Public Storage (PSA - Free Report) recently announced acquisition of two new climate controlled storage locations in Quincy and Everett, MA. The latest move increases the company’s presence in the Boston area by 7% and is in sync with the company’s expansion efforts. The buyouts bring more than 2,300 self-storage units to communities.
One of the acquired facilities, Public Storage 671 Washington St., Quincy, MA 02169, marks the company’s first location in the region. The other one, Public Storage 1901 Revere Beach Pkwy, Everett, MA 02149, marks its second in Everett.
The properties proximity to Boston with the Boston Logan International Airport less than a 30-minute drive by car, and neighboring stops of “the T” subway system, make it a lucrative one.
Notably, Public Storage’s latest expansion in the region is a strategic fit as population is on the rise in both towns. Moreover, according to Zillow.com, housing costs per square foot are higher than average for the Boston area. Further, job markets are robust in both towns with opportunities available in GE, biotech and academic institutions.
In fact, Public Storage has fortified its presence in other key cities on the back of acquisitions and expansion efforts. Since the beginning of 2013 through Jun 30, 2019, the company has acquired 318 facilities, with 22.1 million net rentable square feet from third parties, for approximately $2.9 billion. Additionally, it opened the newly-developed and expanded the self-storage space for a total cost of $1.5 billion, adding around 13.9 million net rentable square feet. Following Jun 30, 2019, the company has acquired or was under contract to acquire 10 self-storage facilities, spanning 0.8 million net rentable square feet of space, for $86.5 million.
Also, as of the same date, Public Storage had several facilities in development (1.1 million net rentable square feet), with an estimated cost of $189 million, and expansion projects (2.7 million net rentable square feet) worth roughly $332 million.
However, Public Storage operates in a highly fragmented market in the nation with stiff competition from numerous private, regional and local operators. In addition, there is a development boom of self-storage units in many markets. This high supply is likely to intensify competition, curb its power to raise rents and turn on discounting.
Shares of this Zacks Rank #3 (Hold) company have gained 12.5% over the past six months, outperforming its industry’s rally of 7.7%.
Stocks to Consider
Some better-ranked stocks from the real-estate space include Alexandria Real Estate Equities, Inc. (ARE - Free Report) , Equity Residential (EQR - Free Report) and Mid-America Apartment Communities, Inc. (MAA - Free Report) , each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alexandria Real Estate’s Zacks Consensus Estimate for 2019 funds from operations (FFO) per share has moved marginally north to $6.98 in the past three months.
Equity Residential’s FFO per share estimate for the current year moved up 0.3% to $3.45 over the past month.
Mid-America’s Zacks Consensus Estimate for the ongoing year’s FFO per share climbed marginally to $6.30 in a month’s time.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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