Public Storage 2003 Annual Report Download - page 65

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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 annual distributions equal to the lesser of (i) five times the per
share dividend on the common stock or (ii) $2.45. The depositary shares are non-cumulative, and have no
preference over our Common Stock either as to dividends or in liquidation.
Capital Improvement Requirements: During 2004, we have budgeted approximately $53.0 million for
capital improvements. Capital improvements include major repairs or replacements to the facilities which keep the
facilities in good operation condition and maintain their visual appeal. Capital improvements do not include costs
relating to the development or expansion of facilities.
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, 2003, we had total outstanding notes payable of
approximately $76.0 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. It is our current intent to fully amortize our debt as opposed to
refinance debt maturities with additional debt.
Acquisition and Development of Facilities: No facilities were acquired from third parties during 2003.
During 2002, we acquired nine self-storage facilities for approximately $30.1 million. Our low level of third party
acquisitions over the past two years is not indicative of either the supply of facilities offered for sale or our ability to
finance the acquisitions, but is primarily due to prices sought by sellers and our lack of desire to pay such prices.
During 2004, we will continue to seek to acquire additional self-storage facilities from third parties; however, it is
difficult to estimate the amount of third party acquisitions we will undertake.
During 2003, we acquired through a merger all of the remaining limited partnership interest not currently
owned by the Company in PS Partners IV, Ltd., a partnership which is consolidated with the Company. The
acquisition cost was approximately $23,377,000, consisting of the issuance of 426,859 shares of our common stock
($13,510,000) valued at the closing trading price of the shares at the date of the acquisition, and cash of
approximately $9,867,000; this acquisition had the effect of reducing minority interest by $6,690,000, with the
excess of cost over underlying book value ($16,687,000) allocated to real estate.
In June 2004, we anticipate that we will acquire a limited partnership interest in one of our Consolidated
Entities. Our estimate of the acquisition cost is approximately $25 million.
In November 1999, we formed a second joint venture partnership for the development of approximately
$100 million of self-storage facilities. The venture is funded solely with equity capital consisting of 51% from us
and 49% from the joint venture partner. The term of the joint venture is 15 years. After six years, the joint venture
partner has the right to cause the Company to purchase the joint venture partners interest for an amount necessary to
provide them with a maximum return of 10.75% or less in certain circumstances. Our estimate of the purchase price
of this interest is approximately $105.0 million.
On January 1, 2004, we entered into a joint venture with an institutional investor for the purpose of
acquiring up to $125.0 million of existing self-storage properties in the United States from third parties. The venture
will be funded entirely with equity consisting of 30% from the Company and 70% from the institutional investor.
The venture has a nine month investment period (through September 2004) to identify and acquire facilities. To
date no facilities have been acquired by the venture.
We currently have a development pipeline of 38 self-storage facilities and expansions to existing self-
storage facilities with an aggregate estimated cost of approximately $156.3 million (unaudited). Approximately
$69.6 million of development cost has been incurred as of December 31, 2003. We have acquired the land for 33 of
these projects, which have an aggregate estimated cost of approximately $121.4 million (unaudited), and costs
incurred as of December 31, 2003 of approximately $67.8 million. The remaining five facilities represent identified
sites where we have an agreement in place to acquire the land, generally within one year. We anticipate that the
development of these projects will be funded solely by the Company.