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Public Storage Secures $700M Loan

Moumita Chattopadhyay

The leading real estate investment trust (:REIT) operating self-storage facilities - Public Storage (PSA) is borrowing $700 million in a one-year term loan from Wells Fargo Bank of Wells Fargo & Company (WFC). The move comes as the company gears up to capitalize on the attractive rates on a short-term bank loan.

Public Storage plans to use the fund for financing its acquisition and development efforts and meeting its other corporate needs. Notably, the company’s acquisition initiatives helped it carve a niche in the U.S and the European market. Therefore, this loan for supporting its growth initiatives bode well going forward.

Notably, Public Storage has already purchased 44 storage facilities (2.8 million net rentable square feet) for $324 million in October. At the end of October, the company was under contract to buy another 44 facilities (2.7 million square feet) for $430 million. These acquisitions are expected to close in Dec 2013.

These 88 facilities help extend the company’s property portfolio with assets in California, Colorado, Florida, Georgia, North Carolina, South Carolina, Texas and Virginia. Moreover, as of Sep 30, 2013, Public Storage had development and expansion projects in its pipeline worth an estimated cost of $188 million ($46 million already incurred at the end of the third quarter).

Furthermore, the ‘Public Storage’ brand is widely recognized in the self-storage industry. Backed by this, we believe the company is well poised to maintain its growth curve going forward.

Public Storage also owns a 43% common equity interest in PS Business Parks Inc. (PSB), which owns and operates commercial space, primarily flex, multi-tenant office and industrial space.

Public Storage currently has a Zacks Rank #2 (Buy). A number of other REITs that are also performing well and deserve a look include Getty Realty Corp. (GTY) and National Health Investors Inc. (NHI), both carrying a Zacks Rank #1 (Strong Buy).

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