Public Storage is tapping the corporate bond market Monday to fund its acquisition of Simply Self Storage on the same day the purchase was announced.
(Bloomberg) — Public Storage is tapping the corporate bond market Monday to fund its acquisition of Simply Self Storage on the same day the purchase was announced.
The company is offering debt in as many as four parts, according to a person with knowledge of the transaction, who asked not to be identified as the deal is private. The longest portion, a 30-year note, may yield around 1.8 percentage point over Treasuries, the person said.Â
The self-storage company becomes the latest to finance M&A with a debt offering quickly after disclosing the deal. In June, Nasdaq Inc., Earthstone Energy Holdings LLC and Civitas Inc. speedily sold debt after announcing their respective transactions. Prologis Inc., which came to the high-grade bond market last month, also announced its acquisition with a same-day turnaround.
It’s standard practice for financing to come through in about three to six months after a company announces a merger or acquisition, but the turnaround has been much quicker so far this year, according to data compiled by Bloomberg. The rapid dash to start a debt offering is likely due, in part, to the uncertain economic outlook as the Federal Reserve hikes interest rates, muddying the outlook into the future. It’s a way to lock down financing ahead of any potential economic turbulence.
Bank of America Corp. and JPMorgan Chase & Co. are managing Monday’s bond sale, which is expected to price later in the day.Â
Blackstone Inc.’s $68 billion real estate trust agreed to sell Simply Self Storage to Public Storage for $2.2 billion as the property vehicle grapples with investor withdrawals and upheaval in the commercial-property sector. The deal is expected to close in the third quarter.
A representative from Public Storage didn’t immediately respond to a request for comment.
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