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Why Is Public Storage (PSA) Down 2.5% Since Last Earnings Report?

A month has gone by since the last earnings report for Public Storage (PSA). Shares have lost about 2.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Public Storage due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Public Storage’s Q4 FFO & Revenues Top Estimates

Public Storage reported fourth-quarter 2022 core FFO per share of $4.16, increasing 17.5% year over year. The core FFO per share, excluding the contribution from the company’s equity investment in PS Business Parks, Inc., was $4.16. Both figures surpassed the Zacks Consensus Estimate of $3.99.

Results reflected better-than-anticipated top-line growth, aided by an improvement in the realized annual rent per occupied square foot. The company also benefited from its expansion efforts through acquisitions, developments and extensions.

Quarterly revenues of $1.09 billion exceeded the Zacks Consensus Estimate of $1.08 billion. Moreover, revenues increased 17.8% year over year.

In 2022, Public Storage reported core FFO per share of $15.92, up 23.1% from $12.93 in the prior year, and beat the Zacks Consensus Estimate of $15.75. Revenues of $4.18 billion surged 22.4% year over year and outpaced the consensus mark of $4.17 billion.

Behind the Headlines

Public Storage’s same-store revenues increased 13.3% year over year to $818.9 million in the fourth quarter, highlighting the higher realized annual rent per occupied square foot, partially offset by a decline in occupancy. This storage REIT witnessed a 15.7% increase in the realized annual rental income per occupied square foot to $22.74. However, the weighted-average square foot occupancy of 93.4% was down 2.6% year over year.

The same-store cost of operations increased 5.3% year over year, mainly reflecting a rise in property tax expense, marketing expense, other direct property costs and repairs and maintenance.

Consequently, PSA’s same-store net operating income (NOI) increased 15.8% to $637.5 million. Also, this REIT’s NOI growth from non-same-store facilities was $50.5 million due to the facilities acquired in 2021 and the fill-up of recently developed and expanded facilities.

Public Storage achieved an 81.2% same-store direct NOI margin in the quarter, reflecting an increase of 1.8% year over year.

Portfolio Activity

In the fourth quarter, Public Storage acquired 30 self-storage facilities comprising 1.6 million net rentable square feet of area for $228.6 million. Following Dec 31, 2022, the company acquired or was under contract to buy eight self-storage facilities spanning 0.5 million net rentable square feet of space for $70.5 million.

The company opened three newly developed facilities and completed several expansion projects with 0.5 million net rentable square feet costing $101.2 million.

As of Dec 31, 2022, PSA had several facilities in development (2.1 million net rentable square feet) with an estimated cost of $492.3 million and several expansion projects (2.5 million net rentable square feet) worth $487.3 million. It expects to incur the remaining $606.6 million of development costs related to these projects, mainly over the next 18 to 24 months.

Balance Sheet Position

Public Storage exited fourth-quarter 2022 with $775.2 of cash and equivalents, down from $883.8 million as of Sep 30, 2022.

2023 Guidance

Public Storage issued guidance for 2023.

It projects 2023 core FFO per share in the range of $16.10-$16.80.

The company’s full-year assumption is backed by 2.5-5% growth in same-store revenues, a 4.75% to 6.75% rise in same-store expenses and a 1.2% to 5.1% expansion in same-store NOI.

Further, the company expects $750 million in acquisitions and $375 million in development openings.


How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Public Storage has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Public Storage has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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