Public Storage Q3 FFO Misses Estimates, Occupancy Falls

Core Insights - Public Storage (PSA) reported third-quarter 2024 core funds from operations (FFO) per share of $4.20, missing the Zacks Consensus Estimate of $4.25 and reflecting a 3% year-over-year decline [1] - The company's shares fell by 0.69% in after-hours trading following the earnings release [1] Financial Performance - Quarterly revenues reached $1.19 billion, marking a 3.8% increase year over year and surpassing the Zacks Consensus Estimate of $1.18 billion [2] - Same-store revenues decreased by 1.3% year over year to $926.3 million, attributed to lower realized annual rent per occupied square foot and a decline in occupancy [3] - Realized annual rental income per occupied square foot dropped by 0.8% to $22.71, with a weighted average square foot occupancy of 92.7%, down 0.5% year over year [3] - Same-store net operating income (NOI) decreased by 2.5% to $699.6 million, while NOI growth from non-same-store facilities was $29.8 million due to acquisitions in 2023 [4] Cost and Expenses - The cost of operations for same-store facilities increased by 2.6% year over year, driven by higher direct property costs, repairs, maintenance, and marketing expenses [4] - Interest expenses rose to $74.3 million, up 27.3% from the previous year [5] Balance Sheet and Cash Position - As of the end of the third quarter, Public Storage had $599 million in cash and equivalents, an increase from $370 million at the end of 2023 [6] Portfolio Activity - In the third quarter, Public Storage acquired three self-storage facilities for $24.3 million, adding 0.2 million net rentable square feet [7] - Post-September 30, 2024, the company is under contract to acquire 14 additional self-storage facilities for $181.2 million, totaling 1.2 million net rentable square feet [7] - The company opened one newly developed facility and completed expansion projects, adding 0.5 million net rentable square feet at a cost of $142.6 million [8] - Future developments are expected to add 4 million net rentable square feet at an estimated cost of $712.4 million, with $401.9 million in remaining development costs projected over the next 18 to 24 months [8] Guidance - Public Storage projects 2024 core FFO per share in the range of $16.50-$16.85, consistent with previous guidance, and the Zacks Consensus Estimate of $16.73 falls within this range [9] - The company anticipates a decline of 1.3%-0.5% in same-store revenues, 2%-3.5% growth in same-store expenses, and a decrease of 2.7%-1.3% in same-store NOI for the year [9]