Public Storage (PSA-PK)

Public Storage is a company born from a simple problem and a founder’s ability to recognize it: people accumulate possessions, and they run out of space. The company’s fifty-year arc from a single property in California to three thousand facilities across the continent tells the story of the self-storage industry itself—how an entrepreneurial insight became a category, a category became a necessity, and a necessity became a stable business worth building a REIT around.

The founding and the first facility

B. Wayne Hughes and Kenneth Volk Jr. founded Public Storage in 1972, opening the first facility in Pasadena, California. The idea was straightforward: divide a plot of land into small enclosed units, rent them month-to-month to people who needed temporary storage, and collect rent. It was not a glamorous business, and the self-storage industry did not exist yet; Hughes was essentially inventing it. The first facility worked—occupancy filled up, rent was collected reliably, and the economics were simple. This was not a seasonal business or a technology play; it was a straightforward real estate business with very low complexity.

Hughes and Volk expanded methodically through the 1970s, building facilities in southern California. The growth was organic and incremental: raise capital, buy land, build a facility, fill it with tenants, use the cash flow to fund the next facility. This model is unchanged today, which is why Public Storage’s history is relatively smooth compared to many companies.

Growth through acquisition and development

Through the 1980s and 1990s, PSA grew by building new facilities and acquiring existing ones. The business was becoming more professional: management systems, tenant-acquisition marketing, property maintenance standards. By the time PSA went public in 1995, it had hundreds of facilities and a recognizable brand in the Western states. Public investors were attracted to the predictable cash flows and the low volatility of real estate combined with the recurring nature of month-to-month leases. REITs are attractive to investors seeking income and stability, and PSA represented a pure-play on the expanding self-storage market.

Going public in 1995 gave PSA access to capital markets. The company could raise debt more cheaply and equity more easily than as a private company. It used this access to accelerate acquisitions and development. The 1990s and 2000s were years of consolidation in the self-storage space; smaller operators and independent facilities were rolled up into larger platforms. PSA was an aggressive acquirer, buying thousands of units at once through the acquisition of other self-storage companies or portfolios of facilities.

A pivotal moment came in the early 2000s when PSA acquired the self-storage business of Shurgard Europe and other large platforms, vaulting the company from a Western regional operator to a continental company. By the mid-2000s, PSA was clearly the dominant player in the industry—both by occupancy rate and by total square footage.

The capital structure and the preferred shares

As PSA grew, it needed capital. The company financed growth through a combination of equity issuances, debt, and preferred shares. Preferred shares were an attractive financing tool: they are cheaper than common equity (because the dividend is fixed and senior to dividends on common stock) but do not change the company’s debt-to-equity ratio the way common equity does. Issuances of preferred shares became a regular feature of PSA’s capital-raising playbook.

By the early 2010s, PSA had issued dozens of preferred series, each with its own coupon rate tied to the interest rate environment at the time of issuance. Early preferred series issued in the late 1990s had coupons of six to seven percent; series issued in the 2000s had coupons of five to six percent; series issued during the 2010s post-financial-crisis period had much lower coupons of three to four percent. PSA-PK is one of the later preferred series, issued during a period of lower interest rates, and its coupon reflects that era.

Each preferred series has a liquidation preference of twenty-five dollars per share, meaning that if the company were wound up, preferred shareholders would receive twenty-five dollars per share (adjusted for any unpaid dividends) before common shareholders received anything. The preferred shares have no maturity and are not redeemable unless the company chooses to do so, usually during periods when new preferred shares can be issued at a lower coupon.

The business matures

By the 2010s and 2020s, PSA had consolidated most of the self-storage industry. Mergers and acquisitions continued—PSA acquired Extra Space Storage facilities, absorbed regional operators, and built and expanded its own properties. The company’s competitive position hardened: it was so large that new competitors could not challenge it; smaller operators found consolidation or being acquired to be their best option. PSA’s scale allowed it to optimize operations, achieve better property acquisition economics, and generate stable, predictable cash flows.

The business became less about discovering a new market—the market was now mature—and more about returns on capital. PSA’s growth came from two places: the underlying growth in the total addressable market (more people accumulating possessions, more small businesses needing flexible space) and accretive acquisitions (buying competitors at reasonable multiples). Neither source was spectacular, but together they drove steady revenue and cash-flow growth.

The supply chain and modern storage

Over PSA’s history, the upstream and downstream relationships of self-storage evolved. Upstream, PSA depends on land, construction, and capital. It buys land in high-demand areas (expensive), builds facilities on schedule and on budget, and finances the capital through debt and equity. Downstream, PSA’s customers range from individuals to small and mid-sized businesses to large corporations. An individual moving stores personal items; a small business stores seasonal inventory or retired equipment; a large manufacturer might use PSA facilities as a distributed buffer in its supply chain.

The e-commerce boom of the 2000s and 2010s created new downstream pressure on PSA. Businesses that do not own distribution centers often use self-storage to manage inventory, returns, and consolidation points. This created a new cohort of commercial customers—businesses using storage as working capital management rather than just overflow space. This commercial segment tends to be larger units and longer leases, which improve the economics and cash flow predictability of the business.

The market position today

By 2024, Public Storage had consolidated its position as the clear market leader. It operated over three thousand facilities, containing over two hundred million square feet, and managed an additional three hundred facilities for other owners. The installed base was vast, and switching costs were low (tenants can move to a competitor), but the combination of brand, geographic coverage, and operational excellence made PSA the preferred choice for most customers. The company’s stock became a dividend-payer beloved by retirees and conservative investors; the preferred shares became a stable source of income for those seeking fixed-income exposure with equity-like tax treatment.

PSA-PK, issued during the low-rate era of the 2010s, carries a coupon reflecting that period. As interest rates rose in the 2020s, secondary market prices for low-coupon preferred shares like PSA-PK declined, making them less attractive to new buyers, but the coupon itself is fixed and does not change. Holders of PSA-PK receive their fixed quarterly dividend regardless of market conditions or changes in interest rates.

Future and legacy

The original founders, Hughes and Volk, are long gone. The company today is run by professional management, guided by a board of directors, and owned by dispersed shareholders and preferred shareholders. The business model is unchanged from 1972: buy land, build or acquire facilities, rent space, collect rent, invest cash flow in the next facility. The industry has matured, and growth has slowed to the rate of GDP growth plus inflation, but the cash flows remain highly predictable and the dividends remain secure.

PSA’s preferred shares are a claim on that stability and maturity. They represent the capital raised over decades as the company grew from one founder’s insight to the largest self-storage operator on Earth. For preferred shareholders, the story is not about future growth or disruption; it is about the durability of a simple business model, the strength of a market position, and the reliability of cash flows to pay dividends for years to come.

How to research PSA’s history and current operations

Public Storage’s annual reports and 10-K filings (SEC CIK 0001393311) provide a long-term view of the company’s growth: the number of facilities, the total square footage, the geographic distribution, the customer mix, and the capital deployed. The investor relations website archives decades of these filings and includes a detailed section on preferred securities with the full terms of each series. Quarterly earnings calls provide color on current market conditions and capital allocation. The company’s preferred share prospectuses, available on the investor relations site, lay out the terms, including the coupon, the liquidation preference, and any redemption features unique to each series like PSA-PK.