Public Storage said it held discussions in recent weeks with activist hedge fund investor Elliott Associates, which had confidentially submitted the names of six nominees for election to the company’s board. Shares climbed 4% in Monday’s pre-market trading session.
In a separate statement, Elliott disclosed that it has made a “substantial investment” in the common stock of the self-storage company. The announcement follows a Dec. 13 Wall Street Street Journal report, which claimed that Elliott had built a significant stake in Public Storage (PSA) and privately nominated six directors to its board.
Specifically, Public Storage announced the appointment of three new members to its Board of Trustees, effective Jan. 1. The members include Shankh Mitra, CEO and director of Welltower; David Neithercut, ex-President and CEO and current Board member of Equity Residential; and Paul Williams, President of the National Association of Corporate Directors (NACD) Chicago Chapter.
Public Storage also reported the retirement of three current trustees, Uri P. Harkham, B. Wayne Hughes, Jr., and Daniel C. Staton, effective Dec. 31.
Ronald L. Havner, Jr., Public Storage’s Chairman of the Board said, “With deep real estate investing experience, corporate governance expertise, and proven track records as public company leaders and board members, they will bring valuable perspectives and skillsets that complement those of our current Trustees.”
PSA shares have gained about 3.33% YTD and are trading at an 8.6% discount to their 52-week high. (See PSA stock analysis on TipRanks)
The stock has a Hold analyst consensus based on 2 Holds, 2 Sells and only 1 Buy. Meanwhile, the average price target of $228.25 implies upside potential of 3.7% to current levels.
On Dec. 9, Morgan Stanley analyst Ronald Kamdem lifted the stock’s price target from $203 to $221 and reiterated a Hold rating. According to Kamdem, “Storage REITs have seen increased demand during the pandemic and same-store revenue growth has already turned positive for some operators.”
Kamdem “reduced his bear case downside estimates across his coverage due to the resiliency of business models.”
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