Public Storage Earnings: Self-Storage Demand Remains Soft and Stabilization Can Take a Few Quarters

No-moat-rated Public Storage reported middling third-quarter results given the fact that expectations were already quite moderated for the sector. The firm's reported core funds from operations, or FFO, of $4.20 per share was 3.0% lower than the $4.33 per share FFO during the third quarter of 2023. The company has maintained its 2024 full-year core FFO guidance of $16.50-$16.85 per share, representing a 1.3% decline at the midpoint when compared with the full-year 2023 core FFO of $16.89. The demand for self-storage units has moderated substantially after a period of extremely strong demand in 2021 and 2022. We think that the demand environment can remain relatively muted for a few more quarters given the fundamentals of the sector. We are maintaining our $318 per share fair value estimate for Public Storage after incorporating the third-quarter results.