Public Storage(PSA) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a same-store occupancy increase of approximately 20 basis points, while same-store rents decreased by 2%, leading to a negative 1.8% performance for rental income in the same-store pool for Q2 2020 [14][16] - Fee collections were down 32% year-over-year, primarily due to customer accommodations and requests for fee relief [15][41] - By the end of Q2, contract rents were down 3.1%, indicating a lower year-over-year rent growth position entering Q3 [16][18] Business Line Data and Key Metrics Changes - The company moved in over 400,000 new customers during the pandemic, demonstrating the strength of its self-storage platform [8][55] - The non-same store portfolio saw an 11% increase in occupancy, with significant move-in activity from new developments and acquisitions [56] Market Data and Key Metrics Changes - The company observed a mixed performance across urban and suburban markets, with urban areas like New York and San Francisco benefiting from increased demand [51] - Move-in volumes in July were down about 2%, while move-out volumes decreased by 15%, contributing to an increase in occupancy [54] Company Strategy and Development Direction - The company is focusing on value opportunities in acquisitions, particularly for assets that may not be stabilized or in markets that enhance its presence [24] - The company has resumed rent increases on a test basis, with expectations that the magnitude of these increases will be lower than in previous years due to regulatory constraints [29][33] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the second half of the year, anticipating that same-store revenue performance may worsen compared to Q2 [17][18] - The company noted that government stimulus has positively impacted collection trends, helping to maintain customer payments [21][70] Other Important Information - The company has resumed auction activities, which had been paused during the pandemic, and is seeing a limited backlog affecting occupancy [46] - The company is actively monitoring the impact of supply growth in its markets, with expectations of a potential decline in new supply in 2021 and beyond [61] Q&A Session Summary Question: Can you tie the strong volume and cautious outlook together? - Management acknowledged strong volume but highlighted various pressures that may affect performance in the second half of the year [11][13] Question: What are the trends in bad debt expense? - Management indicated that bad debt expense remained consistent with historical levels, aided by good collection trends and customer accommodations [19][20] Question: What is the status of rate increases? - Management confirmed that rate increases have resumed but at lower magnitudes due to regulatory constraints [29][33] Question: How are move-in and move-out rates trending? - Move-in rates were down 4% in July, while move-out rates decreased by 6%, indicating improving trends [64][71] Question: What is the outlook for supply growth? - Management expects a healthy amount of supply to continue in 2020, but anticipates constraints in funding for new developments in 2021 [61][62]