Public Storage 1999 Annual Report Download - page 49

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For the Year Ended December 31,
(Amounts in thousands) 1999 1998 1997
Net income $ 287,885 $ 227,019 $178,649
Depreciation and amortization 137,719 111,799 92,750
Less – Depreciation with respect to non-real estate assets (4,915) (4,317) (1,394)
Depreciation from equity investments 19,721 13,884 11,474
Less – Gain on sale of real estate (2,154) — —
Minority interest in income 16,006 20,290 11,684
Net cash provided by operating activities 454,262 368,675 293,163
Distributions from operations to minority interests (25,300) (32,312) (20,929)
Cash from operations allocable to the Company’s shareholders 428,962 336,363 272,234
Less: preferred stock dividends (94,793) (78,375) (88,393)
Add: Non-recurring payment of dividends with respect to the
Series CC convertible stock — — 13,412
Cash from operations available to common shareholders 334,169 257,988 197,253
Capital improvements to maintain facilities:
Storage facilities (29,023) (29,677) (30,834)
Commercial properties — (2,037) (4,283)
Add back: minority interest share of capital improvements
to maintain facilities 1,269 2,476 2,513
Funds available for principal payments on debt, common
dividends and reinvestment 306,415 228,750 164,649
Regular cash distributions to common shareholders (113,297) (100,726) (86,181)
Funds available for principal payments on debt and
reinvestment prior to special distribution 193,118 128,024 78,468
Special distributions to common shareholders
(A)
(82,086) — —
Funds available for principal payments on debt and reinvestment $ 111,032 $ 128,024 $ 78,468
(A) This amount was declared in 1999 and paid in January 2000.
We expect to fund our growth strategies with cash on hand at December 31, 1999, internally generated retained cash flows, proceeds from
issuing equity securities and borrowings under our $150 million credit facility.We intend to repay amounts borrowed under the credit facility
from undistributed operating cash flow or, as market conditions permit and are determined to be advantageous, from the public or private
placement of equity securities.
We believe that our size and financial flexibility enables us to access capital for growth when appropriate. O ur financial profile is
characterized by a low level of debt to total capitalization, increasing net income, increasing cash flow from operations, and a conservative
dividend payout ratio with respect to the common stock. Our credit ratings on our Senior Preferred Stock by each of the three major credit
agencies are Baa2 by Moody’s and BBB+ by Standard and Poor’s and Duff & Phelps.
Our portfolio of real estate facilities remains substantially unencumbered. At December 31, 1999, the Company had mortgage debt
outstanding of $29.3 million and had consolidated real estate facilities with a book value of $3.4 billion.We generally only increased our debt
in connection with the acquisition of real estate facilities. Over the past three years we have funded substantially all of our acquisitions with
permanent capital (both common and preferred stock).We have elected to use preferred stock despite the fact that the dividend rates of our
preferred stock exceed current interest rates on conventional debt.We have chosen this method of financing for the following reasons: (i) 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, (ii) preferred stock allows us to leverage the common stock without the attendant interest rate or refinancing risks of debt,
and (iii) like interest payments, dividends on the preferred stock can be applied to our R EIT distributions requirements, which have helped
us to maintain a low common stock dividend payout ratio and retain cash flow.
U B LI C T O RAG E,N C . 1999 N N UAL RE P O RT