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# Public Storage (PSA) — Narrative, Q3 2026 ## Business *From the FY2025 Form 10-K (accession 0001628280-26-007696), updated to September 30, 2026 from the Q3 2026 Form 10-Q (accession 0001628280-26-067286).* Public Storage rents self-storage space, generally month to month, to households and businesses. It is the largest owner of self-storage facilities in the United States, operating under the Public Storage® brand and its recognizable orange color. Rent from its owned facilities is nearly all of its revenue: in 2025, self-storage facilities produced $4.49 billion of the company's $4.82 billion in total revenue. The remaining $334.7 million came from ancillary operations: reinsuring the goods tenants store, selling locks and boxes, and fees for managing facilities owned by others. The company is a Maryland REIT, headquartered in Frisco, Texas. It is structured as an UPREIT, so substantially all operations are held through Public Storage OP, L.P. (PSA OP) and its subsidiary Public Storage Operating Company (PSOC). **Scale.** At December 31, 2025 the company held interests in and consolidated 3,171 facilities with 229 million net rentable square feet in 40 states. Its largest states were Texas (477 facilities), California (450) and Florida (392). The 2026 acquisitions changed that footprint (see Current quarter). At September 30, 2026 the company: - owned interests in 4,347 facilities with about 308.3 million net rentable square feet across 42 states, Puerto Rico and Canada: 3,772 wholly owned and 575 held in unconsolidated joint ventures; - owned 0.9 million square feet of commercial and retail space; - managed another 417 facilities (30.8 million square feet) for third parties. **Market position.** The industry is highly fragmented. The company estimates that it owns about 9% of U.S. self-storage square footage, that the four largest owners together hold about 22%, and that regional and local operators own the remaining 78%. Management attributes its advantage to brand awareness, scale economies that support higher cash flow per square foot than smaller operators, and a centralized pricing and digital platform. Nearly three quarters of new rentals in 2025 were completed through the eRental® and Rent by Phone processes. **How it makes money:** - **Self-storage operations.** These generate most of the company's net income. Growth comes from raising rents on existing tenants (usually every six to twelve months for tenants who have stayed at least five months), pricing and promotions for new move-ins, and adding facilities through acquisitions, development and expansion. - **Tenant reinsurance.** Tenants may buy coverage for their stored goods from a non-affiliated insurer, which a wholly owned subsidiary fully reinsures. Coverage is capped at $5,000 per storage unit, and the company buys third-party cover of $15.0 million for losses above $10.0 million per occurrence. At September 30, 2026 about 1.9 million certificates were in force, with aggregate coverage of about $8.7 billion. - **Third-party management.** The company manages facilities for other owners for a fee. Management sees the program as a source of future acquisitions and of additional reinsurance volume. - **Bridge lending.** Since 2024 the company has made three- or four-year variable-rate bridge loans to owners of facilities it manages. At September 30, 2026 notes receivable totaled $445.3 million at an average rate of 9.0%. That figure includes a $237 million mezzanine loan at 10.22% to the PS-NSA joint venture formed in the NSA acquisition. - **Shurgard.** The company owns about 35% of Shurgard Self Storage Limited (Euronext Brussels: SHUR), which owned 338 facilities (about 19 million square feet) in seven Western European countries at September 30, 2026. It accounts for the stake under the equity method. **Strategy.** The FY2025 10-K sets out three growth levers: improving operations at existing facilities, external growth through acquisitions, development and expansion, and growing the ancillary businesses. In 2026 management presented this under the names "PS4.0" (its strategic vision) and "PS Next" (its operating platform). Management described the NSA acquisition as the first value-creation milestone under PS4.0. **Seasonality.** Seasonality is minor: demand and rental rates are generally higher in summer, when more people move. The company had about 5,770 employees at the time of the 10-K. ## Risk factors *From the FY2025 Form 10-K (accession 0001628280-26-007696), Item 1A, and the Q3 2026 Form 10-Q (accession 0001628280-26-067286), Part II Item 1A.* The Q3 2026 10-Q carries forward the risk factors in the annual report and those added in the 10-Qs for the quarters ended March 31, 2026 and June 30, 2026. It adds one more, the integration of NSA and PS Canada. The other risks below are condensed from the annual report. **Integration of NSA and PS Canada (new in the Q3 2026 10-Q).** The company may fail to integrate National Storage Affiliates and PS Canada, or may realize the expected synergies late or not at all. The specific hazards named are: - failing to combine systems, programs and controls; - losing customers, joint-venture partners and key employees; - the complexity of managing the related joint ventures; - unknown liabilities; - management distraction. In its Q3 2026 results release, management said it expects $110 million to $130 million of run-rate synergies from the NSA deal within three to four years. **Demand, pricing and competition** - **New supply and competition.** Competition affects occupancy, rents and advertising costs. More outside capital could fund more development and intensify local competition. The company's own new developments and the facilities it manages for others are often priced aggressively during fill-up, which can hurt rents at its nearby stabilized facilities. - **Changing demand.** Much cheaper logistics could bring in valet-style storage competitors. Population shifts could leave the portfolio poorly placed. Security incidents could make customers see facilities as unsafe. - **Dependence on Google.** More than half of new customers in 2025 came directly or indirectly through Google search, unpaid or paid. Google's tools let smaller operators bid on self-storage search terms, which could cut new-customer volume or raise acquisition costs. - **Economic conditions and interest rates.** Weaker employment, income or population growth reduces demand. Elevated interest rates raise the cost of new debt and preferred equity, make the common dividend yield less attractive, raise the hurdle yields for acquisitions and development, and can hurt tenants. **Costs and regulation** - **Operating costs and property tax.** Inflation, labor shortages, minimum-wage increases, energy prices and reassessments can all push costs up. California is the main property-tax exposure: Proposition 13 limits assessed-value increases to 2% a year, and any measure that weakened it could raise property tax substantially. - **Government restrictions on operations.** After wildfires in 2018, 2019 and early 2025 and floods in 2023, California and some localities temporarily capped the rents the company could charge and the increases it could pass to existing tenants. California and other jurisdictions also regulate pricing methods, fees, lien sales of delinquent tenants' goods and promotional pricing. COVID-era rules limited facility use, rent increases, collections and evictions. - **Natural disasters and other catastrophes.** Earthquakes, fires, hurricanes, floods, extreme temperatures, terrorism and civil unrest can damage facilities or tenants' goods. Losses may exceed insurance limits, the company self-insures part of its exposure, and the reinsurance business adds exposure to tenant claims. - **Environmental contamination and moisture infiltration.** Either could create cleanup or mold-related liabilities. - **Tariffs.** Tariffs and retaliatory tariffs could raise the cost of steel, lumber and other development materials and disrupt supply chains. The Q3 10-Q's cautionary statement now also names tariffs imposed by Canada. - **Reinsurance licensing.** The reinsurance business depends on state insurance licenses that regulators can suspend or revoke. **Growth execution** - **Acquisitions.** The company faces competition for deals, may overpay, may miss problems in due diligence (environmental issues, deferred maintenance, collections, assumed liabilities, loss of key people) and faces property-tax reassessment after a purchase. - **Development.** Projects face delays, cost overruns, permitting problems and space that is generally not pre-leased, which can slow lease-up. - **Bridge lending.** Borrower distress could cause loan losses. **Technology and people** - **Technology dependence and cybersecurity.** More than half of new customers arrive by phone or online. Outages, ransomware or a breach of customer and employee personal data could disrupt operations and bring legal liability, regulatory penalties and reputational damage. Insurance may not cover the losses. The company says it has had no known material cybersecurity incident in the prior three fiscal years. - **Artificial intelligence.** Using AI, or failing to adopt it, carries operational, legal, privacy and reputational risk. - **Leadership succession.** The Chairman, the CEO and the CFO all changed in early 2026, and the transitions may not go smoothly. - **Unionization.** Unionization efforts could cause labor disruptions and raise costs. **Shurgard and foreign currency** - **Shurgard.** The European stake brings currency risk, local legal and tax risk, collective bargaining, possible obstacles to repatriating cash, and limited liquidity if the company ever sold, given Shurgard's public float and contractual limits with a legacy partner. - **Foreign-currency debt.** At December 31, 2025 the company had €1.8 billion of euro-denominated notes ($2.1 billion). Changes in their dollar value pass through net income: they drove a $215.6 million foreign-exchange loss in 2025. The company describes the notes as a natural hedge against the value of its Shurgard investment. In 2026 it added Canadian-dollar debt and cross-currency swaps tied to PS Canada. **Structure, REIT status and securities** - **REIT qualification.** Failing to qualify as a REIT would make the company pay federal corporate tax. Its status also depended on PS Business Parks having qualified through 2022. - **PSA OP partnership status.** If PSA OP lost its partnership tax status, it would be taxed as a corporation and Public Storage would fail to qualify as a REIT. - **Holding-company structure.** Public Storage relies on distributions from PSA OP and PSOC, and shareholder claims rank behind those entities' liabilities. - **Preferred shares.** Holders of preferred shares rank ahead of common shareholders on dividends and liquidation, at $25.00 per depositary share. - **Takeover deterrents.** Ownership limits of 3% of common shares and 9.9% of any preferred class (the Hughes family excepted), together with Maryland law and the company's declaration of trust, could deter a change of control. - **Other tax and legal exposures.** REIT dividends do not qualify for the lower tax rate on qualified dividends. Self-storage rent taxes could spread. A cash-settled forward sale under the at-the-market (ATM) share program has uncertain tax treatment. The company faces litigation and regulatory enforcement, including class actions. ## Management's discussion: fiscal 2025 *From the FY2025 Form 10-K (accession 0001628280-26-007696), Item 7.* **Results.** In 2025, net income allocable to common shareholders fell $287.1 million to $1.6 billion, or $9.01 per diluted share, from $10.64. The main reason was currency: a $215.6 million foreign-exchange loss on the euro notes, after a $102.2 million gain in 2024, was a $317.8 million swing. Higher depreciation (+$22.1 million) and interest expense (+$17.1 million) also weighed. Partly offsetting them, self-storage net operating income (NOI) rose $53.1 million and ancillary NOI rose $23.4 million. FFO fell 8.0% to $15.81 per diluted share. Core FFO, which removes currency effects and other non-core items, rose 1.8% to $16.97 from $16.67. **Same Store operations.** The Same Store pool had 2,565 facilities and 175.3 million square feet, about 76% of the U.S. consolidated portfolio. - **Revenue was essentially flat.** Realized rent per occupied square foot rose 0.5%, while average occupancy fell 0.4 percentage points to 92.0%. Management attributed the decline to softer demand, which it met by cutting move-in rents. - **Existing customers held up well.** Move-outs and delinquencies were lower, which supported rent increases to long-term tenants. More than half of tenants had rented for over a year. - **Costs rose 1.8% ($16.6 million),** so Same Store NOI fell $15.3 million. Property tax rose 5.3% on higher assessments and indirect costs rose 6.0%. On-site payroll fell 5.0% on dynamic staffing, and marketing fell 4.4%. **Growth portfolio.** Facilities outside the Same Store pool added $68.4 million of NOI. - **Acquisitions.** Since the start of 2023 the company had bought 273 facilities (19.9 million square feet) for $3.9 billion. That total includes the 2023 purchase of BREIT Simply Storage, with 127 facilities, for $2.2 billion. In 2025 alone it bought 87 facilities in 21 states (6.1 million square feet) for $945.6 million. - **Development.** The 111 newly developed and expanded facilities contributed $124.6 million of NOI. Management underwrites new developments to stabilize at about an 8% yield on cost. At year-end, 29 facilities (2.6 million square feet, about $479.5 million) were in development, and the total development and expansion pipeline was about $609.9 million. **Ancillary businesses.** Tenant reinsurance premiums rose $24.1 million (10.6%) on a larger tenant base and higher coverage and premium rates. The company managed 362 third-party facilities and was under contract for 84 more. Equity earnings from Shurgard fell to $9.6 million from $19.8 million. **Capital.** - **Debt.** Notes payable were $10.3 billion at a weighted average rate of about 3.2%. In 2025 PSOC issued $875 million of U.S. dollar notes and €425 million of notes due 2034. - **Ratings.** Senior notes are rated A by S&P and A2 by Moody's. - **Retained cash flow** was about $566 million, against $400 million in 2024. - **Capital spending.** The company spent $218 million on maintenance capital expenditures and $71 million on solar panels. Solar is installed at 1,191 of a planned 1,600-plus facilities. - **Corporate transformation.** The company started a program to modernize processes, expand offshore and move the principal office from California to Texas. It expects the program to cost $15 million to $20 million over three years and to save $3 million to $5 million a year from 2026. **Outlook given with the annual report.** Management expected new-tenant demand in 2026 to be similar to 2025, and Same Store revenue modestly below 2025. It also expected higher property tax, lower on-site payroll, about $605 million of retained cash flow and about $175 million of maintenance capital spending. In its fiscal 2025 results release (accession 0001628280-26-007684), the company guided 2026 Core FFO to $16.35–$17.00 per share and Same Store revenue growth to between −2.2% and 0%. ## Current quarter: Q3 2026 and the year to date *From the Q3 2026 Form 10-Q (accession 0001628280-26-067286). Guidance is from the Q3 2026 results release, Exhibit 99.1 to the Form 8-K of October 26, 2026 (accession 0001628280-26-067283).* **The story of 2026 is a step change in size.** The company closed two acquisitions during the quarter: - **National Storage Affiliates Trust** on July 22, 2026; - **PS Canada** on September 1, 2026. Together they added 550 facilities to the wholly owned portfolio, which the company calls its "Strategic Acquisitions," plus interests in hundreds more through joint ventures. Wholly owned facilities rose from 3,152 a year earlier to 3,772, and wholly owned square footage from 227.7 million to 270.4 million. The deals depressed GAAP earnings in the quarter through transaction costs and the amortization of acquired tenant intangibles, while Core FFO edged up. **National Storage Affiliates (NSA).** The 10-Q records the fair value of the all-stock merger consideration at $6.44 billion: - 11,217,966 common shares ($3.49 billion); - 4,125,017 PSA OP common units ($1.22 billion); - new Series T and Series U preferred shares, issued in exchange for NSA's preferred ($216.3 million and $153.6 million); - PSA OP Series T-1 preferred units ($14.9 million); - $1.35 billion of cash. NSA's 1,057 properties span 37 states and Puerto Rico. At closing, Public Storage and certain NSA unitholders formed the PS-NSA JV with 313 formerly wholly owned NSA properties. Public Storage owns 20% of that venture and manages it, and it also holds 25% of four legacy NSA joint ventures with 262 properties. The company recorded preliminary goodwill of $451.5 million and assumed $166.8 million of mortgage debt. NSA operations added $86.0 million of revenue through September 30. **PS Canada.** Public Storage bought PS Canada on September 1, 2026: 68 Public Storage-branded properties with about 5.3 million square feet in major Canadian metropolitan markets. The 10-Q accounts for the deal as an asset acquisition at $934 million. That figure consists of 2,762,108 OP units at a fair value of $795 million (discounted for lack of marketability) and $139 million of cash. The allocated purchase price of $934.4 million includes $11 million of direct transaction costs, with $184.3 million of notes payable and a $235.0 million deferred tax liability assumed. The Q3 results release puts the price at $1.2 billion including assumed debt. The difference reflects two things: the accounts carry the OP units at a discounted fair value, and the purchase-price adjustments include PS Canada's debt. Up to 768,000 more OP units may be issued if net operating income targets are met over 2027–2031; they will be recognized only if and when earned. The deal is a related-party transaction: trustee Tamara Hughes Gustavson held less than 0.1% of PS Canada and was one of its managers, and her adult children held the rest. **Q3 results.** Net income allocable to common shareholders fell to $312.3 million, or $1.69 per diluted share, from $461.4 million ($2.62). - **Factors that lowered earnings:** - depreciation and amortization up $122.3 million, largely from the acquired facilities and their tenant intangibles; - $114.6 million of transaction and integration expense; - interest expense up $22.8 million; - general and administrative expense up $9.5 million; - a swing to a $5.5 million equity-method loss, caused by depreciation inside the new NSA joint ventures. - **Factors that offset part of the decline:** - self-storage NOI up $76.5 million; - ancillary NOI up $19.6 million; - a $26.5 million gain on a property taken by eminent domain; - a $15.0 million income tax benefit, which includes a $16.7 million release of a valuation allowance. FFO fell 12.0% to $3.81 per diluted share and unit, and Core FFO rose 0.7% to $4.34. **Year to date.** For the nine months, net income allocable to common shareholders rose $110.7 million to $1.2 billion, or $6.92 per diluted share, from $6.42. The main driver was a $68.7 million foreign-exchange gain, against a $213.9 million loss a year earlier. FFO rose 7.9% to $12.39, and Core FFO was $12.74 against $12.71. **Same Store trends improved in the quarter.** The pool was re-based to 2,755 facilities (192.1 million square feet, about 71% of the U.S. consolidated portfolio). - **Revenue rose 0.5% in Q3** after a flat nine months. Realized rent per occupied square foot rose 0.2% to $22.29, and average occupancy rose 0.3 percentage points to 92.2%. - **Move-in rents and churn improved.** The average contract rent for customers moving in rose 9.3% to $14.66 per square foot, and quarterly churn fell to 20.8% from 21.9%. Rents lost on move-outs fell 5.6%. - **Costs rose 0.4%,** so Same Store NOI rose 0.5% to $768.8 million. Repairs and maintenance (+17.4%) and marketing (+12.5%, from more paid search) rose. Property tax (−0.8%, helped by refunds) and indirect costs (−11.2%) fell. - **Nine months:** Same Store NOI fell 0.5%, mainly because property tax rose 1.4%. **Non-Same Store growth carried the quarter.** NOI from Acquired and Developed and Expanded Facilities rose 95.6% ($73.3 million). The 550 Strategic Acquisition facilities contributed $58.6 million of NOI in the quarter. Excluding NSA and PS Canada, the company bought 48 facilities (3.4 million square feet) for $501.7 million in the first nine months. At September 30, the development pipeline totaled $788.9 million, with $466.6 million still to spend, mostly over the next 18 to 24 months: - 37 new facilities in development (3.3 million square feet, $571.2 million); - expansions adding 1.3 million square feet ($217.8 million). **Ancillary operations grew 40.1% in NOI, to $68.4 million.** - **Tenant reinsurance premiums** rose 20.4%, and premiums from Same Store tenants rose 7.6%. - **Management fees** rose 90.1% on the management contracts acquired with NSA. - **Third-party program:** the company managed 417 third-party facilities and was under contract to manage 76 more. **Financing.** The company funded the deals with new U.S. dollar notes, its first Canadian-dollar notes, a fully drawn $500 million term loan, commercial paper ($200 million outstanding at September 30), OP units issued to sellers, and forward share sales under its ATM program. The forward sales cover 1,230,141 shares and are expected to bring about $399.2 million of net proceeds by December 10, 2027. Its A/A2 senior ratings were unchanged. Two cross-currency swaps with $900 million of notional effectively convert the February 2032 notes and the term loan into Canadian-dollar debt, hedging the net investment in PS Canada. In addition, $370 million of the euro notes due 2034 were designated as a hedge of the Shurgard investment. At September 30 notes payable were $12.1 billion (principal) at a weighted average effective rate of 3.6%. Cash was $560.4 million, and nothing was drawn on the $3.0 billion revolver, though $40.2 million of letters of credit reduced its availability. The next maturities are $650 million of notes due November 9, 2026, followed by $700 million in April 2027 and $500 million in September 2027. On August 4 the board declared a quarterly common dividend of $3.00 per share. The company made no share repurchases in the quarter. **Outlook.** The October 26, 2026 results release raised the company's 2026 guidance. The new ranges are Core FFO of $16.90–$17.10 per share, Same Store revenue growth of 0% to +0.5%, Same Store NOI growth of −0.8% to +0.2%, and non-Same Store NOI of $355 million–$363 million, the last excluding NSA and PS Canada. CEO Tom Boyle said third-quarter performance was better than expected, citing improving trends in churn, occupancy and move-in rates. In the 10-Q, management expects about $600 million of retained operating cash flow over the next twelve months and about $170 million of maintenance capital spending for full-year 2026, down from the $175 million it projected in the 10-K. **Leadership transition costs.** Nine-month general and administrative expense includes $15.2 million of executive severance and CEO transition costs, following the change of CEO, CFO and Chairman in early 2026, and $8.0 million of corporate transformation costs. ## Subsequent events *From Note 19 of the Q3 2026 Form 10-Q (accession 0001628280-26-067286) and its MD&A.* - **Acquisitions.** After September 30, 2026, the company acquired or was under contract to acquire 17 self-storage facilities in twelve states, with 1.3 million net rentable square feet, for $211.5 million. The filing does not name the sellers or individual properties. With the 48 facilities bought in the first nine months, acquisitions completed or under contract for 2026, excluding NSA and PS Canada, total 65 facilities (4.7 million square feet) for $713.2 million. - **Commercial paper.** At October 26, 2026 the company had $375 million of commercial paper outstanding with a weighted average maturity of seven days, up from $200 million at September 30. The note reports no other subsequent events. The Q3 2026 10-Q also reports that from the start of the repurchase program through October 26, 2026, cumulative repurchases stood at 24,448,781 shares for about $879.1 million. That figure is unchanged from the 10-K, and the company says it has no current plans to buy back shares.