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.