Public Storage (NYSE:PSA) (“Public Storage” or the “Company”)
today provided certain updates as to the impact on Public Storage
of the agreed acquisition by affiliates of Blackstone Real Estate
(“Blackstone”) of PS Business Parks, Inc. (NYSE:PSB) (“PS Business
Parks”), which was announced today. Upon consummation of the
transaction, Public Storage, like all holders of PS Business Parks’
common shares and units, would receive $187.50 in cash per PS
Business Parks common share or unit. Public Storage holds an
approximate 41% common equity interest in PS Business Parks through
approximately 7.2 million common shares and 7.3 million limited
partnership units.
Public Storage expects to receive approximately $2.7 billion of
cash proceeds and recognize a $2.3 billion tax gain on sale upon
consummation of the transaction. Public Storage expects to
distribute the $2.3 billion gain to its shareholders.
Public Storage estimates annual Core Funds from Operations would
be lower following the consummation of the transaction to a degree
approximating its $101 million pro rata share of PS Business Park’s
Core FFO in 2021, which comprised approximately 4% of Public
Storage’s total Core FFO during the year.
Additional Transaction
Details
The transaction is expected to close in the third quarter of
2022, subject to approval by PS Business Parks’ stockholders and
other customary closing conditions. Public Storage has agreed to
vote its shares of PS Business Parks common stock, which represent
25.9% of the outstanding shares, in favor of the transaction,
subject to the terms of a support agreement between Public Storage,
PS Business Parks and an affiliate of Blackstone.
The merger agreement also includes a “go-shop” period that will
expire 30 days from today on May 25, 2022, which permits PS
Business Parks and its representatives to actively solicit and
consider alternative acquisition proposals to acquire PS Business
Parks. PS Business Parks has the right to terminate the definitive
merger agreement with Blackstone to enter into a superior proposal,
subject to the payment of a termination fee and certain other terms
and conditions of the definitive merger agreement, and Public
Storage’s support agreement will terminate automatically upon the
termination of the merger agreement.
From the date of the merger agreement through the closing of the
transaction, PS Business Parks is permitted to declare and pay
regular, quarterly cash distributions to holders of its common
stock and to holders of its operating partnership’s units, in each
case, including Public Storage, in an amount of up to $1.05 per
share or unit, including a pro rata distribution in respect of any
stub period.
Additional information regarding the transaction may be found in
documents that PS Business Parks files with the SEC, available on
the SEC’s website at sec.gov.
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, 2021, we had: (i)
interests in 2,787 self-storage facilities located in 39 states
with approximately 198 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 253
self-storage facilities located in seven Western European nations
with approximately 14 million net rentable square feet operated
under the “Shurgard” brand, and (iii) an approximate 41% 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, 2021. Our headquarters are located
in Glendale, California.
Additional information about Public Storage is available on the
Company’s website at PublicStorage.com.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements include statements relating
to the consummation of Blackstone’s agreed acquisition of PS
Business Parks and the impact such acquisition would have on the
Company if consummated in accordance with its terms and all other
statements other than statements of historical fact. Such
statements are based on management’s beliefs and assumptions made
based on information currently available to management. All
statements in this press release, other than statements of
historical fact, are forward-looking statements which may be
identified by the use of the words “outlook,” “guidance,”
“expects,” “believes,” “anticipates,” “should,” “estimates,” and
similar expressions. These forward-looking statements involve known
and unknown risks and uncertainties, which may cause our actual
results and performance to be materially different from those
expressed or implied in the forward-looking statements. Factors and
risks that may impact future results and performance include, but
are not limited to, those described in Part 1, Item 1A, “Risk
Factors” in our most recent Annual Report on Form 10-K that was
filed with the SEC on February 22, 2022 and in our other filings
with the SEC including: the occurrence of any event, change or
other circumstance that could give rise to the termination of the
merger agreement between PS Business Parks and Blackstone’s
affiliates; the failure to obtain the approval of PS Business
Parks’ stockholders of the proposed transaction or the failure to
satisfy any of the other conditions to the completion of the
proposed transaction; stockholder litigation in connection with the
proposed transaction, which may affect the timing or occurrence of
the proposed transaction; general risks associated with the
ownership and operation of real estate, including changes in
demand, risks related to development, expansion, and acquisition of
self-storage facilities, potential liability for environmental
contamination, natural disasters, and adverse changes in laws and
regulations governing property tax, real estate, and zoning; risks
associated with downturns in the national and local economies in
the markets in which we operate, including risks related to current
economic conditions and the economic health of our customers; risks
associated with the COVID-19 pandemic (the “COVID Pandemic”) or
similar events, including but not limited to illness or death of
our employees or customers, negative impacts to the economic
environment and to self-storage customers that could reduce the
demand for self-storage or reduce our ability to collect rent,
and/or potential regulatory actions to (i) close our facilities if
we were determined not to be an “essential business” or for other
reasons, (ii) limit our ability to increase rent or otherwise limit
the rent we can charge, or (iii) limit our ability to collect rent
or evict delinquent tenants; the risk that there could be an
out-migration of population from certain high-cost major markets,
if it is determined that the ability to “work from home,” which has
become more prominent during the COVID Pandemic, could allow
certain workers to live in less expensive localities, which could
negatively impact the occupancies and revenues of our properties in
such major high-cost markets; the risk that more jurisdictions will
reinstitute COVID Pandemic restrictions, which were previously
eased, in response to increases in infections, including as a
result of variants such as the Delta or Omicron variants, or if
additional pandemics occur; the risk that we could experience a
change in the move-out patterns of our long-term customers due to
economic uncertainty and increases in unemployment resulting from
changes in the macro environment, which could lead to lower
occupancies and rent “roll down” as long-term customers are
replaced with new customers at lower rates; the risk of negative
impacts on the cost and availability of debt and equity capital as
a result of the COVID Pandemic, which could have a material impact
upon our capital and growth plans; the risk that the COVID Pandemic
could adversely impact our ability to retain and hire employees,
including as a result of vaccine or testing mandates; the impact of
competition from new and existing self-storage and commercial
facilities and other storage alternatives; the risk that our
existing self-storage facilities may be at a disadvantage in
competing with newly developed facilities with more visual and
customer appeal; risks related to increased reliance on Google and
Sparefoot as customer acquisition channels; difficulties in our
ability to successfully evaluate, finance, integrate into our
existing operations, and manage properties that we acquire directly
or through the acquisition of entities that own and operate
self-storage facilities, or to consummate announced acquisitions in
the expected timeframe or at all; risks associated with
international operations including, but not limited to, unfavorable
foreign currency rate fluctuations, changes in tax laws, and local
and global economic uncertainty that could adversely affect our
earnings and cash flows; risks related to our participation in
joint ventures; the impact of the legal and regulatory environment,
as well as national, state, and local laws and regulations
including, without limitation, those governing environmental
issues, taxes, our tenant reinsurance business, and labor,
including risks related to the impact of new laws and regulations;
risks of increased tax expense associated either with a possible
failure by us to qualify as a real estate investment trust
(“REIT”), or with challenges to the determination of taxable income
for our taxable REIT subsidiaries; risks due to ballot initiatives
or other actions that could remove the protections of Proposition
13 with respect to our real estate and result in substantial
increases in our assessed values and property tax bills in
California; changes in United States (“U.S.”) federal or state tax
laws related to the taxation of REITs and other corporations;
security breaches, including ransomware, or a failure of our
networks, systems or technology, which could adversely impact our
operations or our business, customer, and employee relationships or
result in fraudulent payments; risks associated with the
self-insurance of certain business risks, including property and
casualty insurance, employee health insurance, and workers
compensation liabilities; difficulties in raising capital at a
reasonable cost; delays and cost overruns on our projects to
develop new facilities or expand our existing facilities;
difficulties in our ability to hire and retain skilled management
and staff; ineffective succession planning for our CEO, executive
management and our other key employees; ongoing litigation and
other legal and regulatory actions that may divert management’s
time and attention, require us to pay damages and expenses, or
restrict the operation of our business; and economic uncertainty
due to the impact of war or terrorism.
The acquisition of PS Business Parks by affiliates of Blackstone
is subject to approval by PS Business Parks’ stockholders and other
customary closing conditions. There is no assurance that the
transaction will be completed as described in this document or at
all. There can be no assurance that the Company will realize the
anticipated benefits or results; actual results could differ
materially from the expectations expressed in the forward-looking
statements. Examples of material assumptions made by the Company in
the forward-looking statements, including the Company’s expectation
that it will distribute the taxable gain from the transaction to
its shareholders, as well as the Company’s expectations regarding
financial impact of the transaction, including the impact on the
Company’s Core FFO.
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Ryan Burke (818) 244-8080, Ext. 1141
PS Business Parks (NYSE:PSB)
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