8-KMaterial AgreementsShareholder MattersCorporate Changes+1

Public Storage 8-K Report, Material Agreement (Oct 6, 2010)

Filed October 6, 2010For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) has filed a Form 8-K on October 5, 2010, reporting a material definitive agreement related to the issuance of new preferred shares. The company entered into an Underwriting Agreement to sell 4,800,000 depositary shares, each representing 1/1,000 of a 6.5% Cumulative Preferred Share of beneficial interest, Series P. An option for an additional 720,000 shares to cover over-allotments was also granted. This issuance introduces a new class of preferred stock, Series P, which carries a 6.5% cumulative dividend. Investors should note that the terms of these new preferred shares will impose certain restrictions on the company's ability to make distributions on, redeem, purchase, or acquire, or make liquidation payments on, any other shares of beneficial interest that rank junior to or on parity with the Series P Preferred Shares, particularly if dividends on the preferred shares are not declared. The company's Board of Trustees has the authority to issue up to 100,000,000 shares of preferred stock, and these Series P shares are part of that authorized capital.

Key Highlights

  • 1Public Storage entered into an Underwriting Agreement to issue 4,800,000 depositary shares representing 6.5% Cumulative Preferred Shares, Series P.
  • 2An over-allotment option for up to 720,000 additional depositary shares was granted to the underwriters.
  • 3The issuance of Series P Preferred Shares will place restrictions on distributions to junior or parity securities if preferred dividends are not declared.
  • 4The company's Board of Trustees has the authority to issue up to 100,000,000 preferred shares.
  • 5The Series P Preferred Shares are cumulative, meaning any missed dividend payments must be paid out before dividends can be paid to other classes of shares.
  • 6This action expands the company's preferred equity capital structure.

Frequently Asked Questions

The main purpose of this 8-K filing is to report Public Storage's entry into a material definitive agreement for the sale of new preferred shares, specifically 4,800,000 depositary shares representing 6.5% Cumulative Preferred Shares, Series P.

The Series P Preferred Shares have a 6.5% cumulative dividend. A significant term is that the company's ability to make distributions on, or redeem, purchase, acquire, or make liquidation payments on, junior or parity securities will be restricted if dividends on the Series P Preferred Shares are not declared.

This issuance adds a new series of preferred stock to Public Storage's capital structure. The company has the authorization to issue a significant amount of preferred shares (up to 100,000,000), indicating flexibility in managing its capital needs through preferred equity.

Banc of America Securities LLC acted as the representative for the underwriters in this offering. The filing also notes that lenders under the company's credit facility include Merrill Lynch Bank USA, an affiliate of Banc of America Securities LLC.