Public Storage (PSA) 10-K risk factor changes: FY2019 vs FY2018

[removed: We] [added: We] have significant exposure to real estate [removed: risk.][added: risk.]

Since our business consists primarily of [removed: acquiring] [added: acquiring, developing,] and operating real estate, we are subject to [removed: the] risks related to the ownership and operation of real estate that could result in reduced revenues, increased expenses, increased capital expenditures, or increased borrowings, which could negatively impact our operating results, cash flow available for distribution or reinvestment, and our stock price:

[removed: Natural] [added: *Natural] disasters or terrorist attacks could cause damage to our facilities, resulting in increased costs and reduced [added: revenues.* Natural disasters, such as earthquakes, fires, hurricanes and floods, or terrorist attacks could cause significant damage to our facilities and require significant repair costs, and make facilities temporarily uninhabitable, thereby reducing our] revenues.

See Note 13 to our December 31, [removed: 2018] [added: 2019] financial statements for a description of the risks of losses that are not covered by third-party insurance contracts.

In addition, significant natural disasters, terrorist attacks, threats of future terrorist attacks, or resulting wider armed conflicts could have negative impacts on [removed: storage] [added: self-storage] demand and/or our revenues.

[removed: Operating] [added: *Operating] costs, including property taxes, could [removed: increase.][added: increase*.]

We could be subject to increases in insurance premiums, property or other taxes, repair and maintenance costs, payroll, utility costs, workers compensation, and other operating expenses due to various factors such as inflation, labor shortages, commodity and energy price increases, weather, increases to minimum wage rates, changes to governmental safety and real estate use limitations, [added: as well as other governmental actions.]

Our property tax expense, which totaled approximately [removed: $256.9] [added: $280.5] million during the year ended December 31, [removed: 2018,] [added: 2019,] generally depends upon the assessed value of our real estate facilities as determined by assessors and government agencies, and accordingly could be subject to substantial increases if such agencies changed their valuation approaches or opinions or if new laws are [removed: enacted.][added: enacted, especially if new approaches are adopted or laws are enacted that result in increased property tax assessments in states or geographies where we have a high concentration of facilities.]

[removed: The] [added: *The] acquisition of existing properties [added: or self-storage operating companies] is subject to risks that may adversely affect our growth and financial [removed: results.][added: results.* We have acquired self-storage facilities from third parties in the past, and we expect to continue to do so in the future.]

Failures or unexpected circumstances in integrating [removed: newly acquired properties] [added: facilities that we acquire directly or via the acquisition of operating companies] into our [removed: operations] [added: operations,] or circumstances we did not detect [added: or anticipate] during due diligence, such as environmental matters, needed repairs or deferred maintenance, [added: customer collection issues, assumed liabilities, turnover of critical personnel involved in acquired operating companies,] or the effects of increased property tax following reassessment of a newly-acquired property, as well as the general risks of real estate [removed: investment,] [added: investment and mergers and acquisitions,] could jeopardize realization of the anticipated earnings from an acquisition.

[added: *Development of self-storage facilities can subject us to risks.*] At December 31, [removed: 2018,] [added: 2019,] we have a pipeline of development projects totaling [removed: $607.4] [added: $619.2] million (subject to contingencies), and we expect to continue to seek additional development projects.

[removed: There] [added: *There] is significant competition among self-storage operators and from other storage [removed: alternatives.][added: alternatives*.]

Competition in the local market areas in which many of our properties are located is significant and has affected our occupancy levels, rental [removed: rates] [added: rates,] and operating expenses.

[removed: We] [added: *We] may incur significant liabilities from environmental contamination or moisture [removed: infiltration.][added: infiltration*.]

We have conducted preliminary environmental assessments on most of our properties, which have not identified [added: any] material liabilities.

However, we may not have detected all material liabilities, we could acquire properties with material undetected liabilities, or new conditions could arise or develop at our properties, any of which [removed: would] [added: could] result in a cash settlement or adversely affect our ability to sell, lease, operate, or encumber affected facilities.

[removed: Economic] [added: Economic] conditions can adversely affect our business, financial condition, growth and access to [removed: capital.][added: capital.]

[removed: We] [added: We] have exposure to European operations through our ownership in [removed: Shurgard Europe.][added: Shurgard.]

[removed: | | · | | Currency risks:] [added: *Currency risks:*] Currency fluctuations can impact the fair value of our investment in [removed: Shurgard Europe, as well as future repatriation] [added: Shurgard, our equity earnings, our ongoing dividends, and any other related repatriations] of cash. [removed: |]

[removed: | | · | | Legislative,] [added: *Legislative,] tax, and regulatory [removed: risks:] [added: risks:*] Shurgard [removed: Europe] is subject to a variety of local, national, and pan European laws and regulations related to permitting and land use, the environment, labor, and other areas, as well as income, property, sales, value added and employment tax laws. [removed: These laws can be difficult to apply or interpret and can vary in each country or locality, and are subject to unexpected changes in their form and application due to regional, national, or local political uncertainty and other factors. Such changes, or Shurgard Europe’s failure to comply with these laws, could subject it to penalties or other sanctions, adverse changes in business processes, as well as potentially adverse income tax, property tax, or other tax burdens. |]

[removed: | | · | | Impediments] [added: *Impediments] to capital repatriation could negatively impact the realization of our investment in [removed: Shurgard Europe:] [added: Shurgard:*] Laws in Europe and the U.S. may create, [removed: impede] [added: impede,] or increase our cost to repatriate distributions received from Shurgard [removed: Europe] or proceeds from the sale of [removed: Shurgard Europe’s] [added: Shurgard’s] shares. [removed: |]

[removed: | | · | | Risks] [added: *Risks] of collective bargaining and intellectual [removed: property:] [added: property:*] Collective bargaining, which is prevalent in certain areas in Europe, could negatively impact [removed: Shurgard Europe’s] [added: Shurgard’s] labor costs or operations. [removed: Many of Shurgard Europe’s employees participate in various national unions. |]

[removed: | | · | | Potential] [added: *Potential] operating and individual country [removed: risks:] [added: risks:*] Economic slowdowns or extraordinary political or social change in the countries in which it operates have posed, and could continue to pose, challenges or result in future reductions of [removed: Shurgard Europe’s] [added: Shurgard’s] operating cash flows. [removed: |]

[removed: | | · | | Impediments] [added: *Impediments] of [removed: Shurgard Europe’s] [added: Shurgard’s] public ownership [removed: structure: Shurgard Europe’s] [added: structure:* Shurgard’s] strategic decisions, involving activities such as borrowing money, capital contributions, raising capital from third parties, as well as selling or acquiring significant assets, are determined by its board of directors. [removed: As a result, Shurgard Europe may be precluded from taking advantage of opportunities that we would find attractive but that we may not be able to pursue economically separately. |]

[removed: The] [added: The] Hughes Family could [removed: control] [added: significantly influence] us and take actions adverse to other [removed: shareholders.][added: shareholders.]

Wayne Hughes, Jr., who are both members of our Board of Trustees (collectively, the “Hughes Family”), owned approximately [removed: 14.5%] [added: 14.1%] of our aggregate outstanding common shares.

Our declaration of trust permits the Hughes Family to own up to 35.66% of our outstanding common shares while it generally restricts the ownership by other persons and entities to 3% of our outstanding common [removed: shares.][added: shares unless our Board of Trustees grants an ownership waiver, as has occurred in certain cases for large mutual fund companies.]

Consequently, the Hughes Family may significantly influence matters submitted to a vote of our shareholders, including electing trustees, amending our organizational documents, dissolving and approving other extraordinary transactions, such as a takeover attempt, [removed: resulting] [added: which may result] in an outcome that may not be favorable to other shareholders.

[removed: Takeover] [added: Takeover] attempts or changes in control could be thwarted, even if beneficial to [removed: shareholders.][added: shareholders.]

[removed: | | · | | Provisions] [added: Provisions] of Maryland law may impose limitations that may make it more difficult for a third party to negotiate or effect a business combination transaction or control share acquisition with Public Storage. [removed: Currently, the Board has opted not to subject the Company to these provisions of Maryland law, but it could choose to do so in the future without shareholder approval. |]

[removed: | | · | | To] [added: To] protect against the loss of our REIT status due to concentration of ownership levels, our declaration of trust generally limits the ability of a person, other than the Hughes Family or “designated investment entities” (each as defined in our declaration of trust), to own, actually or constructively, more than 3% of our outstanding common shares or 9.9% of the outstanding shares of any class or series of preferred or equity shares. [removed: Our Board may grant a specific exemption. These limits could discourage, delay or prevent a transaction involving a change in control of the Company not approved by our Board. |]

[removed: | | · | | Similarly,] [added: Similarly,] current provisions of our declaration of trust and powers of our Board could have the same effect, including (1) limitations on removal of trustees, (2) restrictions on the acquisition of our shares of beneficial interest, (3) the power to issue additional common shares, preferred shares or equity shares on terms approved by the Board without obtaining shareholder approval, (4) the advance notice provisions of our bylaws and (5) the Board’s ability under Maryland law, without obtaining shareholder approval, to implement takeover defenses that we may not yet have and to take, or refrain from taking, other actions that could have the effect of delaying, deterring or preventing a transaction or a change in control. [removed: |]

[removed: If] [added: If] we failed to qualify as a REIT, we would have to pay substantial income [removed: taxes.][added: taxes.]

There can be no assurance that we qualify or will continue to qualify as a REIT, because of the highly technical nature of the REIT rules, the ongoing importance of factual determinations, the possibility of unidentified issues in prior [removed: periods] [added: periods,] or changes in our circumstances, as well as share ownership limits in our articles of incorporation that do not necessarily ensure that our shareholder base is sufficiently diverse for us to qualify as a REIT.

Any taxes, interest, and penalties incurred would reduce [added: our cash available for distributions to shareholders and could negatively affect our stock price.]

However, for years in which we failed to qualify as a REIT, we would not be subject to REIT rules [removed: which] [added: that] require us to distribute substantially all of our taxable income to our shareholders.

[removed: Holders] [added: Holders] of our preferred shares have dividend, liquidation and other rights that are senior to the rights of the holders of shares of our common [removed: stock.][added: stock.]

[removed: Preferred] [added: Preferred] Shareholders are subject to certain [removed: risks][added: risks.]

[removed: | | · | | The Company has in the past, and could in the future, issue or assume additional debt.] Preferred shareholders would be subordinated to the interest and principal payments of such debt, which would increase the risk that there would not be sufficient funds to pay distributions or liquidation amounts to the preferred shareholders. [removed: |]

[removed: | | · | | The] [added: The] Company has in the past, and could in the future, issue additional preferred shares that, while pari passu to the existing preferred shares, increases the risk that there would not be sufficient funds to pay distributions to the preferred shareholders. [removed: |]

*Consequences of climate change, including severe weather events, and the steps taken to prevent climate change, could result in increased capital expenditures, increased expenses, and reduced revenues:* Direct and indirect impacts of climate change, such as increased destructive weather events, fires, reduced lifespans and population reduction, reduced natural habitats, water, food, arable land, and other resources, as well as resulting armed conflicts, could increase our costs or reduce demand for our self-storage facilities.

Governmental, political, and societal pressure could (i) require costly changes to future newly developed facilities, or require retrofitting of our existing facilities, to reduce carbon emissions through multiple avenues including changes to insulation, space configuration, lighting, heating, and air conditioning, (ii) increase energy costs as a result of switching to less carbon-intensive, but more expensive, sources of energy to operate our facilities, and (iii) result in consumers reducing their individual carbon footprints by owning fewer durable material consumer goods, collectibles, and other such items requiring storage, resulting in a reduced demand for our self-storage space.

See also “*We have exposure to increased property tax in California*” below.

*Our newly developed and expanded facilities, and facilities that we manage for third party owners, may negatively impact the revenues of our existing facilities.* We continue to develop new self-storage facilities and expand our existing self-storage facilities.

In addition, we are seeking to increase the number of self-storage facilities that we manage for third party owners in exchange for a fee, many of which are in the process of stabilization and are in proximity to our existing stabilized self-storage facilities.

In order to hasten the fill-up of these new facilities, we aggressively price such space during the fill-up period.

While we believe that this aggressive pricing allows us to increase our market share relative to our competitors and increase the cash flows of these properties, such pricing and the added capacity may also negatively impact our existing stabilized self-storage facilities that are in proximity to these unstabilized facilities.

*Many of our existing self-storage facilities may be at a competitive disadvantage to newly developed facilities.* There is a significant level of development of new self-storage facilities, by us and other operators.

These newly developed facilities are generally of high quality, with a more fresh and vibrant appearance, more amenities such as climate control, more attractive office configurations, newer elements, and a more imposing and attractive retail presence as compared to many of our existing stabilized self-storage facilities, some of which were built as much as 50 years ago.

Such qualitative differentials may negatively impact our ability to compete with these facilities for new tenants and our existing tenants may move to newly developed facilities.

In periods when the capital and credit markets experience significant volatility, the amounts, sources, and cost of

capital available to us may be adversely affected.

We own approximately 35% of the common shares of Shurgard, and this investment has a $339.9 million book value and a $1.2 billion market value (based upon the closing trading price of Shurgard’s common stock) at December 31, 2019.

We recognized $15.5 million in equity in earnings, and received $23.1 million in dividends, in 2019, with respect to Shurgard.

Shurgard, as an owner, operator, and developer of self-storage facilities, is subject to many of the same risks we are with respect to self-storage.

However, through our investment in Shurgard, we are exposed to additional risks unique to the various European markets Shurgard operates in which may adversely impact our business and financial results, many of which are referred to in Shurgard’s public filings.

These risks include the following:

These laws can be difficult to apply or interpret and can vary in each country or locality, and are subject to unexpected changes in their form and application due to regional, national, or local political uncertainty and other factors.

Such changes, or Shurgard’s failure to comply with these laws, could subject it to penalties or other sanctions, adverse changes in business processes, as well as potentially adverse income tax, property tax, or other tax burdens.

Many of Shurgard’s employees participate in various national unions.

*Liquidity of our ownership stake:* We have no plans to liquidate our interest in Shurgard.

However, while Shurgard is a publicly held entity, if we chose to, our ability to liquidate our shares in Shurgard in an efficient manner could be limited by the level of Shurgard’s public “float” relative to any ownership stake we sought to sell.

Our existing relationship with our legacy joint venture partner may place further contractual limitations on our ability to sell all of the shares we own if we desired to do so.

As a result, Shurgard may be precluded from taking advantage of opportunities that we would find attractive but that we may not be able to pursue economically separately, or it could take actions that we do not agree with.

‎

We have exposure to commercial property risk through our ownership in PSB.

We own approximately 42% of the common equity of PSB, and this investment has a $427.9 million book value and a $2.4 billion market value (based upon the closing trading price of PSB’s common stock) at December 31, 2019.

We recognized $54.1 million in equity in earnings, and received $60.7 million in dividends, in 2019, with respect to PSB.

PSB, as an owner, operator, and developer of real estate, is subject to many of the same risks we are with respect to real estate.

However, we may be exposed to other risks as a result of PSB’s ownership specifically of commercial facilities.

These risks are set forth in PSB’s Form 10-K for the year ended December 31, 2019, under “Item 1A.

*Risk Factors*.”

At December 31, 2019, B.

Currently, the Board has opted not to subject the Company to these provisions of Maryland law, but it could choose to do so in the future without shareholder approval.

Our Board may grant, and has previously granted, a specific exemption.

These limits could discourage, delay or prevent a transaction involving a change in control of the Company not approved by our Board.

‎

We are increasingly dependent upon Google to source our customers.

Approximately 59% of our new storage customers in 2019 were sourced directly or indirectly through “unpaid” search and “paid” search campaigns on Google.

We believe that the vast majority of customers searching for self-storage use Google at some stage in their shopping experience.

Natural disasters, such as earthquakes, fires, hurricanes and floods, or terrorist attacks could cause significant damage and require significant repair costs, and make facilities temporarily uninhabitable, reducing our revenues.

as well as other governmental actions.

We have acquired self-storage facilities from third parties in the past, and we expect to continue to do so in the future.

Development of self-storage facilities can subject us to risks.

We own a 35.2% equity interest in Shurgard Europe, with our investment having a $349.5 million book value at December 31, 2018, and $14.1 million in equity in earnings in 2018.

As a result, we are exposed to additional risks related to international operations that may adversely impact our business and financial results, including the following:

| --- | --- | --- | --- |

| | · | | Liquidity of our ownership stake: We have no plans to liquidate our interest in Shurgard Europe. However, while Shurgard Europe is a publicly held entity, our ability to liquidate our shares in Shurgard Europe, if we chose to, could be limited by the level of Shurgard Europe’s public “float” relative to our ownership stake. We are subject to a contractual “lock up” that prevents us from selling any shares until April 9, 2019, and our existing relationship with our legacy joint venture partner may place further contractual limitations on our ability to sell all of the shares we own if we desired to do so. |

At December 31, 2018, B.

our cash available for distributions to shareholders and could negatively affect our stock price.

| | · | | While the Company has no plans to do so, if the Company were to lose its REIT status or no longer elect REIT status, it would no longer be required to distribute its taxable income to maintain REIT status. If, in such a circumstance, the Company ceased paying dividends, unpaid distributions to the preferred shareholders would continue to accumulate. The preferred shareholders would have the ability to elect two additional members to serve on our Board of Trustees until the arrearage was cured. The preferred shareholders would not receive any compensation (such as interest) for the delay in the receipt of distributions, and it is possible that the arrearage could accumulate indefinitely. |

These

Our business is subject to regulation under a wide variety of U.S. federal, state and local laws, regulations and policies including those imposed by the SEC, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act and NYSE, as well as applicable local, state, and national labor laws.

Although we have policies and procedures designed to comply with applicable laws and regulations, failure to comply with the various laws and regulations may result in civil and criminal liability, fines and penalties, increased costs of compliance, restatement of our financial statements and could also affect the marketability of our real estate facilities.

In response to current economic conditions or the current political environment or otherwise, laws and regulations could be implemented or changed in ways that adversely affect our operating results and financial condition, such as legislation that could facilitate union activity or that would otherwise increase operating costs.

All of our properties must comply with the Americans with Disabilities Act and with related regulations and similar state law requirements, as well as various real estate and zoning laws and regulations, which are subject to change and could become more costly to comply with in the future.

Compliance with these requirements can require us to incur significant expenditures, which would reduce cash otherwise available for distribution to shareholders.

A failure to comply with these laws could lead to fines or possible awards of damages to individuals affected by the non-compliance.

Failure to comply with these requirements could also affect the marketability of our real estate facilities.

[removed: Critical] [added: Critical] Accounting [removed: Policies][added: Policies]

Our MD&A discusses our financial statements, which have been prepared in accordance with [removed: United States (“U.S.”)] [added: U.S.] generally accepted accounting principles (“GAAP”), and are affected by our judgments, assumptions and estimates.

The notes to our December 31, [removed: 2018] [added: 2019] financial statements, primarily Note 2, summarize our significant accounting policies.

[removed: Income] [added: Income] Tax [removed: Expense:] [added: Expense:] We have elected to be treated as a REIT, as defined in the Internal Revenue Code of 1986, as amended (the “Code”).

[removed: Impairment] [added: Impairment] of Long-Lived [removed: Assets:] [added: Assets:] The analysis of impairment of our long-lived assets involves identification of indicators of impairment, projections of future operating cash flows, and estimates of fair values, all of which require significant judgment and subjectivity.

[removed: Accrual] [added: Accrual] for Uncertain and Contingent [removed: Liabilities:] [added: Liabilities:] We accrue for certain contingent and other liabilities that have significant uncertain elements, such as property taxes, workers compensation claims, tenant reinsurance claims, as well as other legal claims and disputes involving customers, employees, governmental agencies and other third parties.

[removed: Accounting] [added: Allocating Purchase Price] for Acquired Real Estate [removed: Facilities:] [added: Facilities:] We estimate the fair values of [removed: the land, buildings] [added: land] and [removed: intangible assets acquired] [added: buildings] for purposes of allocating the [added: aggregate] purchase [removed: price.][added: price of acquired properties.]

Others could come to materially different conclusions as to the estimated fair values, which would result in different depreciation and amortization expense, gains and losses on sale of real estate assets, [removed: and real estate] [added: as well as the level of land] and [removed: intangible assets.][added: buildings on our balance sheet.]

[removed: Overview][added: Overview]

[removed: Most of our facilities compete with other well-managed and well-located competitors and] [added: In addition to local competition,] we are subject to general economic conditions, particularly those that affect the spending habits of consumers and moving trends.

In the last three years, there has been a marked increase in development of new self-storage facilities in many of the markets [added: where] we [removed: operate in,] [added: operate,] due to the favorable economics of [removed: development which we have also taken advantage of.][added: developing new properties.]

This increase in supply has been most notable in Atlanta, Austin, Charlotte, Chicago, Dallas, Denver, Houston, [added: Miami,] New York, and Portland.

[removed: We] [added: In addition to managing our existing facilities for organic growth, we] plan on growing [removed: organically as well as] through the acquisition and development of new facilities and expanding our existing self-storage facilities.

Since the beginning of 2013 through December 31, [removed: 2018,] [added: 2019,] we acquired a total of [removed: 296] [added: 340] facilities with [removed: 20.6] [added: 23.8] million net rentable square feet from third parties for approximately [removed: $2.7] [added: $3.1] billion, and we opened newly developed and expanded self-storage space for a total cost of [removed: $1.2] [added: $1.6] billion, adding approximately [removed: 11.3] [added: 15.1] million net rentable square feet.

[added: Real Estate Investment Activities:] Subsequent to December 31, [removed: 2018,] [added: 2019,] we acquired or were under contract to acquire (subject to customary closing conditions) 14 self-storage facilities for [removed: $102.4] [added: $245.3] million.

[removed: We expect to continue to seek additional development projects; however, the level of such activity] may be limited due to various constraints such as difficulty in finding available sites that meet our risk-adjusted yield expectations, as well as challenges in obtaining building permits for self-storage activities in certain municipalities.

We believe that our development and redevelopment activities [removed: are beneficial to our business] [added: generate favorable risk-adjusted returns] over the long run.

We believe the level of dilution incurred in [removed: 2018] [added: 2019] will continue at similar levels in [removed: 2019 and beyond, assuming realization of our current expectation of maintaining our current level of development for the foreseeable future.][added: 2020.]

On October 15, 2018, Shurgard [removed: Europe] [added: Self Storage SA (“Shurgard”)] 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 [removed: Europe] issued 25.0 million of its common shares to third parties at a price of €23 per share, for €575 million in gross proceeds.

Our equity interest, comprised of a direct and indirect pro-rata ownership interest in 31.3 million shares, decreased from 49% to [removed: 35.2%] [added: approximately 35%] as a result of the Offering.

While we did not sell any of our shares in the Offering, we [removed: did record] [added: recorded] a gain on disposition in 2018 of $151.6 million, as if we had sold a proportionate share of our investment in [removed: Shurgard Europe.][added: Shurgard.]

See “Investment in [removed: Shurgard Europe”] [added: Shurgard”] below for more information.

On October 18, 2018, we sold our property in West London to Shurgard [removed: Europe] for $42.1 million and recorded a related gain on sale of real estate of approximately $31.5 million.

As of December 31, [removed: 2018, our] [added: 2019, we expect] capital resources over the next year [removed: are expected to be] [added: of] approximately [removed: $1.1 billion] [added: $1.7 billion,] which exceeds our [removed: current planned] [added: currently identified] capital needs [removed: over the next year] of approximately [removed: $711.4] [added: $722.6] million.

Our [added: expected] capital resources include: (i) [removed: $361.2] [added: $409.7] million of cash as of December 31, [removed: 2018,] [added: 2019,] (ii) [removed: $483.8] [added: $484.1] million of available borrowing capacity on our revolving line of credit, [removed: and] (iii) [added: $545.2 million in net proceeds from the public issuance of senior Euro-denominated notes and (iv)] approximately $200 million to $250 million of expected retained operating cash flow [removed: for] [added: in] the next [removed: twelve months.][added: year.]

[removed: Our] [added: We expect our] capital needs [removed: may] [added: to] increase over the next year as we [removed: expect to] add projects to our development pipeline and acquire additional properties.

See [removed: Liquidity] [added: *Liquidity] and Capital [removed: Resources] [added: Resources*] for further information regarding our capital requirements and anticipated sources of capital to fund such requirements.

[removed: Results] [added: Results] of [removed: Operations][added: Operations]

[removed: Operating] [added: Operating] results for 2018 and [removed: 2017][added: 2017]

The increase is due primarily to (i) $183.1 million in aggregate gains due to [removed: Shurgard Europe’s] [added: Shurgard’s] initial public offering and the sale of our facility in West London to [removed: Shurgard Europe,] [added: Shurgard,] (ii) a $47.1 million increase in self-storage net operating income (described below), (iii) our $37.7 million equity share of gains recorded by PS Business Parks in 2018, (iv) a $68.2 million increase due to the impact of foreign currency exchange gains and losses associated with our euro denominated debt, (v) a $29.3 million allocation to preferred shareholders associated with preferred share redemptions in 2017 and (vi) a $7.8 million casualty loss and $5.2 million in incremental tenant reinsurance losses related to Hurricanes Harvey and Irma in 2017.

The $47.1 million increase in self-storage net operating income is a result of a [removed: $15.6] [added: $14.8] million increase in our Same Store Facilities and [removed: $31.5] [added: $32.3] million increase in our [removed: Non Same] [added: non-Same] Store Facilities.

Revenues for the Same Store Facilities increased [removed: 1.5%] [added: 1.4%] or [removed: $33.3] [added: $32.5] million in 2018 as compared to 2017, due primarily to higher realized annual rent per occupied square foot.

Cost of operations for the Same Store Facilities increased by [removed: 3.2%] [added: 3.0%] or [removed: $17.7] [added: $17.6] million in 2018 as compared to 2017, due primarily to increased property taxes.

The increase in net operating income of [removed: $31.5] [added: $27.5] million for the [removed: Non Same] [added: non-Same] Store Facilities is due primarily to the impact of [removed: 164 self-storage] facilities acquired [added: in 2018] and [added: 2019 and the fill-up of recently] developed [removed: since January 2016.][added: and expanded facilities.]

[removed: Operating] [added: Operating] results for [removed: 2017] [added: 2019] and [removed: 2016][added: 2018]

In [removed: 2017,] [added: 2019,] net income allocable to our common shareholders was [removed: $1,171.6] [added: $1,272.8] million or [removed: $6.73] [added: $7.29] per diluted common share, compared to [removed: $1,183.9] [added: $1,488.9] million or [removed: $6.81] [added: $8.54] per [added: diluted common] share in [removed: 2016] [added: 2018] representing a decrease of [removed: $12.3] [added: $216.1] million or [removed: $0.08.][added: $1.25 per diluted common share.]

The [removed: $66.9] [added: $30.1] million increase in self-storage net operating income is a result of a [removed: $46.2] [added: $2.6] million increase in our Same Store Facilities [removed: (as defined below)] and [removed: a $20.7] [added: $27.5] million increase in our [removed: Non Same] [added: non-Same] Store [removed: Facilities (as defined below).][added: Facilities.]

[removed: Revenues for the Same Store] Facilities increased [removed: 3.0%] [added: 1.4%] or [removed: $64.6] [added: $33.3] million in [removed: 2017] [added: 2019] as compared to [removed: 2016,] [added: 2018,] due primarily to higher realized annual rent per occupied square foot.

The increase in net operating income [added: of $32.3 million] for the [removed: Non Same] [added: non-Same] Store Facilities is due primarily to the impact of [added: facilities acquired in 2018 and 2017 and the fill-up of] recently [removed: acquired,] developed [removed: or] [added: and] expanded facilities.

The related estimation processes involve significant judgment.

We estimate the fair value of acquired buildings by determining the current cost to build new purpose-built self-storage facilities in the same location, and adjusting those costs for the actual age, quality, condition, amenities, and configuration of the buildings acquired.

We estimate the fair value of acquired land by considering the most directly comparable recently transacted land sales (“Land Comps”) and adjusting the

transacted values for differentials to the acquired land such as location quality, parcel size, and date of sale, in order to derive the estimated value of the underlying acquired land.

These adjustments to the Land Comps require significant judgment, particularly when there is a low volume of Land Comps or the available Land Comps lack similarity to the acquired property in proximity, date of sale, or location quality.

Most of our facilities compete with other well-managed and well-located competitors within the local trade area, which is generally a three to five mile radius.

The quality of the new supply may also allow these new facilities to compete more effectively with existing self-storage assets.

Much of this new supply, including our own, represents “fifth generation” facilities which often have a more fresh and vibrant appearance, more amenities such as climate control, more attractive office configurations, newer elements, and a more imposing and attractive retail presence as compared to the existing stock of self-storage facilities which were built over the last 50 years.

In order to enhance the competitive position of certain of our facilities relative to local competitors (including newly developed “fifth generation” facilities), we have commenced a comprehensive program to rebrand our properties, in order to develop more pronounced, attractive, and clearly identifiable color schemes and signage, as well as to upgrade the configuration and layout of the offices and other customer zones to improve the customer experience.

This program has initially been concentrated in properties located in a limited number of markets.

The extent to which we continue this program in additional markets, and the relative scope of work, will depend in part upon the results of the initial implementation of the program.

We expect to continue to seek additional development projects; however, the level of such activity

However, in the short run, our earnings are diluted during the construction and stabilization period due to the cost of capital to fund the development cost, as well as the related construction and development overhead expenses included in general and administrative expense.

Our currently identified capital needs consist primarily of $245.3 million in property acquisitions currently under contract and $477.3 million of remaining spending on our current development pipeline, which will be incurred primarily in the next 18 months.

We have no substantial principal payments on debt until 2022.

Additional potential capital needs could result from various activities including the redemption of outstanding preferred securities, repurchases of common stock, or mergers and acquisition activities such as a potential acquisition of National Storage REIT described in Note 15, “Subsequent Events” to our December 31, 2019 financial statements; however, there can be no assurance of any such activities transpiring in the near or longer term.

The decrease is due primarily to (i) $183.1 million in aggregate gains due to Shurgard’s initial public offering and the sale of our facility in West London to Shurgard in October 2018, (ii) our $37.7 million equity share of gains recorded by PS Business Parks during 2018, (iii) a $10.3 million decrease due to the impact of foreign currency exchange gains associated with our euro denominated debt and (iv) a $32.7 million allocation to our preferred shareholders associated with our preferred share redemption activities in 2019.

These impacts were offset partially by a $30.1 million increase in self-storage net operating income (described below) and a reduction in general and administrative expense attributable to $30.7 million in incremental share-based compensation expense in 2018 for the planned retirement of our former CEO and CFO.

Revenues for the Same Store

Cost of operations for the Same Store Facilities increased by 5.0% or $30.6 million in 2019 as compared to 2018, due primarily to 47.2% ($15.3 million) increase in marketing expenses and increased property taxes.

| | (Amounts in thousands, except per share data) | | | | | | | |

| and Shurgard IPO, including our equity | | | | | | | | |

| FFO per share | $ | 10.58 | | $ | 10.45 | | $ | 9.70 |

| to the departure of senior executives | | | | | | | (0.01) | | | 0.18 | | | | | 0.18 | | | (0.03) | | |

| | (Dollar amounts and square footage in thousands) | | | | | | | | | | | | | | |

| Same Store facilities | $ | 2,394,572 | | $ | 2,361,298 | | 1.4% | | $ | 2,361,298 | | $ | 2,328,833 | | 1.4% |

| Acquired facilities | | 59,206 | | | 33,871 | | 74.8% | | | 33,871 | | | 5,577 | | 507.3% |

| Newly developed and expanded facilities | | 150,571 | | | 121,694 | | 23.7% | | | 121,694 | | | 99,864 | | 21.9% |

| Other non-same store facilities | | 80,203 | | | 80,744 | | (0.7)% | | | 80,744 | | | 78,159 | | 3.3% |

| Same Store facilities | | 641,918 | | | 611,273 | | 5.0% | | | 611,273 | | | 593,637 | | 3.0% |

| Acquired facilities | | 22,472 | | | 11,810 | | 90.3% | | | 11,810 | | | 2,006 | | 488.7% |

| Newly developed and expanded facilities | | 63,360 | | | 47,870 | | 32.4% | | | 47,870 | | | 36,810 | | 30.0% |

| Other non-same store facilities | | 24,829 | | | 24,778 | | 0.2% | | | 24,778 | | | 25,180 | | (1.6)% |

| Same Store facilities | | 1,752,654 | | | 1,750,025 | | 0.2% | | | 1,750,025 | | | 1,735,196 | | 0.9% |

| Acquired facilities | | 36,734 | | | 22,061 | | 66.5% | | | 22,061 | | | 3,571 | | 517.8% |

| Newly developed and expanded facilities | | 87,211 | | | 73,824 | | 18.1% | | | 73,824 | | | 63,054 | | 17.1% |

| Other non-same store facilities | | 55,374 | | | 55,966 | | (1.1)% | | | 55,966 | | | 52,979 | | 5.6% |

| Same Store facilities | | (389,737) | | | (382,864) | | 1.8% | | | (382,864) | | | (382,326) | | 0.1% |

| Acquired facilities | | (34,980) | | | (23,809) | | 46.9% | | | (23,809) | | | (5,668) | | 320.1% |

| Newly developed and expanded facilities | | (54,065) | | | (45,851) | | 17.9% | | | (45,851) | | | (36,848) | | 24.4% |

Such estimates are based upon many assumptions and judgments, including (i) market rates of return and capitalization rates on real estate and intangible assets, (ii) building and material cost levels, (iii) comparisons of the acquired underlying land parcels to recent land

transactions, and (iv) future cash flows from the real estate and the existing tenant base.

As of December 31, 2018, we had additional development and redevelopment projects to build approximately 5.2 million net rentable square feet at a total cost of approximately $607.4 million.

However, in the short run, such activities dilute our earnings due to the three to four year period that it takes to fill up newly developed and redeveloped storage facilities and reach a stabilized level of cash flows offset by the cost of capital to fund the cost, combined with related overhead expenses flowing through general and administrative expense.

On July 13, 2018, we received a cash distribution from Shurgard Self Storage SA (“Shurgard Europe”) totaling $145.4 million.

On September 18, 2017, we completed a public offering of $1.0 billion in aggregate principal amount of unsecured notes in two equal tranches (collectively, the “U.S. Dollar Notes”), one maturing in September 2022 bearing interest at 2.370%, and another maturing in September 2027 bearing interest at 3.094%.

This was our first public offering of debt, which should also serve to facilitate future offerings.

Our planned capital needs over the next year consist of (i) $322.1 million of remaining spend on our current development pipeline, (ii) $102.4 million in property acquisitions currently under contract, (iii) $285.0 million for the redemption of our Series Y Preferred Shares on March 28, 2019, and (iv) $1.9 million in principal repayments on existing debt.

In addition to other investment activities, we may also redeem outstanding preferred securities or repurchase shares of our common stock in the future.

The decrease primarily reflects (i) a $67.6 million reduction due to the impact of foreign exchange translation gains and losses associated with our euro denominated debt, (ii) an $8.5 million increase in interest expense associated with higher outstanding debt balances and (iii) a $7.8 million casualty loss and $5.2 million in incremental tenant reinsurance losses related to Hurricanes Harvey and Irma offset partially by (iv) a $66.9 million increase in self-storage net operating income (described below) and (v) an $18.9 million increase in our equity in earnings of unconsolidated real estate entities.

Cost of operations for the Same Store Facilities increased by 3.4% or $18.3 million in 2017 as compared to 2016, due primarily to increased property taxes, advertising and selling expense and repairs and maintenance costs, offset partially by lower snow removal costs.

| | | | | | | | | |

| | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Shurgard Europe - IPO costs | | | | | | | | | | | | | | | | | | |

| executive officer retirement | | | | | 0.18 | | | (0.03) | | | | | (0.03) | | | \- | | |

| | | | | | | | | | | | | | | | |

| Same Store Facilities | $ | 2,242,755 | | $ | 2,209,427 | | 1.5% | | $ | 2,209,427 | | $ | 2,144,872 | | 3.0% |

| Non Same Store Facilities | | 354,852 | | | 303,006 | | 17.1% | | | 303,006 | | | 260,956 | | 16.1% |

| Same Store Facilities | | 579,520 | | | 561,774 | | 3.2% | | | 561,774 | | | 543,426 | | 3.4% |

| Non Same Store Facilities | | 116,211 | | | 95,859 | | 21.2% | | | 95,859 | | | 74,479 | | 28.7% |

| Same Store Facilities | | 1,663,235 | | | 1,647,653 | | 0.9% | | | 1,647,653 | | | 1,601,446 | | 2.9% |

| Non Same Store Facilities | | 238,641 | | | 207,147 | | 15.2% | | | 207,147 | | | 186,477 | | 11.1% |

| Same Store Facilities | | (360,241) | | | (355,700) | | 1.3% | | | (355,700) | | | (361,991) | | (1.7)% |

| Non Same Store Facilities | | (123,405) | | | (98,826) | | 24.9% | | | (98,826) | | | (71,323) | | 38.6% |

| Same Store Facilities | | 1,302,994 | | | 1,291,953 | | 0.9% | | | 1,291,953 | | | 1,239,455 | | 4.2% |

| Non Same Store Facilities | | 115,236 | | | 108,321 | | 6.4% | | | 108,321 | | | 115,154 | | (5.9)% |

| Non Same Store Facilities | | 30,867 | | | 26,982 | | 14.4% | | | 26,982 | | | 22,155 | | 21.8% |

| --- | --- | --- | --- |

We review the operations of our Same Store Facilities, which excludes facilities whose operating trends are significantly affected by factors such as casualty events, as well as recently developed or acquired facilities, to more effectively evaluate the ongoing performance of our self-storage portfolio in 2016, 2017, and 2018.

| Rental income | $ | 2,144,330 | | $ | 2,111,164 | | 1.6% | | $ | 2,111,164 | | $ | 2,046,606 | | 3.2% |

| administrative fees | | 98,425 | | | 98,263 | | 0.2% | | | 98,263 | | | 98,266 | | (0.0)% |

| Total revenues (a) | | 2,242,755 | | | 2,209,427 | | 1.5% | | | 2,209,427 | | | 2,144,872 | | 3.0% |

| Property taxes | | 210,637 | | | 200,005 | | 5.3% | | | 200,005 | | | 192,400 | | 4.0% |

| payroll | | 109,713 | | | 108,477 | | 1.1% | | | 108,477 | | | 107,461 | | 0.9% |

| Supervisory payroll | | 35,275 | | | 38,175 | | (7.6)% | | | 38,175 | | | 37,123 | | 2.8% |

| Repairs and maintenance | | 46,200 | | | 46,447 | | (0.5)% | | | 46,447 | | | 44,346 | | 4.7% |

| Utilities | | 41,075 | | | 39,477 | | 4.0% | | | 39,477 | | | 39,769 | | (0.7)% |

| Marketing | | 30,771 | | | 28,679 | | 7.3% | | | 28,679 | | | 26,025 | | 10.2% |

| Other direct property costs | | 59,096 | | | 56,975 | | 3.7% | | | 56,975 | | | 54,822 | | 3.9% |

Our debt is our only market-risk sensitive portion of our capital structure, which totals approximately [removed: $1.4] [added: $1.9] billion and represents [removed: 15.5%] [added: 21.0%] of the book value of our equity at December 31, [removed: 2018.][added: 2019.]

We have foreign currency exposure at December 31, [removed: 2018] [added: 2019] related to (i) our investment in [removed: Shurgard Europe,] [added: Shurgard,] with a book value of [removed: $349.5] [added: $339.9] million and (ii) €342.0 million [removed: ($391.4] [added: ($383.6] million) of Euro-denominated unsecured notes payable.

The fair value of our fixed rate debt at December 31, [removed: 2018] [added: 2019] is approximately [removed: $1.4] [added: $2.0] billion.

The table below summarizes the annual maturities of our fixed rate debt, which had a weighted average effective rate of [removed: 2.6%] [added: 2.9%] at December 31, [removed: 2018.][added: 2019.]

See Note 6 to our December 31, [removed: 2018] [added: 2019] financial statements for further information regarding our fixed rate debt (amounts in thousands).

| | | [removed: 2019 | | | |] 2020 | | | [added: |] 2021 | | | 2022 | | | 2023 | | | [added: 2024 | | |] Thereafter | | | Total |

| Fixed rate debt | | $ | 2,015 | | $ | 1,871 | | $ | 502,584 | | $ | 19,219 | | $ | 112,280 | | $ | 1,272,895 | | $ | 1,910,864 |

| Fixed rate debt | | $ | 1,867 | | $ | 1,958 | | $ | 1,836 | | $ | 502,522 | | $ | 19,161 | | $ | 891,490 | | $ | 1,418,834 |

[removed: Forward] [added: Forward] Looking [removed: Statements][added: Statements]

[removed: | | · | | general] [added: general] risks associated with the ownership and operation of real estate, including changes in demand, risk related to [removed: development] [added: development, acquisition, and expansion] of self-storage facilities, potential liability for environmental contamination, natural disasters and adverse changes in laws and regulations governing property tax, real estate and zoning; [removed: |]

[removed: | | · | | risks] [added: risks] associated with downturns in the national and local economies in the markets in which we operate, including risks related to current economic conditions and the economic health of our customers; [removed: |]

[removed: | | · | | the] [added: the] impact of competition from new and existing self-storage and commercial facilities and other storage alternatives; [removed: |]

[removed: | | · | | difficulties] [added: difficulties] in our ability to successfully evaluate, finance, integrate into our existing operations, and manage [removed: acquired] [added: properties that we acquire directly or through the acquisition of entities that own] and [removed: developed properties; |][added: operate self-storage facilities;]

[removed: | | · | | risks] [added: risks] associated with international operations including, but not limited to, unfavorable foreign currency rate fluctuations, changes in tax laws, and local and global economic uncertainty that could adversely affect our earnings and cash flows; [removed: |]

[removed: | | · | | risks] [added: risks] related to our participation in joint ventures; [removed: |]

[removed: | | · | | the] [added: the] impact of the [added: legal and] regulatory [removed: environment as well as national, state] [added: environment, including changes in federal, state,] and local laws and regulations [removed: including, without limitation, those] governing [removed: environmental,] [added: environmental issues,] taxes, our tenant reinsurance [removed: business and labor, and risks related to the impact] [added: business, pricing] of [removed: new laws] [added: our self-storage space,] and [removed: regulations; |][added: labor;]

[removed: | | · | | risks] [added: risks] of increased tax expense associated either with a possible failure by us to qualify as a real estate investment trust (“REIT”), or with challenges to the determination of taxable income for our taxable REIT subsidiaries; [removed: |]

[removed: | | · | | risks] [added: risks] due to a potential November 2020 [removed: statewide] [added: California] ballot initiative (or other equivalent actions) that could remove the [added: property tax] protections of Proposition 13 with respect to our [added: California] real estate and result in substantial increases in our [removed: assessed values and] [added: California] property tax [removed: bills in California; |][added: expense;]

[removed: | | · | | changes] [added: changes] in United States (“U.S.”) federal or state tax laws related to the taxation of REITs and other corporations; [removed: |]

[removed: | | · | | security] [added: security] breaches or a failure of our networks, systems or technology could adversely impact our [added: operations or our] business, [removed: customer] [added: customer,] and employee [removed: relationships; |][added: relationships or result in fraudulent payments;]

[removed: | | · | | risks] [added: risks] associated with the self-insurance of certain business risks, including property and casualty insurance, employee health insurance and workers compensation liabilities; [removed: |]

[removed: | | · | | difficulties] [added: difficulties] in raising capital at a reasonable cost; [removed: |]

[removed: | | · | | delays] [added: delays] and cost overruns on our [removed: development projects; |][added: projects to develop or expand our facilities;]

[removed: | | · | | ongoing] [added: ongoing] litigation and other legal and regulatory actions [removed: which] [added: that] may divert management’s time and attention, require us to pay damages and expenses or restrict the operation of our business; and [removed: |]

[removed: | | · | | economic] [added: economic] uncertainty due to the impact of war or terrorism. [removed: |]

[removed: General][added: General]

At December 31, [removed: 2018,] [added: 2019,] our principal business activities were as follows:

[removed: | | (i) | | Self-storage Operations:] We [removed: acquire, develop, own and operate self-storage facilities, which offer storage spaces for lease on a month-to-month basis, for personal and business use. We] are the largest owner and operator of self-storage facilities in the U.S. [removed: We] [added: At December 31, 2019, we] have direct and indirect equity interests in [removed: 2,429] [added: 2,483] self-storage facilities that we consolidate (an aggregate of [removed: 162] [added: 169] million net rentable square feet of space) located in 38 states within the U.S. operating under the “Public Storage” brand name. [removed: |]

[removed: | | (ii) | | Ancillary] [added: (ii)Ancillary] Operations: We reinsure policies against losses to goods stored by customers in our self-storage facilities and sell merchandise, primarily locks and cardboard boxes, at our self-storage facilities. [removed: |]

[removed: | | (iii) | | Investment] [added: (iii)Investment] in PS Business Parks: We have a 42% equity interest in PS Business Parks, Inc. (“PSB”), a publicly held REIT that owns, operates, acquires and develops commercial properties, primarily multi-tenant flex, office, and industrial parks. [removed: At December 31, 2018, PSB owns and operates 28.2 million rentable square feet of commercial space. |]

[removed: | | (iv) | | Investment] [added: (iv)Investment] in [removed: Shurgard Europe:] [added: Shurgard:] We have a 35% equity interest in Shurgard Self Storage SA [removed: (“Shurgard Europe”),] [added: (“Shurgard”),] a [removed: publicly held] [added: public] company [removed: trading under] [added: traded on] Euronext Brussels under the “SHUR” symbol, which owns [removed: 232] [added: 234] self-storage facilities (13 million net rentable square feet) located in seven countries in Western Europe operated under the “Shurgard” brand name. [removed: We believe Shurgard Europe is the largest owner and operator of self-storage facilities in Western Europe. |]

We also manage [removed: 33] [added: 55] self-storage facilities for third [removed: parties.][added: parties as of December 31, 2019.]

We also own [removed: 0.8] [added: 0.9] million net rentable square feet of commercial space which is managed primarily by PSB.

[removed: Competition][added: Competition]

In the last three years, there has been a marked increase in development of new self-storage facilities in many of the markets [added: where] we [removed: operate in,] [added: operate,] due to the favorable economics of [removed: development which we have also taken advantage of.][added: developing new properties.]

This increase in supply has been most notable in Atlanta, Austin, Charlotte, Chicago, Dallas, Denver, Houston, [added: Miami,] New York, and Portland.

As the largest owner of self-storage facilities, we believe that we own approximately 7% of the self-storage square footage in the U.S. and that collectively the five largest self-storage owners in the U.S. own approximately [removed: 15%,] [added: 16%,] with the remaining [removed: 85%] [added: 84%] owned by [removed: numerous] regional and local operators.

We believe that we have significant market share and concentration in major metropolitan centers, with approximately [removed: 71%] [added: 70%] of our [removed: 2018] [added: 2019] same-store revenues generated in the 20 Metropolitan Statistical Areas (each, an “MSA”, as defined by the U.S. Census Bureau) with the highest population levels.

[removed: Industry] [added: While this] fragmentation [removed: also provides opportunities for] [added: offers] us [added: opportunities] to acquire additional [removed: facilities; however,] [added: facilities over time, and our scale allows us to extract more cash flow from the properties] we [added: acquire, we] compete [added: for facilities that are marketed for sale] with a wide variety of institutions and other investors who also view self-storage facilities as attractive investments.

[removed: Business Attributes][added: Business Attributes]

[removed: Centralized] [added: Centralized] information [removed: networks:] [added: networks:] Our centralized reporting and information network enables us to identify changing market conditions and operating trends as well as analyze customer data [removed: and] [added: and, on an automated basis,] quickly change each of our individual properties’ pricing and [removed: promotions] [added: promotions, as well as to drive marketing spending such as the relative level of bidding for various paid search terms] on [removed: an automated basis.][added: paid search engines.]

[removed: Convenient] [added: Convenient] shopping [removed: experience:] [added: experience:] Customers can conveniently shop for available storage space, reviewing attributes such as facility location, size, amenities such as climate-control, as well as pricing, through the following marketing channels:

[removed: | | · | | Our Desktop and Mobile Websites: The online marketing channel is a key source of customers.] Approximately [removed: 73%] [added: 75%] of our move-ins in [removed: 2018] [added: 2019] were sourced through our [removed: websites] [added: website] and we believe that many of our other customers who reserved directly through our call center or arrived at a facility and moved in without a reservation, have reviewed our pricing and availability online through our websites. [removed: We invest extensively in advertising on the Internet to attract potential customers, primarily through the use of search engines, and we regularly update our websites to enhance their productivity. |]

[removed: | | · | | Our Call Center: Our call center is staffed by skilled sales specialists. Customers primarily reach our call center by calling our advertised toll-free telephone numbers provided on search engines or our website.] We believe giving customers the option to interact with a call center agent, despite the higher marginal cost relative to a reservation made on our website, enhances our ability to close sales with potential customers. [removed: |]

[removed: | | · | | Our Properties: Customers can also shop at any one of our facilities.] Property managers access the same information that is available on our website and to our call center agents, and can inform [removed: the customer of available space at that site or our other nearby storage facilities. Property managers are trained to maximize the conversion of such “walk in” shoppers into customers. |]

[removed: Managerial] [added: Managerial] economies of [removed: scale:] [added: scale:] The size and scope of our operations have enabled us to achieve high operating margins and a low level of administrative costs relative to revenues through the centralization of many functions, such as facility maintenance, employee compensation and benefits programs, revenue management, as well as the development and documentation of standardized operating procedures.

[removed: Marketing] [added: Marketing] economies of [removed: scale:] [added: scale:] Our major-market concentration relative to the fragmented ownership and operation of the rest of the industry, combined with our well-recognized brand name, improves our prominence in unpaid online search results for self-storage and reduces our average cost per “click” for multiple-keyword advertising.

[removed: Brand] [added: Brand] name [removed: recognition:] [added: recognition:] We believe that the “Public Storage” brand name is the most recognized and established name in the self-storage industry, due to our national reach in major markets in 38 states, our highly visible facilities, and our facilities’ distinct orange colored doors and signage.

the risk that our existing self-storage facilities may be at a disadvantage in competing with newly developed facilities with more visual and customer appeal;

increased reliance on Google as a customer acquisition channel;

(i)Self-storage Operations: We acquire, develop, own and operate self-storage facilities, which offer storage spaces for lease on a month-to-month basis, for personal and business use.

At December 31, 2019, PSB owns and operates 27.6 million rentable square feet of commercial space.

We believe Shurgard is the largest owner and operator of self-storage facilities in Western Europe.

In order to further increase our economies of scale and leverage our brand, in 2018 we began an effort to expand the number of facilities we manage, through a dedicated internal sales, administration, and implementation team.

During the year ended December 31, 2019, we added 22 facilities to our third party management platform.

At December 31, 2019, we are under contract to manage 27 additional facilities, currently under construction, following their completion.

It is uncertain how many third party managed facilities we will add to our platform over time.

The high level of ownership fragmentation in the industry is partially attributable to the relative simplicity of managing a local self-storage facility, such that small-scale owners can operate self-storage facilities at a basic level of profitability without significant managerial or operational infrastructure.

However, we believe that the economies of scale inherent in this business result in our being able to operate self-storage facilities at a materially higher level

of cash flow per square foot than other operators without our scale.

See “Business Attributes” below for further discussion of these economies of scale.

Recently, larger national operators (including ourselves) are offering to manage facilities owned by third parties on their platform for a fee (“Third Party Management”), and Google is offering a more convenient platform for small operators to compete with larger operators in paid search bidding campaigns to drive web traffic and increase reservations.

These two developments have the potential to diminish the competitive advantage we have versus smaller owner/operators.

The extent to which this trend becomes impactful is dependent on (i) how many smaller operators will choose to avail themselves of Third Party Management, (ii) the extent to which large national operators seek to increase the number of properties under Third Party Management and (iii) the extent to which smaller operators are attracted to Google’s marketing platform and are able to improve the efficacy of their marketing.

Our Desktop and Mobile Websites: The online marketing channel is a key source of customers.

We seek to regularly update the structure, layout, and content of our website in order to enhance our placement in “unpaid” search in Google and related websites, to improve the efficiency of our bids in “paid” search campaigns, and to maximize users’ likelihood of reserving space on our website.

Our Call Center: Our call center is staffed by skilled sales specialists.

Customers reach our call center by calling our advertised toll-free telephone numbers provided on search engines or our website.

Our Properties: Customers can also shop at any one of our facilities.

the customer of available space at that site or our other nearby storage facilities.

Property managers are trained to maximize the conversion of such “walk in” shoppers into customers.

Such concentration and the resulting volume enables us to efficiently leverage systematic bidding strategies to maximize our return on investment across multiple keywords.

From time to time we explore expansion of our activities to other countries.

Any such strategic expansion would most likely involve acquiring an interest in an existing operator’s platform.

There can be no assurance that any such expansion will occur in the future or the timing thereof.

Improve the operating performance of existing facilities: We seek to increase the net cash flow of our existing self-storage facilities through maximizing revenues and controlling operating costs.

We inform these pricing and marketing decisions by observing their impact on web and call center traffic, reservations, move-ins, move-outs, tenant length of stay, and other indicators of response.

We also seek to control operating costs and provide a favorable experience to new, existing, and potential customers by leveraging information technology and our economies of scale, effectively overseeing our customer-facing and back-office property management personnel, and by providing convenient shopping options for the customer.

our current geographic footprint, as well as our return on capital expectations.

From January 1, 2014 through December 31, 2019, Shurgard acquired 39 facilities from third parties for approximately $398.1 million, and has opened 10 development properties at a total cost of approximately $122.9 million.

At December 31, 2019, Shurgard had contracts to acquire six properties and had six properties under development.

Financial Profile and Sources of Growth Capital

Capital Constraints as a REIT*:* While being a REIT allows us to minimize the payment of federal and state income tax expense, we are required to distribute 100% of our taxable income to our shareholders.

This requirements limits cash flow from operations that can be retained and reinvested in the business, increasing our reliance upon raising capital to fund growth.

& Poor’s.

Capital needs in excess of retained cash flow are met with: (i) preferred equity, (ii) medium and long-term debt, and (iii) common equity.

Preferred equity: Preferred equity is an important source of long-term capital.

While preferred equity’s coupon rates generally exceed interest rates on long-term debt, we believe the issuance of preferred equity is a favorable source of capital when available because it does not require repayment and, at our option, we can redeem the security after five years if, for example, market coupon rates have declined and we can reissue new securities at a lower rate.

| --- | --- | --- | --- |

We are seeking to expand our third-party management operations to further increase our economies of scale and leverage our brand; however, there is no

assurance that we will be able to do so.

The large number of facilities we have in major metropolitan centers enables us to efficiently use television advertising from time to time.

Our competitors generally do not use television advertising because they lack the scale in major metropolitan centers.

investment in Shurgard Europe.

We believe that our property management personnel, information technology, our convenient shopping options for the customer, our economies of scale, and our Internet marketing and advertising programs will continue to enhance our ability to meet these goals.

From 2014 through 2018, Shurgard Europe acquired 36 facilities with an approximate 1.8 million net rentable square feet in Germany, the Netherlands, the United Kingdom, Sweden and France for an aggregate purchase price of approximately $380.5 million.

In addition, from 2014 through 2018, Shurgard Europe opened eight development properties in the United Kingdom, Germany and Sweden containing 636,000 net rentable square feet at a cost of $100.7 million.

Financing of the Company’s Growth Strategies

Overview of financing strategy and sources of capital: As a REIT, we generally distribute 100% of our taxable income to our shareholders which, relative to a taxable C corporation, limits the amount of cash flow from operations that we can retain for investments.

As a result, in order to grow our asset base, access to capital is important.

Sources of capital available to us include retained operating cash flow, the issuance of preferred and common securities, the issuance of medium and long-term debt, joint venture financing and the sale of properties.

Historically, we have financed our cash investment activities primarily with retained operating cash flow and the issuance of preferred securities.

While we have issued common shares, such issuances have been minimal, because preferred securities have had a more attractive cost of capital.

In 2015 and 2016, we issued Euro-denominated medium-term debt primarily as a hedge to our Euro-denominated investment in Shurgard Europe.

On September 18, 2017, we completed a public offering of $1.0 billion in aggregate principal amount of unsecured notes in two equal tranches (collectively, the “U.S. Dollar Notes”), one maturing in September 2022 bearing interest at 2.370%, and another maturing in September 2027 bearing interest at 3.094%.

Preferred equity: As noted above, we view preferred equity as an important source of capital over the long term.

However, rates and market conditions for the issuance of preferred securities can be volatile or inefficient from time to time, particularly so in the last few years.

Since 2013, we have issued preferred securities at fixed rates ranging from 4.900% to 6.375%.

Most recently, in August 2017, we issued $300 million of preferred securities at a fixed rate of 5.050%.

rates, as well as demand specifically from retail investors.

Institutional investors are generally not buyers of our preferred securities.

At December 31, 2018, we have approximately $4.0 billion in preferred securities outstanding.

On February 22, 2019, we called for redemption on March 28, 2019 our 6.375% Series Y Preferred Shares, at par ($285 million).

Our preferred securities outstanding at December 31, 2018, excluding the Series Y Preferred Shares that were called for redemption had an average coupon rate of 5.3% and an average market yield of 5.9%.

Our 6.000% Series Z Preferred Shares ($288 million) become callable on June 4, 2019.

None of our preferred securities is redeemable at the option of the holders.

Medium or long-term debt: We have broad powers to issue debt to fund our business.

Our corporate credit ratings are “A” by Standard & Poor’s and “A2” by Moody’s.

We believe these high ratings, combined with our current minimal level of debt, could allow us to issue additional unsecured debt at lower interest rates than the coupon rates on preferred securities.

At December 31, 2018, we have $1.0 billion of U.S. Dollar Notes and approximately €342 million of Euro-denominated senior unsecured notes (the “Euro Notes”) outstanding, which were issued to institutional investors in 2015 and 2016.

Unlikely capital alternatives: We have issued both our common and preferred securities in exchange for real estate and other investments in the past.

We do not expect such issuances to be a material source of capital in the future, though there can be no assurance.

We do not presently expect joint venture financing to be a material source of capital in the future because we have other sources of capital that are currently less expensive and because of potential constraints resulting from joint management and ownership.

PSB and Shurgard Europe, have debt and other obligations that we do not consolidate in our financial statements.

Such debt or other obligations have no recourse to us.

Canadian self-storage facilities owned by Former Chairman and Members of Board of Trustees

At December 31, 2018, B.

We are subject to contingent losses as a result of being a party to various claims, complaints, and legal proceedings.

However, we believe that there is a remote likelihood that the resolution of these contingencies will result in a material loss or have a material adverse affect on our financial condition, results of operations or liquidity.

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.

[removed: UNITED] [added: UNITED] STATES SECURITIES AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: WASHINGTON,] [added: WASHINGTON,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10‑K][added: FORM 10-K]

[removed: \[X\] Annual] [added: \[X\] Annual] Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of [removed: 1934][added: 1934]

[removed: For] [added: For] the fiscal year [removed: ended December 31, 2018.][added: ended December 31, 2019.]

[removed: \[ \] Transition] [added: \[ \] Transition] Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of [removed: 1934][added: 1934]

[removed: For] [added: For] the transition period [removed: from to .][added: from to .]

[removed: Commission] [added: Commission] File [removed: Number: 001‑33519][added: Number: 001-33519]

[removed: PUBLIC STORAGE][added: PUBLIC STORAGE]

[removed: (Exact] [added: (*Exact] name of Registrant as specified in its [removed: charter)][added: charter)*]

| [removed: Maryland] [added: Maryland] | [removed: 95‑3551121] [added: 95-3551121] |

| [removed: (State] [added: (*State] or other jurisdiction of incorporation or [removed: organization)] [added: organization*)] | [removed: (I.R.S.] [added: (*I.R.S.] Employer Identification [removed: Number)] [added: Number*)] |

| [removed: 701] [added: ‎701] Western [removed: Avenue, Glendale, California 91201-2349 (Address] [added: Avenue, Glendale, California 91201-2349 (*Address] of principal executive [removed: offices) (Zip Code)] [added: offices*) (*Zip Code*)] | |

(818) [removed: 244‑8080][added: 244-8080]

[removed: (Registrant's] [added: (*Registrant's] telephone number, including area [removed: code)][added: code)*]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| Depositary Shares Each Representing 1/1,000 of a 5.200% [removed: Cumulative Preferred] [added: Cum Pref] Share, Series [removed: W $.01] [added: W, $0.01] par value | [added: | PSAPrW | |] New York Stock Exchange |

| [removed: Title] [added: Title] of [removed: each class] [added: Class] | [removed: Name] [added: | Trading Symbol | | Name] of [removed: each] exchange on which [removed: registered] [added: registered] |

| Depositary Shares Each Representing 1/1,000 of a [removed: 5.625% Cumulative Preferred] [added: 5.375% Cum Pref] Share, Series [removed: U $.01] [added: V, $0.01] par value | [added: | PSAPrV | |] New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 5.375% Cumulative Preferred] [added: 5.200% Cum Pref] Share, Series [removed: V $.01] [added: X, $0.01] par value | [added: | PSAPrX | |] New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 5.200% Cumulative Preferred] [added: 5.400% Cum Pref] Share, Series [removed: X $.01] [added: B, $0.01] par value | [added: | PSAPrB | |] New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 6.375% Cumulative Preferred] [added: 5.125% Cum Pref] Share, Series [removed: Y $.01] [added: C, $0.01] par value | [added: | PSAPrC | |] New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 6.000% Cumulative Preferred] [added: 4.950% Cum Pref] Share, Series [removed: Z $.01] [added: D, $0.01] par value | [added: | PSAPrD | |] New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 5.875% Cumulative Preferred] [added: 4.900% Cum Pref] Share, Series [removed: A $.01] [added: E, $0.01] par value | [added: | PSAPrE | |] New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 5.400% Cumulative Preferred] [added: 5.150% Cum Pref] Share, Series [removed: B $.01] [added: F, $0.01] par value | [added: | PSAPrF | |] New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 5.125% Cumulative Preferred] [added: 5.050% Cum Pref] Share, Series [removed: C $.01] [added: G, $0.01] par value | [added: | PSAPrG | |] New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 4.950% Cumulative Preferred] [added: 5.600% Cum Pref] Share, Series [removed: D $.01] [added: H, $0.01] par value | [added: | PSAPrH | |] New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 4.900% Cumulative Preferred] [added: 4.875% Cum Pref] Share, Series [removed: E $.01] [added: I, $0.01] par value | [added: | PSAPrI | |] New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 5.150% Cumulative Preferred] [added: 4.700% Cum Pref] Share, Series [removed: F $.01] [added: J, $0.01] par value | [added: | PSAPrJ | |] New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 5.050% Cumulative Preferred] [added: 4.750% Cum Pref] Share, Series [removed: G $.01] [added: K, $0.01] par value | [added: | PSAPrK | |] New York Stock Exchange |

| Common Shares, [removed: $.10] [added: $0.10] par value | [added: | PSA | |] New York Stock Exchange |

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the [removed: Act: None (Title] [added: Act: None *(Title] of [removed: class)][added: class)*]

The aggregate market value of the voting and non-voting common shares held by non-affiliates of the Registrant as of June 30, [removed: 2018:][added: 2019:]

Common Shares, $0.10 Par Value Per Share – [removed: $33,830,475,000] [added: $35,489,494,000] (computed on the basis of [removed: $226.86] [added: $238.17] per share, which was the reported closing sale price of the Company's Common Shares on the New York Stock Exchange (the “NYSE”) on June 30, [removed: 2018).][added: 2019).]

As of February [removed: 25, 2019,] [added: 21, 2020,] there were [removed: 174,498,758] [added: 174,758,632] outstanding Common Shares, $.10 par value per share.

[removed: DOCUMENTS] [added: ‎DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the definitive proxy statement to be filed in connection with the Annual Meeting of Shareholders to be held in [removed: 2019] [added: 2020] are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent described therein.

[removed: PART I][added: PART I]

| | | | | |

| --- | --- | --- | --- | --- |

| 0.875% Senior Notes due 2032 | | PSA32 | | New York Stock Exchange |

| | | | | |

| --- | --- | --- | --- | --- |

10-K 1 psa-20181231x10k.htm 10-K

| --- | --- |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

\[ \]

‎

At December 31, [removed: 2018,] [added: 2019,] we had controlling ownership interests in [removed: 2,429] [added: 2,483] self-storage facilities located in 38 states within the [removed: U.S., and we have a 35.2% interest in Shurgard Europe which owns 232 storage facilities located in seven Western European nations:][added: U.S.:]

| Southern | 250 | | [removed: 18,274] [added: 18,356] |

| Northern | 179 | | [removed: 11,240] [added: 11,271] |

| North Carolina | [removed: 90] [added: 93] | | [removed: 6,369] [added: 6,824] |

| New York | 67 | | [removed: 4,672] [added: 4,650] |

| South Carolina | [removed: 60] [added: 63] | | [removed: 3,385] [added: 3,654] |

[removed: | | (a) | | See] [added: (a)See] Schedule III: Real Estate and Accumulated Depreciation in the Company’s [removed: 2018] [added: 2019] financials, for a summary of land, building, accumulated depreciation, square footage, and number of properties by [removed: market for our properties located in the U.S. |][added: market.]

For the year ended December 31, [removed: 2018,] [added: 2019,] the weighted average occupancy level and the average realized rent per occupied square foot for our self-storage facilities were approximately [removed: 91.3% and $17.01, respectively, in the U.S. and 87.0%] [added: 90.9%] and [removed: $22.47, respectively, in Europe.][added: $17.02, respectively.]

At December 31, [removed: 2018, 30] [added: 2019, 27] of our [removed: U.S.] facilities with a net book value of [removed: $111] [added: $106] million were encumbered by an aggregate of $27 million in mortgage notes payable.

However, [removed: none of our facilities] [added: no individual facility] involves, or is expected to involve, 1% or more of our total assets, gross revenues or net income.

[removed: Description] [added: Description] of Self-Storage [removed: Facilities:] [added: Facilities:] Self-storage facilities, which comprise the majority of our investments, offer accessible storage space for personal and business use at a relatively low cost.

All of our self-storage facilities [removed: in the U.S.] are operated under the "Public Storage" brand [removed: name, while our facilities in Europe are operated under the “Shurgard” brand] name.

[removed: Description] [added: Description] of Commercial [removed: Properties:] [added: Properties:] We have an interest in PSB, which, as of December 31, [removed: 2018,] [added: 2019,] owns and operates approximately [removed: 28.2] [added: 27.6] million rentable square feet of commercial space in six states.

At December 31, [removed: 2018,] [added: 2019,] the [removed: $434.5] [added: $427.9] million book value and [removed: $1.9] [added: $2.4] billion market value, respectively, of our investment in PSB represents approximately 4% and [removed: 17%,] [added: 21%,] respectively, of our total book value assets.

We also directly own [removed: 0.8] [added: 0.9] million net rentable square feet of commercial space managed primarily by PSB.

[removed: Environmental Matters:] [added: Environmental Matters:] We accrue environmental assessments and estimated remediation cost when it is probable that such efforts will be required and the related costs can be reasonably estimated.

| | At December 31, 2019 | | |

| Texas | 311 | | 23,761 |

| Florida | 295 | | 20,312 |

| Georgia | 113 | | 7,625 |

| Washington | 100 | | 6,960 |

| Virginia | 104 | | 6,455 |

| Colorado | 75 | | 5,532 |

| Minnesota | 57 | | 4,249 |

| Arizona | 47 | | 3,103 |

| Michigan | 45 | | 3,094 |

| Indiana | 39 | | 2,451 |

| Tennessee | 35 | | 2,228 |

| Pennsylvania | 28 | | 1,957 |

| Massachusetts | 27 | | 1,875 |

| Other states (12 states) | 113 | | 6,881 |

| Total (a) | 2,483 | | 168,908 |

The configuration of self-storage facilities has evolved over time.

The oldest facilities are comprised generally of multiple single-story buildings, and have on average approximately 500 primarily “drive up” spaces per facility, and a small rental office.

The most prevalent recently constructed facilities have higher density footprints with large, multi-story buildings with climate control and generally up to 1,000 self-storage spaces, a more imposing and visible retail presence, and a prominent and large rental office designed to appeal to customers as an attractive and retail-focused “store.” Our self-storage portfolio includes facilities with characteristics of the oldest facilities, characteristics of the most recently constructed facilities, and those with characteristics of both older and recently constructed facilities.

| | | | |

| --- | --- | --- | --- |

| | At December 31, 2018 | | |

| U.S.: | | | |

| Texas | 304 | | 21,987 |

| Florida | 287 | | 19,617 |

| Georgia | 110 | | 7,246 |

| Washington | 96 | | 6,589 |

| Virginia | 92 | | 5,674 |

| Colorado | 73 | | 5,001 |

| Minnesota | 54 | | 3,690 |

| Arizona | 45 | | 2,975 |

| Michigan | 44 | | 2,939 |

| Indiana | 36 | | 2,249 |

| Pennsylvania | 29 | | 1,993 |

| Tennessee | 34 | | 1,955 |

| Massachusetts | 25 | | 1,691 |

| Other states (12 states) | 112 | | 6,831 |

| Total - U.S. (a) | 2,429 | | 162,047 |

| Shurgard Europe: | | | |

| Netherlands | 61 | | 3,127 |

| France | 56 | | 2,935 |

| Sweden | 36 | | 1,967 |

| United Kingdom | 31 | | 1,771 |

| Belgium | 21 | | 1,265 |

| Germany | 17 | | 969 |

| Denmark | 10 | | 572 |

| Total - Shurgard Europe | 232 | | 12,606 |

| Grand Total | 2,661 | | 174,653 |

Our self-storage facilities generally consist of between 350 to 750 storage spaces.

[removed: PART II][added: PART II]

‎

As of February [removed: 25, 2019,] [added: 21, 2020,] there were approximately [removed: 12,193] [added: 11,573] holders of record of our Common Shares.

From the inception of the repurchase program through February [removed: 27, 2019,] [added: 25, 2020,] we have repurchased a total of 23,721,916 common shares (all purchased prior to 2010) at an aggregate cost of approximately $679.1 million.

Our common share repurchase program does not have an expiration date and there are 11,278,084 common shares that may yet be repurchased under our repurchase program as of December 31, [removed: 2018.][added: 2019.]

‎

| | [added: 2019 | | |] 2018 | | | 2017 | | | 2016 | | | 2015 | | [removed: | 2014 | |]

| Revenues | $ | [removed: 2,754,280] [added: 2,846,823] | | $ | [removed: 2,668,528] [added: 2,754,280] | | $ | [removed: 2,560,549] [added: 2,668,528] | | $ | [removed: 2,381,696] [added: 2,560,549] | | $ | [removed: 2,177,296] [added: 2,381,696] |

| Cost of operations | | [added: 796,783 | | |] 739,722 | | | 707,978 | | | 669,083 | | | 635,502 | [removed: | | 613,324 |]

| Depreciation and amortization | | [added: 512,918 | | |] 483,646 | | | 454,526 | | | 433,314 | | | 426,008 | [removed: | | 437,114 |]

| General and administrative | | [added: 71,983 | | |] 118,720 | | | 82,882 | | | 83,656 | | | 88,177 | [removed: | | 71,459 |]

| Interest expense | | [added: 45,641 | | |] 32,542 | | | 12,690 | | | 4,210 | | | 610 | [removed: | | 6,781 |]

| | | [added: 1,427,325 | | |] 1,374,630 | | | 1,258,076 | | | 1,190,263 | | | 1,150,297 | [removed: | | 1,128,678 |]

| Interest and other income | | [added: 28,436 | | |] 26,442 | | | 18,771 | | | 15,138 | | | 16,544 | [removed: | | 17,638 |]

| estate entities | | [added: 69,547 | | |] 103,495 | | | 75,655 | | | 56,756 | | | 50,937 | [removed: | | 88,267 |]

| Foreign currency exchange gain (loss) | | [added: 7,829 | | |] 18,117 | | | (50,045) | | | 17,570 | | | 306 | [removed: | | (7,047) |]

| Casualty loss | | \- | | | [removed: (7,789)] [added: \-] | | | [removed: \-] [added: (7,789)] | | | \- | | | \- |

| Gain on sale of real estate | | [added: 341 | | |] 37,903 | | | 1,421 | | | 689 | | | 18,503 | [removed: | | 2,479 |]

| Gain due to Shurgard [removed: Europe] public offering | | [removed: 151,616] [added: \-] | | | [removed: \-] [added: 151,616] | | | \- | | | \- | | | \- |

| Net income | | [added: 1,525,651 | | |] 1,717,223 | | | 1,448,465 | | | 1,460,439 | | | 1,317,689 | [removed: | | 1,149,955 |]

| equity interests | | [added: (5,117) | | |] (6,192) | | | (6,248) | | | (6,863) | | | (6,445) | [removed: | | (5,751) |]

| shareholders | $ | [removed: 1,711,031] [added: 1,520,534] | | $ | [removed: 1,442,217] [added: 1,711,031] | | $ | [removed: 1,453,576] [added: 1,442,217] | | $ | [removed: 1,311,244] [added: 1,453,576] | | $ | [removed: 1,144,204] [added: 1,311,244] |

| [removed: Per] [added: Per] Common [removed: Share:] [added: Share:] | | | | | | | | | | | | | | |

| Weighted average common [removed: shares –] [added: shares:] | | | | | | | | | | | | | | |

| Basic | | [added: 174,287 | | |] 173,969 | | | 173,613 | | | 173,091 | | | 172,699 | [removed: | | 172,251 |]

| Diluted | | [added: 174,530 | | |] 174,297 | | | 174,151 | | | 173,878 | | | 173,510 | [removed: | | 173,138 |]

| [removed: Balance] [added: Balance] Sheet [removed: Data:] [added: Data:] | | | | | | | | | | | | | | |

| Total assets | $ | [removed: 10,928,270] [added: 11,365,444] | | $ | [removed: 10,732,892] [added: 10,928,270] | | $ | [removed: 10,130,338] [added: 10,732,892] | | $ | [removed: 9,778,232] [added: 10,130,338] | | $ | [removed: 9,818,676] [added: 9,778,232] |

| Total debt | $ | [removed: 1,412,283] [added: 1,902,493] | | $ | [removed: 1,431,322] [added: 1,412,283] | | $ | [removed: 390,749] [added: 1,431,322] | | $ | [removed: 319,016] [added: 390,749] | | $ | [removed: 64,364] [added: 319,016] |

| Total preferred equity | $ | [removed: 4,025,000] [added: 4,065,000] | | $ | 4,025,000 | | $ | [removed: 4,367,500] [added: 4,025,000] | | $ | [removed: 4,055,000] [added: 4,367,500] | | $ | [removed: 4,325,000] [added: 4,055,000] |

| Public Storage shareholders’ equity | $ | [removed: 9,119,478] [added: 9,062,911] | | $ | [removed: 8,940,009] [added: 9,119,478] | | $ | [removed: 9,411,910] [added: 8,940,009] | | $ | [removed: 9,170,641] [added: 9,411,910] | | $ | [removed: 9,480,796] [added: 9,170,641] |

| equity | $ | [removed: 25,250] [added: 16,756] | | $ | [removed: 24,360] [added: 25,250] | | $ | [removed: 29,744] [added: 24,360] | | $ | [removed: 26,997] [added: 29,744] | | $ | [removed: 26,375] [added: 26,997] |

| [removed: Net] [added: Net] cash [removed: flow:] [added: flow:] | | | | | | | | | | | | | | |

| Used in financing activities | $ | [removed: (1,619,588)] [added: (1,120,735)] | | $ | [removed: (992,219)] [added: (1,619,588)] | | $ | [removed: (1,148,826)] [added: (992,219)] | | $ | [removed: (1,391,283)] [added: (1,148,826)] | | $ | [removed: (1,236,864)] [added: (1,391,283)] |

| Distributions | $ | 8.00 | | $ | 8.00 | | $ | 8.00 | | $ | 7.30 | | $ | 6.50 |

| Net income – Basic | $ | 7.30 | | $ | 8.56 | | $ | 6.75 | | $ | 6.84 | | $ | 6.10 |

| Net income – Diluted | $ | 7.29 | | $ | 8.54 | | $ | 6.73 | | $ | 6.81 | | $ | 6.07 |

| Provided by operating activities | $ | 2,067,643 | | $ | 2,063,637 | | $ | 1,972,889 | | $ | 1,945,248 | | $ | 1,748,126 |

| Used in investing activities | $ | (897,360) | | $ | (515,912) | | $ | (737,064) | | $ | (699,023) | | $ | (455,982) |

| Distributions | | $8.00 | | | $8.00 | | | $7.30 | | | $6.50 | | | $5.60 |

| Net income – Basic | | $8.56 | | | $6.75 | | | $6.84 | | | $6.10 | | | $5.27 |

| Net income – Diluted | | $8.54 | | | $6.73 | | | $6.81 | | | $6.07 | | | $5.25 |

| Provided by operating activities | $ | 2,061,503 | | $ | 1,975,679 | | $ | 1,945,336 | | $ | 1,748,279 | | $ | 1,603,542 |

| Used in investing activities | $ | (513,778) | | $ | (739,854) | | $ | (699,111) | | $ | (456,135) | | $ | (194,331) |

[removed: Conclusion] [added: Conclusion] Regarding the Effectiveness of Disclosure Controls and [removed: Procedures][added: Procedures]

As of December 31, [removed: 2018,] [added: 2019,] we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act).

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, [removed: 2018,] [added: 2019,] at a reasonable assurance level.

[removed: Management’s] [added: Management’s] Report on Internal Control Over Financial [removed: Reporting][added: Reporting]

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in [removed: Internal] [added: *Internal] Control-Integrated [removed: Framework] [added: Framework*] issued by the Committee on Sponsoring Organizations of the Treadway Commission (2013 Framework).

Based on our evaluation under the framework in [removed: Internal] [added: *Internal] Control-Integrated [removed: Framework,] [added: Framework*,] our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2018.][added: 2019.]

The effectiveness of internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] has been audited by Ernst & Young LLP, an independent registered public accounting firm.

[removed: Changes] [added: Changes] in Internal Control Over Financial [removed: Reporting][added: Reporting]

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of [removed: 2018] [added: 2019] to which this report relates that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

[added: |] Report of Independent Registered Public Accounting Firm [added: |]

[added: |] To the Shareholders and Board of Trustees of Public Storage [added: |]

[removed: Opinion] [added: | Opinion] on Internal Control over Financial [removed: Reporting][added: Reporting |]

[added: |] We have audited Public [removed: Storage (the Company)’s] [added: Storage’s] internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). [added: In our opinion, Public Storage (the Company) maintained, in all material aspects, effective internal control over financial reporting as of December 31, 2019, based on the COSO criteria. |]

[added: |] We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, [removed: 2018 and 2017,] [added: 2019] and [added: 2018,] the related consolidated statements of income, comprehensive income, equity and cash [removed: flows,] [added: flows] for each of the three years in the period ended December 31, [removed: 2018] [added: 2019] and the related notes and financial statement schedule listed in the Index at Item 15(a) [removed: of the Company] and our report dated February [removed: 27, 2019] [added: 25, 2020] expressed an unqualified opinion thereon. [added: |]

[removed: Basis] [added: | Basis] for [removed: Opinion][added: Opinion |]

[removed: Definition] [added: Definition] and Limitations of Internal Control Over Financial [removed: Reporting][added: Reporting]

‎

| |

| --- |

| |

| --- |

| The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. 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 Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. |

February 25, 2020

‎

In our opinion, the Company maintained, in all material aspects, effective internal control over financial reporting as of December 31, 2018, based on the COSO criteria.

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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 audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

February 27, 2019

[removed: PART III][added: PART III]

‎

[removed: Joseph] [added: Joseph] D.

Russell, [removed: Jr.,] [added: Jr.,] age [removed: 59,] [added: 60,] has served as Chief Executive Officer since January 1, 2019, and as President since July 2016.

Thomas [removed: Boyle,] [added: Boyle,] age [removed: 36,] [added: 37,] has served as Chief Financial Officer since January 1, 2019, and was [added: previously] Vice President and Chief Financial Officer, Operations [removed: of the company] since joining the Company in November 2016.

Prior to joining [removed: the company,] [added: Public Storage,] Mr. Boyle served in roles of increasing responsibilities with Morgan Stanley since 2005, from analyst to his last role as Executive Director, Equity and Debt Capital Markets.

[removed: Lily Yan Hughes,] [added: Vitan,] age [removed: 55,] [added: 46,] has served as Senior Vice President, Chief Legal Officer and Corporate Secretary since [added: April 20, 2019, and was Vice President and Chief Counsel–Litigation and Operations since] joining the Company in [removed: January 2015.][added: June 2016.]

[removed: Natalia Johnson,] [added: Natalia Johnson,] age [removed: 41,] [added: 42,] has served as Senior Vice President, Chief Human Resources Officer since April 25, 2018 and was previously Senior Vice President of Human Resources since joining the Company in July 2016.

Other information required by this item is hereby incorporated by reference to the material appearing in the Notice and Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act.

H.

Nathaniel A.

Prior to joining Public Storage, Mr. Vitan was Assistant General Counsel for Altria Client Services, Inc. and served as a Trial Practice and Appellate Litigation Attorney at Latham & Watkins LLP.

H.

Prior to joining Public Storage, she was Vice President and Associate General Counsel-Corporate, M&A and Finance at Ingram Micro Inc. from March 1997 to January 2015.

The information required by this item is hereby incorporated by reference to the material appearing in the Notice and Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act.

‎

The following table sets forth information as of December 31, [removed: 2018] [added: 2019] on the Company’s equity compensation plans:

[removed: | | a) | | The] [added: a)The] Company’s stock option and stock incentive plans are described more fully in Note 10 to the December 31, [removed: 2018] [added: 2019] financial statements. [removed: All plans were approved by the Company’s shareholders. |]

[removed: | | b) | | Includes 717,696] [added: b)Includes 619,150] restricted share units that, if and when vested, will be settled in common shares of the Company on a one for one basis. [removed: |]

[removed: | | c) | | There] [added: c)There] are no securities available for future issuance or currently outstanding under plans not approved by the Company’s shareholders as of December 31, [removed: 2018. |][added: 2019.]

[removed: | | d) | | Represents the average exercise price of 2,420,922 stock options outstanding at December 31, 2018.] We also have [removed: 717,696] [added: 619,150] restricted share units outstanding at December 31, [removed: 2018] [added: 2019] that vest for no consideration. [removed: |]

Other information required by this item is hereby incorporated by reference to the material appearing in the Notice and Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act.

| Equity compensation plans approved by security holders (a) | 2,958,817 (b) | $204.53 (d) | 1,110,375 |

All plans were approved by the Company’s shareholders.

d)Represents the average exercise price of 2,339,667 stock options outstanding at December 31, 2019.

| --- | --- | --- | --- |

| Equity compensation plans approved by security holders (a) | 3,138,618 (b) | $201.31 (d) | 1,282,158 |

The information required by this item is hereby incorporated by reference to the material appearing in the Notice and Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act.

The information required by this item is hereby incorporated by reference to the material appearing in the Notice and Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act of 1934.

[removed: PART IV][added: PART IV]

| 3.3 | [Articles Supplementary for Public Storage [removed: 5.625%] [added: 5.375%] Cumulative Preferred Shares, Series [removed: U.] [added: V.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: June 6,] [added: September 11,] 2012 and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312512263631/d366437dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312512389775/d411237dex31.htm)] |

| 3.4 | [Articles Supplementary for Public Storage [removed: 5.375%] [added: 5.20%] Cumulative Preferred Shares, Series [removed: V.] [added: W.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: September 11, 2012] [added: January 7, 2013] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312512389775/d411237dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312513007041/d464078dex31.htm)] |

| 3.5 | [Articles Supplementary for Public Storage 5.20% Cumulative Preferred Shares, Series [removed: W.] [added: X.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: January 7,] [added: March 4,] 2013 and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312513007041/d464078dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312513091511/d496477dex31.htm)] |

| 3.6 | [Articles Supplementary for Public Storage [removed: 5.20%] [added: 5.400%] Cumulative Preferred Shares, Series [removed: X.] [added: B.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: March 4, 2013] [added: January 12, 2016] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312513091511/d496477dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312516428828/d224807dex31.htm)] |

| 3.7 | [Articles Supplementary for Public Storage [removed: 6.375%] [added: 5.125%] Cumulative Preferred Shares, Series [removed: Y.] [added: C.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: March] [added: May] 10, [removed: 2014] [added: 2016] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312514095209/d691697dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312516587149/d153660dex31.htm)] |

| 3.8 | [Articles Supplementary for Public Storage [removed: 6.375%] [added: 4.950%] Cumulative Preferred Shares, Series [removed: Y.] [added: D.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: April 9, 2014] [added: July 13, 2016] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312514137452/d710651dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312516648284/d220245dex31.htm)] |

| [removed: 3.9] [added: 3.10] | [Articles Supplementary for Public Storage [removed: 6.00%] [added: 5.150%] Cumulative Preferred Shares, Series [removed: Z.] [added: F.] Filed with the Registrant’s Current Report on Form 8-K dated May [removed: 28, 2014] [added: 23, 2017] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000139331114000020/psa-20140529ex316b18eae.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312517181653/d403845dex31.htm)] |

| [removed: 3.10] [added: 3.14] | [Articles Supplementary for Public Storage [removed: 5.875%] [added: 4.700%] Cumulative Preferred Shares, Series [removed: A.] [added: J.] Filed with the Registrant’s Current Report on Form [removed: 8-K/A] [added: 8-K] dated November [removed: 24, 2014] [added: 5, 2019] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000139331114000039/psa-20141121ex3191f350a.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519286081/d820234dex31.htm)] |

| 3.11 | [Articles Supplementary for Public Storage [removed: 5.400%] [added: 5.050%] Cumulative Preferred Shares, Series [removed: B.] [added: G.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: January 12, 2016] [added: July 31, 2017] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312516428828/d224807dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312517244616/d431375dex31.htm)] |

| 3.12 | [Articles Supplementary for Public Storage [removed: 5.125%] [added: 5.600%] Cumulative Preferred Shares, Series [removed: C.] [added: H.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: May 10, 2016] [added: February 28, 2019] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312516587149/d153660dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519060872/d707503dex31.htm)] |

| 3.13 | [Articles Supplementary for Public Storage [removed: 4.950%] [added: 4.875%] Cumulative Preferred Shares, Series [removed: D.] [added: I.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: July 13, 2016] [added: September 5, 2019] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312516648284/d220245dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519240029/d95914dex31.htm)] |

| [removed: 3.14] [added: 3.9] | [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](http://www.sec.gov/Archives/edgar/data/1393311/000119312516733812/d146398dex31.htm). |

| 3.15 | [Articles Supplementary for Public Storage [removed: 5.150%] [added: 4.750%] Cumulative Preferred Shares, Series [removed: F.] [added: K.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: May 23, 2017] [added: December 11, 2019] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312517181653/d403845dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519312789/d847836dex31.htm)] |

| [removed: 10.1] [added: 10.2] | [Amended [removed: Management Agreement between Registrant] and [removed: Public Storage Commercial Properties Group, Inc. dated as] [added: Restated Agreement] of [removed: February 21, 1995.] [added: Limited Partnership of Storage Trust Properties, L.P. (March 12, 1999).] Filed with [removed: Public Storage Inc.’s (“PSI”) Annual] [added: PSI’s Quarterly] Report on Form [removed: 10-K] [added: 10-Q] for the [removed: year] [added: quarterly period] ended [removed: December 31, 1994] [added: June 30, 1999] (SEC File No. 001-0839) and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/318380/0000898430-95-000361.txt)] [added: reference.](http://www.sec.gov/Archives/edgar/data/318380/000031838099000018/0000318380-99-000018.txt)] |

| [removed: 10.3] [added: 10.1] | [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.](http://www.sec.gov/Archives/edgar/data/866368/0000866368-98-000024.txt) |

| [removed: 10.4] [added: 10.22] | [removed: [Amended and Restated] [added: [Amendment to Amended] Agreement of Limited Partnership of [removed: Storage Trust Properties,] [added: PS Business Parks,] L.P. [removed: (March 12, 1999).] [added: to Authorize Special Allocations, dated as of January 1, 2017.] Filed [removed: with PSI’s] [added: as Exhibit 10.1 to the Company’s] Quarterly Report on Form 10-Q for the quarterly period ended [removed: June 30, 1999] [added: March 31, 2018] (SEC File No. [removed: 001-0839)] [added: 001-33519)] and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/318380/000031838099000018/0000318380-99-000018.txt)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331118000009/psa-20180331xex10_1.htm)] |

| [removed: 10.5] [added: 10.3] | [removed: [Amended] [added: [Second Amended] and Restated Credit [removed: Agreement] [added: Agreement, dated April 19, 2019,] by and among [removed: Registrant,] [added: Public Storage, the lenders party thereto,] Wells Fargo [removed: Securities,] [added: Bank, National Association, as administrative agent, Wells Fargo Securities] LLC and Merrill Lynch, Pierce, Fenner & Smith [removed: Incorporated] [added: Incorporation,] as joint lead [removed: arrangers, Wells Fargo Bank, National Association,] [added: arrangers and] as [removed: administrative] [added: joint bookrunners, Bank of America, N.A., as syndication] agent, and [removed: the other financial institutions party thereto, dated] [added: Citibank, N.A.,] as [removed: of March 21, 2012.] [added: documentation agent.] Filed [removed: with PSI’s] [added: as Exhibit 10.1 to the Company’s] Current Report on Form 8-K [removed: on March 27, 2012 (SEC File No. 001-0839)] [added: dated April 19, 2019] and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331112000022/ps_ex101.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519112437/d738199dex101.htm)] |

| [removed: 10.5.1] [added: 10.13] | [removed: [Second Amendment to Amended and Restated Credit] [added: [Term Loan] Agreement, [removed: dated as of July 17, 2013,] by and among Public Storage, [removed: the Lenders party thereto] [added: Wells Fargo Securities, LLC as Lead Arranger] and Wells Fargo [removed: Bank,] National [removed: Association.] [added: Bank N.A. as Administrative Agent, dated as of December 2, 2013.] Filed with [removed: the] Registrant’s Current Report on Form 8-K [removed: on July 18,] [added: dated December 2,] 2013 and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331113000021/psex_101.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331113000043/ps_ex101.htm)] |

| [removed: 10.5.2] [added: 10.21] | [Third [removed: Amendment to the Amended and Restated Credit Agreement,] [added: Supplemental Indenture,] dated as of [removed: March 31, 2015, among] [added: January 24, 2020, between] Public [removed: Storage, the lenders party thereto] [added: Storage] and Wells Fargo Bank, National Association, as [removed: agent.] [added: trustee.] Filed as Exhibit [removed: 10.1] [added: 4.2] to the Company’s Current Report on Form 8-K [removed: on April 2, 2015 (“April 2015 8-K”)] [added: dated January 24, 2020] and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331115000009/psa-20150402ex101a46e4e.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000119312520014211/d877682dex42.htm)] |

| [removed: 10.5.4] [added: 10.6*] | [removed: [Fourth Amendment to the Amended and Restated Credit Agreement, dated as] [added: [Form] of [removed: December 22, 2015, among Public Storage, the lenders party thereto and Wells Fargo Bank, National Association, as agent.] [added: 2007 Plan Stock Option Agreement.] Filed as Exhibit [removed: 10.5.4] [added: 10.13] to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331116000036/psa-20151231ex10547caa6.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331116000036/psa-20151231ex101308fcd.htm)] |

| [removed: 10.8*] [added: 10.4*] | [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.](http://www.sec.gov/Archives/edgar/data/1393311/000139331116000036/psa-20151231ex10116996e.htm) |

| [removed: 10.9*] [added: 10.5*] | [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.](http://www.sec.gov/Archives/edgar/data/1393311/000139331116000036/psa-20151231ex101227ce4.htm) |

| [removed: 10.10*] [added: 10.7*] | [Form of 2007 Plan [added: Trustee] Stock Option Agreement. Filed as Exhibit [removed: 10.13] [added: 10.14] to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331116000036/psa-20151231ex101308fcd.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331116000036/psa-20151231ex10145e220.htm)] |

| 10.11* | [Form of [removed: 2007] [added: 2016] Plan Trustee [added: Non-Qualified] Stock Option Agreement. Filed as Exhibit [removed: 10.14] [added: 10.18] to the Company’s Annual Report on Form 10-K for the year ended December 31, [removed: 2015] [added: 2016] and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331116000036/psa-20151231ex10145e220.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331117000008/psa-20161231xex10_18.htm)] |

| [removed: 10.12*] [added: 10.8*] | [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.](http://www.sec.gov/Archives/edgar/data/1393311/000139331117000008/psa-20161231xex10_15.htm) |

| [removed: 10.13*] [added: 10.9*] | [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.](http://www.sec.gov/Archives/edgar/data/1393311/000139331117000008/psa-20161231xex10_16.htm) |

| [removed: 10.14*] [added: 10.10*] | [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.](http://www.sec.gov/Archives/edgar/data/1393311/000139331117000008/psa-20161231xex10_17.htm) |

| [removed: 10.15*] [added: 10.26*] | [Form of 2016 Plan Trustee Non-Qualified Stock Option [removed: Agreement.] [added: Agreement (2018).] Filed as Exhibit [removed: 10.18] [added: 10.28] to the Company’s Annual Report on Form 10-K for the year ended December 31, [removed: 2016] [added: 2018] and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331117000008/psa-20161231xex10_18.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331119000004/psa-20181231xex10_28.htm)] |