Public Storage Q3 FY2024 earnings call

• Operating fundamentals are stabilizing across the portfolio, with improvement in most markets expected to continue. Move-in rents have improved from earlier drops, and in-place customers are behaving well. Supply environment is favorable with slowing new competitive property deliveries. - Public Storage customers are embracing digital engagement options, with 75% of move-ins using eRental and nearly 2 million PS app users. The company received the Great place to Work designation for a third year. - Reduced utilities usage through LED lighting and solar power installations, with a goal to reach 1,300 properties with solar by 2025. - Acquisition market is picking up, with more one-off deals and convergence of buyer-seller expectations.

Core FFO was $4.20 per share, a 3% decline compared to last year. Revenues in the same-store portfolio of stabilized properties declined 1.3% year-over-year, with a relatively even balance between rent and occupancy. Revenue growth in the quarter decelerated 30 basis points sequentially from the second quarter, showing improvement from the prior year's 380 basis points of deceleration. Move-in rents were down 9% year-over-year in Q3 and 5% in October, with in-place customers showing strong payment patterns, long average length of stay, and lower move-outs.

• Reiterated core FFO guidance of $16.50 to $16.85 per share. - Lifted same-store revenue outlook for the year. - Increased the outlook for incremental NOI from the non-same-store pool of assets in 2025 and beyond to $120 million total. - Fourth quarter expected to be the first sequential growth improvement in over two years at the midpoint of guidance.

• Development hurdles such as longer entitlement times and complicated improvement processes. - Hurricane impact on the West Coast of Florida with an estimated $7 million financial cost, though properties are mostly back online.

Q: Jeff Spector asked about the expectation of improvement into 2025 and whether it's regardless of housing market changes.

A: Joe Russell said stabilization in 2024 leads to a better position in 2025 with many trends positive.

Q: Michael Goldsmith inquired about drivers of move-in rent improvement and October occupancy.

A: Tom Boyle said improvement is from improving demand trends, occupancy down 90 basis points year-over-year, existing customers performing well.

Q: Samir Khanal asked about move-in rate trajectory and expense side.

A: Tom Boyle said moving towards trough seasonally, and Joe Russell mentioned e-rental helping with payroll savings.

Q: Eric Wolfe asked about occupancy uplift and pricing elasticity.

A: Tom Boyle said occupancy is part of demand trends, and they test price points to optimize revenue.

Q: Eric Luebchow asked about acquisitions and existing customer activity.

A: Joe Russell said transaction market picking up, and Tom Boyle said existing customer base strong contributing to revenue outlook.

Q: Nicholas Yulico asked about promotions and accounting.

A: Tom Boyle said promotions are contra revenue, with historical comparison.

Q: Juan Sanabria asked about cap rates and COO hiring.

A: Tom Boyle said stabilized yields in 6% range, and Joe Russell talked about COO Chris Sambar's experience.

Q: Todd Thomas asked about promotions and occupancy update.

A: Tom Boyle said promotion mix changed, and occupancy down 90 basis points year-over-year.

Q: Ron Kamdem asked about website data and COO impact.

A: Tom Boyle said good web visits and conversion, Joe Russell talked about PS app users.

Q: Caitlin Burrows asked about acquisitions timing and development.

A: Tom Boyle said activity slipping into 2025, Joe Russell said record deliveries in 2024, slight drop in 2025.

Q: Brendan Lynch asked about labor balance and market strength.

A: Joe Russell talked about analytics for labor, Tom Boyle updated on market performance.

Q: Ki Bin Kim asked about rent trends and hurricane NOI impact.

A: Tom Boyle said on track for rent goals, and impact too early to tell.

Q: Mike Mueller asked about land positioning and development.

A: Joe Russell talked about land strategy, Tom Boyle mentioned $60 million of land holdings