Public Storage 1999 Annual Report Download - page 26

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At December 31, 1999, our investments in real estate entities consist of ownership interests in 13 partnerships, which principally own self-
storage facilities and an ownership interest in PSB. Such interests are non-controlling interests of less than 50% and are accounted for using
the equity method of accounting. Accordingly, earnings are recognized based upon our ownership interest in each of the partnerships. During
1999, 1998, and 1997, we recognized earnings from our investments of $32,183,000, $26,602,000 and $17,569,000, respectively, and received
cash distributions totaling $15,949,000, $17,968,000 and $15,673,000, respectively.
During 1999 and 1998, our investment in real estate entities decreased principally as a result of business combinations whereby the
Company eliminated approximately $66,690,000 and $86,966,000, respectively, of pre-existing investments in real estate entity investments.
Offsetting these decreases are additional investments made by the Company in other unconsolidated entities totaling $77,656,000 and
$319,159,000 (including $219,225,000 due to the deconsolidation of PSB) in 1999 and 1998, respectively.
In April 1997, the Company and an institutional investor formed a joint venture partnership for the purpose of developing up to $220 million
of storage facilities. As of December 31, 1999, the joint venture partnership had completed construction on 44 storage facilities with a total cost of
approximately $211.4 million, and had three facilities under construction with an aggregate cost incurred to date of approximately $13.0 million.
The partnership is funded solely with equity capital consisting of 30% from the Company and 70% from the institutional investor.
OTE 6. Revolving Line of Credit
The credit agreement (the “Credit Facility”) has a borrowing limit of $150 million and an expiration date of July 1, 2002. The expiration date
may be extended by one year on each anniversary of the credit agreement. Interest on outstanding borrowings is payable monthly. At our
option, the rate of interest charged is equal to (i) the prime rate or (ii) a rate ranging from the London Interbank Offered R ate (“LIBOR ”)
plus 0.40% to LIBO R plus 1.10% depending on the Company’s credit ratings and coverage ratios, as defined. In addition, the Company is
required to pay a quarterly commitment fee of 0.250% (per annum). The Credit Facility allows us, at our option, to request the group of banks
to propose the interest rate they would charge on specific borrowings not to exceed $50 million; however, in no case may the interest rate
proposal be greater than the amount provided by the Credit Facility.
Under covenants of the Credit Facility, we are required to (i) maintain a balance sheet leverage ratio of less than 0.40 to 1.00, (ii) maintain net
income of not less than $1.00 for each fiscal quarter, (iii) maintain certain cash flow and interest coverage ratios (as defined) of not less than 1.0
to 1.0 and 5.0 to 1.0, respectively, and (iv) maintain a minimum total shareholders’equity (as defined). In addition, we are limited in our ability
to incur additional borrowings (we are required to maintain unencumbered assets with an aggregate book value equal to or greater than three
times our unsecured recourse debt) or sell assets.We were in compliance with the covenants of the Credit Facility at December 31, 1999.
OTE 7. Notes Payable
Notes payable at December 31, 1999 and 1998 consist of the following:
1999 1998
Carrying Carrying
(Amounts in thousands) amount Fair value amount Fair value
7.08% to 7.66% unsecured senior notes, due at varying dates
between November 2003 and January 2007 $138,000 $138,000 $46,000 $46,000
Mortgage notes payable:
10.55% mortgage notes secured by real estate facilities,
principal and interest payable monthly, due August 2004 26,231 27,438 28,401 30,942
7.134% to 10.5% mortgage notes secured by real estate facilities,
principal and interest payable monthly, due at varying dates
between May 2004 and September 2028 3,107 3,107 7,025 7,025
$167,338 $168,545 $81,426 $83,967
All of our notes payable are fixed rate. The senior notes require interest and principal payments to be paid semi-annually and have various
restrictive covenants, all of which have been met at December 31, 1999.
U B L I C T O R A G E ,N C . 1999 N N U A L RE P O R T