Public Storage 2011 Annual Report Download - page 22

8
Financing of the Company’s Growth Strategies
Overview of financing strategy: Over the past three years we funded the cash portion of our acquisition
and development activities with permanent capital (predominantly retained cash flow and the net proceeds from the
issuance of 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 Item 7, ³0DQDJHPHQW¶V'LVFXVVLRQDQG$QDO\VLVRI)LQDQFLDO&RQGLWLRQDQG
Results of Operations-Liquidity and Capital Resources.’’ Our present intention is to continue to finance
substantially all our growth with internally generated cash flows and permanent capital.
Issuance of preferred and common securities: We believe that we are not dependent upon raising capital
to fund our existing operations or meet our obligations, due to our low levels of debt and significant cash from
operations available for principDOSD\PHQWVRQGHEWDQGUHLQYHVWPHQWVHH³0DQDJHPHQW¶V'LVFXVVLRQDQG$QDO\VLV
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capital is important to growing our asset base. When growth capital is needed, we select either common or preferred
securities based upon the relative cost of capital. For at least the last ten years, we have raised cash proceeds for
growth and other corporate purposes primarily through the issuance of preferred securities, while we have issued
common stock only in connection with mergers and the acquisition of interests in real estate entities. During periods
of favorable market conditions, we have generally been able to raise capital at attractive costs; however, we are
dependent upon capital market conditions and there can be no assurance that future market conditions will be
favorable. During the years ended December 31, 2011 and 2010, we issued approximately $862.5 million and
$270.0 million, respectively, of preferred securities, and on January 12, 2012, we issued another $460.0 million of
preferred securities.
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financing, and repaid those amounts with permanent capital. When we have assumed debt in the past, we have
generally prepaid such amounts except in cases where the nature of the loan terms did not allow such prepayment, or
where a prepayment penalty made it economically disadvantageous to prepay. Our current debt outstanding was
assumed either in connection with property acquisitions or in connection with the merger with Shurgard in 2006.
While it is not our present intention to issue additional 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
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to meet our capital needs with preferred and common equity, this high rating, combined with our low level of debt,
could allow us to issue a significant amount of unsecured debt in the current markets if we were to choose to do so.
Issuance of securities in exchange for property: We have issued both our common and preferred securities
in exchange for real estate and other investments in the past. Future issuances will be dependent upon our financing
needs and capital market conditions at the time, including the market prices of our equity securities.
Joint Venture financing: We have formed and may form additional joint ventures to facilitate the funding
of future developments or acquisitions. However, we can generally issue preferred securities on more favorable
terms than joint venture financing.
Disposition of properties: Disposition of properties to raise capital has not been one of our strategies.
Generally, we have disposed of self-storage facilities only because of condemnation proceedings, which compel us
to sell. We do not presently intend to sell any significant number of self-storage facilities in the future, though there
can be no assurance that we will not.