Core Viewpoint - Morgan Stanley has made significant adjustments to the ratings of nine popular investment targets in the REITs and real estate services sector for 2026, with seven downgrades and two upgrades, reflecting a more stratified rating distribution as the probability of a soft landing for the U.S. economy increases and the Fed's rate-cutting cycle is expected to continue [1][2]. Group 1: Downgraded Companies - Realty Income (O.US) rating downgraded from "Neutral" to "Underweight" due to its large scale making it difficult to achieve above-average profit growth compared to its net lease REIT peers [3]. - Public Storage (PSA.US) rating downgraded from "Overweight" to "Neutral" as improvements in core growth rates are expected to take longer and not follow a straight line [3]. - Welltower (WELL.US) rating downgraded from "Overweight" to "Neutral" based on a short-term stock price judgment rather than any deterioration in growth prospects [3]. - Regency Centers (REG.US) rating downgraded from "Overweight" to "Neutral," which is also a temporary stock trend judgment, as REG is still considered to have one of the best platforms in the REIT sector with optimistic long-term growth prospects [3]. - Kennedy Wilson (KW.US) rating downgraded from "Neutral" to "Underweight" due to limited upside potential from a pending privatization offer [4]. - UDR (UDR.US) rating downgraded from "Neutral" to "Underweight" [4]. - SmartStop (SMA.US) rating adjusted from "Overweight" to "Neutral" [4]. Group 2: Upgraded Companies - Federal Realty Investment Trust (FRT.US) rating upgraded from "Neutral" to "Overweight" as the company effectively recycles capital from mature assets into higher-quality retail assets, improving growth visibility for 2026 [5]. - Camden Property Trust (CPT.US) rating upgraded from "Underweight" to "Neutral" due to a stronger balance sheet providing greater flexibility for buybacks and development, significantly improving relative risk-reward compared to UDR [5].

Core Viewpoint - Morgan Stanley has made significant rating adjustments for nine popular investment targets in the REITs and real estate services sector, with seven downgrades and two upgrades, reflecting a more stratified rating distribution as the U.S. economy approaches a soft landing and the Federal Reserve's interest rate cut cycle is expected to continue [1][2]. Group 1: Downgraded Companies - Realty Income (O.US) rating downgraded from "Neutral" to "Underweight" due to its large scale making it difficult to achieve above-average profit growth compared to its net lease REIT peers [2]. - Public Storage (PSA.US) rating downgraded from "Overweight" to "Neutral" as improvements in core growth rate are expected to take longer and not follow a straight line [2]. - Welltower (WELL.US) rating downgraded from "Overweight" to "Neutral" based on a short-term stock price judgment rather than any deterioration in growth prospects [2]. - Regency Centers (REG.US) rating downgraded from "Overweight" to "Neutral," which is also a temporary stock trend judgment despite its strong long-term growth outlook [2]. - Kennedy Wilson (KW.US) rating downgraded from "Neutral" to "Underweight" due to limited upside from a pending privatization offer [3]. - UDR (UDR.US) rating downgraded from "Neutral" to "Underweight" [3]. - SmartStop (SMA.US) rating adjusted from "Overweight" to "Neutral" [3]. Group 2: Upgraded Companies - Federal Realty Investment Trust (FRT.US) rating upgraded from "Neutral" to "Overweight" as it effectively recycles capital from mature assets into higher-quality retail assets, improving growth visibility for 2026 [4]. - Camden Property Trust (CPT.US) rating upgraded from "Underweight" to "Neutral" due to its stronger balance sheet providing greater flexibility for buybacks and development in 2026, significantly improving relative risk-reward [4].

Core Viewpoint - Morgan Stanley has made significant rating adjustments for nine popular investment targets in the REITs and real estate services sector, with seven downgrades and two upgrades, reflecting a more stratified rating distribution as the U.S. economy approaches a soft landing and the Federal Reserve's interest rate cut cycle is expected to continue [1][2]. Group 1: Downgraded Companies - Realty Income (O.US) rating downgraded from "Neutral" to "Underweight" due to its large scale making it difficult to achieve above-average profit growth compared to its net lease REIT peers [3]. - Public Storage (PSA.US) rating downgraded from "Overweight" to "Neutral" as expectations for PSA's core growth rate improvement are likely to be prolonged and not linear [3]. - Welltower (WELL.US) rating downgraded from "Overweight" to "Neutral" based on a short-term stock price judgment rather than any deterioration in growth prospects [3]. - Regency Centers (REG.US) rating downgraded from "Overweight" to "Neutral," which is also a temporary stock trend judgment, as REG is still considered to have one of the best platforms in the REIT sector with optimistic long-term growth prospects [3]. - Kennedy Wilson (KW.US) rating downgraded from "Neutral" to "Underweight" due to limited upside potential from a pending privatization offer [4]. - UDR (UDR.US) rating downgraded from "Neutral" to "Underweight" [4]. - SmartStop (SMA.US) rating downgraded from "Overweight" to "Neutral" [4]. Group 2: Upgraded Companies - Federal Realty Investment Trust (FRT.US) rating upgraded from "Neutral" to "Overweight" as the company effectively recycles capital from mature assets into higher-quality retail assets, improving growth visibility for 2026 [5]. - Camden Property Trust (CPT.US) rating upgraded from "Underweight" to "Neutral" due to its stronger balance sheet providing greater flexibility for buybacks and development in 2026, significantly improving relative risk-reward [5].

Company Overview - Public Storage (PSA) is a real-estate investment trust (REIT) focused on self-storage facilities, offering month-to-month leases for personal and business use, along with ancillary services [1] - The company is headquartered in Glendale, California, and operates thousands of storage locations across the United States, with a market capitalization of approximately $47.9 billion [1][2] Market Position - Public Storage is classified as a "large-cap" stock, exceeding the $10 billion valuation threshold, and is recognized as a leading self-storage operator due to its extensive network [2] Stock Performance - The stock has decreased by 20.9% from its 52-week high of $345.10 reached in December 2024, and is down 5.2% over the past three months, underperforming the S&P 500 Index, which rose by 6.5% during the same period [3] - Over the past 52 weeks, PSA has slumped 20.6% and is down 8.8% year-to-date, lagging behind the S&P 500's returns of 12.9% and 16.1% respectively [4] - The stock has been trading below the 200-day moving average for most of the past year, with a brief period above it in October [4] Industry Challenges - The decline in Public Storage's stock in 2025 is attributed to soft industry demand, decreasing move-in rental rates, and rising operating costs [5] - The self-storage sector is facing challenges due to ongoing economic uncertainties and a subdued housing market, which significantly impacts storage demand [5] Recent Financial Performance - In Q3 2025, the company's core funds from operations (Core FFO) per share were reported at $4.31, reflecting a 2.6% increase from the same quarter last year [6] - However, the same-store performance showed weakness, with square foot occupancy dropping by approximately 0.5% to 92.2%, and same-store revenue remaining flat year-over-year at $948.9 million [6] - Concerns over same-store performance led to a 3% drop in stock price on October 29, followed by an additional 2.9% decline the next day [6]

Core Insights - Self-storage is identified as a low-risk, resilient investment sector, largely unaffected by interest rates, job growth, or income growth, according to Heitman's research [2] - Over the past 15 years, self-storage has outperformed other real estate sectors in net operating income, driven by factors such as lack of home space, moving, death, downsizing, and remodeling [3] - The correlation of self-storage REITs with traditional stock and bond portfolios is close to zero, indicating a low-risk profile for investors [4] Investment Drivers - The demand for self-storage is primarily driven by life events, including the aging U.S. population, growing millennial families, and downsizing baby boomers [5] - Despite a year-to-date decline of up to 16% in self-storage REIT stocks due to slower home sales and softer revenue growth, the sector is viewed as having favorable entry points for investment [4][5]

Core Viewpoint - Public Storage (PSA) has experienced significant underperformance compared to the broader market and its sector peers, despite reporting better-than-expected financial results for Q3 2023 [2][4]. Company Overview - Public Storage is a REIT based in Glendale, California, focused on acquiring, developing, owning, and operating self-storage facilities. The company has a market cap of $47.6 billion and operates 3,399 facilities across 40 states, totaling approximately 247 million net rentable square feet in the U.S. [1]. Stock Performance - Over the past year, PSA shares have declined by 20.4%, while the S&P 500 Index has increased by nearly 12.3%. Year-to-date in 2025, PSA stock is down 11.1%, contrasting with a 12.9% rise in the S&P 500 [2]. - PSA's performance is also lagging behind the Real Estate Select Sector SPDR Fund (XLRE), which has seen a decline of about 7% over the past year [3]. Financial Results - For Q3 2023, PSA reported a Funds From Operations (FFO) of $4.31 per share, exceeding Wall Street's expectation of $4.24. The company's revenue reached $1.22 billion, surpassing the forecast of $1.21 billion. PSA anticipates full-year FFO in the range of $16.70 to $17 per share [4]. Analyst Expectations - Analysts project PSA's FFO per share to grow by 1.2% to $16.87 for the current fiscal year ending in December. The company's FFO surprise history shows mixed results, beating estimates in three of the last four quarters [5]. - Among 21 analysts covering PSA, the consensus rating is a "Moderate Buy," with 13 "Strong Buy" ratings and eight "Holds" [5]. Price Targets - UBS analyst Michael Goldsmith maintained a "Neutral" rating on PSA, lowering the price target to $293, indicating a potential upside of 10.1%. The mean price target is $324.68, suggesting a 22% premium to current levels, while the highest price target of $350 indicates a potential upside of 31.5% [6].

Group 1 - Public Storage (PSA) is one of the largest Real Estate Investment Trusts (REITs) globally, managing over 3,400 properties with more than 250 million square feet of leasable space [1] - The company has established a strong reputation in the market, indicating its reliability and stability in the REIT sector [1] - Denislav Iliev, an experienced day trader with over 15 years in the field, leads a team of 40 analysts focused on identifying mispriced investments in fixed-income and closed-end funds [1] Group 2 - The investing group Trade With Beta, led by Denislav Iliev, offers features such as frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of over 1,200 equities, IPO previews, and hedging strategies [1] - The service includes an actively managed portfolio and a chat room for discussions among sophisticated traders and investors [1]

Summary of Key Points Core Viewpoint - The preferred stock of Public Storage has experienced a 4% correction from its peak at the end of September, which aligns with the trend observed in most preferred stocks [1]. Group 1: Stock Performance - Public Storage's preferred stock, PSA.PR.F, has seen a 4% decline from its peak [1]. Group 2: Market Context - The correction in Public Storage's preferred stock is consistent with the overall performance of the preferred stock market [1].

Group 1 - Public Storage (PSA) is a leading US-based REIT specializing in the development and operation of self-storage facilities, with significant brand recognition in the industry [1] - The business model of Public Storage is generally viewed positively, indicating a strong market position and potential for growth [1] Group 2 - The Investment Doctor emphasizes a diversified portfolio that includes both dividend and growth stocks, focusing on high-quality small-cap investment opportunities in Europe [1] - The investment group European Small Cap Ideas provides exclusive research on appealing European investment opportunities, highlighting the importance of capital gains and dividend income for continuous cash flow [1]

Group 1 - Public Storage (PSA) is a US-based REIT specializing in the development and operation of self-storage facilities, recognized as one of the largest and most well-known companies in this sector [1] - The company has significant brand recognition, which is considered almost unparalleled in the self-storage industry [1] - The business model of Public Storage is generally viewed positively, indicating a strong foundation for potential growth and investment opportunities [1] Group 2 - The Investment Doctor emphasizes a diversified portfolio that includes both dividend and growth stocks, suggesting a balanced investment strategy [1] - The focus is on high-quality small-cap investment ideas in Europe, with an emphasis on capital gains and dividend income for continuous cash flow [1] - The investment group offers two model portfolios, including the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1]