Business Context and Reporting Period
Company: Public Storage
Filing Type: Form 8-K (Current Report)
Date of Report: May 10, 2016
Event: Entry into a material definitive agreement for the sale of preferred shares and subsequent amendment to the Declaration of Trust.
Key Financial Metrics and Transaction Details
This filing reports a capital raise transaction rather than operational financial results (revenue, profit, or cash flow).
- Instrument Issued: 8,000,000 Depositary Shares.
- Underlying Security: Each Depositary Share represents 1/1,000 of a 5.125% Cumulative Preferred Share of Beneficial Interest, Series C.
- Underwriters: Merrill Lynch, Pierce, Fenner & Smith Incorporated; Morgan Stanley & Co. LLC; UBS Securities LLC; Wells Fargo Securities, LLC.
- Dividend Rate: 5.125% cumulative.
Material Changes and Corporate Actions
Capital Structure Change: On May 11, 2016, the Company filed Articles Supplementary with the Maryland State Department of Assessments and Taxation to designate the 8,000,000 preferred shares as "5.125% Cumulative Preferred Shares, Series C."
Restrictions on Junior Securities: Upon issuance, the Company's ability to make distributions, redeem, purchase, or acquire shares ranking junior to or on parity with the Series C Preferred Shares is restricted if the Company fails to declare distributions on the Preferred Shares during any distribution period.
Management Commentary, Risks, and Contingencies
Related Party Transactions: The underwriters and their affiliates have existing relationships with the Company:
- Bank of America, N.A. (affiliate of Merrill Lynch), Morgan Stanley Bank, UBS Loan Finance LLC, and Wells Fargo Bank, National Association are lenders under the Company's revolving credit facility.
- Wells Fargo Bank, National Association serves as the agent for the facility and is also the lender under the Company's term loan.
- Underwriters have performed investment banking and advisory services for the Company in the past and may continue to do so.
Authorization: The Board of Trustees is authorized to issue up to 100,000,000 preferred shares of beneficial interest without further shareholder action.
Investor Verification Checklist
- Verify the total proceeds received from the sale of the 8,000,000 Depositary Shares (not explicitly stated in this text).
- Review the Articles Supplementary (Exhibit 3.1) for specific redemption terms and liquidation preferences.
- Confirm the impact of the new preferred shares on the Company's existing debt covenants and liquidity position.
- Assess the cumulative dividend obligation relative to the Company's current cash flow generation.