Public Storage 2026 Q2 Earnings Call

Thank you, operator. Hello, everyone. Thank you for joining us for our second quarter 2026 earnings call. I'm here with Tom Boyle and Joe Fisher. 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 30th, 2026, and we assume no obligation to update, revise, or supplement statements that become untrue because of subsequent events. A reconciliation to GAAP of the non-GAAP financial measures we provide on this call is included in our earnings release. You can find our press release, supplement report, SEC reports, and an audio replay of this conference call at our investor relations website, investors.publicstorage.com. We ask that you initially limit yourself to two questions.

If you have additional questions, please feel free to jump back into the queue. With that, I'll turn the call over to Tom Boyle.

Good morning, everyone. Thank you for joining us. Our second quarter marked the start of our new era at Public Storage, what we call PS 4.0. This new era is characterized by greater energy, urgency, and a sharper focus on building the capabilities that will drive stronger per-share performance over time. My four key points today cover initiatives coming together as building blocks from here. First, we recently closed the NSA transaction, marking the first major milestone of our value creation engine. Second, Public Storage Canada is a strong strategic addition to the portfolio and an attractive entry point into an under-penetrated market with meaningful room for future growth. Third, the PS Next operating platform continues to execute with improving leading indicators in the business and new capabilities that are helping us better serve customers.

Fourth, our Own It culture is gaining momentum across the organization, with strong engagement from our team and real urgency around the opportunity ahead. Let me start first with our recently closed NSA transaction. Closing this transaction last week is a major milestone for Public Storage and a clear example of PS 4.0 in action. As we've discussed, this is not just about getting bigger. It is about strengthening our platform, deepening our portfolio, expanding our opportunity set, and driving differentiated per-share earnings into the future. A tremendous amount of integration planning went into this closing, and that preparation paid off. We transitioned the 1,100 store and 575,000 unit portfolio onto Public Storage systems overnight and began operating activities immediately upon close. That is exactly the start we wanted. We welcomed over 1,300 new Public Storage teammates and got busy.

With all our website and digital presence online that morning, the team completed over 1,500 reservations, switched over 265,000 auto-pay accounts, began collecting rents, and started rebranding with temporary signage on the first day. This early execution is important, but it's also just the beginning. The real value creation is ahead of us as we apply PS Next across the portfolio, rebrand the assets, and execute against the operating and capital opportunities we've identified. We are more confident in the achievement of the operating upside with our new unified team driving results from here across customer experience and revenue, operating efficiencies, tenant insurance, and G&A. On the capital front, integration planning has also surfaced additional expansion opportunities that will add to value creation over time. Yes, lots of orange paint is on its way to a location near you.

Thank you to the NSA team for the professionalism, focus, and partnership they brought throughout this process. Thank you to our Public Storage teammates for their leadership. Getting to this point took a significant cross-functional effort, many long days, nights, and weekends, and the strong collaboration between the two organizations is a big reason the transition is off to a solid start. Second, let me turn north to Public Storage Canada. We announced the acquisition of Public Storage Canada in June. We will reunite Public Storage with a portfolio that was operated under common ownership until the 1990s and has since been owned and operated independently by the Hughes family. Today, this high-quality PS-branded portfolio is the third largest in Canada and sits in desirable infill locations across top metros with concentrations in Toronto and Vancouver.

The portfolio demographics are strong, with trade area populations averaging nearly 250,000 people and average household incomes approaching 100,000. The market is significantly underserved with per capita supply of two and a half, significantly lower than the U.S. There is meaningful embedded upside in the assets that gives us a compelling opportunity to create value over time with our PS Next operating platform. The transaction also reflects disciplined capital allocation. It was acquired off-market pursuant to an existing ROFO/ROFR structure with the Hughes family. In addition to being accretive to long-term portfolio NOI, IRR, and FFO growth, it creates the ability to finance a portion of the NSA acquisition with lower cost Canadian debt. It is the second transaction this year funded with Public Storage OP units, creating another win-win opportunity.

When I step back, I see Public Storage Canada as both a strong addition to the portfolio and an important platform for growth in the future. Third, our PS Next operating platform. Our full team is zeroed in on improving customer experience, leading to improved fundamentals and on the building the platform for the future. The leading indicators of the business have turned, and our outlook from here is improving, which Joe will cover in more detail shortly. Our customer focus is translating into better execution, improving customer sentiment year to date, 8% lower move-out activity in the quarter, and better than expected occupancy and move-in rent performance, both ahead of prior year. We continue to see favorable trends in our coastal and Midwestern markets and improving trends in key Sun Belt markets. We are seeing sequential improvement with development activity slowing across markets paired with steady demand.

We have confidence in demand growth over the medium term with demographic tailwinds as millennial and Gen Z customers age into our core customer usage years. In L.A. County, performance will accelerate from here into 2027 with the expiration of pricing restrictions there from the Board of Supervisors. Technology remains a critical differentiator for our customers. Nearly 90% of customers interact with us digitally at some point in their rental journey. Three-quarters complete their lease fully digitally, and our app has been downloaded over 7 million times. That improves the customer experience and helps us run the business more efficiently, and it provides industry-leading data sets for use across the organization, including capital allocation, data science, and machine learning initiatives. We're also investing in what's next for customer interaction.

One example is Ellie, our AI-powered customer service agent, which has already handled more than 90,000 customer interactions in recent months and continues to improve with every conversation. Ellie doesn't just answer questions, she resolves customer needs using our proprietary data and AI models. We're embracing these new capabilities across PS Next to drive a better customer experience, a better employee experience, and stronger financial results. We're excited to bring NSA and Canadian properties onto that platform to drive value creation. Now let's move to my fourth point, the OWN IT culture. We launched our OWN IT culture earlier this year with a combination of customer obsession, new talent and perspectives alongside strong in-place teams, empowerment with accountability, and new incentives to drive alignment. The goal is a culture with more energy, more urgency, and stronger accountability for execution.

We recently moved into our new headquarters in Frisco, Texas, and I can feel the energy in the environment. We're also looking forward to our Southern California team moving into new office space in months ahead. Last week, we welcomed approximately 1,300 new teammates through the NSA transaction in a new office in Denver. We're excited to have them with us. We're bringing them into the Public Storage culture in a way that is clear, aligned, and performance-oriented. As we said before, strategy only creates value if the organization is aligned behind it. That alignment is getting stronger. The energy I'm feeling is translating into urgency. What we're building is a culture grounded in accountability, speed, and execution. We see a meaningful opportunity ahead. Our goal is to make sure the organization is ready to move with discipline and intensity as that opportunity unfolds.

To sum up, the company is putting more of the earnings growth building blocks in place at the same time than at any point in recent years. We closed NSA and have begun the value creation work. We announced Public Storage Canada, which expands our platform into an under-penetrated market with room for future growth. We remain active on acquisitions with new data science tools and faster execution, continue to grow the development pipeline, are expanding the lending platform, and are improving the growth profile of our third-party management business. At the same time, PS Next is strengthening how we operate the core business, improving customer experience, brand, pricing, and efficiency.

Thank you, Tom, good morning, everyone. As Joe will cover, the financial setup also improves from here with contributions from non-same store growth, ancillary businesses, a future tailwind from L.A. restrictions rolling off, and a more favorable financing profile supporting earnings power over time. These building blocks are for the future based on execution from here. That execution will cover several years, the direction is clear. Our operating trends are improving, our growth levers are expanding, and the building blocks we're putting in place today position Public Storage for stronger growth in the second half and into the next several years. With that, let me turn it over to Joe.