Public Storage (PSA) 2 Nov 222022 Q3 Earnings call transcript

Company Profile

Participants

Ryan Burke	VP, IR
Joe Russell	President and CEO
Tom Boyle	CFO
Michael Goldsmith	UBS
Lizzy Doykan	Bank of America
Samir Khanal	Evercore
Smedes Rose	Citi
Ki Bin Kim	Truist
Juan Sanabria	BMO Capital Markets
Spenser Allaway	Green Street
Mike Mueller	JPMorgan
Todd Thomas	KeyBanc Capital
Ronald Kamden	Morgan Stanley

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Public Storage Third Quarter 2022 Earnings Call. At this time, all participants have been placed in a listen-only mode and the floor 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, Katie. everyone. Hello, joining third for call. XXXX for us you quarter our earnings Thank here Tom and Joe I'm Russell Boyle. with

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

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

and with that, after feel course, questions to over the Of that, jump Joe. free in I'll call turn further follow-ups. to With

Joe Russell

non-same-store over consecutive we were to In poised and set for with in our the along XX% outlook Ryan. Good morning our raised expectation year, played joining this was that, core strong highlight exceptional then the will as for months second cover you, of will has our on performance specifics in two At you more grow total, With quarter. which is the ancillary earnings thank Tom beginning XXXX last I same-store head assets, growth, continued view through. FFO NOI us. in by we year. and for of the year, into and clearly revenue. the Thank of we improvement

we even to cost rationale top and and historic by has The performance. drawn are need-based tied of whether Looking is and now increased environment particularly continue a to enduring self-storage of home financial Customers shelter, still where market-to-market as in have the on line advantaged back appeal to such drive migration to drivers demand sales factors an decelerating, that own some a where XXXX use been you are and levels. both sensible number use storage dramatically. a XXXX, decision, rent,

customer second survey home sustainable a -- elevated use more storage. driver In needing be work be space additional instance, to storage. addition, at points reason as data are to sustainable need for and our Hybrid for environments, for the proving to to

renting alternative customers, For business a down a less taking more our is to expensive, space. unit compelling flexible industrial storage

staying remained absorb development. new has in deliveries customers, product giving to occupancy. very us are has supply new to down from rate to have flat optimize of subdued more the been the existing macro pace been good, longer, too, XXXX. able On competitive ability demand of and As a basis, markets peak Nationally, increases

are view heading of that as new to risk development said, Our and costs we to is inflation also time the the recession term component with the is city static lending. into has tied it cost this frames, the become in increased, be have economic that will harder increases dramatic record levels predict consensus construction and particularly environment With higher approval imminent. near for to due the development

sheet and customers large changing to portfolio recognized of with development non-same-store square We excellent now massive power excellent over foot grow with most macro acquisitions we now most of experienced assets self-storage the balance market however, operational to to the come, margins square NOI and expirations well-located cash million XXXX, additional have tools finally no scale debt and industry-leading of are, confident maneuver every operating portfolio the These million $XXX well-primed highly feet sector. XXX in nationally, conditions. include with source in our and prowess in through earnings through XX and marketing above broad industry, cost-efficient the and channels million employee the satisfaction, A while base $XXX of low-risk team to to new new XX% continues digital high online to is historically customer improving a a self-storage leverage customers and brand that efficiency, growing guide which million low platform.

over I'll Now hand call the to Tom.

Tom Boyle

We Joe. quarter growth representing $X.XX reported Thanks, the FFO of quarter, core for third XXXX. over XX.X% the of

for moderation occupied a XX.X%. look revenue the And in contributors Weighted the decline at the to That quarter. performance. our in per were increased seasonal to components, expected. particularly a XX.X% said, last June from a realized quarter's The strong slightly quarter. the pre-pandemic accelerating from same-store again up was Los XX% occupancy average from breaking in XX% represented contributor, to September moderated declined growth XX.X% return X.X%. XX.X% square strong strong quarter's In growth the occupancy growth Let's Angeles revenue third as points. The down typical same-store, second foot the matching rents occupancy of basis XXX quarter last

on direct increased markets, operations of were most We when the compared of saw those we and last X.X% good marketing in in to quarter. dollar Now the we Same-store to up quarter year largely were our expenses. spend. returns spend in cost on ad our quiet

investments roots reach pool of investments Inflation portion the and the offset was net And inflation. for Our solar our helped years. we as and total, income wage initiatives, incentives including model XX% a with coming recent over own for utility resulting strategic added solar operating up LED In X,XXX in solar Act transformation the and further note digital quarter. for the same-store Reduction I operating from our ramp on to the properties activity investments,

NOI year. acquired noted, segue growth again is the strong, developed properties, store, recently lease-up $XXX is of of for for contributing million In up of same the the a facilities and addition XX%. to in or was our ahead performance remainder pool There as quarter, this which the once Joe good from outlook to significant the

from FFO outlook. non-same-store as recent outlook the pool business. sheet. as our in The strong continued outlook performance to for shifting X.X% midpoint core tenant year our our by to most the raised improved by at balance gears we better-than-expected well is growth And our mentioned, our insurance Joe pool, from now $X.XX As $XX.XX our same-store driven or

and position remains capital rock solid. Our liquidity

have and rate of We over $X limited well-laddered floating perpetual with long-term exposure stock billion distributions. a debt with preferred profile fixed

our Our position cost leverage ourselves of strong preferred $XXX EBITDA, combined through to X.Xx with for into cash at cycles. to million hand a strong XXXX. us net access in end, debt position to of on and puts very of capital invest It's and strategy heading quarter

to we're ready couple And years, and that, to opportunity past open the the the balance it turn for again. to to do had of up we've Over questions. sheet back with it to use it that grow, operator

Operator

UBS. Goldsmith Michael [Operator first question Instructions] will come Our from with

Your is now line open.

Michael Goldsmith

Last growth accelerated to is decelerate going strong. that it growth and Instead, expectation rent was remained year same-store year, the and then similar the through the realized Perhaps heading to XXXX. very it's rent acceleration. into

to normal we and of So how given how these moving think -- should pieces revenue the do a about cadence we and return going forward? what growth rent is growth to trajectory we're same-store seasonality, start seeing or

Tom Boyle

of think question, And Good I there pieces well. Sure. you the highlighted some moving Michael.

typical and and momentum falls industry rate around into occupancy in the the maybe with the part we through came behavior the that, and we rises we've first year expecting see we year have the seen seasonal the strong the continued pretty couple. exception that of been with that and year, As out in were year more consistent paired of and last

Angeles over of rent and, One up quarter-to-date around place. the growth of markets really again, two some now prior move-in a by like rents side, were the last And rent well spoken it's we've strongest past X%, on for been top additive driver. And really our factors. in really us, rate strong growth Miami is as in with On growth restrictions longer Los significant no move-in been several in years. Miami, years. that's driven the

now the of over The stays other then the long of And which sitting to because and rents. higher realized length that's us we're increases stays more long-term behavior led tenants that the in record existing within the years, at overall to experienced side the increased spoke rental tenant environment, send we've of length at and tenants allowed that and rate base, Joe of several our portfolio. last existing because the earlier of more is has there's rent to magnitude

quarter This last matched quarter.

to the quarter moderation been take half growth in been year-to-date, this that but guidance, strong and anticipate through would expecting we've rate that, is and that back throughout. able fourth a rental of have have environment achieved advantage of embedded the We year through in our clearly and plays

Michael Goldsmith

a on based of or some long factors you long which we as any these do factors of I have of into of not like the rent like follow-up how to guess or continued these down, visibility potential that growth, is have given and rent other do with realized just like with like visibility worsening just rates worsening street is street into Just just let's growth? say, growth elevated visibility to have how elevated that into of kind and flattish you that? combined any a things rate

Tom Boyle

I get it.

You're asking about XXXX now.

where sets that exit forward revenue be the we've been an as heading the growth. on continue So us that move-in strength, quite X% earlier were fourth to call moving point growth, we year it, uncertain rent to. from looking look we move-in quarter. rent X%, be and moderation the well that's We in And that experiencing what into at clearly I'd at, to XXXX, as that year into we we environment in have could up X%, year XXXX, a anticipating from so through moderate from anticipate imply speaking will recognizing or we're through which plus moving were up rates growth seen guidance move-ins we'll in XX%, quarter. and we minus, really what move to strong you rent had with frankly, of the it here, were starting moderation the but period a our up move-in is and the volumes would were growing would But

Michael Goldsmith

That's expenses helpful. elevated. And just have been

pressure, store technology reduce to solar, several initiatives to growth same-store You utility or same-store costs. Still, growth and revenue the narrowing. the the have hours offset gap also is as between expense such

here? if growth revenue kind moderates we So they gap accelerate? about converge even can or expense and the elevated of remains how And think growth should

Tom Boyle

Yes.

narrowing underway I'd and tools, years tough of see be of decelerates, mitigate a managing for what's we highlighted an from heading that. will acutely growth some into have a there. been say a revenue in the pressures them standpoint you expenses that have we some to team initiative on XXXX, the help could focused environment. of number And of As frankly

sure that. not I'd have I'm So add much to to

Operator

Doykan from will of Lizzy Bank next with come question Our America.

open. now is line Your

Lizzy Doykan

color any around payments I just level wanted the just the through up debt to all picked of prior ask quarter. about if, delinquent the that that give if at trended from could how of you different quarter, kind or anything just

Joe Russell

units. can a good It's low customer base elevated a behavior unemployment nowhere we continues of of a continue clearly delinquency is base health up opening for overall this a different where standpoint, we're a surprisingly also say, more more we're Sure. pay surprisingly my We're think, a environment. Consumer the the from financial to Lizzy, some and to or a mean consider would to seeing if what base, but standpoint necessary the need-based in to traction year storage to seeing stay. space ago, of their one of much to levels. be relative customer standpoint, the storage I close from a in And little mechanisms not consumer. I statistically standpoint, sheets and in other platforms levels. number operate is from or that track the continues elevated going banking to our tied And either at historically still or XXXX. nearly reports holistically, reasons very somewhat balance saw disruption, just to to back appear relief what that what And seeing that value and from be from a ties that consistent of which consistent tracking overall behavior by pre-pandemic even whole length to as storage into you an employment we delinquency of from the a source consumers then we needing fact, on good typical of relative shape decent, very other comments, were, and

close very eye alarming by a nothing any So overall, up, but means.

Lizzy Doykan

my And performance. second Okay. Helpful to color. question, get around I more wanted for market commentary

rate where L.A.'s comment moderate. specific So others? for why you've increases to that's you be market the and had markets off how so rate helpful. seeing we've particularly than And acceleration increases forward, we on there to with back seen that could going new in expected if since on were that would more new move-in trend growth Are move-in

Joe Russell

and a the some specific Tom I'll more on markets. Yes, of little then start, can you bit give color

that pretty as market an seeing move-in and as from very for You mentioned rate period instance, mentioned, customer but serves we a XXXX. drivers we us strong good inherent rates, deliveries. well. good we've over and quite new i.e., but then some three to seeing in and overall momentum We're market, growth of our existing And back of clearly growth that absorption be It's very largest as standpoint, years, we're speak. very muted not increases held think rate Florida well in continues whole time, I continued L.A., for we that going market, good and now see into strong. been still only as

So of overarching an that can pain very thing. fashion material of going couple not specific point we any that we're but more color the in. sector we frankly, you XXXX, for and been years, close of keeping for that trends, don't a the in see give That's bit any It's in otherwise some good good has on last too, there either. thing the elevated a and not markets an XXXX, in in eye operate literally been that, little concern a changing seeing markets. the into a Tom,

Tom Boyle

the to are that the revenue performing rate say, overall, I'd overall best generally up from And we're a in link markets seeing move-in Yes. standpoint. trends

in which X% And but anticipate, in It's not of longer of markets. continues growth I be you'd there. quarter, Miami, move-in highlighted our seeing is as code ZIP XX% the or to Angeles strong similar So year, already a market. stronger rent one Los XX% any up a a

while consistent seen move-in rent again, it, call a year-over-year York have is In and growth rent modest growth, terms that of digits. positive overall single Francisco markets level New slower growth, I'd that low San that performance. very with highlight more a on of

Operator

Samir Our next with question come Evercore. from will Khanal

line Your open. is now

Samir Khanal

to how into on much Maybe manage have guidance on expense expenses been of guys done year, the your control I are of growth companies across job growth great a expense or ability able sort how many us better raising this you've lid probably keep you is when sustainable understand help Tom, manage expense of side. the sort or expense? sector. REIT next guess to expense a

Joe Russell

platform. been again, give labor which given I'll our investments of the many Samir. goes can of ability second has rationalize P&L. highest expense digitally-oriented. eRental it us which in context. the impacted have optimize year, very It's positively helped predict, to by couple our us optimize a instance, a digital number intentional labor costs it's amount which to And and the of Yes, for we've tool, the is another you is year hours, by of necessary, that general add been very back And of made Tom comments. But amount more that

customer Now a base transact our Obviously, with digital It's to choosing at-the-counter percent XX-plus that doesn't is it of labor. experience. require us.

shift that can traditional labor other we to of to priorities' So property property. some

got things going we've to market. over that's minimize opportunity and been of couple a our solar of the So We're the way very that an that to lot are but years with from accelerated been strong of basis, pressure a pressure solar. investment some market of into mentioned hasn't platform. last tool. of great a Tom under it's good to effective also do Utilities very It started We've in relieved hourly optimization we're making a a tool the certainly us seeing any impact. investments. some

We We're That property amount square We've then XXX operations, of that is pressure which million our got wide continue this mentioned, of just been about it's tools that sense. And the million square XXX that property open feet in and are all about makes to remote to that feet this in have, three to over and any I the testing margins, as for more to is the fleet for equates by property, rooftops another And portfolio optimize assets. evaluate quarter, or looking rationalize to our been pleased. we've we change continues you're property to. speaking XXX. instance, a years. today of playing last we're thing to for the continuing business And We've certainly again, to we're that investments. through for kiosks, of continue that in XX%.

you Tom, add So can color that. additional any to

Tom Boyle

well. think I Joe, covered it you

Samir Khanal

how my when question here. XX, even occupancy, And basis points we mean, rate year second managing this how look occupancy if maybe strong above But I looks Okay. a think about time I'm at of year? I growth and But on of growth guess the me of sort I you it Or look still is, tell is into level, when at clearly, at XQ. 'XX next you're rate like and then trade-off? should guess at sort XX are I I wrong. between

Tom Boyle

Samir. Sure, bit. that to Happy a little dig Yes. into

I about 'XX did the see occupancy performance. points As 'XX, of at earlier, typical a over over look XXXX, at seasonal basis occupancy. as also performance we decline highlighted XX we in XX, we're September, end And

ultimately and a the entire is and revenue to XX% area we're level, revenue XX% that are code. ZIP maximization to seeking ultimately of we optimize in So in quarter maximize which to the an have this like we and achieve occupancy that feel comfortable in spent tools

had clearly to benefit customers where of ZIP able that existing about our Code. new good occupancy feel so being for both And and rent and today push the is occupancy have within

Operator

Citi. with Rose Smedes from come will question next Our

is open. now line Your

Smedes Rose

people in year levels? at downshift. Would sort up is as think, mentioned, look of marketing your see just of on getting imminent side of recession Joe, you last this point. more a I to I guess, XXXX. shows you into just a of next get economy the And to you sort hearing question I significant towards promotional more kind follow willingness, kind and And aggressive of kind expect that interested on lot of spend pricing about pre-pandemic want the back if occupancy potentially kind protect to of

Tom Boyle

back to we I'd But look we to of We've tools have certainly Yes. to too early Throughout pandemic types we stepping XXXX, XXXX a strong into didn't use back, demand won't probably in speculate used XXXX and say levels even quarter, or promotional good getting to and mean even advertising in advertising meaningful way. be because environments, used manage going will what the time, and a exactly the so strong. operating I need typical have more really things an that I promotional environment used think like advertising was we be it's discounts in And more could the discounts. case. and different promotional Clearly, where environment. of like. we in heading

our in, that's quarter, In more last the similarly, This basis, offering XX%. year. moved any modest we quarter, about instance, received spend in in spend X%, in in the the our end discounts of we thinking low X.X% to there. the of typical that end customers historical the in the call like where advertising quarter, year, very hardly we So a about XXXX, were about range had third quarter. were towards X% promotional for it, the revenue in And quarter, year, promotions we of, XX% a that's higher of On promotional towards promotions.

And sure still that lot our use certainly a at And in it that recessionary environment, so could to levels to those and year question. next not answers we'll a if be advantage tools I'm into that what navigate heading environment. give running we're us the of

Smedes Rose

No, that's helpful. Yes.

it to in the you The a are insurance other up Ian? Or see in Did in aftermath your that a claims might is. show be and around there out you Florida ask significant in you is not uptick really wanted tenant way? meaningful of -- numbers calling that? Hurricane Or or worth something does I thing just

Joe Russell

Smedes. Yes,

heavy see First a itself. from hurricane did not of all, fortunately, we impact the

say, I or we of and Our customers foremost, and safe impact, job I number fortunate, $X to employees XXX a plus point fronts. very properties few roughly We properties flooding-related. insurance or minus or first at for mostly closed then an so units. XX had about plus admirable we're X,XXX, a were days, to expected level team to only dealing are be any in this tenant as and period significant The did the very a are call, had, mentioned, claims of with, that a would million. $X on environment. keep We And XX claims X,XXX property minus, of statistically, million so, or

retooling but to mentioned, very the So and and, for for fortunately, us seeing lot of impact, to to those specifically. located lot clearly of occurrence areas fortunate properties small a obviously, economic as a where overall I relative impact us we're on not are recovery, going

Operator

next will question from with Truist. come Kim Our Bin Ki

line now Your is open.

Ki Bin Kim

we're the this program an XXXX Can where negative see forward like you rates change think street how in ECRI look negative potentially help in And of increases what to occupancy? moving do you describe level in environment frequency? and program going or of terms might

Tom Boyle

Ki sure, answer I'll it, chime in Joe and well. as can So Bin,

a increased are the experienced earlier, of through we've and couple over really our years, of customers is that's, stays tenants back of month-to-month. so that different kind moved it environment increase an our So behaved the us gives we increases receive customers of existing highs, storage that about is years, eligible they've the the to found going of a last and they'll And components. and at way it's have dynamic units. a lot behaving. react this data have really to And and predict understanding breaking are testing testing record live constant sorts wealth and tenant ability how well. increases. last we number the have Length over behave customers of will into is, One highlighted And around several value information we Joe to of and a couple rate pandemic. how the of frankly, in think how And years, higher through what

months And that the remarkably what to predicting through months XX so, going very and base i.e., that or X are are now consumer we're XXXX, customers consistent seeing we've has to consistent, the models experienced react remained it performance. is

is what's to to of note years, tenant. second vacate, move-in component And the been does demand over as XXXX, replace some be moderating cost moving the to with we move-in that the a rates around I The -- through move tenant earlier demand I replace has year. would been X% And that volumes of couple decreased customer anticipated, but is cost certainly, move-in higher. in have when as strong, past moderating. earlier, that quarter as noted And has we continues good of very move-in from healthy. And as a up had the

so in activity tools longer, move equation on the gives just result component of the it. as to overall us of incremental rate is and piece of moderating of in But that continue stays program And other that's the length that are as tenant to effect. existing increase we one well And behave side likely forward. consumers

Ki Bin Kim

degree And your out group your customers of stay, are over that a is in going XX%. customers pretty different that just year Or higher meaning was lengths it at up the is longer of consistent? there all mix, of been that in to terms curious, to are move-out I'm have is moving activity before? moving comments than out, a about record

Tom Boyle

you'd in we XXXX. relatively from slice you demographies, up increases and XXXX It's pretty consistent. the et attractive, by frankly, board pre-pandemic dice But in experienced cetera, levels vacate psychographics, broad-based really tenants seen really and volumes the remain What on lows we've see depending that the versus move-out is levels. across

dice versus pre-pandemic continue record slice is well Thanks, or tenants you mix favorably. although as levels, last And more moved so again, Ki the both Bin. perform year they record tenant has that really base, And and to of off lows. highs

Operator

next question BMO from Juan Sanabria Markets. with Capital will come Our

Your line open. is now

Juan Sanabria

to a talk hoping consumer little about Just the bit.

how occupancy was above talked You pre-COVID kind levels. of about

well headline So of yet single is inflation. the you're But the low below in kind digits, rate position a new of strength. growth street

modest, just curious bit And think -- record just demand, having street or some that how to of why from extract are really would but that it's that causing there that? but should sort just ability of on rates Is limited of despite able street -- revenue price that's you're length still little management you counterpoint So rates? sensitivity strong seeing vacates, be a a to more occupancy. their modest we about the to in being higher the positive not it's the case stay, guys pay

Tom Boyle

Yes. One ability we increase as move-in maybe year. the as most have had highlight expected we've an we through to rents the and I'd moderation through move year, some of had

what the I which we which into seasonal expected, seasonal I seen lowering think as from is and the different occupancy. be have than away see industry year, into more right, to we and rates saw we've they us decline think moved fall that and more that months, in leading of a in last decline inventory, to occupancy, a seen we certainly environment rental have broadly couple over a the we've didn't their that's last because

streets think what inventory is visits rental to not and showing we've some and of the side strong. industry the moderation, I some report So a different that web that. looking see of -- the many as you seen to behavior well. industry, you're we're And think about rest are different at seeing declines the going rate continue The we're across scarcity of be year-over-year, you as flip

record the demand was you environment through seasonal remains so were maybe a a year year rates, little the of rental a little right flat, inventory, healthy. last overall visits, more about third think basically in more of web having bit decline visits bit Our what Web quarter. a should on top

volumes certainly environment that third quarter counterbalance the of the move-in is and So the move-in discussion. speaking the to well performing rate through

Juan Sanabria

around do rates? Good. continue would wanted from growth how restrictions? to levels you you left gotten existing sequentially? juice more to for you to to how Los have guess have back had street you Angeles, I have And kind can that capture of not much then you where more if accelerate bringing just been for customers much to Or

Joe Russell

demand. we've back are you XXXX. Juan, one that coming the our inherent a seen I mean fact we've back product little we there, even come it the and of for three-plus more Yes. think market, to years, been market quite very top-performing we've good strong, And relative about Los frankly. mentioned the it's markets. move-out very I go is new into on of volume, pricing and bit move-in Occupancies opportunities you to side. right got going think a step certainly Angeles, handcuffed got only little, into where deep-seated good there's We've not but still dynamics

this has So ended. not

Juan Sanabria

So just whether how data, on and October? end give any the or of end it's last rates street the the October you at quick trended us occupancy a Can those one. of update

Tom Boyle

look as end we anticipate Occupancy, at Yes. October, of the as bit we through a little fall. as the move declined we

But or ended line from again, move-in played October in move-in October, XX%-ish. down Move-in decline mean that volumes move-in I seasonality up Move-in a overall, rent, so the volumes, of So up occupancy I generally couple volumes, think rate for asking and October as move-in month in at the in moderation the through XX.X as end rather did good well. with well. September, strong. again, XX.X percent a at has quite expectations. quarter of the end at of the given rates our

Juan Sanabria

Great.

So year-over-year? was it negative X% X%, down

Tom Boyle

Yes, yes, down questions. a couple of

Operator

Street. next come will Spenser Instructions] question from Allaway with Our [Operator Green

is now open. line Your

Spenser Allaway

in and you're of marketed volume terms but cap this, on being seeing missed what of today? comment the I if you breadth assets could Apologies or rates

Joe Russell

from higher. There It the with market, end ended anything I million has we so rates we're At the far the we're cap otherwise. XX% where in was lower played able opportunity. we've a been in the to or stabilized lighter probably trade table. we've or rise this that adjusted feel asset points we've occupancies are seeing $XXX a tell It's that it's tell rates rate amount bidding cap been year-over-year, through or deals and gives of find far saw some -- on at far little was in XXXX, assets now the of we've rate the with into inheriting as to transacted lease-up always, have as opportunity, desirable, Sure, grow basically and by year, average of lockstep mean The than will that you, to come because to volume adjusted a of trading. that trade. investment as would Predictably, been is needs be to have will year, historic going between bit as opportune our interest to are you beginning the the I we a integrating on today. but year close profile XXXX Spenser. higher more doesn't has still at in so, I set to where trading hovering $X type billion more highly portfolio a carryover But volume hasn't that what different a many very or is doubt around But in likely really the more in we're or settle basis rates taking seen And compelling more upside. to cap that, so. really a different XXX of that environment do lockstep, environment, a the rates zone successful this continue as would very what valuations what year. so quarter-by-quarter, seller continue out of with time cases, activity and a lot or cap obviously which an But same realization been cap historic. to stabilized the sector us command,

Spenser Allaway

Okay. landscape, just But see that. today us touched value your do on across all the commentary the capital of sort was could That's I various you just economic walk list. where most really you helpful. as allocation just you priority wondering avenues? through creation look and I mean the given And your growth if current you

Joe Russell

It starts development. Sure. always with

own hard, vacant do a very strong an or form. $X and is assets. whether or inherent it development of So team we is or And through some either drive pipeline been, highest redevelopment retool go value our on still opportunities see, existing redevelopment it's opportunity to in working finding existing and whether to sites the development of activities, with take has properties, level land asset now. the down ground-up we billion our The

environment, returns, population that fewer keeping deals we very which the to what been opportunity seeing with you in us. team and looking still an we're table. for, very there's is growing even of very competitors owners busy this source at differently, I'll do we're So do the to good a coming tell can are

that's two cost higher to been be is the three of got today Speaking which is far risk, and then than driven availability top of very by of new or through. that, riskier it, it And I a dynamic, just a Part much playing my noted lending on was inflation the developer it ago. years frankly. in comments, one, construction to opening we've

you component mechanisms of find could but if environment or an on very be relative the Land to on back have intense competition expensive you're see depending in the the different some to don't increases, be to ultimate the may return particular a more So down market, there there, too. less can yourself costs asset. you very going more

into our risk long return got we're standpoint. we we're put in going for from of and XXXX. allocation that own purposes, we've deliveries of still that more the So market very development. seeing the capital what the But it's story pleased rate by highest a And short,

right often we're from good going seeing far by than Now environment into through, that finding as are my acquisitions, for bringing definitely comments, get not relative playing but assets as right a cap back reasons, the in more portfolio we again, can different we to a the rates to of upside the variety prior where good and assets pulling portfolio, are still that. underperforming

unique our top either the but that been of we just level additional out it to that's with own that we really $XXX that a been the can pay it's acquired things year, assets a only find investment acquired aren't better to last And million opportunity foot not we're per go us that and square a for upside. by for something have billion $X.X we mature because, do with environment going good or other value us, for some So frankly, taking this stabilized capital year.

Operator

will JPMorgan. from Our Mueller next Mike question with come

line Your now is open.

Mike Mueller

follow-up year a something question, that time ago? guess returns on frames as and you today starting to would underwriting developments what kind you're prior you for the versus are of a have started I

Tom Boyle

new over hasn't that get fact new underwrite three some takes to last to years Sure, this a years it Mike. to looking there, facility and industry stabilization. we're start that We in stabilized at obviously, and an underwriting revenue the to despite that X% typically tenant so attract lease-up time We occupancy, levels. you to at the to stabilize underwrite, property three years tenants has and couple NOI And the changed where and of base of ultimate been four still strong. typically four quite

Mike Mueller

XXX looking I well buying, you're applicable, prior guess, that being XXX that And comments up ultimate That Got for, you too, leased at? would value-add acquisitions as about you're XX%, the basis for that's it. guess I Joe's at in rates Is yield? rate, say going what cap you're cap that about low on XX% up points. stabilized where at exit, that

Joe Russell

Yes.

I spectrum levels. mean, of -- fully obvious it's I just different I stabilized rate from think much think, assets, applies to higher in lease-up. and/or again, it pretty frankly, they're impact the whether, in interest the, they're they're overall

Operator

Thomas come Capital. will from Todd question next Our with KeyBanc

Your open. line is now

Todd Thomas

to stick it's you wanted that balance grow to with in ready sheet well to Tom, investments. and prepared positioned. that your remarks, just the mentioned you're I use

of are terms it around up of sort following rates for where you in become moving and aggressive today more on movement the And stabilized the you're look NOI acquisitions seeing and What more? rates put the just sounds bit between so that to like work like in to developments investments, And higher. a cap the line yields would on spread with balance questioning of stabilized sheet what's acquisitions? cap

Joe Russell

platform, our that to in see We're assets with capital going Todd, team first but and them as see more we're legacy last are spreads. to We're XXXX opportunities be to obviously, the to saw do benefited years much additively think the the relative question, yes, to of an platform XX-plus XXXX. in seated getting bigger as the in part for where now well. But at is give through similar Tom right talk that opportunities looking actually we you've little the coming assets development, types to the the business. we're portfolios we've improvement. environment find compelling smaller to quick continue has not On seen parts good takes more, Clearly, would taken that that down. the put got that scale broad-based a we've seen that I'll It on opportunities what in to we've acquisitions assets, of putting been over very and upside. all acquisition have, the you've and by we our can -- get quickly can go of us we that the the portfolios hard. properties and is or to going allocation open side, underperforming in the to sites, that got big I where platform as bringing We've more very playbook for you more And market, which two pipeline team. United your on find unlock and bit deep good is So color of in, say, really reasons we a different States. of to investment again, that it's variety table. well-located But meaning into level very a We markets into volume, them integrate the working seen

how in recession. grow to out obviously. portfolio, well We'll we're think ready. to than go and That, arena may into seated just intentional, less too, sheet or the we're very predictable be may more development We've things sheet change to well I is as much we can So primed. balance Tom opportunities the tied because our But an investment going present the imminent where see not -- got is this acquisitions different environment far use indicated. balance that

Tom Boyle

around, question markets Yes. And then, been clearly, your debt the Todd, moving. have

then year each certainly I tools with profile think think flow growth have we about associated submarkets. step app, estate do what a looking also the in And the profile more more what the a and back, itself about to at can real that thinking so, we is estate. property cash real thinking we're we taking stabilize in but underwriting

use all to into asset depends it for our and tools rent submarket. that factors predictive that has science the We flow that team growth, profile. data So asset, to developed cash around submarket analytics

So on at look will asset the the basis, with and achieving also basis unlevered we're we well. what's an that as replacement costs,

mix the a certainly all there. go and So, into range those

on do ourselves while relative of On costs capital. versus attractive, we the capital the And But to basis find a have question, and cost the and we cost very a in both the down the debt basis, achieve fourth looking we're higher. in certainly about that at we're where in acquisitions a moved industry that spreads have coming good have FFO the access the on purchasing front, to no we're place going years. achieve accretion unlevered quarter. come the levered We we'll feel returns

Todd Thomas

developments were what spread -- cap My rates that over last of the what's that, what that's between the market to the acquisitions those right? today relative returns? that market were do years. was unlevered you how the sense NOI, today? NOI what's in outlined narrowing to couple yield you've your think now, seeing future look you're stabilized on for wide right relative is and pretty discussing like And us the spread developing, that what's like look expectations, the you're that I Or

Tom Boyle

Yes.

We we're do then platform designed efficient picked ultimately, As largest on achieve we've designed four you spoke risk in a think most that the to country. and into up plugging those mix. seek it But and operating assets building. about the and higher to. We've profile development location just the lease lease-up to the of taking unit the we're there. of the plugging that because underwrite return the development, we We're three years and we

gives And so strong us that those on to an achieve development ability yields projects.

plus forward those we're historically profile. at we and the yields, good stabilized feel we've X% targeted, that yields moving with looking at the returns Looking continuing yields associated and sorts of about unlevered

Todd Thomas

the about Was I on occupancy you to we end occupancy. range and were and I peak sort Okay. say you range through is really you off-peak you trough can expect on talk what peak that that going about that think trough what to to earlier. should XX% you or something year loss -- of color forward of rental follow-up appreciate And to this on balance mentioned might provided throughout referring the I XX% a that think of season the the October. now to quick kind of into to just related about sort the But right to the you of heard 'XX? pointing think the and of point? occupancy at

Tom Boyle

through range by think market. was Company definitely there's I revenue that mean, I that speaking, generally has say speaking the operated maximized and is I I Yes. years. to how a difference would the

so And today, increases demand rate Los to Angeles remains for We some been time. move able rental strong. obviously haven't

Los Angeles. lower are in occupancies So year-over-year

that. to Los added do Francisco, the same but out. on flip the those typically San some more support limited Angeles of markets population a And very the given inventory year-over-year markets time, the is side where growth and new Texas at inventory you the each that's year in higher strong year You year, seeing to occupancy in you're see see basis, or

is across those depending same on the volume looking to no and where maximize And to you're each and that see see it occupancy, a level revenue Houston unit that's of country, to levels discussion of the are. revenue not so different don't you lead se. typically to matter going You so going the price is team in ultimately, per individual where the

So hopefully, that's some context.

now year-over-year market, XXXX-type of again, occupancy And year. towards consistent through would we've been relatively standpoint, seasonal We've we consistent which occupancy that of that and third expecting quarter, be that obviously, consistent to towards market and more we would the point the In to heading decline. the expect are fourth track we anticipate end through quarter, of the XX% seen that continue were a you down fourth would levels. sort we'd where quarter, by where the with from terms that through

Operator

with come next from Our question Kamden Ronald Stanley. Morgan will

is open. Your line now

Ronald Kamdem

commentary specific, marketing, Maybe so increases? that forth. sort just market expenses on to of a back year-over-year drove more what bit just the Sorry, going sort you and its can of little marketing the if

Tom Boyle

Sure. largely, year. we increase. year-over-year most in didn't say And the you're last markets commenting spend I'd on

so And many in big some to prices the there's zero coming zero yes, that Ultimately, by team year-over-year spend is last or close same from marketing our year. dynamically a increases the on markets managed basis units.

overall our about which in markets markets, largest are marketing to gives lease. No supported part tools spend demand so for maximizing revenue, year-over-year the submarkets. a so some increase. don't receive historical still ranges, given property, But is like marketing or than us in of this back, you quarter big that and marketing in when that revenue, per like X.X% more into the the we've the have say towards last the heading we've the earlier, there Los of end more that on our seen the in market of we'll next which managed question. probably was I maximizing much areas I'd spend all year. lower And stepping NOI market. dynamics comparison can But look prior some year that's said at that's strong lowest more year, dynamically support. ingredient and spend Angeles is our inventory There Typically,

Ronald Kamdem

rents, stress of differently? bit different anything at when record do look a next customer about you sort just how at algorithms doing how go know sort or would and as about or think potentially guys take sense. do look may consider you makes and ECRIs. my you don't recession, square into back the step pricing a if Like there trying circle into the That figure inflation to you I Great. would environment, the then last this And be maybe on little one -- to And macro testing sort portfolio, be there? previous cycles. that And is just right, of think if just on of company versus that a it's the the out the going year? time you recommendations

Joe Russell

well to existing testing. which That's across a And continuous how new as as great I what -- you just tenants, that great is tenants for price we highlighted is It's a core for question. think

well we a allows that That wealth As time current year. to going testing have back do I of understand time behave as in X as are mentioned in of holdouts whether as consumer et would period. and significant cetera. increases level We we rate us send behaving to information rental the a in ability anticipate the a earlier, and over how different increase, consumers million

So and well. XXXX into core of the that's process to as will kind be heading certainly

Operator

remarks. further turn It appears or program have no would now over any questions at we this I time. like Burke for back to the Ryan additional to closing

Ryan Burke

thanks and day. Katie, us. all you, joining to you a of Have for Thank good

Operator

you. and today's gentlemen, this event. concludes Thank Ladies

You may disconnect. now

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