Public Storage 1996 Annual Report Download - page 23

P UBLIC S TORAGE , I NC . 1996 A NNUAL R EPORT
21
10. P ROPERTY M ANAGEMENT AND A DVISORY C ONTRACTS
Pursuant to the PSMI Merger, the Company became self-advised and self-managed; accordingly, effective November 16, 1995, the Company no
longer incurs either advisory fees or property management fees.
Prior to the PSMI Merger, PSMI provided property operation services for a fee to the Company under a management agreement and an affiliate
of PSMI administered the day-to-day investment operations for a fee pursuant to an advisory contract. Pursuant to the management agreement,
PSMI or an affiliate of PSMI operated all of the properties in which the Company invested in for a fee which is equal to 6% of the gross revenues of
the self-storage facilities spaces managed and 5% of the gross revenues of the business park facilities operated. Management fees relating to the
Company’s real estate facilities, which are included in cost of operations, amounted to $10,232,000 and $8,355,000 in 1995 and 1994, respectively.
During 1994 and 1995 (from January 1, 1995 through November 16, 1995), the Company paid advisory fees equal to $4,983,000 and $6,437,000
pursuant to the advisory contract.
In connection with the PSMI Merger, the Company acquired property management contracts for (i) self-storage facilities owned by affiliated
entities and, to a lesser extent, third parties and (ii) through ownership of a 95% economic interest in a subsidiary, commercial properties. These
facilities constitute all of the United States self-storage facilities and commercial properties doing business under the “Public Storage” name and,
with the exception of third party properties, all those in which the Company had an interest. At December 31, 1996, the Company managed 1,101
self-storage facilities (721 owned by consolidated facilities, 343 owned by unconsolidated affiliates and 37 owned by third parties) and 45 com-
mercial properties (35 owned by consolidated facilities and 10 owned by unconsolidated affiliates).
The property management contracts generally provide for compensation equal to 6%, in the case of the self-storage facilities, and 5%, in the case
of the commercial properties of gross revenues of the facilities managed. Under the supervision of the property owners, the Company coordinates
rental policies, rent collections, marketing activities, the purchase of equipment and supplies, maintenance activity, and the selection and engage-
ment of vendors, suppliers and independent contractors. In addition, the Company assists and advises the property owners in establishing policies
for the hire, discharge and supervision of employees for the operation of these facilities, including resident managers, assistant managers, relief
managers and billing and maintenance personnel.
11. S HAREHOLDERS ’ E QUITY
Preferred Stock
At December 31, 1996 and 1995, the Company had the following series of Preferred Stock outstanding:
At December 31, 1996 At December 31, 1995
Dividend Shares Carrying Shares Carrying
Series Rate Outstanding Amount Outstanding Amount
Series A 10.000% 1,825,000 $ 45,625,000 1,825,000 $ 45,625,000
Series B 9.200% 2,386,000 59,650,000 2,386,000 59,650,000
Series C Adjustable 1,200,000 30,000,000 1,200,000 30,000,000
Series D 9.500% 1,200,000 30,000,000 1,200,000 30,000,000
Series E 10.000% 2,195,000 54,875,000 2,195,000 54,875,000
Series F 9.750% 2,300,000 57,500,000 2,300,000 57,500,000
Series G 8.875% 6,900 172,500,000 6,900 172,500,000
Series H 8.45% 6,750 168,750,000 – –
Series I 8.625% 4,000 100,000,000 – –
Total Senior Preferred Stock 11,123,650 718,900,000 11,112,900 450,150,000
Convertible 8.25% 2,238,975 55,974,000 2,300,000 57,500,000
Mandatory Convertible – Series CC 13.00% 58,955 58,955,000 – –
Mandatory Convertible Participating Variable – – 31,200 28,470,000
Total Convertible Preferred Stock 2,297,930 114,929,000 2,331,200 85,970,000
13,421,580 $833,829,000 13,444,100 $536,120,000
During 1996, the Company issued 6,750,000 depositary shares (depositary shares, each representing 1/1,000 of a share) of its 8.45% Series H
Preferred Stock (January 25, 1996) raising net proceeds of approximately $163.1 million and 4,000,000 depositary shares (depositary shares,
each representing 1/1,000 of a share) of its 8
5
⁄ 8% Series I Preferred Stock (November 1, 1996) raising net proceeds of approximately $96.7 million.
In April 1996, in connection with the acquisition of limited partnership interests (Note 3), the Company issued $58,955,000 (58,955 shares) of
its Mandatory Convertible Preferred Stock, Series CC (the “Series CC Preferred Stock”). The Series CC Preferred Stock ranks junior to the Company’s
Cumulative Senior Preferred Stock with respect to general preference rights and has a liquidation value of $1,000 per share. Other significant