Public Storage (PSA) Rises 19% in 3 Months: Will the Trend Last?

Core Viewpoint - Public Storage is a leading self-storage operator in the U.S., recognized for its brand and presence in major metropolitan markets, and is well-positioned for growth opportunities despite challenges in the self-storage industry [1][3][15]. Company Performance - Public Storage acquired 238 facilities with 16.8 million net rentable square feet for $3.4 billion from early 2022 to March 31, 2024, contributing $37.2 million in NOI during Q1 2024 [3]. - The company expects $500 million in acquisitions and $450 million in development openings in 2024, indicating strong growth potential [3]. - The stock price of Public Storage has increased by 19% over the past three months, outperforming the industry growth of 15.6% [8]. Financial Metrics - As of March 31, 2024, Public Storage had a total debt of approximately $9.1 billion, with a net debt and preferred equity to EBITDA ratio of 3.9X and an EBITDA to fixed charges ratio of 7.8X [5][10]. - The company maintains a strong credit profile with an "A" rating from S&P and an "A2" from Moody's, allowing access to capital at favorable rates [10][16]. Dividend Policy - Public Storage has consistently paid dividends, increasing its payout by 10.79% over the past five years, and is expected to maintain a sustainable dividend in the near future [4][10]. Market Conditions - The self-storage industry is experiencing a softening in demand, with new customer demand for storage space as of March 31, 2024, below the levels of March 31, 2023 [17]. - Management is focusing on lowering rental rates and increasing promotional discounts to attract tenants, which may impact same-store revenues, projected to increase by only 0.9% in 2024 [11][17]. Growth Opportunities - Public Storage holds a 35% stake in Shurgard Self Storage SA, which is expected to contribute to revenue growth, with total revenues estimated to increase by 4.6% year-over-year in 2024 [9].