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Public Storage PSA

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Public Storage Reports Large Rental Rate Increase Combined With Lower Expenses in Q3; FVE to $314

Kevin Brown, CFA Equity Analyst

Analyst Note

| Kevin Brown, CFA |

Public Storage reported very strong results in the third quarter, leading us to increase our fair value estimate for the no-moat company to $314 per share from $279. Same-store occupancy fell slightly in the third quarter, down 20 basis points to 96.8% in the third quarter compared with 97.0% in the second quarter, though it was up 130 basis points from the third quarter of 2020. Rent per occupied square foot for the same-store portfolio increased 12.5% year over year to $19.30 per square foot, leading to a 14.0% increase to same-store revenue. Meanwhile, Public Storage reduced same-store expenses by 6.2% during the quarter, with marketing expenditures down 43.3% and payroll costs down 8.4%. As a result, the company reported same-store net operating income growth of 20.8% in the third quarter. The results also led to Public Storage reporting core funds from operations of $3.42 per share for the period, a 30.0% increase when compared with the third quarter of 2020.

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Company Profile

Business Description

Public Storage owns and operates over 2,600 self-storage facilities in 39 states, with over 180 million net rentable square feet of storage space. Through equity interests, it also has exposure to the European self-storage market through Shurgard Europe and to an additional 29 million net rentable square feet of commercial space in the United States through PS Business Parks.

701 Western Avenue
Glendale, CA, 91201-2349
T +1 818 244-8080
Sector Real Estate
Industry REIT - Industrial
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 5,400