Public Storage raises 2025 outlook with core FFO per share growth and $1.3B acquisitions amid industry stabilization

Earnings Call Insights: Public Storage (PSA) Q3 2025

MANAGEMENT VIEW

* CEO Joseph Russell indicated Public Storage's third quarter reflected "differentiated strategies that continue to drive our outperformance in addition to encouraging industry trends, including operational stabilization, lower competition from new supply and increasing acquisition activity." Russell announced, "We are raising our 2025 outlook for the second consecutive quarter based on outperformance in same-store and nonsame-store NOI growth, acquisition volume and core FFO growth per share."
* Russell highlighted the company's "leading omnichannel customer experience," noting that "customers now choosing digital path and 85% of their interactions and transactions with us." He further stated, "we are modernizing our field operations by utilizing AI to directly provide customer service and staff our properties more appropriately," resulting in over a 30% reduction in labor hours.
* CFO H. Boyle reported, "we have accelerated portfolio growth with more than $1.3 billion in wholly owned acquisitions and developments already announced this year." Boyle explained, "With leverage at 4.2x net debt and preferred to EBITDA and retained cash flow reaching about $650 million this year, we will continue using our advantageous cost of capital to fund portfolio expansion and drive core FFO per share growth."
* Boyle stated, "same-store NOI growth came in better than we anticipated," and highlighted that core FFO per share was "higher by 2.6%" for the quarter, describing this as "a 560 basis point acceleration from the growth level achieved in the third quarter of last year."

OUTLOOK

* Management raised full year guidance, with Boyle noting, "We adjusted our full year guidance to reflect the positive trends I just spoke to with increased outlooks for same-store revenue, same-store NOI and nonsame-store NOI. All in, we increased core FFO per share growth by nearly 1% with 1 quarter left in the year."
* Boyle reiterated, "Looking forward, we are very well positioned to continue driving performance with differentiated strategies that will further enhance our compounding returns platform."

FINANCIAL RESULTS

* Boyle highlighted, "Revenue growth in the same-store pool came in ahead of our expectations, primarily due to strong in-place customer behavior. Overall, in-place rents were up 0.6%, offset by lower occupancy."
* He cited "Chicago, Minneapolis, Tampa, Honolulu and the West Coast are standouts with revenue growth in the 2% to 4% same-store revenue range."
* Boyle pointed out, "Our expense control across the same-store pool continues to be strong as well, held flat for the quarter and driven by reductions across most line items."
* Non-same-store pool outperformance contributed to a 2.6% increase in core FFO per share for the quarter.

Q&A

* Eric Wolfe, Citigroup: Asked about the 2026 budgeting process and return to normal run rate growth. Boyle responded that forecasts use "data-driven processes and historical trends as well as predictive analytics," and Russell added that "it's a robust process across literally every function within the company...we have a lot of analytics relative to the things that we're doing from a deployment standpoint."
* Wolfe also asked about stabilization versus rebound. Boyle said, "we do see steady stabilization. And as we've moved through 2025, we've seen demand bouncing off the bottoms of '24."
* Michael Griffin, Evercore: Inquired about new customer behavior and move-in rents. Boyle emphasized, "the focus here is certainly around revenue is the most important metric."
* Griffin followed up on Q4 guidance. Boyle noted, "Property tax is a tough comp. We had a number of healthy refunds last year. We'll see whether the team can execute on similar amounts this year, but that's a pretty tough comp."
* Samir Khanal, BofA: Asked about L.A. pricing restrictions. Russell replied, "it's completely in the hands of the Governor...the decision time frame, he's looking to come back to announce whatever next set of decisions would be very early January."
* Caitlin Burrows, Goldman Sachs: Asked about supply expectations. Russell stated, "there are going to be fewer and fewer deliveries even going in the next couple of years."
* Ron Kamdem, Morgan Stanley: Queried demand signals and acquisition pace. Boyle said, "Nothing implied there as it relates to demand overall...non-same-store pool is set to continue to accelerate."

SENTIMENT ANALYSIS

* Analysts maintained a neutral to slightly positive tone, focusing on stabilization, acquisition pace, and technology-driven efficiency, with questions often seeking clarity on future growth and risk factors.
* Management delivered confident and data-driven responses in prepared remarks, often using phrases such as "we are very well positioned" and "we are confident," but acknowledged uncertainties regarding regulatory developments and comps.
* Compared to the previous quarter, analyst sentiment shifted from cautious optimism about stabilization to greater focus on growth levers and operational resilience, while management's tone strengthened in confidence, emphasizing the impact of digital transformation and strategic acquisitions.

QUARTER-OVER-QUARTER COMPARISON

* The current quarter saw a further upward revision in full year guidance, whereas the previous quarter's guidance increase was more modest.
* Management expanded discussion of AI and digital initiatives, reporting an 85% digital customer engagement rate compared to less explicit digital figures last quarter.
* Acquisition activity accelerated from $1.1 billion announced last quarter to $1.3 billion this quarter, with management emphasizing a broader pipeline.
* Analysts' focus shifted more toward margin expansion, technology impacts, and the outlook for regulatory changes, reflecting a deeper interest in operational drivers versus last quarter's attention on stabilization and macro headwinds.
* Management tone was more assertive on technology-driven cost controls and the scalability of acquisitions, marking a shift from last quarter's moderate optimism.

RISKS AND CONCERNS

* Continued regulatory uncertainty in Los Angeles, with Russell stating, "it's completely in the hands of the Governor...decision time frame...very early January."
* Boyle highlighted challenging property tax comps in Q4, stating, "that's a pretty tough comp."
* Management noted rising complexity and cost structures in development, but remains confident in the ability to underwrite and execute.
* Analysts raised concerns about new supply, move-in rent pressure, and demand sustainability, with management reiterating focus on revenue maximization and operational flexibility.

FINAL TAKEAWAY

Public Storage management highlighted a quarter of strong operational execution, digital transformation, and significant portfolio expansion, raising full-year guidance for the second consecutive quarter and emphasizing continued investment in technology, acquisitions, and development. Management projects continued outperformance, supported by robust cash flow, disciplined expense management, and confidence in capital allocation despite regulatory and macroeconomic complexities, particularly in key markets like Los Angeles and the West Coast.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/psa/earnings/transcripts]

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