Public Storage has secured funding to complete its deal with Simply Self Storage
Public Storage has raised USD 2.2 billion through the sale of corporate bonds. The company is using the proceeds to buy Simply Self Storage, which Blackstone previously owned. The value of the transaction was USD 68 million.
The proceeds from the sale will be split into four parts. The longest is for 30 years: it yields 1.43 percentage points more than government bonds, which is about 1.8 percentage points more than previous discussions. It’s worth noting that this approach is quite popular among companies. A company Often starts raising funds to close the deal three or six months after announcing the deal. In 2023, there will be an increase in the number of placements in the corporate bond market. Analysts say this is due to the economic problems and uncertainty around the world. In addition, the regular increase in interest rates by the Federal Reserve is also aggravating the situation.
Overview of Public Storage’s business
Public Storage is the largest player in the US self-storage niche market. The company also operates storage facilities in Canada and Europe, totalling more than 2,200 facilities. The company also has an interest in an office park management company and a packaging materials distribution company.
The company was founded in 1972 and, by 1989, was operating a thousand self-service warehouses. The idea for the company came to B. Wayne Hughes during a visit to Texas. At the time, the construction of small warehouses was booming in the state. Hughes decided to adapt such a service for California and enlisted the support of business partner Kenneth Wolk. PS received the funds to grow the business through investment from RELP, a partner in the real estate industry. In the early stages of the company’s development, investors received a return of 3-4 times their initial investment. This was made possible by the growth in the price of warehousing services and property in general. In addition, warehouses had high occupancy rates. By the mid-1980s, Public Storage was worth USD 800 million.
After a slight downturn in the early 1990s, the business began to grow strongly in the 2000s:
– the company joined the index in 2005;
– in 2006, it bought Shulgard Storage for USD 5.5 billion. This allowed the company to expand its number of warehouses, including in Europe;
– in 2010, it acquired 30 facilities from a US competitor.
In 2022, the company operated 2,836 storage facilities in the US alone. In Europe, there were 193, which Shurgard Europe managed. The latter is 42% owned by PS. The company also owns 2,546 office parks managed by Business Parks, in which PS also holds a 42% stake.