HG bonds: Public Storage prints $1.75B deal to back latest M&A play; terms

Public Storage today completed a $1.75 billion, three-part offering across senior notes due 2026, 2028 and 2031, as it closes in on another acquisition target.

On Nov. 1, Public Storage announced that it planned to purchase the All Storage portfolio, which includes 56 self-storage facilities, for $1.5 billion.

Proceeds from today's bond placement will be used to fund the purchase price of the All Storage acquisition, and any remaining proceeds will be used for general corporate purposes, according to regulatory filings.

S&P Global Ratings, which maintains an A rating and stable outlook, noted that since the acquisition will be funded entirely with unsecured debt, the company's pro forma debt to EBITDA will increase to the mid-4x area. "While the transaction increases leverage modestly, we believe it remains within the company's financial policy, which includes maintaining debt to EBITDA below 5x on an ongoing basis," the agency said Nov. 2.

Moody's this week said despite the increase in leverage, the All Storage acquisition enhanced Public Storage's growth profile. The company's "torrid pace of growth" includes the announcement or completion of an additional $3.5 billion of acquisitions so far this year, which collectively increased its gross assets by 26%, the agency noted. Moody's maintains an A2 rating and stable outlook on Public Storage.

The company last tapped the market in April, when it placed a $2 billion, three-part offering across a floating-rate tranche due 2024 at Sofr+47, 1.85% fixed-rate notes due May 2028 at T+55; and 2.30% notes due May 2031 at T+70. Proceeds from that bond placement were used to back the $1.8 billion acquisition of ezStorage Corp., which closed April 29.

Terms: