Public Storage

Ladies and gentlemen, thank you for standing by and welcome to the Public Storage Second Quarter 2022 Earnings Call. At this time, all participants have been placed in 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 telephone keypad. 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. Brian, you may begin.

Thank you, Chelsea. Hello, everyone. Thank you for joining us for our second quarter 2022 earnings call. I'm here with Joe Russell 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 meaning of the federal securities laws. These forward-looking statements speak only as of today, August 5th, 2022, 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, supplement 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, if you have an additional question, feel free to jump back in queue. With that, I'll turn the call over to Joe.

Thank you, Ryan. Good morning, and thank you for joining us. Tom and I will cover second quarter highlights as we achieve the number of record performance metrics and milestones. Now that we are past the midpoint of the year, we are happy to share our view of the next six months, which has resulted in our guidance raise. Before I go to those details, I would like to take a brief moment and acknowledge a significant milestone for public storage that takes place this month. On August 14, 1972, Public Storage was launched by two creative and determined entrepreneurs, Wayne Hughes and Ken Volk, opening the first public storage facility in El Cajon, California. The concept of paying to store stuff was new, but the simple name, a great location, and roll-up doors painted the color of orange created a powerful formula to grow the company. so much so that our brand quickly became synonymous with the self-storage industry. Now, five decades later, the public storage team and I are inspired to stay just as focused on entrepreneurial pursuits, expanding the iconic public storage brand, and empowering the 5,500-plus dedicated employees that cater to our 1.7 million customers on a daily basis. We are appreciative of our shareholders particularly those that have continued their commitment to public storage over our history, while knowing we have the right culture to ensure an equally bright future. Now to Q2 results. Business year today remains quite good, with robust performance in both our same store and non-same store portfolios. New customer demand through the typical summer leasing season has been exceptional, as well as growing length of stay with existing customers. This against the backdrop of muted new property deliveries in most markets. We have good pricing dynamics on both move-ins and with existing customer rate increases, leading to the highest rent levels we have seen historically. Arguably, a number of the pandemic-related drivers to our business are receding, but we are pleased to see elevated levels of demand, new customer adoption, and longevity of use. Customers, consumers, and businesses alike are still in need of more space for a variety of reasons that include decreasing affordability of renting or owning a home, tight inventories of commercial space, hybrid work environments, and the typical movement that takes place nationally this time of year. I would like to highlight a handful of particularly significant milestones or firsts in the quarter. We achieved $1 billion in revenue. Our average length of stay is now 39 months. Operating margins exceeded 80%. Our development pipeline has reached $1 billion and being named by Forbes as best place to work by our employees. Now to acquisitions. By all accounts, 2021 was a historic year, and we were pleased to capture approximately 30% of the total sector volume. These 230 assets are performing well, in fact, above expectation, with more growth ahead for the entire 525 properties in the non-same-store portfolio that is now over 50 million square feet. As we anticipated, 2022 acquisition volume has shifted down with fewer large portfolios entering the market. We are also getting more last calls from sellers and brokers with fewer buyers in the market. Cap rates have adjusted up and could move further. It's a different playing field, and we anticipate some interesting opportunities with over $1 billion in cash, a balance sheet primed for growth, and our reputation as a preferred buyer. The self-storage sector and our own history point to resilience in times of economic change, including recessions of varying degrees. We, too, are looking for all ways to interpret any shift in customer demand and behavior. We are well positioned to compete for customers across all of our markets with the exceptional scale and product offerings in the 39 states we operate in. Our same store and non-same store assets are poised to deliver strong results through the second half of 2022, positioning us well for whatever may play through as we enter 2023. Our leadership team is well equipped to grow and deliver exceptional shareholder returns. Now, Tom will share some financial highlights with you as well. Tom?