Public Storage Earnings: Guidance Revised Downward on Challenging Industry Conditions

No-moat-rated Public Storage reported second-quarter results that reflected continued pressure on the self-storage sector after the sector performed exceptionally well in 2021 and 2022. The firm reported core funds from operations of $4.23 per share, 1.2% lower than the $4.28 per share FFO during the second quarter of 2023. The company revised its 2024 full-year core FFO guidance downward to $16.50-$16.85 per share, representing a 1.3% decline at the midpoint when compared with the full-year 2023 core FFO of $16.89. We have not been surprised by the current slowdown in the self-storage sector demand and have been predicting it for many quarters. We are maintaining our $310 per share fair value estimate for Public Storage after incorporating the second-quarter results.