Public Storage 2003 Annual Report Download - page 63

53
proceeds from the placement of permanent capital. As of December 31, 2003, we had no outstanding borrowings
under our $200 million bank line of credit which matures on October 31, 2004. We are currently in the process of
amending this credit facility to provide for, among other items, an extension of the maturity date and enhancement
to certain covenants.
Over the past three years we have funded substantially all of our acquisitions with permanent capital (both
common and preferred securities). We have elected to use preferred securities as a form of leverage despite the fact
that the dividend rates of our preferred securities exceed the prevailing market interest rates on conventional debt.
We have chosen this method of financing for the following reasons: (i) under the REIT structure, a significant
amount of operating cash flow needs to be distributed to our shareholders making it difficult to repay debt with
operating cash flow alone, (ii) 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, (iii) after the end of a non-call
period, we have the option to redeem the preferred stock at any time, which in 2003, 2002, and 2001 enabled us to
effectively refinance higher coupon preferred stock with new preferred stock at lower rates, (iv) preferred stock does
not contain onerous covenants, thus allowing us to maintain significant financial flexibility, and (v) dividends on the
preferred stock can be applied to our REIT distribution requirements.
Our credit ratings on each of our series of Cumulative Preferred Stock by each of the three major credit
agencies are Baa2 by Moodys and BBB+ by both Standard & Poors and Fitch IBCA.
Our portfolio of real estate facilities remains substantially unencumbered. At December 31, 2003, we had
mortgage debt outstanding of $16.6 million (which encumbers 21 facilities with a book value of $55.5 million) and
unsecured debt in the amount of $59.4 million.
We believe that our size and financial flexibility enables us to access capital when appropriate. Since 2001,
we completed the following capital raising activities (amounts are presented net of issuance costs):
Securities issued
Date issued
Cumulative
Preferred Stock
Equity Stock,
Series A
(in thousands)
8.600% Cumulative Preferred Stock, Series Q January 19, 2001 $ 166,966 $ -
Public issuance of Equity Stock, Series A April 11, 2001 - 51,836
Direct placement of Equity Stock, Series A May 31, 2001 - 20,294
8.00% Cumulative Preferred Stock, Series R September 28, 2001 493,085 -
7.875% Cumulative Preferred Stock, Series S October 31, 2001 139,022 -
Direct placement of Equity Stock, Series A November 21, 2001 - 2,690
7.625% Cumulative Preferred Stock, Series T January 18, 2002 145,075 -
7.625% Cumulative Preferred Stock, Series U February 19, 2002 145,075 -
7.500% Cumulative Preferred Stock, Series V September 30, 2002 166,866 -
6.500% Cumulative Preferred Stock, Series W October 6, 2003 128,126 -
6.500% Cumulative Preferred Stock, Series X November 13, 2003 116,020 -
6.850% Cumulative Preferred Stock, Series Y January 2, 2004 40,000 -
6.250% Cumulative Preferred Stock, Series Z March 5, 2004 112,500 -
$ 1,652,735 $ 74,820
On January 2, 2004, in a private transaction, we sold 1,600,000 shares (par value of $40,000,000) of our
Preferred Stock, Series Y, priced at 6.850% and on March 5, 2004, 4,500,000 depositary shares, with each
depositary share representing 1/1,000 of a share of 6.250% Cumulative Preferred Stock, Series Z (par value
$112,500,000).