Public Storage 2014 Annual Report Download - page 27

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We may incur significant liabilities from environmental contamination 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 were
not 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 customers’ 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 customers to resolve issues, subject to our contractual limitations on
liability for such claims.
We are not aware of any environmental contamination 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 ability to raise capital to fund our activities may be adversely affected by challenging market
conditions. If we were unable to issue preferred shares or borrow at reasonable rates, prospective earnings
growth through expanding our asset base could be limited.
We have exposure to European operations through our ownership in Shurgard Europe.
We own a 49% equity interest in Shurgard Europe, with our investment having a $395 million
book value at December 31, 2014. As a result, we are exposed to additional risks related to international
operations that may adversely impact our business and financial results, including the following:
x Currency risks: Currency fluctuations can impact the fair value of our equity investment in
Shurgard Europe, as well as future repatriation of cash.
x 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 processes, as well as potentially
adverse income tax, property tax, or other tax burdens.