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 2,200 storage facilities comprising some 141 million sq. ft. of storage space in the US and another 187 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.
Geographic Reach
California-based Public Storage operates self-storage facilities in 38 US states. California, Texas, and Florida are its largest markets. Its domestic self-storage facilities generated 93% of the company's revenues in 2013. Public Storage also owns a 49% stake in Shurgard Europe, which operates about 187 units in Belgium, Denmark, France, Germany, the Netherlands, Sweden, and the UK.
Operations
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), which together account for about 7% of total sales.
Sales and Marketing
The company markets its products and services through Internet advertising, signage, and banners. In 2013 Public Storage spent about $27.1 million for advertising and marketing compared to $38.9 million in 2012.
Financial Performance
The company's self-storage business proved to be rather resilient during the economic recession and now during the recovery. Its revenues have been restated due to the divestiture of self-storage facilities and portions of other facilities in connection with eminent domain proceedings. In 2013 Public Storage's revenues grew by 8% due to an increase in average occupancy and in realized rent per occupied square foot.
In 2013 Public Storage’s net income increased by 12% due to higher revenue and a gain in foreign currency exchange.
The company’s cash from operations increased to $1.4 billion in 2013 (from $1.3 billion in 2012) due to higher net income and a net change in current assets.
Strategy
Increasing rental rates to existing customers, generally on an annual basis, is a key component of Public Storage’s growth. It also grows through acquisitions.
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.
Mergers and Acquisitions
Responding to a rebounding economy, in 2013 Public Storage acquired 121 facilities from third parties for about $1.2 billion, primarily through large portfolio acquisitions. This volume was higher than in the previous six years combined.
Company Background
However, in 2010 and 2011 the company began buying properties once again. In the past three years, Public Storage bought more than 75 new properties mostly in California but also in Illinois, Florida, Georgia, Hawaii, New Jersey, Ohio, and Louisiana. Going forward, the company has plans to add approximately $1.3 million net rentable square feet of self-storage space. To that end, in June 2013 the company broke ground its largest self-storage facility in the Bronx, New York. The new 12-story facility will have more than 4,000 units.
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.