Public Storage Q1 FY2026 earnings call

• PS 4.0 era underway with new team and own it culture gaining momentum. • Announced acquisition of NSA as an important early milestone in PS4.0 strategy, with portfolio combination compelling, upside from bringing portfolio onto platform, and structured transaction maintaining strong balance sheet. • Operating platform PS Next strengthening customer experience and business operations, first quarter results in line to a touch better than expectations. • Continuing to invest behind broader value creation engine including acquisitions, development, expansion efforts, and lending platform. • First quarter had lower customer move-in activity but better rental rates and lower move-out activity leading to better occupancy. • PS Next is built for serving customers through digital channels and aligning operating model with customer expectations.

Core FFO in the quarter was $4.22 per share, up 10 cents per share or 2.4% year-over-year. Same-store revenue and NOI growth in the quarter were flat and positive 0.4% respectively. Move-in rents were down 2.4% but better than expected. Occupancy was positive year-over-year by 0.4%. Expense growth was minus 1.1% for the quarter. Non-same-store performance and ancillary growth lifted results. NOI would have been 50 basis points better in the quarter if using a same-store definition similar to peers.

• Have not adjusted guidance at this time as busy seasons still ahead. • Leading indicators of business remain positive, but year-over-year revenue growth as a lagging indicator will soften mid-year. • Expect year-over-year revenue to come down a bit in 2Q and 3Q, but sequentially positive trends continue. • No change in expectations for NSA acquisition synergies and accretion as outlined earlier.

• Operating environment remains uneven. • New supply competition in some Sunbelt markets. • Impact of state of emergency in Los Angeles on same store performance. • Competitive dynamics in lending business. • Potential for new supply to pop up again in Sunbelt markets affecting performance.

Q: Michael Goldsmith with UBS asked about material reduction in churn, including what's driving it and impact on financials.

A: Michael Goldsmith was told it's due to good pay rates, minimal delinquency, strong customer health, focus on customer experience leading to longer length of stay, and existing customers being more profitable.

Q: Samir Canal with Bank of America asked about revenue cadence and investment activity.

A: Revenue cadence has leading and lagging indicators, leading indicators good, but year-over-year revenue will soften mid-year. Investment activity sees similar trends to last year, more active in single asset transactions, building team and data science capabilities.

Q: Todd Thomas with KeyBank Capital Markets asked about NSA integration and synergies.

A: Integration dialogue and collaboration good, plan to integrate assets onto PS Next platform in third quarter. Synergies expected to be $110 million to $130 million over time, accretion break-even in 2026, 35 to 50 cents per share earnings accretion by 2028-2029.

Q: Eric Wolf with Citi asked about JV properties and occupancy.

A: Occupancies similar between JV and wholly owned properties.

Q: Nicholas Ulico with Scotiabank asked about occupancy delta.

A: Sequential occupancy change due to adding square feet in Sunbelt markets with lower occupancy.

Q: Brendan Lynch with Barclays Bank asked about churn initiatives and challenged markets.

A: Churn lower due to macro factors, experience, and customer focus. Challenged markets like Tampa, Atlanta, Phoenix expected to improve as new supply tapers and absorption occurs.

Q: Juan Santabria with BMO Capital Markets asked about churn and ECRIs, and lessons from oil price spikes.

A: Customer behavior steady, price elasticity healthy, no material impact from oil price spikes on storage activity.

Q: Caitlin Burrows asked about no change to guidance and supply side.

A: No change to guidance as early in year with busy season ahead. Supply in Sunbelt markets tapering down, development business challenging.

Q: Michael Griffin with Evercore asked about PS Next initiatives and acquisition deals.

A: PS Next initiatives involve new Chief Revenue and Marketing Officer, targeted marketing and data utilization. Acquisition deals in hopper, not related to WellTower partnership yet.

Q: Spencer with Green Street Advisors asked about LA market rent catch-up.

A: LA market demand healthy, portfolio attractive, expect to charge market rents over 12-24 months, but state of emergency duration affects timeline.

Q: Ravi Vidya with Mizuho asked about expense trend and promotions.

A: Expense growth still constrained but will tick higher, promotions down with improving move-in rental rates and less churn.

Q: Mike Muller with JP Morgan asked about lending program.

A: Lending program looking for risk adjusted return, could grow to half billion to billion dollars, with ancillary benefits like feeder for acquisition activity, third-party property management, and tenant insurance.

Q: Eric Lubchow with Wells Fargo asked about top-of-funnel demand and acquisition side.

A: Top-of-funnel demand varies by market, some stronger markets have good trends. Acquisition side built for one-off acquisitions, prioritizing NSA integration now but looking to be active later.