Public Storage(US:PSA)2023-05-04 19:40Financial Data and Key Metrics Changes - The company reported core FFO of $4.08 for the quarter, representing a 16.2% growth over the first quarter of 2022, excluding contributions from PSB [12] - Same-store revenues increased by nearly 10% year-over-year, with a 9.8% increase specifically noted for the same-store pool [4][12] - Same-store cost of operations rose by 5.6%, leading to a total net operating income growth of 11.2% for the same-store pool [13] Business Line Data and Key Metrics Changes - Same-store move-in volume was up nearly 13%, indicating strong performance from existing customers [1][4] - The lease-up performance of recently acquired and developed facilities grew by 29% compared to last year [13] - The non-same store acquisition and development pool now constitutes nearly 25% of the overall portfolio and continues to outperform [1] Market Data and Key Metrics Changes - The transaction market has been relatively quiet, with potential sellers cautious due to macroeconomic conditions, but the company has closed or is under contract to acquire nearly $200 million worth of assets, on track for a $750 million outlook for the year [11][12] - The company noted that move-in volume growth has been favorable, with April being characterized as strong [7][21] Company Strategy and Development Direction - The company is focused on leading the self-storage industry's digital evolution and enhancing its operating model [97] - A development pipeline exceeding $1 billion is being driven to be delivered over the next 24 months, with a focus on growth and value for shareholders [98][6] - The company is well-positioned to capitalize on acquisition opportunities, particularly in off-market transactions, leveraging its reputation as a preferred buyer [3][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current operating environment, noting that the inherent demand in the market is strong and that they are encouraged by performance trends [115][122] - Despite macroeconomic uncertainties, the company has lifted its outlook for the year based on strong first-quarter performance [5][122] - Management acknowledged the challenges in the lending environment but sees potential for lower new supply, which could benefit their positioning [134] Other Important Information - The company has achieved significant milestones in its digital initiatives, including over 60% of customers moving in through eRental and the installation of solar at more than 200 properties [107][108] - The average length of stay for tenants is over 36 months, indicating strong customer retention [81] Q&A Session Summary Question: What trends are being observed in April regarding demand and price sensitivity? - Management noted that April showed strong demand and occupancy growth, with move-in volumes increasing and move-out volumes decreasing [21][115] Question: How does the company view the potential for revenue growth rates in the second half of the year? - Management indicated that while there is a wide range of potential outcomes, the strength observed in the first quarter has led to an increase in revenue guidance for the year [122] Question: What is the company's perspective on the LA market's sustainability? - The LA market has shown strong performance, with good demand and occupancy levels, and management believes there is potential for continued growth [124][125] Question: How is the company adapting its development underwriting processes in the current environment? - Management stated that they are consistently looking to improve underwriting processes and are focused on maintaining a yield on cost of around 8% for new developments [75][134]