Public Storage Prices Public Offering of Senior Notes

Rhea-AI Summary

Public Storage (NYSE: PSA) has announced a public offering of $2.0 billion in senior notes in three tranches. The first tranche includes $700 million of floating rate notes due in 2024, the second tranche consists of $650 million of fixed rate notes due in 2028, and the third tranche is $650 million of fixed rate notes due in 2031. The offering will close on April 23, 2021, and net proceeds will be used primarily for an $1.8 billion acquisition of 48 self-storage facilities from ezStorage Corp. The offering is not contingent on the acquisition's closing.

Positive

• The $2.0 billion offering strengthens the balance sheet and supports strategic acquisitions.
• Intended use of proceeds for acquiring 48 self-storage facilities enhances portfolio diversification.

Negative

• Potential dilution of existing shareholders due to the large bond issuance.

Tom Boyle, Chief Financial Officer of Public Storage (NYSE:PSA, the “Company”), announced today that the Company has priced a public offering of $2.0 billion aggregate principal amount of senior notes.

The senior notes will be issued in three tranches. The first tranche of $700 million aggregate principal amount of floating rate senior notes due 2024 will bear interest at a rate equal to Compounded SOFR (as defined in the prospectus supplement relating to the offering), reset quarterly, plus 47 basis points, will be issued at 100.000% of par value and will mature on April 23, 2024. We will pay interest on the floating rate notes quarterly on January 23, April 23, July 23 and October 23 of each year, commencing July 23, 2021. The second tranche of $650 million aggregate principal amount of fixed rate senior notes due 2028 will bear interest at an annual rate of 1.850%, will be issued at 99.928% of par value and will mature on May 1, 2028. The third tranche of $650 million aggregate principal amount of fixed rate senior notes due 2031 will bear interest at an annual rate of 2.300%, will be issued at 99.653% of par value and will mature on May 1, 2031. We will pay interest on the fixed rate notes semi-annually on May 1 and November 1 of each year, commencing November 1, 2021.

The offering is expected to close on April 23, 2021, subject to the satisfaction of customary closing conditions. The Company expects to use the net proceeds to fund the $1.8 billion purchase price for the acquisition of 48 self-storage facilities currently owned and operated by ezStorage Corp., related transaction costs and for general corporate purposes. The closing of the offering is not conditioned on the closing of the ezStorage Corp. acquisition.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Wells Fargo Securities, LLC acted as joint book-running managers of the offering. This announcement shall not constitute an offer to sell or a solicitation of an offer to buy these securities nor shall there be any offer or sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful. The offering is being made pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission (the “SEC”) and only by means of a prospectus and prospectus supplement. Investors may obtain these documents for free by visiting EDGAR on the SEC’s website at www.sec.gov. Alternatively, copies of the prospectus and prospectus supplement may be obtained by contacting: Citigroup Global Markets Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, telephone: 1-800-831-9146 or email: prospectus@citi.com; J.P. Morgan Securities LLC, 383 Madison Avenue, New York, New York 10179, Attention: Investment Grade Syndicate Desk, telephone: 212-834-4533; or Wells Fargo Securities, LLC, 608 2nd Avenue South, Suite 1000, Minneapolis, MN 55402, Attn: WFS Customer Service, telephone: 1-800-645-3751 or email: wfscustomerservice@wellsfargo.com.

Company Information

Public Storage, a member of the S&P 500 and FT Global 500, is a REIT that primarily acquires, develops, owns and operates self-storage facilities. At December 31, 2020, we had: (i) interests in 2,548 self-storage facilities located in 38 states with approximately 175 million net rentable square feet in the United States, (ii) an approximate 35% common equity interest in Shurgard Self Storage SA (Euronext Brussels:SHUR) which owned 241 self-storage facilities located in seven Western European nations with approximately 13 million net rentable square feet operated under the “Shurgard” brand and (iii) an approximate 42% common equity interest in PS Business Parks, Inc. (NYSE:PSB) which owned and operated approximately 28 million rentable square feet of commercial space at December 31, 2020. Our headquarters are located in Glendale, California.

Forward-Looking Statements

When used within this press release, the words “expects,” “believes,” “anticipates,” “plans,” “would,” “should,” “may,” “estimates” and similar expressions are intended to identify “forward-looking statements,” including but not limited to, statements about the completion, timing and size of the proposed offering of securities by the Company and the intended use of net proceeds of such offering to fund the ezStorage Corp. acquisition. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results to be materially different from those expressed or implied in the forward-looking statements. Such factors include market conditions and the demand for the Company’s securities and risks detailed in the Company’s prospectus and prospectus supplement filed with the SEC in connection with this offering and in the Company’s SEC reports, including quarterly reports on Form 10-Q, current reports on Form 8-K and annual reports on Form 10-K. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, except as required by law.

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FAQ

What are the details of Public Storage's recent bond offering?

Public Storage is offering $2.0 billion in senior notes split into three tranches: $700 million in floating rate notes due 2024, $650 million in fixed rate notes due 2028, and $650 million in fixed rate notes due 2031.

How will Public Storage use the proceeds from the bond offering?

The company plans to use the proceeds primarily to fund the $1.8 billion acquisition of 48 self-storage facilities owned by ezStorage Corp.

When is the closing date for Public Storage's bond offering?

The offering is expected to close on April 23, 2021, subject to customary closing conditions.

What impact does the bond offering have on Public Storage's shareholders?

The bond offering could lead to potential dilution for existing shareholders due to the large issuance.

What are the interest rates on the new senior notes issued by Public Storage?

The floating rate notes will bear interest based on Compounded SOFR plus 47 basis points, while the fixed rate notes will have annual rates of 1.850% for 2028 and 2.300% for 2031.