Public Storage Inc "Stacking The Boxes" (Neutral) Goldsmith

Research evidence excerpt

Public Storage Inc "Stacking The Boxes" (Neutral) Goldsmith

the company has not talked about. This could stem from areas like redevelopment

opportunities and optimizing unit size mix. Though, the PSA/NSA synergies are

offset by an expected $300 mm in spend on rebranding and technology capex. We

see this as a significant investment that upside to synergy forecasts would help

justify.

What are the key differences between PSA/NSA and EXR/LSI? We see

several key differences between the two acquisitions including a very low starting

point for NSA's occupancy, a slowly improving supply backdrop in 2027, and the

formation of the high-cashflow JV for the PROs. In our view, these factors should

create a modestly easier operating backdrop for PSA to improve growth at NSA

properties compared with EXR's integration of LSI.

PSA expects revenue synergies from improvement in occupancy & operations

Revenue synergies account for about two-thirds of the total synergies for the PSA

acquisition of NSA. Interestingly, this is in-line with what EXR had forecast when it

acquired LSI, providing some validation to this initial figure.

PSA forecasts revenue synergies of $75-$85 mm. This includes upside from

improved tenant insurance. Notably, this equates to a per facility improvement of

$75k (based on wholly owned and JVs). Embedded in this assumption is PSA's

bringing the NSA portfolio occupancy to 90%. This compares with average

occupancy in 2025 of 84.3% (no difference in the 2025 and 2024 pools) and 2019

of 88.8%. Further, since 2015 (ex. the post COVID period), NSA's FY occupancy

was above 90% only once in 2016. Absent an acceleration in demand, it may

require price, promotional, and marketing investment. For comparison, EXR