Public Storage 2000 Annual Report Download - page 45

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P
UBLIC S TORAGE , I NC . 2000 A NNUAL R EPORT
For the Year Ended December 31,
(Amount in thousands) 2000 1999 1998
Net income $ 297,088 $ 287,885 $ 227,019
Depreciation and amortization
(A)
148,967 137,719 111,799
Depreciation from equity investments 21,825 19,721 13,884
Less – Gain on sale of real estate (3,786) (2,154) —
Minority interest in income 38,356 16,006 20,290
Net cash provided by operating activities 502,450 459,177 372,992
Allocable to minority interests (Preferred OP Units) (24,859) ——
Allocable to minority interests (Common equity) (20,635) (25,300) (32,312)
Cash from operations allocable to the Company’s shareholders 456,956 433,877 340,680
Less: preferred stock dividends (100,138) (94,793) (78,375)
Less: Equity Stock, Series A dividends (11,042) ——
Cash from operations available to common shareholders 345,776 339,084 262,305
Capital improvements to maintain facilities:
Storage facilities (33,023) (29,023) (29,677)
Commercial properties ——(2,037)
Add back: minority interest share of capital improvements
to maintain facilities 728 1,269 2,476
Cash available for principal payments on debt, common
dividends and reinvestment 313,481 311,330 233,067
Regular cash distributions to common and Class B shareholders (115,460) (113,297) (100,726)
Cash available for principal payments on debt and reinvestment
prior to special distribution 198,021 198,033 132,341
Special distributions to common shareholders
(B)
(78,673) (82,086) —
Cash available for principal payments on debt and reinvestment $ 119,348 $ 115,947 $ 132,341
(A) Depreciation and amortization includes $4,801,000, $4,915,000 and $4,317,000, respectively, with respect to non-real estate
assets in 2000, 1999 and 1998, respectively.
(B) The special distribution for 2000 was declared in August 2000 and paid in September 2000. The special distribution for 1999 was declared in
1999 and paid in January 2000. In each instance, the special distribution enabled the Company to maintain its REIT status with respect to the
distribution requirements.
Our financial profile is characterized by a low level of debt to total capitalization, increasing net income, increasing cash flow from
operations, and a conservative dividend payout ratio with respect to the common stock. We expect to fund our growth strategies with
cash on hand at December 31, 2000, internally generated retained cash flows, proceeds from issuing equity securities and borrowings
under our credit facility. We intend to repay amounts borrowed under the credit facility from undistributed operating cash flow or, as
market conditions permit and are determined to be advantageous, from the public or private placement of equity securities.
As of December 31, 2000, there were no outstanding borrowings under our $150.0 million bank line of credit. Outstanding debt
at December 31, 2000 totaled $156.0 million, consisting of mortgage debt of $26.7 million and unsecured debt of $129.3 million.
By comparison, our real estate facilities had a net book value of $3.7 billion at December 31, 2000. Accordingly, our portfolio of real
estate facilities is substantially unencumbered.
We have generally only increased our debt in connection with the acquisition of real estate facilities. Over the past three years we
have funded substantially all of our acquisitions with permanent capital (both common and preferred stock). We have elected to use
preferred stock as a form of leverage despite the fact that the dividend rates of our preferred stock exceeds current interest rates on
conventional debt. We have chosen this method of financing for the following reasons: (i) our perpetual preferred stock has no sinking
fund requirement, or maturity date and does not require redemption, all of which eliminate any future refinancing risks, (ii) preferred
stock allows us to leverage the common stock without the attendant interest rate or refinancing risks of debt, and (iii) like interest
payments, dividends on the preferred stock can be applied to our REIT distributions requirements, which have helped us to maintain
a low common stock dividend payout ratio and retain cash flow. Our credit ratings on our Senior Preferred Stock by each of the three
major credit agencies are “baa2” by Moody’s and “BBB+” by Standard and Poor’s and Fitch IBCA.