Q2 2025 Public Storage Earnings Call

Greetings and welcome to Public Storage second quarter 2025 earnings conference call. At this time, all participants are on the list and only mode a question and answer session will follow the formal presentation.

To access the queue, please press star 1 on your telephone keypad.

If anyone should require operator assistance during the conference front, please press star zero on your telephone keypad.

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. Ryan Burke. Thank you. You may begin

Thank you, Rob. Hello, everyone. Thank you for joining us for the second quarter 2025 earnings call. I'm here with Joseph Russell and H. 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, July 31, 2025, and we assume no obligation to update, revise, or supplement statements that become untrue because of subsequent events.

A Reconciliation 2 gap of the non-gaap financial measures. We provide on. This call is included in our earnings release. You can find our news release supplement report SEC reports in an audio replay of this conference call on our website at public storage.com. We do ask that you initially limit yourself to 2 questions after that, of course, feel free to jump back in 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.

We are raising our outlook for 2025 based on stabilizing operations and accelerated acquisitions, which reached $785 million closed or under contract year to date.

Public Storage's industry leadership is proven by, among other things, the highest revenue generation per square foot among peers.

The most efficient operating platform including customer and employee Centric technologies that are enhancing satisfaction while bolstering our revenue and margin advantages.

And the strongest ability to drive portfolio expansion through our best-in-class, acquisition and development teams, backed by our growth oriented balance sheet.

As the operating environment, stabilizes new competitive Supply, deliveries decline further and the transaction Market becomes more active. We are holistically enhancing our advantages and positioning for growth.

From a performance perspective, the West Coast in particular along with other markets, including Washington, DC, and Chicago are standouts with same store, Revenue growth in the 2 to 4% range.

Our expectation for the impact of fire related, pricing restrictions in, Los Angeles is unchanged.

Similar to most of California, Los Angeles will return to being a higher growth market when the restrictions end.

Speaking more broadly, The Trusted Public Storage brand and our geographically Diversified portfolio are highly recognizable to Consumers and businesses in a source of Pride for our team.

We have developed and optimized a mix of digital and in-person service options that have modernized the customer experience while driving returns and revenues.

With our broader operating model transformation, we have created a win-win-win for customers, team members, and our profitability through higher engagement, satisfaction, and efficiency.

our ancillary businesses, including tenant Insurance, third party management, and lending are expanding

Our acquisition and development teams are executing on a creative portfolio. Growth with the 538 property non-sane store pool is expected to generate approximately $470 million of high growth NOI in 2025.

2026 and Beyond.

And Public Storage is uniquely positioned to grow internationally as demonstrated by our success with Sherrard in Europe and the potential new partnership in Australia and New Zealand.

As announced, we are currently in due diligence and therefore in a quiet period.

We are excited about the potential to partner with Abacus Storage King and Kai Corporation, their major shareholder, to enhance the company's customer experience, operating performance, and portfolio growth.

Now, I'll turn the call over to Tom.

Thanks Joe.

We are leaning into our powerful compounding returns platform comprised of three components.

Joe spoke to our industry-leading operations, all now speaking to Capital, allocation in Capital Access.

On Capital, allocation we have accelerated portfolio growth with more than 1.1 billion in Acquisitions and development. Already announced for this year.

The acquisition opportunities are relatively broad-based across size geography and seller type which were built to execute based on our relationships data, driven underwriting and capital structure.

And we will continue expanding the high growth. Non same store pool through additional Acquisitions and our 648 million development pipeline to be delivered over the next 2 years.

We are utilizing our advantageous access and cost of capital to fund that growth.

During the quarter, with ongoing support from bond investors.

We issued new unsecured bonds for refinancing and to fund that growth at the tightest. Spread of REITs for the year.

With leverage at 4.1 * net debt and preferred to ibida and approximately 600 million in retained cash flow. This year, our Capital position is very strong and poised to fund growth into the future.

Now, shifting to financial performance for the quarter in our increased Outlook.

In the same store pool Revenue growth came in as expected increasing for a second consecutive quarter. Following 3 quarters of the clients last year.

Rental rates were up 6%, which more than offset slightly lower occupancy.

And that occupancy gap versus last year continues to improve, down 40 basis points versus down 80 basis points to start the year.

In expense control, we saw strong results leading to a better NOI outcome than we anticipated.

Strong non same store in ancillary. Noi growth drove core ffo Higher by 1.2% in the quarter.

FFO growth accelerated 240 basis points from the level achieved during the second quarter of last year.

In light of that performance, we lifted the low end of our 2025 Core FFO guidance range from $16.35 to $16.45 per share.

Driven by an improved outlook for self storage and ancillary noi.

All-in. Public Storage is very well, positioned to drive performance from our compounding returns platform comprised of leading operations, strong, Capital allocation, and advantageous Capital Access.

With that, we're now open for questions.

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press *1 on your telephone keypad.

A confirmation tone will indicate your line is in the question queue. You may press *2 if you'd like to remove your question from the queue.

As a reminder, we ask that you please limit questions to two and request if necessary.

For participant, Jews and speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

1 moment, please while we pull up for questions.

Our first question comes from Michael Griffin with Evercore. Please proceed with your question.

Great thanks. Um, maybe just first starting off on fundamentals, wondering if you can give us an update on July operating Trends. Maybe both from a rate and occupancy perspective and second is it relates to the guide you know, it seems like you're trending above the revised midpoint at least year to date. So you know, should we kind of interpret the back half of the year as a deceleration and fundamentals and as that changed your stance at all about, you know, potential recovery for for storage fundamentals.

Sure. Thanks Michael. Um,

Ization that we've been speaking to continues to play forth. You know Joe spoke to some of the the strength in in many of our markets, the West Coast markets uh San Francisco, Seattle San Diego, Portland all putting up. Uh good kind of 2 to 4%, same store, Revenue growth. Uh, we continue to have uh, certain markets, like Atlanta and Dallas. Uh, some of the Florida markets, still working through the normalization process. Uh, but we've been encouraged by some of the trends that we've been seeing through through the leasing season, uh, in those markets.

Um, for the quarter move in rents were down about 5% and as I noted occupancy, did close the gap. Uh, to down 40 basis points from starting the year down. 80, uh, July Trends have been relatively consistent. Um, in terms of customer Behavior rents are trending. Similar in July down, call in mid single digits. Uh, we ran a successful Fourth of July sale, which will optically lower that, uh, statistically. Um, but seeing good. Good customer traffic and and behavior. Their occupancy, Gap continues to tighten uh, today down about 30 basis points. Uh, as we sit here today,

um, the the

the second part of your question related to guidance and kind of performance year to date. Um, you know, and and as you highlighted, we're seeing performance uh, pretty similar to to what we've been expecting year to date. Uh, Trends are a little bit above the midpoint on year to date performance and revenue which is encouraging. And I think that's specifically what you're um uh getting at I think the the second half a deceleration that's implied by that guidance, uh, I would point you to the discussion, we've been having in Joe highlighted around Los Angeles and the Los Angeles impact from the fire related. Emergencies will be more felt in the second half as we've consistently highlighted. Uh, and is the the contributor to that deceleration in the second half that said La continues to be a fantastic storage market and 1 that we have a lot of confidence in over the medium to longer term uh and will rebound nicely when those fire emergencies expire.

Tom that's uh that's certainly some helpful color. Uh maybe switching next to kind of the acquisition pipelines and the color on deals closed year to date. Looks like he did about 160 million. Uh in the second quarter with, you know, a healthy pipeline, call it around 40 million under contract outside of that. I I mean, can you give us a sense of how the transaction Market has been? What kind of buyers and sellers out there are out there? You know, could we see incremental Acquisitions on?

Top of that, $480 million set to close. And then it looks like you've targeted a number of Sunbelt markets with your acquisitions. So far this year, obviously those have kind of felt more of the brunt of the supply headwind. So, curious if kind of the acquisition strategy is more getting ahead of a recovery in those markets or it's more submarket specific. Thank you.

Okay, yeah, Michael. This is Joe. I'll I'll I'll take that and Tom's welcome to join in as well. Um, first of all, just talk to him about the overall transaction Market through year to date. Um, tracking that we have seen nationally. Um, it's up year-over-year uh, anywhere from say 10 to 15%. We'll see how that plays out um, full year, uh, typically second half of year transactions, or more robust than first half of year but uh, to be determined. Um, but we have seen again the amount of product coming into the market and the willingness of owners to transact into levels of value that we have seen appropriate actually increase. So that's been encouraging, it's certainly been part and parcel to the amount of volume that we've done year to date that we've spoken to

We'll see how the rest of the year plays out. There are still very few larger portfolios coming into the market. And um those that have have had some level of friction relative to the amount of bidding activity and the value realization that um many of those owners have attempted to achieve both privately through many conversations. We've had with them over the last even 12 to 18 months and then what we've even seen year to date little tough to predict how things are going to go between now and end of the year. But what we've been able to do is unlock many of the things that we do very uniquely, as Tom spoke about in his opening comments, which we have deep-seated relationships. Um, we are inactive dialogue with a whole set of different types of owners, very different Market, um, opportunities and

Market concentration of activity, it has been dominated by a number of markets, more mid to East Coast. Um what we do though is not aim and look for Sun Belt markets. That may have um different Dynamics tied to supply Andor growth. But going right down to a submarket basis where we can use data to guide us to where we see unusual value opportunities. So we're very confident in the way that we've actually

captured assets year to date based on all the tools that we have and the unique opportunities that we have to execute those tools. Um, a number of those transactions have been off Market, um, and outside of 2, I would say, moderately sized portfolios. They've been P. Primarily dominated by 1-off transactions. So we'll see that how that continues to play through the rest of 2025, but we have been encouraged by the realization that many owners um, have taken relative to cap rate, expectations and value expectations. And of uh, frankly captured some, uh, good assets going into 2025 thus far.

So where our Capital will uh you know that was. That was very. Yep. Yep. Thanks so much. I'll hop back in.

You bet. Thank you.

Our next question comes from Nicholas Ulo with Scotia Bank. Please proceed with your question.

Um, thanks. Uh, I guess I just wanted to touch on the, uh, the move-in volume, net of move-outs. And, you know, you talked about that being slightly better, um, than last year. Uh, can you just give us a feel for, you know, how much that you think that might need to pick up in order to help pricing on the, um, you know, the move-ins, where you said, you know, it's been a little bit more competitive on moving rates.

Yeah, I mean we've seen a consistent uh performance uh uh uh closing that documents and GAP with with move in doing better than move outs really for the past year and a half. Um and and would expect that to continue in terms of the dynamic with move in rents. I think there's a couple pieces there 1 is our own uh, strategies related to, to what it is. We're doing to drive Revenue uh and so you know, we do things like rum sales and things like that uh periodically and and otherwise that are going to skew some of the numbers 1 way or the other, but the, the ultimate, um, driver of some of this is overall industry demand and we've been encouraged by uh, industry demand that that really bottomed last year and it's starting to recover and I think it's going to take a little bit more time with that recovery before the industry. Overall, uh, starts to be in a position where we're we're driving

Move in rents higher given the success we've had in using move in rents. Um, uh, at at a lower promotional levels over the past couple years, but I do think that that will will come here. Uh, as we move move through the year and into next year, continued narrowing of that uh, move and rent Gap. And uh, we we will be really supported by that demand uh picture, which we think is modestly improving off the bottoms from last year.

Okay. Thanks and then, uh, second question is just, uh, going back to Los Angeles and um, you know, as a region it does feel like that market is struggling a little bit more than um, some others in the US. Can you just talk about any other sort of Trends you're seeing on the ground and and uh you know I mean I know you have the fire ordinance that's an impact, but is there anything else you're seeing that's kind of pointing to uh you know, near-term weakness? Uh, in that region. Thanks.

Yeah. No, we are actually seeing pretty good strength across the whole West Coast and and even Los Angeles. I mean, you highlighted the rent restrictions. But, you know, if you look at at Los Angeles in Aggregate, and if you look at Orange County for instance, Orange County uh, revenues are up 3% in the uh, in the second quarter uh which is just, you know, speaks to the strength that we're seeing really across the broad-based West Coast. Um, but we are impacted by those rent related, uh, restrictions that, um, that are in place. Uh, but ultimately, they will expire. And we've got a lot of confidence, both in our portfolio, uh, in Los Angeles, as well as

As uh, the the demand Dynamics here in Los Angeles that we'll we'll uh, return Los Angeles to a, a strong performing Market here, um, in the future.

Our next question comes from. Ronald Camden with Morgan Stanley. Please proceed with your question.

Hey uh thanks for taking. My question is Jenny on for Ron. Uh first is uh can you please comment on any Market that you think you become like incrementally more or less constructive and a uh notable change in your underwriting approaches in those areas? Thank you.

Good news is um again quarter by quarter. We're seeing continued progression Market by market where we've seen Improvement in either. Um, Revenue growth itself or the change in Revenue growth. So we're um, continue to be encouraged by uh the amount of demand factors that are listing each of these markets, 1 by 1. There's a whole host of markets that then also lead to our uh confidence relative to Capital allocation. Um, but that, as I mentioned, you know, in a prior question, really goes right down to a submarket by submarket basis. Where we're looking for ideal opportunities to invest into assets, that are going to have the opportunity for us to put our own brand or operational, um, techniques and platform to improve performance as well. And we've been very encouraged by a whole host of markets that give us a, that set of opportunities. So um, the landscape for

Continued investment is quite good. Um, relative to the things that we have uniquely to drive and understand not only current conditions but, you know, changing and improving conditions market by market.

Now, super helpful, uh, second is regarding operations, maybe talk a little bit more about if there's more room to automate or centralized operations. Like what could be the expected margin expansions like from those initiatives. Thanks. Yeah. Yeah. Uh, another very vibrant and robust, uh, part of the business that we uniquely are investing in, in capturing, all types of different levels of either. A optimization, um, B. Um, cost-savings and then C from an employee standpoint opportunities for, uh, different levels of specialization as we allocate for instance, labor in the properties where we can use analytics to determine the best place and location for our own employees to match customer demand. Um many of the things that we've been doing from a cost efficiency standpoint around our investment into solar for instance um to again optimized

Cost High to utilities. Um, and then from a scale and

Um, concentration standpoint, The Leverage that we continue to extract relative to to to to, you know, again, the optimization, uh, in the way that we're running our properties, uh, day-to-day so very encouraged by the, um, the the the amount of progression. Uh, it's not over yet. We're seeing the ability to lift optimization that. It also ties to both revenue and

And expense control, while also preserving, if not enhancing, both customer and employee satisfaction. So, the entire opportunity that we see there continues to grow. And we're very confident we’ve got more to do.

Perfect, thanks so much.

Thank you.

Our next question comes from Jeff Spectre with Bank of America. Please proceed with your question.

Great, thank you. First question on the same store, Revenue growth. Uh, guidance, it's still fairly wide minus 1.3 to uh 0 8%, can you talk about the various scenarios or key drivers? Uh bottom end versus top end. Thank you.

Yeah, sure. Jeff. I, I, I'd point you to the same guide, post, frankly, that that I did earlier in the year. Um, you know, the year has played out, uh, largely in line with our expectations. And so would would point you to guideposts of, you know, higher occupancy from, from here, to the end of the year, and the high-end case, um, with moving rents, probably narrowing to say down 3% on average. So some improvement there, I'm moving rents. The low-end case being, uh, modest drops in occupancy from here, uh, as well as moving rents declining through through the second half. Um, so, you know, while the, the probability of those high and low-end cases may have come down a little bit, we felt like

They were still the right guideposts for investors to be able to gauge performance.

Okay, thank you. And then my second question is on Street rates just curious into July, how are operators using Street rates to manage occupancy versus demand, know how? I guess if you could talk about just the current Pro environment, discounting promotional Activity, thank you.

Yeah, pretty consistent. I wouldn’t point you to anything meaningfully changed, uh, here in July.

Okay, great. Thank you.

Thanks.

Please proceed with your question.

Uh, great, appreciate it. Um, I guess as you look at the back half of the year, um, I guess what type of seasonality are you really expecting into the slower months? The last couple years? It's been pretty competitive on, on moving rate across the industry, uh, into the slower months and and, you know, are you optimistic that we won't see the love the same level of price competition to try to maintain occupancy? Uh, any thoughts that would be helpful.

Yeah, I think our expectation coming into this year as we see, pretty similar seasonal Trends this year as we did last year uh and I I would stick to that into the back half as well. Um, and yeah, it continues to be competitive for new customers. I think that's a a dynamic within our industry that that's been tried and true for a long time. Uh, and so, you know, different operators are going to use different pricing and promotion tactics. But we're certainly well equipped to to utilize ours and and drive traffic to our Public Storage sites around the country.

Great. And as as you think about kind of leveraging move and rent versus promotional discounts versus marketing. Spend, you know, like promotional discounts have been down, uh, your date versus last year. Um, and your marketing spend was up a bit in the quarter and so it's just year-over-year. So, how should we think about the interplay of those? Uh, and your ability to hit your uh your occupancy Targets this year?

Yeah, well I see a big picture. We don't have occupancy targets, we're looking to maximize revenue and you highlighted the the 3 different, levers that we utilize day in and day out, being marketing promotions and moving rental rates. Uh we'll continue to do that that that's an analysis that's done. Very granularly at a a product site um level at at the property and uh, we'll continue to utilize those tools to maximize Revenue over time.

Okay, thank you.

Thanks.

Our next question comes from Eric wolf with City, please proceed with your question.

Thanks. I just wanted to follow up on LA. It seems like you're expecting around negative 6% same-store revenue growth in the second half versus called flat in the second quarter and the first half. Is there anything that could sort of cause that prediction to be materially off one way or the other? Or is it somewhat just sort of math and certainty that you'll end up close to that level? I'm just trying to understand sort of the volatility of outcomes that could happen in LA in the back half of the year.

Yeah, sure. Eric I I think that there's a couple components to that 1 is uh, overall um, you know, the impact of the, the, the state of emergency pricing restrictions on our ability to send rental rate increases to existing customers. And I'd say that component of the impact is, is pretty well defined, uh, because we understand, you know, our customers that are in place and, and they're likely vacate as well as rental rate increase, uh, cadences. So I I'd say that that component is relatively, um, uh, more more known as we move into the second half. And that's the biggest contributor to the decline in performance as we move through the year, as that impact of rental rate. Uh, caps, um, accumulates through the year. The other component though is just the strength of overall demand and and customer behavior in Los Angeles and and that is more variable. And I'd say we've generally been, uh, pretty encouraged by by customer demand in Los Angeles.

Uh, as well as just broadly across the West Coast. As I highlighted earlier, uh, it's not an LA County thing. But I, I mentioned earlier that Orange County is performing particularly well, obviously not impacted At All, by, by these, um, uh, emergency restrictions so that is a little bit more variable, uh, and um, will ultimately report on on Los Angeles as we move through from here, uh, but I think you, you characterized it. Um, well, in terms of our expectations, for the back half,

That's helpful and then I guess uh maybe difficult question but um to the extent that the the restrictions are lifted. Next January is how quickly do you think you could sort of capture um that lost Revenue back?

In the last instance, it probably took more like a year and a half 2 years, but that's because that emergency was in place for, for longer. So, ultimately, I need to judge that when we get to that point early next year,

Thank you.

Our next question comes from Spencer Alloy with Green Street. Advisors, please proceed with your question.

Thank you. Um, can you talk about what's driving the increasing guidance for the non-SAME store pool? Have those been leasing up faster than expected, or is it just more on the right side?

Yeah, great question. I I I break it into 2 components. Uh, 1 is a strong performance from the non same store pools that are in lease up in particular, the development and expansion properties. Had a very good start to the year, uh, leasing up ahead of our expectation, which I think just just um, you know, further reinforces the, the environment for new customers is is stabilizing uh and and modestly improving from here. So that's a, uh, encouraging statistic that that those lease up properties are ahead of expectations. And then the second component is the new acquisitions that are, uh, we've closed on or intend to close on through the back half of this year. Uh, as disclosed also increase that uh from here,

Maybe the last piece Spencer just to highlight is. We did also increase the outlook for the amount of noi to be achieved in 26 and Beyond from that pool, and Joe highlighted that in his prepared, remarks from 80 million to 110 million. So, we're refilling this, high growth, non same store pool that not only will have an impact on this year. But importantly, we'll have an impact on future year growth as well.

Yeah, and maybe just to add 1 more, um, component Spencer to the configuration of the non same store, so about a 1004 or so assets that are in the non same store are, uh, you know, developed assets or expansions that we've intentionally put into markets. Um, and to your question, we're seeing very good lease up but those assets can take some additional amount of time to get to stabilization, which is all very powerful. So, again, about 20% of the nonsense store is actually tied to our, you know, very intentional development activities as well that uh, give us over time the highest Returns on Capital. So again, continue to be very encouraged even with assets that we put into the market over the last year or 2

Okay, that's very helpful. Thank you. Um, and then specific to California, we've seen more attention being brought to potential rent control as well as pricing transparency. While I realize no rent control bill has actually been successful in passing, does the recent push from California legislators...?

Change how you view um you know, your exposure to the state mid to long-term.

Sure the um, you know, the thing that we do nationally just to step back is, we do keep a very close watch on any legislative efforts that are, um, potentially gaining, either attention or attraction, um, that could impact the business. Um, California, uh, can be prone to that kind of activity. And, you know, to your question, um, you know, we we keep a very close eye, you know, on, uh, the variety of things that may be contemplated legislatively or otherwise within the state. You know, we take a very proactive posture when and where we see those kinds of activities in

The case of California, which we do, um, more typically, when any of those kinds of events, take place. Um, you know, we're not, uh, independently, um, engaging with and or formulating, any type of reaction or response. We're going to be doing that with industry Partners, including, you know, the National Storage Association, Etc. Um, you know, most recently, the efforts that we're taking place here in California

Customer attraction. Meaning, you know, it can be very advantageous to the way customers, look at acquiring spaces and holding it, holding those spaces, long term. So we continue to look at all those ways to continue to educate legislative efforts and frankly more often than not, those become very sensible to them and they've given us a good, um, Foundation to continue to, you know, move forward with and if these um events take place. So we're going to continue to stay focused on that again with our our partners nationally and uh we'll go from there.

Excellent, thank you.

Thank you.

Our next question comes from Todd Thomas with KeyBanc Capital Markets. Please proceed with your question.

Um, I wanted to ask about the development and Lisa pool. Um, a little bit more, I was wondering if you can discuss, how the newer vintage projects are trending versus underwriting and comment on stabilization time frames and and noi yields as you refor um those those projects. And then are you underwriting new projects today uh in either the in process pipeline or planning any differently for for new developments going forward?

Yeah. Thanks Todd. Uh, so a number of components there first. Just starting with reiteration of what I mentioned earlier that, that the lease up and and trajectory of the recently, delivered Acquisitions and expansions continues to be robust. Uh, and you can see that in our non same store disclosure in the sub. Uh in in terms of seeing good good traction there uh for lease up and and they are tracking a little bit ahead of of our performance to date, which is encouraging the the overall targets for for yields that we're looking for for those sorts of developments. And uh expansions are typically in the 8% plus or minus yield on cost. And that's something that if you look uh, in the sub, you can see we've consistently uh, hit or exceeded over time uh and have a lot of confidence in these recent vintages.

In terms of, you know, how we're looking at the the program overall going forward, while the overall industry continues to face headwinds. And and we're not immune to that related to, you know, longer timelines in certain jurisdictions higher cost, um, associated with component parts, uh, and financing costs, we do have some pretty unique capabilities, uh, Visa V, others, Building self storage facilities in the fact that, you know, we can purchase nationally given the breadth of our program. Uh our in-house team and and the relationships that we can build around the country.

And obviously our balance sheet and ability to to fund this uh program largely with retained cash flow. Uh today. So, while the the rest of the industry volumes for for new development, we anticipate to decline this year. Um, we're going to have a relatively strong here for, um, for deliveries about 370 million delivering this year. Uh, and while we haven't provided any guidance for next year, would anticipate north of 300 million for deliveries next year, as well, kind of maintaining our kind of 3 to 400 million uh pace of development deliveries. Uh, from here.

That's how fall. And then I wanted to go back to some of the discussions around uh markets and that performance gap between um you know, various various markets on on the west coast and and Chicago and a few others uh that you mentioned relative to um you know, some belt markets that are still normalizing like Atlanta Dallas and some of the Florida markets are are you seeing any indication of stabilization in those more challenged markets, any sense, how far you might be um, from sort of a bottom and and what the timeline for those markets to recover more meaningfully might look like

Yeah, Todd. I mean, again on a Case by case or Market by market basis you're going to see different trajectories um, you mentioned Atlanta for instance, Atlanta's, um, in probably 1 of the toughest spots at the moment. Uh, fair amount of Supply, um, and again, not the amount of demand coming through as quickly, you know, to, um, again, either Shore up or stabilize that Supply. Um, we have been alternatively encouraged by the Turning set of events for instance, in Florida, you know, Florida was a high-flyer through the pandemic. If in fact, the highest flyer um, it had uh, the commensurate

We're seeing, uh, the not only Revenue growth, but the change in Revenue growth, uh, Trend favorably. So the um, the the trajectory from a national standpoint is positive. Um, there are 3 4 or 5 markets that we're keeping a very close eye on I mentioned, Atlanta, uh, Dallas, uh, Phoenix, you know, Charlotte for instance, those are ones that were keeping a particularly close eye on as we speak. Um but we have been pleased by the turnaround that we've been seeing now quarter to quarter frankly for the last 18 months or so. And uh we don't see that changing.

Okay, all right. Thank you.

Thank you.

Our next question comes from Michael Goldsmith with UBS. Please proceed with your question.

Good morning. Thanks for taking my questions. Uh, first questions on the new customer. What are you seeing in terms of top of funnel demand? It sounds like, uh, first half was a little bit ahead of last year, so just trying to get a sense of, uh, what what? The funnel looks like. And, you know, along those lines, you're continuing to run promotions and and marketing spend was up year-over-year. So is, is the customer reacting to these different, uh, factors the same way they have in the past.

Yeah, there's a lot there to unpack, Michael. But I guess I'd say overall, as you highlighted, we are seeing modestly better demand this year versus last year, which is another sign of stabilization that we're seeing in the business. In terms of customer behavior itself, we have pretty consistent trends. Our conversion has been healthy, and reactions to promotions and pricing tactics have been consistent with what we'd expect. So, our revenue management and marketing tools are working well, and we're utilizing those to seek to optimize revenue from new as well as existing customers.

I know you didn't ask about existing customers but I might as well highlight that. Because going next time, good. All right. Well we're doing it together. So uh, existing customers actually performing quite well, uh, year to date. You know, second quarter, we saw um really strong performance from longer term. Tenants, for instance, that's something we were watching very closely coming out of Liberation day to see if there would be any shift in behavior and encouragingly we saw vacate activities diminish. Um, we've seen delinquency levels be consistent to frankly at touch better year-over-year, uh, and uh, as well as, um, you know, accepting of rental rate increases. So as we think about the customer base overall, uh, continues to be a bright spot, um, for us as we sit here today,

Got it. And then, since you covered that, uh, as my follow up, you know, there's been a series of, uh, residential, uh, real estate earnings, uh, this week and, and today, and turnover on the apartment side. And on the multifamily side has remained relatively subdued. He's like, do you see that as a good thing for a self storage or or is that bad is? There's just less movement and you know, on on the 1st staying in place and so continues to use storage as a uh um as an extension of their apartment. But also it could be seen as bad because there isn't a turnover moving to a home, which drives a a different type of demand. So, how would you interpret uh, lower apartment turnover in the impact, on Self Storage?

Yeah, Michael, it actually speaks to the resilience and the unique attributes of self-storage. We actually can benefit from, you know, any of those events and currently are so on one end of the spectrum.

apartment users, that may be stickier. Maybe may not be moving as often that could be tied to affordability or, um, having um, less options to expand or, you know, take an additional size, uh, living space plays very well to the inherent demand factors of our business and then to your other point. Um, if there's some amount of dislocation

Because of movement itself, that's always a driver to our business. So the affordability factor to place here, which again, self storage is commonly looked at as a sensible way of buffering.

We have an overarching concern about, uh, the type of Customer because in fact, they may be a renter. In fact, uh, most renters end up being very good customers, particularly after they stay for, uh, some period of time. So, all those factors are good. Inherent drivers to our business,

Thanks for that. Good luck in the back app.

Thank you. Thanks Michael.

Our next question comes from, Ravi VA with Missoula, please proceed with your question.

Hi there. Uh, thanks for taking my question. I wanted to follow up on the ECRI program. Maybe you can quantify the average rate increase and how it has changed from last quarter and last year, in terms of frequency and amount.

Thanks Robbie, we don't typically quantify uh frequencies or specific magnitudes. But we do disclose uh information that allows folks to get to the contribution from from existing customer rent increases. And as I highlighted in on our February car, when we came out with our Outlook, I'm anticipating contribution from existing customer rent increases, uh, across the country to largely be pretty similar to last year. Uh, but given the rent restrictions in, in Los Angeles, uh, which will, uh Drive, um, less contribution year-over-year overall modestly, lower contribution, uh, from the full National Pool. Um, we continue to see, um, uh,

Customer price sensitivity. That's very much in line with our expectations and and predictable behavior and reaction to to our our tactics on the ground. Um, and a, a stable number of customers that are, uh, requesting some sort of concession after they receive an increase. So I'd say overall, uh, very consistent Trends, and, and write on plan,

Got it, that's helpful. Just just 1 more here. Can you maybe discuss the impacts of the, the big beautiful bill? This is further. Encourage your development pipeline, given the bonus depreciation provision, or do you forecast, home sales increase, and subsequently Self Storage demand, given the salt property tax adjustments. It would just walk us through how you're thinking about, uh, the recent legislation there.

Yeah sure. There's a couple components there that I'd highlight um, you you hit on some of them. I think the uh the full impact of the bill will will will be felt across the the macro I think over time. But I think specifically to Public Storage there's 2 things I'd highlight uh 1 of them relates to our solar program. So we've been very active in uh, investing in solar uh for rooftop generation to offset our own utility usage. And that's something that we've had a robust Pipeline on. Um, and our pipeline is is set to complete here over the next several years. And so we're fortunate that we started that program and and really accelerated over the last several years to take advantage of the incentives that were in place and that will no longer.

Be in place, uh, going forward. So we feel good about that and that will be a Tailwind to our expense profile as we reduce our utility expense um, and our carbon footprint over the next several years. Um, so that that's a um, a negative impact over the longer term, but won't impact us on the near term in our current pipeline.

The the second component relates to bonus depreciation is your highlighting and and bonus depreciation is something that we've we've taken advantage of consistently over the past decade or so uh, that bonus depreciation was starting to to Sunset. Uh, but with the new bill will will come back and so that's an opportunity for us to continue to retain, um, incremental cash flow, over time and reinvested into our development business as well as Acquisitions. And that, um, reinvestment into the business helps Drive our compounding return platform.

And, uh, maybe just about the salt provisions and home sales. Are you seeing anything from that with demand?

No, we haven't seen anything like that yet. Obviously, we will see the broader macro impacts as we go from here.

Got it. Congrats on the quarter.

Thanks Robbie.

Our next question comes from Juan Sanabria with BMO Capital Markets. Please proceed with your question.

Hi. Good morning. Uh, just first on acquisitions, I'm just curious about cap rates or yields going in for what has been done today and kind of what's planned for the remainder of the year, as well as a longer-term, more stabilized view.

Expectation for those Investments.

In the fives, ultimately getting into the sixes. Uh, the portfolio, um, activity and small individual assets, that we've done year to date are right in line with that. Um, but we did do some lease up asset Acquisitions as part of this, uh, component. But even with that, I'd characterize of the 785 that going in yield is probably, um, 5 and a quarter sort of zip code, uh, ultimately stabilizing in the sixes.

Thanks, and then just, uh, on the answer to our part, which is, uh, done better than expected. You called about 10, and insurance just curious, what's changed? There is there, um, maybe more pricey power or, uh, just curious on.

how what's Driven that outperformance on the angular and particularly kind of insurance? Yeah, we continue to see really strong adoption from the tenant Insurance uh program itself. So um, overall coverage levels are trending higher and have been over the past couple years. Uh, in addition to that premiums have also moved higher, so, kind of on both sides of the the stabilized, uh, store base, and then obviously adding new properties into the non same store. Uh, portfolio will will further increase the opportunity for the tenant Insurance business, uh, along with our third party management platform. So um, that that business is really hitting on all cylinders. Um, in 2025

Thanks.

Our next question comes from Caitlyn Burroughs with Goldman Sachs. Please proceed with your question.

The consider marks you guys brought up how your position to grow internationally. So I guess we'll see what happens in Australia. I was wondering if you could go through what benefits, do you think the sugar guard exposure, gives PSA overall, um, and do you expect to pursue additional internal opportunities?

Uh yeah. Caitlyn the

Thing that I highlighted in opening comments around our relationship with Sherrard has been very powerful where we've had a opportunity to um, a learn how many of the tools they've selected from our own platform have been opportunistic for them in a whole host of Western European countries. Uh country by country with many different types of Dynamics, but it's been a great opportunity for us to see understand and work with um, you know, again a platform like that, that could take those kinds of tools that we're developing here in the US and Implement them uh 1 by 1 at their election into their own platform.

So for many years, we've seen the opportunity, how we've been able to optimize and see that integration in markets, not here in the United States. Um with that it's giving us more confidence that for the right set of circumstances. Other International markets, may also be equally if not better prepared to

Achieve the same kind of optimization using the tools that we've been able to develop here in the United States. We think that that's very similar, for instance, in Australia and New Zealand. Um, you know, as you know, we've had an inherent interest in that market for some time, over the last, you know, 5 plus years. Uh, this opportunity, um, again is very attractive for many of those exact same reasons. Um, the partner who controls the entity, uh, is very attracted to the things that again have played for us relative to our relationship with Sherrard and we'll see how this plays out as uh, that opportunity. Um, progresses step by step that, you know, we'll give you some color on as we're able to. But with that to your question, it does give us not only the skill, but the confidence and knowledge of how a complicated but how B, efficient some of these tools can become in different markets. It's not a static.

Set of playbook opportunities, but it's one that, if it's tailorable to a particular market, can be very powerful. So we'll see how that continues to play, not only in markets like New Zealand and Australia, but over time potentially other markets as well.

Got it, thanks.

Stabilizing, um, do you think demand bottomed in '24 and should continue to improve? We also talked about that, uh, the storage industry should be able to outperform in a variety of economic environments. So, I guess this is learning. If you could just give your current thoughts on what you think it takes to get from, like, a stronger improvement and get on the same source side, like positive growth. Whether that's, uh, well, positive or like inflationary plus on the revenue or NOI. So, like, is it the housing market? Is it less supply or do we not really know at this point? Thanks.

Caitlyn. I I do think we've seen that stabilization. I think is demand continues to to grow off that 24 base. You're going to see uh more momentum and and we've already seen that across a number of our markets, right? If you look at the West Coast markets, for instance, that that Joe and I have been speaking to on this call, starting to see that sort of growth already which is encouraging. We've got a lot of confidence in the Sunbelt markets that have taken a little bit longer to normalize, but if you think about an environment, where demand is coming off a base, you've got new Supply that is likely to continue to taper off, given the challenges and the development business. I spoke to earlier, um, and you got a, um, a situation set up for a return to, to Stronger growth, for the sector. Is that going to happen overnight? No, uh, and as we've seen the stabilization process will take some time, um, to, to get back up to those levels of growth, uh, but we've already seen it in many of our markets. And so we have confidence that that around the country, uh, that's to come

Our next question comes from kein Kim with truist Securities. Please proceed with your question.

Thank you. Good morning. Uh, just went back to the impact of the LA wildfires in the beginning of the year. You estimated about 100 basis points, correct to your see why? Uh, but given the the strength in the west coast and I think we see the same beta La looks pretty strong. Do you think that drag is actually potentially bigger than 100 basis points?

Um, keeping in mind that we'd still point you to the 100 basis points impact and would, uh, point you to LA being plus or minus down 3% same-store revenue for the year. So, around that 100 basis points number today.

Okay. And uh on the call you mentioned that 2q pretty much ended up where you thought it would. Um but when we look at the pace, the pace of improvement from 1 Q to 2 Q, you know, it does seem like it.

Just lost a little bit of steam. It's just one quarter, I get it, but it wasn't the same pace. Um, so I was just curious if there was a macro factor or a change in some behavior that occurred during the quarter, where that pace of improvement just looked a little bit softer than the prior quarter. Thank you.

All right, thanks Kay and I wouldn't characterize it as uh, seeing any sort of uh, uh, losing steam or, or any shift during the quarter. It was pretty consistent throughout the quarter and, and uh, generally in line with our expectations. So I I, I wouldn't point you to the to that as a as a something that occurred during the quarter

Frankly.

Okay, thank you guys.

Thanks.

Our next question comes from Mike Mueller. With JP Morgan, please proceed with your question.

Yeah, yeah. Hi. I missed a 2. Uh, 2Q stuff's been asked, but I'm curious—when you have digital rentals versus in-person or from call centers, do you generally get the same amount of customer data that you would get at, you know, that helps you formulate pricing and marketing strategies?

Yeah, go ahead. I was going to say you to your question, Mike. It, uh, all of those channels give us a whole variety of robust data.

and,

We are, uh, continuing to use different tools to leverage that data relative to customer knowledge, behaviors, and efficiencies.

So, if you know, it's a vibrant amount of the business that time and again, channel by channel, as we digitize, we see very good residual impact and knowledge opportunities.

Yeah, the more digital interactions we have, the more data we can get. Yes, it's as simple as that.

Got it. Okay, thank you.

You bet.

Our next question comes from Tail Aasana with Deutsche Bank. Please proceed with your question.

Uh yes, good afternoon. Uh, just a quick one in regards to your markets that are outperforming, as you mentioned: West Coast, Midwest, DC. I just used thematically. Uh, if you can kind of talk about what's happening in those markets, is it a little just kind of boiled down to less supply through the cycle, or is it kind of something thematically happening from a perspective of improved demand across these markets?

To again, just inherit economic activity, um, you know, the cost of housing. The, uh, again the dynamics that are going on just from a movement and trending standpoint market to market. And then, like, always, it's, uh, it can be difficult to put a broad brush on just a market as a whole. And so, you've really got to take it down to a submarket by submarket basis as well. But those are factors that, again, are very important that we've got to keep a very close eye on relative to either trends or different ways that the market's evolving.

As we continue to speak, even on this call, we are very encouraged by the market trends that we're seeing nationally. With that, the supply factor continues to diminish, where today, fortunately, we don't have more than three or four larger markets that are really dealing with an oversupply issue that's dragging down overall market performance.

That's that's helpful. And then 1 other quick 1, uh, just curious again from your call center data that you have from data. You have from prospective customers interacting with your website. Just curious, if you're kind of seeing any change in Behavior, anything that kind of supports this idea of we're kind of getting closer to demand stabilization as I believe we, you know, you guys have kind of mentioned that quite a few times throughout the call.

Yeah, the only thing I'd point you to there is something I noted earlier: conversion has been very healthy year to date, and they've seen conversion improving across the channels, which I think speaks to more customer interest and willingness to transact with us.

Thank you.

Thank you.

All right, last question comes from Brandon Lynch with Barclays Bank. Please proceed with your question.

Great, thanks for taking my questions. Um,

Tom, you mentioned quite a bit about, uh, marketing. Turning positive, it seems to be improving signs of strength throughout the industry, but Street rates seem to be stubbornly, um, negative, as in by your guidance as well. Can you just talk about the dynamics which are contributing to that?

Yeah, I I think the primary contributor to that is that we and and others have found good success, in in lowering, moving rents and and getting good customers and and, uh, moving volumes and so as that's worked, uh, we and others have have utilized it. Uh, but I do think that street rates and move and rents will improve over time, and we've seen that in some of the stronger markets already. Uh, but it will take a little bit of time as demand comes off the bottom.

Okay, thanks, that's helpful. And then you you talked about um,

The the the seasonal pattern being pretty similar to last year, in terms of occupancy, gains and pricing. Uh, I I'm if I recall correctly last year, the seasonal Peak was very early. Um, was there any change in that? I'd imagine all else equal a later Peak is better, uh, in terms of third quarter earnings, thanks

Sure, you know, the it depends on which metric in particular you're looking for, in terms of peak. I mean, we typically get our occupancy Peak, uh, here, uh, in July. And I think that'll be the case here again, uh, this year, um, you know, you typically see move in demand peek at the end of, uh, May early June for instance. And so I think generally, I'd say, we're not seeing anything unusual or shifting from a, a seasonality standpoint, uh, this year, and that's frankly, encouraging.

Okay, very good. Thank you.

Thanks.

We have reached the end of the question and answer session. I'd now like to turn the call back over to Ryan Burke for closing comments.

Thanks, Rob, and thanks to all of you for joining us. Have a good day.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.