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Public Storage (PSA) Q1 FFO Beats on Rent & Occupancy Gains

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Public Storage's (PSA - Free Report) first-quarter 2021 core funds from operations (FFO) per share of $2.82 surpassed the Zacks Consensus Estimate of $2.70. The figure also increased 9.3% year on year.

Quarterly revenues of $767.3 million exceeded the Zacks Consensus Estimate of $750.4 million. Moreover, revenues increased 6.7% year on year.

Results reflect an improvement in realized annual rent per available square foot and weighted average square foot occupancy in the reported quarter. The company also benefited from its expansion efforts through acquisitions, development and extensions. In addition, it witnessed a decrease in on-site property manager payroll and a positive impact due to the timing of property tax expense. Management has also issued the initial core FFO guidance.

Behind the Headlines

Public Storage’s same-store revenues increased 3.4% year over year to $647.8 million during the first quarter, highlighting higher realized annual rent per available square foot and weighted average square foot occupancy. Particularly, this upswing was backed by a 4.6% increase in realized annual rental income per available square foot to $16.86. Also, weighted-average square foot occupancy of 95.6% expanded 2.8% year over year.

Same-store cost of operations fell 4.3% year over year, mainly reflecting a change in property tax timing leading to an 8.6% decrease in property tax expense, 13.2% fall in on-site property manager payroll, partly dampened by an increase in share-based compensation. Consequently, the company’s same-store net operating income (NOI) increased 6.7% to $466.8 million.

Also, the REIT’s NOI growth from non-same store facilities was $11.8 million, on the back of the facilities acquired in 2020 and 2021, as well as the fill-up of the recently-developed and expanded facilities.

Portfolio Activity

During the March-end quarter, Public Storage acquired 15 self-storage facilities, comprising 1.1 million net rentable square feet of area, for $203.1 million. Following Mar 31, 2021, the company acquired or was under contract to acquire 87 self-storage facilities, spanning 7.6 million net rentable square feet of space across 18 states, for $2.3 billion. These included 48 properties, spanning 4.2 million net rentable square feet, currently owned and operated by ezStorage Corp. that Public Storage is under contract to purchase in April 2021 for $1.8 billion.

During the first quarter, the REIT opened one newly-developed facility, encompassing 0.2 million net rentable square feet in Virginia costing $45.4 million.

Finally, as of Mar 31, 2021, Public Storage had several facilities in development (1.4 million net rentable square feet), with an estimated cost of $224 million, as well as expansion projects (2.0 million net rentable square feet) worth $286 million. It expects to incur the remaining $309 million of development costs related to these projects, mainly over the next 18-24 months.

Balance Sheet Position

Public Storage exited first-quarter 2021 with $159.6 million of cash and equivalents, down from the $257.6 million recorded at the end of 2020.


For 2021, the company projects core FFO per share in the range of $11.35-$11.75. The Zacks Consensus Estimate for the same is currently pinned at $11.38.

The company’s full-year assumption is backed by 4-5.5% growth in same-store revenues, a 1-2% rise in same-store expenses and a 4.8-7.3% expansion in same-store NOI. Further, the company expects $2.7 billion of acquisitions and $215 million of development openings.

Dividend Update

On Apr 21, management announced a regular quarterly dividend of $2 per common share. The dividend will be paid on Jun 30, to shareholders of record as of Jun 15, 2021.

Public Storage currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Public Storage Price, Consensus and EPS Surprise

Public Storage Price, Consensus and EPS Surprise

Public Storage price-consensus-eps-surprise-chart | Public Storage Quote

We now look forward to the earnings releases of other REITs, including Vornado Realty Trust (VNO - Free Report) , Realty Income Corporation (O - Free Report) and Healthpeak Properties, Inc. (PEAK - Free Report) , which are slated to release results next week.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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