Public Storage (PSA) 23 Feb 222021 Q4 Earnings call transcript

Company Profile

Participants

Ryan Burke	VP, IR
Joe Russell	President and CEO
Tom Boyle	SVP and CFO
Elvis Rodriguez	Bank of America
Michael Goldsmith	UBS
Jonathan Hughes	Raymond James
Todd Thomas	KeyBanc Capital Markets
Spenser Allaway	Green Street
Caitlin Burrows	Goldman Sachs
Smedes Rose	Citi
Samir Khanal	Evercore
Mike Mueller	JP Morgan
Ronald Kamdem	Morgan Stanley
Keegan Carl	Berenberg
Ki Bin Kim	Truist
Juan Sanabria	BMO Capital Markets

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Public Storage Fourth 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

Thank you, Katherine. everyone. Hello, joining fourth for call. XXXX for us you quarter our earnings Thank here Tom and Joe I’m Russell Boyle. with

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

find initially call website on audio supplement reports report You press do yourself our you questions. limit release, to conference SEC ask replay this can and our that of We at publicstorage.com. an two

in additional. to to free feel the I’ll Joe. with over With queue jump course, call turn that, Of back anything

Joe Russell

Ryan. discuss Last Storage you unlocked highlights us. for XXXX to opportunities then one industry. would like most the for outlook by for the Public few from morning, thank call Thanks, I begin significant reviewing self-storage the of historically and joining year, a and the XXXX. the our Good of eras in team vibrant

if through capturing expand critical acquiring included issuances demand, are a more forward. growth people. the also powerful, success ongoing provide preferred enhancing XXXX, to four the which this, top an low-cost to XXXX. areas our debt customer we have of our giving going excellent us and individual growth, assets have On equally, were for platform, and There stage priorities significant portfolios set in of not in have Our our investment that business exceptionally the operations and firepower our combination outsized through digitalization funded of that

what their the space We offering, of fast their many in this to customers. No Through way storage they e-rental frame. found our new customers time innovative efficient our us comes solve customers on level wanted, a own ways digitally. operator of close XX% told space new a to industry now self-select and to adoption. listening approximately our First, lease to

Our service more with existing and over they customers Storage. us of PS account the an to app, led wanted options, which interface full property digital told to X Public offering including access tools of management. million the self-directed has array now downloads, This rollout

and assets XX Second, the easy both, to were real to added coast markets assets. Public we platform existing the management states development, for grew which $XXX with driving desirable and our our assets market Generation across our XXX totaling industry-leading two built as $X.X feet we quality deliver scale our markets approximately estate from XX Fort platform operating newly D.C. Storage XX to And to million pipeline to additive and approximately This acquired integration Through $X.X Worth. million square billion, presence, teams Dallas X-factor construction portfolios, We adding and Washington, Five of billion-plus our growth properties coast. platform. nationally. included of in to

Forbes the and facilitate recently, increased we invest training utilization issued to of Then balance of the powerful America’s fourth, of preferred And Third, named operations. X.X%. we debt sheet. and overall refinanced from $X as effective with equity, debt our enhanced took instruments, people. XXXX, employers. of preferred cost blended $X.X billion billion our of field by career in commitment X.X% XX%. large new best We hourly an wages one positions We in ongoing In new to were to by progression

we fund growth. to is primed enter the XXXX, As balance sheet

million $XXX cash $X billion flow. approximately and in will likely another have generate free in We cash

year. Now, turning this to

both, strong degree high three Public new has for demand the a fifth high a self-storage cost with outlook One, the Storage areas. strong is from including continue Also, traditional by to set business our adoption The newer Two, Decluttering. customer XXXX and of generational of nationally. housing, launched limited data, own opportunity. we economy, Through for are another D, components and stage acquisition anchored have the poised confidence users of and growth season. factors, good, see busy customer vibrant our of create a behavior year. that in We another retention supply

we began Our deliveries, a new which in three-year supply view holding pattern XXXX. are is in of

through risk is XXX annually now labor We are And property to likely total land XXXX XX% non-same-store elevated to and approvals, see of take to commanding which city costs. our component, to of three, deliveries tied portfolio. XXX place portfolio, due our range a higher

sizable activity the and XXXX, and tied has XX has portfolio With investment current assets, now non-same-store suited of and in continues, The occupancy grown our outsized growth asset the quality Public approximately is the comprised of significantly locations base the under million assets, see is we approximately particularly brand. feet square continue. The power XX%. the earnings to XXX self-storage for likely as to is Storage demand will portfolio activity the and significant exceptional due lease-up of

Now, I’ll the over call Tom. turn to

Tom Boyle

and FFO upper of We XXXX. Thanks, XX.X% the ahead year, guidance and end the for performance. the of $XX.XX of year range Joe. over our growth reported with the representing $X.XX strong finished for We financial quarter core

fourth rate driven look revenue quarter tough the Growth consistent comps factors last let’s leading seasonality XXXX. That contributors this XX.X% was the a two In the to quarter. performance and increased our strength. the same-store, modest continued of to the despite by with with fall. at quarter was Now, compared of return for through the

inventory and up were to versus allowed demand rates limited XX% that achieve XXXX. strong us move-in First,

XX% versus XXXX. to pre-pandemic comparing levels, We’re

we tenant existing Secondly, rate a regulation impacted many contributed increases in by rate period markets. stays with lengthening were customer in to when also in XXXX comparing rental

Now, on to operating expenses.

reported But stabilized discussed quarter. properties XX.X% growth expense in representing at for down if pool calls, timing. we year driven net prior performance. tax of had same-store In total, the quarter on look record was we operating you expense property X%, up had income operating growth full the we fourth As company the higher operating in expenses, same-store the by

In addition lease-up standout acquired of NOI the of the adding full half a NOI in million growth. developed recently or to quarter, roughly portfolio performance the in the and remained facilities $XX same-store, and

Now, I’m going to We guidance outlook. introduced gears shift representing a FFO to XXXX. midpoint, core growth XXXX $XX.XX the from with XX.X%

same-store We’re with at for strong of in year anticipating highlighted second as growth self-storage, XX.X% demand of to another the levels. growth midpoint, leading earlier, line roughly Joe ‘XX revenue half customer

of Rate strongest will the XXXX at performance driver remain going levels. be occupancy revenue, but forward. look above we as to of likely the the is move fall through components As year we

Angeles, of roughly completed XXXX recently through tax expense That our circa capital of Continued performance. investments at accelerate and restrictions on in growth our growth, X.X% to existing tenant midpoint growth. industry-leading X% strength increased poised On in company as Notably, largest are the our and to portfolio with adding from full payroll well the Tomorrow market NOI move-in same-store contribution. market driven X% program. rent strong our for line leads outlook. X% Property this expectations and with primarily as XX.X%, to in rents team Los Los revenue is to our expired expenses, long-running Angeles by the property

$XXX the of strong and development again for contributor Our at NOI $X from this plan $XXX non-same-store ‘XX year. $XXX to million XXXX. to in acquisition be in deliveries properties of that XXXX, to in in acquisitions million Included contribution development a and are is growing midpoint add our poised billion million

leverage we year. store, The non-same to added the for to the XXXX we It stabilization gained acquisitions our years. rest equates capturing yields year-end NOI embedded of And expectations ‘XX developments will XXXX NOI that low a to Looking with several perpetual and It from anticipate interest the and rising XX% against approximately completed to of on laddered preferred non-same-store billion long-term ‘XX. and, us time, ahead $X pool is addition least, yields annual incremental recent in represents ahead to fund a the of past the well ‘XX next our environment. capacity but This last engine balance roughly NOI properties. fixed powerful for guidance distributions element growth and for stock assets same to growth in gives the rate lease-up half sheet development, be to compared our with stabilization over last the incremental over on one acquisitions ‘XX. at X% be and at not those of year debt and and growth

we to With Joe. of financing, it million to approximately reinvest expect retain I’ll to the addition year. growth our $XXX to back for turn external into cash that, In flow

Joe Russell

we summary, for Thanks, year XXXX look Tom. Public as at another In milestone Storage.

of XXth year of the of next the years. associates questions. support, I thank our to Public into and on our reflecting want the for thank lead and And X,XXX by look the owner future behalf for officially States. Storage, abilities our as are self-storage We confidence that, call our for we marking industry your with also your open in XX this you operator largest to in United the to we’ll on past as you

Operator

America. [Operator Instructions] We’ll take Elvis from with today Bank Rodriguez question of our first

Elvis Rodriguez

-- and versus morning, same-store the how you potentially to there’s know more think the if share the on would peers. congrats I been, on in are you your Quick discussion definition? out Tom, would quarter same-store outlook your And been been you have pool year. pool. there. peers’ conservatism question on NOI Good able the have followed much

Tom Boyle

years approach to report that have several for same-store the the stepping for been reporting same-store we way stabilized comparable purposes. Well, properties is our back, in

up And well the performance we’re year-out. that’s there as just about and same-store how And in stabilized the truly see occupancy we I of versus how said, to. represents that, our spoke growth is the that’s rents are that versus just look set submarkets. embedded, as local the of the both, non-same-store and growth the our and So, year-in spent the That you our there. embedded yields at power operating market supplement, because we talking some can time as achieving

growth. achieving also that we’re So, non-same-store

report, won’t but would non-same-store reporting core as relates in highlight or potential our our for it the our our to what ours as peers into of As well their pool unstabilized I get otherwise, growth same-store. assets versus reporting

Elvis Rodriguez

is on LA you X.X% mentioned what revenue the to Great. up I the NOI the share follow know to contribution expiring. able on X% on you side. side? Are And moratoriums just the to

Tom Boyle

that quick as bit X% do growth. have X.X% there. that, on and a going exactly to expense we get the little to side, but what to X% revenue to back north highlighted, you we It’s But I’d can on given operating of leverage, some operating is. to X% number be math

the that’s So difference.

Operator

UBS. from question Michael next comes Goldsmith with The

Michael Goldsmith

the break on to comfort to the revenue the guidance, that’s Can comparison. And guiding same-store well coming you down give up components tougher you that XX%?

County street LA expectation kind is adds to of for So, increases, XXX or of restrictions driving customer points. that what’s XXX we gives in understand help existing rates you is you can change kind get your of a what higher understand the basis us that year all upcoming that for to to the But rent level? -- comfort there

Tom Boyle

Sure.

stab well. you that. take at And me a let Joe, in chime So, as can

As rent heading growth and to the And as customer strong starting Joe the with see we’re year, record momentum begin occupancies XXXX. year. best we’re mentioned, frankly, into continuing we the

that So, encouraging. is certainly

moderate strong to the we to the and And against compare expect half half already experiencing continued of then continue of we what move-in first the we back we’d move through year. move-in move XXXX. to the as anticipate as As that we’re rent through early the trends, rent year, trends we year is

We’re in certain markets. already seeing that

a rates is like since, range. growth growth in quarter the market for that gate New se in XXXX out stronger in pretty was X% has the the quarter, of experiencing but at York, look healthy still per move-in growth you rate at the moderated If in fourth

So, in to certain recovery growth earlier seen markets. that start we’ve moderate

At move play the as and in through quarter. system. the here same in really time, Atlanta So, we we growth who sit from like north seeing that to markets of rent today, anticipate the we’re strong XX% Miami fourth contribution experienced in

room from we’ve here. some So, got to moderate

customer talked return some new component to saw in The we as expected seasonality. that. the XXXX, and it we that to seasonality past how second in is demand about We modest relates with

was again, which saw you If peak given trough. decline Last in unusual pandemic, in a the occupancy we at to trends basis-point peak year we XXXX, from occupancy year, XXXX, a decline. decline XXX looked about in XXXX, from to trough seasonal are And from about XX to saw XXX an points easing a trough basis-point trough. expectations patterns normal about basis year, our for more peak peak into more to with

certainly there will County, further rate And And tenant years. instance, restrictions different to there to is something existing as which we’ve I highlighted, which utilize momentum existing to the the piece, us rate. highlighted, typically important, we is. rent for add number there? for hadn’t rate that is subject our highlighted third We on increase been The really which contribution, is program you in increase allowed would. LA of rent That just a tenant move-in

Los So, of in of case well that’s certainly the Angeles, beginning XXXX. case in back other as half was into the the and through but the it markets XXXX

on we anything on to add So, And increases because you’d the well stays, have we’ve us basis gives year-over-year the send the like rate tailwinds than in a tenant lengthening as of that? more existing customer Joe, ability increases that as done which to past. to

Joe Russell

different from the Michael, it area several years, likely materially supply that all continued Yes. touched And been even deliveries. last is has just though to see the over environment another is my I that than standpoint said, in comments opening a we’re with

that public biggest various know assets the to are looking environment sourcing on only of much the of national tougher, tell and development. it’s we’re both stages I’ll taking nice got a of amount self-storage and to out of giving see And and are team that the new every We’ve hurdles year just and window today’s developer in point basis. bit there You assets through us confidence you surge we’re land into XXXX. any that of of a sites likely see we level development talked of a And to levels saw what coming XXXX. really vibrant about looming in as to play in what Tom this metrics why of don’t is evidence as going outside number we of likely XXXX and be the the

and for continued with a supply window to good new it’s us behavior. customer and then demand, power, operate both customer of existing overall, good So very low pricing good levels

Michael Goldsmith

a example New and that a New in moderation guess, terms is -- you post-pandemic of to markets as markets, you’re quick going to leading as of growth your York of follow-up, And talk where Miami of the as Thanks. touched on And the since can I follow we starting a just an a similar about rent see like little maturation you’re of the York this bit there? sort should you little of bit kind curve -- a enter way, in rest phase. kind of

Tom Boyle

that I there’s think that an do I that element of think resonates.

they as look strongest you look like. XXXX. New York where where in healthy. really be the markets in like well continued past I but very, we peak and we continued summer or we San York. think but through markets those at haven’t the dislocation driving Francisco were saw the strong, if XXXX, Francisco markets growth, really meaning where employment that And as New you’ve talked as of and the demand acceleration, demand accelerate may San And drivers, moving at last as have of as some remain our their Atlanta, remained demand population we activity strong those seen year, housing markets Miami pro-cyclical see related activity they very growth, that and levels through do to -- think I we demand

look for basis but the quarter, market. continued that XX.X% You instance, down Francisco at for occupancy in San occupied momentum fourth the XXX and was points,

stabilization the but see medium-term occupancy, a plays was Miami’s rents these were so, a XXX points as up XX%. quarter we’ll was and for that’s XX% at growth be move-in we basis sit could out. how case But do that today, fourth what in quarter. It that here up And in I markets growth of think as the matures, to of some have

is in largest momentum well. which as Miami, our So, continued really one markets of strong

Operator

with is next Jonathan James. from Our question Hughes Raymond

Jonathan Hughes

and to LA. slowly try strong been your subject to markets, since safe pretty going has I a echo. I’m I’m speak more markets, those think say, restrictions, like in to pricing hearing big are not it’s incredibly growth free to Revenue Sunbelt

the in be you portfolio XXXX, you of obviously, rate rate revenue to look those kind like as rate the occupancy strong on the and are how markets? in think more growth growth you you And But what Sunbelt to loss appears maybe guidance? embedded Do kind in low-double-digit high-single-digit as trend of then see versus difficult. So, overall ahead the occupancy to expect more do comps to overall the side, unwind? migration versus do markets

Tom Boyle

Sure.

is certainly, we’re lot a in So, maybe in take really year. question the strong say, me as for seeing to And achieving in that room are rental in in there. much highlighted the do I’d of rate is It look as let we’re higher. get the we’re as second Atlanta. Miami continuation first, that story, that a places the question, we you there’s at of the XX.X% Sunbelt second to like strength. through move occupancy part going think we quarter. markets what tougher There’s no and at you But anticipate and which not of I occupancy rate Miami growth, that a of growth, some we half And have real comps

So, -- moderate deceleration in those rate not those that fundamentals, but at given we significant rents, of i.e., or backwards see to what expecting of think operating growth we’re markets. to see durability demand in the is likely going the higher we’re

that... hopefully, So,

Jonathan Hughes

meaningful NOI definitely guidance year, That this say, more not my with and the growth to than flow-through answers growth guidance seeing growth But in And fixed impact and Yes. more utilizing same-store NOI significantly last we earnings. a is XX% question. flow leverage is, to guidance done so fund how acquisitions earnings at the one, looking FFO through job If sheet rate great debt to way? preferreds. a the the aren’t balance that? why You’ve last low year’s

Tom Boyle

good a question. That’s Sure.

growth one year And drivers more there. second clearly, volumes recognized and in transaction, quickly you was in the at able place XXXX, that, of and of and such take the acquisition in contributions achieve It going compare the ezStorage our same-store And to which XXXX a others be to of the came a there that the of number last the XX% of them quarter So, were XXXX of that we year, outside is of chunky the the at activity. two look had to portfolio. you of take growth growth. occupied, look if really addition in a year, were if at we acquisition to big growth pool particular, portfolio, last we pretty to in contributors operations good bit a through improved stabilized quarters

you year, about last the think If unstabilized. activity and the quarter of much a was other fourth activity of it acquisitions and lot

So the we talking come spent some call. and about to stabilization portfolio time our Storage on the last All there

there’s bang those lease-up And that the to lower update going portfolios growth see But coming embedded the big less yields path a over per in going next be rental to seek it’s place of so, in means and in coming to how but that at takes that impact given you of and occupancies I what to the that we’ll in years, the ‘XX, years, leads se calls. coming also and ‘XX, XXXX. which stabilize ‘XX, several lower we’ll ultimately, this is we’re on means and rates, year over to spoke

Operator

KeyBanc We’ll Markets. go Thomas now Todd Capital to with

Todd Thomas

the whether just on benefit talk about do and if would curious and of top ‘XX? you’re LA you general. anticipate I’m California in XXXX, be ratably throughout growth in that upside line? or cadence just incremental realized going anticipating Can full uplift that the largely somewhat to you expected to or more -- the question, revenue year same-store the wanted in expect also in to you is accelerate to touch First contribution to I the in growth

Tom Boyle

a Todd. That’s question, great

highlighted I you about but want think at you the markets different whole. the So, and as talk the a LA, so spend if and to look I’ll that, growth time on portfolio profiles, some I

our that rate of year acceleration saw here. about went in poised early our here the largest LA, we in in year. starting the we through from have of a which is to busy us we’re at And all expired the it’s good talking chunk accelerate rent markets. expect, end from play period season a market. last No where tailwinds And the be sitting some that It of place achieved take year. board a we you’d in component the the really restrictions that question, through acceleration So see time as to XXXX, of we’re coming will this across but will through where quarters, the the

first as So, talk more about the we’ll have we through half. to get

of So, a others other as maybe that that rent the and range and restrictions through inherent start go to that’s our half reported markets rate and somewhat that would second some have are what XXXX. accelerating anticipate we consistent subject revenue been to is decline accelerating, direction, the of the growth the of with of see other being LA kind in of there we midpoint

like have markets that have maintain The We’re at still unlikely are to growth say, a rates markets XXXX. to and at accelerating, through grow are Miami going going and is but market, these very of to likely levels, some to some are Atlanta healthy rate we’re in that decelerating.

a acceleration XXXX. view So, we into year into are likely we deceleration, where as and some we healthy see heading some which

Todd Thomas

new being to XXX of through couple supply holding a facilities pattern then, bit And I guess ‘XX, about comments a per Joe, questions. a little in about your of XXX year Okay. at

not development deliveries? the certain from relatively First, bit? still in delivery the ramping projects XXX on is where elevated. XXX markets would see can holding there you why How new up new of what’s Are see activity XXXX to expect see And operations do some facilities from then, cycling to country? pressure development throughout increase you supply? elaborate an expecting And back on you you’re new in a to

Joe Russell

of first in in stages. that a are developer we’re we’re and different yes, particular, So there an the of active Todd, headwinds as variety see, part lot a the we question, of

approvals. operations to normal around constraints cities not even processes. of city got for come you’ve levels close Many So, have

are as chain entering easing we’re that supply there’s that elevated in material that got cost goes any component and into way XXXX, and labor issues with and You’ve availability. not availability

factors a not cost. creating here right material timing and lot delays there’s some there jump where lot many different but into of unknown gives pause that in would both, environment lot it cases, So, of consequences are a say, developers to are a an of to only, I

business to disagree hand. by, not, step fragmented, or, going don’t still you’re than may first level The may a development developers still it that’s in cases, our XXX go, the you see one other is for derive the that that with time. play we and time back our to on a of often site and of process XXX, to And I So, and some we a there’s in both, at going sources, a highly statistics sector continue amount more there. own reasonable at think data volume from that’s be through development through small that activity

you’re dealing committed different or portfolio are concrete we say, around I’m what So, to. vendors our elevated that labor availability. to and tied with, There’s the a or more creating, And there’s what levels the steel see lot headwinds creating angst factors of that that around own that of I a are deliveries. just would whether in they’re different delays lot of speaking deliveries; is more crosscurrents

year we’re and pattern, that we’re you getting markets pretty be this into So, both holding year. tell I in confident oversupplied. going wouldn’t this likely any next that to particular

delivered the ground and that in you past we impacts was new supply see many seeing particularly in where and literally the when of abundance being the measure coming cycles, could a properties certain were very positive markets that’s nationally, up quickly. hitting thing, because more of So,

go good be dynamic to sites. and different continues So, and speak, we it’s for very land compete a as to for window us it a development out

of We’re first levels or of back. into for as degree going about seeing fewer small level far a pull right developer, level of last now I’ve But talked or a a some you’re to, time the again, as have to the competition, creating and and higher a risk, that’s sector discipline several go quarters.

Operator

We’ll Instructions] now Green Allaway [Operator Spenser Street. to go with

Spenser Allaway

about larger Australian many or just about you the internationally, dried Can appetite specifically of the market in given today portfolio for in thinking talk Europe? your the expanding just have U.S. interest into former yields out further expanding especially your

Joe Russell

we’ve Clearly, seen So the opportunities right to yes, and Spenser, very domestic capture broader ability a well-placed the just think grow we’ve here and in than got to capability certainly U.S. opportunities. vibrant good

have ability the going to and I’m global the will of think particular U.S. borders. point part outside to not any to We opportunity. keep

of compared the expansion play One what for depth the that particular any that comes maturity could in things opportunity is the here that, see market, international the through market, kind particular U.S. timing and with with any of of of to and opportunities the we right us

from confident and again, capability knowledge a the So, opportunities right we’re very surface. standpoint, when

right very-focused here I very, States. We’re United the on be set say, very of to opportunity the going would kinds surgical continue good stay in to on at a those opportunities. But moment, we

Spenser Allaway

can you if or a fundamentals Europe trending you have And it in how have color the storage been market, on provide detailed? Okay. little Australian

Joe Russell

is market give factors you operators what’s in the to through demand the that continues fact rely market color to only even self-storage. And can deep that it on perspective Shurgard. embrace Yes. specific to economy. there. there. play on basically what associates our There’s the their look into because color that would And seeing on They good they’re I in are again, to European could and would Western I I going the give Australia, and at Australian you more point on a you just that that to commentary I they’re very talk markets, very good to

Operator

the take next Goldman We’ll question from Caitlin Burrows with Sachs.

Caitlin Burrows

benefited return and taken years that longer think I with the from fact expected. the of the few the storage just Maybe normal starting has uncertainty past has that to than

what’s is that PSA? on for normalization view your normalizes, storage strength demand of of negative permanent thinking behavior as much versus the how a is post-COVID So,

Joe Russell

the people to their the But differently, you that, top it’s work-from-home have some on whether demand from work environments, some has other there’s argue of the and outsized generational strong of environments, to relativity because lives workforces, the or definitely hand the the of it’s population a of directly things, solid home own very been are why, very Florida like tied lives. companies different way quickly surprise, more in. through of reversion the the living theoretically, to very a plus fact impacts beyond a pandemic now drivers that back to behaviors, that mean, and, obvious just are different are two population then situation hybrid my and there’s I whole our pandemic things opening with two their way the are the are will mentioned tied what pandemic, impacts we that on, way the of environment that are how or host pure created ever revert could way years overall a strong I of alone. of Texas shifts just today, might have at the the no and Yes. question demand, reset, again, people into the quick going the moving There’s good economy, beginning market, migration have were strongest comments, reverted in the pre-pandemic, people at to certainly Certainly, living housing factors itself. coupled markets

to storage be you’re and So, sensible to many whether very the think of there continues very other or renter, if financial level. cost are adoption to And about for that diffusing Financially, a self-storage. drive that owner can some strong alternative a escalate cost. and housing, you continue both, of at the factors need an a

serve play the will So, through the benefits well. of longstanding will things storage And that be through. learned us continue inherent to the confident we’ve very that which to the could continue pandemic, deep-seated, both of and sector and many we’re very

Caitlin Burrows

of your positive about maybe customers as think how business you the drivers users seeing it and for last-mile mention this? particular, delivery? you earlier call. you Could You business one just these so, do in talk increased did become? And In demand significant could if are

Joe Russell

business-oriented peg of A there’s do bit elevated at number, specific level see we but no customers. question a little harder to

to what of mentioned expensive, smaller I think think or you is market distribution with you be If again, to portfolio business the demand about a this that sign But they into needing the resuscitating, is companies of economy or back only patterns and levels by for and the in changes as fit. smaller good great coming and lease, tight mean distribution, industrial well. storage space, businesses with may two or seen month something we’re different We’ve how last-mile long-term a continues come they seeing different a having that spot without types need historically.

Operator

Smedes [Operator Rose Citi. with go to Instructions] now We’ll

Smedes Rose

just little wanted your I about ask to bit development pipeline. a

how have where if construction heard higher you had to said you you like supply not has but not, XX% a in were and think, for asset And some come returns. think higher out storage to not yield classes costs, just you we avoid lead maybe And costs? wondering, seen stabilize? it Has might times, issues? stabilized down sort it been, have longer of your targeting managed just in multiple where I you of across from I’m of could increase construction costs, we’ve while, moved these still maybe

Tom Boyle

Sure.

about mentioned had I what clarify me XX% let yields. So,

the annualized for or speaking quarter delivered So, I an you in expect instance, to of see that, to can is where fourth was north XXXX the XXXX in we achieve XX% on yield vintages the the supplement that the basis. are already development stabilization. And here developments X% previously

submarket. four construction vintages a So, but historically minus to our by not upon a map target. XX%, years expect Joe I that we to on been the delivered. modulates obviously, have but second is some yield is plus we’ve And is to XX% property level as point market it are to on that achieve with we provide wanted -- or on relates and to road suggest call asset moving chime XXXX challenges -- XX% so do through is, X% yield circa yields I’ll where then, target target the stabilization, costs it, type to in that. the or that’s range, What aren’t But today, let to out those stabilize, development highlighted and set three associated meant and

Joe Russell

high last of Market We’ll a quite out degree I commanding instance months. over in timing with, labor hopefully, there’s that no of a there. and but chain continues Yes. there’s that issues few be very of playing see the been then, earlier, supply elevated, some cost can volatility, how to easing is itself question But there’s some the And factor. market, that are mentioned Smedes, pressure there’s question, execution, not pronounced. for that’s in and no steel of only through. as

a the of eye of be it. we’re eye size, even impacts, and or and teams. cost development wide-ranging to But, on there’s very a knowledge keeping playing you’re, on and that. having deal either smaller these think I able very the close through, to We’re as close own the I mentioned, more with developer and discipline if you’re a size capability some keeping by our construction of and/or benefit not That’s scale going experience

So, see of elevated through are contain asset on they’re working development the playing to and right understand and now. that costs hard very level

Smedes Rose

you a update length to now? Thanks. us could was where was is Okay. wondering, reminder, it maybe what continues just extend. And on pre-pandemic? stay that mentioned of of you as I that the kind And

Tom Boyle

Sure.

the I the pre-pandemic, highlight of that think about are average average XX of And was length today. of of I’d length is customers XX that months. that or that one with stay in-house our metrics stay

years, a XX just length So, tenants just the in-house under. about of is stay of touch three average but months. that Today, approaching

moved year So, continue that meaningful we way and a through this the see play threshold of part well. to past beginning three-year that as

Operator

from The Evercore. Samir Khanal question with next comes

Samir Khanal

from But we thought rent I in is LA. the that I know for mean, other this Tom, growth? this any Hey mentioned come that driver haven’t benefits markets being a year could lifted potential there restrictions about as you

Tom Boyle

similar rental as not certainly but restrictions rate markets to were a anywhere and Sure. that the benefit other Los same have degree experience Angeles. There

Angeles. out number restrictions. that rental But Angeles well, Los of but County, with the because in other the the there also, so Francisco, through New in as point restrictions nothing Jersey, always for are And specifically Angeles Los playing for that some other New like tenant including over some as And of were of San that Los but there markets at the many modest rental embedded XXXX in two But those markets we you’d and through our past given California, markets, anticipate, are York, a benefits rate really have years called of ,we rest and of size provided the outlook rate increases market there existing duration other markets the those ‘XX. us. tailwinds of

Operator

Elvis Bank And a with follow-up we have of from Rodriguez America. question

Elvis Rodriguez

I year-to-date? able if Are Sorry, to you this. share where occupancy missed is

Tom Boyle

ended levels. it, Yes. points call at above year, basis On occupancy basis, prior that we’ve record year XX, a seen year-on-year XX the

some We January February. of to see moderation and are into that starting through

of point We’re just right this at this time end around flat at we record of as But at again, here the year-over-year. February. year occupancies for sit

Operator

to And Ronald Kamdem we’ll now Morgan Stanley. with go

your to line open. We’ll you’re open. Mueller with check go on phone. mute is Morgan. Please JP is Your line Ronald, function Mike

Mike Mueller

is plus rate Tom, additional bit assume guidance does street more today, a in little it place growth XXXX, increases? taking rate what’s or the in

Tom Boyle

Yes.

we fourth look a the as year, If quarter at is instance. first move-in to to customers you the benefit quarter is like there would rents achieve compared we in for the the first ended contracts which we at rents, through part the I of the look is for move-in to XXXX, we certainly do think of term rents actually in where use, what sign

going we probably first certainly quarter and chunk certainly year. rental quarter. for That sorry, but the of then maintaining we’ve quarter for well, some just the last the the -- two through be we the move-ins -- moderating of quarters year-over-year from rents then first we’re year. experience quarter rate through as of first And is of growth growth is growth rate to months I’m so that growth And the do of year, third positive seen biggest that with will fact anticipate fourth of move-ins thereafter rate that into the do two modest first and the rental the the from associated growth

Mike Mueller

Got I on then, or that an closed on apologize what’s it. I occupancy missed under this. And average contract the for acquisitions have if But are them? XXXX,

Joe Russell

to XXXX. low-XX%. we’re It we what in pipeline. suited going been to And saw investment various as the or combination seeing to stages that of assets our the gate and They’ve the forward well. high-XX%, right to Close We’ve are out look assets well got tactically at of continue for a year. the in of what of those in many of stabilization the that’s strategically, going in strategies, averages beginning here we’re

Operator

Ronald with Stanley. Kamdem Morgan We’ll go to

Ronald Kamdem

actually. I Hey. hear Can you hear myself can me now? Okay.

sensitivity on upper of Just that are you range. just How really goes the sort the elasticity there rate? versus the of on revenue that? it on pushing Is on of the the the top little else lower hitting thinking about a quickly that I same-store bottom? Thanks. guidance, and color guidance just wanted guys Is more anything bit into end

Tom Boyle

Sure.

move-ins, those what for So, revenue year we to did would did range same-store widen in we from, potential it, to and to top drive trying outcomes the end even bottom, think customer higher the for But end the that call compared longer X% versus flip can elements strength lower range X.X% terms year. probably of of capture they this rate more last rental the anticipate end case. And i.e., are, side, I case. in more for you what length true the demand, the stronger of stays

there. particular that in range I’d the that about highlight unique nothing would So, be

Ronald Kamdem

just then, Great. asking And differently.

the seasonality just So and slowing normal reacceleration we assumes you just the should season, should the Is guidance down understand, to see it? leasing that peak where year. how think then of later in back about

Tom Boyle

Yes.

Operator

Keegan Berenberg. go to We’ll now Carl with

Keegan Carl

customers if pool? shift customer at new any that you’re Just stab in could visible the to fifth many sort you of how demographics with seeing your curious a Decluttering? your take Is are of new the falling D, quantifying there

Joe Russell

with we of and the new things, surveys both one customers. So, a do vibrant existing of amount customer

it market from classic any strong still more It generational driver. hasn’t sales, some other users more either of gravitation through means. cluttering an movement or through the only moderated been not hybrid have and It’s got come by many tied was pandemic in to a and of new drivers the but reasons portfolio whether needing amount, of cost as amount which home to talking through it’s work space there’s self-storage effects, a then X being owner market The as do for very away sizable to Decluttering different pronounced a come portfolio. playing the So, needs into that natural gone variety that’s environment definitions to activity to there’s into been it’s deep-seated demand some the we’ve a tied kind as Ds, other itself. host drivers of the to are of the our whole customer I it’s of renter. factor, small a that’s but think of playing long-lasting of And that still it’s goes we’re the surveying the component then, a or they because of economies, also well,

So for create more to at space that, need home. more is going too,

Operator

to go Kim Truist. now Ki with We’ll Bin

Ki Bin Kim

of sheet couple Just a questions. balance

in a million $XXX rising on equity you -- hedged have sure how not thinking have equity, I’m but should floating that’s we $XXX combination of rate preferred secondly, million I or color if think think debt just or debt. about sorry, You of that that additional about any refinance preferred that? that How or about of coming due. holistically, rate not, you’re environment? And

Tom Boyle

Sure. Great question, Ki Bin.

billion we preferred several opportunity over last decrease So, Call amount refinance to to it, had been contributed preferred at that has highlighted rates, and refinanced of a in that cost stock in-place years. stock of the of $X.X capital the lower earlier. significant the Joe have

a structure, preferred rising is never refinance to capital As in like-for-like of of rate and the cornerstone as through attractive the those lower where can that kind which the we’ll of refinance keep of cost can ratchet capital advantage attractive, interest incredibly that to look stock financing. given environment, well we would move take we we lock in have we opportunities and permanent the certainly, year, that extent to

million time. could package see Those years. relates So, that we’ll we to that at to notes the this callable are is it notes floating but last rate then, as where the ezStorage question, address issue refinance that mentioned, we have, the year, for financing floating And in year. as look market here we part have to coming did we’ll potentially rate the of $XXX as you

those. We have not fixed

an to go. the interest and ability as manage have rate risk we we those So, prepay

Ki Bin Kim

capital? Shurgard? or sources these to it think from whoever opportunity how do up And topic been guys that speaking, has investment I expect is know brought this time some to acquisition see be possible in if about your reasonable holistically and of time, basically Are you next TSG you holds, but these just

Joe Russell

Yes. entity. a entity have to we and at investments in the level, either in continue we that Board evaluate -- benefit commitment to Ki the both, our either of Bin, continue

certainly review have set each And commitment to to that’s that’s to garnered ongoing either change place. our returns committed be So, with that if for an and us, very in communicate of continue by Board process when and make would investments and entity, a we pleased pleased each performance. are We’ve in we that. entity their been the we

Operator

comes question from next Juan BMO Our Sanabria with Capital Markets.

Juan Sanabria

is loss price in in new same-store main from Curious the or on and upside Difficulty] portfolio you leasing or versus California [Technical if the and can what revenues lease share of market, market? back LA, specifically, to the

Tom Boyle

Great. That’s question. a good very

going of growth rate in contribution through were move-in and the experience very fact, in regulations in-place longer in the because the of as where we higher of rental existing instances in situation rate some properties rents tenant place rental a Angeles increases. both, forward well with That the move-in And Los dynamics as no Angeles. said, So, the of Los restrictions. rents consistent rents some in here are XXXX in did move-in rate moved rents

to inability existing rents way rate words, other in restrictions, tenants. above rental same was So, the we for increase the had move-in it an

say tenants at our previous we’ve would rents parts, Los portfolio in Angeles existing in it’s both cycle new both years. than higher I into through continuing done tenants to as higher moving well So, as

both sides. So,

Juan Sanabria

then, on Great. is David Thanks. Lee the [ph] since And call.

[Technical there, So, not, of change hourly since on call, he’s Difficulty] market, curious the if above And intent, to a of strategy guys share. any you has just kind that it market or Is bringing workers? to kind Difficulty]. he [Technical if is in

Joe Russell

hourly us compelling pressures strategies to with we’ve management to But employees more very additional a with for do range talented level capabilities as got a ranks. employees. we to strong to components on the reasons environment very strong standpoint property employee focus use career very mentioned, Yes. as even within bring coupled of a of give just number lot and we into continue There’s the within tough longer-term and competitive to that I think into reward property with, retain them of but availability not reward and well. continue our only positions and the went putting and management them What different from employees, vibrant very wage and we opportunities of operations. increases, us wage a development, attract is compete business, It’s

operations done we’re So, but we to on pure by of of a to and rates number part growth just also aggressively. not pleased it’s well. business focus very continue as career only wage we’ve a And things within the relative opportunities that

Operator

We have this like closing at time. in remarks. no questions for the hand call Burke back Ryan to queue I’d to further

Ryan Burke

for we Thanks to echo apologize for all hearing the of question you today. understand joining We that the us you session. were during

get remedied great take all care. certainly that to talk and a soon. moving we’ll you We’ll So, forward. Have day,

Operator

program. Thank you your for today’s participation. conclude does This

disconnect You may any at time.

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