Public Storage Q3 FFO Misses Estimates, Occupancy Falls
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Public Storage PSA reported third-quarter 2024 core funds from operations (FFO) per share of $4.20, which missed the Zacks Consensus Estimate of $4.25. Also, the figure declined 3% year over year.
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Shares of Public Storage were down marginally (by 0.69%) in the after-hours trading on Wednesday following the release of its third-quarter results.
Public Storage experienced lower realized annual rent per occupied square foot and a decline in occupancy, as well as a rise in other direct property costs, repairs and maintenance expenses, marketing expenses and interest expenses, in the quarter.
Quarterly revenues of $1.19 billion increased 3.8% year over year. Revenues also surpassed the Zacks Consensus Estimate of $1.18 billion.
Behind PSA’s Headlines
Public Storage’s same-store revenues decreased 1.3% year over year to $926.3 million in the third quarter due to lower realized annual rent per occupied square foot and a decline in occupancy. This storage REIT witnessed a 0.8% drop in realized annual rental income per occupied square foot to $22.71. The weighted average square foot occupancy of 92.7% was down 0.5% year over year. Our estimate was 92.8%.
The cost of operations for same-store facilities increased 2.6% year over year due to a rise in other direct property costs, repairs and maintenance expenses and marketing expenses, partially offset by decreased on-site property manager payroll.
PSA’s same-store net operating income (NOI) decreased 2.5% to $699.6 million. However, this REIT’s NOI growth from non-same-store facilities was $29.8 million due to the impact of facilities acquired in 2023.
The company achieved a 78.4% same-store direct NOI margin in the quarter, down from 79.4% in the prior-year quarter.
Interest expenses increased to $74.3 million in the third quarter, up 27.3% from the year-ago period. Our estimate was $70.3 million.
PSA’s Balance Sheet Position
Public Storage exited the third quarter of 2024 with $599 million of cash and equivalents, up from $370 million as of Dec. 31, 2023.
PSA’s Portfolio Activity
In the third quarter, Public Storage acquired three self-storage facilities with 0.2 million net rentable square feet for $24.3 million. Following Sept. 30, 2024, PSA acquired or was under contract to acquire 14 self-storage facilities with 1.2 million net rentable square feet for $181.2 million.
During the quarter, Public Storage opened one newly developed facility and completed various expansion projects, which together added 0.5 million net rentable square feet, costing $142.6 million.
As of Sept. 30, 2024, PSA had several facilities in development and expansion, which are expected to add 4 million net rentable square feet at an estimated cost of $712.4 million. It expects to incur the remaining $401.9 million of development costs related to these projects over the next 18 to 24 months.
