Public Storage Urged to Restructure by Elliott Management

Elliott Management wants Public Storage to lift investment in stores, employees and the customer experience to boost performance.
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Public Storage  (PSA) - Get Report shares rose Monday after the release of a letter from activist investor Elliott Management urging the self-storage company to boost lagging performance with a restructuring.

Elliott also has nominated six new directors for the company’s board. Public Storage announced three new directors Sunday, but Elliott said in Monday’s letter that doesn’t represent sufficient change.

Public Storage recently traded at $226.03, up 3.65%. The stock has 5% year to date.

Elliott wants Public Storage to lift investment in stores, employees and the customer experience to jumpstart growth. The investment firm also seeks a new board committee to judge the company’s performance.

“Public Storage has significantly underperformed its self-storage REIT peers over the last decade despite having every structural advantage possible: the highest brand awareness, the best (and most) locations, first-mover advantage, regional density and the most pricing data,” Elliott said in the letter.

The investment firm said it’s looking to cooperate with Public Storage, not fight against it. 

“We hope to work constructively with you on the changes needed at PSA - the changes all PSA stakeholders deserve,” Elliott said.

Morningstar analyst Yousuf Hafuda showed a lack of enthusiasm for Public Storage after its third-quarter earnings report last month. The earnings were “somewhat underwhelming … amid a backdrop of a coronavirus crisis that has tested the self-storage industry, which has developed a reputation for being recession-resistant,” he wrote.

“With third-quarter results not providing any major surprises, we are maintaining our $198 per share fair value estimate for no-moat-rated Public Storage.”