Public Storage · NYSE:PSA
Public Storage — Investor Presentation (June 2021)
57 slides from Public Storage's investor presentation, June 2021
Slide 1: Company Presentation
Company Presentation June 2021
Slide 2: Important Information
Important Information FORWARD-LOOKING STATEMENTS: All statements in this presentation, other than statements of historical fact, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements i
Slide 3: The Self-Storage Industry Leader
The Self-Storage Industry Leader 1972 2,600+ $2.9B founded facilities 2020 revenues 5,600 184M $2.0B employees net rentable 2020 NOI square feet 1.6M 39 customers states in place Source: Company filings and data Note: As of 3/31/21 unless otherwise noted. Property count, square footage, and state co
Slide 4: Unique Competitive Advantages
Unique Competitive Advantages High-Integrity Team & Culture An innovation-driven culture with broad diversity Unmatched Scale & Locations Multi-Lever External Growth Half of the U.S. population lives Acquisition, development, and redevelopment within a Public Storage trade area expertise drives valu
Slide 5: Increasing Consumer Adoption is a Demand Tailwind
Increasing Consumer Adoption is a Demand Tailwind Self-Storage Utilization % of U.S. Population Using Self Storage 10% 9% 9% 8% 7% 6% 5% 4% 3% 3% 2% 1% 0% Source: U.S. Census and Self-Storage Almanac 5
Slide 6: Embedded Generational Demand
Embedded Generational Demand U.S. Population by Age and Generation in 2020 (Millions) 5.0 4.0 3.0 Future Core Core Customer Base 2.0 Customer 30 – 60 years old 1.0 0.0 0 12 24 36 48 60 72 84 96 Age Greatest Gen-Z Millennials Gen-X Baby Boomers Silent Gen Gen Source: U.S. Census and Knoema 6
Slide 7: Committed to Sustainable Growth
Committed to Sustainable Growth Environmental Social Governance A Low Impact Company A People Focus Integral to operational, financial, and reputational resilience Light footprint I Energy, carbon, water, and waste PS Cares Emergency Fund I Established to Significant board refreshment I Added 7 new
Slide 8: Leadership Innovation Growth
Leadership Innovation Growth Most recognized brand Digital customer experience Revenue growth and expense control Best locations Technology platform Portfolio expansion through acquisition, development, and redevelopment Great people Operating model transformation Third party management Strongest ba
Slide 9: Platform Strength and Innovation
Platform Strength and Innovation 9
Slide 10: Organic Growth Powered by Innovation
Organic Growth Powered by Innovation Customer Experience Advancement Digital and in-store, Property of Tomorrow NOI Growth through Innovation Operating Model Transformation Data Science Driven Revenue Growth Increase customer satisfaction at a lower cost Revenue maximization structure to improve mar
Slide 11: The Leading Self-Storage Operator
The Leading Self-Storage Operator Rental Revenue Net Operating Income Operating Margin1 Per Available Square Foot1 Per Available Square Foot1 $16.86 76.5% $16.51 $16.33 72.1% 71.6% $13.87 $13.32 $12.12 68.8% $11.83 66.7% $11.53 $9.37 $8.56 Public CubeSmart Extra Life National Public Extra CubeSmart
Slide 12: Power of the Public Storage Brand
Power of the Public Storage Brand Largest national footprint of any self-storage provider with high visibility physical recognition — “Buildings as Billboards” Public Storage was the top search term for our industry in 2020 Branded search represents 43% of our paid search volume at 1/3 the cost of n
Slide 13: Unparalleled Brand Recognition & High Customer Satisfaction
Unparalleled Brand Recognition & High Customer Satisfaction Which Of The Self Storage Companies Are You Aware Of? Highly Rated: “Has Friendly & Courteous Staff” Public Storage 73% “Excellent Service” CubeSmart 47% 4.8 Rating Extra Space 38% Highly Rated: “Is a Company I Can Trust” Life Storage 36% 4
Slide 14: Maximizing Revenue through Data and Analytics
Maximizing Revenue through Data and Analytics Sales Funnel Customer Market & Competition Property & IoT Search engine demand & WebCHAMP2 CRM interaction data New & future storage supply Revenue and pricing experiments performance Lifetime customer value Asset quality of supply Local move in/out hist
Slide 15: Dimensions of Revenue Maximization
Dimensions of Revenue Maximization Move in Volume Move in Price Maximize Revenue Length of Stay Tenant Rate Increases 15
Slide 16: Omni-Channel Customer Experience
Omni-Channel Customer Experience Reservation Channels WebCHAMP2, our proprietary centralized operating system, Desktop Mobile Call Center Property Office Affiliates enables all channels Integrated digital transactions Move-In Options Consistent and optimized Property Office eRental® Kiosk experience
Slide 17: Industry Leading Self-Service Rental and Move-In
Industry Leading Self-Service Rental and Move-In Online Lease Agreement Utilization by New Customers Public Storage Life Storage Rent and pay for ≈your space online — today. Skip the rental counter and head CubeSmart straight to your space on move- in day. Extra Space 0% 5% 10% 15% 20% 25% 30% 35% 4
Slide 18: Property of Tomorrow - A Focus on Customer Experience and Sustainability
Property of Tomorrow - A Focus on Customer Experience and Sustainability Before After Select Program Enhancements: Holistic brand refresh Public Storage Orange Large sign format Updated office Before After Smart property elements Environmental efficiencies Smart property elements 18
Slide 19: Digital Company with Optimized Data-Driven Operations
Digital Company with Optimized Data-Driven Operations Wired Property, Our customer journey is fully Asset Management Self-Service Leasing & Office digitized and our asset management digital transformation is well underway, providing: An exceptional customer experience Smart Cameras & Security Optimi
Slide 20: Enterprise Platform Supports Data Driven Decisions
Enterprise Platform Supports Data Driven Decisions Customer • Channel move-in • Payment patterns preference • Service inquires Acquisition & Development • Property usage • Move-out data patters • Historical • Real estate value performance • Demographic data • Yields • Supply data Revenue Management
Slide 21: The Digital Transformation of Self-Storage
The Digital Transformation of Self-Storage Optimization is technology enabled and driven by customer preference Improved Customer Experience Enhanced Employee Experience Better Operating Efficiency Better customer service Optimized hours Increased data for revenue management Expedited self-service l
Slide 22: Strengthening Our Operating Leadership Position
Strengthening Our Operating Leadership Position Same-Store NOI Margin1 Plan to increase margins by 2%+ over the next three years2 75.9% Operating model transformation leading to 25% payroll cost savings Solar power and LED light returns leading to 30% utility cost savings 71.3% 70.5% 70.1% 66.8% Pub
Slide 23: A Strong Outlook Driven by Platform Innovation
A Strong Outlook Driven by Platform Innovation Annual Same-Store NOI Growth Favorable Outlook Strong demand trends 4.0% Improving supply trends 3.0% 3.5% Platform innovation improving margins 1.7% Five-Year Long-Term Outlook Margin expansion from operating model Historical Average and efficiency inv
Slide 24: Multi-Factor Portfolio Growth
Multi-Factor Portfolio Growth 24 24
Slide 25: The Portfolio Growth Leader
The Portfolio Growth Leader Portfolio Square Feet Added (millions) Past Fifteen Years Past Ten Years Past Two Years 92 54 20 43 51 33 22 9 15 6 15 4 3 Public Extra Space Life Storage CubeSmart Public Extra Space Life Storage CubeSmart Public National Extra Space CubeSmart Life Storage Storage Storag
Slide 26: Multiple Growth Drivers Maximize Opportunity
New Development Redevelopment Multiple Growth Drivers Maximize Opportunity The only four-factor external growth program Acquisitions Third-Party Management among the self-storage REITs provides: Broad domestic and international opportunity Optionality through market cycles 26
Slide 27: Unrivaled Capabilities
Unrivaled Capabilities In-House Expertise Analytics and Underwriting Reputation and Execution Most experienced and knowledgeable Underwriting focus The preferred buyer teams in the industry (50+ people) ⎻ Cash flow profile and real estate value ⎻ No contingency, execution certainty, cash buyer
Slide 28: Accelerating Capital Deployment in an Attractive Growth Environment
Accelerating Capital Deployment in an Attractive Growth Environment Annual Investment Volume (millions) $2,915 $793 $906 $522 2018 2019 2020 2021E Development Acquisitions Source: Company filings and estimate 28
Slide 29: Nationwide Development Strategy
Nationwide Development Strategy Development Since 20101 $1.7B Investment since 20101 8.6% Stabilized NOI yield2 $1.3B Value creation3 Source: Company filings and data 1. Includes YTD investments closed as of 3/31/21. 2. Estimated stabilized NOI (typically achieved in years 3 to 5 of operations) as a
Slide 30: Development Platform Drives Exceptional Returns
Development Platform Drives Exceptional Returns Development — The Public Storage Way NOI Yield by Development Vintage1 Largest in-house development program in the industry 12.7% 50+ person team and growing 11.0% 8.0% Expected Average Data-driven submarket and site selection 7.6% 6.3% Optimized prope
Slide 31: Multi-Faceted Development Strategy for Growth and Optimization
Multi-Faceted Development Strategy for Growth and Optimization New Development Redevelopment Conversion / Adaptive Reuse Land acquisition Expand opportunity on existing Repurposing existing real estate properties Ground-up construction Expands investment opportunities Increased densification for por
Slide 32: Downtown Seattle New Development
Downtown Seattle New Development $26M Before After Total investment 8.3% Stabilized NOI yield1 $43M Estimated stabilized market value2 2,209 148,000 Units Square Feet 65% Value creation margin2 Source: Company filings and data 1. Estimated stabilized NOI as a percent of total cost (including land).
Slide 33: Los Angeles Redevelopment
Los Angeles Redevelopment $27M Before After Total investment 10.4% Stabilized NOI yield1 $56M Estimated stabilized market value2 3,958 260,300 Units Square Feet 107% Value creation margin2 Source: Company filings and data 1. Estimated stabilized NOI as a percent of total cost (including land). 2. As
Slide 34: San Francisco Bay Area Conversion
San Francisco Bay Area Conversion $29M Before After Total investment 12.3% Stabilized NOI yield1 $71M Estimated stabilized market value2 4,504 320,000 Units Square Feet 145% Value creation margin2 Source: Company filings and data 1. Estimated stabilized NOI as a percent of total cost (including land
Slide 35: Nationwide Acquisition Strategy
Nationwide Acquisition Strategy Acquisitions Since 20101 $4.4B Investment1 7.7% Stabilized NOI yield2 $2.4B Value creation3 Source: Company filings and data 1. Includes YTD investments closed as of 3/31/21. 2. Estimated stabilized NOI (typically achieved in years 3 to 5 of operations) as a percent o
Slide 36: From Commoditized to Widely Recognized
From Commoditized to Widely Recognized Rebranding significantly elevates product visibility, awareness, and performance 36
Slide 37: Proven Value Creation: Acquisitions
Proven Value Creation: Acquisitions Acquisition Case Study — Mid Atlantic Portfolio (9 properties) $500,000 Average Monthly Revenue $450,000 Public Storage Acquisition $400,000 Power of the brand Trajectory of Prior Owner $350,000 Marketing advantages Revenue maximization $300,000 -12 -11 -10 -9 -8
Slide 38: Funding Growth and Value Creation
Funding Growth and Value Creation Illustrative Leverage Neutral Scenario Investment Amount (millions) Stabilized NOI Yield 2.2% Development $300 8.0% Acquisitions 600 5.0% Total $900 6.0% Funding Amount (millions) Interest Rate FFO Growth Retained Cashflow $400 0.0% Illustrative Debt Financing 500 2
Slide 39: Funding Growth and Value Creation
Funding Growth and Value Creation Illustrative Public Storage Increased Investment Investment Amount (millions) Stabilized NOI Yield 3.7% Development $700 8.0% Acquisitions 800 5.0% Total $1,500 6.4% Funding Amount (millions) Interest Rate FFO Growth Retained Cashflow $400 0.0% Illustrative Debt Fin
Slide 40: Portfolio Growth Contribution
Portfolio Growth Contribution Annual Illustrative FFO Growth Contribution of Stabilized Performance 3.7% 2.2% Attractive growth contribution with modest leverage impact Leverage neutral growth Increased investment volumes Annual Debt / EBITDA Impact 0.0x 0.2x 40
Slide 41: Third Party Management
Third Party Management Public
Slide 42: Partnering On Our Competitive Advantages
Partnering On Our Competitive Advantages Brand and Scale Technology & Data Growth Profitability Relationships Deep addressable market First-mover technologies Asset-light income growth Operating and overhead Industry relationships with presents long-term brand and multifarious data to (management fe
Slide 43: Proven Operational Excellence: Third-Party Management Case Study
Proven Operational Excellence Sharing Our Competitive Third-Party Management Case Study — Austin, TX Advantages $50,000 $45,000 Average Monthly Revenue $40,000 $35,000 $30,000 Public Storage Assumes $25,000 Management Trajectory of Prior REIT $20,000 Manager Power of the brand $15,000 $10,000 Market
Slide 44: Partner Endorsements
Partner Endorsements “ I can say without hesitation that third party management provided by Public Storage exceeds their competitors. “ Their organization, the marketing, the knowledge, and expertise is 95 second to none. % “ Aside from most competitive offering in the industry and great brand recog
Slide 45: Growth-Oriented Balance Sheet and Outlook
Growth-Oriented Balance Sheet and Outlook 45 45
Slide 46: Balance Sheet Engine for Sustainable Growth
Balance Sheet Engine for Sustainable Growth Strong access and cost of capital through cycles Flexibility to fund strategic opportunities Interest rate optionality to lower cost of perpetual preferred stock Sustainable growth financing with retained cash flow and debt 46
Slide 47: The Strongest REIT Balance Sheet
The Strongest REIT Balance Sheet Net Debt and Preferred Equity to EBITDA 8x 7x 6x 5x 4.0x 4x 3x 2x 1x 0x Public Alexandria Prologis CubeSmart Life Storage Digital Realty AvalonBay Equity Extra Space Welltower Ventas Boston Simon Storage Communities Residential Properties Moody’s / Baa1 / Baa2 / Baa2
Slide 48: Adding Low-Cost Debt to Optimize Financing Mix
Adding Low-Cost Debt to Optimize Financing Mix Debt and Preferred Equity on Balance Sheet1 (billions) Diversified Funding Sources and Lowered Cost Debt and free cash flow fund growth $4.0 • $5 billion of debt issued at a 1.9% blended rate $1.5 $1.0 • U.S. dollar and euro denominated unsecured debt $
Slide 49: Attractive Long Term Financing Costs
Attractive Long Term Financing Costs Long-Dated Maturities Weighted average maturity % of maturities greater than 15 years 20 16.6 year maturity 80.00% 70.00% 15 60.00% 43% of maturities 50.00% 10 40.00% 5 30.00% 20.00% greater than 15 years 10.00% 0 0.00% Extra Space Boston Life Storage Cubesmart V
Slide 50: Strong Access Across the Capital Stack
Strong Access Across the Capital Stack Funding Ongoing Growth Funding Strategic Opportunities Attractive Perpetual Capital Base Retained Cash Flow Common Equity Perpetual Preferred Equity Unsecured Debt Institutional Equity USD and Euro Joint Venture Partners 50
Slide 51: Engines of Long-Term Growth
Engines of Long-Term Growth Illustrative Long-Term Growth Same Store Growth 3.0% +/- 3% long term SS NOI growth Operating initiatives1 0.5%–1.0% Operating innovation and efficiency investments Portfolio Growth2 2.2%–3.7% Increasing run rate of investments Complementary Growth 0.5%–1.0% Increasing sc
Slide 52: Leadership Innovation Growth
Leadership Innovation Growth Most recognized brand Digital customer experience Revenue growth and expense control Best locations Technology platform Portfolio expansion through acquisition, development, and redevelopment Great people Operating model transformation Third party management Strongest ba
Slide 53: Operating Update
Operating Update Public
Slide 54: Same Store Move-In and Move-Out Summary
Same Store Move-In and Move-Out Summary Revenue Gained from Move-Ins Revenue Lost from Move-Outs Move-In Volume Move-In Rates Move-In Contract Revenue Move-Out Volume Move-Out Rates Move-Out Contract Revenue 55% 55% 45% 33.6% 45% 35% 35% 25% 25% 8.5% 15% 15% 0.8% 5% 5% -5% -5% -8.9% -15% -15% Q1 Two
Slide 55: Same Store Occupancy and Rents
Same Store Occupancy and Rents Square Foot Occupancy at Period End Annual Contract Rent Per Square Foot at Period End 2020 2021 2020 2021 $18.54 $18.06 96.5% $17.88 96.0% $17.42 94.0% 92.7% At March 31 (Q1) At May 31 At March 31 (Q1) At May 31 55
Slide 56: Appendix
Appendix Public Storage
Slide 57: Non-GAAP Reconciliations
Non-GAAP Reconciliations Net Income to EBITDA Reconciliation 2020 2015 2020 1Q2021 LTM Net income $1,318 $1,361 $1,428 Net operating income attributed to noncontrolling interests (8) (6) (7) Depreciation and amortization 425 553 564 Interest expense 1 56 57 Extraordinary and nonrecurring gains and l