Public Storage

Please press star zero. Ladies and gentlemen, thank you for standing by and welcome to the Public Storage Second Quarter 2023 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 one on your telephone keypad. If you wish to remove yourself from the queue, please press star 2. It is now my pleasure to turn the floor over to Ryan Burke, Vice President of Investor Relations. Ryan, you may begin.

Thank you, Shelby. Hello, everyone. Thank you for joining us for our second quarter 2023 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 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 3rd, 2023, and we assume no obligation to update, revise, or supplement statements that 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, publicstorage.com. As usual, we ask that you keep your initial questions limited to two. Of course, if you want to ask additional questions, please feel free to jump back in queue. With that, I'll turn the call over to Joe.

Thank you, Ryan, and thank you all for joining us today. As demonstrated by our second quarter performance and raised outlook for the year, Public Storage continues to maximize its competitive advantages across our platform with several key factors driving positive results, including a better than expected macro environment with higher odds of a soft landing, increased rental activity from our needs-oriented customer base, and execution across all aspects of our industry-leading platform. We are built to operate in all macro environments, and we are proving just that. Let me highlight three specific areas. First, we are driving record year-over-year growth in customer move-in volumes. Move-in volume growth has accelerated throughout the year, up nearly 14% in the second quarter. We have closed the year-over-year occupancy gap from down 220 basis points at the end of March to down 160 basis points at the end of June. We have the right team. technologies and analytics to determine the appropriate mix of marketing, promotions, and rental rates to meet customer expectations in the current environment. Drawn by our leading brand and enhanced digital customer experience, self-storage users are clearly choosing public storage. These trends support our raised outlook, along with the easing of difficult year-over-year comps as we move through the second half of the year. Second, we are growing our portfolio amidst broader market dislocation. Last Monday, we announced and fully funded the $2.2 billion Simply Self Storage acquisition in a matter of a few hours. This is something that very few companies could do today and separates public storage as the acquirer of choice within our industry. We have the strongest balance sheet and the lowest cost of capital both of which were highlighted by our rapid execution on the Simply Self Storage transaction. With the Simply Self Storage acquisition, we are excited to combine our respective strengths as we integrate their portfolio to ours and achieve significant operational enhancements immediately and into the future. As an example, under our platform, the $1.8 billion Easy Storage portfolio acquired in 2021 has seen significant operating margin improvement of 1100 basis points from 72% to 83%. As we do with all of our acquisitions, the entire Simply Self Storage portfolio will be rebranded to public storage in order to maximize the benefits and value of our iconic brand and platform. We expect to stabilize the portfolio at a mid 6% nominal yield by year three. Third, we are well positioned for continued strong execution and growth across the company. From an operating perspective, our digital and operating model transformations are proving to be significant win-win-wins with result to exceeding expectations. Customers benefit from having robust digital options at their fingertips across the entire journey. Finding a unit, renting a unit, moving in, managing their account and navigating the property when on site. Our proprietary digital ecosystem will continue to be a primary reason that customers choose us with more than 2 million PS app downloads and over 60% of customers renting through our online leasing platform today. Additionally, public storage team members benefit from being able to place even more focus on our customers. And for those that excel, the transformation has enabled us to create new pathways for career advancement. And our financial profile benefits as well. We are putting these digital tools in the hands of our customers and employees for convenience combined with in-person onsite customer service when and where it's needed. The result is a better customer and employee experience and a higher operating margin. From an external growth perspective, our industry-leading NOI margins, multi-factor in-house platform, access and cost of capital, and growth-oriented balance sheet put us in a unique position. So far this year, we have secured $2.5 billion worth of properties. We will have also delivered $375 million in development by year-end and have a pipeline of more than $1 billion of development to be delivered over the next two years. Our advantages enable us to acquire and develop when others can't. We have a strong appetite for more with a matching ability to execute. Now I'll turn the call over to Tom.