Image Source: TradingView
By Brian Nelson, CFA
Public Storage (PSA) recently reported better than expected fourth quarter results with revenue and funds from operations (FFO) exceeding the consensus forecast. Net income fell compared to the same period a year ago, but core FFO increased to $4.26 versus $4.21 in the year-ago period. Among the highlights in the quarter, the company achieved positive same store revenue growth in 56% of its markets, increasing from 49% during the fourth quarter of 2024. It achieved a 78.4% same store net operating income margin, while it acquired 13 self-storage facilities with 0.9 million net rentable square feet for $131 million. Public Storage delivered new developments and completed expansion projects, adding 1.0 million net rentable square feet at $140.1 million in cost.
Management had the following to say about the results:
Public Storage’s fourth quarter results reflect differentiated strategies that continue to drive our performance. As industry fundamentals stabilize, new competitive supply declines, and acquisition market activity increases, we are well-positioned to capitalize on the opportunities ahead. With the launch of PS4.0, we are building on that foundation by elevating the customer and employee experience, accelerating value creation, and unlocking the next phase of long-term growth for Public Storage.
Strong existing customer performance paired with solid execution from our team driving new move-ins resulted in quarter-end occupancy that was 0.5% better year-over-year. That represents the first occupancy increase in over four years further reinforcing the fundamental stabilization leading into 2026. We are maximizing revenue and NOI as the industry operating environment stabilizes.
Looking to 2026 guidance, management expects revenue growth to be down 2.2% to flat, while expense growth is expected to be in the range of 1.5%-2.8%. Net operating income growth is targeted to fall 3.9%-0.5% on the year, while core FFO per share is expected in the range of $16.35-$17.00, compared to $16.97 in 2025. As of December 31, Public Storage had various projects in development, consisting of 2.6 million net rentable square feet, and various expansion projects, consisting of 0.9 million net rentable square feet.
The company’s total indebtedness as of the end of the year was $10.3 billion, with $1.15 billion maturing in 2026, while it had approximately $2.4 billion of liquidity through a combination of cash, undrawn capacity on its credit facility, and expected retained cash flow over the next twelve months. Net debt and preferred equity to EBITDA stood at 4.2x at the end of the year, good enough for A2/A credit ratings at Moody’s and S&P. We continue to like Public Storage as an idea in the High Yield Dividend Newsletter portfolio.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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