Public Storage plans to keep pursuing the acquisition of rival Life Storage after the latter rejected an $11 billion offer earlier this month.
Public Storage, the storage giant based in Glendale, California, is committed to combining the two companies despite Life Storage's rebuff, CEO Joe Russell said Wednesday on a fourth-quarter earnings call.
Life Storage, based in Williamsville, New York, said Feb. 16 that Public Storage's bid significantly undervalued the New York company. However, Life Storage also said in its rejection letter that its board is open to opportunities and will consider proposals that appropriately value the company.
Russell said Wednesday that the statement signaled Life Storage's openness to more talks about a potential combination. Life Storage operates more than 1,100 self-storage facilities in 37 states, while the larger Public Storage has more than 2,800 self-storage facilities located in 40 states.
"Nothing in that response changed our thinking," Russell said.
Public Storage's offer to buy Life Storage was at a "substantial premium" and the opportunity would accelerate the combined company's growth and revenue, Russell said. Public Storage received "overwhelming positive feedback" after announcing the acquisition on Feb. 5.
Russell declined to take further questions after talking about the potential acquisition on the call. A Life Storage representative declined to comment to CoStar News.
Life Storage is holding an earnings call on Feb. 24 and is expected to further address the acquisition offer.
Development Pipeline
Outside of its $11 billion acquisition talks, Public Storage's future development pipeline totals $1 billion, CFO and Chief Investment Officer Tom Boyle said on the fourth-quarter earnings call. In addition, the company has roughly $750 million in acquisitions planned, according to a statement.
In 2022, Public Storage bought 74 self-storage facilities totaling $730 million, according to the statement.
Self-storage properties saw increased demand during the pandemic as working from home and spending more time at home led to more self-storage space needs. Russell said he forecasts demand to continue for self-storage after the robust early years of the pandemic.
"We're firing on all cylinders," Russell said.
For the fiscal quarter that ended Dec. 31, Public Storage reported revenue rose 13% from the year-earlier period to $818.9 million. Net income attributable to common shareholders was down 35% to $362.6 million.