8-KMaterial AgreementsShareholder MattersCorporate Changes+1

Public Storage 8-K Report, Material Agreement (May 30, 2014)

Filed May 30, 2014For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) has announced the issuance of 10,000,000 depositary shares, each representing a 1/1,000th interest in its 6.00% Cumulative Preferred Shares, Series Z. This offering, conducted through an underwriting agreement with major financial institutions, aims to raise capital. The company has also granted the underwriters an option to purchase up to an additional 1.5 million depositary shares to cover potential over-allotments. This issuance introduces a new class of preferred stock that comes with specific terms regarding distributions and redemption. Notably, the terms of these Series Z Preferred Shares may impose restrictions on the company's ability to distribute or redeem other junior or parity securities if preferred distributions are not declared. Investors should review the Articles Supplementary and Master Deposit Agreement for a full understanding of their rights and the company's obligations.

Key Highlights

  • 1Public Storage is issuing 10,000,000 depositary shares representing 6.00% Cumulative Preferred Shares, Series Z.
  • 2The offering is being conducted under an Underwriting Agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC, UBS Securities LLC, and Wells Fargo Securities, LLC.
  • 3An option to purchase up to 1,500,000 additional depositary shares has been granted to underwriters to cover over-allotments.
  • 4The issuance of these preferred shares may impose restrictions on distributions or redemptions of other securities ranking junior to or on parity with the Series Z Preferred Shares if preferred distributions are not paid.
  • 5The Board of Trustees has authorized the issuance of up to 100,000,000 preferred shares, and 11,500 have been designated as Series Z.
  • 6Several of the underwriters or their affiliates are also lenders and agents under Public Storage's existing credit facilities, which is a common practice in such transactions.

Frequently Asked Questions

This 8-K filing announces Public Storage's entry into a material definitive agreement for the sale of 10,000,000 depositary shares representing a new series of preferred stock (Series Z). It also details modifications to the rights of security holders due to this issuance and the filing of Articles Supplementary to designate these shares.

The Series Z Preferred Shares carry a 6.00% cumulative dividend. A key feature is that if the company fails to declare distributions on these preferred shares during any distribution period, it will be subject to certain restrictions regarding distributions, redemptions, purchases, or liquidation payments on other shares that rank junior to or on parity with the Series Z Preferred Shares.

The filing notes that lenders under Public Storage's credit facility include affiliates of the underwriters. For example, Bank of America N.A. (affiliate of Merrill Lynch), Morgan Stanley Bank (affiliate of Morgan Stanley), UBS Loan Finance LLC (affiliate of UBS), and Wells Fargo Bank (affiliate of Wells Fargo Securities) are involved. Wells Fargo Bank also acts as the agent and lender for a term loan. While common, this suggests established banking relationships and potential for continued business between the company and these financial institutions.

The Company's Declaration of Trust authorizes the Board of Trustees to issue up to 100,000,000 preferred shares of beneficial interest without further shareholder action. With this issuance, 11,500 of these have been designated as 6.00% Cumulative Preferred Shares, Series Z.