Business Context and Reporting Period
This Form 8-K Current Report was filed by Public Storage on April 5, 2011. The filing documents the entry into a material definitive agreement for the issuance of preferred shares and the subsequent amendment to the company's Articles of Incorporation to designate these shares.
Key Financial Metrics and Capital Structure
The filing details a capital raise through the sale of preferred equity rather than reporting operational financial metrics such as revenue or cash flow.
- Instrument: 6.5% Cumulative Preferred Shares of beneficial interest, Series Q.
- Structure: Sale of 13,000,000 depositary shares, each representing 1/1,000 of a Preferred Share.
- Over-Allotment Option: Underwriters granted an option to purchase up to 1,950,000 additional depositary shares.
- Underwriters: Merrill Lynch, Pierce, Fenner & Smith Incorporated; Citigroup Global Markets, Inc.; and Wells Fargo Securities, LLC.
Material Changes Versus Prior Period
The primary material change is the authorization and filing of Articles Supplementary on April 6, 2011, designating 14,950 shares of preferred beneficial interest as the Series Q shares. This issuance introduces new restrictions on the company's ability to make distributions, redeem, or acquire junior or parity shares if distributions on the Series Q shares are not declared.
Guidance, Outlook, and Risks
The filing does not provide operational guidance, outlook, or management commentary regarding future earnings. However, it notes specific contractual risks and relationships:
- Distribution Restrictions: Future distributions on junior or parity shares are contingent upon the declaration of distributions on the new Series Q Preferred Shares.
- Related Party Transactions: The underwriters and their affiliates (including Merrill Lynch Bank USA, Citicorp North America, and Wells Fargo Bank) are also lenders under the Company's credit facility. The underwriters have received customary fees for investment banking services.
Investor Verification Checklist
- Verify the final closing price and total proceeds from the sale of the 13,000,000 depositary shares (and any over-allotment exercise) in subsequent filings.
- Review the Articles Supplementary (Exhibit 3.1) for specific terms regarding redemption rights and dividend payment dates.
- Confirm the impact of the new preferred equity on the company's existing credit facility covenants.
- Check for any subsequent filings regarding the exercise of the 1,950,000 share over-allotment option.