Public Storage Earnings: Fundamentals Held Up Relatively Well, but Growth Is Beginning To Moderate

No-moat-rated Public Storage achieved decent results in the second quarter as the firm reported core funds from operations, or FFO, of $4.28 per share, 7.3% higher than the $3.99 per share FFO during the second quarter of 2022. If we exclude the contribution from the company’s equity investment in PS Business Parks, which was sold in July 2022, then core FFO grew by 11.5% in the second quarter. The company has increased the bottom end of its 2023 full-year core FFO guidance to $16.40-$16.80 per share, representing around 4.25% growth at the midpoint when compared with the 2022 core FFO of $15.92. The fundamental performance of the company held up relatively well during the second quarter. However, we think that the growth in the self-storage sector will moderate in the upcoming quarters after two exceptionally strong years of growth. We are reducing our fair value estimate for Public Storage to $317 per share from $326 as we slightly moderate our long-term expectations for the sector.