Maryland
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95-3551121
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(State or Other Jurisdiction
of Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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Adam O. Emmerich, Esq.
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Steven M. Glick, Esq.
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James E. Showen, Esq.
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Wachtell, Lipton, Rosen & Katz
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Stephanie Heim, Esq.
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Kevin L. Vold, Esq.
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51 West 52nd Street
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Public Storage
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Hogan Lovells US LLP
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New York, New York 10019
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701 Western Avenue
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Washington, D.C. 20004
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(212) 403-1234
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Glendale, California
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(202) 637-5600
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(818) 244-8080
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Large accelerated filer x
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Accelerated filer ¨
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Non-accelerated filer ¨
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Smaller reporting company ¨
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Title Of Each Class Of Securities To Be Registered
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Proposed maximum aggregate offering price
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Amount of registration fee
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Common Shares of Beneficial Interest,
$.10 par value per share
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$99,657,480.06 (1)(2)
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$11,570.23 (1)(2)
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(1)
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This Registration Statement relates to the proposed acquisition by the Registrant of all of the units of limited partnership interest (“Units”) in Public Storage Partners, Ltd. (2,560 Units), Public Storage Partners II, Ltd. (4,501 Units), Public Storage Properties, Ltd. (7,530 Units), Public Storage Properties IV, Ltd. (15,138 Units) and Public Storage Properties V, Ltd. (16,993 Units), each a California limited partnership (collectively, the “Partnerships”) that are not currently owned by the Registrant or affiliates. The Registrant’s acquisitions of the Units will be accomplished through mergers of newly formed, wholly owned subsidiaries of the Registrant into each of the Partnerships. As a result of the mergers, holders of Units (other than the Registrant) will be entitled to exchange their Units for either common shares of the Registrant or cash. The exact number of common shares of beneficial interest of the Registrant to be issued cannot be determined at this time.
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(2)
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Calculated in accordance with Rule 457(f) under the Securities Act, based on the appraised values of the Partnerships’ properties at April 5, 2011, and the book value of the Partnerships’ other net assets as of March 31, 2011, which were, in the aggregate, $2,740.85 per Unit for Units of Public Storage Partners, Ltd., $ 4,187.08 per Unit for Units of Public Storage Partners II, Ltd., $2,373.31 per Unit for Units of Public Storage Properties, Ltd., $2,097.95 per Unit for Units of Public Storage Properties IV, Ltd. and $1,422.06 per Unit for Units of Public Storage Properties V, Ltd.
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Very truly yours,
PUBLIC STORAGE
General Partner
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By: Ronald L. Havner, Jr.
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President & Chief Executive Officer
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Public Storage, together with B. Wayne Hughes, who is the chairman of Public Storage and also serves as a general partner of PSP3, PSP4 and PSP5, and his family, and their respective affiliates, own sufficient units of each of the Partnerships to approve the mergers without your consent, and have approved the mergers.
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Neither Public Storage nor any of the Partnerships has (1) negotiated the mergers at arm’s length, (2) hired independent persons to negotiate the terms of the mergers for you or (3) asked any person to make an offer to buy the Partnerships’ assets.
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Public Storage, the Hughes family, and their affiliates control each of the Partnerships and have significant conflicts of interest in connection with, and will benefit from, the mergers. In the absence of these conflicts, the terms of the mergers may have been more favorable to you.
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The mergers will be a taxable event for public limited partners and, therefore, will generally result in taxable gain or loss to most of you regardless of whether you receive shares or cash. Public limited partners who acquired their units when the units were originally issued by the Partnerships will recognize substantial taxable gain. Limited partners that acquired their units after the original offerings may have a different tax basis than a limited partner that acquired their Partnership units in the original offerings. As a result, the tax impact to partners that acquired their Partnership units after the original offerings may be different than those who acquired their Partnership units in the original offerings. If you receive Public Storage common shares and recognize gain in connection with the mergers, you will, as a general matter, incur a tax liability without the receipt of any cash. As a result, you may need to sell shares, or raise cash from other sources, to pay any tax obligations resulting from the mergers, and many will recognize a substantial taxable gain.
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After the mergers, if you do not elect cash you will own common shares in an ongoing fully-integrated real estate investment trust, Public Storage, instead of an interest in a specified portfolio of properties for a fixed period.
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If you receive Public Storage common shares, your level of distributions is expected to be lower after the mergers than the amount you received as a limited partner of the Partnerships.
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The assets of the Partnership in which you hold units might be worth more later. Public Storage will realize the benefit of any future increase in value.
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Under California law, you will not be entitled to dissenters’ rights of appraisal in the mergers.
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TABLE OF CONTENTS
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Page
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QUESTIONS AND ANSWERS ABOUT THE MERGER
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1
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SUMMARY
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5
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RISK FACTORS
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24
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
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26
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BENEFITS TO INSIDERS
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27
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THE MERGERS
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28
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AMENDMENT TO PARTNERSHIP AGREEMENTS
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61
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APPROVAL OF THE MERGERS AND AMENDMENT TO PARTNERSHIP AGREEMENTS
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62
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CERTAIN RELATED TRANSACTIONS
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63
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DESCRIPTION OF THE PARTNERSHIPS’ PROPERTIES
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64
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PSP1
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64
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PSP2
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66
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PSP3
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68
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PSP4
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70
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PSP5
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72
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DESCRIPTION OF PUBLIC STORAGE’S PROPERTIES
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75
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DISTRIBUTIONS AND PRICE RANGE OF PUBLIC STORAGE COMMON SHARES
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77
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DISTRIBUTIONS AND MARKET PRICES OF PARTNERSHIP UNITS
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78
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DESCRIPTION OF PUBLIC STORAGE SHARES OF BENEFICIAL INTEREST
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82
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CERTAIN PROVISIONS OF MARYLAND LAW AND THE PUBLIC
STORAGE DECLARATION OF TRUST AND BYLAWS
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90
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF THE PARTNERSHIPS
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95
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PSP1
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95
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PSP2
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102
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PSP3
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109
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PSP4
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116
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PSP5
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124
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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
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134
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STATE AND LOCAL TAXES
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158
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LEGAL OPINIONS
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159
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EXPERTS
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159
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ABOUT THIS INFORMATION STATEMENT
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159
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WHERE YOU CAN FIND MORE INFORMATION
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159
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PARTNERSHIP FINANCIAL STATEMENTS
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F-1
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Appendix A
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–
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Agreement and Plan of Reorganization among Public Storage, PSOP, the Partnerships and the Merger subs
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Appendix B
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–
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Real Estate Appraisal Reports by Cushman &Wakefield Western Inc., for the Partnerships dated May 5, 2011
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Appendix C
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–
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Opinion of Robert A. Stanger & Co., Inc., dated June 30, 2011
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A:
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We are furnishing this information statement, notice of action without a meeting and prospectus to limited partners of each of the Partnerships in connection with the acquisition by Public Storage of all of the units of limited partnership interest and general partnership interests it does not currently own.
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Q:
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What was the original issue price of the Partnership units?
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A:
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$500 per unit. See “Summary – The Partnerships.”
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Q:
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Who owns Partnership units?
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A:
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Partnership units are owned by Public Storage, the Hughes family, PS Orangeco Partnerships, Inc. (“PSOP”) and the public limited partners (defined to exclude Public Storage, PSOP and the Hughes family). (PSOP) is an affiliate of Public Storage and the Hughes family, and certain of Public Storage’s current and former executives and their families are minority shareholders in PSOP. See “Approval of the Mergers and Amendment to Partnership Agreements – Security Ownership of Certain Beneficial Owners and Management – Partnerships and PSOP.
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Q:
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How was the purchase price for the Partnership units determined?
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A:
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The price you receive for your Partnership units is based on the appraised value of the Partnership properties as determined by a third party appraiser, Cushman & Wakefield, Western, Inc., as of April 5, 2011 and the book value of the Partnerships’ other net assets as of March 31, 2011. You may also receive a final distribution, as discussed above.
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Robert A. Stanger & Co., Inc., an investment banking firm, has concluded that, subject to the assumptions, limitations and qualifications contained in the fairness opinion, as of the date of the fairness opinion, the consideration to be received in the mergers is fair to you, from a financial point of view. See “The Mergers – Determination of Amounts to be Received by Limited Partners and General Partners in the Mergers,” -“Real Estate Portfolio Appraisals by Cushman” and “– Fairness Opinion from Stanger.”
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Q:
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What will happen in the mergers?
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A:
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In the mergers, newly formed subsidiaries of Public Storage will merge with and into the Partnerships. Following the mergers, Hughes will resign as general partner of PSP3, PSP4 and PSP5, and all the Partnerships will be dissolved. See “The Mergers – General.”
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Q:
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When do you expect to complete the mergers?
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A:
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The mergers will become effective upon the filing of certificates of merger with the California Secretary of State, which under the rules of the Securities and Exchange Commission will not take place until at least 20 business days following the date on which this information statement is mailed to limited partners. The effective date of the mergers is expected to be on or about _________, 2011.
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Q:
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Are the mergers of the Partnerships with Public Storage subsidiaries conditioned on each other?
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A:
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No. The mergers of the newly formed subsidiaries of Public Storage with PSP1, PSP2, PSP3, PSP4 and PSP5 are not conditioned on each other.
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Q:
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Who is Public Storage and what interest does it hold in the Partnerships?
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A:
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Public Storage is the largest owner and operator of self-storage facilities in the United States. At March 31, 2011, it holds direct and indirect equity interests in 2,052 self-storage facilities located in 38 states operating under the “Public Storage” name and 189 storage facilities located in seven Western European nations operating under the "Shurgard" brand. Public Storage also owns a 41% common equity interest in PS Business Parks, Inc., which owned and operated approximately 21.8 million rentable square feet of commercial space, primarily flex, multi-tenant office and industrial space, at March 31, 2011.
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Public Storage is a general partner of each of the Partnerships, and as general partner owns between 20% and 25% of the economic interests in each Partnership. Public Storage directly and indirectly (with PSOP) owns between 31.6 % and 50.4% of the limited partnership units in each Partnership. Public Storage has a 99.4% economic interest in PSOP. Public Storage also manages the Partnership properties and is paid management fees. See “The Mergers – Summary – Ownership and Relationships,” “Approval of the Mergers and Amendment to the Partnership Agreements – Security Ownership of Certain Beneficial Owners and Management – Partnerships” and “Certain Related Transactions.”
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Q:
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Who is the Hughes family and what interests do they hold in the Partnerships?
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A:
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B. Wayne Hughes is the chairman of Public Storage and, together with members of his family, owns 16.7% of the Public Storage common shares.
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Hughes is a general partner of PSP3, PSP4 and PSP5 and a Hughes family affiliate owns 5% of the economic interest in these three Partnerships attributable to Hughes’ general partner interests. The Hughes family and its affiliates also own limited partnership units in all of the Partnerships ranging from 11% to 30% of the outstanding limited partnership units. In the mergers, the Hughes family will be selling all of its general and limited partnership interests in the Partnerships on the same terms as the public limited partners. The Hughes family has informed us that it expects to make cash elections in respect of all of its units. The Hughes family also holds a 0.5% economic interest in PSOP which owns limited partnership units in the Partnerships. The Hughes family will also sell its interest in PSOP to Public Storage prior to the mergers with the limited partnership units held by PSOP also valued in the same manner as for the public limited partners. See “Summary – Hughes Family” and “– Ownership and Relationships.”
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Q:
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What are the reasons for the mergers?
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A:
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The Partnerships’ reasons for the mergers are that each of the Partnerships was formed as a finite-life entity and each has been existence for more than 30 years. The mergers provide limited partners with the opportunity to elect either (1) to convert their relatively illiquid investment in the Partnerships into a liquid investment in Public Storage or (2) to receive a cash payment based on the appraised value of the Partnership properties. There has been no consideration of the Partnerships’ reasons for the mergers by any independent persons. As a result of the mergers, Public Storage will acquire a 100% interest in all of the Partnership properties, without taxable gain to Public Storage, and the Hughes family will generate liquidity from the disposition of their interests in the Partnerships based on the appraised value of their properties. See “Risk Factors – Public Storage has conflicts of interest in the mergers,” “Benefits to Insiders” and “The Mergers – Background and Reasons for the Mergers.”
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Q:
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Do the general partners of the Partnerships believe that the mergers are fair to the public limited partners?
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A:
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Yes. Public Storage, the general partner of all the Partnerships and Hughes, a general partner of PSP3, PSP4 and PSP5, believe that the mergers are fair to the public limited partners, based in significant part on (1) third party appraisals of the Partnership properties, (2) the opinions of a financial advisor in which they concur and (3) the decision of the Hughes family to sell its interests to Public Storage on the same terms as the public limited partners. See “The Mergers – Fairness Analysis.”
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Q:
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In considering the fairness of the mergers to the public limited partners, did the general partners consider alternatives to the mergers?
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Yes. The general partners considered liquidation as well as continued operation of the Partnerships as alternatives to the mergers. The general partners believe that the payment you receive in the mergers generally compares favorably with those two alternatives. The general partners did not ask any person to buy the Partnership properties. See “The Mergers – Alternatives to the Mergers.”
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Q:
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Do the general partners have conflicts of interest in connection with the mergers?
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A:
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Yes. Public Storage and Hughes have significant conflicts of interest with respect to the mergers. See “Risk Factors – Public Storage has conflicts of interest in the mergers” and “Benefits to Insiders.”
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Q:
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What are the potential benefits to the public limited partners of the mergers?
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A:
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The potential benefits of the mergers to you depend on whether you receive cash or Public Storage common shares. If you elect to receive cash, the primary potential benefit is that you will be liquidating your investment based on the appraised value of the Partnership properties. If you receive Public Storage common shares, the primary potential benefit is that you will own an interest in a much larger entity that is actively traded on The New York Stock Exchange under the symbol “PSA.” See “The Mergers – Potential Benefits of the Mergers.”
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Q:
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Do the mergers present risks and detriments for the public limited partners?
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A:
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Yes. For a discussion of certain risks and detriments of the mergers, see “Risk Factors” beginning on page 24.
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Q:
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How will the Public Storage common shares to be issued in the mergers be valued?
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A:
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For purposes of determining the share consideration to be issued in the mergers, the market value of the Public Storage common shares will be the average of the per share closing prices on the NYSE during the 20 consecutive trading days ending on the fifth trading day prior to the effective date of the mergers. Since the market price of Public Storage common shares fluctuates, the market value of Public Storage common shares that you may receive in the mergers may be less when the shares are actually issued than the average price used in the mergers, and that value could decrease. See “Risk Factors – The number of Public Storage common shares to be issued in the mergers has not been determined.”
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Q:
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Do the limited partners have dissenter’s rights?
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A:
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No. Limited partners have no dissenter’s rights under the partnership agreements or California law.
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Q:
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Will the rights of the public limited partners change as a result of the mergers?
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A:
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Yes. If you elect cash, you will have no further interest in either the Partnerships or Public Storage.
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If you receive Public Storage common shares, your rights as a Public Storage shareholder will be governed by Maryland law and Public Storage’s declaration of trust and bylaws. See “The Mergers – Potential Benefits of the Mergers” and “– Comparison of Partnership Units with Public Storage Common Shares.”
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Q:
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What are the material U.S. federal income tax consequences of the mergers to the public limited partners?
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A:
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The mergers will be a taxable event for public limited partners and, therefore, will generally result in taxable gain or loss to most of you regardless of whether you receive shares or cash. Public limited partners will, as a general matter, recognize gain or loss in an amount equal to the difference between the value of what they receive in the mergers (shares or cash) and their adjusted basis in their Partnership units. The particular tax consequences of a merger for a public limited partner will depend upon a number of factors related to the partner’s tax situation, including the tax basis of the partner’s Partnership units. Because the consideration to be paid will significantly exceed the tax basis of public limited partners who acquired their units when the units were originally issued by the Partnerships between 1976 and 1979, those limited partners generally can be expected to recognize substantial taxable gain. Limited partners that acquired their units after the original offerings may have a different tax basis than limited partners that acquired their Partnership units in the original offerings. As a result, the tax impact to partners who acquired their Partnership units after the original offerings may be different than those who acquired their Partnership units in the original offerings.
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If you do not elect to receive cash and therefore receive Public Storage common shares in the mergers and recognize gain in connection with the mergers, you may incur a tax liability without the receipt of any cash. As a result, you may need to sell shares, or raise cash from other sources, to pay any tax obligations resulting from the mergers. See “Material U.S. Federal Income Tax Considerations – The Mergers.”
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Procedures
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Q:
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Are you asking the public limited partners for proxies?
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A:
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No. We are not asking you for a proxy and you are requested not to send us a proxy. While the affirmative vote of a majority of the Partnership units in each of the Partnerships is required to approve the mergers and the related amendment to the partnership agreement of each Partnership, Public Storage, the Hughes family and PSOP own a majority of the units in each of the Partnerships. On June 30, 2011, they executed written consents approving the proposed mergers and the related amendments to the partnerships agreement.
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Q:
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Do I need to take action in connection with the mergers?
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A:
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You will need to return the enclosed election form to indicate whether you want to receive cash or stock in the mergers.
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If you want to receive cash in the mergers, you must make a cash election. TO BE EFFECTIVE A CASH ELECTION MUST BE MADE BY ___________, 2011, IN ACCORDANCE WITH THE ACCOMPANYING ELECTION FORM. FOR INFORMATION ON OBTAINING A DUPLICATE ELECTION FORM AND CONTACT INFORMATION, SEE “THE MERGER – CASH ELECTION FORM.”
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If you want to receive Public Storage common shares in the mergers, you should so indicate on the election form. If you do not make a cash election, you will receive Public Storage common shares. As soon as practicable after the mergers, the exchange agent, Computershare Trust Company, N.A., will send to each holder of Partnership units whose units have been converted into Public Storage common shares as shown on the books of Computershare Trust Company, N.A., a statement confirming the number of Public Storage common shares registered to you. Once you receive your statement evidencing the direct registration in book entry form of your Public Storage common shares, you may contact Computershare Trust Company, N.A. to receive your shares in certificate form if you prefer. IF YOU DO NOT RECEIVE YOUR STATEMENT OF HOLDINGS OF PUBLIC STORAGE COMMON SHARES RECEIVED IN THE MERGER BY _____________, 2011, CALL COMPUTERSHARE TRUST COMPANY, N.A. AT ___________________ FOR A COPY. YOU WILL NOT RECEIVE A CERTIFICATE FOR YOUR SHARES UNLESS AND UNTIL YOU REQUEST A CERTIFICATE FROM COMPUTERSHARE TRUST COMPANY, N.A. SEE “THE MERGER – MERGER AGREEMENT – DIRECT REGISTRATION OF PUBLIC STORAGE COMMON SHARES.”
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Whether you receive common shares or you elect to receive cash in the mergers, you will need to complete and return the certificate of non-foreign status, to ensure that 10% U.S. federal income tax withholding is not required. The certificate of non-foreign status will be included in the election form. See “Material U.S. Federal Income Tax Considerations – The Mergers – Certification of Non-Foreign Status to Avoid FIRPTA Withholding.”
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Q:
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Can I make a cash election as to less than all of the Partnership units I own in a particular Partnership.
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A:
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No.
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Q:
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Where can I find more information about Public Storage and the Partnerships?
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A:
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You can find more information about Public Storage from various sources described under “Where You Can Find More Information.”
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Q:
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Where can I get help to answer my questions?
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A:
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If you have any questions about the mergers or need additional copies of this information statement, you should contact Computershare Trust Company at (800) 546-5141.
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PSOP will first be merged into Public Storage. PSOP shareholders (other than Public Storage) will receive a cash payment based on the value of the Partnerships units and Public Storage common shares owned by PSOP.
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Wholly-owned subsidiaries of Public Storage will then be merged into the Partnerships. The date each merger occurs is referred to as the “Effective Date” for that merger.
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Each Partnership unit (other than units owned by Public Storage) will be converted into Public Storage common shares or, at the election of a limited partner, into cash at the following values:
• PSP1 - $2,740.85
• PSP2 - $4,187.08
• PSP3 - $2,373.31
• PSP4 - $2,097.95
• PSP5 - $1,422.06
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Cash distributions will be made to limited partners and general partners to cause the estimated net asset value per Partnership unit or equivalent Partnership unit (in the case of the general partners) as of the Effective Date (valuing the properties based upon the Cushman appraisals) to be substantially equivalent to the values set forth above.
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For purposes of determining the share consideration to be issued in the mergers, the market value of the Public Storage common shares will be the average of the per share closing prices on the NYSE of the Public Storage common shares during the 20 consecutive trading days ending on the fifth trading day prior to the Effective Date. If, prior to the Effective Date, Public Storage should split or combine the Public Storage common shares, or pay a share dividend, the Public Storage common shares issued in the mergers will be appropriately adjusted to reflect such action.
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In the mergers, Public Storage will acquire all Partnership units and general partnership interests not currently owned by it, and subsequently all of the Partnerships will be dissolved.
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changes its portfolio of properties from time to time without approval of shareholders;
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does not plan to sell its assets, if any, within a fixed period of time; and
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is engaged in all aspects of the self-storage industry in the United States and Europe, including property development and management, and also has interests in commercial properties.
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One Appraiser. Cushman performed appraisals of the Partnership properties. Another appraiser may have concluded that the properties have higher valuations, which would result in a higher payment per limited partnership unit.
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Sale by Hughes Family. In the mergers, the Hughes family, like the public limited partners, will be selling its illiquid interests in the Partnerships for consideration based on the appraised values of the Partnership properties.
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Own All Partnership Interests and all Partnership Properties. As a result of the mergers, Public Storage will acquire all of the interests in the Partnerships and therefore will hold a 100% interest in all of the Partnership properties and other assets, without taxable gain to Public Storage. Public Storage will have a tax basis in the assets acquired from the public limited partners equal to the value of the shares and amount of cash paid to acquire the Partnership units.
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Cost Efficiencies. The mergers will eliminate substantially all of the Partnerships’ administrative expenses, much of which have been borne by Public Storage as owner of between 45% and 58% of the economic interests in the Partnerships.
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Issue Capital Shares. To the extent that public limited partners do not make cash elections, the mergers will enable Public Storage to acquire the Partnership properties in part by issuing common shares that, assuming market prices do not materially decline from current prices, will be valued at historically high trading prices.
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Eliminate Potential Conflicts of Interest. The mergers will eliminate the potential conflicts of interest resulting from the economic ownership interests in each of the Partnerships of (1) the Hughes family and their affiliates (ranging from 8.3% to 27.4%), (2) PSOP (ranging from 0.7% to 13.6%), and (3) the public limited partners (ranging from 28.0% to 35.3%). These percentage ownerships of economic interests for the Partnerships represent the partners’ economic rights in the Partnerships, taking into account both Partnership units held by the Hughes family, PSOP and the public limited partners and equivalent units held by the Hughes family in PSP3, PSP4 and PSP5, as well as the Hughes family’s rights to incentive distributions in PSP3, PSP4 and PSP5.
The principal potential conflicts involve the competition of the Partnership properties with other self-storage facilities owned by Public Storage.
The merger of PSOP into Public Storage will also eliminate the potential conflicts of interest due to the Public Storage executives’ and their families’ ownership of voting shares of PSOP. The aggregate value of the current and former executives (and family) economic interests in PSOP is less than 1% of the total economic interest in PSOP and collectively these individuals hold approximately 6% of the total outstanding voting shares of PSOP. See “- Ownership and Relationships.”
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(1)
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If you elect to receive cash, you will liquidate your investment based on the appraised value of the Partnership properties.
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(2)
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If you receive Public Storage common shares, the principal potential benefits to you are:
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Ownership Interest in a Large REIT. Because the Partnerships are not authorized to issue new securities or to reinvest sale or financing proceeds, the Partnerships are less able to take advantage of new real estate investment opportunities. In contrast, Public Storage has a substantially larger, more diversified investment portfolio that reduces the risks associated with any particular assets or group of assets and increases Public Storage’s ability to access capital markets to fund new capital investments.
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Increased Liquidity. There is no active market for the Partnership units. By comparison, Public Storage has approximately 170 million common shares listed on the NYSE with an average daily trading volume during the first quarter of 2011 of approximately 750,144 shares. Given Public Storage’s market capitalization and trading volume, you are likely to enjoy a more active trading market and increased liquidity for the Public Storage common shares you receive.
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(3)
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Simplified tax reporting. The mergers will, as a general matter, simplify your tax reporting for years after 2011.
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the Commission has declared effective the Registration Statement;
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Public Storage has received all other authorizations necessary to issue Public Storage common shares in exchange for Partnership units and to complete the mergers;
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holders of a majority of the Partnership units have approved each of the mergers (this condition has been satisfied by the vote of Public Storage, the Hughes family and PSOP of their units in favor of the mergers);
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the NYSE has approved the shares of Public Storage common shares issued to the public limited partners;
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Stanger has issued the fairness opinion to each of the Partnerships which was delivered on June 30, 2011 (this opinion has been received);
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no legal action prohibiting or challenging the mergers is pending;
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the average of the per share closing prices on the NYSE of Public Storage common shares during the 20 consecutive trading days ending on the fifth trading day prior to the Effective Date is not less than $95.00. (Public Storage does not intend to postpone the mergers if this condition is not satisfied, and if this condition is not satisfied or is waived by Public Storage, Public Storage intends to promptly notify the limited partners in writing);
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the partnership agreements are amended as described under “Amendment to Partnership Agreements”;
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Public Storage in its sole discretion, is satisfied as to title to, and the results of any environmental audit of, the Partnership properties; and
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Prior to the mergers, PSOP has been merged into Public Storage.
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By Mail
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By Overnight Courier
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For Assistance
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Computershare Trust
Company, N.A.
Attn: Corporate Actions Voluntary Offer
P.O. Box 43011
Providence, RI
02940-3011
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Computershare Trust
Company, N.A. 250 Royall Street, Suite V Canton, MA 02021
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Computershare Trust
Company, N.A. Shareholder Services
(781) 575-3120
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Partnerships
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Public Storage
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Investment Objectives and Policies
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To provide (1) quarterly cash distributions from operations and (2) long-term capital gains through appreciation in the value of the Partnership properties.
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The investment objectives of Public Storage are to create long-term shareholder value.
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No outstanding borrowings.
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Permitted to borrow in furtherance of its investment objectives, subject to certain limitations.
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Under the partnership agreements, limited partner approval is required for a variety of business transactions with affiliates, including purchases, sales, leases and loans. See “Amendment to Partnership Agreements.”
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Public Storage’s bylaws have no comparable provision.
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PSP1 owns three properties in California.
PSP2 owns four properties in California.
PSP3 owns nine properties in California.
PSP4 owns 17 properties in California and Florida.
PSP5 owns 14 properties in California, Florida and Georgia.
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Public Storage owns equity interests (through direct ownership) as well as joint ventures and general and limited partnership interests in 2,052 properties in 38 states in the United States, and 189 properties in seven European countries operated under the “Shurgard” brand. Public Storage also owns an interest in PSB. See “Description of Public Storage’s Properties.”
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No active trading market for Partnership units. The Partnerships may not issue securities having priority over Partnership units.
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Public Storage common shares are traded on the NYSE. During the three months ended March 31, 2011, the average daily trading volume of Public Storage common shares was approximately 750,144 shares. Public Storage has issued, and may in the future issue, securities that have priority over Public Storage common shares as to cash flow, distributions and liquidation proceeds.
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The partnership agreements do not provide for the issuance of additional Partnership units.
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Subject to the rules of the NYSE and applicable provisions of Maryland law, Public Storage can issue authorized shares without shareholder approval.
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For the Three Months Ended March 31,
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For the Year Ended December 31,
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2011
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2010
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2010
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2009
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2008 (1)
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2007 (1)
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2006
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(unaudited)
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Revenues
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$ | 419,818 | $ | 397,447 | $ | 1,645,444 | $ | 1,623,448 | $ | 1,719,256 | $ | 1,782,998 | $ | 1,345,548 | ||||||||||||||
Depreciation and amortization
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88,542 | 84,717 | 353,848 | 339,576 | 407,970 | 618,900 | 434,769 | |||||||||||||||||||||
Interest expense
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6,984 | 7,339 | 30,225 | 29,916 | 43,944 | 63,671 | 33,062 | |||||||||||||||||||||
Equity earnings
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13,716 | 9,961 | 38,352 | 53,244 | 20,391 | 12,738 | 11,895 | |||||||||||||||||||||
Foreign currency exchange gain (loss)
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31,252 | (34,843 | ) | (42,264 | ) | 9,662 | (25,362 | ) | 58,444 | 4,262 | ||||||||||||||||||
Gain (loss) on disposition of real estate investments
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198 | 333 | (1,505 | ) | 37,540 | 336,020 | 5,212 | 2,177 | ||||||||||||||||||||
Income from continuing operations
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210,923 | 129,384 | 688,082 | 797,560 | 981,901 | 487,761 | 341,429 | |||||||||||||||||||||
Balance Sheet Data:
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Cash and cash equivalents
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$ | 145,105 | $ | 719,982 | $ | 456,252 | $ | 763,789 | $ | 680,701 | $ | 245,444 | $ | 535,684 | ||||||||||||||
Total assets
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$ | 9,435,521 | $ | 9,744,471 | $ | 9,495,333 | $ | 9,805,645 | $ | 9,936,045 | $ | 10,643,102 | $ | 11,198,473 | ||||||||||||||
Total debt
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$ | 461,882 | $ | 516,132 | $ | 568,417 | $ | 518,889 | $ | 643,811 | $ | 1,069,928 | $ | 1,848,542 | ||||||||||||||
Public Storage Shareholders’ Equity
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$ | 8,717,565 | $ | 8,676,023 | $ | 8,676,598 | $ | 8,928,407 | $ | 8,708,995 | $ | 8,763,129 | $ | 8,208,045 | ||||||||||||||
Per common share:
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Net income – diluted from continuing operations
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$ | 0.87 | $ | 0.21 | $ | 2.30 | $ | 3.51 | $ | 4.23 | $ | 1.17 | $ | 0.30 | ||||||||||||||
Net income – basic from continuing operations
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$ | 0.87 | $ | 0.21 | $ | 2.31 | $ | 3.52 | $ | 4.24 | $ | 1.18 | $ | 0.30 | ||||||||||||||
Cash distributions
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$ | 0.80 | $ | 0.65 | $ | 3.05 | $ | 2.20 | $ | 2.80 | $ | 2.00 | $ | 2.00 | ||||||||||||||
Book value (at end of period)
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$ | 31.40 | $ | 31.28 | $ | 31.20 | $ | 32.83 | $ | 31.44 | $ | 30.90 | $ | 31.65 | ||||||||||||||
(1)
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The significant increase in Public Storage’s revenues, cost of operations, depreciation and amortization, and interest expense in 2007 is due to Public Storage’s acquisition of Shurgard Storage Centers in August 2006, with the operations of the facilities acquired being included in Public Storage’s operations for a full year in 2007 as compared to the period following the acquisition in 2006. The decreases in Public Storage’s revenues, cost of operations, and depreciation and amortization in 2008 is due primarily to Public Storage’s disposition of an interest in Shurgard Europe on March 31, 2008. See Note 3 to Public Storage’s December 31, 2010 consolidated financial statements for further information.
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For the Three Months Ended March 31,
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For the Year Ended December 31,
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2011
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2010
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2010
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2009
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2008
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2007 (1)
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2006
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(unaudited)
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Revenues
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$ | 587 | $ | 583 | $ | 2,366 | $ | 2,392 | $ | 2,506 | $ | 2,454 | $ | 2,283 | ||||||||||||||
Depreciation
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14 | 6 | 36 | 26 | 24 | 17 | 29 | |||||||||||||||||||||
Net income
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405 | 401 | 1,669 | 1,727 | 1,835 | 1,793 | 1,614 | |||||||||||||||||||||
Allocation of net income:
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Limited partners' share
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259 | 242 | 1,080 | 1,033 | 1,216 | 1,039 | 1,052 | |||||||||||||||||||||
General partners' share
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146 | 159 | 589 | 694 | 619 | 754 | 562 | |||||||||||||||||||||
Limited Partners' Per Unit Data (2):
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Net income
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$ | 55.96 | $ | 52.29 | $ | 233.36 | $ | 223.21 | $ | 262.75 | $ | 224.50 | $ | 227.31 | ||||||||||||||
Cash distributions
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$ | 55.10 | $ | 63.96 | $ | 219.97 | $ | 281.98 | $ | 222.99 | $ | 315.04 | $ | 208.08 | ||||||||||||||
Balance Sheet Data:
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Cash and cash equivalents
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$ | 127 | $ | 133 | $ | 99 | $ | 84 | $ | 344 | $ | 564 | $ | 732 | ||||||||||||||
Total assets
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$ | 1,114 | $ | 961 | $ | 1,019 | $ | 919 | $ | 1,206 | $ | 1,393 | $ | 1,536 | ||||||||||||||
Public Storage – Pro Forma per Partnership Unit
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Per Equivalent Partnership Unit (3)
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Net income –diluted from continuing operations
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$ | 20.73 | $ | 55.05 | ||||||||||||||||||||||||
Net income –basic from continuing operations
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$ | 20.73 | $ | 55.29 | ||||||||||||||||||||||||
Dividends
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$ | 19.07 | $ | 72.68 | ||||||||||||||||||||||||
Book Value
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$ | 748.26 | ||||||||||||||||||||||||||
(1)
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Cash distributions were increased in the year ended December 31, 2007 to reduce the excess cash reserves.
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(2)
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Limited partners’ per unit data is based on the weighted average number of Partnership units outstanding during the period (4,628 units for all periods).
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(3)
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Presents pro forma amounts of Public Storage per equivalent Partnership unit. Net income, cash distributions and book value are calculated by multiplying Public Storage’s historical results (before impact of the merger, which is not expected to have a material impact on Public Storage’s per share amounts) by an assumed exchange ratio of approximately 23.83 (PSP1’s merger value of $2,741 divided by an assumed issue price of Public Storage common shares of $115).
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For the Three Months Ended March 31,
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For the Year Ended December 31,
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2011
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2010
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2010
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2009
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2008
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2007
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2006
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(unaudited)
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Revenues
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$ | 1,114 | $ | 1,117 | $ | 4,744 | $ | 4,744 | $ | 4,746 | $ | 4,476 | $ | 4,318 | ||||||||||||||
Depreciation
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25 | 21 | 91 | 73 | 67 | 63 | 61 | |||||||||||||||||||||
Net income
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952 | 960 | 4,164 | 4,185 | 4,163 | 3,898 | 3,965 | |||||||||||||||||||||
Allocation of net income:
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Limited partners' share
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803 | 682 | 3,047 | 3,074 | 3,066 | 2,858 | 2,866 | |||||||||||||||||||||
General partners' share
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149 | 278 | 1,117 | 1,111 | 1,097 | 1,040 | 1,099 | |||||||||||||||||||||
Limited Partners' Per Unit Data (1):
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Net income
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$ | 81.19 | $ | 68.96 | $ | 308.09 | $ | 310.82 | $ | 310.01 | $ | 288.98 | $ | 289.79 | ||||||||||||||
Cash distributions
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$ | 41.96 | $ | 80.99 | $ | 324.97 | $ | 323.05 | $ | 319.01 | $ | 302.33 | $ | 320.02 | ||||||||||||||
Balance Sheet Data:
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Cash and cash equivalents
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$ | 433 | $ | 397 | $ | 143 | $ | 249 | $ | 465 | $ | 552 | $ | 704 | ||||||||||||||
Total assets
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$ | 1,977 | $ | 1,928 | $ | 1,662 | $ | 1,775 | $ | 1,913 | $ | 2,000 | $ | 2,118 | ||||||||||||||
Public Storage – Pro Forma per Partnership Unit
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Per Equivalent Partnership Unit (2)
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Net income –diluted from continuing operations
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$ | 31.68 | $ | 84.11 | ||||||||||||||||||||||||
Net income –basic from continuing operations
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$ | 31.68 | $ | 84.47 | ||||||||||||||||||||||||
Dividends
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$ | 29.13 | $ | 111.05 | ||||||||||||||||||||||||
Book Value
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$ | 1,143.27 | ||||||||||||||||||||||||||
(1)
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Limited partners’ per unit data is based on the weighted average number of Partnership units outstanding during the period (9,890 units for all periods).
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(2)
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Presents pro forma amounts of Public Storage per equivalent Partnership unit. Net income, cash distributions and book value are calculated by multiplying Public Storage’s historical results (before impact of the merger, which is not expected to have a material impact on Public Storage’s per share amounts) by an assumed exchange ratio of approximately 36.41 (PSP2’s merger value of $4,187 divided by an assumed issue price of Public Storage common shares of $115).
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For the Three Months Ended March 31,
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For the Year Ended December 31,
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2011
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2010
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2010
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2009
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2008
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2007
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2006
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(unaudited)
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Revenues
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$ | 1,836 | $ | 1,829 | $ | 7,385 | $ | 7,505 | $ | 7,872 | $ | 7,524 | $ | 7,371 | ||||||||||||||
Depreciation
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35 | 36 | 150 | 147 | 142 | 130 | 165 | |||||||||||||||||||||
Net income
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1,281 | 1,261 | 5,259 | 5,386 | 5,649 | 5,314 | 5,042 | |||||||||||||||||||||
Allocation of net income:
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Limited partners' share
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981 | 768 | 3,707 | 4,059 | 4,266 | 3,701 | 3,751 | |||||||||||||||||||||
General partners' share
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300 | 493 | 1,552 | 1,327 | 1,383 | 1,613 | 1,291 | |||||||||||||||||||||
Limited Partners' Per Unit Data (1):
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Net income
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$ | 49.05 | $ | 38.40 | $ | 185.35 | $ | 202.95 | $ | 213.30 | $ | 185.05 | $ | 187.55 | ||||||||||||||
Cash distributions
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$ | 43.00 | $ | 72.00 | $ | 225.00 | $ | 191.00 | $ | 199.00 | $ | 234.00 | $ | 186.00 | ||||||||||||||
Balance Sheet Data:
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Cash and cash equivalents
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$ | 298 | $ | 405 | $ | 273 | $ | 422 | $ | 802 | $ | 559 | $ | 1,483 | ||||||||||||||
Total assets
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$ | 3,683 | $ | 3,688 | $ | 3,504 | $ | 4,280 | $ | 4,089 | $ | 3,745 | $ | 4,720 | ||||||||||||||
Public Storage – Pro Forma per Partnership Unit
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Per Equivalent Partnership Unit (2)
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Net income –diluted from continuing operations
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$ | 17.95 | $ | 47.66 | ||||||||||||||||||||||||
Net income –basic from continuing operations
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$ | 17.95 | $ | 47.86 | ||||||||||||||||||||||||
Dividends
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$ | 16.50 | $ | 62.92 | ||||||||||||||||||||||||
Book Value
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$ | 647.78 | ||||||||||||||||||||||||||
(1)
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Limited partners’ per unit data is based on the weighted average number of Partnership units outstanding during the period (20,000 units for all periods).
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(2)
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Presents pro forma amounts of Public Storage per equivalent Partnership unit. Net income, cash distributions and book value are calculated by multiplying Public Storage’s historical results (before impact of the merger, which is not expected to have a material impact on Public Storage’s per share amounts) by an assumed exchange ratio of approximately 20.63 (PSP3’s merger value of $2,373 divided by an assumed issue price of Public Storage common shares of $115).
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For the Three Months Ended March 31,
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For the Year Ended December 31,
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2011
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2010
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2010
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2009
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2008
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2007 (1)
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2006
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(unaudited)
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Revenues
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$ | 3,171 | $ | 3,134 | $ | 12,755 | $ | 12,944 | $ | 13,306 | $ | 12,885 | $ | 12,819 | ||||||||||||||
Depreciation
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104 | 108 | 464 | 433 | 422 | 421 | 383 | |||||||||||||||||||||
Net income
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2,136 | 2,093 | 8,860 | 9,033 | 9,250 | 8,809 | 8,862 | |||||||||||||||||||||
Allocation of net income:
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Limited partners' share
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1,634 | 1,565 | 6,598 | 6,516 | 6,931 | 6,054 | 6,613 | |||||||||||||||||||||
General partners' share
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502 | 528 | 2,262 | 2,517 | 2,319 | 2,755 | 2,249 | |||||||||||||||||||||
Limited Partners' Per Unit Data (2):
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Net income
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$ | 40.85 | $ | 39.13 | $ | 164.95 | $ | 162.90 | $ | 173.28 | $ | 151.35 | $ | 165.33 | ||||||||||||||
Cash distributions
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$ | 36.00 | $ | 38.00 | $ | 163.00 | $ | 182.00 | $ | 167.00 | $ | 200.00 | $ | 162.00 | ||||||||||||||
Balance Sheet Data:
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Cash and cash equivalents
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$ | 889 | $ | 735 | $ | 371 | $ | 654 | $ | 1,139 | $ | 787 | $ | 2,525 | ||||||||||||||
Total assets
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$ | 7,719 | $ | 7,559 | $ | 7,214 | $ | 7,569 | $ | 8,074 | $ | 7,752 | $ | 9,725 | ||||||||||||||
Public Storage – Pro Forma per Partnership Unit
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Per Equivalent Partnership Unit (3)
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Net income –diluted from continuing operations
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$ | 15.87 | $ | 42.13 | ||||||||||||||||||||||||
Net income –basic from continuing operations
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$ | 15.87 | $ | 42.32 | ||||||||||||||||||||||||
Dividends
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$ | 14.59 | $ | 55.63 | ||||||||||||||||||||||||
Book Value
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$ | 572.73 | ||||||||||||||||||||||||||
(1)
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Cash distributions were increased in the year ended December 31, 2007 to reduce the excess cash reserves.
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(2)
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Limited partners’ per unit data is based on the weighted average number of Partnership units outstanding during the period (40,000 units for all periods).
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(3)
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Presents pro forma amounts of Public Storage per equivalent Partnership unit. Net income, cash distributions and book value are calculated by multiplying Public Storage’s historical results (before impact of the merger, which is not expected to have a material impact on Public Storage’s per share amounts) by an assumed exchange ratio of approximately 18.24 (PSP4’s merger value of $2,098 divided by an assumed issue price of Public Storage common shares of $115).
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For the Three Months Ended March 31,
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For the Year Ended December 31,
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2011
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2010
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2010
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2009
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2008
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2007 (1)
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2006
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(unaudited)
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Revenues
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$ | 2,510 | $ | 2,472 | $ | 10,017 | $ | 10,154 | $ | 10,763 | $ | 10,449 | $ | 10,309 | ||||||||||||||
Depreciation
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121 | 115 | 485 | 439 | 366 | 346 | 324 | |||||||||||||||||||||
Net income
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1,526 | 1,504 | 6,299 | 6,486 | 7,120 | 6,813 | 6,849 | |||||||||||||||||||||
Allocation of net income:
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Limited partners' share
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1,188 | 1,123 | 4,652 | 4,734 | 5,347 | 4,627 | 5,094 | |||||||||||||||||||||
General partners' share
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338 | 381 | 1,647 | 1,752 | 1,773 | 2,186 | 1,755 | |||||||||||||||||||||
Limited Partners' Per Unit Data (2):
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Net income
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$ | 27.00 | $ | 25.52 | $ | 105.73 | $ | 107.59 | $ | 121.52 | $ | 105.16 | $ | 115.77 | ||||||||||||||
Cash distributions
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$ | 22.00 | $ | 25.00 | $ | 108.00 | $ | 115.00 | $ | 116.00 | $ | 144.41 | $ | 115.00 | ||||||||||||||
Balance Sheet Data:
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Cash and cash equivalents
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$ | 727 | $ | 604 | $ | 332 | $ | 592 | $ | 1,002 | $ | 718 | $ | 2,495 | ||||||||||||||
Total assets
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$ | 7,188 | $ | 7,007 | $ | 6,764 | $ | 7,094 | $ | 7,195 | $ | 7,002 | $ | 8,791 | ||||||||||||||
Public Storage – Pro Forma per Partnership Unit
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Per Equivalent Partnership Unit (3)
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Net income –diluted from continuing operations
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$ | 10.76 | $ | 28.57 | ||||||||||||||||||||||||
Net income –basic from continuing operations
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$ | 10.76 | $ | 28.70 | ||||||||||||||||||||||||
Dividends
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$ | 9.90 | $ | 37.73 | ||||||||||||||||||||||||
Book Value
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$ | 388.42 | ||||||||||||||||||||||||||