Public Storage Q2 FY2025 earnings call

• Raised 2025 outlook based on stabilizing operations and $785 million in closed or under contract acquisitions year-to-date.
• Industry leadership with highest revenue per square foot among peers, efficient operating platform, and strong acquisition/development teams.
• West Coast, Washington D.C., and Chicago are standouts with same-store revenue growth in 2% to 4% range. Los Angeles fire-related pricing restrictions impact unchanged but market will rebound when restrictions end.
• Optimized mix of digital and in-person services enhancing customer experience and driving returns. Ancillary businesses expanding.
• Acquisition and development teams executing on accretive portfolio growth with 538 property non-same-store pool expected to generate ~$470 million of high-growth NOI in 2025, with additional $110 million in 2026 and beyond. International potential with Shurgard in Europe and potential partnership in Australia/New Zealand.

The West Coast, along with markets like Washington, D.C. and Chicago, showed same-store revenue growth in the 2% to 4% range. Ancillary businesses, including tenant insurance, third-party management, and lending are expanding. Revenue contribution from these segments isn't specified in absolute terms beyond the mentioned growth and expansion.

• Lifted the low end of 2025 core FFO guidance range from $16.35 to $16.45 per share due to improved outlook for self-storage and ancillary NOI.
• Same-store revenue growth guidance remains wide (-1.3% to 0.8%) with key drivers including rental rate caps in Los Angeles and demand in various markets.
• Expect stabilization in operations and continued growth through accelerated acquisitions and development.

• Fire-related pricing restrictions in Los Angeles impacting performance in the second half.
• Potential impact of legislative efforts on rent control in California and other states affecting the business.
• Variable demand and normalization process in some Sunbelt markets like Atlanta, Dallas, and certain Florida markets.

Q: Michael Griffin asked about July operating trends and guidance, specifically on rate and occupancy and if the back half will decelerate.

A: H. Thomas Boyle responded that July trends were consistent, occupancy gap tightened, and Los Angeles fire-related restrictions contribute to second half deceleration but L.A. will rebound.

Q: Nicholas Yulico inquired about move-in volume and move-in rates.

A: H. Thomas Boyle said move-ins were better than move-outs, move-in rents were down mid-single digits, and demand is recovering but will take time for move-in rents to increase.

Q: Jeffrey Alan Spector asked about same-store revenue growth guidance range.

A: H. Thomas Boyle explained the range is due to factors like occupancy and move-in rents in different scenarios.

Q: Eric Wolfe asked about Los Angeles restrictions lifting and recapturing lost revenue.

A: H. Thomas Boyle said rental rate caps impact is defined, but demand in L.A. is variable, and revenue would accelerate post-restriction expiration.