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Public Storage (PSA) Beats Q2 FFO Estimates, Trims Guidance
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Public Storage (PSA - Free Report) reported a second-quarter 2024 core FFO per share of $4.23, which surpassed the Zacks Consensus Estimate of $4.20. However, the figure declined 1.2% year over year.
Shares of Public Storage were down 4.96% in the after-hours trading on Tuesday following the release of its second-quarter results. Management noted that customer move-in rents were impacted by industry-wide competition and adjusted PSA’s outlook for 2024 to reflect market move-in rent dynamics.
Public Storage experienced lower realized annual rent per occupied square foot and a decline in occupancy, as well as a rise in property tax expenses and interest expenses, in the quarter.
Quarterly revenues of $1.17 billion increased 4.8% year over year. However, revenues narrowly missed the Zacks Consensus Estimate of $1.18 billion.
Behind the Headlines
Public Storage’s same-store revenues decreased 1% year over year to $921.66 million in the second quarter, mainly due to lower realized annual rent per occupied square foot and a decline in occupancy. This storage REIT witnessed a 0.6% drop in realized annual rental income per occupied square foot to $22.54. The weighted average square foot occupancy of 93% was down 0.5% year over year. Our estimate was 92.4%.
The cost of operations for same-store facilities increased 0.9% year over year, mainly due to a rise in property tax expenses, partially offset by decreased on-site property manager payroll.
Consequently, PSA’s same-store net operating income (NOI) decreased 1.6% to $705.6 million. However, this REIT’s NOI growth from non-same-store facilities was $39.5 million, mainly due to the impact of facilities acquired in 2023 as well as the fill-up of recently developed and expanded facilities.
The company achieved a 79.3% same-store direct NOI margin in the quarter, down from 80.1% in the prior-year quarter.
Interest expenses increased to $73.2 million in the second quarter, up from $38.1 million in the year-ago period. Our estimate was $67.4 million.
Balance Sheet Position
Public Storage exited the second quarter of 2024 with $542.26 million of cash and equivalents, up from $370.0 million as of Dec 31, 2023.
During the quarter, Public Storage repurchased $200 million of its common shares at an average price of $275 per share under its previously announced share repurchase program on the open market.
Portfolio Activity
In the second quarter, Public Storage acquired two self-storage facilities with 0.1 million net rentable square feet for $22 million. Following Jun 30, 2024, PSA acquired or was under contract to acquire three self-storage facilities with 0.2 million net rentable square feet for $24.2 million.
During the quarter, Public Storage opened two newly developed facilities and completed various expansion projects, which together added 0.4 million net rentable square feet, costing $84.9 million.
As of Jun 30, 2024, PSA had several facilities in development and expansion, which are expected to add 3.8 million net rentable square feet at an estimated cost of $738.7 million. It expects to incur the remaining $358 million of development costs related to these projects, mainly over the next 18 to 24 months.
2024 Guidance
Public Storage projects 2024 core FFO per share in the range of $16.50-$16.85 compared with the $16.60-$17.20 range guided earlier. This is below the Zacks Consensus Estimate of $16.88.
PSA’s full-year assumption is based on the projection of a decline of 1.5%-0.5% in same-store revenues, 2%-3.5% growth in same-store expenses and a decrease of 3%-1.3% in same-store NOI.
Further, the company expects $500 million in acquisitions and $450 million in development openings.
Public Storage currently carries a Zacks Rank #4 (Sell).
Extra Space Storage Inc. (EXR - Free Report) reported second-quarter 2024 core FFO per share of $2.06, which beat the Zacks Consensus Estimate of $2.00. The figure also remained flat year over year. Quarterly revenues of $810.7 million beat the Zacks Consensus Estimate of $796.1 million. The top line jumped 58.5% year over year, reflecting acquisition.
The results reflect a rise in occupancy and better-than-anticipated revenues. However, higher same-store operating expenses and increased interest expenses during the quarter were a spoilsport.
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Ventas Inc. (VTR - Free Report) and Federal Realty Investment Trust (FRT - Free Report) , both of which are slated to report on Aug 1.
The Zacks Consensus Estimate for Ventas’ second-quarter 2024 FFO per share is pegged at 79 cents, which suggests a year-over-year increase of 5.3%. VTR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Federal Realty’s second-quarter 2024 FFO per share is pegged at $1.68, which implies a year-over-year increase of 0.6%. FRT currently carries a Zacks Rank #3.
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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Public Storage (PSA) Beats Q2 FFO Estimates, Trims Guidance
Public Storage (PSA - Free Report) reported a second-quarter 2024 core FFO per share of $4.23, which surpassed the Zacks Consensus Estimate of $4.20. However, the figure declined 1.2% year over year.
Shares of Public Storage were down 4.96% in the after-hours trading on Tuesday following the release of its second-quarter results. Management noted that customer move-in rents were impacted by industry-wide competition and adjusted PSA’s outlook for 2024 to reflect market move-in rent dynamics.
Public Storage experienced lower realized annual rent per occupied square foot and a decline in occupancy, as well as a rise in property tax expenses and interest expenses, in the quarter.
Quarterly revenues of $1.17 billion increased 4.8% year over year. However, revenues narrowly missed the Zacks Consensus Estimate of $1.18 billion.
Behind the Headlines
Public Storage’s same-store revenues decreased 1% year over year to $921.66 million in the second quarter, mainly due to lower realized annual rent per occupied square foot and a decline in occupancy. This storage REIT witnessed a 0.6% drop in realized annual rental income per occupied square foot to $22.54. The weighted average square foot occupancy of 93% was down 0.5% year over year. Our estimate was 92.4%.
The cost of operations for same-store facilities increased 0.9% year over year, mainly due to a rise in property tax expenses, partially offset by decreased on-site property manager payroll.
Consequently, PSA’s same-store net operating income (NOI) decreased 1.6% to $705.6 million. However, this REIT’s NOI growth from non-same-store facilities was $39.5 million, mainly due to the impact of facilities acquired in 2023 as well as the fill-up of
recently developed and expanded facilities.
The company achieved a 79.3% same-store direct NOI margin in the quarter, down from 80.1% in the prior-year quarter.
Interest expenses increased to $73.2 million in the second quarter, up from $38.1 million in the year-ago period. Our estimate was $67.4 million.
Balance Sheet Position
Public Storage exited the second quarter of 2024 with $542.26 million of cash and equivalents, up from $370.0 million as of Dec 31, 2023.
During the quarter, Public Storage repurchased $200 million of its common shares at an average price of $275 per share under its previously announced share repurchase program on the open market.
Portfolio Activity
In the second quarter, Public Storage acquired two self-storage facilities with 0.1 million net rentable square feet for $22 million. Following Jun 30, 2024, PSA acquired or was under contract to acquire three self-storage facilities with 0.2 million net rentable square feet for $24.2 million.
During the quarter, Public Storage opened two newly developed facilities and completed various expansion projects, which together added 0.4 million net rentable square feet, costing $84.9 million.
As of Jun 30, 2024, PSA had several facilities in development and expansion, which are expected to add 3.8 million net rentable square feet at an estimated cost of $738.7 million. It expects to incur the remaining $358 million of development costs related to these projects, mainly over the next 18 to 24 months.
2024 Guidance
Public Storage projects 2024 core FFO per share in the range of $16.50-$16.85 compared with the $16.60-$17.20 range guided earlier. This is below the Zacks Consensus Estimate of $16.88.
PSA’s full-year assumption is based on the projection of a decline of 1.5%-0.5% in same-store revenues, 2%-3.5% growth in same-store expenses and a decrease of 3%-1.3% in same-store NOI.
Further, the company expects $500 million in acquisitions and $450 million in development openings.
Public Storage currently carries a Zacks Rank #4 (Sell).
Public Storage Price, Consensus and EPS Surprise
Public Storage price-consensus-eps-surprise-chart | Public Storage Quote
Performance of Another Self-Storage REIT
Extra Space Storage Inc. (EXR - Free Report) reported second-quarter 2024 core FFO per share of $2.06, which beat the Zacks Consensus Estimate of $2.00. The figure also remained flat year over year. Quarterly revenues of $810.7 million beat the Zacks Consensus Estimate of $796.1 million. The top line jumped 58.5% year over year, reflecting acquisition.
The results reflect a rise in occupancy and better-than-anticipated revenues. However, higher same-store operating expenses and increased interest expenses during the quarter were a spoilsport.
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Ventas Inc. (VTR - Free Report) and Federal Realty Investment Trust (FRT - Free Report) , both of which are slated to report on Aug 1.
The Zacks Consensus Estimate for Ventas’ second-quarter 2024 FFO per share is pegged at 79 cents, which suggests a year-over-year increase of 5.3%. VTR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Federal Realty’s second-quarter 2024 FFO per share is pegged at $1.68, which implies a year-over-year increase of 0.6%. FRT currently carries a Zacks Rank #3.
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.