Company Reports

Public Storage acquires, develops, owns, and operates self-storage facilities, which offer storage spaces of varying sizes and features on a monthly lease for personal and business use. The company also has a lucrative insurance business that offers products to cover losses for the goods in self-storage facilities.

Public Storage reported core funds from operations of $4.17 per share and a same-store net operating income decline of 2.2% for the second quarter.

Public Storage reported solid first-quarter results with core funds from operations of $4.22 and a same-store net operating income improvement of 0.4% from a year ago.

Public Storage acquires, develops, owns, and operates self-storage facilities, which offer storage spaces of varying sizes and features on a monthly lease for personal and business use. The company also has a lucrative insurance business that offers products to cover losses for the goods in self-storage facilities.

Public Storage reported core funds from operations of $4.26 per share and a same-store net operating income decline of 1.5% for the fourth quarter.

Public Storage acquires, develops, owns, and operates self-storage facilities, which offer storage spaces of varying sizes and features on a monthly lease for personal and business use. The company also has a lucrative insurance business that offers products to cover losses for the goods in self-storage facilities.

Public Storage's third-quarter results were in line with expectations. Core funds from operations of $4.31 per share came in 2.6% higher than $4.20 a year ago. Demand continues to be relatively weak, affecting move-in rents and occupancy and leading to a lackluster outlook.

Public Storage acquires, develops, owns, and operates self-storage facilities, which offer storage spaces of varying sizes and features on a monthly lease for personal and business use. The company also has a lucrative insurance business that offers products to cover losses for the goods in self-storage facilities.

Public Storage reported middling second-quarter results as the firm reported a core FFO of $4.28 per share, 1.2% higher compared with $4.23 per share in the previous year. Demand remains relatively weak, which is affecting move-in rents and occupancy rates for the portfolio.

Public Storage's first-quarter results were in line with our expectations, as the firm reported a core funds from operations of $4.12 per share in the first quarter, 2.2% higher than the previous year. Demand continues to be relatively weak but moderating incremental supply should support rents.

Public Storage posted an uninspiring set of numbers in the fourth quarter, as fundamentals are expected to remain under pressure due to weakening demand for self-storage. The firm reported a core FFO of $4.21 per share in the fourth quarter, flattish compared with $4.20 per share the previous year.

Public Storage acquires, develops, owns, and operates self-storage facilities, which offer storage spaces of varying sizes and features on a monthly lease for personal and business use. The company also has a lucrative insurance business that offers products to cover losses for the goods in self-storage facilities.

Over the past few years, we have observed an inverse relationship between share prices in the REIT sector and interest-rate movements. We believe a major reason is that all commercial real estate valuations are connected to interest rates. Capitalization rates directly indicate the return expectations for a real estate investment and expectations for risk and growth. Historically, we have observed that commercial real trades at cap rates consistently spread above the 10-year US Treasury. If interest rates rise, investors will require a higher return, and thus a higher cap rate, to accept the risk associated with an investment in a real estate asset. Since return expectations have held relatively steady for most real estate sectors over the past few years, higher cap rates translate to falling prices for real estate.

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.

The REIT sector in the US offers many companies that should see relatively stable cashflow growth over the next several years. While the pandemic hurt REIT valuations in 2020, the recovery of fundamentals across most sectors combined with low interest rates led to strong total returns in 2021 and early 2022. However, despite fundamentals continuing to perform well over the past three years with many reaching historical levels of net operating income growth, the REIT sector underperformed the broader equity markets in 2023 and into the first half of 2024. We believe that is due to the sector’s negative correlation with interest rates, as income-oriented investors rotate out of the sector, higher rates lower the value REITs can create with external growth, and property valuations fall in line with higher rates. However, interest rates have fallen since the end of July, leading to a rally for the REIT sector. Still, we still view many of companies in the US REIT sector as being undervalued as the companies should continue to produce solid long-term growth.

Despite a rally over the past two months, we still view the US REIT sector as being undervalued. While the pandemic hurt REIT valuations in 2020, the recovery of fundamentals across most sectors led combined with low interest rates led to strong total returns in 2021 and early 2022. However, despite fundamentals continuing to perform well over the past three years, with many reaching historical levels of net operating income growth, the REIT sector has underperformed the broader equity markets in 2023 and into the first half of 2024. We believe that the cause has been due to the sector's negative correlation with interest rates as income-oriented investors rotate out of the sector, higher rates lower the value REITs can create with external growth, and property valuations fall in line with higher rates. However, interest rates have fallen since the end of July, leading to a rally for the REIT sector. We believe that US REITs will continue to see share price movements that are inverse of interest rate movements.

Public Storage acquires, develops, owns, and operates self-storage facilities, which offer storage spaces of varying sizes and features on a monthly lease for personal and business use. The company also has a lucrative insurance business that offers products to cover losses for the goods in self-storage facilities.

No-moat-rated Public Storage reported second-quarter results that reflected continued pressure on the self-storage sector after the sector performed exceptionally well in 2021 and 2022. The firm reported core funds from operations of $4.23 per share, 1.2% lower than the $4.28 per share FFO during the second quarter of 2023. The company revised its 2024 full-year core FFO guidance downward to $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. We have not been surprised by the current slowdown in the self-storage sector demand and have been predicting it for many quarters. We are maintaining our $310 per share fair value estimate for Public Storage after incorporating the second-quarter results.

The US REIT sector remains significantly undervalued, in our perspective. While the pandemic hurt REIT valuations in 2020, the recovery of fundamentals across most sectors combined with low interest rates led to strong total returns in 2021 and early 2022. However, despite fundamentals continuing to perform well over the past two years, with many REITs reaching historical levels of net operating income growth, the sector has underperformed the broader equity markets over the past two years. We believe that the cause has been the sector’s negative correlation with interest rates as income-oriented investors rotate out of the sector, higher rates lower the value REITs can create with external growth, and property valuations fall in line with higher rates. However, we don’t believe that higher rates significantly change our fair value estimates for the sector. Additionally, interest rates are down from the October 2023 highs, and REIT share prices have generally inversely followed the movements of the US 10-year Treasury.

No-moat-rated Public Storage reported first-quarter results that were largely in line with our expectations as muted demand for self-storage units weighed on rental rates in many markets. The firm reported core funds from operations of $4.03 per share, 1.2% lower than the $4.08 per share FFO during the first quarter of 2023. The company maintained its 2024 full-year core FFO guidance of $16.60-$17.20 per share, representing flattish growth at the midpoint when compared with the full-year 2023 core FFO of $16.89. We have been predicting the slowdown in self-storage demand for many quarters. On a somewhat encouraging note, the current demand slowdown is relatively mild, and management commentary points to a slow recovery in the coming months. We are maintaining our $310 per share fair value estimate for Public Storage after incorporating the first-quarter results.