Public Storage To Pay $10.5B For Self-Storage Competitor
Public Storage has struck a deal to acquire National Storage Affiliates Trust, adding more than 1,000 properties to its portfolio and creating a self-storage giant with a combined enterprise value of $77B.
The all-stock transaction is valued at $10.5B, including debt, according to an announcement by the companies Monday. Both firms’ boards of trustees have unanimously approved the transaction, which is expected to close in the third quarter.
Frisco, Texas-based REIT Public Storage already owns and operates more than 3,500 self-storage facilities, totaling 258M SF, across 40 states. It also holds a 35% interest in Shurgard Self Storage Limited, which owns 332 facilities in Western Europe.
Once the deal closes, Public Storage will wholly own 488 of Colorado-based NSA’s properties, primarily those in the Sun Belt.
The companies will also form a joint venture for another 313 of NSA’s properties, valued at roughly $3.3B. NSA unitholders will own about 80% of the venture upon inception, while Public Storage will manage the portfolio and collect management fees.
“This transaction will enable us to strategically and accretively expand our platform with assets that are highly complementary with our portfolio, deepen our significant market presence, and enhance our long-term per share growth profile,” incoming Public Storage CEO Tom Boyle said in a statement.
Under the deal, NSA investors will receive 0.14 shares of Public Storage common stock for each share they own. Based on Public Storage’s closing price on Friday, the offer values NSA at $41.68 per share.
NSA closed trading Friday at $30.94 a share. Its stock surged nearly 30% by Monday afternoon to roughly $40, while Public Storage’s price dipped by 1.8%.
“This outcome reflects the incredible transformation we have undertaken over the past few years to refocus our portfolio, enhance operations, and drive growth,” NSA CEO David Cramer said in a statement.
Public Storage has agreed to repay NSA’s existing bank debt and senior unsecured notes as well as assume its mortgage debt and certain preferred equity.
Goldman Sachs and Wells Fargo have committed $4B in financing for the deal, consisting of a $2B corporate bridge loan and a $2B joint venture off-balance sheet bridge loan, which will become permanent secured mortgage financing.
Goldman Sachs, Wells Fargo and Eastdil Secured advised Public Storage on the deal. Morgan Stanley advised NSA.
Despite prolonged self-storage demand since the pandemic, REITs in the sector have seen their values fall as higher interest rates and construction costs have hindered development. In areas where the housing market has cooled, self-storage leasing has also slowed.
In his statement, Boyle said he expects the deal to create significant value “as our industry emerges from the bottom of the self storage operating cycle.”
In 2023, Public Storage made an $11B unsolicited offer for Life Storage but lost out to Extra Space Storage.
