Segment Information

12 Months Ended

Dec. 31, 2019

11.Segment Information

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

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

Self-Storage Operations

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

Ancillary Operations

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

Investment in PSB

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

Investment in Shurgard

This segment represents our equity interest in Shurgard, a publicly held company which owns and operates self-storage facilities located in seven countries in Western Europe. Shurgard has a separate management team and board of trustees that makes its financing, capital allocation, and other significant decisions. In making resource allocation decisions with respect to our investment in Shurgard, the CODM reviews Shurgard’s net income. The segment presentation below includes our equity earnings from Shurgard.

Presentation of Segment Information

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


		For the Years Ended December 31,
		2019		2018		2017

Self-Storage Segment
Revenue	$	2,684,552	$	2,597,607	$	2,512,433
Cost of operations		(752,579)		(695,731)		(657,633)
Net operating income		1,931,973		1,901,876		1,854,800
Depreciation and amortization		(512,918)		(483,646)		(454,526)
Net income		1,419,055		1,418,230		1,400,274

Ancillary Segment
Revenue		162,271		156,673		156,095
Cost of operations		(44,204)		(43,991)		(50,345)
Net operating income		118,067		112,682		105,750

Investment in PSB Segment
Equity in earnings of unconsolidated
real estate entities (a)		54,090		89,362		46,544

Investment in Shurgard Segment
Equity in earnings of unconsolidated
real estate entities (a)		15,457		14,133		25,948
Gain due to Shurgard public offering		-		151,616		-
Net income from Investment in Shurgard Segment		15,457		165,749		25,948

Total net income allocated to segments		1,606,669		1,786,023		1,578,516

Other items not allocated to segments:
General and administrative		(71,983)		(118,720)		(82,882)
Interest and other income		28,436		26,442		18,771
Equity in earnings of unconsolidated real
estate entities - Other Investments (a)		-		-		3,163
Interest expense		(45,641)		(32,542)		(12,690)
Foreign currency exchange gain (loss)		7,829		18,117		(50,045)
Casualty loss		-		-		(7,789)
Gain on sale of real estate		341		37,903		1,421
Net income	$	1,525,651	$	1,717,223	$	1,448,465

(a)See Note 4 for a reconciliation of these amounts to our total Equity in Earnings of Unconsolidated Real Estate Entities on our income statements.