Public Storage 2012 Annual Report Download - page 30

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12
We may incur significant liabilities from hazardous wastes or moisture infiltration. Existing or future laws
impose or may impose liability on us to clean up environmental contamination on or around properties that we
currently or previously owned or operated, even if we weren’t responsible for or aware of the environmental
contamination or even if such environmental contamination occurred prior to our involvement with the property.
We have conducted preliminary environmental assessments on most of our properties, which have not identified
material liabilities. These assessments, commonly referred to as “Phase 1 Environmental Assessments,” include an
investigation (excluding soil or groundwater sampling or analysis) and a review of publicly available information
regarding the site and other nearby properties.
We are also subject to potential liability relating to moisture infiltration, which can result in mold or other
damage to our or our tenants’ property, as well as potential health concerns. When we receive a complaint or
otherwise become aware that an air quality concern exists, we implement corrective measures and seek to work
proactively with our tenants to resolve issues, subject to our contractual limitations on liability for such claims.
We are not aware of any hazardous waste or moisture infiltration related liabilities that could be material to
our overall business, financial condition, or results of operation. However, we may not have detected all material
liabilities, we could acquire properties with material undetected liabilities, or new conditions could arise or develop
in the future. Settling any such liabilities could negatively impact our earnings and cash available for distribution to
shareholders, and could also adversely affect our ability to sell, lease, operate, or encumber affected facilities.
We incur liability from tenant and employment-related claims. From time to time we have to make
monetary settlements or defend actions or arbitration (including class actions) to resolve tenant or employment-
related claims and disputes.
Economic conditions can adversely affect our business, financial condition, growth and access to capital.
Our revenues and operating cash flow can be negatively impacted by reductions in employment and
population levels, household and disposable income, and other general economic factors that lead to a reduction in
demand for rental space in each of the markets in which we operate our properties.
Our ability to issue preferred shares or access other sources of capital, such as borrowing, has been in the
past, and may in the future be, adversely affected by challenging credit market conditions. The issuance of perpetual
preferred securities historically has been a significant source of capital to grow our business. We believe that we
have sufficient working capital and capacity under our credit facilities and our retained cash flow from operations to
continue to operate our business as usual and meet our current obligations. However, if we were unable to issue
preferred shares or borrow at reasonable rates, prospective earnings growth through expanding our asset base would
be limited.
We have exposure to European operations through our ownership in Shurgard Europe.
As a result of our ownership of 49% of the equity in Shurgard Europe with a book value of $411.1 million
at December 31, 2012, and our loan to Shurgard Europe totaling $411.0 million at December 31, 2012, we are
exposed to additional risks related to the ownership and operation of international businesses that may adversely
impact our business and financial results, including the following:
• Currency risks: Currency fluctuations can impact the fair value of our investment in, and loan to
Shurgard Europe, as well as the related income we receive.
• Legislative, tax, and regulatory risks: We are subject to complex foreign laws and regulations related to
permitting and land use, the environment, labor, and other areas, as well as income, property, sales,
value added and employment tax laws. These laws can be difficult to apply or interpret and can vary in
each country or locality, and are subject to unexpected changes in their form and application due to
regional, national, or local political uncertainty and other factors. Such changes, or Shurgard’s failure to
comply with these laws, could subject it to penalties or other sanctions, adverse changes in business