Public Storage 2011 Annual Report Download - page 30

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Board has opted not to subject the Company to the statutory limitations of either the business combination
provisions or the control share acquisitions provisions of Maryland law, but the Board may change this option as to
either statute in the future. If the Board chooses to make them applicable to us, these provisions could delay, deter
or prevent a transaction or change of control that might involve a premium price for holders of common shares or
might otherwise be in their best interest. Similarly, (1) limitations on removal of trustees in our declaration of trust,
(2) restrictions on the acquisition of our shares of beneficial interest, (3) the power to issue additional common
shares, preferred shares or equity shares, (4) the advance notice provisions of our bylaws and (5) the Board’s ability
under Maryland law, without obtaining shareholder approval, to implement takeover defenses that we may not yet
have and to take, or refrain from taking, other actions without those decisions being subject to any heightened
standard of conduct or standard of review, could have the same effect of delaying, deterring or preventing a
transaction or a change in control that might involve a premium price for holders of the common shares or might
otherwise be in common shareholders’ best interest.
To preserve our status as a REIT under the ,QWHUQDO5HYHQXH&RGHRIDVDPHQGHGWKH³&RGH´RXU
declaration of trust contains limitations on the number and value of shares of beneficial interest that any person may
own. These ownership limitations generally limit the ability of a person, other than the Hughes Family (as defined
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own more than 3% of our outstanding common shares or 9.9% of the outstanding shares of any class or series of
preferred or equity shares, in each case, in value or number of shares, whichever is more restrictive, unless an
exemption is granted by our board of trustees. These limitations could discourage, delay or prevent a transaction
involving a change in control of our company not approved by our board of trustees.
If we failed to qualify as a REIT for income tax purposes, we would be taxed as a corporation, which would
substantially reduce funds available for payment of dividends.
Investors are subject to the risk that we may not qualify as a REIT for income tax purposes. REITs are
subject to a range of complex organizational and operational requirements. As a REIT, we must distribute at least
90% of our REIT taxable income to our shareholders. Other restrictions apply to our income and assets. Our REIT
status is also dependent upon the ongoing qualification of our affiliate, PSB, as a REIT, as a result of our substantial
ownership interest in that company.
For any taxable year that we fail to qualify as a REIT and are unable to avail ourselves of relief provisions
set forth in the Code, we would be subject to federal income tax at the regular corporate rates on all of our taxable
income, whether or not we make any distributions to our shareholders. Those taxes would reduce the amount of
cash available for distribution to our shareholders or for reinvestment and would adversely affect our earnings. As a
result, our failure to qualify as a REIT during any taxable year could have a material adverse effect upon us and our
shareholders. Furthermore, unless certain relief provisions apply, we would not be eligible to elect REIT status
again until the fifth taxable year that begins after the first year for which we fail to qualify.
We may pay some taxes, reducing cash available for shareholders.
Even if we qualify as a REIT for federal income tax purposes, we are required to pay some federal, foreign,
state and local taxes on our income and property. Since January 1, 2001, certain corporate subsidiaries of the
Company have elected to be treated aV³WD[DEOH5(,7VXEVLGLDULHV´RIWKH&RPSDQ\IRUIHGHUDOLQFRPHWD[SXUSRVHV
A taxable REIT subsidiary is taxable as a regular corporation and may be limited in its ability to deduct interest
payments made to us in excess of a certain amount. In addition, to the extent that amounts paid to us by our taxable
REIT subsidiaries are in excess of amounts that would be paid under similar arrangements among unrelated parties,
we could be subject to a 100% penalty tax on the excess payments. To the extent that the Company is required to
pay federal, foreign, state or local taxes or federal penalty taxes, we will have less cash available for distribution to
shareholders.