Public Storage

Ladies and gentlemen, thank you for standing by, and welcome to the Public Storage Second Quarter 2021 Earnings Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you have a question at that time, please press star 1 on your touchtone phone. If you wish to remove yourself from the queue, please press the pound key. It is now my pleasure to turn the floor over to Ryan Burke, Vice President of Investor Relations. Ryan, you may begin.

Thank you, Tamika. Hello, everyone. Thank you for joining us for our second quarter 2021 earnings call. I'm here with Joe Roswell and Tom Boyle. Before we begin, we want to remind you that certain matters discussed during this call may constitute forward-looking statements within the meeting of the federal securities laws. These forward-looking statements are subject to certain economic risks and uncertainties. All forward-looking statements speak only as of today, August 4th, 2021. and we assume no obligation to update, revise, or supplement statements become untrue because of subsequent events. A reconciliation to GAAP of the non-GAAP financial measures we provide on this call is included in our earnings release. You can find our press release, supplemental report, SEC reports, and an audio replay of this conference call on our website at publicstorage.com. We do ask that you initially limit yourselves to two questions. Of course, after two, if you have further questions, please feel free to jump back in queue. With that, I'll turn the call over to Joe.

Thanks, Ryan. Good morning, and thank you for joining us. Tom and I will walk you through some highlights from Q2, as well as our perspective on the second half of the year, and then we will open up the call for questions. I'd like to start by stating the obvious. Business is excellent. Move-in rates are up 27% from where they were in 2019, and there is little evidence that pricing strength is abating. A meaningful wave of new first-time customers are using storage based on a combination of traditional and non-traditional reasons. In 2021, we have welcomed nearly 700,000 new customers to our platform, many having never used self-storage before. Demand has been strong for several quarters, with upward pressure tied to vibrant home sales of 34% year-over-year. In addition, a hybrid work-home environment is being planned by 68% of companies, according to a recent Deloitte survey. This certainly gives us confidence that overall adoption of self-storage will continue to grow and is looked upon favorably by consumers and businesses as a cost-efficient alternative to storing goods in residential commercial space I'd like to step back for a moment and reflect on our May 3rd investor day the public storage leadership team took you behind the orange door and outlined several strategic initiatives I am pleased to say many of these strategies are taking hold in 2021 and I'd like to highlight three areas that were particularly evident in our q2 results first organic growth powered by innovation. Our multi-year and continued investment in technology has allowed us to give customers what they want, an efficient and more consistent leasing experience with the support of a knowledgeable and helpful property manager when needed. Our industry-leading online e-rental platform opened up an entirely new channel for customers to rent a self-storage unit and adoption has been impressive. Nearly 50% of our customers now select this option. It's fast, intuitive, and simple. What's even better, the quality of the customers using this option has been excellent, and our employees have embraced it as well. We are already seeing the impact this new channel will have on labor utilization while improving customer satisfaction. This has clearly been a win-win for customers and our operations team. In 2021, we also launched the PS Storage app, giving customers a new tool to access their property via smartphone, along with the ability to manage their account, including automatic payment of rent. Second, our four-factor growth platform. Public Storage is uniquely positioned to drive growth through acquisitions, development, redevelopment, and third-party management. All areas took steps forward in Q2. Acquisition volume is robust. Year-to-date, we have closed or are under contract on nearly $3 billion of assets. The $1.8 billion easy storage portfolio closed 90 days ago. and the integration and performance of those assets has exceeded expectations. Our development and redevelopment pipeline continues to grow up $150 million this quarter, as we are seeing good opportunities to expand the largest development program in the industry. And third-party management is growing with assets under management to 131 properties, along with a deepening pipeline of assets under review. Our goal is to reach 500 assets by 2025. Overall, our non-same-store assets added 20 cents of FFO this quarter, with NOI up 138 percent, driven by improving yields on both development, redevelopment, and acquisitions. This 34 million square foot base of assets is now 86 percent occupied, compared to the same store portfolio at 96.5%, with strong momentum to drive additional shareholder value. And third, the utilization of our exceptional balance sheet. This quarter, we funded $2.3 billion in transactions through bond issuances, driving down our blended cost of leverage to 3.1%. Public Storage has the longest duration balance sheet in the REIT industry, with one of the lowest cost profiles, with room to fund significant additional growth. Overall, we remain optimistic about the core drivers in our business, along with the commanding capabilities tied to the Public Storage brand. Our industry-leading ownership position in core national markets, all led by a talented and committed team of professionals in every part of our business. Now I will hand the call over to Tom.