Public Storage 2003 Annual Report Download - page 27

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obtained, with respect to recent acquisitions, and intend to obtain with respect to pending or future acquisitions,
appropriate purchase price adjustments or indemnifications that we believe are sufficient to cover any related
potential liability. Although we cannot provide any assurance, based on the preliminary environmental assessments,
we believe we have funds available to cover any liability from environmental contamination or potential
contamination and we are not aware of any environmental contamination of our facilities material to our overall
business, financial condition or results of operation.
There has been an increasing number of claims and litigation against owners and managers of rental
properties relating to moisture infiltration, which can result in mold or other property damage. When we receive a
complaint concerning moisture infiltration, condensation or mold problems and/or become aware that an air quality
concern exists, we implement corrective measures in accordance with guidelines and protocols we have developed
with the assistance of outside experts. We seek to work proactively with our tenants to resolve moisture infiltration
and mold-related issues, subject to our contractual limitations on liability for such claims. However, we can make
no assurance that material legal claims relating to moisture infiltration and the presence of, or exposure to, mold will
not arise in the future.
Delays in development and fill-up of our properties would reduce our profitability. Since January 1, 1999,
we have opened 63 newly developed self storage facilities and 17 facilities that combine self storage and
containerized storage space at the same location, with aggregate development costs of $534.6 million. At December
31, 2003 the Company had 38 projects in development that have total estimated costs of $156.3 million.
Construction delays due to weather, unforeseen site conditions, personnel problems, and other factors, as well as
cost overruns, would adversely affect the Companys profitability. Delays in the rent-up of newly developed
facilities as a result of competition or other factors would also adversely impact the Companys profitability.
Property taxes can increase and cause a decline in yields on investments. Each of our properties is subject
to real property taxes. These real property taxes may increase in the future as property tax rates change and as our
properties are assessed or reassessed by tax authorities. Such increases could adversely impact the Companys
profitability.
We must comply with the Americans with Disabilities Act and fire and safety regulations, which can
require significant expenditures. All our properties must comply with the Americans with Disabilities Act and with
related regulations (the ADA). The ADA has separate compliance requirements for public accommodations and
commercial facilities, but generally requires that buildings be made accessible to persons with disabilities.
Various state laws impose similar requirements. A failure to comply with the ADA or similar state laws could result
in government imposed fines on us and the award of damages to individuals affected by the failure. In addition, we
must operate our properties in compliance with numerous local fire and safety regulations, building codes, and other
land use regulations. Compliance with these requirements can require us to spend substantial amounts of money,
which would reduce cash otherwise available for distribution to shareholders. Failure to comply with these
requirements could also affect the marketability of our real estate facilities.
We have no interest in Canadian self-storage facilities owned by the Hughes family
B. Wayne Hughes, Chairman of the Board, and his family (the Hughes Family) have ownership interests
in, and operate, approximately 38 self-storage facilities in Canada under the name Public Storage. We currently do
not own any interests in these facilities nor do we own any facilities in Canada. The Hughes Family owns
approximately 36% of our common stock outstanding at December 31, 2003. We have a right of first refusal to
acquire the stock or assets of the corporation engaged in the operation of the 38 self-storage facilities in Canada if
the Hughes Family or the corporation agrees to sell them. However, we have no interest in the operations of this
corporation, have no right to acquire this stock or assets unless the Hughes Family decides to sell, and receive no
benefit from the profits and increases in value of the Canadian self-storage facilities.
Company personnel have been engaged in the supervision and the operation of these 38 properties and have
provided certain administrative services for the Canadian owners, and certain other services, primarily tax services,
with respect to certain other Hughes Family interests. The Hughes Family and the Canadian owners have
reimbursed us at cost for these services (U.S. $542,499 with respect to the Canadian operations and U.S. $151,063