Public Storage's Q2 FFO Beats Estimates, Occupancy Falls, View Raised

Public Storage PSA reported second-quarter 2025 core funds from operations (FFO) per share of $4.28, which surpassed the Zacks Consensus Estimate of $4.23. Also, the figure increased 1.2% year over year.

Results were backed by top-line growth, with the company experiencing higher realized annual rent per occupied square foot, though a fall in occupancy partly offset the upside. PSA also raised its outlook, backed by stabilizing operations and accelerated acquisition volume.

Quarterly revenues of $1.20 billion exceeded the Zacks Consensus Estimate by 0.6%. Revenues were also up 2.4% year over year.

However, reflecting broader market concerns, shares of Public Storage were down 1.1% in after-hours trading on Wednesday following the release of its second-quarter results.

Behind PSA’s Headlines

Public Storage’s same-store revenues increased 0.2% year over year to $945.2 million in the second quarter due to higher realized annual rent per occupied square foot, offset by a decline in occupancy. This storage REIT witnessed a 0.6% increase in realized annual rental income per occupied square foot to $22.50. The weighted average square foot occupancy of 92.6% was down 0.4% year over year. Our estimate stood at 92.3%.

The cost of operations for same-store facilities rose 2.9% year over year due to increased other direct property costs, repairs and maintenance expenses and marketing expenses, partially offset by decreased on-site property manager payroll.

PSA’s same-store net operating income (NOI) was down 0.6% year over year at $716.6 million. However, this REIT’s NOI growth from non-same-store facilities was $12.0 million due to the impact of facilities acquired in 2024 and the lease-up of newly acquired and development/expansion properties.

The company achieved a 78.8% same-store direct NOI margin in the quarter, down 0.4% from the prior-year quarter.

Interest expenses decreased 2.2% year over year to $71.6 million in the second quarter, marginally below our estimate of $71.1 million.

PSA’s Portfolio Activity

In the second quarter, Public Storage acquired 16 self-storage facilities, comprising 1.1 million net rentable square feet of space, for $162.3 million. Following June 30, 2025, PSA acquired or was under contract to acquire 47 self-storage facilities with 3.1 million net rentable square feet across 17 states for $481.9 million.

It opened two newly developed facilities and completed several expansion projects, which together added 0.2 million net rentable square feet, costing $64 million.

As of June 30, 2025, Public Storage had several facilities in development (expected to contribute around 2.6 million net rentable square feet), estimated to cost $487.9 million, and various expansion projects (expected to contribute around 1.2 million net rentable square feet), estimated to cost $160.2 million. It expects to incur the remaining $390.9 million of development costs related to these projects over the next 18 to 24 months.

PSA’s Balance Sheet Position

Public Storage exited the second quarter of 2025 with $1.1 billion of cash and equivalents, up from $447.4 million as of year-end 2024.

PSA’s 2025 Guidance

Public Storage has raised its 2025 core FFO per share projections to the $16.45-$17.00 band, up from the $16.35-$17.00 range guided earlier. The Zacks Consensus Estimate is currently pegged at $16.84 and lies within the guided range.

The company’s full-year assumption is backed by a 1.3% decline to 0.8% growth (unchanged) in same-store revenues, a 2.3% to 3% rise (previously 2.5% to 4.0%) in same-store expenses and a 2.6% decline to 0.3% expansion (previously down 2.9% to 0.2% growth) in same-store NOI. 

Further, the company projects $370 million in development openings and expects capital expenditures relating to maintenance of real estate facilities amounting to $150 million and $50 million in energy efficiencies.

Public Storage currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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 reported second-quarter 2025 core FFO per share of $2.05, missing the Zacks Consensus Estimate of $2.06. The figure decreased 0.5% from the prior-year quarter. Extra Space Storage’s results reflected a year-over-year rise in revenues due to growth in occupancy. However, high same-store expenses and interest expenses during the quarter were a spoilsport.

Quarterly revenues of $841.6 million surpassed the Zacks Consensus Estimate of $835.8 million. The top line increased 3.8% year over year. Extra Space Storage carries a Zacks Rank #3.

Upcoming Earnings Release

We now look forward to the earnings release of another REIT — Equity Residential EQR — which is slated to report on Aug. 4.

The Zacks Consensus Estimate for Equity Residential’s second-quarter 2025 normalized FFO per share stands at 99 cents, indicating a 2.1% increase year over year. The consensus mark for Equity Residential’s second-quarter revenues is pegged at $769.26 million, calling for a 4.8% increase year over year. EQR currently has a Zacks Rank #2 (Buy).

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research