Public Storage 2010 Annual Report Download - page 65

51
Our financial profile is characterized by a low level of debt-to-total-capitalization. We expect to fund our
long-term growth strategies and debt obligations with (i) cash and marketable securities at December 31, 2010, (ii)
internally generated retained cash flows, (iii) depending upon current market conditions, proceeds from the issuance
of equity securities, and (iv) in the case of acquisitions of facilities, the assumption of existing debt. In general, our
strategy is to continue to finance our growth with permanent capital, either retained operating cash flow or capital
raised through the issuance of common or preferred equity to the extent that market conditions are favorable.
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. We have chosen this
method of financing for the following reasons: (i) under the REIT structure, a significant amount of operating cash
flow needs to be distributed to our shareholders, making it difficult to repay debt with operating cash flow alone, (ii)
our perpetual preferred shares have no sinking fund requirement or maturity date and do not require redemption, all
of which eliminate future refinancing risks, (iii) after the end of a non-call period, we have the option to redeem the
preferred shares at any time, which enables us to refinance higher coupon preferred shares with new preferred shares
at lower rates if appropriate, (iv) preferred shares do not contain covenants, thus allowing us to maintain significant
financial flexibility, and (v) dividends on the preferred shares can be applied to satisfy our REIT distribution
requirements.
2XUFUHGLWUDWLQJVRQHDFKRIRXUVHULHVRISUHIHUUHGVKDUHVDUH³%DD´E\0RRG\¶V,³%%%+´E\6WDQGDUG
3RRU¶V DQG³$-´ by Fitch Ratings.
Summary of Current Cash Balances and Short-term Capital Commitments: At December 31, 2010, we
had approximately $456.2 million of cash and $102.3 million of short-term investments in high-grade corporate
securities. We also have access to our $300 million line of credit which does not expire until March 27, 2012. Our
capital commitments for 2011 are approximately $153.3 million and include (i) $133.8 million in principal payments
on debt and (ii) $19.5 million for the acquisition of five self-storage facilities described below.
Loan to PSB: On February 9, 2011, we loaned PSB $121.0 million which PSB used to re-pay borrowings
against their credit facility and repurchase preferred stock. The loan has a six-month term, no prepayment penalties,
and bears interest at a rate of three-month LIBOR plus 0.85%.
Access to Additional Capital: We have a revolving line of credit for borrowings up to $300 million which
expires in March 2012. There were no outstanding borrowings on the line of credit at February 28, 2011. We
seldom borrow on the line of credit and generally view borrowings on the line as a means to bridge capital needs
until we are able to refinance them with permanent capital.
Our ability to raise additional capital by issuing our common or preferred securities is dependent upon
capital market conditions. Capital markets have improved from the severe stress experienced in late 2008 and early
2009, and we have recently issued preferred shares at favorable rates (in April and May, 2010, we issued cumulative
preferred shares at a rate of 6.875% for gross proceeds of $145 million, and in October 2010 we issued cumulative
preferred shares at a rate of 6.500% for gross proceeds of $125 million). Despite our recent issuances of preferred
equity, there can be no assurance that market conditions will continue to permit preferred security issuances at
amounts and at rates that we will find reasonable. We are not dependent, however, on raising capital to fund our
operations or meet our obligations.
Debt Service Requirements: At December 31, 2010, outstanding debt totaled approximately
$568.4 million. Approximate principal maturities are as follows (amounts in thousands):