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Public Storage PSA recently priced a public offering of $500 million of senior notes. Bearing interest at an annual rate of 0.875%, these notes are issued at 99.817% of par value. Starting Aug 15, 2021, the interest on the notes will be payable semi-annually on Feb 15 and Aug 15 of each year. It is scheduled to mature on Feb 15, 2026.
The offering is anticipated to close today conditioned on the customary closing norms.
Reflecting positive sentiments, the company’s shares were up 1.4% during Friday’s regular session.
The self-storage REIT plans to use the net proceeds for investments in its expansion efforts. This includes investments in self-storage facilities as well as in entities that own self-storage facilities. Also, investments involve the development of self-storage facilities as well as for general corporate needs plus preferred shares redemption.
Notably, the notes offering will enable Public Storage to procure financing without straining its liquidity position. Particularly, the company had $294 million of cash as of Sep 30, 2020, and $475.7 million of available borrowing capacity on its revolving line of credit. It has no material debt maturity until September 2022. Moreover, the company’s debt maturity schedule is well laddered with material debt maturities at least 18 months apart that moderate its refinancing risk.
The company maintains a robust financial profile characterized by solid credit metrics including low leverage relative to its total capitalization and operating cash flows plus enjoys an “A” credit rating from Standard & Poor’s and an “A2” from Moody’s. This allows it to borrow at an advantageous rate. Given its balance-sheet strength and prudent financial management, the company is well poised to bank on growth opportunities.
In fact, Public Storage is one of the largest owners and operators of storage facilities in the United States. The ‘Public Storage’ brand is the most recognized and established name in the self-storage industry. This success is supported by its growth strategies, including acquisitions, development and redevelopment efforts to improve customer satisfaction.
Since the beginning of 2019, the company has expanded its portfolio by 13.9 million net rentable square feet on the back of buyouts, development and redevelopment worth $1.9 billion. This also includes the $500-million acquisition of the Beyond Storage portfolio. During the same period, Public Storage has delivered $471 million of properties through its development platform and has a pipeline of $563 million activity planned. Public Storage has also enhanced the scale of its third-party property management business by adding 113 properties.
Other than these organic and inorganic growth measures, the company continues to be focused on its $500-million “Property of Tomorrow” investment program, spanning five years. This program is aimed at improving customer satisfaction and enhancing its existing portfolio.
Markedly, the successful execution of such growth strategies and efforts to enhance operating platform have enabled the company to see a 20-year CAGR of 7% in core funds from operations (FFO) per share and 12% in dividends per share.
Shares of this Zacks Rank #3 (Hold) company have gained 19.5% over the past six months compared with the industry’s growth of 5.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Duke Realty’s DRE Zacks Consensus Estimate for 2021 funds from operations (FFO) per share has moved up marginally to $1.64 in the past month. The company currently carries a Zacks Rank of 2 (Buy).
Rexford Industrial Realty, Inc.’s REXR FFO per share estimate for the current year has been revised marginally upward to $1.44 in the past week. The company carries a Zacks Rank of 2, currently.
Four Corners Property Trust, Inc.’s FCPT Zacks Consensus Estimate for the ongoing-year FFO per share has been marginally revised upward to $1.55 in the past week. The company holds a Zacks Rank of 2 at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Public Storage (PSA) : Free Stock Analysis Report
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Four Corners Property Trust, Inc. (FCPT) : Free Stock Analysis Report
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