Public Storage

Greetings and welcome to Public Storage first quarter 2026 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If you'd like to gain access to the queue, please use the command 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 conference over to your host, Brandon Reagan. Thank you. You may begin.

Thank you, operator. Hello, everyone, and thank you for joining us for our first quarter 2026 earnings call. I'm here with the public storage leadership team, Tom Boyle and Joe Fisher. 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, April 28, 2026, 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 at our investor relations website, investors.publicstorage.com. We ask that you initially limit yourself to two questions. However, if you have additional questions, please feel free to jump back into queue. With that, I'll turn the call over to Tom Boyle.

Good morning, everyone, and thank you for joining us. I'll frame my comments this morning around four points. First, the PS 4.0 era is now underway, with the new team in place and own it culture gaining momentum. Second, the announced acquisition of NSA is an important early milestone in that strategy. Third, our operating platform, PS Next, is strengthening the customer experience while also improving how we run the business with first quarter results in line to a touch better than expectations. And fourth, even ahead of the forthcoming recovery and storage fundamentals, we're continuing to invest behind a broader value creation engine that we believe can drive stronger per share growth over time. Let me start with PS 4.0. What PS 4.0 is really about is building the next phase of public storage around a simple idea. We have a unique opportunity to create value by combining the scale of our platform, the strength of our brand, the quality of our portfolio, our unique own it culture, and increasingly the advantages of our data and analytics capabilities. We hosted our 160-person leadership team a few weeks ago to kick off the new era with an enthusiastic response internally. Our teams have embraced the strategic vision and there is real energy across the organization around what comes next. That matters because strategy only creates value if the organization is aligned behind it. Right now, that alignment is getting tighter. The energy is being translated into urgency for execution. That takes me to point number two, NSA. The announced acquisition of National Storage Affiliates is a major step forward for us and a very clear example of PS4.0 in action. When we discussed the transaction in March, we highlighted three things. One, the portfolio combination is compelling. The two portfolios deepen our brand, scale, and operating presence across the national opportunity set. Two, There is meaningful upside from bringing that portfolio onto our platform. On the M&A call, we discussed the customer experience opportunity with managing the properties under the PS brand and PS Next operating model. This will also lead to revenue potential and margin upside. And three, we structured the transaction with a win-win joint venture that optimizes portfolio structure for public storage and preserves financial strength. Public Storage will wholly own 46% of the over 1,000 assets in the portfolio with the remaining in joint ventures. Importantly, the transaction maintains our industry-leading balance sheet. So when I step back and look at the NSA acquisition, I don't see a bigger company. I see a stronger platform, a deeper portfolio, and a broader opportunity set for value creation. This will drive differentiated per-share earnings growth in coming years. And importantly, integration planning is progressing well. The teams are engaged, the work streams are moving, and we're preparing the business to execute well upon closing. I also want to take a moment to thank both the NSA and public storage teams. Transactions like this require an enormous amount of focus, coordination, and professionalism, and we appreciate the strong collaboration we're already seeing across both organizations. There's obviously much more to come as we work toward completion of the transaction, but I'm encouraged by the work that's underway. That leads to point number three, the operating platform. A big part of why we're excited about NSA is that PS Next is built for this. PS Next is an operating platform that is increasingly shaping how we serve customers, price inventory, manage demand, and drive efficiency across the business. Customers are increasingly interacting through digital channels, whether through our website, app, agents, and over time, more through large language model-driven interfaces. We're building our operating model around those shifting customer expectations. That customer focus is central to PS4.0. The team is aligning this direction. Let's connect that strategy to what we're seeing in the business today. The operating environment remains uneven. We're seeing lower customer move-in activity overall in the first quarter with some weather impacts and modest demand. But at the same time, we have driven better rental rates than expected. And importantly, our existing customer base remains very healthy. Move-out activity was meaningfully lower in the quarter, leading to better occupancy than last year. This is not a one-speed environment. It's a market where execution matters. And that is where the operating model transformation becomes so important. We're improving customer experience in a way that supports performance both on the revenue side and the expense side. We're seeing that playbook continue to develop, and that gives us confidence, not just in integrating NSA, but improving the performance of the broader portfolio over time. Now let me go to point number four, the value creation engine. We're not waiting for the environment to get easier. We're acting now. We have confidence in the long-term fundamentals of storage and have the opportunity to invest today to benefit the platform over time. That mindset is important because while the near-term environment remains uneven, the longer-term setup is compelling. Several longer-term drivers support that optimism. Self-storage adoption has increased over the last decade. Participation has broadened across customer cohorts with strong participation from younger generations. Our units also present an affordable space solution in a high cost of living environment, and competitive supply is slowing as new development becomes harder and more expensive. We like that backdrop. We're positioning the company now to outperform as the environment improves. NSA is the first major milestone of our value creation engine, but it's not the only one. We continue to execute upon value creation through multiple levers. That is a year-in and year-out opportunity given our capital resources at Public Storage across four different levers, acquisitions, development, expansion efforts, and our lending platform. Our capital resources will be allocated across those levers in order to, one, improve our portfolio, two, accelerate per share earnings and cash flow, and three, compound our returns. Our external growth and capital allocation capabilities continue to build. In March, we announced the Strategic Data Science Partnership with Welltower. That partnership brings together Welltower's capital allocation-oriented data science platform and Public Storage's operational, pricing, and customer analytics capabilities to better our micro-market targeting and portfolio construction over time. Our value creation engine is driven by a combination of our PS Next operating platform advantages, enhanced data science approach, and team investments. So if I put it all together, here's how I'd summarize the quarter. One, we launched PS 4.0 and aligned the organization towards a new strategic vision. Two, we announced the NSA acquisition, which, with a unique structure, strengthens our scale, our platform, our portfolio, and our value creation opportunity. Three, we continued advancing PS Next and our operating model transformation with a strong focus on customer experience. And four, we expanded the reach of our value creation engine through both external growth and the WellTower Data Science Partnership. We're realistic about the operating environment. It remains uneven, but we're also optimistic, optimistic about the demand and supply setup over the next several years, optimistic about the capabilities we're building, and optimistic about our ability to translate those investments into stronger per share earnings growth over time. With that, let me turn it over to Joe.