Public Storage 2000 Annual Report Download - page 46

P UBLIC S TORAGE , I NC . 2000 A NNUAL R EPORT
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We believe that our size and financial flexibility enable us to access capital when appropriate. During 2000, despite difficult capital
markets, we privately issued $365.0 million of preferred partnership units as follows: $240.0 million of 9.5% Series N Cumulative
Redeemable Perpetual Preferred Units (issued March 17, 2000), $75.0 million of 9.125% Series O Cumulative Redeemable Perpetual
Preferred Units (issued March 29, 2000), and $50.0 million of 8.75% Series P Cumulative Redeemable Perpetual Preferred Units
(issued August 11, 2000). In addition, in December, 2000, we publicly issued $28.5 million of Equity Stock, Series A.
Subsequent to December 31, 2000, we issued approximately $172.5 million of our 8.600% Series Q Cumulative Perpetual
Preferred Stock.
Distribution requirements: We have operated, and intend to continue to operate, in such a manner as to qualify as a REIT under the
Internal Revenue Code of 1986, but no assurance can be given that we will at all times so qualify. To the extent that the Company
continues to qualify as a REIT, we will not be taxed, with certain limited exceptions, on the taxable income that is distributed to our
shareholders, provided that at least 95% of our taxable income is so distributed prior to filing of the Company’s tax return. We have
satisfied the REIT distribution requirement since 1980.
During 2000, we paid regular quarterly distributions of $0.22 per common share. In addition, during the quarter ended September 30,
2000, a special distribution in the amount of $0.60 per common share (an aggregate of $78.7 million) was declared and paid. Distribu-
tions with respect to the Common Stock and Equity Stock, Series A will be determined based upon our REIT distribution requirements
after taking into consideration distributions to the preferred shareholders. We expect to increase our common distribution in 2001
and beyond from the level of our regularly quarterly distribution level of $0.22 per common share assuming a continuation of our
increasing level of taxable income. These increased distributions will be in the form of special distributions of cash or securities, an
increase in the regular quarterly common distribution, or a combination thereof.
With respect to the depositary shares of Equity Stock, Series A, we have no obligation to pay distributions if no distributions are paid
to the common shareholders. To the extent that we do pay common distributions in any year, the holders of the depositary shares
receive the lesser of (i) five times the per share dividend on the common stock or (ii) $2.45. The depositary shares are noncumulative,
and have no preference over our Common Stock either as to dividends or in liquidation.
During 2000, we paid dividends totaling $100.1 million to the holders of our Senior Preferred Stock, $184.1 million to the holders
of our Common Stock, $10.0 million to the holders of our Class B Common Stock and $11.0 million to the holders of our Equity
Stock, Series A. We estimate that the distribution requirements for fiscal 2001 with respect to Senior Preferred Stock outstanding at
December 31, 2000 will be approximately $100.1 million. We estimate the annual distribution requirement with respect to the
Series Q Cumulative Perpetual Preferred Stock to be approximately $14.8 million per year.
Our conservative distribution policy has been the principal reason for our ability to retain significant operating cash flows which
have been used to make additional investments and reduce debt. During 1998, 1999 and 2000, we paid regular distributions to
common and Class B shareholders of approximately 38%, 33% and 33% of our cash available from operations allocable to common
shareholders, respectively. Including the special distributions paid in 1999 and 2000, we paid total distributions to common and
Class B shareholders of 58% and 56%, respectively, of our cash available from operations allocable to common shareholders.
Capital improvement requirements: During 2001, we have budgeted approximately $26.8 million for capital improvements.
Debt service requirements: We do not believe we have any significant refinancing risks with respect to our mortgage debt, all of
which is fixed rate. At December 31, 2000, we had total outstanding notes payable of approximately $156.0 million. See Note 7
to the consolidated financial statements for approximate principal maturities of such borrowings. We anticipate that our retained
operating cash flow will continue to be sufficient to enable us to make scheduled principal payments.
Growth strategies: During 2001, we intend to continue to expand our asset and capital base through the acquisition of real estate
assets and interests in real estate assets from both unaffiliated and affiliated parties through direct purchases, mergers, tender offers
or other transactions and through the development of additional storage facilities. In addition to 618 wholly owned storage facilities,
we operate, on behalf of approximately 46 ownership entities in which we have an interest, 629 storage facilities under the ‘’Public
Storage’’ name in which we have a partial equity interest. From time to time, some of these storage facilities or interests in them are
available for purchase, providing us with a source of additional acquisition opportunities.