Public Storage : 2024 Annual Report Annual Report 2023

Published: 2025-03-28 16:49:50 ET PSA

PUBLIC STORAGE

2024

ANNUAL

REPORT

107

446

464

PROPERTIES (as of December 31,

2024

)

NH NY2 73

MA 29

RI 4

CT 15

NJ 67

IN OH

137 54 66

DE 5

MD 106

121

NC TN

111

SWED

128

DENMARK

365

UNITED KINGDOM

NETHERLANDS

BELGIUM

FRANCE

GERMANY

)

Number of Properties Net Rentable Square Feet

Public Storage

Alabama Arizona California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maryland Massachusetts Michigan Minnesota Mississippi Missouri Nebraska Nevada

New Hampshire New Jersey New York North Carolina

1,528,000 Ohio

4,383,000 Oklahoma

446

32,025,000 Oregon

6,518,000 Pennsylvania

1,024,000 Rhode Island

324,000

365

25,475,000 Tennessee

128

8,621,000 Texas

890,000 Utah

669,000 Virginia

137

8,930,000 Washington

3,585,000 Wisconsin

59,000

24 1,538,000

17 1,009,000

14 1,011,000

Public Storage (cont.)

South Carolina

Number of Properties

66 4,511,000

48 3,499,000

45 2,618,000

37 2,685,000

83 5,176,000

55 3,443,000

464 39,412,000

121 7,969,000

107 7,629,000

3,073 221,280,000

106 7,990,000 Shurgard Self Storage Limited

29 2,052,000 Belgium

61 4,387,000 Denmark

68 5,425,000 France

449,000

2,919,000

882,000

2,419,000

132,000

67 4,651,000

73 5,232,000

111 8,195,000

Germany Netherlands Sweden

Net RentableSquare Feet

248,000

800,000

968,000

21 1,266,000

580,000

66 3,536,000

42 2,310,000

68 3,917,000

39 2,119,000

United Kingdom

3,771,000

318 17,499,000

Total

3,391 238,779,000

CHAIRMAN'S LETTER

Fellow Stakeholders,

Our businesses performed well in 2024, achieving operational stabilization in the United States and healthy growth in Europe. Both individually and collectively, Public Storage and Shurgard (Euronext Brussels: SHUR) achieved record revenues and net operating income in their core self-storage and ancillary businesses (primarily tenant reinsurance).

Below are the key figures for these businesses. Public Storage owns approximately 35% of Shurgard, the largest owner and operator of self-storage properties in Europe. While our interest is significant, Shurgard is a separate company with its own management and Board of Directors. The figures below are presented on a combined basis to help you better understand our performance.

Combined Revenues1

(Amounts in millions)

Total ........................................... $ 3,715

PublicStorage'sshare ............................... $ 3,535

1. See accompanying schedule "Supplemental Non-GAAP Disclosures."

2024

U.S.self-storage ................................... $ 4,396

Total ........................................... $ 5,130

Combined Net Operating Income (NOI)1

(Amounts in millions)

2023

2022

$ 4,260

$ 3,946

342

316

298

275

$ 4,900

$ 4,537

2024

2023

2022

U.S.self-storage ................................... $ 3,259

$ 3,198

$ 2,966

212

195

207

196

$ 3,617

$ 3,357

$ 3,456

$ 3,209

European self-storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390

Ancillarybusinesses ................................ 344

European self-storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239

Ancillarybusinesses ................................ 217

The combined revenues of Public Storage and Shurgard increased by $230 million, to a record $5.1 billion, and the combined NOI increased to a record $3.7 billion in 2024. Our share of the combined NOI was $3.5 billion.

Both companies are the industry leaders in their respective geographies, and they share the key characteristics of operational innovation and excellence, multi-factor external growth, and prudent balance sheet management. As detailed by Public Storage CEO Joe Russell and Shurgard CEO Marc Oursin in their shareholder letters, the teams are successfully executing against strategic initiatives to drive growth and value creation. I want to thank Public Storage's Board of Trustees and Shurgard's Board of Directors for their support and leadership in guiding such talented teams.

With industry-leading brands and strategic initiatives, increasingly efficient operating platforms, high-quality properties located in growing markets, multi-faceted growth levers, and balance sheets underpinned by low leverage, we are in a position of strength in 2025 and poised to deliver solid returns to shareholders for years to come.

Ronald L. Havner, Jr.

Chairman of the Board of Trustees February 28, 2025

CHIEF EXECUTIVE OFFICER'S LETTER

Fellow Stakeholders,

Before I discuss our 2024 accomplishments, I want to speak to the recent fires that have impacted our "home" market of Los Angeles. Public Storage was founded in Southern California in 1972, and our longstanding and deep connections to the area made the devastation from these tragic events even more poignant. We have been inspired by the strength and perseverance of LA's residents, businesses, and associates, and I am extremely proud of our team for providing support to our customers in their time of need. LA has been one of the best-performing self-storage markets consistently throughout our history. As in the past, it will recover from this tragedy and ultimately be stronger from it.

Public Storage is built to operate, innovate, and evolve in any environment. We performed well in 2024 by achieving operational stabilization, advancing our distinctive transformation plan, and driving total shareholder return outperformance relative to our self-storage REIT peers. We created growth and value for our stakeholders while further strengthening our industry-leading brand and platform.

In reviewing our 2024 performance and outlook into 2025, we are mindful of the challenges that our industry still faces, including a competitive environment for new customers. We are appropriately calibrated, and the rallying of our community, operational stabilization of our business, advancement of our unique platform, growth-oriented balance sheet, and broadly positive momentum make me even more optimistic for Public Storage's future.

2024 Performance Summary

Reflecting on 2024, we reached several milestones, including:

• Expanding our portfolio to 3,380 properties, 245 million square feet, and over two million customers;

• Delivering $4.7 billion and $3.4 billion in consolidated revenue and net operating income (NOI), respectively;

• Leading self-storage REITs on same store revenue and NOI per square foot;

• Achieving peer-leading profitability with a 79% same store direct operating margin;

• Completing the Property of Tomorrow program, a more than five year and $600 million investment to re-brand and modernize properties throughout our portfolio;

• Driving outsized growth through our non-same store portfolio, comprising 566 properties and 51 million square feet, which is now 23% of our total owned portfolio;

• Maintaining a more than $741 million property development and redevelopment pipeline; and

• Outperforming our self-storage REIT peers on total shareholder returns by 570 basis points, on average, during the year.

I am proud of the team for their commendable focus and determination. Our initiatives have positioned us well for improving fundamentals, additional performance-enhancing innovation, and a more active transaction environment in the coming years.

2024 Business Results

We have two principal businesses: (i) self-storage, conducted under the Public Storage® brand, and (ii) ancillary businesses, primarily the reinsurance of policies offered to our self-storage customers under the Orange Door Storage Insurance Program® brand. Below are the revenues and NOI for each business.

Revenues

(Amounts in millions)

2024

2023

2022

Self-storage ...................................... $ 4,396

$ 4,260

$ 3,946

Ancillarybusinesses ................................ 300

258

236

Total ........................................... $ 4,696

$ 4,518

$ 4,182

2024

2023

2022

Self-storage ...................................... $ 3,259

$ 3,198

$ 2,966

Ancillarybusinesses ................................ 178

172

163

Total ........................................... $ 3,437

$ 3,370

$ 3,129

Net Operating Income1

(Amounts in millions)

In 2024, the NOI of these businesses increased by $67 million, or 2%, to a record $3.4 billion. Our core funds from operations and free cash flow per diluted common share were as follows:

2024

2023

2022

Earningspershare ................................. $ 10.64

$ 11.06

$ 23.50

CoreFFOpershare1 ............................... $ 16.67

$ 16.89

$ 15.92

Freecashflowpershare1 ............................ $ 14.74

$ 14.80

$ 13.85

1. See accompanying schedule "Supplemental Non-GAAP Disclosures."

How We Measure Our Results

We consider our operating results by analyzing our portfolio across two categories: (i) stabilized properties in the same store pool and (ii) unstabilized properties in the non-same store pool. The same store pool allows us and investors to assess the health of our self-storage business by only including properties with stabilized revenues (i.e., rent and occupancy) and operating expenses that reflect organic growth on an "apples-to-apples" basis.

Same store NOI declined by 1.7% in 2024, slowing from 4.7% growth in 2023 and record 17.9% and 15.4% growth in 2022 and 2021, respectively.

Same Store Properties

(Dollar amounts in millions, except occupancy and REVPAF)

2024

2023

2022

Revenues .................................

$ 3,677

$ 3,703

$ 3,533

Costs of operations . . . . . . . . . . . . . . . . . . . . . . . . . .

896

874

836

Netoperatingincome1 .......................

$ 2,781

$ 2,829

$ 2,697

Netrentablesquarefeet ......................

170.0

Average occupancy . . . . . . . . . . . . . . . . . . . . . . . . . .

92.4%

93.0%

94.6%

Year-endoccupancy .........................

90.5%

91.3%

92.0%

REVPAF .................................

$ 20.89

$ 21.05

$ 20.12

1. See accompanying schedule "Supplemental Non-GAAP Disclosures."

We exclude our 566 unstabilized non-same store properties from the same store pool because their year-over-year performance is not comparable to stabilized assets. Given self-storage's stabilization period (typically 3-5 years for occupancy and rents), this group primarily comprises properties developed or redeveloped since 2019 and acquired since 2022. It consists of 51 million square feet, or 23% of our total portfolio, as we enter 2025. The cost to acquire and build these properties totaled approximately $8.7 billion. At stabilization, we estimate their market value will approximate $11.5 billion, resulting in nearly $3 billion of value creation.

Our non-same store NOI increased meaningfully during 2024 due to strong lease-up and the addition of new acquisition and development properties, providing an engine of growth to offset the industry's broader deceleration. We have significant upside tied to this pool of high-growth assets over the coming years.

Non-Same Store Properties

(Amounts in millions, except occupancy and REVPAF)

2024

2023

2022

Revenues ................................. Costs of operations . . . . . . . . . . . . . . . . . . . . . . . . . .

719 241

557

$ 413

188 144

Netoperatingincome1 .......................

$ 478

$ 369

$ 269

Netrentablesquarefeet ...................... Average occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . REVPAF .................................

51.3 83.1%

48.1 82.7%

34.2 82.4%

$ 14.02

$ 13.51

$ 12.78

1. See accompanying schedule "Supplemental Non-GAAP Disclosures."

2024 Business Strategy Impact

The competitive advantages unique to Public Storage, including our leading operating platform, multi-factor external growth strategy, and strong balance sheet, comprise a wide moat relative to our competition. We entered 2024 with a teamwide focus on:

• Driving revenues and controlling expenses;

• Transforming our operating model to further enhance the customer experience, advance the employee experience, and bolster our financial performance;

• Partnering with industry peers through third-party management and our new lending program;

• Investing in our people, culture, and communities;

• Enhancing the size and quality of our property portfolio; and

• Utilizing our growth-oriented balance sheet.

Operationally, 2024 was a year of stabilization for Public Storage. Following two consecutive years of record growth in 2021 and 2022, a mix of customer demand normalization and competitive move-in pricing behavior among property owners drove significant growth deceleration in 2023. These trends continued into 2024, but the deceleration slowed, and fundamentals improved sequentially throughout the year.

Move-in rents, the primary source of pressure, closed from being down 16% year-over-year during the first quarter to being down 5% during the fourth quarter. The improvement was primarily driven by stabilizing move-in demand. Performance was bolstered by in-place customers, who continue to behave well with strong payment patterns, healthy lengths of stay, and consistent move-out volumes.

These dynamics were particularly evident in our sequential same store revenue growth, which improved for the first time in more than two years during the fourth quarter. While better operational trends are broad-based across markets, we expect a more gradual re-acceleration than in the past due to the competitive new customer environment, a year of pricing restrictions in Los Angeles, and muted housing activity.

Quarterly Same Store Revenue Growth

20%

15%

10%

-5%

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Within the stabilizing yet still competitive environment of 2024, the Public Storage team once again achieved the highest same store revenue and NOI per square foot among the self-storage REIT peer group. We did so at a superior level of profitability as well, with a 79% operating margin that was 440 to 730 basis points higher than the respective margins of our peers.

Transforming Our Operating Model

Developing and implementing the industry's first comprehensive and centralized digital ecosystem continues to strengthen our competitive advantages and enhance our operating performance. Natalia Johnson, our Chief Administrative Officer who oversees technology, data science, human capital, and customer care, leads the effort with Mike Braine, our Chief Technology Officer. Natalia and Mike closely partner with Chris Sambar, our Chief Operating Officer, and Steven Lentin in operations, Richard Craig in revenue management, Philip Kim in advanced data science, Dilhara Kaluarachchi in customer care, Jeff Cox in security, and additional leaders from across the company.

The digital ecosystem connects all aspects of our business. Customers utilize the omni-channel digital tools to rent units, manage their accounts, and receive live customer care. Our centralized security team monitors for safety through digital cameras and property access systems. Cleaning, repairs, and maintenance are led by multi-property local teams. The result is an even better customer experience as we've aligned it with the digital expectations customers now have across their lives. Adoption has been swift, with self-selected digital options now comprising 85% of our customer interactions, a significant increase from 30% in 2019.

The ecosystem is a critical element of our broader operating model transformation. Real-time data, which provide insight into how and when customers use our properties, and cross-platform cohesion are enabling a shift to optimized staffing based on the timing of customer needs. Our expert team of over 5,000 property personnel now have more tools to support customers when and where they need us on a 24/7 basis instead of being constrained to a traditional property office for nine business hours each day.

We are tracking ahead of schedule on our transformation plan, with more optimization and margin expansion to come from additional initiatives, including our growing solar power program, over the next few years.

Select Progress & Goals

= Current progress

= Goals

Digital Customer Rentals

(% of move-ins)

75%

Customers increasingly executing rentals online instead of in-person

Payroll Cost Savings (Field hours versus 2019)

29%25%

Savings enabled by digitalization and staffing optimization

NOI Margin Expansion

(Versus 2020)

270 bps200 bps

Transformation is additive to broader margin expansion

Supporting and Investing in Our People, Culture, and Communities

Nathan Tan leads our human capital management and development. Our brand and platform strength are driven by our people, who embody a culture of pride, integrity, innovation, development, engagement, and community.

Highlights of our people-centric approach in 2024 included:

• Receiving the Great Place to Work® certification, an award based entirely on employees' experiences working at Public Storage, for a third consecutive year;

• Reducing team member turnover and increasing engagement, in part driven by expanding roles for our 5,000 property managers, including new specialized positions focused on team training and customer delinquency, and creating a new career path leading to district management; and

• Completing year three of "Community Connects," our corporate volunteering and giving program.

The quality and dedication of our people drive our success. I am honored to lead such a strong team and am committed to ongoing advancement to ensure our people are positioned to excel professionally and personally within our communities.

Enhancing the Size and Quality of Our Property Portfolio

Tom Boyle, our Chief Financial and Investment Officer, leads our capital allocation strategies. We have a multi-dimensional approach to portfolio growth centered on acquisitions, development, redevelopment, and third-party property management.

We expanded our portfolio by adding 29 properties comprising 3 million square feet through acquisition, development, and redevelopment in 2024. The 566 non-same store properties, which we refer to as a "company within a company" due to its size and growth potential, now comprise 23% of our total portfolio square footage, but only 15% of our NOI (due to 83% average occupancy and rents that are below market), providing meaningful embedded growth through lease-up over the next few years.

Disclaimer

Public Storage published this content on March 28, 2025, and is solely responsible for the information contained herein. Distributed via , unedited and unaltered, on March 28, 2025 at 20:47 UTC.