Security Capital to acquire Storage USA for 4.34 times revenue

Weekly Corporate Growth Report, Nov 19, 2001

The Deal: Security Capital Group has agreed to purchase the 57 percent of Storage USA Inc. it does not already own, for $42 a share. The acquisition values Storage USA at about $1.15 billion. After news of the transaction was announced, shares of Storage USA rose $3 to $42.80, and Security Capital shares gained 57 cents to close at $18.65.

Discussion: Storage USA is a real estate investment trust that owns some 400 self-storage facilities and manages about another 120, including some 60 franchises, in more than 30 states and the District of Columbia. Most of the facilities it buys, builds, develops and runs are rented on a monthly basis. Many facilities are equipped with computer-- controlled access gates and door alarm systems, and have an average rent of about $12 per square foot and rental fees are usually raised at least once a year. The firm also rents trucks and sells packing materials, locks, boxes and other related products.

Security Capital Group holds stakes in a variety of properties, including retail, office and industrial centers, senior assisted living housing, and self-storage facilities through investments in about a dozen real estate operating companies in the United States and Europe. Security Capital owns interests in companies such as CarrAmerica Realty, ProLogis Trust, Regency Centers and Storage USA.