PSA - Earnings call transcript Q3 2021

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Operator

Ladies and gentlemen. Thank you for standing by and welcome to the Public Storage Third Quarter 2021 Earnings Call. At this time, all participants have been placed in a listen-only mode and the phone will be opened for your questions following the presentation. [Operator instructions] It is now my pleasure to turn the floor over to Ryan Burke, Vice President of Investor Relations. Ryan, you may begin.

Ryan Burke

Emma. you, Thank Hello, everyone. for us Third XXXX joining Quarter our Call. for Earnings you Thank Tom Joe of and with here Boyle, Acquisitions. Russell, President I'm Vice CEO; CFO; Senior Mike McGowan,

or assume of Before reconciliation statements supplement within All only the revise included that today, non-GAAP of the and release. update remind this we Xnd, uncertainties. laws. provide obligation forward-looking may to November meaning is of want as These to A certain securities this discussed risks forward-looking call statements speak matters our we subject on during the or we become events. no because and you forward-looking of untrue financial constitute statements federal measures earnings in call begin, we to XXXX, are statements certain subsequent to GAAP economic

report, our You audio of this can find website, call release, replay press PublicStorage.com. reports, an our on conference and SEC supplement

that questions yourself we keep limited do usual, two ask to As with. you begin to

you free call over if more, the course, feel Joe. turn back to in with I'll to have Of queue that, jump

Joseph Russell

I'd Good us. you the I want team efforts. their thank Ryan. morning Storage begin Overall, Public to is for for at and do to the joining excellent. entire thank business with Thanks, obvious. like

markets, benefits to properties, customers team level drawn focused our self-storage. on and than office of industry been to driving ever using have the performance. from Our more members and our throughout consistently this corporate before the back, are of Across our

coming as the X dislocation We and death, from events, to characterized referred Ds; have life often additive which demand divorce, we've disasters.

more appreciate as in have and markets. said, record again. need share more more like expensive. Xth D reached in to living and NOI, a commercial come environments behaving meaning customers place are cost emerged; the In historically customers, per now space the have become Unfortunately, and are last particularly to cash that strong. third the storage, to Customers they revenue, due spaces all residential of flow demand several the using come us remains pandemic Decluttering. our the quarters once the cell traditional For and they With across levels at staying convenience home working during shifts as quarter, benefit has foot, that

outlook the we up well. self-storage Millennials beyond and XXXX two at and And wrap our are As it to groups, is XXXX, Storage customer has the The US as the journey. life-stage, leading the transformation, favorable is options, digital, across XX% towards core a experience, for as customer for Public which by climb, rate Zs, as driven decades, is as continues user self-storage traditional aging well of entire the of customer utilization big into now industry's Gen provides population. XDs. once again, that

immune. what e-rental nearly are listen has customer some led commitment the are free. our our your deep-seated multiple great customers pressure, digitally been is efficiencies. have a manage to of want customers industries, us industry-leading to One These challenging allowing the easy terms our have in headlines example X input that PS directs and giving how to to offerings. and In we labor to the we exciting downloaded, in spoken app, win-win they platform. is have impressive. We vibrant use. there intuitive, customers early and XXX,XXX It's consequences across a And our Daily priorities. Today, navigate customers and This our An taking customers us through chosen option rental. to our now customers our few online is customer our unit. remind XXXX, in anxious have us impacting million a of of a which investment renting not And Year-to-date, two nearly has technology of hands model. however, transforming examples are complete many this economy introduced both XX% our quality e-rental to and nearly been are it's operating accounts a operating and e-rental the minutes fast, changes also properties for with have secure lease. self-storage just to self-directed, tools

more We investing teammates. skilled actively increased mobility wages and in team through are our providing upward for positions our even that are new, property specialized greater

served locations also are On and have the Lee ranks, the that Storage to responsibility Officer. board. leadership front, joined With David our Vice strengthened and excited Chief of has the U.S. UPS Public Store. Operations President in on for David we than Canada, for X,XXX yesterday previously we retail announced as Operating Senior as the have more him

Now area, initiatives. to pleased share I'm to you growth with external another our

on assets Our trade. more assets across X-factor see acquisitions, areas with on some Public acquired one-off XX% investments, while been for potential This also growth growth with wide industry changes. we management. once industry average of a embedded spans amount redevelopment, monetize volume assets or onto XX.X is of both The geographies, seeing Year-to-date, contract Starting to million strong volume of of XX%, with development, XXXX, or to is is we the acquisitions, under motivated the off-market bring to the -- purchases, in and these spectrum market have has are is of of Platform. centered This this about All transaction self-storage portfolios, deals. have market, which comprised likely providing and Storage acquisitions, billion a XXX occupancy opportunity approximately place square significant and billion this third-party tax come year. tremendous of platform and opportunity. external $XX a their will growth. or plan Owners $X.X properties feet

tied efficiency, which $X.X be buyer and the -- our With population note, preferred based has Fort continue We at is ability the of average. past the a high-quality quarter's storage volume of Dallas, been Portfolio in X Dallas, times to of over a years. Worth nearly one national acquiring on the is All-Storage Worth. to billion. best transaction are primarily located XX markets growth Of that All knowledge, looked easily of Portfolio, storage to we XX transactions. fund for properties Fort this as Storage XX% cell

and single or expanding under market significant or XX%. already Portfolio accretive ranging were our at growth which them XX% recently closed well. geographically own our and average in billion are feet, the assets XXX acquisitions we the of through owned And will is per smaller new, foot. country, assets, developed level the us as significant produced remaining FFO $XX nearly The other XX%, Fort than All-Storage to submarkets, of to properties will average. national platform a in XXX in we NOI accelerate as to contract, transaction and with the at also Our resulting size square comprised under industry-leading acquisitions, additional by assets million to portfolios, contract million of XX% to across yield. diversified occupancy significant annual move in current The stabilization square occupancy of The provides immediately $X.X direct combined exposure million X.X approximately growth onto accretion from particularly to a $XXX X% upside in Basis Fort Many higher-growth give with points or our higher, $XXX vibrant properties this NOI of are These Dallas, dollars Worth. around Worth, platform. totaling provide

continue the million good we and to underwriting where quarter. grown the by our our ground seeing land this to sites development to the million We're our expertise, to from addition build self-storage well-located $XX is pipeline has as in opportunity assets. Nationally, new up to $XXX developer redevelopment, our development in as expanding Now properties existing team industry. largest leverage

This investment square XXXX. have third-party portfolio billion, increasing the from $XXX that clearly have footage an approximately acquired $X we added XXXX, square and platform Of million of total feet, which well. We note, of strong growth In will XXX foot, we beginning expanded value also square management also summary, quarter, XX with average XX expect management to produced assets continue. has by properties XXX. for we a third-party XX% we since our to XX properties assets reach of to our equaling plan by management per platform, as creation our under

to turn will call the I Now over Tom.

Thomas Boyle

Thanks, Joe.

third accelerated Our quarter. financial into performance the

the by to performance a up the and rent X.X% a improvement X. increased in limited period quarter represented per which quarter, by versus were comparing XXXX sequential inventory, allowed Strong rate in rental of foot. XX% us revenue to X. achieve rate. from X rates That XX% move-in regulation that in XX% third in versus driven and realized led at the factors significantly contributed, markets. increases rate many Existing impacted same-store Our were of second XXXX. we growth tenant acceleration to XXXX, demand compared to XXXX,

of [indiscernible] Investor at year, an a Day was increased October efficiencies XX.X% labor this we higher expenses to offset tax, annual the again. $X.XX be wages, in to on a great partially future. but in the up payroll, the hours properties fourth expenses to for quarter. by reversing In in discussed expenses. team timing expenses property which through we property will income we environment forward, discussed, lead a approximately benefit to total, marketing, May. quarter. On utilities, taxes. to to transformation This more Xst, in quarter-over-quarter Property operating tied our stable The executing will operating leading pool the the a $X.XX Joe by will in as were Manager in net model and benefit On same-store on payroll, property job year-to-date did stabilized the going and headwind expense on our Lower Now driven once will estimate property lead

or in In in in adding and up addition lease in was developed standout the to quarter, $X.XX NOI performance FFO. also the recently million facilities, the $XX same-store, quarter, of the acquired and a

As customer quarter, we new of the customer with in part is leasing sit existing solid, behavior peak robust. coming off the move-outs season, demand down the and remaining year-over-year here today,

let's our guidance We or midpoint, So that FFO core shift the by outlook. at X.X%. to raised $X.XX the with

to outlook at XXXX, implies very a tough modest fourth outlook our against from Looking in XX.X% in same-store that we the grow to for in growth quarter, the X.X% revenue, revenue comps. deceleration drivers, increased

healthy baton rate been are moderate But end from the Our occupancy to of points about at the the the growth to basis at the year. the to current of here continue a we end passed to levels XXXX see picture, strength. by That expectations clearly land has where for big year. occupancy would XXX

X.X% X Our for growth. expense expectations are same-store to

discussed. in fourth quarter reminder, by property a circa that implies of an the I As the tax increase XX% timing driven

own We performance also increased our our strong and the given for up facilities. of stabilized acquisitions lease guidance non-same-store acceleration of

grow the sheet plan We with year. capacity unsecured well on of to the balance to the debt, activity balance has sheet, back with that on we discussed. Now, the finance the s seen fund have With funding leading set to Joe acquisitions this it continued that, to we've up remain you, transaction industry's we one and volumes poised all-storage Joe. turn

Joseph Russell

Tom. Thanks,

business are We good about reason. our and optimistic for

brand, commanding high growth sustainable our and and tied creation. the always, a most and to well-located people, well-positioned platform, have As the industry-leading Public us operating capabilities portfolio, for Storage of all, value the important quality,

Now we'll up call open questions. the for

Operator

if of America. to question, first Instructions] time, we a our this ask Spector question like from take [Operator you Bank At will Jeff would And with

Jeffrey Spector

see Thank new I a and and on on Very bit hire, if would David quarter. -- I can Public interesting, you guess the you afternoon. Good questions, sure Storage, the role more there's little please. Great. details X you to 's if allowed Lee. my what bringing on if provide I'm congrats first Joe so David him we're guess, not be

Joseph Russell

Sure Jeff.

executive First, comprise committed to clearly associates, we're many of over deliver now, team. team. our been about. over to We've leadership joining operations of while the David X,XXX who exceptional we've service the decades Today, customer the number and built great talking of are about teams changes a that excited a adapting over

industry. UPS organization. the the platform its very were dynamic but as forward be time. to will important to fresh based David entire with lines attractive, 's engagement perspective, customer so The so years that, at continue his brings call model. or about on time And whole we only what with our not changes bit the with skills leading for move for be team the continue definitely the more Store our UPS the Company, particularly, XX a the to the to front his teams team channels an and our for and management excited look new customers. overall journey, offering we his experiences very contributions will a various entire as as us he operating where exciting forward delivering different joining through So we're at unlocking the the His very tools we team. And we're Clearly, to -- and role right

Jeffrey Spector

of you I be with feel favorable. if and getting consider your for in I supply 'XX, great. I Great. statement a elaborate? makes outlook particular, comfortable a it's I comments, to now beyond hear have make encouraging then, guess. And Can 'XX Not guess, lot you that hopefully always in what for the and guidance, so That looking on questions second, to sounds Joe, you supply? looks We're but to conservative

Joseph Russell

in that that Yeah, in of Jeff. this to year issues talked that availability or permit saw put has itself. national markets products. again from to a as a particularly of for year from and there's deliveries, $X.X peak it storage that over We've of of property there more many cities on are see understaffed longer of clearly billion. X, billion come actually is the or simple and and seeing day-in likely then The time, construction something new We're to takes property we're a includes use compared nationally, the in processes about a hurdles thing out a likely the the -- that it some XXXX, components a to for for for to the number occupancy day-out, the we window $X trend get down that the been time development with get be labor entitled, commanding or about use nice where and see we last to that deliveries the clearly are reduction through, cost that even seeing as us of so we're XXXX of standpoint a some about meant to new

some this has different in any today to there's operate So commanding go environment. would an I that of through and to developer say kind issues

draft we're So for to predicting that's likely down-drop this produce, XXXX. that again,

as said to having fragmented. markets the of very on, The Now, performance that, level tied industry activity strong what our sector. know, fragmented resurface is has, of very to hard too the development is different based it's very self-storage industry might continued all you and in well whole frankly, a predict

on keeping close we're a that. very So eye

about, entire third-party we've working talked deep also we've As the that a activity through of our set management got we're platform across coming national And on. we're opportunities seeing team that's

Joseph Russell

to tied as well, that is development. future

speak? of business. more The will the much with dealing with question long-term of is be one storage. how of it So Which us. is, environment we're momentum comes the we cell as out attributes great It's

but So knowledge deep monitor the markets. point likely to we've this we good at all we out good and have we'll and have across land go to the with rate our development capture to feel and see continue sites the run very of impact that's got a team

Jeffrey Spector

Okay, thank you.

Joseph Russell

Thank you.

Operator

Smedes Rose We'll Citi. to next go of

Smedes Rose

think about Hi, competitive bit it little was more bit this I load the thanks. to are risks me little to a you process, -- the and -- wrong, entry Dallas guess I but if could to targeting? up just get portfolio. to ask And decision to stabilized market any you're just low wanted in I a yields fairly I as And there a that maybe if barrier of I'm I more meeting Dallas. just talk I'm about then wondering these how correct

Joseph Russell

Smedes. sure. Yes,

my in that's Dallas. I market. we mean, to First longstanding a off, of mentioned that opening seen, as We've out come growth good commitment I have comments,

to centrally It's growth. has States, both taxes, an that's business-friendly, it for economy, located of business a of housing a But from low the within huge United right, see embedded been and the cost, prone that You're draw including that's we frankly, great cost etc., infrastructure. been time-to-time. growth very to overall level development outside population market a tied

leapfrogging we another So came opportunity XXX this with and already as top it our where position, properties have well that an portfolio properties. what was XX had so dozen a leapfrog that was approximately assets, by as existing to to or management position, a XX third-party market,

to instance, Fort for Fort as the Worth Worth particularly additional put in. we the presence opportunity growing actually Dallas lighter Fort Fort like in Worth were and huge whole parts or is Worth, Metroplex, So a of Dallas, Dallas And dramatically. grow that market,

encouraged with hold through really will multiple house continue came market. strong, us; industry-leading mic Mike that very by with position went in you through process He good and attributes we really we're the income, over capture to little So can McGowan is actually to It's I'm our like on and particular growth. to the going the we that what see to we the hand color portfolio. population him. give a see that with

Thomas Boyle

Joe. Thanks

storage market. come properties a that us, are for for we're in these was the less reference And did It kept that time, competitors transaction in take or out really it the of to which in zoning, supply could this great same really high-growth was having issues better high type to are so of down developer putting footprint select He built the these size. marketplaces, at few the markets a of barriers areas areas competitive a in job process. your new the people his of far areas, in starting new marketed of more of -- areas, the were same out this see in, coming size about your new getting large quietly So storage those a lot with newer location question Dallas, with lot properties in. to a Fort of ahead a of Worth a XX In time. of that

a us same big gaps in it it us, new those strong for very to want at us do a to the time. we that markets be gives in and So be markets us great for all in, fills puts position to in presence

Joseph Russell

to efficient. the as Dallas, We're standpoint, skilled have other with Fort be opportunity very the for and Storage these very of new integration there Worth. did Metro Storage just Public operations will at one opportunity team we great integrate them with assets we us about team. ezStorage. Washington assimilation that bring to right members the Public in to under brand and had we're thing, excited adding the majority in The those Clearly, ezStorage, off from a Smedes, experience we their put coming on And

coming that our thousand are able So in confident we based that our can very on value XX own we do of and plus into the very as systems the we're going period drive properties be that those this own opportunity to portfolio. short to time, we're customers portfolio a transfer way to entire run our with

Smedes Rose

Great. it. Appreciate Thank you.

Operator

go next to BMO. Juan We'll Sanabria with

Juan Sanabria

you. morning. Thank Good Hi.

could for hoping on Just quarter on as the dock, stabilized as a bit you transactions yields the side, and what's the in the All talk well including target about little going acquisition third Storage.

on You -- stabilized a yields on it going about the bit talked curious basis, about in little a but from modeling a perspective.

Thomas Boyle

This Tom. Sure. is

activity mentioned, lot fourth the quarter Joe quarter the of a As third is the unsterilized in activity. into

point. similar X.X% across the their type with even it would say occupancy. third little that a probably you And we you standpoint, have then about a that starting quarter, on storage, from so the in I mindset. average in gave And yield your XX% in And Call obviously are. a gives so for properties, lower bit yields what all other -- if those occupancies think what the a would yields platform sense you I operating

to in I that ability point. our these up. Clearly, you have lease properties a confidence So gives we think starting

operating Washington, of earlier similar in around things in Dallas, to our our One that Fort Worth, the Joe DC. confidence mentioned platform

of really a XX% from we're at so a where take the the leasing inventory. to when earlier season. built at and that similarly, are our of acquired a If occupancies successfully properties is XX% and those season, and market in we're we we we've you the several in to the Dallas, to got next All-Storage over last months. of which up out transaction leased ez the you over the them In that we strong We've up these growth inventory, strong bought poised end our few give look activity sense, through out to busy XX% clearly properties of activity. several by over over XX% in took here the And occupied, years, it got year. busy

Joseph Russell

feel great add, and in focused I'd again lot built the un opportunity as assets we've over or are assets. have of to, to Juan, -stabilized been why Yeah. good very mostly built with had values, any and occupancy last on X have year-and-a-half, in his performance. taking this team That's grow years. shy talked for really been we the particular, Mike these recently last capture cycle. very been on the X we we've And and haven't assets, about a to level opportunities high-quality of And what good

As era demand, capabilities, relative confident, well environment good as Tom in seeing we're an taking stabilization in and on mentioned, we're very, frankly. up as some our particularly the very very business consumer where its to lease

Juan Sanabria

just rate hoping October, then data a you occupancy and And Great. through could an the speak points, latest to perspective. from maybe

You basis occupancy noted for moderation. is the point fourth implied guidance at quarter the XXX

on to-date stand we how on curious that? Just

Thomas Boyle

Yes. this to Sure. a as gap October the to a at basis were at occupancy, of XX and has to It's That you just point. September. fallen point we year-over-year -- ended, positive end X.X% at around sense give touch the gap where made

in as rate. fourth occupancy here, quarter but are the we moderation modest seeing move into we strength that on So continued

continue we see to good there. so And Growth

we're move this most continuing strength, the in time markets seeing, than XXXX. the of growth a compared the at of aggregate, Southeast in to Miami, that rate the see Sunbelt XX% to year Atlanta, Some greater

really modest in So, declines despite here strong momentum pricing occupancy. a Year-over-year

Juan Sanabria

Thank you.

Thomas Boyle

Sure.

Operator

Michael UBS. to Goldsmith with next go We'll

Thomas Boyle

Are Michael. on Hey, you mute?

Operator

KeyBanc go Todd Capital. Thomas with will We next to

Todd Thomas

Hi, out morning there. thanks. Good

portfolios, up taking And larger other a Tom. more basis. market, wanted those on besides scale to I Storage, the couple discussed. question forma to and for that lot a you've All to circle Joe pro there product reportedly are disclosed, portfolios now investments on times First a X.X leverage back or you you're With of

in dry to But year. you're discussed to X powder's bit you take that if capital to to leverage You you still a well. obviously, of in Day that decreasing times your stay at range Investor up looking lot as access earlier the the room X have a have

then what funding to So scale assume part is the additional issuing contract. under we going of forward? appetite I'm units the that PSA for $XX today that plans issuing And larger we saw you're the curious Should deals, million is of for as more like equity deals open

Joseph Russell

of capacity location, on And want depending maintain balance through. be etc., come to all, to the type So, around in vibrant. asset it's a I'll coming Todd, We're environment environment we give first it's sheet that the more advantageous, call think highly even that our tools And competitive very to address where the market this, to different be the would of like Tom to little the because with quite types holistically, then of can acquirer. a continue poised. array toolkit. very color of we sellers what in our well a But market. continues well I bit we're you feel might the seeing a feel efficient poised and vast of very we We

balance may has I been look a many tools sheet very different us, range Tom, in embrace we'll with advantage give that, this on Our our to color but for as of through. will a that to, confident opportunities and toolkit. more mentioned, at to can be continue continue we to and competitive whole continue you of little we're be the able come great will a environment

Thomas Boyle

way confident activity of to is. access strong ability balance set broad we're have do we position Todd, mentioned, tools. a you with in our the sheet to And capital as continue our to fund And with it acquisition Joe. thanks, Yes,

we've unsecured attractive open So equity feel fund That and to it for fund we alternatives, doesn't common unsecured to or return, Storage where it toolkit to over plan Investor we our spoke the as we years financial use are over open, about debt. variety to that we're we in including and JV broad But with volumes Day, debt, time. used to mean good is of would activity. the extent level unsecured about we equity the welcome today. All the a that And both using last at tools not in really the certainly several be particular, discussed debt high-quality, leverage other opportunity

Todd Thomas

could that growth talked then ask if XX% just the I portion more, Okay. the the was the revenue revenue balance think between in was one the at And When about you you and rates a you ECRIs? existing at of look about from look there when customer rent should the growth And how higher Tom, of the period, increases. we the to related in occupancy. quarter, about impact small you the contribution move-in that described

Thomas Boyle

Yeah good a question. that's

the move-out put par move-out I each of other our we've with disclosed is So a would them move-in, both activity going and the between dynamics terms do increases, in seen pretty really rate roughly side, existing rates. contribution on basis, year-to-date of then contribution. a the the think forward, contributing one I the on balanced tenant move-out one on and meaningfully. things we

seen headwind starting with will they're up. They tailwind rent up have market to as are rates that here, move-in on move-out up but a the the contribution have from tenant from the So, still start we've increases we yet, given the And catch rent that starting to a across to but rates. to move-outside. will increases catch caught move-in existing not be country.

Todd Thomas

happens Okay. And to bit -- bit as a as that to foot that you the little gas with there, you the see program take to to at up customer a all ECRI your existing off increases as would moderate is catch case? you or the out do rates or -- that have rent on move just expect the have not the

Thomas Boyle

tenant they sticky, to market of kind continue that higher lowers rents the base. to be that quite base. increases managed very tenant dynamically that across across that the something benefits Well, the if elect And is the is tenant that replace cost environment us I increases to think that's existing about continues to of That to and rent the really out to leave. base to one send way say the current is, and gives the would of tenant which I country, think confidence

contributors being that As about tenant forward, fact, fact existing is successful higher one move-out think base. the rental in actually we that we're the rates where in increasing we're of going to on rates

I say tenant on move people that to us. as leave that rate the rate that successful which reverse, the rent So the paying, meaning is we're higher. would are rate that will almost do a Move-out lot existing I'd move-out increases, anticipate

Todd Thomas

Great. you. Okay. Thank

Joseph Russell

Todd. Thanks,

Operator

Goldman with We'll go next to Caitlin Burrows Sachs.

Caitlin Burrows

Hi areas. getting one continue on one that attractive great the opportunity, there. land to is be can development. This a in hurdles of definitely Maybe ability but

wondering that Just now it, to difficulties if you're any continue could this process going you go running through and is into how

Joseph Russell

we that goes have, deep-seated transpiring the portfolio knowledge we've I've what's have relative of that any over we operate look Well the down team to as entire has in right you focus that spoken The because as acquire got given the we've growth continue to, across tapering And a land somewhat been and to delivery. additional so well. elevated opportunity year-and-a-half so the very in submarket, to today. for markets down seen that to last to or

as to select to right find need a developers momentum, a competition, as dynamics competitive. entrepreneurial kind quite business XX states, as much being one an standpoint. ground-up a relative to nearly we though and very So have and into self-storage population etc. top from have A very asset, our across owner that There's amount and to day-in most, fragmented complementary in land lot very sites coming of out of the that every we submarkets. overall particular But of come the there. knowledge location able from lands way lot the because of data you of as day-out, to of from the very differently exact presence that's again, those the come The future locate growth factors of a are well already of development not that set still growth, it's than different

seen there's So a can in than to it, very but may entitlements inflation good either I component a it's mentioned, cases a through environment costs and/or actually we've in playing cost where And we've more seeing on justify of environment tools that competition the eye Keeping to half. even an where develop execute, feel actually very come the tied, that and get that got to great we labor that as in moment. through. only to over degree like sites some find are an year the and at land last high not particularly close elevated costs tough facilities become are we're from

Caitlin Burrows

expense the inflation having on wondering, strong just business actually And a have what on inflation you given, revenue or point, think impact is revenues I really Can the lot, [Indiscernible] go through your was business from you is or down. are side. obviously both do will a up

Joseph Russell

lease advantageous that's the self-storage in we that thing one general, have a is business. Well, month-to-month fact to

huge it's to So a opportunity through to pressures. react cost may play that the inflationary actually from pressures

continue close running that to ways effectively for to. affords cost in product advantage us actually we that we inflationary why that's we and constantly as very something through possible. of our itself but monitor to confident at We're every pressures. So, those can look look to the keep can business, the maneuver -- and And to part pressures, it's an efficiencies our react and as any we business those -- that's have operating of we

Caitlin Burrows

it. Thanks. Got

Joseph Russell

Thank you.

Operator

go We'll to Truist. next Ki Kim, Bin

Ki Bin Kim

good and there. Thanks, out morning

question XXXX, simple built-in there a revenue. If in how market is upside much So same-store revenue? increase already in rents don't on same-store

Thomas Boyle

already, Looking Ki Bin? for XXXX guidance

Ki Bin Kim

This low guidance. inside below Not -- is the point. the

the do So how much is market point, you if think? even starting grow, rents don't

Thomas Boyle

a think in I there's is, there. One things Well, strength continue Yeah. see we market rents. to few

for But continue question shifts here, the really we to and macroeconomic growth, And which at but you're the demand driven if population strongest the I so look with helpful. demographic, is continue think are self-storage by markets poised think strong country. I understand the that we that see suggesting, across to you

move have has a and there higher been rents moving in market increases tenant current existing higher rate tenant been alongside clearly, that. So the base

Now, manner that's regulations have markets over rents And as the been that -- the year, through definitely tenant portion year, today, of pricing emergencies headwind relates us and we really going. and a are of to healthcare and in state impact continuing market same of a good base it of this existing on and because the the the moving environment. course some them. in last the of had

healthcare County emergencies to way a most extent is related state that's related available we So, Los of but of some that there the embedded see standpoint, say growth to rate that I is fire is continue normalization continue in think continue from not to monitor. the that to will we another ago which pandemic, to notable Angeles to several expire. The to years and

Ki Bin Kim

us And much -- portfolio? get sense just how from as people to how be. to meaningful for was impact up get of could compares Just another way, to a the full was that? how I guess that it said money

Thomas Boyle

Yeah.

the precisely our impact same-store we've for year, otherwise impact the first year, quarter. what have this the last we versus of was year. of numbers at. -- through quarter, look And suggested for first-half so the revenue that part those I one give the that it of at ran So point basis been it would send the what it we XXX of I'll of negative us these on you that increases about quarter, first-half out don't I the last things a what pricing for restrictions is, models in was to have but the have growth

that's pretty sense magnitude. So through a gives quarter. But remained anticipate you that that the largely the consistent of third

Ki Bin Kim

Got Alright, thank it. you.

Thomas Boyle

Sure.

Operator

Management. Simone Hedgeye next go Rob to with Risk Well,

Rob Simone

the thanks for guys, on is I management. a well. question Hey third-party all have Hope taking longer-term question.

Between really it's you You platform helpful. unlike guys peers, that is expenses specifically, that attribute are in actually you, unique some which of somewhat and your and credit XXX to the a now to

Rob Simone

looking then little perspective, guys? that margin a about the stores. business. crossover green What the what line buried crossover And property you talk with you think And do of bit for is in point that potentially from that you you of in firmly used the could Or when into at could point get a item singular the as because management a G&A. ask segments scale kind fees I to? costs in to a lot or we're other

you just your trying think on to that. pick how about brains So

Joseph Russell

sure. Yeah,

in of folks business, one that the customer and So, ramping size obviously, of is base is our have developed from there's line from of business that properties. for we've new demand that a of been One there. couple components the most areas vibrant

new we one stabilized property a than the nature given those obviously, one of is as properties, so revenue of less of on the profitability has the And that fees. take

there's we similar as each individual program, profitability our business ramp store. almost, a ramping that so And of of to the development

take might the So way, several it's you to to set before the another years really going anticipate. impact volumes P&L that produce anticipating we're start that

business? to second there. factors margins that there's of The of of a your the piece question what relates couple And are

of properties versus mix if get operating are is at you look different but the the say, and can fees basis again, margin the the XXs themselves, a lot to base I the And So the that we're they're what tied reasonable store think, overall probably to to clearly as of okay, geographic significant one costs over just But number we a of add in you them, several that's margin them a years. is next we where XX%. charging? variability properties

Rob Simone

still I capacity, consider ever And I Joe would mentioned there's capital but -- it. a maybe of deploying capital in you're know consider a ever with know Got would you guys mean, a and Program you lot JV an participate partner? some also obviously now it the I there timing folks exit. it about program his opportunities in just grows you do management? JV Are remarks their -- rethinking are speak. lot so out pie to the where a to And to there of that third-party a right

Joseph Russell

just opportunities be likely like Rob. will that, There

scenarios anxious are open to in tell a you they as get variety currently we're would or different ownership into I self-storage. to groups, So we're of engaging that different whether

color definitely continue certainly to those. that as be able And arise, on more you to So something we'll those evaluate. that's opportunities we'll give

Rob Simone

Understood. Yep.

Okay.

All the right. guys. Appreciate Be about Thanks, thinking it. Just thinking. strategic well.

Thomas Boyle

Okay. Thank you.

Joseph Russell

you. Thank

Operator

with to James. next go We'll Jonathan Raymond Hughes

Jonathan Hughes

the Coast. West morning on good Hey,

acquisitions. equity the a think, I ago. financing haven't or avoid triggering ask just units to XX of Just offered those sellers tax get those a continuation years events from Todd sweetener shares 's for you We million to deal since question Did XX a offer for earlier on as Shurgard did or done? using seen, units

Thomas Boyle

as good there open sellers by is accepting driven question. Yeah. It's currency, that's a the to. shares in and that out really are there something interested are we're our And fact it that

we're But transact a it’s with the it, in and first years. that right, an number there. interested of You're we've to the can be done open time are way attractive to it it sellers

Jonathan Hughes

price portfolio And Okay. that say the those of perhaps more gets to like or a share little units moves deals, little billion-dollar large be would open you cost shares using attractive, another higher, a equity as several acquisition, for fair?

Thomas Boyle

Sure.

think about our non-levered is return of profile on we basis. think the I deals typically a way the

the profile evaluating leverage on we're neutral basis or is, so return And either basis. unlevered what a

of core the we but the opportunity the look preferred use make we've even as equity financing had potentially. piece capital, And grow, good that benefits the to continue to as of the financial it the so of or and transactions, ultimately higher will continue continue sense structure, to to equity, broaden at costs maybe growth capital of and debt as with sources volumes using JV these unsecured will

Jonathan Hughes

Yeah.

have Okay. then just may. if one And more, I I

of see we'll level say level One your of ago. maybe you wages, from higher even year. on-site than they that greater to just inflation portfolio month a did peers expect X.X% cost stomp fair said a your labor It's slightly increases next since a

Joseph Russell

But definitely well. the highly skill mentioned, It's as across So organization. market yeah, I'll I labor at attract time personnel it's difficult and as is a of somewhat you competitive. to retain unpredictable Jonathan, entire any the tell level

So that continue or we're look we're our going the making well. to to wage variety with changes to and benefits of the at seeing efficiencies rates either operating of transition a different model as with of balancing

So environment likely again competitive we're a next that very year. into going and see, going to monitor continue to

Jonathan Hughes

it Alright, thanks the for time. that's me, for

Joseph Russell

you. Thank

Operator

Stanley. question from [Operator Instruction] with We'll Kamdem Morgan Ronald next take the

Ronald Kamdem

really you Thanks. opportunities assets? lend term. think potentially just X portfolio to not about markets what but that you strong sell forth. long a market, the thinking you next strong strong some itself own much talk expansion the does long and the But a the want comment about the to so term, markets how -- over I so you're about portfolio, spent When you Clearly made Probably the of thanks in to the to and today XXXX. are very X given how Hey, think about years, for demand, are XX% X time.

Joseph Russell

too. Yes, the evaluating continuing that assets the to of level to any owning that call Meaning thinking and something definitely it benefit Ron, assets. we're analytical whatever tied of have always multiple recycling of a, point about I looking understanding in either fluid value markets, at that's a existing capital across approach impact and/or we would

the we'll that's that potentially way continue to ongoing that seeing we value to definitely that process opportunity assets. to creation we're internal from its And existing the process then part the So an relative to of use look and recycle.

Ronald Kamdem

should the Great. COO different I we should appointment maybe new a about opportunities, to second And But incremental ways team. is of this business about this trying this doing color new COO introduced change? little to know the Just question products new a think how revolutionary then a question role. you impact way. we Or as and operations think operating? the bit my mentioned get more just of asking was

Joseph Russell

detail on across where to different the we that ways our go variety different gave Well, we're with a to and then and opportunities our whole fair giving in customers, through engage us, that model, in channels Day, investments a back things Investor amount spectrum. we're of described I'd enhancing technology of operating we the

continue As focused think and on the to continue suited that types of relative well be that to we things to development quality the grow workforce. to as are of opportunities people our internally the well we very

of And ties business. coming it isn't Company directly, amount have. of added think digitization into, level investment we platforms, new pace as relates the well of the we as in we're people to as the prudent the goals that accelerating that 's the is of and the context the leadership our as the technological business It's change forward. particularly the that strategies we're to So our an David in move the making that role of that to we just

timed a to opportunities forward optimize to of continuing to giving our that of really base. it's we we're a and employee one So we're we is and well variety look the including way existing engaging layer running different that added as whole, think the way Portfolio also that the leadership

mentioned, as we're about come really as is for time have and So to to him excited going I the well. into good business, the he perspective fresh

Ronald Kamdem

Helpful. Thank you.

Joseph Russell

Thank you.

Operator

go Hallway We'll Spencer next [indiscernible] to

Spencer Hallway

of we've Have supply an guys increasing months? recent seeing issues, being widespread what's Thank chain demand noted called incremental any number companies business-related you Inventory. just-in-case you. keeping in With this been

Joseph Russell

coming trying goods from or space -- more to us keeping because mean customers just to immediate differently core at availability? maybe the you Do use of

Spencer Hallway

Yeah. Exactly.

Joseph Russell

where but I use of surprise oriented may they need demand easily. do on they self-storage by point Spencer, way storage elevated couldn't virtue Yeah, of to, and that, more wouldn't spot fit to, can that's of an that have based based in me customers cater an it on a in level business that that, that lift to exact demand the need quite variety different

that seeing many there's we're So benefit from likely some that in markets.

Spencer Hallway

in costs Okay. see material And us then would up manner? begin just on back for to side, [Indiscernible] where need creep the to marketing occupancy expense a

Thomas Boyle

decision that say local seeing an a to would what in funnels. we're and item. customer dynamic necessarily It I it's occupancy-based relates manage. pretty And that say I we Spencer, the that's wouldn't

Storage So are self-storage. advertising increase number when Public of to for people go funnel, search of searching benefit top they has that the say, Storage a are finding or for Public to

we're as seeing where managing markets in have impact top of conversion, funnel funnel. helpful etc. But that will that promotion pricing, erode. tools it, is that demand within other so, we And we're Be revenue.

are returns of board. levers. the those say our across into system, top in flat. the funnel associated so calls visits, of call see roughly I up across the we And To-date, strong XX% Web center for different and were the pulling would demand North were funnel instance, we're to different watching of the continue quarter components the what with

very funnel demand, led still top to solid, which in overall, the quarter. of So the around marketing decision-making

we'll pull demonstrated the past, our in start advertising do as to change, we we've that spend on dynamics those good we returns pretty see typically well. if As see and lever

Spencer Hallway

Thank very you. helpful. That's

Thomas Boyle

Thanks.

Operator

Morgan. We'll to Morgan go with Mike next Mueller J.P.

Mike Mueller

Hi.

you yield your XXXX Storage, growth did All to rate stabilized X% for for wondering, through to get expectations? Just assume what

Thomas Boyle

Yeah.

in what is there's we pool then and that properties the delivered them from have stabilized management is, own that the looked that there. we'll and and standpoint like been drive not And can things of we until ultimately call reality stabilize the lease acquisitions then squeeze seeing underwrite we we're on they're basis is, ultimately think rate put what And stores, year systems on date, have improvements. go obviously within at the what in our a process a but the operating place portfolio the of within revenue through platform, stabilized, and recently and area stores revenue those underwriting our in to up, further we our of our One we in our opportunity opportunity have really, we to platform. to we an competition and seeing last through platform a

submarkets portfolio and that So you in our But the see Dallas underwritten overall to as rental rates rates the are. instance, achieve a rental properties over you sense rates. these we it obviously, for can time. have gives upside think we where their in own And portfolio can

Mike Mueller

to pulling Were you and market out embedding capped current that additional rate growth beyond market current it's or just assuming them there? up

Thomas Boyle

rental as those submarkets, questions around combination forward Yes, ultimately, are risk then, which earlier see rates. rate so And a in it's rents, rates one new we is development a today, think market of rate consideration to that within for rental due spot of that well. the about we runway as activity with we counterbalanced where the think

the punching see in-place to at our $XX a I rents can of about where you But there rents Dallas at those would per versus presentation So, third same-store a number you things. point quarter combination of $XX. in the foot in the

there's So rate rental occupancy and upside. definitely

Mike Mueller

you. Thank Okay.

Thomas Boyle

Thanks.

Operator

Rose We'll go Citi. Smedes next to with

Michael Bilerman

to to never Michael previously a the the Company came wasn't with going this not Joe, Bilerman on COO down think new because back go has to gone here time Smedes. stuck. go that it down, but it's path hiring -- you've of COO gone you, we're there Hi, back every and I

this And this other to, go what's the now versus initiatives position, on curious in just past rehired different start so for the around topic? at I'm as COO you've the

Joseph Russell

you my Part year had COO don't periods of the of our business, multiple the time in in yeah. then where dynamics I never know changes. we've I Well, agree positions and obviously place of made history virtue the different we've of predating history, Michael, by had if here, I stuck. tenure it mean,

For instance, years or senior instance, for on at over go taking Shurgard to some a leaders, X for etc. X time, to sabbatical

of by responsibility it's somewhat with I been name, consistently. So and position us somewhat by been fluid agree, focus, of a would it's but --

One as overall this point to that of we fresh bring the capability I is that role to more different things that leadership and characterize at additive the and more see relative our even opportunity in dramatic the change business. to perspective as in growth

of of couple changing, as about sizable As putting And the employee of I've size that great our investments amount development been of the competitors. that making, different we're years, a we've noted, for tied is skills place, opportunity literally continue us over the the how business think to and some in operations. tools the and we're acquired assets importantly, to the of it's our base a last the

role, more much on on emphasis the even So has it's we're whole. great overall continue effectiveness focused that coming to in, leadership we time as David's the team and that about excited put a operations the our we're for to and do to things very of a what can us relative with

Michael Bilerman

you're him the or about XXX of top any can What call restructuring -- going underneath in is those to talked him in about And a how three set as talk about you've for terms business are priorities team, XX the next the it changing. you days.

contactless ago. You a years didn't doing few XX% have online,

about are bit things little priorities the like a talked you So that. and what

Joseph Russell

all the priority coming business. than lines differently It's massive in I a something the here's optimize an to in not the change frankly, way enhance into with we've Well, on possible other come platforms. come or the retool to that's operational of focused a opportunity business. are make as that's one a that's number front as what the and foundational we've that seeing top and many priorities mean, made and of in and you're great definitely that's broke. it's that whole investments Being statistically,

plus customers XX,XXX our than a customers months amazing, exist than using XX,XXX channel or that where month that use ago. or did to minus more XX e-rental, are As less not X XX% e-rental. of That's I mentioned,

well. the a team team. that So what opportunities we with we're And unlock running entire as we're excited the confident we continues that the operational to we're way can David coming have really foundation good do about on

Michael Bilerman

Store talk of what level gotten Can initiated, you David at local the give insights us has a he in did terms UBS better over on a changes been years, some the the of this driver bit what little at rule? drew sort to that lot store but about my able UPS it hopefully he's you which will so prior accomplish you to the and of him, in that, what characteristics about,

Joseph Russell

Well, very centric, kind is that that and and of transaction-oriented, to really question self-storage. in relates skills there's platform liked very it's what And we environment, transactional. it again, tied the of how own - we no to in many that customer operating their advancement it's see of attributes a the model.

then, very lot environment, worlds. both good and he'll the that we we be that from environment create as things a best can our and learn of well, So of learning from can

Michael Bilerman

And Great. topic. just question last on this

that the the drive front I to store you how real into it's about? Company? real an given type store of the pickup people for front thing, differently part thinking of you're cash the you of self-storage think Is retail at you someone I you have Amazon online, -- revolutionary. of that Could you in of things fact don't You at it's delivery And focus the is that Hawaii asset incremental about or service and -- doing XX% the a bring facility. estate it that have? like in mentioned having be that that an can that all mentioned terms only are store estate thinking differentiation additive flow. think And Are is lot opportunity much

Joseph Russell

opportunities as question, all that tell strategic There's evolve. you to more the we're way any that particularly we'll interact they those to It's you. happy good than seeing those of the opportunities type continue creativity that with lot they sharing vibrant And surround to a as as continues they are customers demands business, be to variety we'll and ours. going a forward. want with be think there's arise, I And share shift we of of customer-driven will very

Michael Bilerman

Joe. Okay. Thanks,

Joseph Russell

you. Thank

Operator

from Michael UBS. question final with our take We'll Goldsmith

Michael Goldsmith

can Good these talk how with acquisitions Storage doing the taking Joe been? And, acquisitions your several Tom. lot a Thanks maximize as How a yields risks you and of they've Public my the do large about about at growth platforms? think are you on can for associated afternoon, low time, questions. as when

Joseph Russell

obviously Yes, of ties I to part scale the years, sure even fair and a one-off our over it the the Michael. a mentioned ability integrate we've to amount assets, on ability highly it's but in metropolitan Portfolio with concentrated, and two portfolio. whether operating we basis, that But of large volume last the scale a had couple on All-Storage again, to as saw prowess ezStorage, with markets. a when have it structure from big what even now of and the and smaller, you points standpoint.

run day teams very out. and that assets these in We've deep we're got in these So day markets. strong

from are, from benefit this. mentioned, as yields just we see. integration. made volume The we've the to for this integration in the that with this can efficient skill that systems we years. it platform, compelling. of been to in the investments have investment technological And likely certainly doing degrees and we've And Our we've do higher concentration. we'll Again, do degrees very fact higher allow our we've and ties of the inherent many that with it many, made

dramatically the capital the actually integration we've our continue do of the the to in to the to ability well, I growth us assets and as we with no pretty that buy. continuing and question great team a due to is as continue mentioned on a job my kind as So there's for seen whole, improve the comments, structure opening to performance fund of most the

Michael Goldsmith

That's couple the helpful. second year in less the row And this than is we end decline How that? in is to of should summer more year are the the of circumstances you moderation -- just future kind or the in the the of years. teams so past, last from and think surrounding about a this thinking years, seasonal to where occupancy norm, the kind a unique we do return new is

Thomas Boyle

Yes.

of through So pattern year, healthcare then benefit for students, Summer, had we Fall. that things the much some the we DIY sales college the occupancy decline nature driver's, into demand the moved over and like year, because we to of but of unique instance, demand summer, last add last a didn't This year. patterns environment home see the a seasonal frankly different projects of an any in see will year and the as the we if out as we'll where move then move was saw etc., certainly of the seasonal year. did And we more seasonal

more year, was demand bit additive this seeing moderation. are little but that we there a So

why the reasons stickiness that we're base. of of continued One is tenant moderation the the seeing

And so year. fewer we've had move-ins this

And most out. so to likely recent move-ins move the are

seasonality we little business the customer And seasonal going we've been more be next it, we year-out, that think will so so self-storage I a the to but over need seeing are contribution this play forward. really The drivers that to years and but behavior. overall will have had still more we'll of for degree driving year-in do encouraging continue several year, bit and and see operate out seasonal it years, a a of a year. demand demand little this bit and that benefit

Michael Goldsmith

Just one last one for me.

the for volume tax year. expect next volumes catalyst to year, this as in up dry Do change the or mentioned transaction elevated transaction the Thanks. You laws continue elevated pace? you a an throughout

Joseph Russell

motivation of amount the seems to strong. Well be

Just bring relative owners market. product to that more wanting put to way, it existing to

working Mike XXXX. we So into continued very going be as we're and to into on transition his team busy things

at like the it could So always but predict, be moment to [Indiscernible] tough looks XXXX

Operator

or closing Burke over any back call the additional hand to remarks. now Ryan will for I

Ryan Burke

Thanks forward weeks to week you the us team Emma. thank of care. everybody behalf take want coming in for our today. the of On next entire joining with many on to side, I and I speak look and

Operator

you for program. your today's participation. concludes Thank This

You any may disconnect at time.

Public Storage (PSA) 2 Nov 212021 Q3 Earnings call transcript