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.