Public Storage 2014 Annual Report Download - page 28

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x Impediments to capital repatriation could negatively impact the realization of our investment
in Shurgard Europe: Laws in Europe and the U.S. may create, impede or increase our cost to
repatriate capital or earnings from Shurgard Europe.
x Risks of collective bargaining and intellectual property: Collective bargaining, which is
prevalent in certain areas in Europe, could negatively impact Shurgard Europe’s labor costs or
operations. Many of Shurgard Europe’s employees participate in various national unions.
x Potential operating and individual country risks: Economic slowdowns or extraordinary
political or social change in the countries in which it operates have posed, and could continue
to pose, challenges or result in future reductions of Shurgard Europe’s operating cash flows.
x Impediments of Shurgard Europe’s joint venture structure: Shurgard Europe’s significant
decisions, involving activities such as borrowing money, capital contributions, raising capital
from third parties, as well as selling or acquiring significant assets, require the consent of our
joint venture partner. As a result, Shurgard Europe may be precluded from taking advantage of
opportunities that we would find attractive. In addition, we could be unable to separately
pursue such opportunities due to certain market exclusivity provisions of the Shurgard Europe
joint venture agreement, and our 49% equity investment may not be easily sold or readily
accepted as collateral by potential lenders to Public Storage due to the joint venture structure.
x Risks related to Shurgard Europe’s Debt: Shurgard Europe has a total of €407.5 million in
debt outstanding at December 31, 2014, of which €35.0 million is due annually in each of
2015, 2016 and 2017 and €100.0 million is due annually in each of 2021, 2024 and 2025. If
Shurgard Europe is not able to refinance its debt when due or otherwise service its debt
obligations due to a constrained credit market, negative operating trends or other reasons, our
equity investment in Shurgard Europe could be negatively impacted.
The Hughes Family could control us and take actions adverse to other shareholders.
At December 31, 2014, B. Wayne Hughes, our former Chairman, and his family (together, the
“Hughes Family”), which includes two members of the Board, owned approximately 15.5% of our
aggregate outstanding common shares. Our declaration of trust permits the Hughes Family to own up to
35.66% of our outstanding common shares while it generally restricts the ownership by other persons and
entities to 3% of our outstanding common shares. Consequently, the Hughes Family may significantly
influence matters submitted to a vote of our shareholders, including electing trustees, amending our
organizational documents, dissolving and approving other extraordinary transactions, such as a takeover
attempt, resulting in an outcome that may not be favorable to other shareholders.
Takeover attempts or changes in control could be thwarted, even if beneficial to shareholders.
In certain circumstances, shareholders might desire a change of control or acquisition of us, in
order to realize a premium over the then-prevailing market price of our shares or for other reasons.
However, the following could prevent, deter, or delay such a transaction:
x Provisions of Maryland law may impose limitations that may make it more difficult for a
third party to negotiate or effect a business combination transaction or control share
acquisition with Public Storage. Currently, the Board has opted not to subject the
Company to these provisions of Maryland law, but it could choose to do so in the future
without shareholder approval.
x To protect against the loss of our REIT status due to concentration of ownership levels,
our declaration of trust generally limits the ability of a person, other than the Hughes
Family or “designated investment entities” (each as defined in our declaration of trust), to
own, actually or constructively, more than 3% of our outstanding common shares or 9.9%