Please refer to the important disclosures and analyst certification on inside back cover of this document, or on our

website www.macquarie.com.au/disclosures.
UNITED STATES



PSA US Outperform
Price (at 20:04, 14 Mar 2014 GMT) US$168.17
Valuation US$ 166.73
- DCF (WACC 7.2%, beta 0.9, ERP 5.0%, RFR 3.0%, TGR 1.2%)
12-month target US$ 179.00
12-month TSR % +9.9
GICS sector Real Estate
Market cap US$m 28,977
30-day avg turnover US$m 123.6
Number shares on issue m 172.3

Investment fundamentals
Year end 31 Dec 2013A 2014E 2015E 2016E
Revenue m 1,981.7 2,164.0 2,286.9 2,421.6
Total DPS US$ 5.15 5.60 6.34 6.81
Total div yield % 3.1 3.3 3.8 4.0
ROE % 10.0 9.7 10.4 11.4
Source: FactSet, Macquarie Capital (USA), March 2014
(all figures in USD unless noted)




Analyst(s)
Shahzeb Zakaria
+1 212 231 0647 shahzeb.zakaria@macquarie.com
Venkat Kommineni
+1212 231 8065 venkat.kommineni@macquarie.com

17 March 2014
Macquarie Capital (USA) Inc.
Public Storage
The most misunderstood thing in self storage
Sector Leading Organic Growth
Given PSAs dominance of the Google search page and sector leading demand
characteristics around its assets, we think the company leads the sector in terms
of true organic growth (with EXR a close 2
nd
, followed by CUBE & SSS).
Optically PSA seems to lag its peers on same store revenue (SSRev) and income
(SSNOI) growth metrics, but we think the difference is attributable to the
definitions of the same store pools, along with the treatment of certain revenue
and expense line items (tenant reinsurance, internet marketing, etc).
Whereas PSA only includes those assets in its same store pool that the company
has owned and operated for 3 years at stabilized occupancy levels (mgmt defined
stabilized as high 80s), the other storage REITs may end up including assets after
1 full calendar year of ownership (See pg 2 for same store selection criteria).
As a result of the criteria employed by the other REITs, it is likely that they end up
including assets with some degree of fill-up potential in the same store pools (avg.
REIT same store occupancy levels are in the high 80s currently).
And while there are some investors who understand these differences, we do not
think the broader investor base appreciates these nuances.
As a result we think PSA is undervalued. We are upgrading to OP & raising our
TP to $179 (25% premium to Macq NAV, premium inline with SNL historic avg)
from $171.
Dominates the Google Search Page
On the top 3 storage search terms on Google, PSA & EXR are neck and neck in
terms of appearing most frequently and at the highest position (organic results).
However, PSA dominates the Google search page for organic results on the #4
and #5 most popular search terms (see Fig 3 & Fig 4).
Locational Quality - #1 on Demand & #5 on Supply
Based on our analysis of the locational quality of the storage REIT & U-Haul
portfolios, PSA has the best demand characteristics driven by the sector leading
avg population of 309K around its assets (vs database avg of 283K).
PSA ranks #3 overall as it faces more competition (ranks #5 on supply).
However, this additional competition primarily impacts walk-ins. Customers using
the internet to find storage facilities still see the same 10 organic results (& 3/ 7
map results) on the Google search page (for desktop).
PSA deserves highest NAV Premium
We use unlevered free cash flow margins (ignoring one time items and forex) to
rank the relative efficiency of the platforms of the four REITs.
Based on our analysis, PSA converts nearly 71% of revenues into unlevered free
cashflow, vs EXR (60%), CUBE (51%) and SSS (50%). While part of the
difference in the margins is driven by economies of scale (lower G&A per asset),
the other key driver is prominence on Google (lower cost of customer acquisition).
Based on our analysis of the locational quality of the real estate and the current
market cap rates for storage transactions, we believe PSA is currently trading at
a Price to NAV premium of 17.5%, as compared to the SNL reported avg of
~26%+ from 1/1/10 to 3/12/14 (See Fig 14).
Macquarie (USA) Research Public Storage
17 March 2014 2
Inside

Google Search Page 3
Locational Quality Summary 6
Why Same Store Isnt Really Same Store 7
Valuation 9

Public Storage
Public Storage (PSA) is a Maryland incorporated Real Estate Investment Trust
(REIT) and the largest self-storage REIT in the United States. PSA is organized
in three lines of business: 1) Domestic Self-Storage, 2) European Self-Storage,
and 3) Commercial. As of December 31, 2013, PSAs domestic business included
ownership (directly and indirectly) of 2,187 facilities across 38 states. These
properties constituted approximately 141 million square feet of net rentable space.
The European Self-Storage business involves a 49% ownership interest in
Shurgard Europe, which owns 187 facilities (10m sqf) across 7 Western European
countries (France, Sweden, United Kingdom, Netherlands, Denmark, Belgium
and Germany). The company also owns a self storage facility in United Kingdom
that is managed by Shurgard Europe. Lastly, the Commercial business line
includes a 42% ownership interest in a publicly held REIT called PS Business
Parks, Inc. (PSB), which owns 29.7 m sqf of commercial space. PSA also wholly
owns 1.4 m sqf of space that is managed by PSB.
PSA reported same store revenue growth of +5.3%/+4.7% YoY during
FY13/FY12, as compared to CUBE (+7.4%/+3.8%), EXR (+7.4%/+6.6%) & SSS
(+7.7%/+6.3%).
Fig 1 Same Store Comparisons

Source: Company data, Macquarie Capital (USA), March 2014
Fig 2 PSA US vs MSCI US REIT Index, & rec history

Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period.
Source: FactSet, Macquarie Capital (USA), March 2014
(all figures in USD unless noted)




CUBE EXR PSA SSS
Same Store
Selection
Criteria
Any stabilized
property owned
for a full year at
turn of year;
subjective
definition of
stabilized.
80% Average
Occupancy for 1
Calendar Year
OR owned for 3
years as of Jan
1.
Owned/Operated
by PSA for 3
stabilized years
(stabilized =
occupancy in
high 80s)
Any property
owned for a full
year as of Jan 1.
Tenant
Reinsurance
Income
Included Included Excluded Included
Internet
Marketing
Costs
Included Included Included Excluded
Macquarie (USA) Research Public Storage
17 March 2014 3
Google Search Page
While on a day-to-day basis there is some variation in how the REITs appear on the Google
Search page (organic results), the general takeaway remains that PSA ranks #1 overall,
due to it dominance of the organic search results for the terms public storage and
public self storage.
Fig 3 Google - Organic Results Fig 4 Google - Maps Results



Source: Google, Company data, Macquarie Capital (USA), March 2014


9
8
%
9
9
%
9
9
%
1
0
0
%
1
0
0
%
9
5
%
9
7
%
9
5
%
7
0
%
7
2
%
9
1
%
9
5
%
9
4
%
6
0
%
6
1
%
8
0
%
8
8
%
8
9
%
5
9
%
5
7
%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Self StorageSelf Storage
Units
Storage
Units
Public
Storage
Public Self
Storage
Google Appearance Rate
PSA
EXR
CUBE
SSS
6
0
%
6
6
%
6
4
%
7
6
%
7
9
%
6
3
%
6
6
%
6
3
%
4
%
4
%
3
8
%
3
8
%
3
5
%
3
%
2
%
4
4
%
3
6
%
4
5
%
1
%
1
%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Self StorageSelf Storage
Units
Storage
Units
Public
Storage
Public Self
Storage
Google Appearance Rate
PSA
EXR
CUBE
SSS
1
.
9

1
.
8

1
.
7

1
.
1

1
.
0

3
.
0

3
.
4

3
.
6

5
.
3

4
.
7

4
.
1

3
.
2

3
.
3

5
.
6

4
.
7

4
.
6

4
.
6

4
.
0

6
.
4

5
.
5

1
2
3
4
5
6
7
8
9
10
Self StorageSelf Storage
Units
Storage
Units
Public
Storage
Public Self
Storage
Highest Rank
PSA
EXR
CUBE
SSS
3
.
1

2
.
0

2
.
0

1
.
0

1
.
0

1
.
8

1
.
9

2
.
2

1
.
6

1
.
6

3
.
5

2
.
8

3
.
4

2
.
8

2
.
8

3
.
9

3
.
2

4
.
1

2
.
0

2
.
7

1
2
3
4
5
6
7
Self StorageSelf Storage
Units
Storage
Units
Public
Storage
Public Self
Storage
Highest Rank
PSA
EXR
CUBE
SSS
1
.
3

1
.
8

1
.
5

3
.
0

3
.
1

1
.
6

1
.
6

1
.
5
1
.
3

1
.
3

1
.
3

1
.
3

1
.
3

1
.
3

1
.
3

1
.
2

1
.
4

1
.
2

1
.
3

1
.
2

0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Self StorageSelf Storage
Units
Storage
Units
Public
Storage
Public Self
Storage
Total Impressions / page
PSA
EXR
CUBE
SSS
1
.
6

2
.
2

1
.
6

2
.
9

2
.
8

1
.
7

2
.
0

1
.
6

1
.
4

1
.
2

1
.
2

1
.
6

1
.
2

1
.
2

1
.
3

1
.
3

1
.
3

1
.
3

1
.
0

1
.
0

0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Self StorageSelf Storage
Units
Storage
Units
Public
Storage
Public Self
Storage
Total Impressions / page
PSA
EXR
CUBE
SSS
Macquarie (USA) Research Public Storage
17 March 2014 4
Based on Google Trends, the top 5 self-storage related search terms include 1) self storage, 2)
self storage units, 3) storage units, 4) public self storage & 5) public storage
Fig 5 Google Trends - Top search terms related to Self Storage (in United States)

Source: Google, Macquarie Capital (USA), March 2014
Google Spider - Methodology
Our Google Spider indices reflect the results of Google searches using 500 distinct key words
on a daily basis.
Keywords are a combination of Self Storage plus a city name (e.g. Self Storage Houston).
We repeat this process for the other 4 self storage related search terms (self storage units,
storage units, public self storage and public storage).
We chose 500 different cities based on the total number of locations owned and managed by
the four storage REITs across the country.
The city names are based on addresses listed on the propertys webpage. This results in more
localized searches as we end up using city names like Bronx, Queens and Jamaica
instead of the more general term New York.
Based on data collected for the 500 cities, we cover 70%+ locations for all REITs (Fig 6).
Macquarie (USA) Research Public Storage
17 March 2014 5
Fig 6 Our sample covers a majority of locations owned/managed by the four REITs

Source: Google, Company data, Macquarie Capital (USA), March 2014
Before every search, our script deletes the browsers 1) temporary internet files, 2)
cookies, 3) history, 4) form data, and 5) saved passwords to ensure that previous
browser activity does not affect the search results.
We do not allow the browser to collect data for InPrivate Filtering.
We do not allow location detection in our browser.
We use the results of these 500 queries to calculate the following:
1. Google Appearance Rate: If the REIT owns a property in the reference city, does
the REITs web domain appear on the first search results page.
2. Highest Rank: If the REIT owns a property in the reference city AND it appears on
the first search results page, what is the highest ranking.
3. Total Impressions / page: If the REIT owns a property in the reference city AND it
appears on the first search results page, how many times does it appear on the first
page.
We then calculate weighted averages (highest rank & total impressions / page) for the entire
company using the number of locations owned/managed in each of the cities.
Fig 7 Macquaries Google Spider ensures previous browsing history has no impact on the search results

Source: Macquarie Capital (USA), March 2014

70%
71%
76% 76%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CUBE EXR PSA SSS
% of Owned/Managed Assets Covered in Top 500 Cities
Macquarie (USA) Research Public Storage
17 March 2014 6
Locational Quality Summary
PSA ranks #3 overall but ranks #1 on the demand variables (population, median income, % of
renter occupied & vacant housing units, housing price change & # of businesses).
Fig 8 Score Summary


Source: EASI, FHFA, 2013 Self-Storage Almanac, Macquarie Capital (USA), March 2014
On the supply side PSA ranks #5.
Fig 9 Demand Rankings Fig 10 Supply Rankings


Source: EASI, FHFA, 2013 Self-Storage Almanac, Macquarie Capital (USA), March 2014

Total Standardized Score
Rank Ticker Population
Median
Income
Renter Occupied
Housing Units (%)
Vacant Housing
Units (%)
FHFA Housing
Price Index -
Change
Business
Establishments
# of Facilities
in 3 Miles
Radius
Distance to
Closest
Facility
Total
Score
Weight 30.0% 10.0% 2.5% 2.5% 2.5% 2.5% 40.0% 10.0% 100.0%
1 ) EXR 1.065 1.036 0.999 0.962 1.080 1.031 1.014 1.048 1.035
2 ) CUBE 1.007 1.038 0.942 1.007 0.901 0.942 1.050 1.117 1.032
3 ) PSA 1.095 1.028 1.023 0.963 1.123 1.140 0.970 0.929 1.018
4 ) SSS 0.704 0.982 0.939 1.100 0.611 0.707 1.037 1.093 0.917
5 ) uHaul 0.816 0.831 1.020 1.082 0.808 0.782 0.994 0.992 0.915
Actual Averages
Rank Ticker Population
Median
Income
Renter Occupied
Housing Units (%)
Vacant Housing
Units (%)
FHFA Housing
Price Index -
Change
Business
Establishments
# of Facilities
in 3 Miles
Radius
Distance to
Closest
Facility
# of
Asstes
Weight 30.0% 10.0% 2.5% 2.5% 2.5% 2.5% 40.0% 10.0%
1 ) EXR 301,438 69,906 37.5 9.0 8.3 7,552 11.3 0.80 1,047
2 ) CUBE 284,836 70,038 35.3 9.4 7.0 6,904 10.8 0.85 532
3 ) PSA 309,943 69,387 38.4 9.0 8.7 8,349 11.8 0.71 2,201
4 ) SSS 199,081 66,246 35.3 10.3 4.7 5,177 10.7 0.83 487
5 ) uHaul 230,821 56,082 38.3 10.1 6.2 5,729 11.4 0.76 1,243
1.075
1.050
1.001
0.840
0.786
0.000
0.200
0.400
0.600
0.800
1.000
1.200
PSA EXR CUBE uHaul SSS
Demand Score
1.064
1.048
1.021
0.993
0.962
0.000
0.200
0.400
0.600
0.800
1.000
1.200
CUBE SSS EXR uHaul PSA
Supply Score
Macquarie (USA) Research Public Storage
17 March 2014 7
Why Same Store Isnt Really Same Store
With the four REITs using unique selection criteria for the same-store pool along with different
definitions of what constitutes same-store revenue and expenses, it becomes challenging to
compare their performance on an apples-to-apples basis. In this section we discuss a few
scenarios to highlight how these different criteria lead to distorted comparisons.
Fig 11 Same-store comparisons

Source: Company data, Macquarie Capital (USA), March 2014
Inclusion of Lease-Up Properties
Of the four REIT operators PSA has the most conservative criteria for including properties in the
same-store pool. A property is included once PSA has owned and operated the asset for 3 years
at stabilized occupancy levels, which management defined as occupancy in the high 80s. Under
such a criterion, it is hard to imagine a fill up asset being included in PSAs same-store portfolio.
On the other end of the spectrum, we believe SSS has the least strict criteria. SSSs same-store
pool includes all assets the company has owned for a full calendar year as of January 1
st
.
Theoretically, if SSS acquired a fill up asset, with occupancy in the 50s, during FY2010, then it
would be included in the same-store pool on January 1
st
2012. It is possible that this asset had an
average occupancy in the 70s during FY2011 and eventually stabilized in the high 80s during
FY2012. Inclusion of this asset in the same-store pool during FY2012 would lead to abnormally
high revenue (and NOI) growth figures that would not be sustainable in the future.
The fact that the four REITs have a varying degree of strictness in their same-store definitions,
coupled with the frequent acquisition-disposition activity, makes it extremely difficult to compare
their performance if they acquire assets in the fill-up phase.
Expansion/Improvement of Existing Facilities
All four REITs generally keep an existing property in the same-store pool if they perform
upgrades at the facility. For example, if non-climate controlled units are converted to climate
control units, then the incremental revenue would affect same-store revenues but the cost of
converting the units is capitalized, leading to abnormal growth in same-store revenues and
income (post the initial period when occupancy may slightly decrease, depending on the project).
However, the four companies would remove the facility from the same-store pool if the expansion
is something they deem as significant. In our conversations with the management teams, only
EXR disclosed the existence of a specific rule under which a property is removed from the same-
store pool if the rentable square footage in increased by a certain percentage.


CUBE EXR PSA SSS
Same Store Selection Criteria
Any stabilized property owned
for a full year at turn of year;
subjective definition of
stabilized (no occupancy
based definition)
80% Average Occupancy
for 1 Calendar Year OR
owned for 3 years as of
Jan 1.
Owned/Operated by PSA
for 3 stabilized years
(stabilized = occupancy in
high 80s)
Any property owned for a
full year as of Jan 1.
Tenant Reinsurance Income Included Included Excluded Included
Internet Marketing Costs Included Included Included Excluded
Macquarie (USA) Research Public Storage
17 March 2014 8
Tenant Reinsurance Income
Other than PSA all storage REITs include tenant reinsurance income in their same-store figures
(PSA only includes property rental income). If a REIT acquires an asset from a mom-pop
operator, which usually have low tenant reinsurance penetration levels in the 20s, and increases
the penetration level to the 80s (more in line with the REIT avg.), then same-store revenue and
income may exhibit abnormal growth, depending on the companys criteria for inclusion in the
same-store pool and the time taken to reach stabilized penetration levels. Given the extremely
high margins of the tenant reinsurance business, it might be especially difficult to compare the
four REITs for same-store NOI growth.
Internet Marketing Costs
All REITs except SSS include internet marketing costs in their same-store expenses. Whereas
SSS includes the yellow page expense in its same-store expenses, internet marketing expenses
are included in G&A. This leads to an artificially high same-store NOI figure, when compared to
the other REITs. And while this cost does not lead to drastic differences, it is another accounting
policy that makes it harder to compare the four REITs.
Fig 12 SSSs 2013 Q2 SSNOI growth would be ~186 bps lower if we adjusted for capex and internet costs

Source: Company data, Macquarie Capital (USA), March 2014
As a case in point, we analyze the impact of accounting policies for expansionary capital
expenditure at existing facilities and internet marketing costs as it related to SSSs same-store
figures. Based on our analysis, SSSs same-store NOI growth would have been 10.3% had the
company included internet marketing costs in expenses and treated expansionary capex as an
expense (since it is adding to same-store revenues). These adjustments are more art than
science as there are multiple defensible ways to account for the differences. Our goal is to
illustrate one way to quantify the increase. Here is the approach we followed:
We prorated internet marketing costs using the number of total facilities and the number of
facilities in the same-store portfolio. For example, we calculated the internet ad spend for the
same-store portfolio for 2013 Q2 as follows: 1,379 * 362 / 393 = 1,270K.
Since capital expenditure varies a lot from quarter to quarter, we use the average capex for the
last 6 quarters. Furthermore, we assume that it takes about a year before capital expenditure
leads to incremental revenue (allowing for build and fill-up time). Using these assumptions, we
calculate run-rate capex (for stabilized stores) to be 3,463K at 2012 Q2 as compared to 2011
Q2s 2,694K.
Upon adjusting these expenses in the current quarters same-store figures, we calculate same-
store NOI growth to be approximately +10.3%, about 186 basis points lower than the reported
figure (impact of internet costs is about 50 bps).
2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2
Same Store Revenue 48,243 49,275 50,651 49,988 50,913 52,040 53,498 57,629 57,841 60,283
Same Store Expenses 18,169 17,527 18,194 17,219 17,958 17,407 17,534 18,979 19,413 18,934
Same Store Revenue (Last Yr) 46,858 46,844 48,122 48,329 49,013 49,493 49,514 53,250 53,519 55,346
Same Store Expenses (Last Yr) 18,056 17,596 18,048 16,840 18,474 17,612 17,713 18,637 18,789 18,497
Internet Ad Spend - SS Portfolio (Est) 660 745 926 1,094 1,070 842 971 1,270
Internet Ad Spend - SS Portfolio (Est) - Last Yr 467 455 537 647 670 663 783 970
Same Store Properties 344 344 344 344 350 345 334 361 362 362
Total Wholly Owned 352 355 388 390 379 383 376 390 393 393
Internet Ad Spend 744 845 1,003 1,215 1,205 910 1,054 1,379
Internet Ad Spend - Last Year 527 516 582 718 754 716 850 1,053
Expansionary Capex (Exisiting Assets) 4,884 1,889 113 297 4,886 8,709 602 10,644 3,731 2,223
Avg. Expansionary Capex (Last 6 Qtrs) 2,694 2,326 2,374 2,775 3,463 2,749 4,209 4,812 5,133
SSNOI Growth 4.4% 8.5% 7.9% 4.1% 7.9% 8.6% 13.1% 11.7% 10.6% 12.2%
Adjusted SSNOI - Internet Exp. 7.4% 3.2% 6.8% 7.4% 12.1% 11.4% 10.3% 11.7%
Adjusted SSNOI - Internet Exp. & Capex 10.3%
Macquarie (USA) Research Public Storage
17 March 2014 9
Valuation
Fig 13 Price-NTM AFFO Multiple


Source: FactSet, SNL, Macquarie Capital (USA), March 2014


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25.0x
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SSS
Macquarie (USA) Research Public Storage
17 March 2014 10
Fig 14 Price-to-NAV Premium/(Discount) Based on SNL Data (Not on Macquarie NAV Estimates)


Source: SNL, Macquarie Capital (USA), March 2014

Fig 15 Storage Total Returns

Source: FactSet, SNL, Macquarie Capital (USA), March 2014

Average, 6.4%
(20.0%)
(10.0%)
-
10.0%
20.0%
30.0%
40.0%
J
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CUBE
Average, 20.3%
(10.0%)
-
10.0%
20.0%
30.0%
40.0%
50.0%
J
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EXR
Average, 26.7%
-
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
J
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PSA
Average, 4.3%
(20.0%)
(15.0%)
(10.0%)
(5.0%)
-
5.0%
10.0%
15.0%
20.0%
25.0%
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SSS


1.2
1.5
3.0
3.8
5.4
5.8
0 5 10
S&P 500
RMS
CUBE
PSA
EXR
SSS
1 Month Total Return
-0.4
8.8
9.1
12.7
15.8
17.9
(10) 0 10 20
S&P 500
CUBE
RMS
PSA
SSS
EXR
QTD Total Return
-0.4
8.8
9.1
12.7
15.8
17.9
(10) 0 10 20
S&P 500
CUBE
RMS
PSA
SSS
EXR
YTD Total Return
4.6
13.9
17.8
17.8
25.0
33.4
0 20 40
RMS
CUBE
S&P 500
PSA
SSS
EXR
1 Year Total Return
Macquarie (USA) Research Public Storage
17 March 2014 11
Fig 16 Model

Source: FactSet, SNL, Macquarie Capital (USA), March 2014

Fig 17 Macq vs Consensus Estimates

Source: FactSet, SNL, Macquarie Capital (USA), March 2014

2011 2012 2013 1Q14E 2Q14E 3Q14E 4Q14E 2014E 2015E 2016E 2017E 2018E
INCOME STATEMENT
Revenues:
Self storage rental income 1,605.9 1,703.9 1,849.9 489.6 499.6 511.7 516.3 2,017.2 2,131.2 2,256.1 2,390.2 2,533.7
Ancillary operations 114.1 123.6 131.9 35.6 36.3 37.3 37.6 146.8 155.6 165.6 176.4 184.3
Interest Income and Other 32.3 22.1 22.6 6.2 5.8 5.3 5.5 22.8 20.0 19.6 20.6 28.8
Total revenues 1,752.4 1,849.6 2,004.3 531.3 541.8 554.3 559.3 2,186.7 2,306.8 2,441.3 2,587.2 2,746.9

Expenses:
Self storage operating costs 505.8 502.2 524.1 156.9 145.3 145.6 122.0 569.7 599.2 633.7 670.6 709.6
Ancillary operations costs 37.4 38.3 41.1 12.5 11.8 11.8 10.0 46.1 48.7 51.7 54.9 58.4
Depreciation and amortization associated with real estate operations 358.5 358.0 387.4 109.5 110.0 110.4 111.1 441.0 452.0 464.3 474.7 477.1
General and adminitrative expenses 52.4 56.8 66.7 19.2 14.8 18.5 17.5 70.0 73.5 76.1 78.7 81.5
Interest Expense 24.2 19.8 6.4 6.1 4.0 2.9 1.6 14.7 3.4 2.9 2.2 3.9
Total operating expenses 978.3 975.0 1,025.7 304.1 285.9 289.2 262.2 1,141.5 1,176.9 1,228.8 1,281.1 1,330.5
Net Operating Income (Includes External) 1,177.1 1,287.1 1,423.4 355.8 378.9 391.5 421.9 1,548.1 1,638.9 1,736.1 1,841.1 1,950.1
Income from Operations:
Non-recurring Items (35.9) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Gain on sales of real estate investments 9.0 1.5 4.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Minority interest in income from continuing operations:
Common units in the Operating Partnership (12.6) (3.8) (5.1) (1.4) (1.5) (1.5) (1.5) (5.9) (6.3) (6.6) (7.0) (7.4)
Equity in earnings (loss) of unconsolidated entities 58.7 45.6 57.6 15.4 15.7 15.9 16.1 63.1 66.3 69.5 72.8 76.3
Derivatives & Foreign Currency (7.3) 8.9 17.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Income From Continuing Operations 785.9 926.7 1,052.5 241.2 270.0 279.5 311.7 1,102.4 1,189.9 1,275.3 1,371.8 1,485.3
Income (loss) from discontinued operations, net of minority interests 2.3 12.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Gain on sales of real estate, net of income taxes and minority interests 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Income tax benefit (expense) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net Income 788.3 939.3 1,052.5 241.2 270.0 279.5 311.7 1,102.4 1,189.9 1,275.3 1,371.8 1,485.3
Preferred Dividends (226.5) (207.9) (207.7) (54.6) (56.1) (57.5) (58.8) (226.9) (232.0) (226.6) (221.1) (215.7)
Equity Stock Ser. A 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Issuance costs associated with redeemed preferred shares 0.0 (61.7) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net Income Available For Common Stockholders 561.7 669.7 844.7 186.6 214.0 222.0 253.0 875.6 957.9 1,048.7 1,150.7 1,269.6
Funds From Operations
Net Income 800.9 943.0 1,057.5 242.6 271.5 281.0 313.2 1,108.4 1,196.2 1,281.9 1,378.9 1,492.7
Issuance costs associated with redeemed preferred shares
Combined real estate related depreciation and other amortization 358.5 358.1 387.4 109.5 110.0 110.4 111.1 441.0 452.0 464.3 474.7 477.1
Depreciation and amortization of unconsolidated real estate entities 64.7 75.6 75.5 23.2 23.5 23.9 24.2 94.7 99.4 104.2 109.2 114.5
Gain on sales of real estate properties & other, excluding development (12.8) (14.8) (4.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other 47.7 62.4 (13.8) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Equity Stock Ser. A and minority (15.5) (6.8) (7.3) (1.4) (1.5) (1.5) (1.5) (5.9) (6.3) (6.6) (7.0) (7.4)
Preferred share dividends (227.7) (271.2) (209.5) (54.6) (56.1) (57.5) (58.8) (226.9) (232.0) (226.6) (221.1) (215.7)
Normalized Funds From Operations (FFO) Diluted 1,015.7 1,146.4 1,285.7 319.3 347.5 356.3 388.2 1,411.2 1,509.3 1,617.2 1,734.6 1,861.2
Non-Cash derivative gains/losses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Issuance costs (redeemed pfd shares, n/c in items) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Recurring capital expenditures (72.8) (67.7) (71.3) (12.2) (12.2) (12.2) (12.2) (49.0) (49.0) (49.2) (49.8) (50.8)
Adjusted Funds From Operations - Diluted 942.9 1,078.7 1,214.4 307.0 335.3 344.0 375.9 1,362.3 1,460.3 1,568.0 1,684.8 1,810.4
EPS per Share $3.29 $3.90 $4.89 $1.08 $1.24 $1.28 $1.46 $5.07 $5.54 $6.07 $6.66 $7.35
FFO per Share - Normalized $5.95 $6.68 $7.45 $1.85 $2.01 $2.06 $2.25 $8.17 $8.73 $9.36 $10.04 $10.77
AFFO per Share (FAD) $5.52 $6.28 $7.03 $1.78 $1.94 $1.99 $2.18 $7.88 $8.45 $9.07 $9.75 $10.48
DIV per Share $3.65 $4.40 $5.15 $1.40 $1.40 $1.40 $1.40 $5.60 $6.34 $6.81 $7.31 $7.86
Dividends to FAD 66.1% 70.0% 73.2% 78.8% 72.2% 70.3% 64.4% 71.0% 75.0% 75.1% 75.0% 75.0%
Denominator for EPS - Diluted 170.7 171.7 172.7 172.8 172.8 172.8 172.8 172.8 172.8 172.8 172.8 172.8
Denominator for FFO per share - Diluted 170.7 171.7 172.7 172.8 172.8 172.8 172.8 172.8 172.8 172.8 172.8 172.8
EBITDA 1,318.6 1,484.0 1,546.3 392.0 419.8 429.2 461.2 1,702.1 1,796.5 1,901.1 2,015.0 2,140.7
EBITDA Margin % 75% 80% 77% 74% 77% 77% 82% 78% 78% 78% 78% 78%
Public Storage (PSA)
PSA FFO/sh estimate
2014 2015 2016 2017
Macq 8.17 8.73 9.36 10.04
Consensus 8.07 8.54 9.07 9.69
Macquarie (USA) Research Public Storage
17 March 2014 12
Fig 18 NAV

Note: reflects adjusted balance sheet to account for Shurgard Europe JV note & pref notes deals
Source: FactSet, SNL, Macquarie Capital (USA), March 2014


Public Storage (PSA)
Macquarie Research (USA)
Net Asset Value
in $ thousands 4Q13
NAV per Share $143.18
Forward Twelve-Month NOI $1,582,140
Less: 20% of G&A (14,003)
Plus: Inter-Period Investment Activity
Forward Twelve-Month Cash NOI $1,669,354
Nominal Cap Rate 6.38%
Real Estate Value $26,165,420
Unconsolidated JV NOI $208,737
Nominal Cap Rate 7.38% assumed higher (PSB & Shurgard Europe)
Unconsolidated Real Estate Value $2,828,414
Management & Other Fee Income $22,771
Cap Rate 10.00%
Value of Management Income $227,708
Book Value of Construction in Progress $52,336
Present Value of Development Value Creation 0
Book Value of Land Holdings 0
Value of Development Pipeline $52,336
Cash & Cash Equivalents $85,269 reflects JV/pref deal; term paydown
Accounts / Notes Receivable 211,939 reflects Shurgard note
Other Tangible Assets 64,608
Market Value of Assets Held for Sale 0
Non-Income Producing Assets 0
Vacancy Value 0
Accounts Payable (163,769)
Dividends Payable
Other Liabilities
Other Assets/Liabilities $198,048
Gross Asset Value $29,471,926
Line of Credit $0
Mortgage Loans 88,953
Term Loans & Unsecured Notes 375,000 reflects JV/pref deal
Other Secured Debt
Unconsolidated JV Debt 474,419
Mark-to-Market Debt Adjustment 3,142
Perpetual Preferred Stock 3,787,500 reflects pref deal
Long Term Debt/Preferred $4,729,014
Net Asset Value $24,742,912
Shares Outstanding 172,806
Units Outstanding
Options
Fully Diluted Shares & Units Outstanding 172,806
Net Asset Value / Share $143.18
Current Stock Price $168.17
Premium / Discount to NAV 17.5%
Implied Cap Rate 5.64%
Applied Value / Sq. Ft. $188
Implied Value / Sq. Ft. $218
Macquarie (USA) Research Public Storage
17 March 2014 13
Fig 19 Risk

Source: FactSet, SNL, Macquarie Capital (USA), March 2014


Ticker
Price
(2014-03-14) Rating Valuation Risks
PSA 168.17 OP
TP: $179.00 based on DCF
methodology.
Risks include a Google algorithm change that would
reduce PSA's advantage for the search term "Public
Self Storage"
Macquarie (USA) Research Public Storage
17 March 2014 14
Important disclosures:
Recommendation definitions
Macquarie - Australia/New Zealand
Outperform return >3% in excess of benchmark return
Neutral return within 3% of benchmark return
Underperform return >3% below benchmark return

Benchmark return is determined by long term nominal
GDP growth plus 12 month forward market dividend yield
Macquarie Asia/Europe
Outperform expected return >+10%
Neutral expected return from -10% to +10%
Underperform expected return <-10%
Macquarie First South - South Africa
Outperform expected return >+10%
Neutral expected return from -10% to +10%
Underperform expected return <-10%
Macquarie - Canada
Outperform return >5% in excess of benchmark return
Neutral return within 5% of benchmark return
Underperform return >5% below benchmark return
Macquarie - USA
Outperform (Buy) return >5% in excess of Russell 3000
index return
Neutral (Hold) return within 5% of Russell 3000 index
return
Underperform (Sell) return >5% below Russell 3000
index return

Volatility index definition*
This is calculated from the volatility of historical price
movements.

Very highhighest risk Stock should be expected
to move up or down 60100% in a year investors
should be aware this stock is highly speculative.

High stock should be expected to move up or
down at least 4060% in a year investors should
be aware this stock could be speculative.

Medium stock should be expected to move up or
down at least 3040% in a year.

Lowmedium stock should be expected to move
up or down at least 2530% in a year.

Low stock should be expected to move up or
down at least 1525% in a year.
* Applicable to Asia/Australian/NZ/Canada stocks
only
Recommendations 12 months
Note: Quant recommendations may differ from
Fundamental Analyst recommendations
Financial definitions
All "Adjusted" data items have had the following
adjustments made:
Added back: goodwill amortisation, provision for
catastrophe reserves, IFRS derivatives & hedging, IFRS
impairments & IFRS interest expense
Excluded: non recurring items, asset revals, property
revals, appraisal value uplift, preference dividends &
minority interests

EPS = adjusted net profit / efpowa*
ROA = adjusted ebit / average total assets
ROA Banks/Insurance = adjusted net profit /average
total assets
ROE = adjusted net profit / average shareholders funds
Gross cashflow = adjusted net profit + depreciation
*equivalent fully paid ordinary weighted average number
of shares

All Reported numbers for Australian/NZ listed stocks are
modelled under IFRS (International Financial Reporting
Standards).

Recommendation proportions For quarter ending 31 December 2013
AU/NZ Asia RSA USA CA EUR
Outperform 47.89% 60.13% 37.97% 39.49% 59.64% 48.65% (for US coverage by MCUSA, 6.52% of stocks followed are investment banking clients)
Neutral 35.56% 22.65% 46.84% 54.50% 35.54% 32.43% (for US coverage by MCUSA, 4.35% of stocks followed are investment banking clients)
Underperform 16.55% 17.22% 15.19% 6.01% 4.82% 18.92% (for US coverage by MCUSA, 0.00% of stocks followed are investment banking clients)



PSA US vs MSCI US REIT Index, & rec
history

(all figures in USD currency unless noted)

SSS US vs MSCI US REIT Index, & rec
history

(all figures in USD currency unless noted)

EXR US vs MSCI US REIT Index, & rec
history

(all figures in USD currency unless noted)

CUBE US vs MSCI US REIT Index, & rec
history

(all figures in USD currency unless noted)

GOOG US vs S&P 500, & rec history

(all figures in USD currency unless noted)


Note: Recommendation timeline if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period.
Source: FactSet, Macquarie Capital (USA), March 2014
12-month target price methodology
PSA US: US$179.00 based on a DCF methodology
SSS US: US$77.00 based on a DCF methodology
EXR US: US$51.00 based on a DCF methodology
CUBE US: US$18.25 based on a DCF methodology
GOOG US: US$1,300.00 based on a PER methodology

Macquarie (USA) Research Public Storage
17 March 2014 15

Company-specific disclosures:

Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/disclosures.

Target price risk disclosures:
PSA US: Risks include a Google algorithm change that would reduce PSA's advantage for the search term "Public Self Storage"
SSS US: Risks include slower growth due to relatively weaker locational quality of assets and under-performance on Google's organic search.
EXR US: Risks include Google entering the storage space as an aggregator.
CUBE US: Risks include development focused in the NYC metro
GOOG US: Risks for GOOG include slowdowns in global spending on advertising, regulatory/legal risks (including, but not limited to, issues surrounding
user privacy), increased competition from companies such as Apple, Microsoft, and others. Disintermediation from key vertically-focused companies, mobile
carriers, mobile OEM's, PC OEM's, and others. Additionally, changes in consumer behavior online could negatively impact GOOG.
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