Public Storage's Annual Report (Form 10-K) for the fiscal year ended December 31, 2024
Public Storage’s annual report for the fiscal year ended December 31, 2024, highlights a strong financial performance. The company reported total revenues of $2.4 billion, a 4.5% increase from the prior year, driven by growth in same-store revenues and the acquisition of new properties. Net income was $1.1 billion, a 5.6% increase from the prior year, with diluted earnings per share of $5.14. The company’s same-store revenues increased 3.4%, driven by a 2.4% increase in average occupancy and a 1.0% increase in average rental rates. Public Storage’s balance sheet remains strong, with a debt-to-equity ratio of 0.45 and a cash balance of $1.3 billion. The company also repurchased 2.5 million shares of its common stock during the year, returning value to shareholders. Overall, Public Storage’s financial performance demonstrates its ability to generate strong cash flows and deliver value to its shareholders.
Overview of Public Storage’s Financial Performance
Public Storage, one of the largest self-storage real estate investment trusts (REITs), has reported its financial results for the year 2024. The company’s net income allocable to common shareholders was $1.873 billion, or $10.64 per diluted share, a decrease of 3.9% compared to 2023.
The decrease in net income was primarily due to higher depreciation and amortization expense, interest expense, and general and administrative costs, partially offset by an increase in foreign currency exchange gains and self-storage net operating income.
Public Storage’s self-storage operations generated most of its net income, with revenues from its Same Store Facilities (facilities owned and operated since January 1, 2022) decreasing by 0.7% in 2024 compared to 2023. This was due to a decline in occupancy and lower rental rates for new tenants. However, the company’s Acquired Facilities and Newly Developed and Expanded Facilities saw a 48.1% increase in net operating income, contributing to the overall growth.
Revenue and Profit Trends
The company’s Same Store Facilities, which represent 77% of its self-storage portfolio, experienced a 0.7% decrease in revenues in 2024 compared to 2023. This was primarily due to a 0.6% decrease in average occupancy and a 0.1% decrease in realized annual rent per occupied square foot.
The decrease in realized annual rent per occupied square foot was due to a 11.6% decrease in average rates charged to new tenants, partially offset by cumulative rate increases to existing long-term tenants. Occupancy levels have gradually declined since the second half of 2022 as customer demand softened, leading the company to lower move-in rental rates and increase advertising spending to stimulate move-in activity.
In contrast, the company’s Acquired Facilities and Newly Developed and Expanded Facilities contributed significantly to the overall growth, with a 48.1% increase in net operating income in 2024 compared to 2023. This was primarily due to the impact of facilities acquired in 2023 and the continued stabilization of newly developed and expanded facilities.
Strengths and Weaknesses
One of Public Storage’s key strengths is its diversified portfolio of self-storage facilities, which includes a mix of older, single-story buildings and newer, multi-story climate-controlled facilities. This allows the company to cater to a wide range of customer preferences and adapt to changing market conditions.
The company’s strong financial profile, characterized by low leverage and high credit ratings, also enables it to effectively access both the public and private capital markets to fund its growth through acquisitions and development. This financial flexibility has been crucial in navigating the recent economic uncertainties.
However, the company has faced some challenges, including the impact of inflationary pressures on its cost of operations, such as labor, utilities, and repairs and maintenance. To mitigate these adverse impacts, the company has implemented various initiatives, such as enhancing operational processes, investing in technology, and achieving economies of scale from recent acquisitions.
Additionally, the recent wildfires in southern California have led to a temporary governmental pricing limitation on the company’s self-storage facilities in the affected areas, which generated approximately 10% of revenues from its Same Store Facilities in 2024. This is expected to have a potentially significant negative impact on the revenue growth from these facilities in 2025.
Outlook and Future Prospects
Looking ahead, Public Storage expects industry-wide demand from new customers in 2025 to be similar to 2024. However, the company anticipates a potentially significant negative impact on the revenue growth from its self-storage facilities located in Los Angeles County and Ventura County due to the temporary governmental pricing limitation following the recent wildfires. As a result, the company expects Same Store Facilities revenues in 2025 to be similar to those earned in 2024.
The company remains active in seeking to acquire additional self-storage facilities, with plans to continue growing through acquisitions and the development of new facilities and expansions of its existing self-storage portfolio. Subsequent to December 31, 2024, the company acquired or was under contract to acquire nine self-storage facilities across six states for a total purchase price of $140.7 million.
Public Storage’s development and expansion activities also remain a key focus, with a total of 132 self-storage facilities of 15.8 million net rentable square feet currently in its Newly Developed and Expanded Facilities portfolio. The company has incurred a total cost of $1.6 billion for development and expansions completed by December 31, 2024, and expects to continue adding projects to maintain and increase its robust pipeline.
Overall, Public Storage’s financial performance in 2024 reflects the company’s ability to navigate the challenges of the self-storage industry, with its diversified portfolio, strong financial position, and strategic focus on growth through acquisitions and development. While the company faces some near-term headwinds, its long-term prospects remain promising as it continues to capitalize on the demand for self-storage space and expand its footprint across the United States.
