8-KMaterial AgreementsShareholder MattersCorporate Changes+1

Public Storage 8-K Report, Material Agreement (Jun 10, 2020)

Filed June 10, 2020For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) announced a significant capital raise through the issuance of 20,000,000 depositary shares, each representing a 1/1,000 interest in its 4.625% Cumulative Preferred Shares, Series L. This offering, executed via an Underwriting Agreement with several prominent financial institutions, aims to bolster the company's financial flexibility and fund ongoing operations or strategic initiatives. The company has also granted underwriters an option to purchase an additional 3,000,000 depositary shares, indicating strong demand expectations. This issuance of preferred stock, designated as Series L, carries a fixed dividend rate of 4.625% and is authorized under the company's existing preferred share structure. The terms of these preferred shares introduce certain restrictions on the company's ability to make distributions or take actions regarding junior or parity shares if preferred dividends are not declared. Investors should note the established relationships between the underwriters and lenders under PSA's existing credit facilities, which is standard practice but worth observing.

Key Highlights

  • 1Public Storage is issuing 20,000,000 depositary shares representing a 4.625% Cumulative Preferred Share, Series L.
  • 2The offering is being conducted through an Underwriting Agreement with BofA Securities, Morgan Stanley, UBS Securities, and Wells Fargo Securities.
  • 3An option for underwriters to purchase up to 3,000,000 additional depositary shares to cover over-allotments has been granted.
  • 4The issuance of Series L Preferred Shares is authorized under the company's existing Declaration of Trust.
  • 5The terms of the Series L Preferred Shares include restrictions on distributions to junior or parity shares if preferred dividends are not paid.
  • 6The underwriters and their affiliates have existing relationships with lenders under Public Storage's revolving credit facility.

Frequently Asked Questions

While the 8-K filing does not explicitly state the purpose, the issuance of preferred shares typically serves to raise capital. This capital can be used for various corporate purposes, such as funding operations, acquisitions, debt repayment, or general corporate expenses.

The Series L Preferred Shares have a fixed dividend rate of 4.625% per annum. These dividends are cumulative, meaning any missed payments will accrue and must be paid before distributions can be made to common shareholders.

Investors should be aware that the issuance of these preferred shares introduces restrictions on the company's ability to make distributions on other classes of shares if preferred dividends are not paid. Like all preferred stocks, they are also subject to interest rate risk, and their market price can fluctuate.

The filing notes that several of the underwriters and their affiliates are also lenders or agents under Public Storage's existing revolving credit facility. This indicates established banking relationships and suggests the capital raise may complement existing financing arrangements rather than replace them.