Public Storage 2003 Annual Report Download - page 26

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Series A. Holders of preferred securities are entitled to receive, when declared by our board of directors, cash
distributions in preference to holders of our common stock and Equity Stock, Series A.
Since our business consists primarily of acquiring and operating real estate, we are subject to real estate
operating risks.
The value of our investments may be reduced by general risks of real estate ownership. Since we derive
substantially all of our income from real estate operations, we are subject to the general risks of owning real estate-
related assets, including:
• lack of demand for rental spaces or units in a locale;
• changes in general economic or local conditions;
• potential terrorist attacks;
• changes in supply of or demand for similar or competing facilities in an area;
• the impact of environmental protection laws;
• changes in interest rates and availability of permanent mortgage funds which may render the sale or
financing of a property difficult or unattractive; and
• changes in tax, real estate and zoning laws.
There is significant competition among self-storage facilities and from other storage alternatives. Most of
our properties are self-storage facilities, which generated 95% of our rental revenue during 2003. Local market
conditions will play a significant part in how competition will affect us. Competition in the market areas in which
many of our properties are located from other self-storage facilities and other storage alternatives is significant and
has affected the occupancy levels, rental rates and operating expenses of some of our properties. Any increase in
availability of funds for investment in real estate may accelerate competition. Further development of self-storage
facilities may intensify competition among operators of self-storage facilities in the market areas in which we
operate. As discussed in Managements Discussion and Analysis of Financial Condition and Results of Operations
 Self-Storage Operations, the net operating income prior to depreciation of the Consistent Group of facilities
declined 1.8% in the year ended December 31, 2003 as compared to 2002. Such competition could have been a
factor in this decline.
We may incur significant environmental costs and liabilities. As an owner and operator of real properties,
under various federal, state and local environmental laws, we are required to clean up spills or other releases of
hazardous or toxic substances on or from our properties. Certain environmental laws impose liability whether or not
the owner knew of, or was responsible for, the presence of the hazardous or toxic substances. In some cases,
liability may not be limited to the value of the property. The presence of these substances, or the failure to properly
remediate any resulting contamination, whether from environmental or microbial issues, also may adversely affect
the owners or operators ability to sell, lease or operate its property or to borrow using its property as collateral.
We have conducted preliminary environmental assessments of most of our properties (and intend to
conduct these assessments in connection with property acquisitions) to evaluate the environmental condition of, and
potential environmental liabilities associated with, our properties. These assessments generally consist of an
investigation of environmental conditions at the property (not including soil or groundwater sampling or analysis),
as well as a review of available information regarding the site and publicly available data regarding conditions at
other sites in the vicinity. In connection with these property assessments, our operations and recent property
acquisitions, we have become aware that prior operations or activities at some facilities or from nearby locations
have or may have resulted in contamination to the soil or groundwater at these facilities. In this regard, some of our
facilities are or may be the subject of federal or state environment investigations or remedial actions. We have