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Public Storage (PSA) Q3 FFO Beats on Rent & Occupancy Gains

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Public Storage's (PSA - Free Report) third-quarter 2021 core funds from operations (FFO) per share of $3.42 surpassed the Zacks Consensus Estimate of $3.23. The figure also increased 30% year on year.

Quarterly revenues of $894.9 million exceeded the Zacks Consensus Estimate of $851.9 million. Moreover, revenues increased 21.8% 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. Management has also raised the 2021 core FFO guidance.

Concurrent with its earnings release, Public Storage announced the acquisition of the All Storage portfolio for $1.5 billion. The portfolio encompasses 56 self-storage properties, spanning 7.5 million net rentable square feet, mainly located in the growing Dallas-Fort Worth market.

Behind the Headlines

Public Storage’s same-store revenues increased 14% year over year to $716.1 million during the third quarter, highlighting higher realized annual rent per available square foot and weighted average square foot occupancy. This upswing was backed by a 14% increase in the realized annual rental income per available square foot to $18.68. Also, the weighted-average square foot occupancy of 96.8% expanded 1.4% year over year.

Same-store cost of operations fell 4.6%, year over year, mainly reflecting a decrease in marketing expenses, a decline in on-site property manager payroll, and a change in property tax timing contributing to a fall in property tax expense.

Consequently, the company’s same-store net operating income (NOI) increased 21.7% to $540.4 million. Also, the REIT’s NOI growth from non-same store facilities was $52.5 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 September-end quarter, Public Storage acquired 27 self-storage facilities, comprising 2.2 million net rentable square feet of area, for $326.8 million. Following Sep 30, 2021, the company acquired or was under contract to acquire 107 self-storage facilities, spanning 11.8 million net rentable square feet of space across 16 states, for $2.3 billion.

During the third quarter, the REIT opened one newly-developed facility and several expansion projects costing $85.5 million. Finally, as of Sep 30, 2021, Public Storage had several facilities in development (1.7 million net rentable square feet), with an estimated cost of $272.8 million, as well as expansion projects (2.9 million net rentable square feet) worth $457.8 million. It expects to incur the remaining $502.2 million of development costs related to these projects, mainly over the next 18-24 months.

Balance Sheet Position

Public Storage exited third-quarter 2021 with $958.2 million of cash and equivalents, up from the $257.6 million recorded at the end of 2020.


For 2021, the company raised the core FFO per share outlook to $12.50-$12.80 from the prior guidance of $11.90-$12.30. This is ahead of the Zacks Consensus Estimate for $12.38.

The company’s full-year assumption is backed by 9.5-10.5% growth in the same-store revenues, a 0-0.5% rise in same-store expenses and a 13.1-14.7% expansion in the same-store NOI. Further, the company expects $5 billion of acquisitions and $215 million of development openings.

Dividend Update

On Oct 27, the company’s board announced a regular quarterly dividend of $2 per common share. The dividend will be paid on Dec 30, to shareholders of record as of Dec 15, 2021.

Public Storage currently carries a Zacks Rank #2 (Buy). 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 Regency Centers Corporation (REG - Free Report) , Welltower Inc. (WELL - Free Report) and Iron Mountain Incorporated (IRM - Free Report) , scheduled for this 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.