8-KMaterial AgreementsShareholder MattersCorporate Changes+1

Public Storage 8-K Report, Material Agreement (Aug 13, 2020)

Filed August 13, 2020For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) announced on August 13, 2020, the successful closing of a public offering of 8,000,000 depositary shares, each representing a 1/1,000th interest in its 4.125% Cumulative Preferred Shares, Series M. This offering, which also included an option for underwriters to purchase an additional 1,200,000 depositary shares, aimed to raise capital through the issuance of preferred equity. The company has also filed Articles Supplementary to its Declaration of Trust, officially designating these shares as Series M. This issuance of preferred stock introduces certain restrictions on the company's ability to make distributions, redeem, purchase, or acquire other shares that rank junior to or on parity with the Series M Preferred Shares, specifically if distributions on the preferred shares are not declared for a given period. Investors should note the relationships between the underwriters and entities that provide services under PSA's existing credit facilities and senior notes, as detailed in the filing.

Key Highlights

  • 1Public Storage successfully issued 8,000,000 depositary shares representing interests in its 4.125% Cumulative Preferred Shares, Series M.
  • 2An option was granted to underwriters to purchase up to an additional 1,200,000 depositary shares to cover over-allotments.
  • 3The offering was executed through an Underwriting Agreement with BofA Securities, Morgan Stanley, UBS Securities, and Wells Fargo Securities.
  • 4The company formally designated 9,200 preferred shares as Series M via Articles Supplementary to its Declaration of Trust.
  • 5New Series M Preferred Shares are subject to specific distribution and redemption restrictions if distributions are not declared.
  • 6The filing notes existing relationships between the underwriters and financial institutions providing credit and administrative services to Public Storage.

Frequently Asked Questions

The main purpose of this 8-K filing was to report on the material definitive agreement entered into by Public Storage for the sale of its depositary shares representing a new series of preferred stock (Series M) and to formally amend its charter to designate these shares.

The Series M Preferred Shares have a dividend rate of 4.125% and are cumulative. However, the filing notes that upon their issuance, there are restrictions on Public Storage's ability to make distributions on, redeem, purchase, or acquire junior or parity securities if distributions on the Series M Preferred Shares are not declared.

The filing discloses that the underwriters, or their affiliates, are also lenders under Public Storage's existing revolving credit facility and that some of these entities serve as administrative agent and trustee for PSA's debt. While standard practice, investors should be aware of these pre-existing financial relationships.

Public Storage offered 8,000,000 depositary shares, with an option for the underwriters to purchase up to an additional 1,200,000 shares. This represents a significant issuance of preferred equity, which could impact the capital structure and potentially dilute common shareholders' equity if not managed effectively.