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Self-storage is a great business. Americans buy too much stuff and need somewhere to store it. Plus, moving things is a hassle so most people end up keeping their storage units for a long time. I know this from personal experience. When I moved back to the Bay Area a decade ago, I rented a couple of self-storage units. Despite meaning to clean them out for years, I only recently got around to it. In the end, I ended up spending tens of thousands of dollars to store things worth only a fraction of that.
The two leading self-storage stocks are Public Storage (PSA) and Extra Space Storage (EXR). PSA reported 4Q23 earnings last Tuesday afternoon and EXR reports this afternoon. PSA guided 2024 same store comps to -1% to +1% and Core Funds from Operations (FFO) of $16.60-$17.20. That’s about 17x the current stock price – similar to what EXR trades for.
We live in a consumer culture where many of us define ourselves or at least place a lot of emphasis on what we own – and that’s not going to change anytime soon. The self storage stocks are well suited to this culture of consumption and I expect them to continue to perform well for a long time.
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