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    PSA
    Earnings call· Mar 2025(Q1 FY25)

    Public Storage Q1 FY25 earnings call PSA

    May 1, 2025 Source

    Executive summary

    Public Storage Q1 FY25 — Strong FFO Growth and Portfolio Stabilization

    Public Storage delivered strong Q1 FY25 results, marked by accelerating Core FFO per share growth and significant portfolio stabilization driven by increased move-in volumes and effective revenue management. The company is leveraging its digital transformation and robust balance sheet to pursue growth through development and acquisitions, including an international expansion proposal. While move-in rates remain pressured and LA rent restrictions pose a headwind, management is encouraged by broad-based demand and the resilience of the self-storage business.

    Highlights

    5

    • Core FFO per share grew more than 2% YoY to $4.12, representing a 200 basis point sequential improvement.

    • Move-in volumes increased over 2% in Q1 and 3% in April, driving occupancy gains.

    • Same-store occupancy gap to prior year closed from down 80 bps (Dec 31) to down 30 bps (Mar 31) and further to down 10 bps (April end).

    • Non-same-store revenue growth accelerated to nearly 11%, contributing an additional $80 million of NOI through stabilization.

    • Acquisitions and properties under contract totaled $184 million, significantly ahead of $35 million at the same time last year.

    Concerns

    3

    • Move-in rates were down circa 5% year-to-date, with April seeing an 8% decline, reflecting competitive market behavior.

    • Fire-related pricing restrictions in Los Angeles are anticipated to have a 100 basis point impact on full-year same-store revenue growth, weighted to the back half.

    • Transaction volumes in the overall self-storage market were abnormally light in 2024 and remain light in 2025.

    Guidance & targets

    5
    CategoryTargetConfidence
    Full-year 2025 Core FFO per share
    Unchanged
    high materiality
    High
    Full-year 2025 Same-store revenue growth impact from LA restrictions
    100 basis point impact
    medium materiality
    High
    Full-year 2025 Same-store occupancy
    down 10 basis points on average
    medium materiality
    Medium
    Full-year 2025 Same-store expense growth
    3.25% at the midpoint
    medium materiality
    High
    Full-year 2025 Retained cash flow
    approximately $600 million
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Same-store pool
    Revenue growth turned positive and improved sequentially after more than 2 years of deceleration.
    Occupancy gap to last year: closed from down 80 bps (Dec 31) to down 30 bps (Mar 31)Occupancy gap to last year: closed to down 10 bps (April end)
    		positive—accelerated sequentially—
    Non-same-store pool
    Continues to be an engine of growth, contributing significant future NOI.
    Properties: 520Portfolio percentage: 21%Additional NOI through stabilization: $80 million (through 2026 and beyond)
    		—nearly 11%accelerated—

    Operational metrics

    15
    Core FFO per share growth
    2.2%YoY
    Q1 FY25

    Acceleration from prior quarter's growth level.

    Move-in volumes
    over 2%increased
    Q1 FY25

    Driven by increased website traffic and customer conversion.

    Move-in volumes
    3%up
    April 2025

    Good volume trends in April.

    Move-in rates
    down circa 5%down
    Year-to-date

    In line with the midpoint of the full-year outlook.

    Move-in rates
    down 8%down
    April 2025

    Fluctuating month-to-month, but overall strategy is to optimize for revenue.

    Move-in rates
    down 2%down
    March 2025

    Fluctuating month-to-month, but overall strategy is to optimize for revenue.

    Same-store expenses growth
    30 basis pointsgrowth
    Q1 FY25

    Well controlled, driven by operating model initiatives and moderated advertising spend.

    Property payroll labor hours
    approximately 12%down
    Q1 FY25

    Result of dynamic staffing model and AI utilization.

    Customer digital interactions
    85%
    Current

    Customers choosing digital options for interactions.

    Retained cash flow
    $600 millionincrease by 50%
    FY25

    Expected to be reinvested primarily into development and acquisitions.

    Move-out volumes
    1%down
    April 2025

    Contributed to occupancy improvement.

    Acquisition cap rates (going-in)
    5s to low 6s
    Current

    Consistent playing field for cap rates on trading properties.

    Business customers
    15%
    Current

    Approximate percentage of total customer base, with consumers making up 85%.

    Advertising spend
    10%down
    Q1 FY25

    Managed dynamically through the year.

    National development delivery growth
    plus or minus 2%declining from 5% in 2019
    FY25

    Multiyear deceleration of development completions continues, healthy for the industry.

    Industry KPIs

    2
    MetricValueDetails
    Move in rate growth churnover 2%%
    Self storage same store revenue noi growthpositive

    Orderbook & backlog

    2
    Development pipeline$650 millionQ1 FY25

    To be delivered over the next 2 years.

    Acquisitions and properties under contract$184 millionMay 1, 2025

    ahead of $35 million at this time last year

    Reflects increased acquisition activity.

    Deals & partnerships

    1
    Abacus Storage King and Ki CorporationProposal to acquire a leading owner-operator in Australia and New Zealand.

    Public Storage is uniquely positioned to execute on international growth, leveraging experience with Shurgard in Europe.

    Capital programs

    1
    Development programunderway$650 million
    Period spend: $144 million
    Funding: retained cash flow

    Benefit: grow and enhance the quality of our portfolio

    Robust pipeline, with $144 million delivered during Q1 FY25. Funded by increased retained cash flow.

    Risks & headwinds

    4
    Fire-related pricing restrictions in Los AngelesFY25, back-half weighted, continuing into early 2026

    100 basis point impact on full-year same-store revenue growth

    Mitigation: Company is complying with regulations; impact is factored into guidance.

    Light transaction volumes in the self-storage market2024-2025

    abnormally light in 2024 and 2025

    Mitigation: Public Storage has strong balance sheet and capital to execute on growth opportunities when they arise.

    Potential cost increases from tariffs and policy uncertaintyOngoing

    impact on land, labor, and component costs (e.g., steel)

    Mitigation: Monitoring closely; current environment creates a good window for development with fewer competitors.

    Muted peak leasing season due to housing marketSummer 2025

    not embedded in base outlook for 2025

    Mitigation: Broad-based demand factors still drive customers; self-storage is a sensible financial alternative.

    What to watch in Q2 FY25

    5

    Same-store occupancy gap

    next quarter
    Currentdown 10 basis points (end of April)
    Targetfurther narrowing or positive

    Why it matters

    Indicates continued stabilization and demand recovery, crucial for revenue growth.

    Occupancy finished April down 10 basis points. And to your point🎣, we are seeing demand overall for storage bouncing off that bottom and that's leading to some stabilization in many of the metrics I just spoke to.

    Q&A highlights

    6

    Given fundamentals bottoming but move-in rates staying down 5%, when will comps ease enough for a lift-off, and how conservative is the guide?

    Management highlighted Q1 performance was in line with expectations, April move-in volumes were up 3%, move-out volumes down 1%, and occupancy finished April down 10 bps. Move-in rates were down 8% in April, but year-to-date around 5%, in line with the outlook. Demand is showing signs of bouncing off the bottom, leading to stabilization.

    “we are seeing demand overall for storage bouncing off that bottom and that's leading to some stabilization in many of the metrics I just spoke to.”

    asked by Daniel Tricarico · answered by H. Boyle

    2 min read6 chapters

    Detailed Narrative

    01

    Portfolio Stabilization and Demand Trends

    The company observed stabilization across its portfolio in Q1 FY25, with move-in volumes increasing over 2% and the same-store occupancy gap to the prior year closing significantly from down 80 basis points at year-end to down 30 basis points by March 31, and further to down 10 basis points by April end. Management noted that demand is "bouncing off the bottom" and customer behavior in April was "very good" with move-out volumes down 1%.

    02

    Digital Transformation and Operating Model

    Public Storage is advancing its digital transformation, with 85% of customer interactions now digital. This, coupled with AI-driven staffing optimization, has led to a 12% reduction in labor hours in Q1 FY25, contributing to improved operating margins and a more efficient field team. The company sees a significant runway for further labor optimization and skill development.

    03

    Capital Allocation and Growth Avenues

    The company is actively growing its portfolio through acquisitions and development. It acquired or has under contract $184 million in properties, significantly more than the $35 million at the same time last year. A robust development pipeline of $650 million is expected to be delivered over the next two years, with $144 million delivered in Q1. Retained cash flow is projected to increase by 50% to $600 million, primarily fueling development and acquisitions.

    04

    International Expansion

    Public Storage announced a proposal to acquire Abacus Storage King in Australia and New Zealand, highlighting its capability for international growth, similar to its experience with Shurgard in Europe. This move aims to enhance customer experience, operating performance, and portfolio growth in new markets.

    05

    LA Rent Restrictions Impact

    Fire-related state of emergency declarations in Los Angeles are expected to impact same-store revenue growth by 100 basis points for the full year 2025. This impact is anticipated to ramp up through the year, becoming more pronounced in the back half, and will continue into early 2026.

    06

    Self-Storage Industry Dynamics

    Management emphasized the resilience of the self-storage industry, driven by needs-based demand that persists across economic conditions. Move-in rents have normalized to levels not seen since 2013, making storage affordable. The industry is also benefiting from a multi-year deceleration in new development completions, with national delivery growth projected at plus or minus 2% in 2025, down from 5% in 2019.

    AI-generated summary of the company’s earnings call. Not investment advice.