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 nearly 2,350 storage facilities under the Public Storage brand comprising some 155 million sq. ft. of storage space in the US and nearly 220 facilities in Europe under the Shurgard brand. The firm's self-storage properties, located in densely populated areas, generate about 95% 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 part of publicly traded PS Business Parks, an office building REIT.
Operations
The company reports its operations in two segments: Self-storage Operations and Ancillary Operations.
Self-Storage segment accounts for some 95% of revenue, and consists of the nearly 2,570 total units it owns across the US and its non-US markets. The self-storage business rents storage units mostly on a month-by-month basis to both individual and business customers. Typically, individual customers will store furniture, household belongings, and vehicles, while businesses store excess inventory, records, seasonal goods, and equipment and fixtures. Facilities have between 350 and 750 storage spaces. Some of its facilities have on-site parking.
The Ancillary segment re-insures policies against losses to goods stored by customers in their self-storage facilities, and sells merchandise, such as locks and boxes.
Geographic Reach
California-based Public Storage operates self-storage facilities in 38 US states. As might be expected, Public Storage's biggest markets are the three most populous states. It has more than 420 facilities in California, more than 280 in Florida, and about 280 in Texas. Public Storage also owns a 49% stake in Shurgard Europe, which operates about 220 units in Belgium, Denmark, France, Germany, the Netherlands, Sweden, and the UK.
The company has an additional fully-owned facility in London.
Sales and Marketing
Public Storage markets its products and services through internet advertising, signage, and banners.
Financial Performance
Public Storage might need to start using its own units soon to store its mounting cash piles.
In fiscal 2016, revenue increased a further 8% to $2.6 billion. About 70% of the growth came from same-store sales increases due to higher rent per sq. ft., with the rest coming from acquired, developed, or expanded facilities.
Net income grew 12% to $1.2 billion -- an astonishing rate of profitability. The increase came from higher self-storage income and the $17.3 million positive impact on euro-denominated debt due to favorable currency changes.
Cash from operations increased 11% to $1.9 billion due to higher net income an increase in distribution from retained earnings of unconsolidated real estate entities.
Strategy
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 it's 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 2016, the company's development and expansion pipeline amounts to 5.4 million net rentable square feet at a total cost of $660.2 million.
Public Storage still pursues facility acquisitions, but at a much lower rate than before due to the significantly higher costs than development and expansion.
The company views Europe has having great potential for growth as the storage industry is in an earlier stage of development. In 2014-16 Shurgard Europe (of which Public Storage owns 49%) acquired 27 facilities with 1.3 million net rentable sq. ft. of storage space.
Mergers and Acquisitions
In 2014-16, Public Storage acquired 116 facilities for $1.0 billion.
Company Background
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.