Public Storage PSA is tripling the number of units owned by it in East Palo Alto, by acquiring a facility from American Self Storage and revamping it, according to a Businesswire report. This additional storage is situated next to the company’s existing property at 1961 E. Bayshore Rd, East Palo Alto, CA 94303.
The company’s effort to expand its presence in the San Francisco Peninsula is a strategic fit, given the prospect of drawing more customers. This is because the newly acquired 3-building site with 765 storage units has affordable homes and retail stores such as IKEA and The Home Depot, Inc. HD in its neighborhood. Also, the Stanford University is situated just three and a half miles away from the place.
Public Storage has been capitalizing on growth opportunities in top U.S. markets. The company targets acquisition of existing buildings and refurbishing them as against commencing from the ground up. This, we believe, reduces operating risks to some extent as well as allows use of existing structures.
As part of such efforts, in 2014, the company had acquired 44 self-storage facilities for approximately $431 million that added a total space of 3.4 million net rentable square feet to the company’s portfolio. In first-quarter 2015, the firm bought 4 self-storage facilities – one each in Florida, North Carolina, Texas and Washington – spanning 0.3 million net rentable square feet – for a sum of $32.3 million.
Following the first quarter, the company was either under contract to acquire or have already purchased 7 self-storage facilities spread across 0.6 million net rentable square feet for $80 million. Such acquisitions bode well for the company’s long-term growth.
Going forward, we believe that Public Storage’s strong brand image and acquisition initiatives would help it ride on the growth curve. Yet, a choppy European market and an anticipated rise in interest rates in the medium term can pose a challenge for the company.
Public Storage currently has a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider stocks like First Industrial Realty Trust Inc. FR and Gladstone Land Corporation LAND. Both these stocks hold a Zacks Rank #2 (Buy).
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