Analyst Note
| Yousuf Hafuda |Public Storage reported disappointing second-quarter results that demonstrate the self-storage market is vulnerable amid the coronavirus crisis. During the quarter, core funds from operations were $2.46 per share, a nearly 7% decrease as compared with $2.64 during the second quarter of 2019. Meanwhile, same-store net operating income likewise decreased by 7%, with revenue decreasing by 3% while costs increased by 6.7%. Self-storage is typically considered among the defensive real estate subsectors, but we’ve found that the idiosyncratic nature of this current downturn has challenged that perception somewhat. Despite the disappointing results, we are maintaining our $177 fair value estimate for no-moat-rated Public Storage.