Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Public Storage Fourth Quarter and Full Year 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. Sir, you may begin.

Ryan Burke

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

Before may we forward-looking want These during meaning begin, we the forward-looking this matters that of to call discussed (sic) of revise statements certain are may All assume no we events. forward-looking uncertainties. as or certain and and securities constitute federal statements speak only statements because subject the of to [XXXX], update, become today, risks statements to February subsequent within supplement laws. remind that XX, economic you untrue XXXX obligation

to the in provide our reconciliation financial included on release. measures A we GAAP of earnings is this call non-GAAP

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

jump feel questions. after that, Of free additional course, in to queue with back

to the that, over I’ll turn Joe. With call

Joe Russell

you Thank thank you, Ryan, and us. for joining

on We’ll begin XXXX XXXX. by I’m our on and outlook recent in then two providing going performance to move for to color announcements.

platform. a It increase a the Xth, $XX ongoing record last share XX% raise a of basis. in announced and an a validation from quarterly over effort great per our team confidence our the that on February has strength annualized dividend, First, $X common of we to result our by performance to on a is of produced few years the

made a negotiations after separately, to privately. Second, premium in several at we as engage substantial Life to announced proposal acquire Storage attempts a

and poised important combination value to growth reasons superior I’d why like we is few shareholders. to creation for this highlight unlock a think

and from Storage’s opportunity industry-leading Public portfolio Life significant Storage’s as is profitability there to brand. accelerate growth First, benefits

Life opportunity of narrow assets same-store operating part achieves Storage’s as estate an XX%. gap our approximately approximately to platform And industry-leading that to with Our real we see margins their compared margins at XX% platform.

business lines, earnings revenues property third-party including and believe management, ancillary our upside storage offerings to business in is respective significant Second, grow customer insurance, there and we lending.

all Storage’s we only one existing balance as by of Third, Storage’s low team, advantaged we growth opportunities Public of see integrated and cost expanded to development capitalize in-house supported in development conjunction an cash forma finally, industry, capital opportunities enhance Life leverage in capacity to future fully its flow. will industry-leading the kind leverage, And pro sheet on additional to redevelopment portfolio growth this be of with and retained significant with portfolio. fund an the

benefits who a Public we received positive the recognize proposal, significant achievable the clearly companies’ announcing have uniquely combination overwhelmingly through shareholders Since from with feedback both Storage.

As its you February our release Life that press issued thinking. XXth, Nothing likely rejecting on our saw, in proposal. Storage response changed own

conviction the potential pursuing have strategic in high committed We a combination. level merits, are a and to we and of financial

to in release, engaging that faith encouraged, to are a openness We indicated Life discussions to February in good enhance Storage We opportunities mutually shareholder value. combination. XXth forward agreeable regarding look

for outlook While to our purposes we ongoing to fourth call shareholders questions is the respect analysts our proposal, our quarter XXXX. earnings have appreciate of with discuss and that today’s and

time. we addressing such, at proposal be As related not this will the to questions

in model Now, Storage, experience platform celebrating customer through transformation, including the cash sheet, industry’s best acquisitions, turning redevelopment of flow. significant Tomorrow portfolios, through to to and balance conjunction management. of the the Property program a was elevating of XXth anniversary. and poised moving this and while outlook. is The record growing maintaining our team year milestones for did all enhancing fund and our with in development achieved the through third-party performance which growth XXXX portfolio We properties our and retained results technology forward non-same-store Public operating same-store and and our

the through achieved owned square just an our in that million We NOI of combination of XXX expense only beyond To Public feet and few we $X of. is accomplishments, collective Storage the grew stabilized on generation revenues. achieved provided capable employees. a revenue and billion built Great total approximately Work U.S. name sustainability margin to XX% received prestigious efficiency the benchmarks. top-scoring direct We We our based feedback REITs award to directly Place by our pipeline And leading across $X billion. property we self-storage development

competitive a environment in in advantages brand top to strengthening on the are all are those type FFO business. Simply on of years competitive have consecutive technologies, heightened We of we lead macro two have put, firing of in growth. cylinders which and advantages And record we strength while are already our across the XXXX. core formidable today XX%-plus people, platforms position us we the of

our remains economic XX% a needs-based cycles. self-storage business see with than on it throughout the quarter. and for business up have are during move-in historically is The display. strong, as demand aspects made more multidimensional you that volume that This resilient are fluid of drivers the Demand with

in a form at increasing more with people driver continue also work from hybrid has to the benefit time here of which stay. to and We spending permanence home, newer remote

stay existing key record our to revenue driver a are rent positive growth. The customers also in our of favor. levels, competitive given are is for a lengths customer Our supply outlook trend, at increases new to

new positioned continuing seeing pressures, higher pressure concern strong well property are cost municipal With to interest very and less numerous we the less in and difficult macro landscape. over XXXX. rates, development demand, are competitive supply advantages, from new our We processes due nationally

over turn to I’ll Tom. Now, call the

Tom Boyle

Joe. Thanks,

portfolio fourth property for management over Neighborhood I’ll added platforms. properties to with $X allocation we’re that portfolio in start our $XXX the of remote our XXXX, and That invested capital between with XXX year. We billion operating acquisitions a quarter. million in developments the the review Florida including

by a of XXXX down smaller shift volumes XXXX. acquisition capital of driven was to impacted the transaction compared environment deals Overall, with cost by and

that continue our of Public expect last $XXX trend year with volume We with for Storage for to transaction million forecast this consistent year.

sheet and of cost industry-leading We our balance are positioned an as given acquirer well capital. today,

backdrop, seek portfolio with stands Against to $X as development Public adding our as acquisitions, is we that expand The industry, the team. in-house Storage across today million challenging pipeline environment $XXX on our And is planning our Joe billion on we development platform to on properties at And approximately highlighted. as advantages. X we more and in XXXX look competitive these in XXXX, to forward the our new drive outperformance. of generation properties development to lean national delivering putting new

Now, on the XXXX, for contribution guidance of upper We over year the reporting growth the range FFO of strong, $XX.XX quarter our the and of Business PS and $X.XX representing for financial end quarter excluding year, performance. the ahead finished of of the XX.X% fourth the core Parks.

seasonality XX% the tough of quarter revenue represents a quarter’s for the increased from contributors That fourth comps look and last In XX.X% compared Let’s to to XXXX. same-store, at our return the quarter. ‘XX. performance comparing and moderation the growth to a

XX.X% same-store stabilized Now same-store costs up properties the was operations pool for the expenses, on were of up direct income of In quarter. operating X.X%. net in total,

same-store, last addition to a lease-up remained In year. compared standout, developed XX% performance and of the the to recently growing and acquired facilities

shift to of midpoint, FFO representing Parks. with core the I’ll contribution again XXXX Business from PS We introduced outlook. X.X% XXXX, Now, the guidance growth excluding a $XX.XX

to pathway point and year, macroeconomic certainly pathways outlook, behavior. a of range revenue there’s the enter potential well this economy. Fed end the a the will recessionary demand is range low signaling in I’d but of held of up we customer year, that The the characterize at the influence as the question they’re there’s consumer higher landing for not the finished. has same-store a end wide If no outlook the softer we and the look as As

growth comps. a year growth. results throughout trending follow lower anticipate the tougher and increase tenant longer-term be occupancy averages the existing lower with will rents moderation year Rate pattern. the on towards of will revenue be in driver based rate We move-in typical through seasonal That of moderation a and the

growth Our expectations same-store at X.XX% leads and are of to expense. driven property X.X%. same-store expense growth, the primarily midpoint marketing That for by tax NOI

be completed XXst non-same-store powerful properties next incremental years. at be an growing engine again December those looking the non-same-store And and NOI XXXX contribution This $XXX are additional million the million is stabilization ahead from to $XX acquired a over pool $XXX to lease-up Our at the beyond, to and to of midpoint. NOI development strong million in several contributor, poised XXXX continue a of from acquisition to properties NOI. will of assets growth or

least, not and capital liquidity rock but position our Last remain solid.

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

in Our cash end to million leverage of preferred EBITDA strong puts at very debt position, quarter and a combined X.X net XXXX. heading $XXX times us on nearly with hand into of

up So to with like open questions. for I’d the that, call

Operator

ISI. Thank with our you. [Operator Instructions] Sakwa Steve will question come from first Evercore And

Steve Sakwa

components of I most number setting surprised? out, guess both kind on or the about morning, you, the Good upside this be you surprised could as wide year, that I and negatively expense But and out for the back side components positively do a on side there. Thanks. appreciate guess and maybe, which risk, potential range the feel can a you have where you thought I guidance for downside there. different there’s of laid Tom, come I like and revenue guess, you

Tom Boyle

good Steve. Sure. That’s question, a

a here. So, through like fourth consistent make to trends is started, has saw couple around One, how of I with I’d little the comments which a year what comment the quarter. we want to pretty bit

have move-in move-in volumes move-out that mid-single move-in, XX%, We’ve So consistent. been seen trends pretty down up digits. circa rates

X% it, or minus quarter. call we So consistent that, that in fourth plus the with we saw

we’re the part continued year. storage So, through of for the seeing good first demand

to do year of halves. two your I question, break XXXX to think like into in the But response I’d

the lead into of we of the the to. about think first to through facing we through as year. to that’s And the consistent comps we’ve half, first tough quarter trends part first fourth some move moderation going the spoke seen as The but it, I as really

against -- we’re strength. there’s highlight. if year part of you comps the XXXX, revenue be macro seasonal position second ultimately, uncertainty be levels side half XXXX the of the of the year, higher about One, the more But or growth, of couple but of easier we’ll second given to -- with from the significantly things comping a higher. But given of is flip end starting will the second is a absolute year, rather. a think in The the

pathway I But likely at the lower disclosures, that that typical be end, as the about leads in would the year-over-year to to our that recession. outlook, you towards revenue for of recessionary some see recessionary pathways a growth so, comps in higher highlighted negative half. than we revenue would the as growth to a And described think think pathway end, and we as first much positive second the it year, that half easier in better I’d we the through And more lead half result as say, move has does. second could about the performance the towards and certainly, uncertainty growth you

Steve Sakwa

you for you of it’s And I second if deals is Okay. still for $X doing just have then question, Joe, mentioned think about that but you you but challenging. deployment, or capital know don’t as new billion development

kind think relation Just spread the over of think do understand where that new next stand development help you that yields. to where two one trend are yields does in Kind years? kind acquisition how And of today? might us you to of

Joe Russell

continuing Yes, think certainly is Steve. that we a still trend that in There XXXX. applies through XXXX to played

lower First It’s year be might side. typical by of in the year as quarter to be on first of all, the out off. so the seeing definitely speak. or not on That’s started the we that we’re activity. of and case the transaction virtue light Certainly, acquisition where likely how side, a year volumes

to for this impacts are of how looking tied assets. higher and sellers environment trends at limited we’re transact capital, looking capital, to evaluating So, again, from of the availability cost

low, of command going are more year cap stabilized the asset, pricing compared asset, going Typically, stabilized see ago, today a you assets. cetera. XXX, maybe tell quality depend to are then, you’re rates tied XXX there’s more those the rates. in still rate. to different cap depending of to range location, cap of might a stronger to assets And or where level this whether X on going where it’s on them, up assets on stabilized going have that in rate’s be mechanisms we types to handle cap And the were I’d flexibility basis-point high-X, et mid to

assets XXXX. of value focus, Our volume we we the captured those that’s the Tom That see has higher it that been in played actually where about, talked acquisition through that kinds as to look for creation. certainly because

So we’re assets. still for good quality hunting out

plays frankly, through we’ll so the Our and the so backlog to the that up It’s how now, closed million. is we’ll little opportunities. slow approximately toward now months But on unusual of a again see contract’s see. not right for under between $XX though that start summer right market picking market set

any quite flip to pipeline two. talking continues what from be do as mentioned, robust. more Now, or about on our last than side, yes, development to the not the for development standpoint, It’s a year been difficult you we’ve different

prime Our team is working hard land to extract sites.

sites, some particularly do actually there. able opportunities that or been couple But get frankly, we’ve that, finding the and world good prime not speaking for the types And expecting minus been we’ve opportunities got abilities where to We’re with extract private these actually our years, last of X% we’ve yields on cash-on-cash investments. competitors that plus good very skills north in of to or returns the have. we’re to

very we’re by encouraged our So, own pipeline.

to very our the types overall Tom the and lease-up as contribution our have portfolio be to And continues mentioned, revenue relative to performance. and vibrant. assets encouraged, We’re NOI those of non-same-store

right ability challenging could still good and focus on across mentioned, ability fortitude skills look a a frankly, which the cycle, we’re to to out term development long different we’ve So, thing. And variety I actually the more we’re as go and we It of properties to gives got the nationally, good opportunities to through we’ve markets. encouraged sites, what got speak. those the so that X is as a very spectrum, our put continue into very Gen going us and that capture, land be great

Operator

Our question will Goldsmith from with Michael next come UBS.

Michael Goldsmith

landing, you where up the On XX% end probability end XX-XX end the low of see yourself ending guidance, more landing. while up probability low time. of you at and a you is I’m is it another combination? within scenario the high see a the recession, the end, end’s a to trying you at end, of the range or a up soft at recession a you the a for or understand soft that this likelihood XX% said Do high of range

Tom Boyle

Michael. question, Good Sure.

there’s So, of things couple a I there. think

pathways this we pathway is first is recessionary we view has percentage is. because a a everyone point own range provide know The to wanted on encapsulated a probably of that what to their multiple or as call landing soft probability

And so, range, own can their was appropriate thought that obviously, provide it and perspective. investors make to wide we

is range, potential look the outcomes at look to balanced we but to going obviously Fed we and we consumer know As don’t relatively the it, at the is that going as what do within how X interest ago, landing that no react. talk fact lower. back that X landing or weeks. to were a gone the We’ve There is weeks no maybe the was X rates of table. over those off

year. to pathways. provide So, and through I ebb our And to to out flow think year analysts the as that’s according play those going could the what and through was go understand to macro framework investors objective we a

Michael Goldsmith

were then, every maybe X you Got over on so. high every And say, teens year, it. X% let’s XX%, been sending And increases months to X.X-year, sending increases the pre-pandemic, ECRIs months. XX you’ve or past of this mid-teens,

the what to of about But ECRIs expected the this on role the the how just you kind it’s Obviously, for of ability quantify in going to along right year? you. help year? is So change talk your upcoming and the scenarios. looks now different maybe and top-of-funnel pass -- to depending rate can a you over is included the play traffic Thank in maybe this ECRIs year because going plan your if can and guidance, the frequency

Tom Boyle

Michael. Thanks, Sure.

the tenant program about the We’ve and really demand increase specifically increase hit talk our well. to rate spoken So, then top-of-funnel is two existing program, I’ll about rate around tenant components. consistently as existing

at performing to largely is increases? expectations reiterate to sensitivity expectations. how the and are I is consumer in consumer And with past and that would continues first in noted they behaving? the perform the line and is today the we’ve How reacting The

no to real so, the that And around on there’s thought change process program side. that

And component to that years. the replace leave. over last no quite that’s the tenant is But cost a that second they question bit when there’s changed the several

cost was, no a and You potentially There in-place benefit had were replace XX%, markets in replace. fact, to rents there XX% up Miami like where a was tenant. to

in through and And that new magnitude started in. still tenants and frequency to will revenue ‘XX. existing shift that to optimize lower come increases result pool that lower we so tenants And impact of into ‘XX from as moved that and but

well. part volumes of is I an mentioned, the important digits think, is fourth quarter Then one, Joe demand your around second performing, XX%. the through because as the are this question how nearly up through top-of-funnel move-in volumes were double as part of Move-in up year

system. from we’re into customers coming And the so, new seeing demand good

Now, more we’re bit spending on little advertising. a

to very them discounts are rates Our little that’s forward that. with or spaces Those the the capture those us bit of you I And and achieve will move a But order question. to is tenants looking promotional There’s to they be tenants, think lower. are XXXX where customers into. portion to willing little move well. bit storage tenants enabling a more as ultimately, which will through were a long-term good going as in

Michael Goldsmith

Thank you much. Good in XXXX. very luck

Tom Boyle

Thanks, Michael.

Operator

you. Thank

will with next America. from come of question Spector Jeff Bank Our

Jeff Spector

like on I’d macro to of -- second I to bit and half. lack guess here. going a totally the I’m here given picture understand, guidance first little clarity, I push the half,

on, there’s where let’s it -- season. guess, July, is really leasing we’re again, it? like does even my start? Because hits peak And that When of the just a is what say, that to focus bulk Let’s through, if lag storage. I June, think any that understanding I recession

play trying peak of the your this get just important season. how leasing through like months, picture I’m out a So shake out, to could most

Tom Boyle

Yes.

and July. peak see April, season really answer really into in then, way in June a in to the think I May start question big typically we pick leasing up directly, then the and

right? And the seeing pickup would starting for already to occupancy some sit you your in seasonal that to in markets, are the year, as far a to point, end more So anticipate in our seasonal instance. see some very it’s of the February of markets our patterns compared here we The already away. of we’re not

And is typical pattern so encouraging. seasonal that to out, which is play starting

the And on later year. obviously, if performance financial a in very recession year. busy through if the operational and impact that a I certainly that think you the a year not business. has going would there positive performance it’s the where may that is earlier a chance it’s the is, season, And there’s And certainly that performance impact overall of financial comes, of the and be good in sector

Jeff Spector

that peak leasing fall any or do Tom. grab or let’s to potentially how I the rock months alter customers? given say, weaker now strategy a Thanks operate, then, things or mean, uncertainty? right ‘XX. during you seem potentially change solid months into for, Does but preparing more winter Like, Again, this

Tom Boyle

week team Yes. I’d be time by space. where our through our day just to manage summer next typically hard our exactly say, And But it’s year to and day sitting we’re know storage this to environment. period be in week we’ll demand constantly maximizing current by to and busy the noted, dynamically planning seeing we’ll looking own as we operational what our at the customers performance through for ultimately we’re when well a react strong serving there’s time. and

Operator

Thank you.

from question next come BMO. Juan will Our with Sanabria

Juan Sanabria

about within you could further range it about little exit to I guys quarter really think same-store discussions year, rate like talk revenue run the on guidance. expect you the the Wondering bit And it. if if fourth looking be. to called Just you the last what saw you a

to initial the it true, in relative you are raise like little the to conservative guidance more set. year? really peers And this the time full greater a be and guys or uncertainty of this more Are and the to much tried of were changing maybe in being see trying is of bit at well the planning acknowledgment kind that some it You up, you call game. with you ahead

Tom Boyle

there, Well, in there’s a whole host Juan. of questions

So, let take of few a a to me try time here. them at

think little out from second I and first more the talking But maybe around the half I think do trying characterization... I about the think bit the the second and half tease question guidance. even, So to is -- me the you’re a part XXXX of

Juan Sanabria

fourth quarter. Just

Tom Boyle

quarter, Yes, just right. fourth

half. the level second face will then, comps half, going to savings, So, really I’ll the performance, some through comps earlier, go macroeconomic time season the go we’re which on the speaking is that is depend that and as they was we half, first to points for that a to half the excess have first et the moderation and savings excess half, to and back by those do half lower And through which the will the how what I to we impacted the consumers busy cetera. comment, the of like growth first is to, made just of through the likely the is second absolute lead the period Jeff and burn Fed quickly tougher the as experience going and environment to how first consumer

look you all is weakness in performance And at find the I in storage delinquency, and a think there, rate if right? which tenant looked to as the things. year, number a of there’s we revenue typical is sensitivity, that modeled demand, board metrics, across is consumer those is performance, the different And year-over-year One other recessionary recessions the negative at through pieces led moving what’s behavior and new really different environment, past. existing what of you’d those

that recessions. you weakness. help expect in like recessionary have will would easier we spoken potential there we’ve the So, seen in to, in revenue second pathway offset declines, that the prior that some comps negative benefit we’ve of which of year-over-year is will But half,

next can right, going to the find is recession, deep X which we well, here months. come? those On it? prognosticate on, ultimately, flip we’re is and side, does All talking out over of sit it sorts about, XX when just we’re to the the but How things,

positive fact we’ll the half. of as consumer market easier strength that the labor if healthy and U.S. labor certainly second situation be the comps be there that the more pretty the where if consumer Fed holds there’s half stronger, If because in tough, effectively, second the up push the a of could is market in having growth doesn’t the

outcomes, then, we’ll And think to will and relates the range of sense it half how I our potential that’s so, think it responsive to that your I second moves And I on that’s as exit, hope question. depend of exactly forward. how

Juan Sanabria

then, could cetera, a food group’s more right. you a And color more. around in if little numbers little little taxes, prepared just I property expenses, a remarks just That’s et know that you hoping bit that marketing, major called curious give or to but on your the out flesh bit bit

Tom Boyle

sure. Yes,

our item year within specifically largest operating the percent with property So XXXX is same-store operating expense growth on expenses, line property them. taxes. a the We X-handle ended with taxes

to the We higher continue rate that we’ve to the be likely years, the we several NOI seen as expect over growth the that in a that’s into growth years. given past coming sector move

So, as through That’s driver update expense something X% the we’ll move like and operating we there, the biggest growth. we’re X% to growth year. of expecting obviously, certainly

The others smaller. are

prepared second one The I highlighted in remarks my was marketing.

with in markets. really top-of-funnel saw, you the drive to further saw That against demand there returns in fourth when very expense. that, we and in very of we XXXX spending quarter, into little the our system, comping most associated was marketing period increased So, was good a

against So, the comps. really percentage growth low looks elevated

marketing the we’re facing year, first another part So really to low because comps. in is likely similar of this one, be those expense

today of transformation the labor even the see the line facing items wage inflationary market which efficiencies other digital several Some the to the could given past transformation of again, There’s over strength we you years, operating pressures, pressure. were working has led But are model in wage staffing. pressures, the that those of fourth in continues. quarter, that some been we’ve through and mitigate to able

mitigate. that So help will

by conversion go about LED solar but investments energy solar which and years seeking room end helping then one utilities is to our to to about utility properties we’re year properties add looking aggregate XXX move combat be well that. seen And our of total our efficiency, it in with there the we’ve another that with the as mitigate in with bring we’re as XXX future programs, higher, to more that to to our rates

landscape a line further high-level to that’s a So, number go of Happy helpful. into the of detail items. if any

Operator

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

Todd Thomas

I first back guidance. question, Tom, to the guess,

or that a the lower and at Was sort You throughout mentioned provide little the Do year-over-year widening year, move you of will end narrowing so as detail year? year. where low ended range you high bit there that around call what maybe expect XXX you throughout can it, the be points. down to the occupancy likely of relative you see if you the wondering basis might spread more

Tom Boyle

talk the first starting Well, obviously, will we that first occupancy occupancy then there’s let macro about spoken me half you But as do talk that. and can second influence we’ve think about which half, uncertainty the about, experienced X.X%. the think that decline XXXX the a about we’re was back half, of we seasonal with the year down about decline. And the occupancy we in half first

decline. seasonal to is markets. pickup that our June that is December typical better occupancy seasonal in in in touch fact, a seeing what decline a But than of from today inherent the we’re In a was some

seasonal the I we’ve pattern the to as half. So, opportunity spoken from narrow typical busy spread into for then follow that to, but the anticipate in would there’s certainly back we there a season get would as

Todd Thomas

the where And occupancy to some starting build, Okay. talk markets see about you markets seasonal when already are which you’re those?

Tom Boyle

if to tend the see to pronounced. typically that look that Northeast, you seasonal be you your they see Well, But be weather Los Minneapolis your a colder more pattern. seasonal San at pattern Diegos, or Chicago start markets, or same Miamis and you Angeles so and don’t

Todd Thomas

I of which I forth. the an mid-X% with example, think extreme margin you’ve scale and in capital circling XXXX, some extreme, was through going you about stabilization. that maybe so deal, cap improvements, $X.X All to the then making a during that X%, billion comments And you deployment expectation like think Storage one of not around deals yields investments. talked in example think it. and back And got to Okay, of upside XXXX made initial was acquisitions the increase rate sort When sort earlier just I did and but the larger Company’s at substantially an some to

the willing on, in would have bit you is ‘XX and different landscape you future to of initial different environment spread be the relative you of you capital capital realize your the you of a about characteristics. and dilution like deals at? to about But today growth cycles, uncertainty look cost give around does cost or still think in current be the early I invest at think would or willing that prior greater your how have as to and tolerate pause all acquisitions, today you little to

Joe Russell

years now looking Yes, Todd. I speaking strategically for do that with doing that three assets the last opportunities or mentioned that been for upside you’re more what to. we’ve have is

it’s through included, the bought larger nice metrics, done relative portfolio some cetera. the to So, and occupancy, lease-up thing exact well. with portfolios, stabilization period at et a revenue in that very really the time XX% lift of short continued about we a of same And deals one-off as All had whether of Storage we’ve

right something we’ve market not doing, be the continues When market, got good vast see to going assets knowledge confidence that’s that level elevated that majority we’re that a of for deep-seated we deals of these extracted an platform, literally put out of acquire, the our about So, we be very to shy own on which once playbook opportunity to gate. you and into can it do we we us. have

higher-margin, as cetera. that benefits the brand, relative platform, assist our speaking to to our our et see efficiencies You opportunities, we’ve been

not have kinds them looking assets all. definitely and backed we’re away those from at So, of for

be our has allocation process. part of So, very vibrant capital a continue to that will and

Operator

Street. come will Spenser from question next with Our Green Allaway

Spenser Allaway

year? storms provide rent place you And type this on put NOI early the lifted? Has that contemplated headwinds was an of any not, guidance? is update Can in in the been there if related to California freeze the in

Tom Boyle

Sure.

place think, in here out of I you’re storms took early that There Spenser, the a emergency January is speaking So February. state that was in to in that California. in here was put expiring place

emergency I anticipated, lead rain to pricing can restrictions. continue it not as going those. events like and or believe one-off think, we’ll in to California, And So, of and navigate to there’s that storms be state

out into guidance things that of there’s As and to embedded different markets. that our it what’s in expectations, relates come come like

estimate significant reasonable we we’re outlook. underwriting those in through a as so, And rate rental move year could the what any be not as our the to take to through we’ll embedded restrictions year. try But

Spenser Allaway

Okay. And ahead. then you -- go

Tom Boyle

ahead. go No,

Spenser Allaway

how line going ECRIs you you on specifically thus high on guidance, low comment the guidance? then, the move-in lot is rates commentary providing terms contemplated great magnitude in you in ‘XX. provide to And recent volumes on and item and was what’s provided specific ECRI guys a and of are and say, can those any in activity? have I at on of far being But, of able are there trending end of color both, without general to guidance guys

Tom Boyle

Sure.

can’t them. grow That So, my as markets, tenant sent market we’ve and an I’d that year example were where back certain is customers several have Miami go to response rents down in that we increases the a for question that to frequency that in as existing in for which and and moderation Miami years, perpetuity. new rate that’s highlighted And others like there’s no I XX%, anticipated. up the around each we slow in earlier, past started XX% magnitude

the rate and rental that, at of already of that start this to the magnitude the because of to existing customers we’ve likely increases seen and frequency is year. moderate But year,

In but terms a what do as and the to around unit pathways to to the different choose that cost a through that they or as move the tenant going outlook. rest increases of And to replace the if to as the along in I’m well send move out. their year, replace tenant on take we value with they averages the cost could tenant not that or we range of of get into understand the place specifics a numbers sensitivity there’s based band, we whatnot, wide

And result in going stronger the outlook, the to it’s a frequency, to weaker the tenants and rate the for is tenant opposite going magnitude in so, stronger have outlook existing and effect. increase,

Operator

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

Ki Bin Kim

Thanks. thinking your A for quick one in move-in guidance, first. XXXX Implicit are what rates? you

Tom Boyle

Good Yes. Bin. question, Ki

territory. I’ve move-in as finished rents are and a year, we certainly, we year, highlighted, started that the fourth below the in quarter with similar So prior

We the move busy as that rents lift are we see anticipating season we through months.

we’re around anticipate, I rents. story higher I as to looking as rates absolute in the part that an than as second the to rental noted lead we’d comps. earlier, in demand the inventory first in is Obviously, we will could of they anticipate consumer out. year As as what are a the in half if are The get recessionary half, demand And in first are the to the going and capture play environment as a you’d higher lower year. that tighter rates Right? as there’s comments move through noted, we’re variability to the But where tougher on increases, in that result the of around half second demand. In earlier comps remains gets strong, you definitely the point move-in customer to compared rental that’s lot second. environment,

Ki Bin Kim

I should maybe it. So rephrased have

move-in rents of down So are your XQ. X% as

a trying that’s the I’m year-over-year the basis, So, understand way trend... to on

Tom Boyle

are right well. they Ki too, as what are Bin. That’s they what that’s And right now, now

Ki Bin Kim

Tomorrow and I’m with color you components guidance over And of solar of three maintenance of a Okay. between around return you past and if out has that. $XXX your great provide item just CapEx on job million, curious CapEx, years, and CapEx can some it breaking line this associated Property grown LED. do some of a the might have the if this obviously,

Joe Russell

more portfolio at solar, entire markets. that returns returns. as re-lit additional to likely on entire very And XXX candidates that But definitely good, The near the will in say, part look three into over investment very years. at five our term, properties the as of help we’ve recent to multiple for percentage legislation, mentioned, there’s motivation to opportunities basically the had good, to for We leads LED. good returns. as again, the energy even speak that Tom from with We’ve has particular. combing portfolio And come efficiency we we’re through stimulus solar investment. portfolio XXX continue good mentioned, we’ll are got Likely, here, to think, the to I Tom strong sizable the a next, as get onset

lifting Property satisfaction, et do that to of from market XX% has on of to satisfaction, standard see We It’s seeing market and of the awareness, portfolio of of as curb market XX% the specific now that we’re level the at type been we’re of elevated higher little enhancement properties. market, the over a rebranded very appeal a the we’re just cetera. to the well. Tomorrow receptivity seeing a point aesthetics returns by to good brand we’re employee And and Property investment. of to the functionality that customer Tomorrow, then harder measure some clearly, and of the

So, pure a results to continue to harder basis a as little measure good but on from just investment economic that see well.

Operator

Thank you.

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

Ronald Kamdem

Hey.

middle guidance. revenue Just Maybe assumption the going debt sort on color to the the more same-store of lower Thanks. at end for and upper the back of at bad the any the and range?

Tom Boyle

debt through I but are quiet, was the you’re that good. I embedded that of Ron, Is coming in think okay, outlook. guidance kind what heard bad -- expectations

onset how spoke last the I’d to and a bad as dramatically. half of So, through back first characterize performance good debt lot delinquency the pretty declined of be We being overall of part at and bad year. debt -- pandemic the around a year really this the continue

pay those below their off lows, a to bit continue our remains consumers and levels. good delinquency bills pre-pandemic but We’re

specifically associated good the morning, on the increase pathway recessionary pathway the we that of that speak reversal with to spent through likely we bit question bad a that bad did increase see debt would we’ve the debt we’re talking And towards anticipate to in end. the and time higher ranges, assumption the to so and as this that guidance about

Ronald Kamdem

assumptions super Great. the about helpful. second talked one, of you guidance, my which the And macro then, was sort in

first, there it’s maybe leading whatever? of Are turns, to a of macro ground? sort the from you you would there tracking indicators the wondering, that you whether move-in indicators sort the operating or guys are that guys of any Just before handle are this volumes business. of leading Are sort get sort see in, on

Joe Russell

a I and amount we customers Yes. month-to-month move a of move-outs have in business. We well. running mean, on obviously, lease XX-plus-thousand basis as we’re a monthly healthy

to So below to other to payment obvious stress et elevated the market we look pandemic. at saw relative of relative And be what payment to we’re the just of monitoring stress continue quite economy either is change continuous macro what pre good. But, the still the degree the level of might flow some things like on events, market that patterns maybe mentioned, those with be large metrics happening at patterns. actually relative to nature but as Tom evolving just of that activity, one constantly we more cetera. or it’s, a There’s of basis, of

got very tied our so of close cetera. new it. We’ve keeping to We’re now business track interaction to that ways actually a different on with much is digital eye et and customers, this

to we’ve evolving. good So, of that be to guide stress got to tools whatever relative points stay us and ahead might

Operator

[Operator Citi. Instructions] Rose question from with come Smedes Our next will

Smedes Rose

capital wanted just any you if kind just ability -- supply to these the of in access and insight you I any to outlook maybe developers’ have kind you’ve ask changes if of you seen have days. if into

Joe Russell

where Yes. similar in an years, elevated we’re Smedes, uptick two risk been relative approvals I you the from looking static mentioned last ties more for have amount into complication at standpoint. a that very had nationally many not coming deliveries And processes. That go in to and my fashion is just with deliveries. benefit opening remarks. XXXX the somewhat the economy. the We’ve of development through as in the tied to the There’s complication of unknowns overall getting step-by-step cost to likely

So, the actually meaning seeing is very new overall picture we’re supply good, to development. a not rush

beyond we’re eye real development validation acquiring or platform of opportunities closer that keeping majority looking for and even lens Our third-party seeing a are either us those little the bit development. as we’re gives more team our tied estate to out team of opportunities. day-to-day on well where what our that as through development our And a development is

we’ll continue amount going that we’re again the in through going or downtick, to hopefully, of be a track that. fingers it to deliveries either slightly forward, to see continue crossed, and range actually could same So but XXXX

Smedes Rose

think head might been we around or into pricing then, other potentially long a And maybe two helps. maybe kind which or or the Okay. the interested more recessions, -- as done wondering economic kind would of guess. recessions, prior you of there now one so now, of I’m you just big in when back do strategic Company just weakness XX of would had AutoPay either just there are of are look now, given on of have, kind color has you I’m front, I three than at you like kind there picture, history what perspective were the that you and over from things sort like on But then I differently years of periods occupancy your any in people

Joe Russell

to and cycle strengths, core strategies, away cycle, resiliency types practices, ways continue see build our upon to economic best flows the overall the of it take that and different but ebbs to et not buffer only stress, our to cetera. relative we different to we again, of platform and of those Well goes

our ever got that So, mentioned of, it’s are business move-out more and more that now had. to clearly the processes instance. the on we data the running fluid amount pricing, things that we’re doing is then constantly can whether all that we’ve We’ve far volume very basis. a And move-in whether I than to analytical it’s relative us do have optimization. promotions, guide tied marketing, we the again testing again, to tools for that

great continue a well. got able it, and got to tools. reconnaissance, technologies going continue served We’ve different in have those us of, make investments and that. ways, deeper to very into we economic think to just cycles, great do got we’ve actually, of We’ve even whole test again, we’re been strong in that so we that to we’ve So, variety out

Operator

Thank you.

Carl from question Keegan come Research. next will Wolfe Our with

Keegan Carl

Yes.

off of we you here. range XXXX When deck, FFO. growth to back long-term to X.X% guys May forecasted maybe a starting your bigger X.X% on a question So investor think picture with

continue curious, Just kind going is growth of moderate? do or to in that play you to still forward anticipate

Tom Boyle

Yes.

growth, presentation, the that and through out them recall. a investor of broke I’ll there’s number looking worth. I we talk at engines back different So, of it’s And really as had longer strong that mean, appreciate first years of of blocks. storage the Certainly, building growth. and the I term question. the rates we’ve I one a incredible around And growth couple here

term we’re of the and about that enhancements a towards the where talking we operational of through. improvements -- growth those that longer engines But towards year components was now getting averages. We’re of formula trending one back walked

over the operating data moment that doing Joe’s just revenue So, we’re today X things That to new systems investor an is rate rental management and are same-store a to a growth. and million to have science new earlier X test approaches. and year. efficiency ago, we energy and And ability and I continue The NOI transformation around our continue to which to hear model we team, implement benefiting move-ins got million community fine-tune that increases over spoke our from processes. point those

So, we think that’s certainly intact.

going capital deck. think through I walked time has changed the we ones, through of from question cost no that the when other that portfolio there’s growth, the

are out that allocated more to set over amount capital And one that of last change Last a components of in we’ve there’s the that think that year line certainly several was years. to so, some at significant with I were our year Certainly, another. expectations Day. Investor going from

received on growth and those benefit that to, the think we spoke FFO absolutely from as we platform, still Complementary that the the were components continue down the that I grow growth are outlook, and other and leverage intact our Joe and list. third-party investment reinsurance led to business management Shurgard other to that tenant that our in

on very play push that to So advantages much many competitive factors drive still are continue in and to in our growth. of summary, those

flow ebb another. I the more one is think the that’s portfolio to to year from one and going growth

Keegan Carl

we necessarily where And do throw utilize here first-time users demand don’t subsequent customers pandemic one gain. sit any commentary here. to out the demand these just tailwind, and just be? I’m anticipate if self-storage? do where ultimately you prior you how to think guys your occupancy given out, reconcile meaningful another through I’ll tough it. how the expect trying think Got and level And sticky could you many But

Tom Boyle

Yes.

activity, a well, new in home to a hybrid and, time decline last question, improvement a sale spoken activity different pickup in activity right? of a more homes. storage question are the lot around surge drove users. through first-time several as now a the we that’s fact users forward we use users of in move a tailwind that over combination new part of home lot during a frankly, of a new do of in And people change And storage think and around work spending as time. first cases home first-time significant was that sale years, big the the influx their So, there we’ve No the pandemic. part The

continued think good younger it goods by from to do you grow that storage XXXXs first-time smaller seek a that for of And value users the encouraged adoption forward. the in And a a where so, users, to those about think as the tailwind is to the base store their storage as that has and today. is industry to continue we’re moving

Operator

you. Thank

will with from question Our next Mueller JP come Michael Morgan.

Michael Mueller

Yes. Hi.

I there think of in over a first, you customers of mentioned I out stats And wondering, you can the year the record throw of and years? percentage length stay. terms just over was the two

Tom Boyle

Sure.

around That’s years. like around in-place today. in we mention back how spoken that’s months tenants. average I’ll of XX, call XX it, that the the tenure going which to past from, First, metric is several sitting XX right the up And the we’ve communicate, months

in benefit here stay the of question, that longer his as Joe of And highlighted prepared so, sit no length we and a today, continued remarks.

I today, two as year. a here it’s healthy, XX% been question over longer for around, then of the different sit today. think XX% with years it, segmenting we specifically to XX%, And a XX%, is than very -- bands, XX% are over us longer your customers have have well, And the tenure -- we than still, call

healthy pretty from that’s obviously closely see there sticky continue watching to existing and encouraged continue trends something we’re by. And to tenant we be So, base. customer the

Michael Mueller

Got it.

then down scenario versus but the same-store landing. going you And about guess drilling not I to guidance soft talked Okay. on recession the

foot you head do the that starts envision on development recession taking off down you all If of probably gas scenario, would or the at not?

Joe Russell

that have are still cycle actually would or value persuading out cycles development in mentioned, view environments otherwise we think for many a or that particularly in can fortitude, can our like We good I I go we very and And creation to mentioned others not the cases, opportunities pursue lead financial longer-term macroeconomic to us, and is better might with see as the cycles that’s not sites to own and basically, some long. view to you’ve development. this. Mike, Yes. got it in And through capture the see. and actually cases, capabilities land of even us opportunity

then So, getting out entrenched into sites our that’s going the and our processes. and getting having et all through approvals, construction estate benefit of, again, cetera, looking entitlements, teams then complications of deep-seated knowledge, very of the development for real nationally and

lumber and costs, anything it’s Now, come the just through amount there’s or or et inflationary to we immediate to of any have pressures see relief don’t cetera. tied component oil, been, whether that steel

and and cycles, our flows the only good But them, we through make even but and happen in corrections we’ve capability expected of not lot have there’s look and So, particularly sure that risk ability evolve development our hitting cycles. uniquely of got a of returns market through, very underwriting we that think bandwidth to own the that see market give business. continues we to enough to exceeding ebbs these hopefully if again, into us

fortitude longer-term to dynamics got always we’ve to that. do assess we’re near- trying what looking the the market So, and are and but

Operator

now closing question-and-answer This you. any back the for or Burke to of call. additional turn Thank to portion like Ryan And our call remarks. I the concludes would

Ryan Burke

for us. you, thanks great a Thank all joining to and Have you Chelsea, of day.

Operator

Storage Thank appreciate any participation. and the conclude Public fourth you, We at And may disconnect your full year you ladies time. call. earnings and quarter gentlemen. This does XXXX

Public Storage (PSA) 22 Feb 232022 Q4 Earnings call transcript