Public Storage

Greetings and welcome to Public Storage Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you'd like to enter the queue, please press star 1 on your telephone keypad. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the comments over to your host, Mr. Ryan Burke.

Thank you. You may begin. Thank you, Rob. Hello, everyone. Thank you for joining us for our fourth quarter 2024 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 are subject to certain economic risks and uncertainties. All forward-looking statements speak only as of today, February 25, 2025, and we assume no obligation to update, revise, or supplement statements to become untrue because of subsequent events. A reconciliation to GAAP of the non-GAAP financial measures we provide in 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. We do ask that you initially limit yourselves to two questions. After that, if you have more, of course, please jump back in the queue. With that, I'll turn the call over to Joe.

Thank you, Ryan, and thank you all for joining us today. Tom and I will walk you through our performance, industry views, and outlook. Then we'll open it up for Q&A. I will focus on three key themes. First, we ended 2024 on a positive note with results that reflected the stabilization we are driving across our business. We began 2024 by pointing out that a handful of markets were improving sequentially and that we expected more would follow suit. They did, and we ended the year with nearly all markets having inflected, and we are seeing broad operational stabilization. As a result, our quarterly same-store revenue growth improved sequentially for the first time in more than two years. This, coupled with strong performance in our sizable non-same-store pool and ancillary businesses, helped drive core FFO per share growth positive. Similar to same-store revenues, this is the first sequential improvement in more than two years. Simply put, industry and portfolio fundamentals are steadily heading in the right direction. Second, we are inspired by the strength and perseverance of the Los Angeles community following the tragic fires nearly two months ago. We have a longstanding and deep connection here, and we empathize with those that have been affected. I am very proud of the team for keeping our properties secure and open to serve our customers. We welcome our new customers and thank them for choosing us in their time of need. We are deeply experienced in navigating states of emergency and look forward to Los Angeles re-emerging as a long-term outperformer among self-storage markets. In the meantime, we are driving operational stabilization across the rest of our portfolio, and we expect sequential improvement to continue outside of Los Angeles in 2025. Third, through portfolio enhancement, industry-leading innovation, and company-wide competitive advantages, we have positioned ourselves for opportunity as the industry environment improves. We recently completed the Property of Tomorrow program, a multi-year and more than $600 million investment into holistically rebranding our entire portfolio nationwide. This has further enhanced our brand positioning within local markets. As a result of completing the program, we expect our annual retained cash flow to increase from $400 million in 2024 to approximately $600 million in 2025, providing additional liquidity to grow our portfolio. Our digital transformation is advancing and further connecting all aspects of our business. Adoption by customers has been particularly swift with self-selected digital options of our customer interaction and transactions, a significant increase from around 30%. The platform digitalization has helped drive our implementation of a new and more efficient operating model. One of the many ways we are flexing the platform and using AI is to staff properties more appropriately. We are now meeting customers when and where they need us instead of always having someone onsite for nine hours every day. As a result, we've reduced on-property labor hours by nearly 30% and there's more to go. Importantly, we are doing so while also driving satisfaction higher among our customers and the 6,000-member property operations team. We are also actively rolling out our solar program, reaching nearly 900 properties and with more growth ahead. Our strong progress so far has resulted in a 30% reduction in utility use, which benefits our financial profile and the environment. These are just a few of our many active initiatives, and we are excited about further operational enhancement to come this year and beyond. With that said, we are mindful of the challenges that the industry still faces, including competitive customer move-in dynamics. Our team and strategies are calibrated appropriately as we are driving improvement across our portfolio. Now I'll turn the call over to Tom. Thanks, Joe.