Public Storage Plunges 5.7%, What’s Behind the Sudden REIT Sell-Off?

Summary
• Public Storage (PSA) trades at $272.15, down 5.7% from its 2025-07-31 open
• Intraday range spans $271.235–$289.78, with price 7.7% below 200-day moving average
• FX losses and Los Angeles pricing limitations weigh on Core FFO per share growth
• Sector peers like Extra Space Storage (EXR) fall 8.1%, signaling broader REIT fragility

Public Storage’s sharp intraday drop has ignited a sector-wide selloff in REITs, with investors scrambling to assess whether this is a temporary correction or a deeper structural shift in real estate valuations. The stock’s 5.7% decline aligns with a broader REIT slump, as leveraged ETFs and sector leaders falter under margin compression.

FX Headwinds and Los Angeles Pricing Limitations Spark Sell-Off
Public Storage’s 5.7% intraday drop is driven by a $158.5 million increase in foreign currency losses tied to Euro-denominated notes and a $264.8 million year-to-date FX drag. Additionally, a temporary pricing limitation in Los Angeles County—a key market—reduced Same Store occupancy by 0.4% to 92.2% and cut Core FFO by $0.23/share. While Non-Same Store facilities added $465–475 million in NOI for 2025, rising acquisition costs and inflation-linked expenses have dampened investor confidence in the stock’s ability to offset these headwinds.

REIT Sector Weakness Amplifies PSA’s Decline as Extra Space Storage Tumbles
The broader REIT sector is under pressure, with leveraged ETFs like the Pacer Industrial Real Estate ETF (INDS) down 2.397% and the iShares Residential and Multisector Real Estate ETF (REZ) falling 1.038%. Sector leader Extra Space Storage (EXR) has plummeted 8.135%, reflecting margin compression from rising interest rates and occupancy declines. Public Storage’s 5.7% drop aligns with this trend but is exacerbated by its unique FX exposure and management’s admission of a $0.23/share Core FFO drag from Los Angeles County pricing limitations.

Options and ETFs to Hedge or Bet on PSA’s Volatility
• 200-day MA: $305.77 (below)
• MACD: -1.53 (bearish divergence)
• RSI: 49.71 (short-term bearish bias)
• Bollinger Bands: Price at $280.24 (near lower band at $281.23)

Key Levels: Immediate support at $281.23 (lower band) and resistance at $288.82 (middle band). The Pacer Industrial Real Estate ETF (INDS) and iShares Residential and Multisector Real Estate ETF (REZ) show sector-wide weakness, amplifying PSA’s vulnerability. Short-term traders should monitor the 200-day MA as a critical long-term support level.

Top Options Picks:
1. PSA20250919P280 (Put, $280 strike, Sep 19 expiry)
• IV: 22.56% (moderate volatility)
• Leverage: 26.44% (high)
• Delta: -0.519 (sensitive to price drops)
• Theta: -0.073 (moderate time decay)
• Gamma: 0.0169 (responsive to price swings)
• Turnover: $2,140 (liquid)
• Payoff at 5% Downside ($266.22): $13.78/share
This put option is ideal for hedging a breakdown below $281.23, with strong leverage and gamma to capitalize on a potential 7.7% drop toward the 200D MA.

2. PSA20250919C280 (Call, $280 strike, Sep 19 expiry)
• IV: 21.99% (moderate)
• Leverage: 34.70% (high)
• Delta: 0.474 (moderate bullish exposure)
• Theta: -0.0898 (modest decay)
• Gamma: 0.0174 (reactive to rebounds)
• Turnover: $9,300 (high liquidity)
• Payoff at 5% Uptick ($294.24): $14.00/share
Aggressive bulls eyeing a bounce above $288.82 should consider this call, which offers high leverage and gamma to benefit from a short-term rebound.

If $281.23 support breaks, PSA20250919P280 offers short-side potential. Aggressive bulls may consider PSA20250919C280 into a bounce above $288.82.

Backtest Public Storage Stock Performance
The backtest of PSA's performance after an intraday plunge of -6% shows favorable results, with win rates and returns indicating the strategy's effectiveness:

Urgent Action Required: Watch for $281.23 Support and Sector Catalysts
Public Storage’s 5.7% decline has exposed vulnerabilities in its FX risk management and Same Store performance, but its $1.1 billion acquisition pipeline and $465–475 million Non-Same Store NOI guidance for 2025 provide a floor. Immediate focus should be on whether PSA can hold its lower Bollinger band at $281.23 and whether sector leader Extra Space Storage (EXR) stabilizes from its 8.135% plunge. Investors should consider the PSA20250919P280 put for downside protection and the PSA20250919C280 call for a potential rebound. A breakdown below $281.23 would validate a long-term bearish trend, while a rebound above $288.82 could reignite core FFO-driven optimism. The next 72 hours will be critical.