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 increased 6.5% to $1.1 billion, with diluted earnings per share of $5.14. The company’s cash flow from operations was $1.3 billion, and it ended the year with a cash balance of $1.1 billion. Public Storage also repurchased 2.5 million shares of its common stock for $125 million during the year. The company’s debt-to-equity ratio remained stable at 0.55, and its interest coverage ratio improved to 4.3 times. Overall, the report highlights Public Storage’s continued growth and financial strength, with a focus on expanding its portfolio and generating value for 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. The company’s earnings growth was impacted by the performance of its Same Store Facilities, as well as its Acquired Facilities and Newly Developed and Expanded Facilities.
Same Store Facilities Performance
Public Storage’s Same Store Facilities, which include 2,507 facilities the company has owned and operated since January 1, 2022, saw a 0.7% decrease in revenues in 2024 compared to 2023. This was 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 lower move-in rental rates, 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.
Cost of operations for the Same Store Facilities increased by 2.4% in 2024, primarily due to higher property tax expense, marketing expense, and repairs and maintenance expense, partially offset by decreased centralized management costs and on-site property manager payroll expense.
Acquired Facilities and Newly Developed and Expanded Facilities
Public Storage has been actively acquiring and developing new self-storage facilities to drive growth. Since the beginning of 2022, the company acquired a total of 260 facilities with 18.5 million net rentable square feet for $3.7 billion. These Acquired Facilities contributed net operating income of $159.7 million in 2024.
The company also has 132 Newly Developed and Expanded Facilities, which include 46 facilities developed on new sites since January 1, 2019, and 86 facilities expanded to increase their net rentable square footage. These Newly Developed and Expanded Facilities contributed net operating income of $151.4 million in 2024.
Ancillary Operations
In addition to its self-storage operations, Public Storage generates revenue from ancillary operations, including tenant reinsurance, merchandise sales, and third-party property management. These ancillary operations contributed $178.3 million in net operating income in 2024, an increase of 3.6% compared to 2023.
The increase was primarily due to higher tenant reinsurance premium revenue, partially offset by higher reinsurance claims expenses and increased costs related to the company’s growing third-party property management business.
Outlook and Future Initiatives
Public Storage expects to continue growing through acquisitions and development of new facilities, as well as expansions of its existing facilities. The company has a robust pipeline of development and expansion projects, with a total cost of approximately $741.6 million as of December 31, 2024.
However, the company’s earnings growth may be impacted by recent inflationary pressures on its cost of operations, including labor, utilities, and repairs and maintenance. To manage these adverse impacts, Public Storage has implemented various initiatives, such as enhancing operational processes, investing in technology to reduce payroll hours, and investing in solar power and LED lights to lower utility usage.
Additionally, the company’s revenue growth may be negatively impacted in 2025 due to the recent wildfires in southern California, where a temporary governmental pricing limitation is in place. These self-storage facilities generated approximately 10% of revenues earned by Public Storage’s Same Store Facilities in 2024.
Liquidity and Capital Resources
Public Storage maintains a strong financial profile, with high credit ratings that enable it to effectively access both the public and private capital markets to raise capital. The company’s current and expected capital resources include $447.4 million of cash as of December 31, 2024, approximately $600 million of expected retained operating cash flow over the next twelve months, and $1,480.4 million available borrowing capacity on its revolving line of credit.
The company’s current committed cash requirements include $140.7 million in property acquisitions, $433.5 million of remaining spending on its current development pipeline, and approximately $651 million in scheduled principal repayments on its unsecured notes in the next twelve months. Public Storage plans to refinance these unsecured notes as they come due in 2025.
Over the long term, the company believes it has a variety of possibilities to raise additional capital, including issuing common or preferred securities, debt, and limited partnership interests, or entering into joint venture arrangements to acquire or develop facilities.
Conclusion
Public Storage’s financial performance in 2024 was impacted by a mix of factors, including softness in demand for its storage space, inflationary pressures on its cost of operations, and the potential negative impact of the recent wildfires in southern California. However, the company remains focused on growing its business through acquisitions, development, and expansions, while maintaining a strong financial profile and access to capital.
The company’s ability to adapt to changing market conditions and effectively manage its costs will be crucial in determining its future performance and growth prospects. Investors and analysts will likely continue to closely monitor Public Storage’s operational and financial metrics, as well as its progress on key strategic initiatives, to assess the company’s long-term outlook.
