Public Storage(US:PSA)2019-05-03 05:16Financial Data and Key Metrics Changes - The company reported a steady revenue growth range between $1.2 million to $1.5 million over the last few quarters, with expectations for similar performance in Q2 2019 [9][10] - Move-in rates decreased by 1% in Q1, marking the best performance in move-in rates seen in some time, while street rates increased slightly by over 1% [15][17] - The company experienced a modest deterioration in rent roll down, but noted it was one of the better performances in rent roll down deceleration [15] Business Line Data and Key Metrics Changes - The company observed good operating trends with consistent contract rent growth and occupancy through the quarter, supported by a strong labor market [10][11] - The marketing spend increased year-over-year, driven by a competitive environment and the need to acquire customers in markets impacted by new supply [35][36] Market Data and Key Metrics Changes - The company noted a commanding year of deliveries in 2019, with expectations of 400 to 500 properties and approximately 30 million square feet of new supply [21][22] - Certain markets like Washington D.C. and Chicago showed improved occupancy trends, with occupancy up 180 basis points and 160 basis points year-over-year, respectively [38] Company Strategy and Development Direction - The company is focusing on navigating through new supply in various markets and is optimistic about the traction and capabilities being developed [14] - The company is actively pursuing acquisitions, having exceeded acquisition volume from all of 2018 in the early part of 2019, including properties acquired out of bankruptcy [24][25] - The company is rolling out a fifth-generation reinvestment program, with an anticipated capital investment of approximately $100 million in 2019, aiming to enhance properties across its portfolio [75][76] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue trends for 2019, particularly as the company enters the seasonally busy move-in period [13] - The management highlighted that while there are challenges in certain markets due to new supply, they are seeing resilience in demand and occupancy gains in others [20][90] - The company expects to see inflationary pressure on payroll costs moving forward, but is implementing strategies to maintain productivity [84][85] Other Important Information - The company has issued both preferred and bonds as financing tools, maintaining a strong balance sheet with approximately $600 million in cash available for growth [64][108] - The company is seeing a competitive increase in customer acquisition costs, with cost per click up in the double digits [70] Q&A Session Summary Question: Revenue growth outlook amidst new supply - Management noted steady revenue growth and positive customer trends, with expectations for continued performance into Q2 2019 [9][10] Question: Broader views on supply for 2019 and 2020 - Management indicated no change in outlook, with 2019 expected to see significant deliveries, but noted a shift in supply dynamics in certain markets [21][22] Question: Marketing expenses and their impact - Management confirmed increased marketing spend is a response to competitive dynamics, with positive demand response observed [35][36] Question: Development pipeline activity - Management clarified that while the development pipeline decreased, it was due to timing rather than a slowdown in activity, with ongoing redevelopment efforts [41][42] Question: Balance sheet and financing strategy - Management expressed a preference for long-term financing through preferreds and bonds, with no immediate plans for short-term debt [62][108]