If the attic or garage are packed, Public Storage can help. The real estate investment trust (REIT), is one of the largest self-storage companies in the US. It operates more than 2,250 storage facilities comprising some 146 million sq. ft. of storage space in the US and more than 190 facilities in Europe (through its Shurgard Europe affiliate). The firm's self-storage properties, located in densely populated areas, generate more than 90% of the company's sales. Public Storage, which was founded in 1980, also rents trucks, and sells moving supplies such as locks, boxes, and packing supplies. It also owns about 42% of publicly traded PS Business Parks, an office building REIT.
The company operates through three main segments: Domestic Self-Storage, European Self-Storage, and Commercial.
The Domestic Self-Storage Segment comprises 90% of all revenue, and consists of more than 2,230 self-storage facilities owned by the company.The European Self-Storage division consists of Public Storage's interest in Shurgard Europe. The Commercial segment consists of the company's 42% stake investment in PSB, a publicly-traded REIT managed by a separate team, along with Public Storage's direct interest in certain commercial facilities, most of which are managed by PSB.
In addition to rental income on its storage facilities, the company sells tenant reinsurance (on policies issued through non-affiliated insurance companies) against losses and merchandise (locks, boxes, packing supplies).
California-based Public Storage operates self-storage facilities in 38 US states. California, Texas, and Florida are its largest markets. Its US self-storage facilities generate more than 90% of the company's revenue. Public Storage also owns a 49% stake in Shurgard Europe, which operates more than 190 units in Belgium, Denmark, France, Germany, the Netherlands, Sweden, and the UK.
Sales and Marketing
The company markets its products and services through Internet advertising, signage, and banners. Public Storage spent about $26.7 million on advertising and marketing in 2014, compared to $27.9 million in 2013 and $38.9 million in 2012.
The company's self-storage business has proven to be resilient in both recessions and recovery, with growing revenue and profit over the past several years. Revenue in 2014 again jumped by double digits to a record-high $2.2 billion, mostly thanks to a 5% jump in same store facilities revenue as occupancy rates and rental rates rose. Additionally, the company acquired some 3.44 million square feet of leasable space during the year, further adding to rental revenue.
Higher revenue in 2014, coupled with higher equity earnings from the company's investments in PSB, Shurgard Europe and others, pushed net income up by 9% to a record-high $1.14 billion.
The company’s cash from operations increased to $1.61 billion in 2014 (from $1.43 billion in 2013) thanks mostly to higher earnings, but also because the company adjusted for higher non-cash charges related to depreciation and amortization expenses.
Increasing rental rates to existing customers, generally on an annual basis, is a key component of Public Storage’s growth. It also aims to keep average occupancy levels above 90%, and seeks to grow its rental income further through acquisitions and through new facility openings.
Because its become more expensive to purchase existing facilities in recent years, Public Storage has increasingly been developing its own new self-storage locations and expanding its existing facilities for growth. In 2013, the company opened its largest self-storage facility n Bronx, New York (Public Storage’s 2,079th location in the US). The new facility is designed with a large variety of sizes to suit the needs and demands of customers from Manhattan to Harlem and the Bronx and includes free parking and off-street loading docks for large moving vans.
Still, Public Storage has continued to pursue property acquisitions in recent years to increase its leasable footprint and grow its rental income. In 2014, for example, the company invested $430.7 million toward acquiring 44 operating self-storage facilities spanning 3.44 million square feet of leasable space. In 2013, Public Storage acquired 121 facilities spanning 8.04 million square feet of leasable space from third parties for about $1.2 billion, primarily through large portfolio acquisitions. This volume was higher than in the previous six years combined.
In Europe Public Storage owns 49% of Shurgard Europe. In 2011 Shurgard Europe acquired the remaining 80% interest it already didn't own in two joint ventures. The deal gave Shurgard full ownership in 72 self-storage facilities in seven countries. While the company expected big opportunities for growth in the European self-storage industry, prospects for growth were stunted in 2011 as the continent struggled with an economic downturn.
Former chairman and co-founder Wayne Hughes and his family own about 16% of Public Storage.