Public Storage and National Storage Affiliates Trust have agreed to an all-stock transaction that will combine two of the largest publicly traded self-storage platforms in the U.S. The deal assigns National Storage Affiliates an enterprise value of approximately $10.5 billion and will create a substantially larger self-storage REIT once completed.
National Storage Affiliates brings a portfolio of more than 1,000 self-storage properties totaling 69 million rentable square feet and approximately 550,000 storage units across 37 states and Puerto Rico. Following the transaction, the combined company is expected to have a pro forma equity market capitalization of about $57 billion and a total enterprise value of roughly $77 billion, significantly expanding its scale in the self-storage sector.
Tom Boyle, incoming CEO of Public Storage, said the acquisition aligns with the company’s PS4.0 strategic vision, which emphasizes accelerated per-share earnings and cash flow growth. He described National Storage Affiliates’ portfolio as highly complementary to Public Storage’s existing holdings and indicated that the transaction is intended to deepen the company’s market presence while supporting its long-term per-share growth profile.
As part of the structure, Public Storage and limited partners in National Storage Affiliates’ operating partnership will form a joint venture immediately prior to closing. The joint venture will include 313 properties on National Storage Affiliates’ operating platform totaling 19.6 million rentable square feet across 28 states and Puerto Rico, with an estimated value of approximately $3.3 billion. At inception, operating partnership unitholders are expected to own about 80% of the joint venture, with Public Storage holding the remaining interest.
Public Storage plans to repay National Storage Affiliates’ existing bank debt and senior unsecured notes at closing, while assuming its existing mortgage debt and its Series A, B and A-1 preferred shares and units. To support the transaction and related balance sheet actions, Public Storage has arranged $4.0 billion of committed financing from Goldman Sachs and Wells Fargo. The financing package consists of a $2 billion corporate bridge loan and a $2 billion off-balance sheet joint venture bridge loan that is expected to be converted into permanent secured mortgage financing.
On the advisory side, Goldman Sachs, Wells Fargo and Eastdil Secured are acting as financial advisors to Public Storage. Wachtell, Lipton, Rosen & Katz is serving as legal advisor, DLA Piper is providing real estate financing counsel and Kekst CNC is serving as strategic communications advisor. For National Storage Affiliates Trust, Morgan Stanley & Co. LLC is the exclusive financial advisor, Clifford Chance US LLP is serving as legal advisor and Joele Frank, Wilkinson Brimmer Katcher is providing strategic communications support.
The transaction is expected to close in the third quarter, subject to customary closing conditions and approvals. Upon completion, the enlarged platform is positioned to be one of the most significant players in the self-storage industry by both equity market capitalization and enterprise value.
