Below is a chart and brief excerpt from today's Early Look written by REIT analyst Rob Simone.
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The last two weeks have definitely been interesting for Best Idea Long PSA. Since we launched on 4/5, another activist (Land & Buildings) joined the fray along with Elliott Management, pressuring the company on a parallel front. Then yesterday the company announced a ~$1.8 billion portfolio acquisition, which adds 48 higher-quality, newer-vintage assets to its mid-Atlantic portfolio. A big portion of the thesis is capital deployment towards external growth at very attractive economics, and this deal definitely accomplishes that. It’s not too often that you look at a sources & uses chart and see only one source of funds – unsecured debt. But that’s exactly the point – PSA’s under-levered balance sheet, scale and significant cash flow generation provides a unique opportunity to fund external growth accretively at an extremely low cost of funds. |
