Rating Action: Moody's affirms Public Storage's A2 rating, stableoutlookGlobal Credit Research - 13 Apr 2021New York, April 13, 2021 -- Moody's Investors Service, ("Moody's") hasaffirmed the ratings of Public Storage, including its A2 senior unsecuredand A3 preferred stock ratings. The rating outlook remains stable. Therating affirmation follows the self-storage REIT's announcement that ithas agreed to acquire the ezStorage portfolio for $1.8 billion.The ratings' affirmation reflects the strategic benefits of the ezStoragetransaction, which include enhancing Public Storage's market leadership inthe Washington, DC and Baltimore region and the addition of 48high-quality, well-located assets that will enhance its long-term growthprofile.Offsetting these positives, Moody's notes that Public Storage is paying afairly high valuation for this portfolio and has indicated plans tofinance the purchase price entirely with unsecured debt -- a distinctshift from its traditional funding strategy. But even as debt levels areincreasing, pro forma leverage will remain modest. The ratings affirmationreflects Moody's view that the ezStorage transaction is fundamentallypositive and that PSA remains committed to maintaining a conservativefinancial profile as a core element of its business strategy.The stable outlook reflects Moody's expectation that the REIT's strongfranchise and operating platform will continue to drive solid cash flowgrowth over time. Even as leverage may increase modestly further, Moody'sexpects the REIT remains committed to conservative balance sheetmanagement as it executes strategic growth. The stable outlook assumesthat Public Storage completes long-term financing for the transaction inadvance of closing, which is expected in May 2021.The following ratings were affirmed:Public Storage -- senior unsecured debt at A2, senior unsecured shelf at(P)A2, preferred stock at A3, preferred stock shelf at (P)A3Outlook Actions:Issuer -- Public StorageOutlook, Remains StableRATINGS RATIONALEPublic Storage's A2 senior unsecured rating reflects the REIT's excellentfranchise and market position as the largest global owner and operator ofself-storage properties. PSA has a long history of conservative balancesheet management, funding itself primarily with permanent sources ofcapital including preferred and common equity as well as retained cashflow, and in recent years shifted its financial policy to include publicunsecured debt, broadening its access to capital as it seeks continuedgrowth. The REIT's credit profile is also supported by modest leverage(including the impact of preferred), very high fixed charge coverage andretained cash flow that is generally sufficient to fund its developmentand redevelopment spend. Key credit challenges include increasingleverage, albeit from very low levels. Additional credit challengesinclude geographic concentration in Los Angeles and San Francisco, as wellas low barriers to entry characteristic of the self-storage industry.Public Storage maintains good liquidity and access to capital, and weexpect it will complete intended long-term debt financing in advance ofclosing the ezStorage transaction. The REIT also retains full capacity onits $500 million credit revolver and an almost entirely unencumberedproperty portfolio, with no debt maturities until late 2022.The stable outlook reflects Moody's expectation that the REIT's strongfranchise and operating platform will continue to drive solid cash flowgrowth over time. Even as leverage may increase modestly further, Moody'sexpects the REIT remains committed to conservative balance sheetmanagement as it executes strategic growth.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSPublic Storage's ratings could be upgraded if it were to maintain NetDebt/EBITDA in the mid-1x range on a consistent basis. Achievement ofgreatly increased market share, enhancing Public Storage's profitabilityand earnings stability through market cycles would also support anupgrade.The ratings could be downgraded should Net Debt/EBITDA rise above 4.5x ona consistent basis. Operating missteps that erode the REIT's strong marketposition and margins, or meaningful revenue declines for more than a12-month period could also lead to a downgrade.The principal methodology used in these ratings was REITs and OtherCommercial Real Estate Firms published in September 2018 and available athttps://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1095505.Alternatively, please see the Rating Methodologies page on www.moodys.comfor a copy of this methodology.Public Storage (NYSE: PSA), based in Glendale, California, is aself-storage REIT that owns approximately 2,500 facilities across 38states. The REIT also owns a ~35% interest of Shurgard Self Storage SA (ENBrussels: SHUR) and ~42% interest in PS Business Parks (NYSE: PSB).REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions andsensitivity analysis, see the sections Methodology Assumptions andSensitivity to Assumptions in the disclosure form. Moody's Rating Symbolsand Definitions can be found at:https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt orsecurity this announcement provides certain regulatory disclosures inrelation to each rating of a subsequently issued bond or note of the sameseries, category/class of debt, security or pursuant to a program forwhich the ratings are derived exclusively from existing ratings inaccordance with Moody's rating practices. For ratings issued on a supportprovider, this announcement provides certain regulatory disclosures inrelation to the credit rating action on the support provider and inrelation to each particular credit rating action for securities thatderive their credit ratings from the support provider's credit rating. Forprovisional ratings, this announcement provides certain regulatorydisclosures in relation to the provisional rating assigned, and inrelation to a definitive rating that may be assigned subsequent to thefinal issuance of the debt, in each case where the transaction structureand terms have not changed prior to the assignment of the definitiverating in a manner that would have affected the rating. For furtherinformation please see the ratings tab on the issuer/entity page for therespective issuer on www.moodys.com.For any affected securities or rated entities receiving direct creditsupport from the primary entity(ies) of this credit rating action, andwhose ratings may change as a result of this credit rating action, theassociated regulatory disclosures will be those of the guarantor entity.Exceptions to this approach exist for the following disclosures, ifapplicable to jurisdiction: Ancillary Services, Disclosure to ratedentity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designatedagent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy forDesignating and Assigning Unsolicited Credit Ratings available on itswebsite www.moodys.com.Regulatory disclosures contained in this press release apply to the creditrating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social andgovernance (ESG) risks in our credit analysis can be found athttps://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.The Global Scale Credit Rating on this Credit Rating Announcement wasissued by one of Moody's affiliates outside the EU and is endorsed byMoody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322,Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No1060/2009 on Credit Rating Agencies. Further information on the EUendorsement status and on the Moody's office that issued the credit ratingis available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement wasissued by one of Moody's affiliates outside the UK and is endorsed byMoody's Investors Service Limited, One Canada Square, Canary Wharf, LondonE14 5FA under the law applicable to credit rating agencies in the UK.Further information on the UK endorsement status and on the Moody's officethat issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead ratinganalyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com foradditional regulatory disclosures for each credit rating.Lori MarksVP - Senior Credit OfficerCorporate Finance GroupMoody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007U.S.A.JOURNALISTS: 1 212 553 0376Client Service: 1 212 553 1653Philip KibelAssociate Managing DirectorCorporate Finance GroupJOURNALISTS: 1 212 553 0376Client Service: 1 212 553 1653Releasing Office:Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007U.S.A.JOURNALISTS: 1 212 553 0376Client Service: 1 212 553 1653© 2021 Moody's Corporation, Moody's Investors Service, Inc.,Moody's Analytics, Inc. and/or their licensors and affiliates(collectively, "MOODY'S"). 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