Life Storage, Inc.

Good day and welcome to the Life Storage Inc. second quarter 2020 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. And now I'd like to turn the conference over to David Dodman, Senior Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to our second quarter 2020 earnings conference call. Leading today's discussion will be Joe Sapphire, Chief Executive Officer of Life Storage, and Andy Gregory, Chief Financial Officer. As a reminder, the following discussion and answers to your questions contain forward-looking statements. Our actual results may differ from those projected due to the risks and uncertainties with the company's business. Additional information regarding these factors can be found in the company's SEC filings. A copy of our press release and quarterly supplement may be found on the investor relations page at lifestorage.com. As a reminder, during today's question and answer session, we ask that you please limit yourself to two questions to allow time for everyone who wishes to participate. Please re-queue with any follow-up questions thereafter. At this time, I'll turn the call over to Joe.

Good morning, and thank you for joining us. I hope that you and your families are all safe and healthy. Although the second quarter's results were not as we planned earlier this year, I can say that I feel more confident today as compared to late March and early April. As an essential business, we were extremely proactive ensuring our stores remained open and our employees and customers felt safe conducting business during these difficult times. Our strategic focus on enabling customers to self-serve with rent now has been a key differentiator for us during the past couple of years, and I believe that is evident in our results. Move-ins during April, the height of the stay-at-home orders across the country, were only down 15% year-over-year, which compared favorably across our sector. And from a financial perspective, same-store payroll and benefits were down 7.3% for the quarter, our seventh straight quarter of year-over-year decline. Rent now hasn't been the only reason for that trend, as we have had several efficiency initiatives underway to improve our store operating margin, but it has clearly been an important contributor. Rent now seems to have settled in at around 30% to 35% of rentals after spiking to 50% in April. It is clear to us that customers continue to embrace this new platform and will continue to do so at a much higher rate than pre-COVID days. I am also pleased that self-storage is once again proving to be resilient in a very difficult macroeconomic environment. We have remained hopeful that there would be pent-up demand, and July activity was indeed strong, with same-store move-ins up 16.5% for the month. Furthermore, in June, we resumed both our auction processes and our ECRI program after pausing both early in the second quarter. And both of those initiatives have accelerated through July, with only limited exceptions in certain states. Since asking rate pressures remains, occupancy is an important lever for us, and we grew same-store occupancy 170 basis points year over year, to 93% as of the end of July. Even after adjusting for auctions that could not be performed, we estimate occupancy as of July 31 to be at 92.3%, which is 100 basis points over July 2019. Considering we were 50 basis points lower in year-over-year occupancy as of March 31 of this year, we have many more customers on our platform relative to both the start of the pandemic and also this time last year which will serve us well going forward. This is an outstanding accomplishment by our team. And lastly, although much more is clear to us today as compared to spring when we pulled our 2020 guidance, uncertainties remain and continue to make it difficult to restore reliable and precise guidance. With that said, based on what we know today with regards to the recent momentum, current market trends, and demonstrated cost control, We anticipate that the second half of 2020 will be stronger than the same period last year as it relates to adjusted funds from operations per share. And I'll turn it over to Andy to walk through the details of the quarter.