Public Storage (PSA) 31 Jul 242024 Q2 Earnings call transcript

Company Profile

Participants

Ryan Burke	executive
Joseph Russell	executive
H. Boyle	executive
Steve Sakwa	analyst
Juan Sanabria	analyst
Nicholas Yulico	analyst
Jeffrey Spector	analyst
Ronald Kamdem	analyst
Michael Goldsmith	analyst
Michael Bilerman	analyst
Keegan Carl	analyst
Todd Thomas	analyst
Ki Bin Kim	analyst
Eric Luebchow	analyst
Jonathan Hughes	analyst
Michael Mueller	analyst
Spenser Allaway	analyst

Call transcript

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Operator

Greetings, and welcome to Public Storage Second Quarter 2024 Earnings Conference Call. [Operator Instructions] -- As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ryan Burke. Thank you.

You may begin.

Ryan Burke

Thank you, Rob. everyone. Hello, joining second for call. XXXX for us you quarter our earnings Thank here Tom and Joe I'm Russell Boyle. with

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

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

with free Of I'll feel course, call after turn that, in to more. With to the that, over Joe. queue jump

Joseph Russell

for our it and and you walk Thank you, updated will I you through Tom today. joining performance Q&A. for Then thank we'll us up views. and open recent Ryan, all

supported a and acquisition space for momentum strategies. Occupancy customer new we sustained with a but year, move-ins have a regarding in Accordingly, positive move-in charged healthy rents expectations performance compares are forecast. reflect year-to-date. positive outpacing broad-based of more consumer which down by second our guidance Our in markets. occupancy market on dynamics the more XX% original many with customer the net Tom competitive down by our the X% rent our we to That with activity, were to short expectations our ranges will exceeded moment. Overall, and conditions behavior levels, including new home quarter move-in Move-in for in fell rents our customer trends business, at effectiveness existing in adjusted customers. remainder to encouraged of need competitive cover pricing

a customers and behaving length payment stays. good on of year-over-year basis well vacate activity in-place Our strong are with patterns, reduced

be will acquisition Our XX% signs And accelerating within up some quiet, development growing in month-over-month while quickly shares of showing these also properties to and million $XXX portfolio high-growth which the common quarter. Several improvement. broader favorable we revenue markets on total activity. Based are supply, footage non-same-store supportive our operating and the NOI pool, which growth nearly seeing of new portfolio comprises fundamentals. Public is trends XX% is second capital square our XXX during leasing Storage with of quarter. the market, competitive position, repurchased during strong still Waning

our We a year continue stabilization across to XXXX as portfolio. of view

the excited are trajectory and medium We about long near, our over term.

additional will detail. provide Now Tom

H. Boyle

the in Joe. decline a to the quarter. the and We first reported core with FFO share, representing compared Thanks, period of XXXX, X.X% X.X% same line in per second $X.XX quarter same during experienced

lower better-than-expected the at that A decline by market and compared which our declined offset same-store move-in portfolio second even Looking occupancy in-place relatively of behavior decline. revenues mix lower rents properties, was primarily of partially XXXX. to X% drove rent of were customers. of quarter The rents, the by driven stabilized

expenses, Our in the basis end, points on quarter. basis occupancy of XX quarter outperforming to XX down same-store XXXX up our net at to were gap points positive compared expectation operations move-ins. On second narrowed cost

and line quarter. solar the X.X% other same-store helping and power indirect strategic payroll, items. In offset income As the generation our operating utilities pool in costs, net for operating total, initiatives reduced declined model transformation

total the comprising at growth engine it of remainder the of XX% healthy occupancy for in XX% at down are parity XX% XX%. margin an other for unchanged. The the compared this mid-single digits; average, We revenue our operating Occupancy scenario square with increases non-same-store our of growth possibility basis XXXX. The strong down outlook remained and of Our Joe averaging removed an our mentioned. updated negative which reflected With consistent more move-in X% industry-leading customer underpinning busy season, year XX future, rent performance pool scenarios contribution a will the as follows: for to and into assumptions our which June optimistic last lower move-in rents Move-in footage, year. Our as with core our our range, same-store during continues, 'XX. We FFO midpoint rents be new for from per full points into the namely the of this December into May, year, reflect guidance assumptions the rents, within finishing July. assumptions our and at during move-in share growth year year, a reaching to on revised down in are is existing rents and revenue segue last and good pool

move-in non-same-store by million reflect We closings lower outlook midpoint also adjusted $XX later rents pool. the NOI to acquisition similar XXXX our same-store and at timing of the to

the growth is for a strong pool. this pool Our incremental an $XXX beyond to is year outlook additional of strong million in this continue from NOI XX% That midpoint. the and with non-same-store at expected for growth 'XX

approximate those of on the midpoint prior have X% our a guidance reduction revised our to we assumption core guidance range $XX.XX to changes, per share, of compared $XX.XX Based FFO range. an to

capital XXXX for is in allocation Our unchanged. outlook

Public development in eager pent-up both million in activity will there. record and well We're this transaction Storage. and a of acquisition $XXX the year for we're activity services in signs positioned year, new seeing market, We activity deliver

in capital We preferred puts XXXX our of Our strong leverage liquidity April, us debt in EBITDA position. and refinanced strong. remains net very and and maturities a position to X.Xx

of we business. stabilization earlier, our of this many as the positive confident momentum in XXXX. trajectory year aspects by move we in through encouraged are We're in highlighted Joe As

Q&A. Rob open with call I'll So for the turn that, back to it up to

Operator

[Operator Instructions].

comes question Steve first Sakwa ISI. Evercore Our from with

Steve Sakwa

thought Maybe Tom, And just either I the about. guidance up guess what that mix risks you under back spoke maybe could talk that you're economic of And the the -- or about that Joe worse changes Maybe, sort housing that? conditions sort down on in excuse XX% of of forecasting? about scenarios, market following me, get the of just could sort half I year? or better how are be that and the you down in currently than XX% possibly what the guess, the

H. Boyle

Yes. Sure, Steve.

in of that Mid-Atlantic, markets couple I'll the we San components a that positive in the But we we there's start can date, those Francisco the seeing of seeing And are rents highlighted markets? markets the as we're if many markets to like with well. is, move-in reiterate Seattle, So improvements those are there. in and helpful. we've which momentum what first highlighted, seeing continued piece in you

have to move-in are this higher going to are market growth years fundamentals, longer flat already good the good that rent comps in their continue shape move-in there. The down in versus pre-pandemic in bit very population for even with nearly but was have So we've of Seattle, were rents a like more instance, and trends that instances. terms like a that markets Those in for the the is stabilize. markets and maybe XX%, is last take XX% still to spoken and little like, than many down high tougher inflows demand about improving on side, bit several flyers more the second a flip during quarter

for right. And big seen I'd a picture, rents. modest We've say move-in improvement year-to-date,

second quarter, down XX%, rents quarter down were the for first If you move-in XX%. at the look us

they're down As in we XX%. here sit July,

but there. here, February improvement for the what It's calling that originally than outlined sit in we've still in that into more second of we So as we're our And well. improvements as modest just pace pace modest the today, we is half had terms call. here recalibrated

Steve Sakwa

what picking seeing you maybe on touching bit, And just do on that, spend are partly not acquisition interesting sets you and a of the buybacks what capital and/or away how either guess, really just maybe and are I front? the that the you function the acquisition sort activity the on measure capital It was opportunity were share being that's there. mentioned side, acquisitions? development to up see And things Okay. I allocation. of against buybacks, but the assume I a think

Joseph Russell

host for active acquisition an for last Sure. that we standpoint, were opportunity pointed a fact owners, X somewhat that relatively the the larger of calls Okay. small hand. What basis, or That Steve. activities see you'll any to in either portfolios. of type activity ahead still cases, transact, pivoting owners an activity of existing individual, We a position there amount there reason. of a whether there more for start was quarters, are There whether X or number reasons, type some is us. of dialogue start, at -- whole to different of the and a I'll of we assets with in types different for or annual typically From of inbound any half happens on second likely or percolate it's that, a in a of of asset is out that number think need are in recapitalizing to capital of year. constraint the related particular that variety

we're fair as So of Clearly, we beginning the we by of have to see But likely at of the that's gives encouraged a we'll us to that amount meet the that we out. speak. continues number activity that of through how to confidence amount level we're the a play playing activity guided that year.

a something back capital question Now got always that's think and forward. to from our opportunity buy it value with that size we'll see do reasons, for the the plays deploy. the good And as buying as we through we us the we've in around plenty back opportunity that a at do. alternative in your efficacy actually an alternative that look Obviously, investment look extract timing, stock, standpoint. a as standpoint, to at of forward, felt felt go variety We a we the we And had about to we'll shares. good what we how that, typically our continue go from shares. of we for alternative see of capital was quarter.to we We own

Operator

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

Juan Sanabria

about Just differently, range, the exit may or run know, just of little -- 'XX think same-store you early that but to cadence will guys at come thinking with out at, about days, just a how the speak start? bit the are could hoping revised least I 'XX you rate said revenue

H. Boyle

Juan. sure, Yes,

about number XX right? And I growth at was X.X%. about think So outlook revised basis down second in points revenue a half, is the the same-store down our you is as second obviously, half, first implied the half implied for in look the

of I get And set we're otherwise. in industry with year 'XX So that's around share the of a the here fundamentals more where today. the be to well get growth and one at the sit that to going stability about how 'XX. we of December this fundamentals is as own to as be you given as to 'XX positive points spoken to as the declining would today. going around as February. The future any reasons be through time, of new specific we get counterbalanced same optimistic There's of month both I that stabilization We've competitive deliveries exactly new obviously, of we supply continue into is be in give we'll or construction trajectory wouldn't demand for terms year And sector. outlook challenges our we

business So the future specifics. to for we continue any XXXX into without be outlook years getting the optimistic around in

Juan Sanabria

not could of whether enough. there's Fair bit of asset up leasing assets hands, buy Steve's question. you but maybe where assets where follow-up are to just still changing about just you're commentary please? talk amount kind maybe looking or cap a then rates, pricing, to a And and volume little on transacting, a recognizing huge stabilized Hoping

Joseph Russell

Yes.

all, trended I have rates think, more we question to. or either activity there's transaction where reinforce first of stabilize need cap no to

a or or you eye years on value our or the something that or we're over X-plus at the If we cap last probably unstabilized of the minus minus well. asset keeping some have X X% and market change range, to extract, years rate lease it very transact so, you clearly at that and look plus clearly were cost handles ago, see progression looking what on to whether plus transition value what's as say, again, your Today, for capital trading transaction see stabilized to a in X it's coming to tied one, creation from X% need activity volume our into can to to point fair probably on we're is based that's at X. we looking for, stabilize. We going it of close those amount handles and a realize standpoint, the but But to activity.

based we well opportunity to cost seeing. that confidently and deploy, But capital, again, sense, positioned of that capital that we're the we're any with magnitude the the size makes relative own go forward again, see on that we of and our creation can we'll value

Operator

with Our next question comes from Nick Yulico Scotiabank.

Nicholas Yulico

are the give Did you July missed yet, and able Sorry rates? move-in on or if occupancy any to, this. commentary I you

H. Boyle

I sit are highlight Yes. did XX% provide Sure, July about here I there. can rents down today. some Nick. that move-in commentary as we

sequential in occupancy. and there. quarters first again, the we're points XX from On closing So basis month down the second improvement occupancy, circa

a below where a So in narrower finished touch but gap where the we year. June we started than

Nicholas Yulico

all Okay. what well of were you on tenants? of assumptions on are with And it there be seeing trends moving just Was to question any fatigue rents? just then is is ECRI? terms change. mean, your on same-store guidance or getting on you're the I as clear signs that that I change in pushback ECRIs? ECRI, a there in wanted any Or

H. Boyle

Thanks. Yes.

the year year with last in continue been as base prior we tenants. right, such in more to an had and we've of you tenant tenants the and consistent And So lot be move-ins sort tenants base. customer in is got to we're customers encouraged year. were standpoint by the their about that seen before. we customers existing from the price by the from And environment value the what And same performance continue to the storage, existing find in time, And of frankly, at from that us our we lot the a contribution sensitivity they think a strong. first and existing move-in our speaking a last marketplaces. today if be those matched behavior moved trend encouraged the more where half very than age we from we've largely we've recent of year in volume And that year-to-date, quite has product

continue point, a compared we've consistent original in to encouraged contribution relatively your 'XX. been our from program customer outlook is that, by 'XX to to And to be unchanged And base. to from we revenue so overall pointing that that growth

Operator

with Our next America. of question comes Bank Spector from Jeff

Jeffrey Spector

people than more provide My move-ins, first -- move-ins to given better housing the know can question, Can discuss that you've you more? a on on little expected. few we net don't know driver. I just focus in. surveys? the But you why are has a said color you a if bit changed if key been on see anything as times all moving that curious has do I

Joseph Russell

you're counter acquisition of good opportunity activity whether larger less that renter quite able to relative in to activity driver And tied renter sale on us. opening factors general, seeing to variety factors, that's or has part was There's kind any whether stay, a eye in And quite for important to the bring existing a been very very more customer commitment rationale of obviously, through be than I again, beneficial the We're to going more far a Clearly, that that opportunity. overall activity that more space, on is strong. Jeff. come that those actually the sale erosion mentioned been different space to we Yes, keep factor, it need affordability space, Sure, X-plus clearly definitely the reason of be, close length we're to an a the that active to an the pandemic. to continue or owner. keep home has active past quite of relative acquisition quite activity home owner in which or to demand the not at surfacing now. The needing self-storage. activity. the to types really activity, moving times you're dynamic is to and customers we've renter continue space continues needing comments, et Housing my affordability vibrant. or What an to cetera. is be

relative very those change stabilization no of the Tom But to And So behavior environment look business that to have a and as competitive key the -- as real are. there. actually, rates driver customers in existing We're at I to, the we relative good. vibrancy quite what of the move-in and just more is spoken overall. initial a again

Jeffrey Spector

remarks, about And elaborate in development that I supply, question, talked think lower second please? Or you I in quantify on opening guess, waning then Can said supply. your that? you you my new comment,

Joseph Russell

any I change We're basis. national development kind had deliveries, on there's so. Again, stock that the existing mid-X% an sea on sure. we've consistent wouldn't Yes, in an say increase that view of in meaning or range on

cycles, markets the volume that we quite coming So particular seen that development nationally. a a not a prior the it's development active certainly meaning, that's little on activity really to the in any seeing any been see same to eye likely that handful might volume market we're has relative don't keeping positive, and we've always, activity. momentum Like of of to happen be too close back amount

coming factored the One Coast might of existing levels activity There's on risk bit going again, for timing very into and quite a the that example to But of several activity going more we'd see. happy component very frankly, bit of we've what in capital, about development stock need have costs, a over are Florida. development on of than projections are beyond we're with the spoken of Vegas and as around Phoenix like West the for and be, and rent quarters. to time markets. The activity stabilization there. amount instance, activity little into lack that, percentage the then, around Cost well. entitlements, of Las a headwinds consistent new be to last

backdrop that, with of activity. basically a we all have development So very low

activity we for a development the given of that's particularly to us number drive. markets into continue a amount to development it's team, flip our the own good jump On opportunity fueling of side,

and 'XX, for a opportunities 'XX hard is development activity we're into level of to and working additional mentioned, the Tom team looking 'XX. XXXX, at record in As look

Operator

Ronald is with question Stanley. Morgan next from Our Kamdem

Ronald Kamdem

ones. colleagues help Just the moving sort tenants the X in has digitally with is, with starting quick of payroll how there of to more just expenses. being get taxes property well as a little commentary bit of how that? on One on is sort lot as Maybe just much much And the both able go? a to reductions? And more

H. Boyle

Yes.

taxes year-to-date, question up the up quarter, So X.X%. first X.X% around the property for

our minus for or plus taxes. in X% think property I outlook year the is

as around we're payroll. what around some question property through both based transformation going your that to is earlier last interesting the over around assessments catching years, that's we've talked increases assessment around the embark working there. back as right highlighted in And on more property we've specifics So continued several to really value more still cycles. What I of are the up some several last model well operating years our upon anticipating Day that and several years. over Investor to NOI

eRental, Our digitally of which a a think to put coming us are around the today, leasing the that, at that's XX% can which we which allowed customer roles were initial to enabled that our has that's utilize to at both to the that But one operational elements you being expectations transactions differently digital P&L. about us around before in you see And arrives us our lease new that call of that property, powerful. time digital highlighted, staffing and ecosystem levels. is platform, signed and

reducing Initially, XX%. year. that we at last by the achieved end about property shared of had We hours

opportunity taking optimization this through place. can here that's We think continued we're about from not we've And talking year, got so here. there's you this. done And see

to that consistent continue activity, customer encouraged by be providing digital a we So experience. and

our I solar of on. well. path both, down can highlight to got several prepared in on in well. initiatives footprint you that you're putting as our highlighted the utility X,XXX my the see And starting benefit as remarks, the On and our over also. a power carbon well utilities mic I our expenses, quarter years. in next properties the benefits We're I've X% as might utilities While That obviously also on solar see of over And expenses, like.

that be by to as we initiative So well. encouraged continue

Ronald Kamdem

be Great. pricing. And back on new going going to changes guidance question was to tenants of the then my just second the sort

think the actually pretty whether or been about think website environment, you when visits the that's it's commentary debt, been I think has good. I bad

trying more demand what just consumer? heart So is do competition? the out we're what's environment Is I Is what's at still the causing more think down, -- guess supply what more the look coming a of sort but cost-conscious -- that's figure if it of presumably Like pretty to is indicators it is housing? us? driving good, competitive you

H. Boyle

Yes. That's Ron. good a question,

there. couple mentioned One has year. year, I a last very think Joe there's strong earlier is with traffic our been which around of a was components pretty talk through what consistent move-in own to

So side. customers, to those our see traffic et we including attract continue advertising, we're order But tools cetera. on in good using increased to

about Looking is in industry our down we as overall, competitive year-over-year. markets, to at think the the demand the impact local landscape

the with down metrics keyword we highlighted being as Google year past storage-related year-over-year. for of the that And is One that down search we've in year-over-year. terms. volumes around you share can the We started

the of to was thing is there start be the now the at that continue is year-over-year encouraging what half year. today We the -- decline it

So I continuing but to that's stabilization dynamic many new markets. move-in see signs the for to there, contributed our in customers we're of competitive think of

Operator

question Our UBS. comes with Michael next from Goldsmith

Michael Goldsmith

growth, down July. rent XX% you second market the quarter the and XX% it was in in said down On

starting in back happened the June are your half same you in it the on point? what of just a expectations different year, with improvement is of recent So provide most like just like for And magnitude see sequential the to the just context then, can improvement? the improvement

H. Boyle

Yes.

June components of down couple pretty similar, a So about there. One, was XX%.

at that improvement April July, June So into peak and improvement a or of the And magnitude the pretty were get anticipating. saw the rents. the as but July, from pace we you into you're of near nowhere and we good June May and

guidepost so several the to it's year. isn't the of also relates it are about the months you the important year. think And very as that through those market for why a And rents setting as important so rents remainder

based second recalibrated but as the the half of of we June pace the have anticipating improvement, decline through we in on year, July of performance. that terms that move moderation we and are the In

different assumed, modest starting from we're what for we than so here. had And a place improvement but originally

Michael Goldsmith

bit question the like be seems lot this independents right? unwind, speculative, just is how can that a quickly to privates when start little may it but things follow-up My Like a get time street rate down? there players as the kind an Like that of the demand is rest other more come street rates recutting the their rapidly of move rate will when expectation better, -- starts bring kind and thing when and to the up. took things of industry of back,

does improve So of It this get it quicker grind than slow like we've when that better? of should kind a maybe experienced? lot down kind

H. Boyle

to react. still dynamic that right? given fact guidepost they'll that I'm terms for rates. you think this how is variable our remainder of highlighted I new private and competitive are what assumptions through in remains the the We've of year. operators in the be terms about a pace, seen around the of specifically to going customer ultimate and speculate We've not

Operator

Citi. from Our with comes next Joseph Nick question

Unknown Analyst

Just wanted occupancy. to on touch

XXX It You July XX year-over-year. guidance seems that back the is, points. you're implied like in divided basis about mentioned at in being gap half, points basis down could

So assumption? of talk you underpinning kind about can that what's

H. Boyle

Yes, that's good question. a

-- frankly, the strong last did come an the the spring through standpoint well. upward occupancy to slope you up So on improvements Heading in really base the down you're spring, more in the first activity highlighting from likely move-in performance was year that of the did and that see based to part we year back an occupancy into through existing assumption and tenant what from in here we as go the anticipating half as fall. of the we're Joe

moves experienced time are period. less And we're pre-pandemic what's so recall, underpinning talking that's what seasonal that we the than had occupancy that some much about of in in activity. And

So year while first nowhere talking occupancy seasonal half, still year. in in in about we a year bit decline typical rise we occupancy that this the the saw saw near a more because in decline we're the little last versus of

Unknown Analyst

needs for spent any incremental Or that? to that for NOI, that then And all dropping it the through? there the additional just $XXX capital million is nonsame-store flows be basically as NOI is just to of

H. Boyle

clarification. good Yes, that's a

So assets. is that the in-place on

in-place to capital that there. pool. And so No that get we to, can you effect, for about required 'XX, as in stabilization million in-place of the add think our for to additional expectation NOI that $XXX

capital only from we'll invest we adjust half this into be As upside that frankly, number. will And second the of incremental year, that here.

Michael Bilerman

will within become the of some then in same-store XXXX? pool that And

H. Boyle

likely right? about you into pool stabilized that upside rents for the to operating into come the it, Well, think add same-store both isn't pool, we occupancy, As are expenses. same-store properties our and

as will stabilized properties we non-same-store into about same-store our that the will over but remain And so to in upside pool stabilization, cycle time think the pool.

Operator

Our is next question with from Keegan Research. Wolfe Carl

Keegan Carl

And guess sort broad commentary you're seeing that first, consumer? on you your I just any softness seeing what maybe of outlook with rest impacted material the are for the year? of the

Joseph Russell

tools seeing the in not assess we're particular quarters. from relative in number patterns the a a just particular can on any that any good behavior now of new shape change And that of we're using delinquency have of customer to surprised seeing activity of amount to and based both any changing level Keegan, and/or the that risk standpoint, movement consumer payment all wouldn't through continue consistent we playing been own evolving factor or payment pattern stress been we're again, keep, highlight serve length of for I relatively the Yes, to pleasantly that well. stay, tied our new base. We've to us that's or stress on even that

Keegan Carl

I'm for any management quarter? your if there is third-party it. shifting just last gears. versus curious just Got are changes and trending platform how then pipeline And in the

Joseph Russell

Yes, sure.

third-party for complexion good of and a our last the quarters few had pretty So frankly, with improved run we've platform. size the management

XXX we'll year next that in in them or of another the So are of we that today, so. development are different opening relative be assets stages over XXX to a open, we that XXX have variety and approximately have program.

This quarter, at puts year-to-date That XX. we additional us program. XX the added over additions to

number a of again, number got we've into portfolios existing some frankly, where clients and that of activity, of assets expanding our seeing So both amount the a are small good larger putting program. they're actually

to serve well ourselves. can in scale not that it's additional our things only So Different very markets. relative be to continuing clients but advantageous, many us to

a growth wholly that of So team continuing program platform well. putting to and it in amount as we're dedicated fair storage the the see good well public to as resource with into that's

good see half this some traction, good of into and activity second we year. the again, going So

Operator

with Thomas next question Markets. Our from is Todd Capital KeyBanc

Todd Thomas

with I environment up power given just ECRIs softer the to and the and experienced growth understand that pricing the an your there the versus back ahead has on when expectations. potential changed lack occupancy guidance. the just might and to of quarter provide contribution demand and a Tom, pricing I rental wanted a the not of revenue little to you follow preserve the bit. in during revised July demand bit going more into of of the a 'XX setup into the a effort season little bit to recover? off-peak better prior just Is But half

H. Boyle

Todd. there, lot a There's Okay.

a will as we're Let I going drivers me how we and about we think where the program think because step that, back from take that through about here. talk think reinforce the

equation, the increase really about consistent. been spoken X side. very to call I've spoken this which around existing side already consistently the components price sensitivity I've of customer the So customer on has rent

The I cost think the too, the is tenants. other to replace around side that

into X those the expenses, years, downside right, things the has several space replace upside is the years. component, component of all long the the on over will that play vacant, has variable, that moving been market And past tenant remain cost how the to been both over on that side. rents, the sorts marketing by then and that And more last the influenced

replace so, the over third charge 'XX because positive more can add the a focus frequency that's around been an otherwise. as over eligible volume piece a around then additive as placing that on have customers third it for of been in moved And moderate. And more our past cost decisions increases of increases, speaking component I've the It's well that rents so isn't occupancy. to their year the the around recent been internally might magnitude But who from value existing add that's And we have as to will units. an protecting program. are tenants not that offset. the and no or there's into moved we or preserving around a or which a of overt optimization are I lot the But that tenants occupancy protecting there as is of I'd component,

Todd Thomas

Got Okay. it.

the of was for eligible percent today tenants sounds. year higher it increases last is rent So and the than year, prior it

H. Boyle

there's that tenants near-term are program. more Yes. and in the yes,

Todd Thomas

Right.

process the Okay. was curious went helpful. question to that I closed speak appointment, decision, latest in And second 'XX. just make through transaction Hawthorne. announcement then could the and was the PSP That's you Board Board if that to around the Maria my just

So I'm the just curious about the timing to Board today? the decision and expand

Joseph Russell

process to sure. any Board committed phase composition and vibrant board Board a whole. and collective has skill very Yes, of knowledge and continues the a of wisdom serve our that relative The to amount the company itself configuration as

but REIT, CEO is addition of another many that real a only public ways, as knowledge to to So relative experience in on a estate. her Maria great also her not standing based

other of et cetera. shareholder as on great with history delivering acumen, public very coupled well. got sits She's value, strong She very X financial strong boards

we feel as look of contributions stands rest it forward overall, the with Board she's her the today. So board great to the a addition and to

Operator

Our next Kim Bin comes from with Truist question Securities. Ki

Ki Bin Kim

revenue? could to spent as new given weaker look the you that just have demand to think of was it? look slightly the that? last contract and company. into of combined optimize -- Or percent lack bit that, increase maybe you I have efficacy year. at maybe brought just at wouldn't a how It when that mindset rates the more do that marketing more your had than little Do So great you of spend promotions more a When percentage-wise you you digest -- the you are

H. Boyle

Yes, Ki Bin, you're as highlighting as both marketing well spend. promotions

Those Let me the independent. X are levers. the maybe take X of

marketing And and In move-in over we that in several our the very specifically, increased our And very a toggling markets. environment. and marketing forth we the power continues marketplace, speak customers of been move-in addition, efficacy years obviously, we've seeing years. On around today. rich in advantages the over our aware competitive of are both utilizing, we've our frankly, couple the rents last And the increasingly we're back last brand, consistently are of spend active the inventory returns. that because of the providing good regularly scale set, customers

looking the and have given continue touch activity, promotional in so second associated number metric the the But on rents. that a going particular with that have forward. is, with anticipate new customer spend that we reason it's decline good you're associated into increase half. On look rents returns promotions, with received we've things investments versus move-in I'd themselves in to is, and lever same the metric the that And there's as were you year-over-year second to returns you're couple our of our quarter, good XX%. a and acquisition, those that at activity maybe move-in at. been and about we customers And One discussed, of as use year-to-date, a promotional very those a down the seeing we'll highlight move continue that it, more. as

for just discount year-over-year, giving, first on dollars vibrant so associated that to using. basis $X a nominally nominal and promotional continues with a less tool the we're but is And be month instance, the dollars for

Ki Bin Kim

Okay. think let's your say, you And rents versus, do Move-in rents? question, today where XXXX. second are

H. Boyle

Yes.

to We've territory were are that a today XXXX. are in and some feel XXXX, some right? rents highlighted in where Our relates the XXXX. that rents XXXX on bit they in in around reiterate to of some markets terms that move-in good got as it depending have as overcorrected markets past we are I'd we below the similar markets have We've like above a well. And market, that

Ki Bin Kim

Yes.

I'm relatively the cumulative Since better, about are rental that's part we've but that XX% flat right? understand XXXX, versus to probably trying inflation, time period. So had

more definitely the rents. given we've So just surge back in COVID than

take, over I supply? just is abated? that I understand trying through guess, time consumer has demand Or, something your the the that on was curious to for additional by there else it Just So weakness? Is where that's what frame? additional changed accounts absorbed

H. Boyle

I it, Joe, lower. pretty you're characterize sharp move is as would as in at. variable sharp on I had of the and And that higher Yes, marketplace demand, too. characterize looking would depending in said, I you a a it can we've and sharp number movement move chime right? metric in had years We that here,

impacted are led comps may some Some of in in of Joe supply the I'd 'XX and cases, lower the activity you by markets pricing the sector. new dynamic. say have And so many that have overall, overcorrection in that the of led competitive 'XX tough competitive amongst But pretty have to that highlighted to shift an and operators in marketplaces. demand and

monthly past. income the than But highlighting I think charging about discretionary that today think attractive consumers' today is, the was rents you're positive we're the budget, even component what versus move-in it's frankly it more or in if you that

And to so through as a for opportunity higher. about you number potential that think cycle move

encouraging, past. And today I think stabilization to it's given that industry, more working of demand. the the affordable frankly, it's we in than as it side. more other And an we're get was through will

Operator

[Operator Instructions].

next comes Luebchow Wells with Eric Fargo. from question Our

Eric Luebchow

the moving in-place of lower Are materially of move-in more talk about are customers longer customers that more type of replacement you cost they the stay tenured Could lower length any of from the and on rates? that coming space are year-to-date the versus terms that rates are out? seen of at recently customers you've current above changes in

H. Boyle

how stay And as for really Eric. XXXX combination well last with extended XXXX. from at we've back of tenants to years, sure, fewer several the spoken of a replace that looking need staying longer those length of as Stepping Yes, the a and stay length longer was lot new around customers. tenants to

time of that and big So mix a stay performance had contributor some standpoint, sharply period. was pricing we over financial and to a of length period grew time from pretty the power that over

And today, the I were I and been probably rapid right? calls anticipating to of maybe of XXXX. that of moderation, moderation that think numbers. they of been continue by was it has return in back pace "pre-pandemic" a And length really sort moderation. we've encouraged several these myself on we've if been here on we've go years in seeing years stays. were we to what average then, those be I And of encouraged since length couple stays sit been as more than a Really, to at to listen of ago, longer fact the

some So there. trends encouraging

an and versus comfortable there The of that's longer-term second maybe I'd around renter another period highlight goods tenants between use just stickier. the in in use be sitting apartment apartment case. instance, time, is have space. example, a the gotten was question long an using They've of of that time moving [indiscernible] using your that one to And vacate levels. their our as tend have component unit case and for for a They

those so the from less. tenants And vacate is frequency

those public our in so that more have look And been you as it's any activity, concentrated given at the really, vacate more base. recently within quarter, storage customers customer joined

Eric Luebchow

what mid-single assumed And down commentary. the of follow-up, half digits. as just you moving months last year. exit rents. aggressive the know about this more things do about sorry some of October, fall that year, because a a from in we relatively Appreciate actions comp think lot second we and Does perspective, the guide about Great. assume from year said get to assumes you've harp pricing a But September made of kind winter seasonality into that I normal summer there and peak amount were given the in a easier that

be to quite So and realize in just normal we thinking would some about compares a had year, I time. a normal how what seasonality haven't year

H. Boyle

Yes.

it's industry moving the for point being But year what last have we last we that very operable highlighted haven't assumptions, rents we're environment are a of for the they rents a continuing did But competitive the move-in year. think a I accelerated last a on that is that the "normal where moving a environment in and were competitive And number and that same we consideration sort more clearly, below one, around based recognize year-over-year is decline. path on of half clearly, had into you year" move-in which is expect fall. gap a our probably narrowing decline where taken don't years. face in last to that second

Operator

James. Jonathan next Raymond Hughes Our question from comes with

Jonathan Hughes

revenue guide, pretty has predictive accurate metric next do for the And occupancy a with contract revenue XQ it out and fourth quarter actually of in time that growth in improved negative when the lockdowns. been quarter the third when a full the The coming when 'XX and to COVID rent implies from combined decade accelerates lately. was gets it And less XQ for combine last growth I or only were growth year we that revenue quarter. XQ I

so it if that is does sounds we'll the see improvement in fourth guidance? that in so, embedded So improvement what like quarter since And unique? gives the you sequential what's confidence

H. Boyle

is certainly of things one highlighted Well, numbers, of I've of our are based we've guidance. forward the our around metric its financial that on to moving for robust around the bit, related it provide over years couple quite a some with a And when terms started year period-end outlook things loses efficacy. there's last that that on a the to more transparency

specifically. be in trends half improving have X.X% stabilization earlier, And that But to given going how you do confidence markets markets lead so then I'd I things period not down metrics specifically, end outlook And same-store implied point of going versus many those the second using particular we outlook. our guidance, to towards on it's have in X the moving you to more from reacceleration other, the time. implied ultimately and quarter-by-quarter revenue to is as noted around. over annual comment And right? I'm guidance than any quarter giving across We're been

Jonathan Hughes

Okay. My second question.

L.A., to, average in noticed comps affordability supply of are the that basis quarters. know kind there, Equity and premium points it XXX I slow growth did headwinds points tough, X at about an call the Residential revenue looking basis prior some I L.A. talked Just XX yesterday, but it, from

So turn but in the specific even revenue market premium occupancy that a expect Could as rents L.A. modest going broader a maybe highest there more slowdown negative are and forward? that portfolio? economic the growth can in in there's

Joseph Russell

Yes.

be of we're revenue abstract that meaningful to health continues Jonathan. in that growth that to It's sustained saw off. good, very pointing to market we and just a market of to First to relative any market time, period the of that you're addition the just [indiscernible] overall all, trend for see leveling the a not going supply that it's

don't that of issues, hope some might good other or supply see see more Los impacted you periods. to very that in we'll that trajectory We going into continue the value have But would this been assets. it markets we either in occupancies. Angeles quality certainly at we'll relatively in We're future just of say how strong continue those We shift I relative shape overall point, in stable demand, the very good performs. very see see it's material a and to to

supply. no and mentioned, dynamics new new I As from concerning

inherent thing in portfolio again the to that other relative supports a the -- through. our over great So L.A. is supports demand playing there living customer market, demand for public locations, great because, which market, particular again, of inherent the time see high -- it is cost for and scale overall storage with good we

Operator

JPMorgan. Mike Our question is from with next Mueller

Michael Mueller

digits the mid-single of assumption move-in in Is or by a quick comp rates Is issue sort that spot rates. of to being year-end. rates the just of by improving some combination or down I guess, move-in improvement follow-up an Just on both? driven, guidance

H. Boyle

rental guess right -- to seasonally, I question of the In -- about think way rates. this. that we're think I'm peaks at the no to Well, There's trying about

think about going moved talk through lower as going half right. differential, last be fourth a through they what's rents out we you and move-in in than about now, did where year-over-year significant assumed we play the to of outlook. rent as year. pretty in quarter to But have the we the So decline are what's level second The are as the

year-over-year. And reminder, for XX% move-ins about us were year's a just down last quarter fourth

comps a do year-over-year the ease basis. so And on

a as we're while was to now and sharp the are here really, that year, expecting, we level December, in we and experienced between be we're December, modest every where last year, rents decline do so they between which anticipating decline more what than And frankly, of decline.

Michael Mueller

Got it.

dynamic. improvement it there like seems making you're some comp ignoring just So in the

H. Boyle

[indiscernible] dynamic, summer would decline winter primarily revenue comp it's as expecting a between we're say would to Storage. typically we and I and the

Michael Mueller

the little getting bit seasonality that's of Okay. a was front, that outside but, Yes, more environment better Okay. I from thinking overall as it.

Operator

Allaway Our next Advisors. Street question is Green from with Spenser

Spenser Allaway

non-same-store one on the just Maybe pool. more

lease-up but conversely, where markets average front, slower You to seeing guys success great on leasing on either able trends? the on color Or seeing you have front? where are provide some here you're maybe you're additional above the lease-up had -- activity

H. Boyle

been the pool. within overall, leasing say strong, non-same-store very activity across the has board really, I'd

obviously, impacts a pace redevelopment One that portfolio, lease-up things think our pace, place strong in highlighted the not which actual pace. easiest probably see the the can are of as we vintages, lower see move-in lease-up to I whole the store. development, you lease-up same But rents right, the just about

We continue be to that. by encouraged

fact I activity markets because isn't mentioned, there by supply that, overwhelming we supplemented think that new And being of delivering an these Joe the in of as And that's that that new amount the we're delivering are And we local well those but in nonsame-store dynamics marketplaces that being think and the also both for assets the is absorbed in that, as marketplace our the helps efficiently. received industry our of well. the into. marketplace, pool, same-store

Joseph Russell

we've you I'd portfolio of we've years. say they at taken Maybe are Spenser, relative scale. been only all exceeding portfolios kind where increase look just markets on range the to our down that a a good headline meeting able standpoint, seen the or couple we've not over underwriting, but in particularly either if to traction in similar larger last of

I call unusual point or Again, then Simply any out recently, negative And most trends. states. different XX touched the portfolio, which out wouldn't

in underwriting portfolio seeing that we're continued multi-market that own based. fact, even our to In was relative outperformance

throughout see periods. future and continued entire traction going to growth was we're Tom that speaking driver continuing what and portfolio being into definitely just it of So as at good a reinforce to, stabilization look to

Spenser Allaway

but for you time stabilization to the in And of averages portfolio? Tom, kind alluded developments this new compared today does how this, your and to historic readouts

H. Boyle

X X years certainly of earnings seen faster continued several strong et periods of the time from years then of or otherwise, have underwrite X long get a I'd X the drivers last there much for. been the that individual typically asset, but X-year in of for within period There to we're We another and asset. demand and profile kind depending that in markets particular. in that the of to couple cetera. out But a frankly, size or years, time of is over that to or that still And obviously, point there's stabilization you of where Yes. looking asset on a shift you're period. the year supply time, years to X- than level are one growth we've to kind And of particular going year of

Operator

the reached Ryan the over back for We closing question-and-answer end like have I'd session. now to Burke of turn comments. call the to

Ryan Burke

Thanks, day. a Rob, and thanks joining for to all of you us. Have great

Operator

This concludes today's conference.

may thank your disconnect at You and participation. your you time, lines we for this

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