Public Storage Q2 FFO Misses on Same-Store NOI Decline, Revenues Beat

Quarterly revenues rose 2.6% year over year to $1.23 billion and surpassed the consensus estimate of $1.21 billion.

PSA's Same-Store Portfolio Faces Pressure

Same-store revenues decreased 0.6% year over year to $1.01 billion. Realized annual rental income per occupied square foot declined 0.8% to $21.89, while rental income per available square foot fell 0.6% to $20.24.

Direct operating costs increased 4.3% to $227.7 million, and indirect operating costs rose 5.7% to $32.5 million. Same-store NOI fell to $746.4 million from $763.3 million. The NOI margin contracted 120 basis points to 74.2%.

Public Storage's Lease-Up Assets Fuel Growth

The non-same-store pool remained PSA's main operating growth engine. The portfolio included 441 acquisition, development and expansion properties totaling 39.3 million rentable square feet, representing 17% of its U.S. consolidated portfolio.

Revenues from these properties increased 25.6% during the quarter, while NOI advanced 21.5%. The gains helped counter pressure within the mature same-store portfolio and supported overall self-storage revenue growth.

PSA's Ancillary Operations Add Support

Ancillary revenues increased 12.7% year over year to $92.9 million from $82.4 million. Ancillary operating costs rose 9% to $36.3 million, allowing the business to generate a wider contribution to consolidated operating results.

Total self-storage facility revenues improved 1.9% to $1.14 billion. However, self-storage operating costs climbed 8.1% to $307.8 million, reflecting the combination of higher same-store expenses and the expansion of the non-same-store portfolio.

Public Storage Expands Its Investment Pipeline

During the quarter, Public Storage acquired 20 self-storage facilities with 1.5 million rentable square feet for $222.5 million. Including activity after quarter-end, the company had acquired or agreed to acquire 44 facilities totaling 3.2 million square feet for $454.9 million.

PSA also opened three newly developed facilities and one expansion project during the first six months of 2026. These projects added 0.4 million rentable square feet at a cost of $57.3 million. Its development and expansion pipeline is expected to deliver 4 million square feet at an aggregate cost of $691.7 million.

Public Storage Strengthens Its Balance Sheet

PSA ended June with $10.3 billion of total indebtedness and approximately $3.8 billion of liquidity. Net debt to EBITDA improved to 2.9X from 3.1X a year earlier, while the weighted average interest rate increased 30 basis points to 3.3%.

During the quarter, the company issued $500 million of 5% senior notes due in 2035. It also established a $3 billion revolving credit facility, a $500 million delayed-draw term loan and a $1 billion commercial paper program. Subsequent to quarter-end, PSA issued an additional $900 million of senior notes at an effective rate of 4.855%.

PSA Raises Its 2026 Core FFO Outlook

Public Storage raised its 2026 core FFO per share guidance to $16.75-$17.05 from $16.35-$17.00. The revised outlook includes 2 cents per share of expected accretion from financing the National Storage Affiliates Trust and Public Storage Canada transactions.

The company also improved its same-store assumptions. It now expects revenue growth between negative 0.7% and positive 0.3% compared with the prior range of negative 2.2% to flat. Same-store NOI is projected to decline 0.3%-2%, narrower than the earlier expected decrease of 0.5%-3.9%.

PSA’s Zacks Rank

Public Storage currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

Digital Realty Trust DLR reported second-quarter 2026 core FFO per share, excluding net promote, of $2.13, up 13.9% from a year ago. The figure surpassed the Zacks Consensus Estimate by 7.6%. Strong bookings, a record backlog and sharp renewal rent increases supported the quarter.

Prologis PLD reported second-quarter 2026 core FFO per share of $1.63, outpacing the Zacks Consensus Estimate of $1.53. Results reflected strengthening demand, disciplined execution and expanding capabilities across logistics, data centers and energy.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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