Core Insights - The market for REITs exhibits significant mispricing, presenting both opportunities for enhanced returns and challenges for investors [1][19][21] - The complexity of REITs relative to their market size contributes to this mispricing, as fewer resources are allocated for analysis [2][3][9] Group 1: Mispricing Factors - REITs have a high ratio of complexity to size, making them more prone to mispricing compared to the broader market [2] - The combined market cap of all equity REITs is approximately $1.38 trillion, with the top 10 companies accounting for nearly half of this total [4][6] - Less than $700 billion of market cap is distributed among over 250 common and preferred REIT issues, leading to small average issue sizes that limit analytical resources [9] Group 2: Analytical Challenges - REITs are difficult to analyze due to various property types and locations, requiring extensive knowledge to assess their fundamental trajectories [10][11] - Non-GAAP metrics, such as FFO and AFFO, are commonly used in the REIT industry, but definitions vary significantly across companies, complicating comparisons [12][14] - Property-level metrics and cap rates also lack standardization, leading to potential misinterpretations of performance [16][18] Group 3: Investment Opportunities - The mispricing in the REIT sector creates opportunities for skilled stock pickers to identify undervalued assets, as many REITs are trading at significant discounts to their net asset values [21][25] - The median REIT is currently trading at 84.9% of NAV, with forward FFO and AFFO multiples at 13.5X and 15.3X respectively, indicating a generally cheap valuation relative to the broader market [23][26] - Investing in a broad REIT ETF may not capture the potential of mispriced REITs, as ETFs tend to include both overvalued and undervalued stocks [24]

Core Insights - The Forbes 400 ranking for 2025 highlights that extreme wealth in the U.S. is concentrated in a few populous states, with California, New York, Florida, and Texas accounting for nearly two-thirds of the total wealth of $6.6 trillion [1][2][3] State Summaries - **California**: Home to 85 billionaires, an increase from 83 last year, with a combined worth of $1.7 trillion. Larry Ellison leads with a fortune of $276 billion, regaining the top spot from Mark Zuckerberg [2][19] - **New York**: Hosts 57 billionaires, up by 3 from last year, with a total worth of $690.9 billion. Michael Bloomberg is the richest resident at $109 billion [3][18] - **Florida**: Now has 49 billionaires, down from 54 last year, with a total worth of $716.3 billion. Jeff Bezos is the richest Floridian at $241 billion [3][17] - **Texas**: Maintains 43 billionaires, with a combined worth of $1 trillion for the first time. Elon Musk is the richest Texan at $428 billion, having moved from California [4][16] - **District of Columbia**: Now includes Michael Sabel as a new member of the Forbes 400, while the total number of states represented has decreased to 38 from 40 [5] - **Michigan**: Returns to the top 10 with 8 billionaires worth $80.1 billion, led by Daniel Gilbert at $26.7 billion [8] - **Massachusetts**: Tied for 8th place with 9 billionaires worth $98.8 billion, with Abigail Johnson as the richest at $35 billion [10] - **Nevada**: Also tied for 8th with 9 billionaires, now worth $111.7 billion, led by Miriam Adelson at $37.9 billion [11] - **Georgia**: Holds 10 billionaires worth $93.2 billion, with the wealthiest being the Cathy siblings at $13.7 billion each [12] - **Pennsylvania**: Has 11 billionaires worth $141.8 billion, with Jeff Yass leading at $65.7 billion [13] - **Illinois**: Features 16 billionaires worth $132.8 billion, with Lukas Walton as the richest at $39.8 billion [15]

Company Overview - Public Storage (PSA) is the largest owner and operator of self-storage facilities with a market cap of $51.7 billion, structured as a REIT [1] - As of June 30, 2025, the company managed 3,432 facilities across 40 states and holds a 35% equity interest in Shurgard Self Storage Limited, which operates 321 facilities in Western Europe [2] Stock Performance - PSA shares have decreased 20.5% from their 52-week high of $369.99 and have fallen 2.8% over the past three months, underperforming the Pacer Benchmark Industrial Real Estate SCTR ETF (INDS) which rose by 1.1% during the same period [3] - Year-to-date, PSA's shares have declined by 1.8%, while INDS gained 5.8%. Over the past 52 weeks, PSA stock dropped 16.3%, compared to INDS's nearly 12% decline [4] Financial Performance - In Q2 2025, Public Storage reported a core FFO of $4.28 per share and revenues of $1.2 billion. However, same-store occupancy declined by 0.4% year-over-year to 92.6%, and same-store NOI slipped by 0.6% [5] - Expenses rose by 2.9%, indicating margin pressure, and management's updated guidance suggested muted same-store growth and highlighted higher costs, which led to a 5.8% drop in shares the following day [5] Competitive Landscape - In comparison, rival Extra Space Storage Inc. (EXR) has shown a less pronounced decline, with a YTD dip of 1.7% and a 15.9% drop over the past 52 weeks [6] - Analysts maintain a moderately optimistic outlook for PSA, with a consensus rating of "Moderate Buy" from 22 analysts and a mean price target of $323.31, representing a 9.7% premium to current levels [6]

Core Insights - Public Storage (PSA) reported a second-quarter 2025 core funds from operations (FFO) per share of $4.28, exceeding the Zacks Consensus Estimate of $4.23 and reflecting a 1.2% year-over-year increase [1][11] - The company experienced top-line growth with quarterly revenues of $1.20 billion, surpassing the Zacks Consensus Estimate by 0.6% and increasing 2.4% year over year [2] - Despite the positive results, PSA's shares fell 1.1% in after-hours trading due to broader market concerns [2] Financial Performance - Same-store revenues rose 0.2% year over year to $945.2 million, driven by higher realized annual rent per occupied square foot, which increased by 0.6% to $22.50, although occupancy declined by 0.4% to 92.6% [3][5] - The cost of operations for same-store facilities increased by 2.9% year over year, influenced by higher direct property costs, repairs, maintenance, and marketing expenses [4] - Same-store net operating income (NOI) decreased by 0.6% year over year to $716.6 million, while NOI from non-same-store facilities grew by $12.0 million due to acquisitions [5] Portfolio Activity - In Q2, PSA acquired 16 self-storage facilities for $162.3 million, adding 1.1 million net rentable square feet [7] - The company has plans to acquire an additional 47 self-storage facilities with 3.1 million net rentable square feet for $481.9 million [7] - PSA is developing several facilities expected to contribute around 2.6 million net rentable square feet, with estimated costs of $487.9 million [9] Balance Sheet and Guidance - As of June 30, 2025, PSA had $1.1 billion in cash and equivalents, a significant increase from $447.4 million at the end of 2024 [12] - The company raised its 2025 core FFO per share guidance to a range of $16.45-$17.00, up from the previous range of $16.35-$17.00 [13] - Full-year assumptions include a 1.3% decline to 0.8% growth in same-store revenues and a projected $370 million in development openings [14]

Financial Data and Key Metrics Changes - The company raised its outlook for 2025 based on stabilizing operations and accelerated acquisitions, which reached $785 million closed or under contract year to date [6][10] - Same store revenue growth increased for the second consecutive quarter, with rental rates up 0.6% and occupancy gap improving to down 40 basis points [13][14] - Core FFO grew by 1.2% in the quarter, with FFO growth accelerating by 240 basis points from the second quarter of last year [14] Business Line Data and Key Metrics Changes - The non same store pool is expected to generate approximately $470 million of high growth NOI in 2025, with an additional $110 million coming through stabilization in 2026 and beyond [9][10] - Ancillary businesses, including tenant insurance and third-party management, are expanding and contributing positively to revenue [9][10] Market Data and Key Metrics Changes - The West Coast markets, including Washington D.C. and Chicago, showed same store revenue growth in the 2% to 4% range [8] - Los Angeles is expected to return to higher growth once fire-related pricing restrictions end, with current impacts unchanged [8][21] Company Strategy and Development Direction - The company is focused on capital allocation and capital access, with over $1.1 billion in acquisitions and development announced for the year [11] - The company is positioned for international growth, with successful operations in Europe and potential partnerships in Australia and New Zealand [10][125] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the storage fundamentals, particularly in Los Angeles, despite current restrictions [21][34] - The overall transaction market is up year over year by 10% to 15%, with expectations for robust second-half transactions [22][24] Other Important Information - The company is actively monitoring legislative efforts in California that could impact the business, maintaining a proactive posture [76][78] - The company is investing in solar energy to offset utility costs, which will positively impact its expense profile [109][110] Q&A Session Summary Question: Update on July operating trends and guidance implications - Management indicated that July trends are consistent with expectations, with occupancy gaps tightening and rental rates down in mid-single digits [19][21] Question: Insights on acquisition pipelines and market dynamics - The transaction market is showing increased activity, with a focus on submarket-specific opportunities rather than broad geographic trends [22][26] Question: Impact of move-in volume on pricing - Management noted that move-in rents are down slightly, but overall industry demand is improving, which should support future pricing [30][31] Question: Trends in Los Angeles market - Despite current restrictions, management remains confident in the long-term performance of the Los Angeles market [34][35] Question: Changes in underwriting approaches and market conditions - Management highlighted ongoing improvements in various markets, with a focus on submarket dynamics for investment opportunities [38][39] Question: Same store revenue growth guidance - Management provided a range for same store revenue growth, indicating potential scenarios based on occupancy and rental rates [45][47] Question: Seasonal expectations for the back half of the year - Management expects similar seasonal trends as previous years, with continued competition for new customers [52][53] Question: Expectations for LA revenue growth in the second half - Management anticipates a decline in LA revenue due to pricing restrictions, but remains optimistic about future recovery [61][62] Question: Insights on tenant insurance performance - The tenant insurance program is seeing strong adoption and higher premiums, contributing positively to ancillary revenue [118][119] Question: International growth opportunities - Management expressed confidence in leveraging successful strategies from Europe to potential markets in Australia and New Zealand [125][126]

Financial Data and Key Metrics Changes - The company raised its outlook for 2025 based on stabilizing operations and accelerated acquisitions, which reached $785 million closed or under contract year to date [5] - Same store revenue growth increased for the second consecutive quarter, with rental rates up 0.6% and occupancy gap improving to down 40 basis points from down 80 basis points at the start of the year [11] - Core FFO grew by 1.2% in the quarter, with FFO growth accelerating by 240 basis points from the second quarter of last year [12] Business Line Data and Key Metrics Changes - The West Coast, Washington D.C., and Chicago markets showed same store revenue growth in the 2% to 4% range [6] - Ancillary businesses, including tenant insurance and third-party management, are expanding, contributing to overall revenue growth [7] - The non-same store pool is expected to generate approximately $470 million of high growth NOI in 2025, with an additional $110 million coming through stabilization in 2026 and beyond [7] Market Data and Key Metrics Changes - The transaction market is up year over year by 10% to 15%, with a healthy pipeline of acquisitions and development opportunities [21] - Los Angeles is expected to return to a higher growth market once fire-related pricing restrictions end, despite current challenges [6][19] - Orange County revenues were up 3% in the second quarter, indicating strength in the broader West Coast market [32] Company Strategy and Development Direction - The company is focused on enhancing its competitive advantages through customer and employee-centric technologies, optimizing service options, and expanding its portfolio through acquisitions and development [5][7] - International growth is being pursued, with potential partnerships in Australia and New Zealand, alongside successful operations in Europe [8][123] - The company is leveraging its strong capital position to fund growth, with a $648 million development pipeline to be delivered over the next two years [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the self-storage market, particularly in Los Angeles, once current restrictions are lifted [19][63] - The company anticipates continued improvement in demand and revenue growth across various markets, with a focus on submarket-specific opportunities [37][128] - Management highlighted the importance of monitoring legislative efforts in California that could impact the business, maintaining a proactive approach [75] Other Important Information - The company is investing in automation and operational efficiencies to drive margin expansion and improve customer satisfaction [40] - The impact of the recent legislation, including bonus depreciation, is expected to provide opportunities for reinvestment into the development business [108] Q&A Session Summary Question: Update on July operating trends and guidance implications - Management indicated that July trends are consistent with expectations, with occupancy gaps closing and rental rates stabilizing [16][19] Question: Insights on acquisition pipelines and market dynamics - The transaction market is showing increased activity, with a focus on submarket-specific opportunities for acquisitions [21][24] Question: Impact of lower apartment turnover on self-storage demand - Management noted that lower turnover can be beneficial for self-storage, as renters may seek additional space due to affordability issues [99] Question: Discussion on the ECRI program and rate increases - Management highlighted consistent trends in customer price sensitivity and rent increases, with expectations for modest contributions from existing customer rent increases [104] Question: Cap rates and yields for acquisitions - Management reported that cap rates for transactions remain stable, with yields generally in the 5% to 6% range [115] Question: International growth opportunities and benefits from SureGuard - The company is leveraging its relationship with SureGuard to optimize operations in international markets, with confidence in future growth opportunities [123]

Financial Performance - Public Storage (PSA) reported quarterly funds from operations (FFO) of $4.28 per share, exceeding the Zacks Consensus Estimate of $4.23 per share, and showing an increase from $4.23 per share a year ago, resulting in an FFO surprise of +1.18% [1] - The company posted revenues of $1.2 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.58%, compared to revenues of $1.17 billion in the same quarter last year [2] Market Performance - Public Storage shares have declined approximately 2.3% since the beginning of the year, while the S&P 500 has gained 8.3% [3] - The current consensus FFO estimate for the upcoming quarter is $4.26 on revenues of $1.21 billion, and for the current fiscal year, it is $16.84 on revenues of $4.8 billion [7] Industry Outlook - The REIT and Equity Trust - Other industry, to which Public Storage belongs, is currently ranked in the top 34% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in estimate revisions, which can be tracked by investors [5]

PART I FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents Public Storage's unaudited consolidated financial statements, detailing asset growth, net income decline, and cash flow from operations [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$20.54 billion**, liabilities rose to **$11.07 billion** due to notes payable, and total equity decreased Consolidated Balance Sheet Highlights (in thousands of USD) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$20,541,453** | **$19,754,934** | | Cash and equivalents | $1,104,603 | $447,416 | | Real estate facilities, net | $18,430,821 | $18,360,653 | | **Total Liabilities** | **$11,065,104** | **$9,941,282** | | Notes payable | $10,440,279 | $9,353,034 | | **Total Equity** | **$9,476,349** | **$9,813,652** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Total revenues slightly increased to **$1.20 billion**, but net income allocable to common shareholders significantly decreased to **$309.0 million** due to foreign currency losses Income Statement Summary (in thousands of USD, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$1,201,094** | **$1,173,211** | **$2,384,278** | **$2,330,431** | | Self-storage facilities | $1,118,658 | $1,099,736 | $2,221,656 | $2,185,781 | | **Net Income** | **$361,411** | **$521,209** | **$772,202** | **$1,032,906** | | Foreign currency exchange (loss) gain | ($146,070) | $12,449 | ($214,765) | $49,992 | | **Net Income (Common Shareholders)** | **$308,968** | **$468,366** | **$667,198** | **$927,575** | | **Diluted EPS** | **$1.76** | **$2.66** | **$3.79** | **$5.26** | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities remained stable at **$1.58 billion**, while investing activities increased and financing activities decreased Cash Flow Summary - Six Months Ended June 30 (in thousands of USD) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash from operating activities** | **$1,577,771** | **$1,560,865** | | **Net cash used in investing activities** | **($624,797)** | **($377,659)** | | Acquisition of real estate facilities | ($303,277) | ($21,963) | | **Net cash used in financing activities** | **($295,787)** | **($1,010,125)** | | **Net increase in cash and equivalents** | **$657,187** | **$173,081** | [Condensed Notes to Consolidated Financial Statements](index=13&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the company's portfolio, Shurgard interest, significant real estate acquisitions, notes payable, and a potential major acquisition offer - As of June 30, 2025, Public Storage owned interests in 3,103 self-storage facilities in the U.S. and held a 35% common equity interest in Shurgard, which operates 321 facilities in Western Europe[37](index=37&type=chunk)[38](index=38&type=chunk) - In the first six months of 2025, the company acquired 25 self-storage facilities for **$303.3 million** in cash and completed development activities costing **$208.4 million**[44](index=44&type=chunk) - On June 30, 2025, PSOC issued **$875 million** in senior notes, and the company also entered into interest rate swaps with a notional amount of **$475 million** to convert fixed-rate debt to a variable rate[60](index=60&type=chunk)[67](index=67&type=chunk) - Subsequent to the quarter end, the company acquired or was under contract for 47 facilities for **$481.9 million** and announced a non-binding offer to acquire Abacus Storage King in Australia/New Zealand for an estimated cost of **$710 million**[120](index=120&type=chunk)[121](index=121&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting Same Store revenue growth, net income decrease due to foreign currency losses, Core FFO per share growth, liquidity, and strategic initiatives [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q2 2025 net income allocable to common shareholders fell to **$309.0 million** due to foreign currency losses, while self-storage NOI modestly increased - Q2 2025 net income per diluted share was **$1.76**, a decrease from **$2.66** in Q2 2024, mainly due to a **$158.5 million** increase in foreign currency losses[135](index=135&type=chunk) - For the six months ended June 30, 2025, net income per diluted share was **$3.79**, down from **$5.26** in the prior year, also primarily due to a **$264.8 million** increase in foreign currency losses[137](index=137&type=chunk) [Funds from Operations and Core Funds from Operations](index=32&type=section&id=Funds%20from%20Operations%20and%20Core%20Funds%20from%20Operations) FFO per share for Q2 2025 decreased **20.0%** to **$3.44** due to foreign currency losses, while Core FFO per share increased **1.2%** to **$4.28** FFO and Core FFO per Share Reconciliation (in USD) | Metric | Q2 2025 | Q2 2024 | % Change | YTD 2025 | YTD 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Diluted EPS** | **$1.76** | **$2.66** | **(33.8)%** | **$3.79** | **$5.26** | **(27.9)%** | | **FFO per share** | **$3.44** | **$4.30** | **(20.0)%** | **$7.15** | **$8.54** | **(16.3)%** | | Foreign currency loss (gain) per share | $0.82 | ($0.08) | - | $1.21 | ($0.29) | - | | **Core FFO per share** | **$4.28** | **$4.23** | **1.2%** | **$8.39** | **$8.26** | **1.6%** | [Analysis of Net Income — Self-Storage Operations](index=35&type=section&id=Analysis%20of%20Net%20Income%20%E2%80%94%20Self-Storage%20Operations) Self-storage operations analysis shows a **0.6%** Same Store NOI decrease, while Acquired and Newly Developed facilities drove significant growth, and ancillary operations also contributed positively Self-Storage Net Operating Income (NOI) by Facility Group - Q2 2025 vs Q2 2024 (in thousands of USD) | Facility Group | Q2 2025 NOI | Q2 2024 NOI | % Change | | :--- | :--- | :--- | :--- | | Same Store Facilities | $716,552 | $720,870 | (0.6)% | | Acquired Facilities | $37,600 | $32,173 | 16.9% | | Newly Developed & Expanded | $30,607 | $26,298 | 16.4% | | Other Non-Same Store | $49,182 | $46,894 | 4.9% | | **Total NOI** | **$833,941** | **$826,235** | **0.9%** | - Same Store revenue growth of **0.2%** in Q2 was driven by a **0.6%** increase in realized rent per occupied square foot, but offset by a **0.4%** decrease in average occupancy[154](index=154&type=chunk) - Same Store cost of operations increased **2.9%** in Q2, primarily due to a **4.4%** rise in property tax expense[163](index=163&type=chunk)[164](index=164&type=chunk) - Ancillary operations NOI grew to **$49.1 million** in Q2 2025 from **$45.9 million** in Q2 2024, led by a **10.3%** increase in tenant reinsurance premium revenue[199](index=199&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$1.1 billion** cash and a **$1.5 billion** credit facility, supported by high credit ratings, and faces significant cash requirements for acquisitions, development, and debt repayments - The company has strong credit ratings of **'A'** from S&P and **'A2'** from Moody's for its senior notes[216](index=216&type=chunk) - As of June 30, 2025, liquidity sources include **$1.1 billion** in cash and **$1.48 billion** available on its credit facility[220](index=220&type=chunk) - Major committed cash requirements include **$481.9 million** for property acquisitions, **$390.9 million** for development, and **$1.2 billion** in debt repayments over the next year[221](index=221&type=chunk) - The proposed acquisition of Abacus Storage King is estimated to cost Public Storage approximately **$710 million**, which is anticipated to be funded with Australian Dollar denominated unsecured debt[221](index=221&type=chunk)[229](index=229&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk stems from its **$10.4 billion** debt with a **3.0%** weighted average rate and foreign currency fluctuations related to its Shurgard investment and Euro-denominated notes - Total debt outstanding at June 30, 2025, is approximately **$10.4 billion** with a weighted average effective rate of **3.0%**[236](index=236&type=chunk)[237](index=237&type=chunk) - The company has foreign currency exposure from its investment in Shurgard (book value **$387.9 million**) and **€1.6 billion** of Euro-denominated debt, which acts as a natural hedge[238](index=238&type=chunk) [Item 4. Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[240](index=240&type=chunk) - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2025[241](index=241&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings but believes the likelihood of a material loss is remote - The company states that the likelihood of any legal proceedings resulting in a material loss, either individually or in aggregate, is remote[242](index=242&type=chunk) [Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 were reported - No material changes to the risk factors disclosed in the 2024 Form 10-K were reported[243](index=243&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase common shares during Q2 2025, with **10.6 million** shares remaining available for repurchase under the existing program - No common shares were repurchased during Q2 2025. The company has authorization to repurchase an additional **10.6 million** shares under its program[245](index=245&type=chunk)

[Overall Financial Performance and Outlook](index=1&type=section&id=Overall%20Financial%20Performance%20and%20Outlook) [Q2 & H1 2025 Performance Highlights](index=1&type=section&id=Q2%20%26%20H1%202025%20Performance%20Highlights) Public Storage's Q2 and H1 2025 net income decreased due to foreign currency losses, yet the company raised its full-year outlook on stabilizing operations and accelerated acquisitions - The company is raising its 2025 outlook based on stabilizing operations and increased acquisition volume, anticipating over **$1.1 billion** in investment for the year[4](index=4&type=chunk) Q2 2025 Key Performance Indicators | Metric | Value | | :--- | :--- | | Net Income per Diluted Share | $1.76 | | Core FFO per Diluted Share | $4.28 | | Same Store Direct NOI Margin | 78.8% | | Acquisitions (Q2) | 16 facilities for $162.3 million | | Development & Expansion (Q2) | 0.2 million sq. ft. for $64.0 million | [Detailed Operating Results](index=2&type=section&id=Detailed%20Operating%20Results) Net income for Q2 and H1 2025 significantly decreased due to increased foreign currency losses, while self-storage NOI saw a modest increase driven by Non-Same Store facilities Net Income Comparison (Common Shareholders) | Period | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | **Three Months Ended June 30** | $309.0 million ($1.76/share) | $468.4 million ($2.66/share) | -$159.4 million (-$0.90/share) | | **Six Months Ended June 30** | $667.2 million ($3.79/share) | $927.6 million ($5.26/share) | -$260.4 million (-$1.47/share) | - The primary driver for the decrease in net income in both periods was a significant increase in foreign currency exchange losses related to Euro-denominated notes payable[9](index=9&type=chunk)[11](index=11&type=chunk) - Increases in self-storage net operating income were driven by Non-Same Store facilities, with a **$12.0 million** increase in Q2 and a **$25.5 million** increase in H1, offsetting slight Same Store declines[10](index=10&type=chunk)[12](index=12&type=chunk) [Funds from Operations (FFO) Analysis](index=2&type=section&id=Funds%20from%20Operations%20(FFO)%20Analysis) Core FFO per share increased for both Q2 and H1 2025, while GAAP FFO per share declined significantly due to foreign exchange losses FFO & Core FFO per Share vs. Prior Year | Metric (per share) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Diluted EPS | $1.76 | $2.66 | (33.8)% | | FFO per Share | $3.44 | $4.30 | (20.0)% | | Core FFO per Share | $4.28 | $4.23 | 1.2% | | **Metric (per share)** | **H1 2025** | **H1 2024** | **% Change** | | Diluted EPS | $3.79 | $5.26 | (27.9)% | | FFO per Share | $7.15 | $8.54 | (16.3)% | | Core FFO per Share | $8.39 | $8.26 | 1.6% | - The significant divergence between FFO and Core FFO is primarily due to the exclusion of a **$146.1 million** foreign currency exchange loss in Q2 2025 from the Core FFO calculation[16](index=16&type=chunk) [2025 Full-Year Outlook](index=6&type=section&id=2025%20Full-Year%20Outlook) Public Storage raised its full-year 2025 Core FFO per share guidance, reflecting improved Non-Same Store NOI expectations and increased incremental Non-Same Store NOI forecast Updated 2025 Full-Year Guidance | Metric | Current Guidance | Prior Guidance | | :--- | :--- | :--- | | Core FFO per Share | $16.45 - $17.00 | $16.35 - $17.00 | | Same Store Revenue Growth | (1.3)% to 0.8% | (1.3)% to 0.8% | | Same Store Expense Growth | 2.3% to 3.0% | 2.5% to 4.0% | | Same Store NOI Growth | (2.6)% to 0.3% | (2.9)% to 0.2% | | Non-Same Store NOI | $465 million - $475 million | $444 million - $464 million | | Incremental Non-Same Store NOI (2026+) | $110 million | $80 million | - The 2025 guidance includes an estimated negative **1%** impact on Same Store revenue growth and a **$0.23** per share impact on Core FFO due to temporary government pricing limitations in Los Angeles County[25](index=25&type=chunk) [Property Operations](index=4&type=section&id=Property%20Operations) [Same Store Facilities Performance](index=4&type=section&id=Same%20Store%20Facilities%20Performance) Same Store facilities experienced a slight 0.6% decrease in Q2 2025 NOI due to rising direct costs offsetting modest revenue growth, with occupancy slightly declining Q2 2025 Same Store Operating Results (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $945.2 million | $943.1 million | 0.2% | | Total Direct Cost of Operations | $200.2 million | $196.1 million | 2.1% | | Net Operating Income (NOI) | $716.6 million | $720.9 million | (0.6)% | | Weighted Average Occupancy | 92.6% | 93.0% | (0.4)% | | Realized Annual Rent per Occupied Sq. Ft. | $22.50 | $22.36 | 0.6% | - The increase in direct costs was driven primarily by a **4.4%** rise in property taxes and a **5.0%** increase in marketing expenses, partially offset by a **2.9%** decrease in on-site property manager payroll[17](index=17&type=chunk) [Non-Same Store Facilities Performance](index=5&type=section&id=Non-Same%20Store%20Facilities%20Performance) The Non-Same Store portfolio, comprising 538 unstabilized facilities, is a key driver of overall NOI growth, with the Simply portfolio generating significant NOI in Q2 2025 - The Non-Same Store portfolio consists of **538** facilities, including **211** acquired, **40** newly developed, **62** expanded, and **225** other unstabilized properties[18](index=18&type=chunk) - The Simply portfolio, acquired in 2023, generated **$77.5 million** in revenue and **$53.9 million** in NOI in Q2 2025 with an average occupancy of **88.6%**[20](index=20&type=chunk) [Investing, Capital Activities, and Strategic Initiatives](index=1&type=section&id=Investing%2C%20Capital%20Activities%2C%20and%20Strategic%20Initiatives) [Acquisitions and Development](index=5&type=section&id=Acquisitions%20and%20Development) The company maintained an active investment pace in Q2 2025 with significant acquisitions and new developments, and a robust pipeline for future growth - Q2 2025 Acquisitions: Acquired **16** self-storage facilities (**1.1 million** sq. ft.) for **$162.3 million**[19](index=19&type=chunk) - Post-Q2 Acquisitions: Acquired or under contract to acquire **47** facilities (**3.1 million** sq. ft.) for **$481.9 million**[19](index=19&type=chunk) - Development Pipeline: Projects are expected to add **3.8 million** net rentable square feet for an estimated total cost of **$648.2 million**, with **$390.9 million** remaining to be spent[21](index=21&type=chunk) [Strategic Transactions](index=6&type=section&id=Strategic%20Transactions) Public Storage, as part of a consortium, made a non-binding offer to acquire Abacus Storage King, potentially expanding its presence in Australia and New Zealand - A consortium including Public Storage made a non-binding offer to acquire Abacus Storage King (ASX:ASK)[23](index=23&type=chunk) - Public Storage's estimated share of the cost is approximately **$710 million** (A$1.08 billion), expected to be funded with Australian Dollar denominated debt[23](index=23&type=chunk) - The transaction is subject to due diligence, negotiation of a definitive agreement, and various approvals[23](index=23&type=chunk) [Corporate Governance](index=1&type=section&id=Corporate%20Governance) The Board of Trustees appointed Luke Petherbridge as a new independent trustee, bringing over 20 years of corporate finance and real estate experience - Luke Petherbridge was appointed as a new independent trustee to the Board of Trustees, effective immediately[6](index=6&type=chunk) - Mr. Petherbridge has over **20** years of experience and currently serves as the CEO of Link Logistics, joining the Nominating, Governance, and Sustainability Committee[6](index=6&type=chunk)[7](index=7&type=chunk) [Consolidated Financial Statements](index=8&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Income Statement](index=8&type=section&id=Consolidated%20Income%20Statement) Q2 2025 total revenues increased, but net income decreased significantly due to a substantial foreign currency loss, impacting common shareholders' allocation Q2 2025 Consolidated Income Statement Highlights (in thousands) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $1,201,094 | $1,173,211 | | Total Expenses | $701,095 | $687,109 | | Foreign currency exchange (loss) gain | ($146,070) | $12,449 | | Net Income | $361,411 | $521,209 | | Net income allocable to common shareholders | $308,968 | $468,366 | [Consolidated Balance Sheet](index=9&type=section&id=Consolidated%20Balance%20Sheet) Total assets increased driven by cash and real estate, while liabilities rose mainly due to notes payable, resulting in a slight decrease in total equity Selected Balance Sheet Data (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and equivalents | $1,104,603 | $447,416 | | Total real estate facilities, net | $18,430,821 | $18,360,653 | | **Total Assets** | **$20,541,453** | **$19,754,934** | | Notes payable | $10,440,279 | $9,353,034 | | **Total Liabilities** | **$11,065,104** | **$9,941,282** | | **Total Equity** | **$9,476,349** | **$9,813,652** | [Funds Available for Distribution (FAD)](index=10&type=section&id=Funds%20Available%20for%20Distribution%20(FAD)) Q2 2025 FAD increased to **$719.4 million**, leading to an improved payout ratio of **73.2%** despite stable common distributions per share FAD and Distribution Payout Ratio | Metric (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | FFO allocable to common shares | $604,494 | $756,142 | | FAD | $719,398 | $657,849 | | Distributions paid to common shareholders | $526,358 | $525,003 | | **Distribution payout ratio** | **73.2%** | **79.8%** | [Reconciliation of Self-Storage NOI to Net Income](index=11&type=section&id=Reconciliation%20of%20Self-Storage%20NOI%20to%20Net%20Income) Total self-storage NOI increased in Q2 2025, primarily driven by strong growth from Non-Same Store facilities, offsetting a slight decrease in Same Store contributions Self-Storage NOI by Facility Type (Q2, in thousands) | Facility Type | NOI Q2 2025 | NOI Q2 2024 | | :--- | :--- | :--- | | Same Store Facilities | $716,552 | $720,870 | | Acquired facilities | $37,600 | $32,173 | | Newly developed and expanded facilities | $30,607 | $26,298 | | Other non-same store facilities | $49,182 | $46,894 | | **Total Self-storage NOI** | **$833,941** | **$826,235** |

Core Insights - Public Storage (PSA) is expected to report quarterly earnings of $4.23 per share, unchanged from the same period last year, with revenues projected at $1.19 billion, reflecting a year-over-year increase of 1.8% [1] - The consensus EPS estimate has remained stable over the last 30 days, indicating analysts have not altered their initial projections significantly during this period [1][2] Revenue Estimates - Analysts forecast 'Revenues- Self-storage facilities' to be $1.11 billion, indicating a year-over-year increase of 1.1% [4] - The estimate for 'Revenues- Ancillary operations' is projected at $79.66 million, representing a year-over-year increase of 8.4% [4] Key Metrics - The consensus estimate for 'Square Foot Occupancy' is 92.7%, slightly down from 93.0% a year ago [4] - 'Rent per Occupied Square Foot' is expected to reach $22.23, down from $22.72 a year ago [5] - Analysts predict 'Depreciation and amortization' will total $285.08 million [5] Market Performance - Public Storage shares have decreased by 0.4% over the past month, contrasting with the Zacks S&P 500 composite's increase of 4.6% [6] - PSA holds a Zacks Rank 3 (Hold), suggesting it is expected to closely follow overall market performance in the near term [6]