Public Storage 2002 Annual Report Download - page 18

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• Investing in the securities of other issuers for the purpose of exercising control: There have been two
instances in the past three years where the Company has invested in the securities of another publicly-
held REIT, one which resulted in control of that REIT (the merger with Storage Trust in 1999), and
one that did not. The Company may engage in these activities in the future as a component of its real
estate acquisition strategy. The Company also owns partnership interests in various consolidated and
unconsolidated partnerships. See “Investments in Real Estate and Real Estate Facilities.”
• To underwrite securities of other issuers: The Company has not engaged in this activity in the last
three years, and does not intend to in the future.
• Short-term investing: The Company has not engaged in investments in real estate or real estate entities
on a short-term basis in the last three years with the exception of the aforementioned investments in the
securities of other REIT’s. Instead, historically, the Company has acquired real estate assets and held
them for an extended period of time. The Company does not anticipate any such short-term
investments.
• Repurchasing or reacquiring the Company’s shares or other securities: The Board of Directors has
authorized the repurchase from time to time of up to 25,000,000 shares of the Company’s common
stock on the open market or in privately negotiated transactions. Cumulatively through December 31,
2002, we repurchased a total of 21,497,020 shares of common stock at an aggregate cost of
approximately $535,862,000. In addition, in 2001 and 2002, we redeemed or repurchased $636.9
million of our senior preferred stock and $80,000,000 of our preferred partnership units for cash,
representing a refinancing of these securities into lower-coupon preferred securities. Any future
repurchases of the Company’s common stock will depend primarily upon the attractiveness of
repurchases compared to our other investment alternatives. Future redemptions or repurchases of the
Company’s preferred securities, which will become available for redemption or repurchase on their
respective call dates, will be dependent upon the spread between market rates and the coupon rates of
these securities.
Financing of the Company’s Growth Strategies
Overview of Financing Strategy: Over the past three years we have funded substantially all of our
acquisitions with permanent capital (retained cash flow as well as 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, because of certain benefits described in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and
Capital Resources.’’ Our present intent is to continue to finance our growth with substantially permanent capital.
Borrowings: We have in the past used our $200 million line of credit described below under
“Borrowings” as temporary “bridge” financing, and repaid those amounts with permanent capital. In the last four
years, the only additional long-term debt we have incurred has been assumed in connection with property
acquisitions, most notably the merger with Storage Trust in 1999 wherein we assumed $100 million in senior
unsecured notes. While it is not our present intention to issue debt as a long-term financing strategy, we have
broad powers to borrow in furtherance of our objectives without a vote of our shareholders. These powers are
subject to a limitation on unsecured borrowings in the Company's Bylaws described in “Limitations on
Borrowings” below.
Issuance of Senior Securities: The Company has in the last three years, and expects to continue, to issue
additional series of preferred stock that are senior to the Company’s Common Stock and Equity Stock. At
December 31, 2002, we had approximately $1.8 billion of preferred stock outstanding. The preferred stock, which
was issued in series, has general preference rights with respect to liquidation and quarterly distributions. We
intend to continue to issue preferred securities without a vote of our common shareholders.