Published on 1 May 2024 on Zacks via Yahoo Finance

Public Storage (PSA) Q1 FFO Misses Estimates, Occupancy Falls

Public Storage PSA reported a first-quarter 2024 core FFO per share of $4.03, which lagged the Zacks Consensus Estimate of $4.07. The figure also declined 1.2% year over year.While this self-storage REIT came up with a better-than-anticipated top line, aided by an improvement in the realized annual rent per occupied square foot in the reported quarter, a rise in property tax expenses and marketing expenses, as well as higher interest expenses, acted as spoilsports.Quarterly revenues of $1.16 billion exceeded the Zacks Consensus Estimate by 0.4%. Moreover, revenues increased 5.8% year over year.

Behind the Headlines

Public Storage’s same-store revenues rose marginally year over year to $913.1 million in the first quarter, highlighting higher realized annual rent per occupied square foot, partly offset by a decline in occupancy. This storage REIT witnessed a 0.8% increase in realized annual rental income per occupied square foot to $22.53. However, the weighted average square foot occupancy of 92.1% was down 0.8% year over year. Our estimate was 92.2%.The cost of operations for same-store facilities increased 4.8% year over year, mainly due to a rise in property tax expenses and marketing expenses.Consequently, PSA’s same-store net operating income (NOI) decreased 1.5% to $677.4 million. However, this REIT’s NOI growth from non-same-store facilities was $35.4 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 77.2% same-store direct NOI margin in the quarter, down from 78.7% in the prior-year quarter.Interest expenses increased to $67.8 million in the first quarter, up from $36.1 million in the year-ago period. Our estimate was $60.6 million.