Press release·02/24/2025 22:22:37

Overview of Public Storage’s Financial Performance

Public Storage, one of the largest self-storage real estate investment trusts (REITs), has reported its financial results for the year 2024. The company’s net income allocable to common shareholders was $1.873 billion, or $10.64 per diluted share, a decrease of 3.9% compared to 2023.

The decrease in net income was primarily due to higher depreciation and amortization expense, interest expense, and general and administrative costs, partially offset by an increase in foreign currency exchange gains and self-storage net operating income.

Public Storage’s self-storage operations generated most of its net income. The company’s earnings growth was impacted by the performance of its Same Store Facilities, as well as its Acquired Facilities and Newly Developed and Expanded Facilities.

Same Store Facilities Performance

Public Storage’s Same Store Facilities, which include 2,507 facilities the company has owned and operated since January 1, 2022, saw a 0.7% decrease in revenues in 2024 compared to 2023. This was due to a 0.6% decrease in average occupancy and a 0.1% decrease in realized annual rent per occupied square foot.

The decrease in realized annual rent per occupied square foot was due to an 11.6% decrease in average rates charged to new tenants, partially offset by cumulative rate increases to existing long-term tenants. At the end of 2024, annual contract rent per occupied square foot was 0.4% higher than at the end of 2023.

Cost of operations for the Same Store Facilities increased by 2.4% in 2024, primarily due to higher property tax expense, marketing expense, and repairs and maintenance expense, partially offset by decreased centralized management costs and on-site property manager payroll expense.

Acquired Facilities and Newly Developed and Expanded Facilities

Public Storage has been actively acquiring and developing new self-storage facilities to drive growth. Since the beginning of 2022, the company acquired a total of 260 facilities with 18.5 million net rentable square feet for $3.7 billion. These Acquired Facilities contributed $159.7 million in net operating income in 2024.

The company also has 132 Newly Developed and Expanded Facilities, which contributed $151.4 million in net operating income in 2024. These facilities are in various stages of their revenue stabilization periods, as it typically takes 3-4 years for a newly developed or expanded facility to fully stabilize.

Ancillary Operations

In addition to its core self-storage business, Public Storage generates revenue from ancillary operations, including tenant reinsurance, merchandise sales, and third-party property management. These ancillary operations contributed $178.3 million in net operating income in 2024, an increase of 3.6% compared to 2023.

The tenant reinsurance business saw a 11.3% increase in premium revenue in 2024, driven by growth in the tenant base and higher insurance participation. The third-party property management business also expanded, with Public Storage managing 307 facilities for unrelated third parties at the end of 2024.

Liquidity and Capital Resources

Public Storage maintains a strong financial profile, with high credit ratings that allow it to effectively access the public and private capital markets. The company’s current capital resources include $447.4 million in cash, $600 million in expected retained operating cash flow over the next 12 months, and $1.48 billion in available borrowing capacity on its revolving line of credit.

The company’s current committed cash requirements include $140.7 million for property acquisitions under contract, $433.5 million for its current development pipeline, and $651 million in scheduled principal repayments on unsecured notes in 2025. Public Storage plans to refinance these notes as they come due.

Over the long term, the company has a variety of options to raise additional capital, including issuing common or preferred securities, debt, and limited partnership interests, or entering into joint venture arrangements.

Outlook and Risks

Looking ahead, Public Storage expects industry-wide demand from new customers in 2025 to be similar to 2024. However, the company anticipates a potentially significant negative impact on revenue growth from its self-storage facilities located in Los Angeles County and Ventura County, where a temporary governmental pricing limitation is in place due to recent wildfires.

As a result, Public Storage expects Same Store Facilities revenues in 2025 to be similar to those earned in 2024. The company also expects to continue experiencing inflationary impacts on its cost of operations, including labor, utilities, and repairs and maintenance, as well as development and expansion activities.

Potential risks to Public Storage’s financial performance include further softening in customer demand, continued inflationary pressures, and any disruptions in the capital markets that could impact the company’s access to debt and equity financing.

Conclusion

Overall, Public Storage’s financial results for 2024 reflect the company’s ongoing efforts to grow its self-storage portfolio through acquisitions and development, while also managing its costs and diversifying its revenue streams through ancillary operations. The company’s strong liquidity and access to capital provide it with the flexibility to adapt to changing market conditions and pursue strategic growth opportunities.