A massive merger in the storage industry could create a new $57 billion corporation with enough combined square footage to match the size of small cities like Cupertino, California or Chapel Hill, North Carolina.
Public Storage announced Monday its plans to acquire National Storage Affiliates through an all-stock transaction valued at approximately $10.5 billion. The combined entity would control 327 million square feet of storage space across nearly 4,600 facilities throughout the United States.
According to Public Storage, the acquisition aims to strengthen its foothold in rapidly growing regions, particularly the Sun Belt and other areas experiencing population increases.
Should regulators approve the transaction, it would merge the nation’s largest self-storage operator with the fourth-largest by market value. Extra Space Storage and CubeSmart currently rank as the second and third largest companies in the sector.
Public Storage, previously headquartered in Glendale, California, announced earlier this year its intention to move operations to Frisco, Texas, in the Dallas area. National Storage operates from Greenwood Village, Colorado, located in the Denver suburbs.
Under the agreement terms, National Storage shareholders and operating partnership unit holders will receive 0.14 shares of Public Storage stock or partnership units for each National Storage share or unit they currently own. This exchange rate equals $41.68 per share.
Market reaction was immediate, with National Storage shares surging nearly 30% when trading opened, while Public Storage stock declined by less than one percent.
Prior to finalizing the deal, Public Storage and National Storage’s limited partners will establish a joint venture encompassing 313 properties from National Storage’s portfolio. This venture includes 19.6 million rentable square feet spread across 28 states and Puerto Rico, with an estimated worth of roughly $3.3 billion.
Operating partnership unit holders are projected to control approximately 80% of the joint venture initially, while Public Storage will maintain the remaining ownership stake. Public Storage will have exclusive management rights over the joint venture properties and will receive standard fees for property management, asset oversight, and tenant insurance services.
Both companies’ boards have approved the transaction, which is anticipated to conclude during the third quarter. The deal still requires endorsement from National Storage shareholders and regulatory authorities.
