Greetings and welcome to Public Storage First Quarter 2026 Earnings Conference Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If you'd like to gain access to the queue, please use the command star 1 on your telephone keypad. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. A reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brandon Regan. Thank you. You may begin.

Hello, everyone, and thank you for joining us for our first quarter 2026 earnings call. I'm here with the Public Storage Leadership Team, 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, April 28, 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. However, if you have additional questions, please feel free to jump back into queue. With that, I'll turn the call over to Tom Boyle.

Hi, everyone, and thank you for joining us. I'll frame my comments this morning around four points. First, the PS4.0 era is now underway, with the new team in place and Own It culture gaining momentum. Second, the announced acquisition of NSA is an important early milestone in that strategy. Our operating platform, PSNext, is strengthening the customer experience while also improving how we run the business with first quarter results in line to a touch better than expectations. Even ahead of the forthcoming recovery and storage fundamentals, we're continuing to invest behind a broader value creation engine that we believe can drive stronger per-share growth over time. Let me start with PS4.0. What PS4.0 is really about is building the next phase of public storage around a simple idea. We have a unique opportunity to create value by combining the scale of our platform, the strength of our brand, the quality of our portfolio, our unique own-it culture, and increasingly the advantages of our data and analytics capabilities. We hosted our 160-person leadership team a few weeks ago to kick off the new era with an enthusiastic response internally. Our teams have embraced the strategic vision, and there is real energy across the organization around what comes next. That matters, because strategy only creates value if the organization is aligned behind it. Right now, that alignment is getting tighter. The energy is being translated into urgency for execution. That takes me to point number two, NSA. The announced acquisition of National Storage Affiliates is a major step forward for us and a very clear example of PS4.0 in action. When we discussed the transaction in March, we highlighted three things. One, the portfolio combination is compelling. The two portfolios deepen our brand, scale, and operating presence across the national opportunity set. There is meaningful upside from bringing that portfolio onto our platform. On the M&A call, we discussed the customer experience opportunity with managing the properties under the P.S. brand and P.S. Next operating model. This will also lead to revenue potential and margin upside. And three, we structured the transaction with a win-win joint venture that optimizes portfolio structure for public storage and preserves financial strength. Public storage will wholly own 46% of the over 1,000 assets in the portfolio with the remaining in joint ventures. Importantly, the transaction maintains our industry-leading balance sheet.

I step back and look at the NSA acquisition.

I don't see a bigger company. I see a stronger platform, a deeper portfolio, and a broader opportunity set for value creation. This will drive differentiated per-share earnings growth in coming years. And importantly, integration planning is progressing well. The teams are engaged, the work streams are moving, and we're preparing the business to execute well upon closing. I also want to take a moment to thank both the NSA and public storage teams. Transactions like this require an enormous amount of focus, coordination, and professionalism, and we appreciate the strong collaboration we're already seeing across both organizations. There's obviously much more to come as we work toward completion of the transaction, but I'm encouraged by the work that's underway. That leads to point number three, the operating platform. A big part of why we're excited about NSA is that PSNext is built for this. PSNext is an operating platform that is increasingly shaping how we serve customers, price inventory, manage demand, and drive efficiency across the business. Customers are increasingly interacting through digital channels, whether through our website, app, agents, and over time, more through large language model-driven interfaces. We're building our operating model around those shifting customer expectations. That customer focus is central to PS4.0. The team is aligning this direction. Let's connect that strategy to what we're seeing in the business today. The operating environment remains uneven. We're seeing lower customer move-in activity overall in the first quarter with some weather impacts and modest demand. But at the same time, we have driven better rental rates than expected, and importantly, our existing customer base remains very healthy. Move-out activity was meaningfully lower in the quarter, leading to better occupancy than last year. This is not a one-speed environment. It's a market where execution matters. And that is where the operating model transformation becomes so important. We're improving customer experience in a way that supports performance both on the revenue side and the expense side. We're seeing that playbook continue to develop, and that gives us confidence not just in integrating NSA, but improving the performance of the broader portfolio over time. Now let me go to point number four, the value creation engine. We're not waiting for the environment to get easier. We're acting now. We have confidence in the long-term fundamentals of storage and have the opportunity to invest today to benefit the platform over time. That mindset is important because while the near-term environment remains uneven, the longer-term setup is compelling. Several longer-term drivers support that optimism. Self-storage adoption has increased over the last decade. Participation has broadened across customer cohorts with strong participation from younger generations. Our units also present an affordable space solution in a high cost-of-living environment, and competitive supply is slowing as new development becomes harder and more expensive. We like that backdrop. We're positioning the company now to outperform as the environment improves, say is the first major milestone of our value creation engine. but it's not the only one. We continue to execute upon value creation through multiple levers. That is a year-in and year-out opportunity given our capital resources at public storage across four different levers, acquisitions, development, expansion efforts, and our lending platform. Our capital resources will be allocated across those levers in order to, one, improve our portfolio, two, accelerate per-share earnings and cash flow, and three, compound our returns. Our external growth in capital allocation capabilities continue to build. In March, we announced the Strategic Data Science Partnership with WellTower. That partnership brings together WellTower's capital allocation-oriented data science platform and Public Storage's operational pricing, and customer analytics capabilities to better our micro-market targeting and portfolio construction over time. Our value creation engine is driven by a combination of our PSNext operating platform advantages, enhanced data science approach, and team investments. So if I put it all together, here's how I'd summarize the quarter. One, we launched PS4.0 and aligned the organization towards a new strategic vision. Two, we announced the NSA acquisition, which, with a unique structure, strengthens our scale, our platform, our portfolio, and our value creation opportunity. We continued advancing PSNext and our operating model transformation with a strong focus on customer experience. And four, we expanded the reach of our value creation engine through both external growth and the well-towered data science partnership. We're optimistic about the operating environment. It remains uneven, but we're also optimistic. Optimistic about the demand and supply setup over the next several years. Optimistic about the capabilities we're building. And optimistic about our ability to translate those investments into stronger per-share earnings growth over time. With that, let me turn it over to Joe.

Thank you, Tom, and good morning, everyone. The topics I will cover today include our first quarter results, a summary of recent transactions, and a balance sheet and capital markets update. Core FFO in the quarter was $4.22 per share, up $0.10 per share, or 2.4% year-over-year. These results were driven by better-than-expected same-store NOI and significant growth from our non-same-store portfolio and ancillary income initiatives. Same-store revenue and NOI growth in the quarter were flat and positive 0.4% respectively. Move-in rents, while still negative, came in better-than-expected at minus 2.4% versus full-year expectations of down mid-single digits, which had been expected to start the year lower and improve throughout the year. Occupancy was positive year-over-year by 0.4 percent versus guidance assumed at flat for the year. Lastly, our existing customers continue to perform well, as demonstrated by a material reduction in churn. We continue to see a market that is mixed by geography. In a number of sunbelt markets, new supply continues to weigh on performance and pressure revenues. But at the same time, we are seeing strong growth in many of our coastal and Midwest markets. Lastly, Los Angeles continues to be hindered by the state of emergency with the most recent extension through the end of May. As a reminder, we have assumed the state of emergency remains in place all year at a negative 80 basis point impact to same store performance. But given the quality of our portfolio, low supply, high occupancy, and strong performance in other Southern California markets, LA will be a strong tailwind for performance in the future. Expense growth performed very well at minus 1.1% for the quarter. Property tax, we did see earlier than expected appeals wins of approximately $3 million in the quarter, which we had previously expected in the second quarter. Away from property tax, PS Next helped drive negative growth in payroll, R&M, utilities, and marketing. Outside of the same-store pool, NOI growth of 27% in our non-same-store pool and ancillary growth of 12% lifted results. Non-same store performance and our external value creation engine continue to be a substantial and repeatable driver of shareholder value. If we utilized a same store definition similar to that of peers, NOI would have been 50 basis points better in the quarter. While we are pleased with our results having started the year ahead of our expectations, we have not adjusted our guidance at this time, with busy seasons still ahead of us. As we spoke about in our initial guidance, the leading indicators of our business remain positive, but year-over-year revenue growth as a lagging indicator will soften mid-year. On to transactions. Year-to-date, we acquired or are under contract for $186 million. The first quarter is typically a slow quarter for external growth. However, we do continue to see opportunities that are a great fit for our PSNext operating platform and expect to have more activity to discuss in the second quarter. On the development and expansion front, we had openings of $45 million during the quarter. The development pipeline stands at $618 million, with stabilized yields targeting 8% and remaining amounts unfunded of $416 million. And for our lending business, we had $143 million outstanding at a current rate of approximately 7.9%. Lastly, our Fortress balance sheet remains in excellent position from both a metric and liquidity perspective. At quarter end, we had available liquidity of $1.3 billion between our line of credit and cash on hand, plus approximately $600 million of annual free cash flow. Subsequent to quarter end, we issued $500 million of well-priced, 10-year unsecured notes at 5.0%, with proceeds being utilized to pay down our revolving credit facility and improve liquidity. Our balance sheet remains one of the strongest in the REIT sector, with debt to EBITDA of just 2.9 times, debt plus preferred equity to EBITDA of 4.2 times, and debt plus preferred equity to enterprise value in the low 20% level. In summary, we're encouraged by our start to the year and by the opportunities we see ahead. We delivered solid results, maintained a fortress balance sheet, and continued to execute against our capital allocation priorities. We remain disciplined on deployment, constructive on the long-term fundamentals of the business, and confident in our ability to drive per-share value creation. With that, I'd like to turn the call back to the operator to open up for Q&A. Thank you.

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. As a reminder, please limit yourself to two questions. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Michael Goldsmith with UBS. Your line is now live.

Good morning. Good afternoon. Thanks a lot for taking my questions. Joe, in your prior remarks, you talked a little bit about a material reduction in churn during the quarter. So can you talk a little bit more about that specifically? Was that just in the month of March? Was that throughout the quarter? What do you think is driving that? And what is the impact on the financials of a material reduction in churn?

Hey, Michael. Good afternoon. Good question and definitely a good statistic to highlight for us as we've been very encouraged by the existing customer dynamic and them staying with us longer. So we did see a pretty material reduction in that churn number and move outs coming down in the quarter. In terms of what's driving that, I think it's a multitude of factors. One, we're seeing good pay rates and minimal delinquency coming off of the existing customer and an ability to continue to pay those ECRIs as they come through. So the health of the overall customer is strong at this point in time. At the same time, from a customer experience and focus on that experience and length of stay, as part of PS4.0, we've talked a lot about the customer obsession, and the teams are really laser-focused right now on customer experience, making sure we deliver a good product and a good experience overall, and hopefully that results in a longer length of stay for us. And from an economic perspective, obviously that existing customer is a little bit more profitable for us. So the more that we can hold onto that individual and have less inventory available to sell going forward, that helps pricing on the new side as well, which you saw that move-in rate clearly come up pretty materially and ahead of expectations there in the first quarter.

Thanks for that. And as a follow-up question, can you talk about what you've seen – we're almost at the end of April now – but what you've seen through April – I know we're lapping Liberation Day, so just trying to get a sense of what's the latest and greatest.

operating metrics. Yeah, sure, Michael. It's Tom. We saw similar trends in April to what we saw really through the first quarter. So similar to what Joe was just highlighting in terms of better churn year over year. So lower move out volume, lower move in volume with occupancy kind of flat to a touch better and improving trends as it relates to move in rates, move in rates flat to a touch positive through the month of April. So, you know, busy seasons here, just getting started. We have busy months ahead of us here in May, June, and July. Teams ready and look forward to updating you on that further second quarter activity as we move forward. Thank you very much.

Good luck in the second quarter. Thanks, Michael. Our next question comes from Samir

canal with bank of america your line is live good morning everybody i guess joe i mean how should we think about the the cadence of revenue growth here right i mean as we think about the next few quarters i mean when you look at the first quarter you know you're certainly tracking well above the midpoint here just help us kind of unpack kind of revenue growth thanks

yeah hey samir so i guess i'd bifurcate that into two different pieces you have your leading indicators and your lagging indicators. And on the leading side, I think inherent in the question is obviously we started off the year really well from a leading indicator perspective across the board, whether that's those move-in rates, the churn, the occupancy, et cetera. So feel really good on that front. What we did communicate going back to the original guidance call was that year-over-year revenue as a lagging indicator does get a little bit worse before it gets better. And so we had some pressures in third quarter and fourth quarter of last year flow into that year-over-year number as we get into 2Q and 3Q. So we do expect year-over-year revenue to come down a little bit on a year-over-year basis, but sequentially we continue to be positive in terms of those trends that Tom just talked about coming through April.

Got it. And I guess my second question is around kind of how should we think about your investment activity this year, you know, excluding NSA, maybe expand on kind of the opportunities you're seeing out there and maybe also comment on kind of the lending platform.

Sure. So I'll maybe take the first piece of that, and Joe can take the second piece. I think, you know, stepping back on the transaction market, we're seeing similar trends than what we saw last year, which was encouraging, you know, a broadening of the seller set, a combination of, you know, single one-off transactions as well as some smaller portfolios. We were more active, and I'll get to that in a moment. on single-asset transactions in the first quarter. In terms of the first quarter itself, it tends to be a little bit quieter seasonally, so we'd expect that transaction volume picks up as we move through the year. But I think a more stable interest rate environment, a more stable operating trends, and a broadening seller set all point to encouraging trends for transaction activities overall. As Joe highlighted just a few moments ago, So we've acquired or under contract around $200 million in acquisition activity, and that's really being driven by a couple factors. You know, on our last call, spoke specifically to investments we're making into our capital allocation capabilities, and I reiterated those a few moments ago, building the team, enhancing our data science capabilities, and utilizing the PSNext operating platform to drive differentiated cash flow. So we're built for the small one-off transactions, which has really been where we've been active year to date. About three-quarters of the activity has been off-market as well. So as we continue to find those micro-market opportunities that we think fit really well for the portfolio. So teams are executing. The balance sheet's certainly poised to support that level of activity. And we'll keep going from here. The second part of your question on lending, Joe.

Yeah, hey, Samir. So I guess first off, Tom mentioned the capacity and obviously the P.S. next advantage we have across all forms of capital allocation to drive that outsized and compounding return piece. From a guidance perspective, I just highlight there really is no implication to this year whether or not we're more aggressive or less aggressive from an external growth perspective. It really has to do with compounding that per share earnings growth into 27 and 28 and setting up the growth profile there. So not a big swing factor for 26. As it relates to lending, this continues to be a growing part of the business. It was a slow start to the year, but we do expect that to continue to grow over time and significantly enhance both the value creation and the size of that platform. I'd say there's some puts and takes to why we were a little bit slower. From a demand for lending, it is a little bit lighter right now, which given the backdrop of lower development starts and lower supply, that shouldn't be unexpected and is actually a net long-term positive, obviously, for us from an industry perspective. The other piece is that it's a pretty competitive dynamic in terms of individuals and groups trying to make new loans. And we are remaining disciplined in terms of keeping to our rate, keeping to the metrics that we all want to underwrite to and have not deviated from that to date. So if we miss out on a few deals because of that, so be it. But we think that's in the

long-term interest to shareholders. Got it. Thank you. Our next question comes from Todd Thomas with KeyBank Capital Markets. Your line is now live. Yeah. Hi. Thanks. First question for me,

I just wanted to follow up on the revenue cadence in response to your Samir's question. Would the pressure that you're anticipating on same-store revenue growth in 2Q and 3Q, So, you know, I guess absent L.A., if you did not have L.A. in the portfolio, would revenue growth still be pressured like the guidance implies? Or do you think that the mix of stronger coastal and Midwest markets would carry the recovery more evenly throughout the balance of the year?

Yeah, Todd, it would come off a little bit when you look at both coastal and Sunbelt in 2Q and 3Q. Again, you kind of saw some broader-based weakness back in 3Q and 4Q when you looked at some of the new move-in rates going a little bit more negative than where we're at today. And so it is a little bit more broad-based there in 2Q and 3Q. It's not material, but it is expected to be slightly lower than where we're at here in the first quarter. And then you called out a good point there. From an L.A. perspective, the state emergency is still in place, at least at this point in time, through end of May. From a guidance perspective, we did factor that in through the entire year and that minus 80 basis point impact to same-store rep for the full year. But because of the timing and the comps, L.A. on a same-store revenue basis does continue to get worse throughout the year, assuming that the state of emergency remains in place, which we don't have insights one way or the other. And as I said in my upfront comments, we do think that's going to be a pretty material tailwind to recapture that market rent growth at some point in the future. But for now, it does remain a drag here as we move throughout the year.

Okay, that's helpful. And then, Tom, I wanted to ask about the integration of NSA, which you touched on in your prepared remarks. Can you talk about the steps or the measures being taken to ensure that NSA's operations during the peak leasing season through closing here are sort of intact, I guess, that leasing, revenue management, everything's moving along according to plan? And then any incremental thoughts about the expected revenue or expense synergies from the transaction as you work toward closing?

Yeah, I'll take the first part of that, and Joe can cover the second piece. On the first part, you know, we've been really encouraged by, you know, the dialogue and collaboration between the national storage team and the public storage team as we've gotten together here and are developing, you know, deep plans to be able to integrate the properties together as we move into the third quarter here. And over the interim, to your point, you know, they're running their business and they're running the business well. We're doing the same and look forward to the opportunity to bringing them together here in the third quarter. And, you know, we'll obviously share some more on that as we get closer. But as we spoke about on the M&A call last month, The plan is to integrate those assets immediately onto the PS Next platform, start the rebranding process, welcome all their customers and their employees, and really get going here in the third quarter.

Hey, Todd, it's Joe. And just to close that out, just from a synergy, timing, and value creation perspective, no changes at this point in time in terms of what we put out in early March from that presentation that we put together. We still expect $110 million to $130 million of synergies over time. From an accretion perspective, you know, at 2026, we had commented that we do expect that to be break-even in 2026. But by the time we get to stabilization out in 2028 and 2029, we do think we'll have $0.35 to $0.50 per share earnings to compound on top of our existing profile, which I think at the time we had talked about the total value creation coming from that at our multiple. that's over a billion and a half of value creation coming off of a $10 billion transaction. So very excited to get going on the integration and go out there and prove the upside that we put together.

All right, great. Thank you.

Our next question comes from Eric Wolf with Citi. Your line is now live.

Thanks. It's Nick Joseph here with Eric. Just as part of the structure of JVing certain properties and retaining the ownership of others, is there a difference in occupancy between those properties that are going into the JV versus what will be wholly owned?

No, no, there isn't pretty similar occupancies between the different pools today.

So just in terms of the high cash flow JV, there's no difference of stabilization or anything that would drive different return profiles?

You know, both sets of those assets have been owned by NSA for a period of time, and, you know, occupancies are in a pretty similar place. is we thought about, you know, that formation of that joint venture really creating that win-win and different return profile for the joint venture compared to on balance sheet, some of the market mix compositions and the like, but occupancy wasn't the driver of the selection of assets one way or the other.

Got it. Thank you.

Our next question comes from Nicholas Uliko with Scotiabank. Please proceed with your question.

uh thanks um i guess if we look at the um you know so the average occupancy and same store versus you know where you ended on occupancy the year over year delta you know it was different there sort of not as much occupancy growth on the year uh the period end versus year over year versus in the fourth quarter is there something that happened in march like we're trying to push prices and uh and you dealt with you know some occupancy loss because that can you just unpack

that a little bit. Hey, Nick. Yeah, just from an occupancy perspective, we did come in quite a bit better than expected there in the first quarter, given some of that lower move-out activity that we saw. I think one thing that you might be referring to is just the change. If you look at same-store occupancy in fourth quarter of 25 versus first quarter of 26, it did come down a little bit sequentially, but I'd highlight that we did add about 17 million square feet into the same-store pool from 25 to 26, and predominance of that was a little bit more heavily weighted towards our Sunbelt markets, which are running a little bit lower from an occupancy perspective. So if you're thinking about 4Q versus 1Q, I really wouldn't read into that much. Focus on

that year-over-year momentum that we're seeing. Okay, yeah, I guess the follow-up on that was I was also looking at some of the year-over-year, you know, dealt in terms of the ending occupancy in the first quarter versus what that growth was year over year in the fourth quarter, and it was a lower year over year on the ending. In fact, I wasn't sure if there was anything that sort of happened late in the quarter that might have impacted the ending occupancy

in March. There wasn't anything in particular towards the end, but as Joe just mentioned, we were really encouraged by churn being lower through the first part of this year, and certainly the models adapted to that and predicted that moving forward, which led to, you know, a little bit more pricing power as we move through the quarter. You know, and if you look at the statistics through the quarter, churn really being a really helpful component, but rates improving through the quarter, promos down, marketing down, and occupancy up on a year-over-year basis, all encouraging kind of leading indicators as we move forward from here.

All right. That's helpful. Thanks, guys.

Our next question is from Brendan Lynch with Barclays Bank. Your line is now live.

Great. Thanks for taking my questions. Tom, I just wanted to follow up on churn being lower year over year. Can you kind of discuss some of the initiatives that are driving that outcome and how much of that is actually in your control given most customers aren't generally moving out

to go to a competitor? Yeah, a great question. I do think there's a number of factors at play here. Joe touched on some of them earlier. And just to reiterate, I do think there's some macro factors at play here. As you think about activity levels across the economy, GDP growth, job growth, housing transaction activity all slowing as we moved into 2026. And I think that has an impact both on the ins and the outs. But overall, net-net, we'd prefer less churn within the portfolio. In terms of initiatives that we have underway, I highlighted earlier around one of the key components of the own it culture and PS 4.0 is customer obsession and a focus on customer experience. And that alignment amongst the teams is growing. And it's really top to bottom from targeting new customers and conversion into the platform, as well as a heightened focus on customer experience at the property as well, including new incentive programs targeted towards churn. And so overall, lots of different initiatives internally targeting that customer experience, which we think is also benefiting churn levels into the first quarter.

Great. Thanks. That's helpful. And then maybe just touching base on some of your more challenged markets like Tampa and Atlanta and Phoenix, do you anticipate the dynamics in these markets to continue to improve or is there a new supply or any other challenges that are, you know, still potentially could still emerge going forward?

Yeah, that's a good question. I think overarching, we continue to expect that new supply will taper down, and that is impacting many of those markets. Tampa, you highlighted, in particular, was related to some storm activity and the comps associated with that as we lap those. But away from that, we've seen encouraging trends in markets like Dallas, for instance, Atlanta, Phoenix, where new supply is being absorbed. Revenue growth is still negative on a year-over-year basis, but improving sequentially. And that speaks to the overall trajectory of that Sunbelt group over time, which we expect had a modest improvement as we move through 26 and forward.

I think, Brendan, one of the things we've been keeping an eye on is just, you know, Tom talked up front about the secular backdrop and the positivity there for the industry as a whole, But going through this cyclical disruption right now, and when you look at third-party data out there from both an occupancy and a rate perspective, we do seem to be leveling out and stabilizing. And so that's a really good sign in terms of what the go-forward trajectory is going to be coming out of this. And so as supply continues to come down, and then we go out there and put our initiatives in place to capture more than our fair share, definitely optimistic from a cyclical perspective that we've kind of found this period of stabilization.

Yeah. And I think stepping back, obviously, the recovery in some of those markets has taken longer than what we would have liked. But that absorption is taking place. And you've got strength in some of the coastal markets that it frankly continues to build. So such that the recovery is on its way, the timing of it continues to come, but is a little slower than maybe what we would have liked a couple years ago. But in the meantime, we're investing in the platform and focused around where we can deploy capital, improve operations to take advantage of that opportunity set moving forward. Great. Thank you both.

Our next question is from Juan Sanabria with BMO Capital Markets. Your line is now live.

Hi. Good morning. Just a question with regards to the churn and the interplay with ECRIs. If I look at the implied contribution of ECRIs, it seems to have come down. So just curious, kind of piggybacking off the last question, is there, I guess, a greater ability for local or corporates to kind of soften those ECRIs if the customer complains to try to keep them on board and reduce churn? Or if you could talk a little bit more about that, the interplay of ECOIs and churn and what we should just expect given the moderating macro environment.

Yeah, good question, Juan. The encouraging thing is we've seen really steady customer behavior, and that goes across the board. You know, Joe highlighted earlier, you know, lower delinquency, payment patterns, things like that, vacate activity clearly. But I would put price elasticity on that list as well, which is we haven't seen a shift in terms of price elasticity. And in fact, you know, the replacement cost component of the ECRI modeling is improving as well. So as we think about the customer reaction to rental rate increases, they've been encouraging year over year. What you're seeing in terms of overall contribution on a year-over-year comp basis is a big component of that is Los Angeles, right, where this year we don't have the ability to send rental rate increases at all, whereas last year we had the ability to send more modest increases. And I'd say that's probably the primary component of that year-over-year comp. But stepping back, that price elasticity remains healthy. Customers continue to place a lot of value on the product we're offering. Our rents continue to be affordable versus other space alternatives. And I think all of that is leading towards lower vacate activity from that program and overall.

And then just kind of a bigger picture question. And given the long history and data that you have, what lessons or takeaways do you have from previous times when oil or energy prices have spiked and what that may or may not mean for storage and the stickiness of the customer or potential churn as a result? I'm not sure if there's a lag or any insights you make going from the past data.

Yeah. What we've seen over time, stepping back, is in periods of macro stress. So if you look back at prior recessions, with the exception of the COVID environment, what you really saw was vacate activity starting to tick higher. And encouragingly, obviously, we've spoken about it a number of times on this call, we've seen the opposite taking place, and that's continued through April as well. So very encouraging existing customer trends. In terms of, you know, gas prices specifically, you know, we've seen gas prices and oil prices go higher at several different points over the last 10 to 15, 20 years. And we haven't seen a material impact on storage activity. And I think that goes back to the needs-based nature of our product and the fact that, you know, folks aren't waking up on a Saturday morning dreaming of moving their stuff into storage. There's something that's going on in their life, right? And there's a change that's occurring. And we're a solution for that change. And so we don't tend to see, you know, short-term moves in gas prices materially impacting the customer base. That all said, teams are laser focused on watching customer behavior and seeing if there's any shifts. It's just been encouraging to date. Thank you. Our next question comes from

Caitlin Burroughs with Goldman Sachs. Your line is now live. Hi, everyone. Maybe just first,

it seems like a number of the one key metrics came in better than expected. So I'm wondering if the reason for no change to guidance is just that it's too soon in the busy seasons ahead, or are there some known issues that we should take note of, like the timing of the one-off acquisitions, timing or rate of debt raise or anything else to offset the strength so far or

not necessarily. Hey, Kaylin, it's definitely the former. So hopefully you're picking up in our tone and commentary the positivity that we have around the start to the year. Very encouraged by everything we're seeing. But to your point, we are still early in the year with a busy scene ahead of us. We still have NSA to get closed and integrated. And so our thought process is simply stay focused on the task at hand, focus on how we're going to finish the year, not how we're going to start it from a guidance perspective. And we'll revert back in 2Q with hopefully a positive update for everyone. Got it. Okay. And then maybe just on the supply

side, you mentioned how you continue to see new supply competition in some Sunbelt markets in particular. I guess, how long do you think that's going to take to dissipate and what makes you confident that those sorts of headwinds don't just pop up again as you think about your comments on the confidence in long-term kind of, I don't know, strength and supply demand that you mentioned

earlier. Yeah. So the Sunbelt markets have pretty good demand trajectory. And you think about population growth trends, job growth, income growth. And so there's really encouraging trends that are taking place in many of the markets that we spoke to earlier, be it Tampa, West Coast of Florida, Atlanta, Dallas, Fort Worth, et cetera. And so we're encouraged by the longer term trajectory there. There is the impact of new supply periodically in a real estate cycle that occurs in those markets. And we're in that. I think the encouraging thing is new supply is tapering down and, frankly, being absorbed in those markets. And the sequential trends on a quarter-over-quarter basis have been improving in many of those markets that I just highlighted. And so it does feel like, from a second derivative standpoint, we're headed the right direction. And I think that just relates to the fact that development business continues to be more challenging. And that's not just a Sunbelt element. That's a nationwide component. You look at timelines and city processes continue to get longer, not easier. Financing costs are obviously higher than they were several years ago. Construction costs are more elevated and not dropping from here. And obviously, in many of those Sunbelt markets, for instance, rents have been coming down, right? Revenues are going lower. And so you think about the economic barriers to entry that are coming through in some of those markets as well. So we're anticipating that supply takes another leg lower this year and probably further into next year. And you will see that occur in some of the Sunbelt markets as well as elsewhere.

I think it's important, too, to add on that, just in terms of Tom's commentary on the challenges around supply broadly and those economics. That is very different than what you see out of us. So we've talked about wanting to continue to lean into our development platform, but that's really a byproduct of the quality of the team, the benefits of being one of the largest, if not the largest, developers in the space, and very importantly, benefits of PS Next. The fact that we're getting an 8% stabilized yield on our platform is not representative of what's taking place in the broader marketplace. So that value creation is to us alone. That's why we continue to lean into that area while the rest of the market is pulling back.

Thanks for those details.

Our next question is from Michael Griffin with Evercore. Your line is now live.

Great, thanks. Maybe just circling back on the PS Next initiatives and how it relates to your marketing spend and sort of targeted marketing. Tom, can you maybe quantify or give some examples of how the framework around either customer acquisition or marketing spend, leveraging data from Google or AI that you might have, might have changed with the PS Next relative to how public was doing it previously?

Yeah, there's a lot there to unpack. We'll take it piece by piece. I will say we welcome the new chief revenue and marketing officer, Ayash Basu, here earlier this year. and he's getting his fingerprints on our revenue and marketing strategies moving forward. And I think working with the team that's in place, we've had the ability to lean in through the first quarter around some of our targeting initiatives, be it through Google as well as our conversion of initiatives on our website to target customers that we think have an attractive lifetime value. And I think they're working very closely with Natalia Johnson and her data science team around what it is that we can do and utilize our data to be able to be more refined so that when a customer drops on our website, we have an expectation of what their lifetime value is going to be, what the right potential pricing and promotion mix is, and then to your point on Google, how do we go out and find more customers like that? So all of those things are in the mix and excited to see what those leaders can drive as we move forward from here.

Thanks, Tom. That's certainly helpful. And then maybe just a point of clarification on the $185 million of deals that closed subsequent to quarter end. Were any of these in relation to the new data science partnership you have with WellTower, or was this stuff that was already in the hopper that just happened to close this month?

Yeah, that stuff was more in the hopper. So that's all to come.

great thanks so much our next question comes from spencer gimshare with green street advisors

your line is now live thank you um in terms of the la market can you just remind us of how long it has historically taken you to get those customers up to market rents after periods of rent freezes and do you think that this catch-up could take longer this go-around just due to the

weaker demand landscape? Yeah, great question, Spencer. The first thing I'd say is that the demand landscape in Los Angeles continues to be very healthy. If you look at Orange County activity and the other counties around LA County, San Diego, continue to see strong demand, high occupancies, good rental rate trends. And so we've got a lot of confidence in terms of the overall macro backdrop around LA and the performance that we're seeing there. And then on the ground, we have a differentiated, attractive portfolio that's really irreplaceable in Los Angeles that we've owned for decades and continue to improve. And so we're optimistic as it relates to the upside from a demand standpoint moving forward from here. As it relates to the ability to charge market rental rates, obviously that's not within our control today. But we would look to charge those market rental rates over time, and it will partially depend on how long the state of emergency is in place in terms of how long it takes to get it back. If you look back at the Hill and Woolsey fire and the COVID emergencies, it probably took us 18 to 24 months to get back to the levels of rents that we were charging. That state of emergency was obviously in place for a longer period of time than where we sit today. So that gives you a guidepost. But we're certainly not going to go rush out and do it immediately either, given the breadth of the platform and the brand in L.A. But we do have a lot of confidence and track record in our ability to accelerate those rents, to market rents over, call it a 12 to 18 to 24-month period.

Okay, thank you. That's a very helpful color. And then maybe just switching gears, just in regards to the transaction market, Obviously, you guys have been pretty active, and you guys see, I would assume, everything that's coming across being marketed. Can you just comment on what you're seeing in terms of assets on the market today? You know, where's the bid-ask spread generally, and can you comment broadly on cap rates?

Sure. You know, as I highlighted earlier, we've been encouraged by a broadening of the seller set. So we've got activity in the first quarter from institutional sellers, from mom-and-pop sellers, and everything in between. And so that's been an encouraging development in terms of the breadth. And I do think the stability that we've seen both operationally as well as within interest rates has led to a narrowing of that bid-ask spread, i.e. there's less of a gap between what a seller thinks rental rates should be versus what we think rental rates should be. Interest rates are more stable, all those sorts of things, all helpful. In terms of cap rates, they've been reasonably consistent with stabilized product, trading in the fives, getting into the sixes as we put them on our platform. And we really have that PS next opportunity to take the assets, put it on our platform, and earn more cash flow, which is attractive. But overall, that's a sense of where cap rates are across the industry. And I think our team is really built, again, for that one-off activity. Again, about three-quarters of the activity year-to-date has been off-market and really targeted micro-market activity. and certainly NSA on the other end of the spectrum, certainly a large portfolio opportunity. So we're interested in the full spectrum and have different tactics and team investments to try to attack those opportunities.

Great. That's all for me.

As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment while we poll for questions. Our next question comes from Ravi Vadia with Mazuho.

please proceed with your question. Hi there. Thank you for taking my question. I know you guys offered some comments on how you expect revenue to trend throughout 26, but how do you expect expenses to trend given that we're off to such a strong start? Hey, Robbie, it's Joe. Yeah,

we did have a lot of success coming through 1Q, even probably better than expected, as you saw, P-Tax, personnel, marketing, utilities, R&M, all down year over year. I think I highlighted in my upfront comments. We did have about a $3 million one-time benefit in P-TACs, which was really an appeal win that we thought we would have coming through in 2Q. So no change to full year guidance from that, just a timing implication. So if you look at where our midpoint is on a go forward, still really constrained expense growth overall, as well as relative to the peers. But we do think it'll tick higher as we track closer towards that midpoint that we previously laid out. So you'll see some of those numbers going higher, but still a lot of initiatives in place to keep

that number constrained and below inflation. God, that's really helpful. Just one more here. Can you comment on the decision to have maybe less promotional activity this quarter than a year ago? Is this something that we could expect going forward? And how do you consider promotions as a tool and environment when both move-in and move-out volumes are declining? Thank you.

Yeah. So you're highlighting promotions, which is one tool. I'd also highlight marketing as well as rental rates as all tools that we use to drive conversion and traffic to the customer acquisition funnel. And promotions have been down really pretty consistently over the last year. And, you know, move-in rental rate trends have been improving, as we spoke about, through the course of the year. And marketing, as well as we think about less churn and less inventory to re-rent, came down a little bit in the first quarter as well. So encouraging trends really across all three of those levers for customer acquisition, and we'll continue to use them dynamically really at the store level to optimize revenue.

Thank you.

Our next question is from Mike Muller with JP Morgan. Your line is now live.

Yeah, hi. Can you talk a little bit about the lending program? Are you looking at this largely as a lending business that you can make money in, or does there need to be an angle where you can ultimately get to the real estate or the management, and how big do you think it could ultimately be?

Hey, Mike, so you hit on a couple of the key points there. Of course, we're looking to make a strong risk-adjusted return coming out of this business. It's around a $150 million business today. We think it could grow up into the half-billion-to-billion-dollar range over time, but we're not going to strive just to get there. As I said, we went pretty slow here in the first part of the year, given the discipline that we have around it. To your point on ancillary pieces, though, there are a lot of ancillary benefits coming off of this platform. So you hit on one of them, which is it could be a potential feeder of future acquisition activity. So that is one thing that we look at. In addition, we get third-party property management on these assets, and we also get tenant insurance on these assets. So when you look at the profitability of the platform as a whole, you really have to take a holistic view of not just the yield that we get on the loan, but also the revenue streams and cash flow streams coming in from these other businesses.

Got it. Okay. Thank you.

Our next question is from Eric Lubchow with Wells Fargo. Your line is now live.

Great. Thanks for the question. Tom, you touched a little bit on, you know, move-ins being down year over year due to, you know, less inventory. But just curious if you could touch on top of funnel demand, whether measured through, you know, web search or in-store traffic. And, you know, given some of the recent volatility we've seen in mortgage rates, the increase in fuel prices, slower home sales, you know, any caution that you're sensing from the incoming customer, if you could touch on that, it'd be great.

Yeah, it's a good question. And, you know, some of the same macro themes that I hit on that are influencing churn being lower also having an impact on the move inside as well. And, you know, it really varies by market. So, you know, stronger markets like Minneapolis, San Francisco, New York, Boston, for instance, good top of funnel trends and activities. But some of the markets we were highlighting earlier that continue to be in negative territory and are suffering from more competition with new supply as that's being absorbed, you know, the Florida markets, Dallas, for instance, others also seeing a little softer incoming traffic to pair with that, as you'd expect. So, you know, big picture, you know, some of those macro trends driving more modest demand coming in, but also supporting the churn level and lack of churn and less inventory to rent. So a really nice pair there and giving us, frankly, a little bit more pricing power.

Great. Thanks. And just one follow-up on the acquisition side. I know you started off a little slower this year, but given, you know, the size and the complexity of the NSA transaction, does it, you know, impact at all your willingness to go after larger, more complex portfolios, given you still have some leverage capacity? Or should we expect more of these one-off kind of private market assets to trade this year?

Bigger portfolios are obviously much tougher to predict. The team is built for the one-off acquisitions and the micro-market targeting that we're speaking to, and we've been investing in that platform, clearly increasing the size of the team, the data science capabilities in order to enhance that. It's certainly applicable to portfolios as well, but will be dependent on sellers as they come to market. In terms of ability to transact, certainly we've got a big closing coming up here in the third quarter. And so right around the immediate closing, we're going to be thoughtful and certainly prioritizing the NSA transaction and making sure that that integration goes smoothly as we get started there. But away from that time period, really looking to continue to deploy capital at good risk-adjusted returns and grow our per-share earnings platform over time. And so I'd say teams are built, balance sheets in a good spot, and looking to be active as we move through 26.

Thanks, Tom. We have reached the end of the question and answer session. I'd now like to turn the call back to Joe Fisher for closing comments.

Hey, it's Tom. Thanks, everybody, for joining this morning, this afternoon. Appreciated the questions and look forward to getting you updated how the busy season goes through second quarter. Thanks very much everybody.