Go on vacation for a couple of weeks and you miss everything. Well, perhaps not everything, but I still have some catching up to do. Speculation about when Public Storage
Given that Public Storage had approached Shurgard multiple times and always received a chilly reception -- until now -- it's a very interesting deal. It's also just one of many deals involving real estate investment trusts in the last year, including General Electric
I have gone on record that I think this deal can work for both parties, but I find it particularly attractive to Shurgard shareholders. They get a premium now, and Public Storage should be able to get value out of the Shurgard properties over time by reducing the operating expenses and improving occupancy. Public Storage has demonstrated that it can do this with smaller acquisitions; now it will need to do so on a larger scale.
The 0.82 shares of Public Storage being offered for each share of Shurgard is not too far above the 0.8 shares initially offered. However, given that there are no caps or collars on the share price, I think it's a very fair deal. The deal also creates a monster in the industry, dwarfing the next two largest storage REITs -- U-Store-It Trust
Investors on the sidelines, like me, will want to pay attention to the progress the combined company makes over the next six to 12 months. If there are any stumbles, there could be a very attractive opportunity to pick up a well-managed company at an attractive price -- and make no mistake, I view this company as well-managed. However, right now, the shares don't offer the margin of safety that I'd prefer.
For more REIT-related Foolishness: