The short thesis
Public Self Storage (PSA) is trading at a growth multiple despite fundamentals that are pointing toward negative growth for the foreseeable future. We see substantial margin compression as oversupply forces self-storage owners into mutually destructive competitive behavior. While much of our bear thesis applies to the entire sector, PSA appears to be the most shortable in terms of both valuation and strategic positioning.
Oversupply
The impending oversupply in the sector is not really in dispute. Annual deliveries of 40 to 70 million square feet have substantially overtaken absorption, leading to