
U.S. Dollar Denominated Unsecured Debt
Notes due September 2022	2.370%		2.483%		$	500,000		$	(1,947)		$	498,053		$	482,017		$	497,525
Notes due September 2027	3.094%		3.218%			500,000			(4,604)			495,396			469,055			494,868
						1,000,000			(6,551)			993,449			951,072			992,393
Euro Denominated Unsecured Debt
Notes due April 2024	1.540%		1.540%			114,449			-			114,449			115,964			119,795
Notes due November 2025	2.175%		2.175%			276,982			-			276,982			286,078			289,921
						391,431			-			391,431			402,042			409,716
Mortgage Debt, secured by 30
real estate facilities with a net
book value of $111.0 million	4.090%		4.045%			27,403			-			27,403			27,613			29,213
					$	1,418,834		$	(6,551)		$	1,412,283		$	1,380,727		$	1,431,322

U.S. Dollar Denominated Unsecured Debt

On September 18, 2017, we issued, in a public offering, two tranches each totaling $500.0 million of U.S. Dollar denominated unsecured notes (the “U.S. Dollar Notes”). In connection with the offering, we incurred a total of $7.9 million in costs, which is reflected as a reduction in the principal amount and amortized, using the effective interest method, over the term of each respective note. Interest on the U.S. Dollar Notes is payable semi-annually on March 15 and September 15 of each year, commencing March 15, 2018.

The U.S. Dollar Notes have various financial covenants, all of which we were in compliance with at December 31, 2018. Included in these covenants are a) a maximum Debt to Total Assets of 65% (4.2% at December 31, 2018) and b) a minimum ratio of Adjusted EBITDA to Interest Expense of 1.5x (67.4x for the year ended December 31, 2018) as well as covenants limiting the amount we can encumber our properties with mortgage debt.

Euro Denominated Unsecured Debt

Our Euro-denominated unsecured notes (the “Euro Notes”) are payable to institutional investors. The Euro Notes consist of two tranches, (i) €242.0 million were issued on November 3, 2015 for $264.3 million in net proceeds upon converting the Euros to U.S. Dollars and (ii) €100.0 million were issued on April 12, 2016 for $113.6 million in net proceeds upon converting the Euros to U.S. Dollars. Interest is payable semi-annually. The Euro Notes have various customary financial covenants, all of which we were in compliance with at December 31, 2018.

We reflect changes in the U.S. Dollar equivalent of the amount payable, as a result of changes in foreign exchange rates as “foreign currency exchange (loss) gain” on our income statement (gain of $18.1 million for 2018, loss of $50.0 million for 2017 and gain of $17.6 million for 2016).

F-19

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

Mortgage Debt

Our non-recourse mortgage debt was assumed in connection with property acquisitions and recorded at fair value with any premium or discount to the stated note balance amortized using the effective interest method.

During 2016, we assumed mortgage notes with aggregate contractual values of $12.9 million and interest rates of 4.2%, which approximated market rates, in connection with the acquisition of real estate facilities.

At December 31, 2018, the notes’ contractual interest rates are fixed, ranging between 3.2% and 7.1%, and mature between November 2022 and September 2028.

At December 31, 2018, approximate principal maturities of our Notes Payable are as follows (amounts in thousands):

	Unsecured			Mortgage
	Debt			Debt			Total
2019	$	-		$	1,867		$	1,867
2020		-			1,958			1,958
2021		-			1,836			1,836
2022		500,000			2,522			502,522
2023		-			19,161			19,161
Thereafter		891,431			59			891,490
	$	1,391,431		$	27,403		$	1,418,834
Weighted average effective rate		2.6%			4.0%			2.6%

Cash paid for interest totaled $36.3 million, $16.8 million and $9.4 million for 2018, 2017 and 2016, respectively. Interest capitalized as real estate totaled $4.8 million, $4.4 million and $5.1 million for 2018, 2017 and 2016, respectively.

7.Noncontrolling Interests

At December 31, 2018, the noncontrolling interests represent (i) third-party equity interests in subsidiaries owning 17 operating self-storage facilities and five self-storage facilities that are under construction and (ii) 231,978 partnership units held by third-parties in a subsidiary that are convertible on a one-for-one basis (subject to certain limitations) into common shares of the Company at the option of the unitholder (collectively, the “Noncontrolling Interests”). At December 31, 2018, the Noncontrolling Interests cannot require us to redeem their interests, other than pursuant to a liquidation of the subsidiary. During 2018, 2017 and 2016, we allocated a total of $6.2 million, $6.2 million and $6.9 million, respectively, of income to these interests; and we paid $7.0 million, $7.4 million and $7.6 million, respectively, in distributions to these interests.

During 2017, we acquired Noncontrolling Interests for $14.4 million (none for 2018 or 2016) in cash, of which $7.7 million was allocated to Paid-in capital and $6.7 million as a reduction to Noncontrolling Interests. During 2018, 2017 and 2016, Noncontrolling Interests contributed $1.7 million, $2.5 million and $3.5 million, respectively.

F-20

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

8.Shareholders’ Equity

Preferred Shares

At December 31, 2018 and 2017, we had the following series of Cumulative Preferred Shares (“Preferred Shares”) outstanding:

	Series		Earliest Redemption Date		Dividend Rate		Shares Outstanding		Liquidation Preference
							(Dollar amounts in thousands)
	Series U		6/15/2017		5.625%		11,500		$	287,500
	Series V		9/20/2017		5.375%		19,800			495,000
	Series W		1/16/2018		5.200%		20,000			500,000
	Series X		3/13/2018		5.200%		9,000			225,000
	Series Y		3/17/2019		6.375%		11,400			285,000
	Series Z		6/4/2019		6.000%		11,500			287,500
	Series A		12/2/2019		5.875%		7,600			190,000
	Series B		1/20/2021		5.400%		12,000			300,000
	Series C		5/17/2021		5.125%		8,000			200,000
	Series D		7/20/2021		4.950%		13,000			325,000
	Series E		10/14/2021		4.900%		14,000			350,000
	Series F		6/2/2022		5.150%		11,200			280,000
	Series G		8/9/2022		5.050%		12,000			300,000
	Total Preferred Shares						161,000		$	4,025,000

The holders of our Preferred Shares have general preference rights with respect to liquidation, quarterly distributions and any accumulated unpaid distributions. Except under certain conditions and as noted below, holders of the Preferred Shares will not be entitled to vote on most matters. In the event of a cumulative arrearage equal to six quarterly dividends, holders of all outstanding series of preferred shares (voting as a single class without regard to series) will have the right to elect two additional members to serve on our board of trustees (our “Board”) until the arrearage has been cured. At December 31, 2018, there were no dividends in arrears.

Except under certain conditions relating to the Company’s qualification as a REIT, the Preferred Shares are not redeemable prior to the dates indicated on the table above. On or after the respective dates, each of the series of Preferred Shares is redeemable at our option, in whole or in part, at $25.00 per depositary share, plus accrued and unpaid dividends. Holders of the Preferred Shares cannot require us to redeem such shares.

Upon issuance of our Preferred Shares, we classify the liquidation value as preferred equity on our balance sheet with any issuance costs recorded as a reduction to Paid-in capital.

In 2017, we redeemed our Series S and Series T Preferred Shares, at par, for a total of $922.5 million in cash, before payment of accrued dividends.

In 2017, we issued an aggregate 23.2 million depositary shares, each representing 1/1,000 of a share of our Series F and Series G Preferred Shares, at an issuance price of $25.00 per depositary share, for a total of $580.0 million in gross proceeds, and we incurred $18.8 million in issuance costs.

F-21

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

In 2016, we redeemed our Series Q and Series R Preferred Shares at par, for a total of $862.5 million in cash, before payment of accrued dividends.

In 2016, we issued an aggregate 47.0 million depositary shares, each representing 1/1,000 of a share of our Series B, Series C, Series D and Series E Preferred Shares, at an issuance price of $25.00 per depositary share, for a total of $1,175.0 million in gross proceeds, and we incurred $38.8 million in issuance costs.

In 2017 and 2016, we recorded $29.3 million and $26.9 million, respectively, in EITF D-42 allocations of income from our common shareholders to the holders of our Preferred Shares in connection with redemptions of Preferred Shares.

Common Shares

During 2018, 2017 and 2016, activity with respect to the issuance of our common shares was as follows (dollar amounts in thousands):

		2018						2017						2016
			Shares			Amount			Shares			Amount			Shares			Amount
Employee stock-based compensation and
exercise of stock options (Note 10)			277,511		$	12,525			564,583		$	42,500			367,546		$	25,541

Our Board previously authorized the repurchase from time to time of up to 35.0 million of our common shares on the open market or in privately negotiated transactions. Through December 31, 2018, we repurchased approximately 23.7 million shares pursuant to this authorization; none of which were repurchased during the three years ended December 31, 2018.

At December 31, 2018 and 2017, we had 3,138,618 and 3,208,046, respectively, of common shares reserved in connection with our share-based incentive plans (see Note 10), and 231,978 shares reserved for the conversion of partnership units owned by Noncontrolling Interests.

The unaudited characterization of dividends for U.S. federal income tax purposes is made based upon earnings and profits of the Company, as defined by the Code. Common share dividends including amounts paid to our common shareholders and our restricted share unitholders totaled $1.396 billion ($8.00 per share), $1.394 billion ($8.00 per share) and $1.268 billion ($7.30 per share) for the years ended December 31, 2018, 2017 and 2016, respectively. Preferred share dividends totaled $216.3 million, $236.5 million and $238.2 million for the years ended December 31, 2018, 2017 and 2016, respectively.

For the tax year ended December 31, 2018, distributions for the common shares and all the various series of preferred shares were classified as follows:

		2018 (unaudited)
			1st Quarter				2nd Quarter				3rd Quarter				4th Quarter
Ordinary Income			100.00	%			100.00	%			100.00	%			93.17	%
Long-Term Capital Gain			0.00	%			0.00	%			0.00	%			6.83	%
Total			100.00	%			100.00	%			100.00	%			100.00	%

The ordinary income dividends distributed for the tax year ended December 31, 2018 do not constitute qualified dividend income.

F-22

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

9.Related Party Transactions

B. Wayne Hughes, our former Chairman and his family, including his daughter Tamara Hughes Gustavson and his son B. Wayne Hughes, Jr., who are both members of our Board, collectively own approximately 14.5% of our common shares outstanding at December 31, 2018.

At December 31, 2018, B. Wayne Hughes and Tamara Hughes Gustavson together owned and controlled 62 self-storage facilities in Canada. These facilities operate under the “Public Storage” tradename, which we license to the owners of these facilities for use in Canada on a royalty-free, non-exclusive basis. We have no ownership interest in these facilities and we do not own or operate any facilities in Canada. If we chose to acquire or develop our own facilities in Canada, we would have to share the use of the “Public Storage” name in Canada. We have a right of first refusal, subject to limitations, to acquire the stock or assets of the corporation engaged in the operation of these facilities if their owners agree to sell them. Our subsidiaries reinsure risks relating to loss of goods stored by customers in these facilities, and have received approximately $1.3 million, $1.1 million and $848,000 for the years ended December 31, 2018, 2017 and 2016, respectively. Our right to continue receiving these premiums may be qualified.

10.Share-Based Compensation

Under various share-based compensation plans and under terms established by our Board or a committee thereof, we grant non-qualified options to purchase the Company’s common shares, as well as restricted share units (“RSUs”), to trustees, officers, and key employees.

Stock options and RSUs are considered “granted” and “outstanding” as the terms are used herein, when (i) the Company and the recipient reach a mutual understanding of the key terms of the award, (ii) the award has been authorized, (iii) the recipient is affected by changes in the market price of our stock, and (iv) it is probable that any performance conditions will be met.

We amortize the grant-date fair value of awards as compensation expense over the service period, which begins on the grant date and ends generally on the vesting date. For awards that are earned solely upon the passage of time and continued service, the entire cost of the award is amortized on a straight-line basis over the service period. For awards with performance conditions, the individual cost of each vesting is amortized separately over each individual service period (the “accelerated attribution” method).

In amortizing share-based compensation expense, we do not estimate future forfeitures in advance. Instead, we reverse previously amortized share-based compensation expense with respect to grants that are forfeited in the period the employee terminates employment. We recorded a cumulative-effect adjustment of $789,000 to increase accumulated deficit and increase paid-in capital as of January 1, 2016, representing the impact of estimated forfeitures at December 31, 2015.

In February 2018, we announced that Ron Havner and John Reyes, our Chief Executive Officer and Chief Financial Officer, respectively, at the time, were retiring from their executive roles at the end of 2018 and would then serve only as Trustees of the Company. Pursuant to our share-based compensation plans, their unvested grants will continue to vest over the original vesting periods during their service as Trustees. For financial reporting, the end of the service periods for previous stock option and RSU grants for these executives changed from (i) the various vesting dates to (ii) December 31, 2018 when they retired. Accordingly, all remaining share-based compensation expense for these two executives was amortized in the year ended December 31, 2018.

F-23

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

See also “net income per common share” in Note 2 for further discussion regarding the impact of RSUs and stock options on our net income per common share and income allocated to common shareholders.

Stock Options

Stock options vest over a three to five-year period, expire ten years after the grant date, and the exercise price is equal to the closing trading price of our common shares on the grant date. Employees cannot require the Company to settle their award in cash. We issue new common shares in order to settle exercised stock options. We use the Black-Scholes option valuation model to estimate the fair value of our stock options.

Outstanding stock option grants are included on a one-for-one basis in our diluted weighted average shares, to the extent dilutive, after applying the treasury stock method (based upon the average common share price during the period) to assumed exercise proceeds and measured but unrecognized compensation.

The stock options outstanding at December 31, 2018 have an aggregate intrinsic value (the excess, if any, of each option’s market value over the exercise price) of approximately $35.8 million and remaining average contractual lives of approximately six years. The aggregate intrinsic value of exercisable stock options at December 31, 2018 amounted to approximately $31.3 million. Approximately 1,351,000 of the stock options outstanding at December 31, 2018, have an exercise price of more than $200. We have 69,755 stock options exercisable at December 31, 2018, which expire through June 30, 2020, with an average exercise price per share of $71.55.

Additional information with respect to stock options during 2018, 2017 and 2016 is as follows:

F-24

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

		2018						2017						2016
						Weighted						Weighted						Weighted
						Average						Average						Average
			Number			Exercise			Number			Exercise			Number			Exercise
			of			Price			of			Price			of			Price
			Options			per Share			Options			per Share			Options			per Share
Options outstanding January 1,			2,408,917		$	192.12			1,995,440		$	150.83			1,940,279		$	130.08
Granted			200,000			194.29			1,096,000			223.58			310,000			239.11
Exercised			(179,995)			69.53			(482,523)			88.07			(254,839)			100.23
Cancelled			(8,000)			223.50			(200,000)			203.64			-			-
Options outstanding December 31,			2,420,922		$	201.31			2,408,917		$	192.12			1,995,440		$	150.83
Options exercisable at December 31,			1,147,122		$	178.31			848,250		$	143.55			1,105,433		$	108.84

		2018			2017			2016
Stock option expense for the year (in 000's) (a)		$	17,162		$	8,707		$	5,180
Aggregate exercise date intrinsic value of options exercised during the year (in 000's)		$	25,117		$	61,334		$	33,228
Average assumptions used in valuing options with the Black-Scholes method:
Expected life of options in years, based upon historical experience			5			5			5
Risk-free interest rate			2.7%			1.9%			1.2%
Expected volatility, based upon historical volatility			12.5%			17.9%			17.9%
Expected dividend yield			4.1%			3.6%			2.9%
Average estimated value of options granted during the year		$	13.09		$	23.49		$	26.18

(a) Amounts for 2018 include $8.1 million, in connection with the acceleration of amortization on grants discussed above. Amounts for 2017 reflect a reduction in compensation expense of $0.8 million related to stock options forfeited during the period.

Restricted Share Units

RSUs generally vest ratably over a five to eight-year period from the grant date. The grantee receives dividends for each outstanding RSU equal to the per-share dividends received by our common shareholders. We expense any dividends previously paid upon forfeiture of the related RSU. Upon vesting, the grantee receives common shares equal to the number of vested RSUs, less common shares withheld in exchange for tax deposits made by the Company to satisfy the grantee’s statutory tax liabilities arising from the vesting.

The fair value of our RSUs is determined based upon the applicable closing trading price of our common shares.

The fair value of our RSUs outstanding at December 31, 2018 was approximately $145.3 million. Remaining compensation expense related to RSUs outstanding at December 31, 2018 totals approximately $91.1 million and is expected to be recognized as compensation expense over the next 5.3 years on average. The following tables set forth relevant information with respect to restricted shares (dollar amounts in thousands):

F-25

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

		2018						2017						2016
			Number of			Grant Date			Number of			Grant Date			Number of			Grant Date
			Restricted			Aggregate			Restricted			Aggregate			Restricted			Aggregate
			Share Units			Fair Value			Share Units			Fair Value			Share Units			Fair Value
Restricted share units outstanding January 1,			799,129		$	166,144			696,641		$	136,905			737,388		$	129,284
Granted			138,567			27,733			340,957			73,953			171,144			40,263
Vested			(164,104)			(30,717)			(144,473)			(25,305)			(180,050)			(26,689)
Forfeited			(55,896)			(11,948)			(93,996)			(19,409)			(31,841)			(5,953)
Restricted share units outstanding December 31,			717,696		$	151,212			799,129		$	166,144			696,641		$	136,905

		2018			2017			2016
Amounts for the year (in 000's, except number of shares):
Fair value of vested shares on vesting date		$	32,317		$	31,962		$	41,400
Cash paid for taxes upon vesting in lieu of issuing common shares		$	12,347		$	14,092		$	15,357
Common shares issued upon vesting			97,516			82,060			112,707
Restricted share unit expense (a)		$	53,869		$	28,841		$	32,303

(a)Amounts for 2018, 2017 and 2016 include approximately $1.1 million, $0.7 million and $1.4 million, respectively, in employer taxes incurred upon vesting. Amounts for 2018 include $22.6 million, in connection with the acceleration of amortization on grants to our CEO and CFO as discussed above. Amounts for 2017 reflect a reduction in compensation expense of $4.6 million related to RSUs forfeited during the period.

11.Segment Information

Our reportable segments reflect the significant components of our operations where discrete financial information is evaluated separately by our chief operating decision maker (“CODM”). We organize our segments based primarily upon the nature of the underlying products and services, as well as the drivers of profitability growth. The net income for each reportable segment included in the tables below are in conformity with GAAP and our significant accounting policies as denoted in Note 2. The amounts not attributable to reportable segments are aggregated under “other items not allocated to segments.”

Following is a description of and basis for presentation for each of our reportable segments.

Self-Storage Operations

The Self-Storage Operations segment reflects the rental operations from all self-storage facilities we own. Our CODM reviews the net operating income (“NOI”) of this segment, which represents the related revenues less cost of operations (prior to depreciation expense), in assessing performance and making resource allocation decisions. The presentation in the tables below sets forth the NOI of this segment, as well as the depreciation expense for this segment, which while reviewed by our CODM and included in net income, is not considered by the CODM in assessing performance and decision making. For all periods presented, substantially all of our real estate facilities, goodwill and other intangible assets, other assets, and accrued and other liabilities are associated with the Self-Storage Operations segment.

F-26

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

Ancillary Operations

The Ancillary Operations segment reflects the sale of merchandise and reinsurance of policies against losses to goods stored by our self-storage tenants, activities which are incidental to our primary self-storage rental activities. Our CODM reviews the NOI of these operations in assessing performance and making resource allocation decisions.

Investment in PSB

This segment represents our 42% equity interest in PSB, a publicly-traded REIT that owns, operates, acquires and develops commercial properties, primarily multi-tenant flex, office, and industrial space. PSB has a separate management team that makes its financing, capital allocation, and other significant decisions. In making resource allocation decisions with respect to our investment in PSB, the CODM reviews PSB’s net income, which is detailed in PSB’s periodic filings with the SEC, and is included in Note 4. The segment presentation in the tables below includes our equity earnings from PSB.

Investment in Shurgard Europe

This segment represents our equity interest in Shurgard Europe, a publicly held company which owns and operates self-storage facilities located in seven countries in Western Europe. On October 15, 2018, Shurgard Europe completed an Offering of its common shares, and its shares commenced trading on Euronext Brussels under the “SHUR” symbol. Shurgard Europe has a separate management team and board of trustees that makes its financing, capital allocation, and other significant decisions. In making resource allocation decisions with respect to our investment in Shurgard Europe, the CODM reviews Shurgard Europe’s net income, which is detailed in Note 4. The segment presentation below includes our equity earnings from Shurgard Europe.

Presentation of Segment Information

The following tables reconcile NOI (as applicable) and net income of each segment to our consolidated net income (amounts in thousands):

F-27

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

For the year ended December 31, 2018
	Self-Storage Operations			Ancillary Operations			Investment in PSB			Investment in Shurgard Europe			Other Items Not Allocated to Segments			Total
	(Amounts in thousands)
Revenues:
Self-storage operations	$	2,597,607		$	-		$	-		$	-		$	-		$	2,597,607
Ancillary operations		-			156,673			-			-			-			156,673
		2,597,607			156,673			-			-			-			2,754,280
Cost of operations:
Self-storage operations		695,731			-			-			-			-			695,731
Ancillary operations		-			43,991			-			-			-			43,991
		695,731			43,991			-			-			-			739,722
Net operating income:
Self-storage operations		1,901,876			-			-			-			-			1,901,876
Ancillary operations		-			112,682			-			-			-			112,682
		1,901,876			112,682			-			-			-			2,014,558
Other components of net income (loss):
Depreciation and amortization		(483,646)			-			-			-			-			(483,646)
General and administrative		-			-			-			-			(118,720)			(118,720)
Interest and other income		-			-			-			-			26,442			26,442
Interest expense		-			-			-			-			(32,542)			(32,542)
Equity in earnings of
unconsolidated real estate entities		-			-			89,362			14,133			-			103,495
Foreign currency exchange gain		-			-			-			-			18,117			18,117
Gain on sale of real estate		-			-			-			-			37,903			37,903
Gain due to Shurgard Europe
public offering		-			-			-			151,616			-			151,616
Net income (loss)	$	1,418,230		$	112,682		$	89,362		$	165,749		$	(68,800)		$	1,717,223

F-28

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

For the year ended December 31, 2017
	Self-Storage Operations			Ancillary Operations			Investment in PSB			Investment in Shurgard Europe			Other Items Not Allocated to Segments			Total
	(Amounts in thousands)
Revenues:
Self-storage operations	$	2,512,433		$	-		$	-		$	-		$	-		$	2,512,433
Ancillary operations		-			156,095			-			-			-			156,095
		2,512,433			156,095			-			-			-			2,668,528
Cost of operations:
Self-storage operations		657,633			-			-			-			-			657,633
Ancillary operations		-			50,345			-			-			-			50,345
		657,633			50,345			-			-			-			707,978
Net operating income:
Self-storage operations		1,854,800			-			-			-			-			1,854,800
Ancillary operations		-			105,750			-			-			-			105,750
		1,854,800			105,750			-			-			-			1,960,550
Other components of net income (loss):
Depreciation and amortization		(454,526)			-			-			-			-			(454,526)
General and administrative		-			-			-			-			(82,882)			(82,882)
Interest and other income		-			-			-			-			18,771			18,771
Interest expense		-			-			-			-			(12,690)			(12,690)
Equity in earnings of
unconsolidated real estate entities		-			-			46,544			25,948			3,163			75,655
Foreign currency exchange loss		-			-			-			-			(50,045)			(50,045)
Casualty loss		-			-			-			-			(7,789)			(7,789)
Gain on sale of real estate		-			-			-			-			1,421			1,421
Net income (loss)	$	1,400,274		$	105,750		$	46,544		$	25,948		$	(130,051)		$	1,448,465

F-29

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

For the year ended December 31, 2016
	Self-Storage Operations			Ancillary Operations			Investment in PSB			Investment in Shurgard Europe			Other Items Not Allocated to Segments			Total
	(Amounts in thousands)
Revenues:
Self-storage operations	$	2,405,828		$	-		$	-		$	-		$	-		$	2,405,828
Ancillary operations		-			154,721			-			-			-			154,721
		2,405,828			154,721			-			-			-			2,560,549
Cost of operations:
Self-storage operations		617,905			-			-			-			-			617,905
Ancillary operations		-			51,178			-			-			-			51,178
		617,905			51,178			-			-			-			669,083
Net operating income:
Self-storage operations		1,787,923			-			-			-			-			1,787,923
Ancillary operations		-			103,543			-			-			-			103,543
		1,787,923			103,543			-			-			-			1,891,466
Other components of net income (loss):
Depreciation and amortization		(433,314)			-			-			-			-			(433,314)
General and administrative		-			-			-			-			(83,656)			(83,656)
Interest and other income		-			-			-			-			15,138			15,138
Interest expense		-			-			-			-			(4,210)			(4,210)
Equity in earnings of
unconsolidated real estate entities		-			-			31,707			22,324			2,725			56,756
Foreign currency exchange gain		-			-			-			-			17,570			17,570
Gain on sale of real estate		-			-			-			-			689			689
Net income (loss)	$	1,354,609		$	103,543		$	31,707		$	22,324		$	(51,744)		$	1,460,439

12.Recent Accounting Pronouncements and Guidance

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which requires revenue to be based upon the consideration expected from customers for promised goods or services. In February 2017, the FASB issued ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which provides guidance with respect to the sale of real estate facilities. The new standards permit either the retrospective or cumulative effects transition method. We adopted the new standards effective January 1, 2018 utilizing the modified retrospective transition method applied to open contracts. The new standards did not have a material impact on our results of operations or financial condition, primarily because most of our revenue is from rental revenue from self-storage facilities, and included in self-storage facilities revenue on our statements of income,

F-30

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

which the new standards do not address, and because we do not provide any material products and services to our customers or sell material amounts of our real estate facilities. The remainder of our revenues are composed of elements that are either covered by the new standards but not impacted, or are not covered by the new standards.

In February 2016, the FASB issued ASU 2016-02, Leases, which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new standard, effective on January 1, 2019, requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief effective January 1, 2019 with a cumulative effect through December 31, 2018 recorded through retained earnings. The primary practical expedients we used included (i) using hindsight in determining the lease term and in assessing impairment of right-of-use assets, (ii) not assessing whether existing or expired land easements that were not previously accounted for as leases are or contain a lease under this new standard, and (iii) not separating lease and associated non-lease components for all existing leases where we are a lessor at January 1, 2019 in accordance with the requirements of the practical expedient. We do not believe this standard will have a material impact on our results of operations or financial condition, because substantially all of our lease revenues are derived from month-to-month self-storage leases, and we do not have material amounts of lease expense.

In May 2017, the FASB issued ASU 2017-09, Stock Compensation: Scope of Modification Accounting, to increase clarity and consistency of practice and reduce cost and complexity when modifying the terms of share-based awards. We prospectively adopted this guidance effective January 1, 2018, with no material impact on our financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash, which primarily requires the statement of cash flows to explain not only the change in cash and equivalents, but also the change in restricted cash. The standard is effective on January 1, 2018, with early adoption permitted and requires the use of the retrospective transition method. The Company early adopted the new guidance during the fourth quarter of 2017.

13.Commitments and Contingencies

Contingent Losses

We are a party to various legal proceedings and subject to various claims and complaints; however, we believe that the likelihood of these contingencies resulting in a material loss to the Company, either individually or in the aggregate, is remote.

Insurance and Loss Exposure

We carry property, earthquake, general liability, employee medical insurance and workers compensation coverage through internationally recognized insurance carriers, subject to deductibles. Our deductible for general liability is $2.0 million per occurrence. Our annual deductible for property loss is $25.0 million per occurrence. This deductible decreases to $5.0 million once we reach $35.0 million in aggregate losses for occurrences that exceed $5.0 million. Insurance carriers’ aggregate limits on these policies of $75.0 million for property losses and $102.0 million for general liability losses are higher than estimates of maximum probable losses that could occur from individual catastrophic events determined in recent engineering and actuarial studies; however, in case of multiple catastrophic events, these limits could be exceeded.

We reinsure a program that provides insurance to our customers from an independent third-party insurer. This program covers customer claims for losses to goods stored at our facilities as a result of specific named perils

F-31

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

(earthquakes are not covered by this program), up to a maximum limit of $5,000 per storage unit. We reinsure all risks in this program, but purchase insurance to cover this exposure for a limit of $15.0 million for losses in excess of $5.0 million per occurrence. We are subject to licensing requirements and regulations in several states. Customers participate in the program at their option. At December 31, 2018, there were approximately 914,000 certificates held by our self-storage customers, representing aggregate coverage of approximately $2.9 billion.

Construction Commitments

We have construction commitments representing future expected payments for construction under contract totaling $138.5 million at December 31, 2018. We expect to pay approximately $126.3 million in 2019 and $12.2 million in 2020 for these construction commitments.

14.Supplementary Quarterly Financial Data (unaudited)

			Three Months Ended
		March 31,			June 30,			September 30,			December 31,
		2018			2018			2018			2018
			(Amounts in thousands, except per share data)
Self-storage and ancillary revenues		$	669,924		$	685,528		$	706,368		$	692,460
Self-storage and ancillary cost of operations		$	192,827		$	190,977		$	195,544		$	160,374
Depreciation and amortization		$	117,979		$	119,777		$	124,516		$	121,374
Net Income		$	344,436		$	405,292		$	379,589		$	587,906
Per Common Share
Net income - Basic		$	1.66		$	2.00		$	1.85		$	3.05
Net income - Diluted		$	1.65		$	2.00		$	1.85		$	3.04
			Three Months Ended
		March 31,			June 30,			September 30,			December 31,
		2017			2017			2017			2017
			(Amounts in thousands, except per share data)
Self-storage and ancillary revenues		$	645,547		$	664,312		$	686,361		$	672,308
Self-storage and ancillary cost of operations		$	182,902		$	182,578		$	190,619		$	151,879
Depreciation and amortization		$	110,929		$	110,177		$	113,320		$	120,100
Net Income		$	344,021		$	355,207		$	358,274		$	390,963
Per Common Share
Net income - Basic		$	1.62		$	1.59		$	1.61		$	1.92
Net income - Diluted		$	1.62		$	1.59		$	1.61		$	1.92

F-32

PUBLIC STORAGE

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

15.Subsequent Events

Subsequent to December 31, 2018, we acquired or were under contract to acquire 14 self-storage facilities (nine in Virginia and one each in Colorado, Florida, Georgia, Kentucky and Michigan with 935,000 net rentable square feet, for $102.4 million.

On February 22, 2019, we called for redemption, and on March 28, 2019, we will redeem our 6.375% Series Y Preferred Shares, at par ($285.0 million). We will record an $8.5 million allocation of income from our common shareholders to the holders of our Preferred Shares in the three months ending March 31, 2019 in connection with this redemption.

F-33

PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
		Net	2018	Initial Cost		Costs	Gross Carrying Amount
	No. of	Rentable	Encum-		Buildings &	Subsequent	At December 31, 2018			Accumulated
Description	Facilities	Sq. Feet	brances	Land	Improvements	to Acquisition	Land	Buildings	Total	Depreciation

Self-storage facilities by market:
Los Angeles	224	16,086	538	510,249	924,346	296,987	507,862	1,223,720	1,731,582	686,584
Houston	123	9,093	-	177,951	443,126	142,048	177,412	585,713	763,125	261,800
San Francisco	138	8,952	-	241,791	527,127	190,078	254,541	704,455	958,996	426,169
Dallas/Ft. Worth	122	8,760	-	173,223	414,707	118,863	174,821	531,972	706,793	257,203
Chicago	130	8,172	-	137,165	352,595	122,609	140,002	472,367	612,369	340,765
New York	94	6,940	-	250,900	548,541	166,300	257,237	708,504	965,741	386,344
Atlanta	103	6,749	-	129,671	341,153	67,847	129,468	409,203	538,671	243,122
Seattle/Tacoma	93	6,424	-	183,213	466,998	95,459	182,225	563,445	745,670	301,030
Miami	90	6,416	-	215,278	461,099	87,470	217,170	546,677	763,847	284,258
Washington DC	91	5,648	-	233,905	406,769	112,017	239,100	513,591	752,691	285,899
Orlando/Daytona	72	4,550	12,174	140,411	253,375	55,715	145,892	303,609	449,501	141,198
Denver	61	4,295	9,661	95,009	226,499	65,256	95,738	291,026	386,764	131,592
Charlotte	54	4,056	-	77,016	194,846	54,628	84,879	241,611	326,490	107,397
Minneapolis/St. Paul	54	3,690	3,931	107,071	211,200	25,259	107,236	236,294	343,530	106,371
Tampa	53	3,613	-	87,165	174,499	46,672	89,927	218,409	308,336	113,117
Philadelphia	57	3,582	-	51,682	152,406	55,037	50,703	208,422	259,125	152,874
West Palm Beach	45	3,398	-	153,414	216,913	48,466	154,122	264,671	418,793	109,277
Detroit	41	2,795	-	62,990	159,461	28,972	63,840	187,583	251,423	103,405
Phoenix	38	2,536	-	60,974	169,042	25,757	60,965	194,808	255,773	94,513
Austin	31	2,343	-	51,150	115,641	39,486	53,172	153,105	206,277	76,208
Portland	43	2,256	-	51,182	126,464	26,792	51,840	152,598	204,438	95,235
Sacramento	34	1,959	-	25,141	69,409	27,711	25,646	96,615	122,261	72,863
Raleigh	28	1,882	-	50,348	99,583	28,318	51,479	126,770	178,249	54,523
San Diego	20	1,815	-	47,884	108,911	39,142	50,394	145,543	195,937	80,945
San Antonio	28	1,791	-	27,566	76,028	26,691	27,524	102,761	130,285	62,052
Norfolk	29	1,727	-	35,608	92,053	17,323	35,047	109,937	144,984	57,997
Boston	25	1,679	-	61,583	158,870	21,353	62,149	179,657	241,806	83,539
Columbus	22	1,629	-	25,341	64,746	26,791	25,448	91,430	116,878	41,711
Oklahoma City	22	1,533	-	35,704	68,360	12,840	35,704	81,200	116,904	19,843
Baltimore	23	1,472	-	25,176	79,734	18,139	25,300	97,749	123,049	66,565
Indianapolis	23	1,472	-	21,945	60,353	12,874	22,945	72,227	95,172	42,326

F-34

PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
		Net	2018	Initial Cost		Costs	Gross Carrying Amount
	No. of	Rentable	Encum-		Buildings &	Subsequent	At December 31, 2018			Accumulated
Description	Facilities	Sq. Feet	brances	Land	Improvements	to Acquisition	Land	Buildings	Total	Depreciation

St. Louis	26	1,464	-	20,037	56,237	21,401	20,680	76,995	97,675	60,081
Kansas City	24	1,461	-	14,225	43,732	27,046	14,425	70,578	85,003	57,162
Columbia	23	1,331	-	20,169	57,131	19,062	20,928	75,434	96,362	31,667
Las Vegas	20	1,259	-	23,168	52,723	10,024	22,417	63,498	85,915	46,030
Milwaukee	15	964	1,099	13,189	32,071	9,958	13,158	42,060	55,218	31,402
Cincinnati	17	947	-	15,023	32,351	22,398	14,941	54,831	69,772	27,878
Louisville	14	875	-	22,813	43,250	6,390	22,812	49,641	72,453	11,155
Jacksonville	14	841	-	11,252	27,714	11,197	11,301	38,862	50,163	30,515
Nashville/Bowling Green	16	835	-	12,744	29,420	10,330	12,742	39,752	52,494	26,255
Honolulu	11	807	-	54,184	106,299	11,378	55,101	116,760	171,861	58,488
Greensboro	13	787	-	12,737	29,811	13,032	14,826	40,754	55,580	24,203
Colorado Springs	12	706	-	8,229	19,659	12,877	8,225	32,540	40,765	26,212
Chattanooga	10	706	-	6,569	26,045	6,682	6,371	32,925	39,296	13,385
Hartford/New Haven	11	693	-	6,778	19,959	21,307	8,443	39,601	48,044	30,275
Savannah	12	690	-	33,094	42,465	2,267	31,766	46,060	77,826	13,779
Charleston	11	681	-	12,415	34,114	16,528	13,391	49,666	63,057	21,688
Fort Myers/Naples	9	670	-	15,373	35,353	4,945	15,608	40,063	55,671	15,558
New Orleans	9	627	-	9,205	30,832	5,871	9,373	36,535	45,908	23,480
Greensville/Spartanburg/Asheville	11	623	-	9,036	20,767	9,349	9,965	29,187	39,152	18,918
Reno	7	559	-	5,487	18,704	3,987	5,487	22,691	28,178	11,189
Birmingham	14	538	-	5,229	17,835	13,238	5,117	31,185	36,302	26,512
Salt Lake City	8	517	-	7,846	15,947	4,625	7,495	20,923	28,418	13,744
Memphis	9	510	-	7,962	21,981	8,784	9,315	29,412	38,727	19,019
Buffalo/Rochester	9	462	-	6,785	17,954	3,617	6,783	21,573	28,356	12,638
Richmond	10	460	-	13,248	23,253	4,248	13,053	27,696	40,749	16,460
Tucson	7	439	-	9,403	25,491	5,475	9,884	30,485	40,369	17,863
Cleveland/Akron	7	437	-	4,070	16,139	5,344	4,463	21,090	25,553	10,952
Wichita	7	433	-	2,017	6,691	7,078	2,130	13,656	15,786	11,416
Mobile	9	394	-	4,257	17,441	4,532	4,084	22,146	26,230	11,804
Omaha	4	377	-	7,491	20,930	1,800	7,491	22,730	30,221	2,165
Monterey/Salinas	7	329	-	8,465	24,151	4,045	8,455	28,206	36,661	19,811
Palm Springs	3	242	-	8,309	18,065	1,240	8,309	19,305	27,614	9,531

F-35

PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
		Net	2018	Initial Cost		Costs	Gross Carrying Amount
	No. of	Rentable	Encum-		Buildings &	Subsequent	At December 31, 2018			Accumulated
Description	Facilities	Sq. Feet	brances	Land	Improvements	to Acquisition	Land	Buildings	Total	Depreciation

Evansville	4	232	-	1,826	8,445	1,169	1,798	9,642	11,440	3,132
Dayton	5	230	-	1,074	8,975	4,752	1,073	13,728	14,801	6,593
Augusta	4	202	-	1,793	5,990	2,328	1,793	8,318	10,111	5,497
Fort Wayne	3	168	-	349	3,594	3,095	349	6,689	7,038	5,718
Providence	3	155	-	995	11,206	2,847	995	14,053	15,048	5,716
Huntsville/Decatur	3	153	-	1,024	3,321	2,989	971	6,363	7,334	5,820
Shreveport	2	150	-	817	3,030	2,252	741	5,358	6,099	4,498
Springfield/Holyoke	2	144	-	1,428	3,380	1,781	1,427	5,162	6,589	4,401
Rochester	2	99	-	1,047	2,246	1,963	980	4,276	5,256	3,710
Santa Barbara	2	98	-	5,733	9,106	385	5,733	9,491	15,224	5,043
Topeka	2	94	-	225	1,419	1,983	225	3,402	3,627	2,852
Lansing	2	88	-	556	2,882	821	556	3,703	4,259	2,058
Roanoke	1	57	-	819	1,776	580	819	2,356	3,175	2,132
Flint	1	56	-	543	3,068	217	542	3,286	3,828	1,687
Joplin	1	56	-	264	904	952	264	1,856	2,120	1,538
Syracuse	1	55	-	545	1,279	777	545	2,056	2,601	1,897
Modesto/Fresno/Stockton	1	33	-	44	206	963	193	1,020	1,213	725
Commercial and non-operating
real estate			-	9,615	22,472	24,155	10,651	45,591	56,242	39,095
	2,429	162,047	$27,403	$3,987,212	$8,842,668	$2,466,964	$4,047,982	$11,248,862	$15,296,844	$6,140,072
	Note: Buildings and improvements are depreciated on a straight-line basis over estimated useful lives ranging generally
	between 5 to 25 years. In addition, disclosures of the number and square footage of our facilities are unaudited.

F-36