Business Context and Reporting Period
Company: Public Storage
Filing Type: Form 8-K (Current Report)
Date of Report: July 19, 2011
Event: Entry into a Material Definitive Agreement for the issuance of preferred shares.
Key Financial Metrics
This filing does not report operational financial metrics such as revenue, profit, cash flow, or margins. It details a capital raising transaction:
- Instrument: 6.35% Cumulative Preferred Shares of beneficial interest, Series R.
- Structure: Sale of 17,000,000 depositary shares (each representing 1/1,000 of a Preferred Share).
- Over-Allotment Option: Underwriters granted an option to purchase up to 2,550,000 additional depositary shares.
- Underwriters: Merrill Lynch, Pierce, Fenner & Smith Incorporated; Morgan Stanley & Co. LLC; UBS Securities LLC; and Wells Fargo Securities, LLC.
Material Changes
The primary material change is the authorization and issuance of a new class of preferred equity:
- Capital Structure: The Board of Trustees designated 19,550 preferred shares of beneficial interest as "6.35% Cumulative Preferred Shares, Series R" via Articles Supplementary filed on July 20, 2011.
- Distribution Restrictions: Upon issuance, the Company's ability to make distributions on junior or parity shares is restricted if distributions on the Series R Preferred Shares are not declared during any distribution period.
Guidance, Outlook, and Risks
Management Commentary: The filing confirms the execution of the Underwriting Agreement and the filing of necessary legal documents (Articles Supplementary, Master Deposit Agreement).
Risks and Contingencies:
- Distribution Priority: The new Series R shares have priority over junior shares regarding distributions and liquidation payments.
- Related Party Transactions: Affiliates of the underwriters (Merrill Lynch Bank USA, Morgan Stanley Bank, UBS Loan Finance LLC, and Wells Fargo Bank) are lenders under the Company's existing credit facility. Wells Fargo Bank acts as the agent for the facility.
Investor Verification Checklist
- Verify the final net proceeds from the sale of the 17,000,000 depositary shares and any exercised over-allotment option.
- Confirm the specific terms of the "6.35% Cumulative Preferred Shares, Series R" in the filed Articles Supplementary (Exhibit 3.1).
- Review the impact of the new preferred shares on the Company's existing credit facility covenants, given the underwriters' affiliates are lenders.
- Check subsequent filings for the actual exercise of the 2,550,000 share over-allotment option.