Analyst Note| Kevin Brown, CFA |
Public Storage reported first-quarter results that were relatively in line with our expectations, leading us to reaffirm our $340 fair value estimate for the no-moat company. Same-store occupancy fell 30 basis points to 95.6%, and while that is slightly better than our estimate, the company reported that occupancy ended the quarter at 95.1%, which is more in line with our estimate. Rent growth remains strong as Public Storage averaged $20.29 rent per occupied square foot in the first quarter for the same-store portfolio, which is 15.7% higher than the first quarter of 2021. Meanwhile, same-store operating expenses only grew 4.4% in the first quarter, leading to same-store net operating income growth of 19.3%. The same-store growth combined with additional revenue generated from the $5.1 billion in properties acquired in 2021 resulted in Public Storage reporting core funds from operations growing 29.4% year over year to $3.65 per share.