Ladies and gentlemen, thank you for standing by and welcome to the Public Storage Third Quarter 2018 Earnings Call. At this time, all participants have been placed in a listen-only mode and the floor will be opened for your questions following the presentation. [Operator Instructions] It’s now my pleasure to turn the floor over to Ryan Burke, Vice President of Investor Relations. Sir, you may begin.

Thank you, Holly. Good morning, good afternoon, everyone. Thank you for joining us for the third quarter 2018 earnings call. I am here with Joe Russell and Tom Boyle. Before we begin, we want to remind you that all statements other than statements of historical fact included on this call are forward-looking statements that are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected by the statements. These risks and other factors could adversely impact our business and future results that are described in yesterday’s earnings release and our reports filed with the SEC. All forward-looking statements speak only as of today, October 31, 2018 and we assume no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. 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, SEC reports and an audio webcast replay of this conference call on our website, publicstorage.com. With that, I will turn the call over to Joe.

Great. Thank you, Ryan and thank you for joining us. We had a good quarter. I’d like to open the call for questions.

[Operator Instructions] Our first question will come from the line of Juan Sanabria, Bank of America/Merrill Lynch.

Hi, good morning. I am just hoping you guys could speak a little bit about your tech initiatives, I think you guys have launched a new web platform which is pretty all-encompassing. I was hoping you could just give us an update on that and the benefits you have seen and how that should impact core results and earnings over time?

Okay. Thanks Juan. Yes, the frontline or customer interface system you are talking to is what we call Web Champ 2. So Web Champ 2 is both the interface from customers to employees and it’s also our inventory system. It has a number of attributes that we built over several years and fully now have implemented it throughout the company. We started integrating it into our properties in early 2017 to finish by the end of the year. So now we are coming up to a full year of its use. And the levels of benefits tied to it are several. First of all, it’s built around a very high degree of customer interface. So, it includes speed of transactions, knowledge of customer, tools that the property manager and the district manager can use to enhance not only our movement activity, but the ways in which other ways in which we can encourage our customers to stay with us. And it’s also a paperless system. So, it has a number of other advantages relative to just the day-to-day operations as well. Now, those are some of the headlines of the system. The other things that over time it will continue to give us benefits around are the ways in which that we grow and understand customer behavior and the knowledge that we have relative to not only the existing customers, plus or minus today about 1.5 million customers, so we got a big pool of existing customers, but even year-to-date, we have moved in nearly 900,000 customers. So the system is working great. We are getting a lot of good traction out of it. It’s a system that we can continue, like I mentioned continues to enhance over time and its inherent design is included in a number of things that we integrate from, again, customer sourcing, revenue management and other things, but a lot of that’s highly proprietary. But I can tell you that we are very pleased with the success the system is bringing to us and efficiencies and knowledge that we continued to gain to optimize our overall environment.

Great. And then just a follow-up question if you don’t mind on the occupancy front from a same-store perspective that’s kind of declined consistently the last few quarters, at what point do you think that you will have easier comps and that occupancy will stabilize at least from the same-store perspective?

Sure. Juan, so it’s Tom speaking. Occupancy trends throughout the year have frankly been encouraging on a year-over-year basis. So while we have had year-over-year declines we have seen some positive momentum there. And the hurricanes this quarter in particular mask some of that benefit. So if you look at the occupancy at quarter end for example which was down 1.2%, if you look at the system as a whole excluding the hurricane markets it’s down 0.8%. So there have been some positive trends there. I think generally speaking, we have talked about this in the past with system as a whole before supply really started impacting us in 2016 was north of 96% occupied and there is no question we have been impacted by the opening of new facilities. In many markets which I won’t rattle off here as you know them where occupancy has been more impacted than otherwise. Looking at our markets this quarter we are still looking at Los Angeles 95.4%, San Francisco 94.8%, so very healthy occupancies. And again system wide, I think we are seeing some encouraging trends as we step through 2018.

Thank you.

Our next question will come from the line of Jeremy Metz, BMO Capital Markets.

Hey, guys. Hey, Joe. Can you just give us an update on your outlook for supply here looking out into the rest of this year and 2019 and any changes, if I would have look at just where deals are trading in the market on a per square foot basis and I look at where you are building today, that spread remains pretty attractive and lending is more or less still available, so wondering why supply would tail off if developers can still get these sort of margins out there?

Okay. Yes. Thanks Jeremy. So yes, let me give you a little bit of view on the way we track supply and some of the perspective coming into an environment that really started in 2016 more or less when the supply momentum began to build and it’s carried now to 2017, ‘18 and we feel we will have a consistent level of deliveries going into 2019, but let me give you a little bit of color on that. So coming into 2016 obviously for a decade plus or minus prior to that, overall nationally you might have been seeing deliveries say plus or minus in the $1 billion range, that doubled in 2016 went to $2 billion. And then 2017 we had $3.5 billion, 2018 our best guess is it’s going to be slightly higher say plus or minus $4 billion. And the data we track in our top 30 markets is telling us 2019 is likely to be equivalent to 2018. So you step back and you look at okay that volumes has been pronounced, Tom just talked about it relative to the impact that we see relative to occupancy. In total let’s say plus or minus 400 to 500 properties a year, plus or minus 30 million square feet. And the other element that we are also tracking is a nuance that goes on with this inventory today is overall facility size is magnifying, so even if you also evaluated on a market to market basis on a per square foot or amount of inventory that’s hitting markets it can be heavy. So we clearly see again part of your question developer motivation to continue to put product into some markets. The motivation is tied to again you can sell assets at still pretty low cap rates. There…

No, that’s great color. Appreciate that. Switching gears just a little bit, if I look into the move-in rates, they were down about 2% in the quarter, they were down 4% in the last quarter. So, wondering if you could just talk about how those trended in the quarter so far in October, and then directionally is the right read – is a read at all on whether be from comps, easier comps and better traction on rent that we see that negative spread continue to trend down or is it too early to tell?

So let me take that apart. So – thanks, Jeremy. The move-in rate as you highlighted down 2.1% in the quarter on a square footage basis compares to the 4.2% in the second quarter. So that is some improvement. I would say they’re down 2.1% is pretty consistent through the quarter, so it’s not as though you see a significant amount of variability by a month. We did have in the second quarter some sale activity that drove that rate in the second quarter lower, but overall down 2.1% for the quarter we continue to see in many markets a more challenged move-in environment in those markets that have had new supply impacted and in other markets where there's less supply, we have more traction and ability to hold rate or even push rate. So as Joe highlighted supply as we move forward will be impacting some markets may be less next year than it did this year and in other markets may impact it more. So, I think it's too early to call where move-in rates are going to go down the line, but there's no question will be impacted by supply in some markets. The flipside is, we continue to see pretty good demand and move-in volume in the broader macro environment is good. So the job market is great. Wage pressures are increasing and so our customers and consumers as a whole are putting more dollars in their pocket, which is helpful, and GDP is growing well. So that's all supporting the demand situation. Maybe taking that a step further just in general around our customer base, our existing tenant base is also being supported by those same demand factors and that group of customers is behaving as they have in the past if not better. So, I talked a little earlier about occupancy trends improving. One of the drivers of that is actually an even stickier existing customer base and with move-outs actually declining year-over-year. So I would say those are the pushes and pulls. I think it’s too early to call where exactly we are going to end up as we move forward here, but some encouraging trends in the quarter as you highlight.

Great. Thanks for the time.

Thanks, Jeremy.

Our next question will come from the line of Ronald Kamdem, Morgan Stanley.

Hey, thanks for taking the time. Just going back to the existing customer base, maybe could you just talk about I know you mentioned in the 10-Q that increases were similar in 3Q as it was in the previous year. Maybe can you just provide more color in terms of what type of increases are you pushing through and sort of the reaction that you are seeing would be helpful?

Sure. So the third quarter is a busy quarter for us sending out existing tenant rate increases and those were received well by our customer base, so no change there. In terms of the magnitude or strategies again no distinct changes in strategies, we are always tweaking and testing and modifying our approach there, but generally speaking, the range of increases can be reasonably large depending on the customer, the market, the dynamics, but we point you to kind of high single-digits as a ZIP code for average increases.

Got it. That’s helpful. And then for the contract rents, I think you touched on this a little bit, in terms of the improvement, it sounded like is it fair to say that sort of all markets improved in 3Q versus 2Q or are there some markets that were notable standouts and so forth?

No, certainly this is a very local business. So even within a market you will have pockets of demand that are doing much better than others. Even in a market like LA, where you would say that’s one of the strongest markets in our system, it’s our largest market we see differentials within that market, with strength at San Fernando Valley, out Eastern Inland Empire as we have been able to push move-in rates there at a higher rate than in other parts of LA. So I would take it even down further, which is that this is the local business and the variability is meaningful. We are obviously driving pricing decisions on a very dynamic, but also very local unit size level by property.

Got it. Alright. The last one from me is I just noticed that Portland was added to the list of challenged markets this quarter, maybe if you can just talk about a little bit more color on maybe what’s the supply outlook, when do you see that sort of abating and so on?

Well, yes, Portland is a market that again we have been talking to in the last couple of quarters as one that has been positioned for an outpaced level of inventory. And again with the construction starts that have taken hold and the amount of inventory entering that market is it’s certainly poised to be a challenged market in the next year or two. We have statistically a number of properties on our radar that again are examples of what I talk to, not only by quantity, there is roughly 18 properties that are coming into that market as we speak. On average they are bigger and there is more square footage that’s likely to hit from a percentage on existing inventories. So, if you stack rate Portland, it’s near the top of the list relative to again a market that’s likely to see an elevated level of stress tied to the deliveries themselves. Now, the thing that we do have is we have a portfolio there of about 40 properties, well located. We think we have got good competitive positioning because of the locations those specific properties have in the market, some of the new developments happening in some of the outer parts of Portland. So again, as Tom mentioned, we have to evaluate as we do market-to-market, submarket-to-submarket, the individual impacts on how we react to all things relative to potential customer demand, the way we price, the way we encourage customers to stay with us. So, the good news on that front is we think we have got a good sustainable portfolio in the market and we are going to keep a close eye on the potential impact that this new inventory is going to have, not necessarily adjacent to or budding up to most of our existing product, but it’s going to be in the market at large.

Helpful. Thanks so much.

Thank you.

Our next question will come from the line of Smedes Rose, Citi.

Hi, thank you. I wanted to ask you just a little bit as you look at acquisition opportunities if you have seen any changes in pricing or sort of an upward bias in interest rates and maybe your expectations around pricing going forward?

Yes Smedes. I would say not a big change yet. You are correct in the potential impact that higher interest rate environment could create relative to again the opportunity tied to picking up properties that certain owners may have decided to put back in the market, because they don’t meet either their own investment returns or they have got some level of stress that they want to deal with, but unfortunately, at the moment, we are not seeing a lot of that. On the fringe, we are seeing a few reverse inquiries, where owners have come into the market thinking that pro formas that were set say, 2 or 3 years ago, with pretty aggressive assumptions, not only to lease up, but rates and stability of assets, may not be happening. And you can probably imagine some of the areas that that could be taking place relative to again the pressure points tied to the supply that we are talking about, but for the most part, we really haven’t seen a material shift yet. As I mentioned, there is still a lot of capital that wants to come into the sector and we, at the end of the day, really can’t make sense of a lot of the valuations. When you see stabilized assets in certain markets trading at $300, $400, $500 a square foot, I mean it makes no sense to us. Now, part of the things that we have obviously shifted to and we have continued to do is look for opportunities that are rounding out presence that we have in markets that we can increase our scale. We can buy good assets say plus or minus for $100 to $110 a square foot. We have seen a number of those and that’s really the theme of the…

Thanks. That’s super helpful. And then maybe just on you talked a fair amount about development in the levels of dollar spend, I was just wondering since you are in so many markets obviously the biggest portfolio, have you seen at all a migration maybe out of some of those poster child markets that people have focused on for a while and just smaller markets as developers kind of migrate I guess to be well into MSAs or not..

Yes. And I think I talked about that a few minutes ago relative to again some of those oversupplied markets that statistically we see tapering down of deliveries in 2019. I wouldn’t say necessarily it’s a migration, some developers leave one market to go to the next market, but again I think that’s some encouraging news relative to hopefully some level of discipline that will play forward relative to slowing down some of these developments that at the end of the day maybe oversupplying certain markets. So that’s encouraging. And again, we will see how through not only next year but the year after, how some of that discipline continues to play through.

Great. Okay, thanks a lot.

Thank you.

Our next question will come from the line of Todd Thomas, KeyBanc Capital Markets.

Hi, thanks. Just first question, I guess, following up on the development topic and speaking to your development and redevelopment pipeline specifically both of which are thinning a bit here as you complete some projects and bring them online, are you seeing opportunities to backfill projects such that this inning of the pipeline is really just timing related or is the opportunity set in front of you for development shrinking?

Yes. Todd, I wouldn’t take that it’s holistically shrinking. We have continued to look for well-placed and priced land sides. And concurrent with that, we have talked about over the last few quarters also another opportunity we continue to have, which is the redevelopment or expansion of existing properties. So there has been a shift to even more investment into the redevelopment and expansion part of the portfolio. One of the things that came out of the hurricane as I mentioned a few minutes ago in Houston specifically is we ended up accelerating some of the potential rebuilds that we saw in that market because of the damage that took place on 8 or so properties. So, those have or are close to being fully completed. So there is a little bit of that and the shift of size of the development pipeline going into the next couple of years. But again, we continue to see really good opportunities to develop and create great value with the expertise that we have not only in ground-up construction, but with our team focused on expanding and enhancing existing properties. Again, in a natural way, it is shifting, where over the last couple of years, we have put a lot of new product in Dallas and Houston, for instance, but going into 2019 although Texas is still an area we feel confident about investing into, but it’s more balanced. We have got properties going into Florida, Washington, Minnesota and other markets. So we are continuing to find really good opportunities. And again, we are keeping a very close eye on other factors as well, which includes construction costs and again, the things that we need to make sure that we are ticking and tying as we look at the value that we can create. But again, it continues to be a very vibrant part of our capital allocation decisions and I think we are going to see really strong value. As you look at again how again these developments stack up particularly from 2016 to today, most of them are still in really early stages of not only lease up, but stabilization. And if you look at the vintage of acquisitions or not the acquisition, excuse me, with developments that we did between 2013 and ‘15, they are plus or minus in that high single to low double-digit return range and again the population of assets that we continued to develop are still likely to generate similar levels of returns. So, it’s a good business for us and again we continue to see very good opportunities around that.

Okay, that’s helpful. And then I just wanted to also just circle back to the new technology system you have implemented. And I am assuming that that system is state-of-the-art in terms of utilizing data and understanding customer behavior and ultimately helping maximize revenue, how do you think your technology stacked up before the implementation of that system? I am just wondering how much room is there for an improvement and where is the biggest opportunity across operations from your standpoint?

,:

Okay. Thank you.

You bet.

Our next question will come from the line of Ki Bin Kim, SunTrust.

Thanks. Just following up on Todd's question. So, the new platform, the improved platform you put in place, so where does that ultimately lead you to? Is the new system in some incremental way suggesting that you should improve or change allocation or invest in mobile versus however you use as CEO, where the different avenues that is pulling it towards?

Yes. Ki, I wouldn’t say the system itself does that. Those are all other, again, I would say interrelated initiatives that we pulled together to again drive the tools that we uniquely can drive, because we've got a brand that resonates very effectively through even in Internet world versus one that a decade ago was tied to Yellow Pages and drive buy and call center, okay. So, we've got search engine optimization it’s tied to that. We've got Internet strategies. We’ve got knowledge around our customer. So, it’s a very vibrant, but interrelated set of initiatives. And again, we think that we’ve got great opportunities and tools, look we’ll continue to improve our ability to not only fine, but retain the most valuable types of customers.

Okay. And in terms of capital allocation, you're sitting on about over $400 million of cash, you have obviously some uses for capital in the near-term and you have I think about $700 million plus of preferred – preferred equity that is redeemable next year. I’m just curious about where you think the best use of capital would be next year or going forward?

Sure. So, Ki Bin maybe – it’s Tom, I can talk about the cash balance we have and the uses there and maybe we can talk about capital allocation as the second component of the question. We were sitting on as you highlighted about $430 million in cash, that's largely spoken for, for the most part. The $340 million of cash is required to complete our existing pipeline. So that will be spent over the next 12 months to 18 months. So that’s capital allocation that Joe highlighted we think will have good returns and value for the company and we made that decision. In addition, we have about $80 million of acquisitions under contract today. So, as you add those together you get a meaningful portion of our cash balance. We’re hopeful that 2019 will bring more opportunities on the acquisition front maybe cap rates do change at some point here and would allow a shift back to acquisitions from a capital allocation standpoint. We are not seeing that today, but that's certainly an opportunity, and if that were the case, we would need new financing for that. But as we look at our capital allocation today, we go back to what Joe said earlier, which is we’ve seen a lot more value and being able to build Class A Public Storage designed and location picked locations at $100 to $120 a square foot compared to the acquisition environment out there that's multiples of that.

Okay, thank you.

Thank you.

Our next question will come from the line of Eric Frankel, Green Street Advisors.

Thank you. I posed this question to the management team at PSB last week, and maybe you could comment and looks like the split roll Prop 13 ballot initiatives will be on the 2020 ballot. I wanted to get a take on what the impact would be to your portfolio in terms of either expense growth or NOI hit at – if that passes eventually, obviously – the implementation will be – is obviously uncertain, but I’d like to understand if property tax bases were brought to market, how that’ll impact your portfolio? Thanks.

Sure. Yes, Eric, I mean, we’re tracking the potential of this happening over the last literally two or three decades has come and gone many, many times. So frankly, we haven’t gotten to the point where we think that at this point there's a high likelihood that it could happen, but as we get closer we’ll continue to evaluate what impacts it would have. There is no question that we’ve got a sizable portfolio in California. We've owned it for a number of years, so there would be a – an impact, no question. What we have no idea is what that impact could be from a size, timing and even complexity standpoint. I think that's all ahead of us relative to what to play forward. So, it's a – it's a change that we frankly have no idea if it's going to happen. So, we’re going to hold off on putting a lot of potential impacts out, because we frankly just don't know what it could be yet. We’ll track it. We’ll see if it becomes something more realistic, we’ll at that point give a little more perspective relative to potential impacts, but at this point it’s too soon to tell.

Okay. This – the betas to be to continued. That’s all I had. Thank you.

Okay. Thanks, Eric.

Our next question comes from the line of Tayo Okusanya, Jefferies.

Hi, yes, good morning over there in Cali. I just – I may have missed this earlier on, but could you just talk a little bit about how the acquisition outlook, whether you're starting to see cap rates moving as supply continues to be an issue, and kind of what you also kind of see now just in regards to how buyers versus sellers are interacting?

Yes, Tayo, I think we talked to that at some length, but at the end of the day there's really not yet been a material shift in both seller expectations and what buyer expectations are relative to create what I would say a more vibrant transaction environment. We've been very disciplined, 2018 at the end of the day going to be a light acquisition year for us and I think that's appropriate. So, we're not seeing a lot of sense that’s tied to valuations that are far in excess of replacement costs. And as you may have heard, we’re instead putting far more of our energies into our development pipeline, where we can create much better value.

Great. Okay. And then also with Shurgard now being a public company, does not become an attractive source of capital for you guys?

Shurgard obviously went public and we’re very happy for the management team there. They hosted their first conference call yesterday. Over time, we’ve had that investment since 2006. As we said we have no plan to monetize that position today, but we’re believers in that business and wish the team there certainly all the best wishes as a new public company.

Got it. Great. Thank you.

Thank you.

[Operator Instructions] Our next question comes from the line of Mike Mueller, JPMorgan.

Hi. Joe, just wondering, can you give us an update on the roll-out of the third-party business?

Sure. So, as we’ve talked the last couple of quarters, Mike, we've been building the team that’s focused and dedicated to build that business for us. So, Pete Panos has got now a fully rounded out team. So they are out hitting the markets hard over the last 2 or 3 months have now started participating in SSA shows, whether on a national basis or – they are really recently at the Texas SSA. So that transition to more of an outbound process has begun. We are encouraged by the level of receptivity we are getting to our platform, obviously, the advantages of coming into our system because of our brand and operational capabilities etcetera. So, so far the team has got 12 new properties signed up. We did last quarter mention a larger component of integration or new properties coming into the third-party management platform. We intentionally however made a decision to separate one portfolio that we decided was not a good fit for the program. We hadn’t brought those properties into it yet, but we are very encouraged by the backlog that we have got and feel that the offering itself continues to resonate really well. It’s weighted at the moment more heavily as you can imagine on pending and/or new development properties that are coming into market. So because of that, it takes some amount of time to actually pull those properties into our system once they open, but we are seeing good quality, we are seeing good ability on our part to integrate them into current operations. So, we feel very encouraged by the platform.

Got it. And just separately on the expansion pipeline, I mean, what’s the visibility that you have for looking out over the next few years to maintain $300 million, $350 million that you have been running at thus far?

It’s a good question Mike. And obviously, we have got 2,400 properties. Many of them are in prime locations as candidates for this kind of development activity. So it’s going to depend on a number of factors. The easiest expansion opportunities we always have is where we have either got land and/or just parking areas that we can put say a 3-plus storey facility into basically tied to or complement what’s already on the ground. So, we have many of those opportunities that we have yet to touch. So, that’s great and we are evaluating those. And then what can be a little bit more complicated is when you need to make the decision to actually take down parts or full existing properties. So again, on a case-by-case basis, we continue to look at those. Another factor that comes into play is zoning may or may not enable us to get the kind of density that we would like in certain locations. So there is a number of processes that we put together relative to the right candidates for this, but I am very pleased by what our real estate development team has been able to do so far and I think it’s going to continue to be a vibrant part of our overall development program.

Got it. Okay. That was it. Thank you.

You bet. Thanks Mike.

Our next question will come from the line of Juan Sanabria, Bank of America/Merrill Lynch.

Hi. Just a follow-up on supply, do you have sense on a 3-year rolling basis given that’s how you think about the lease-ups, what percentages of your portfolio is exposed toady in 2018 and how that changes in 2019?

Yes. Juan, we really don’t look at it on this 3-year rolling basis. I really would tie it more to what we are seeing in just raw deliveries year by year. So, as I mentioned, there is some shifting that is starting to take place in certain markets, which I named that are likely to start shifting down in deliveries and then others that are likely to taper up. So, again, it’s not always to a specific property an immediate or direct impact, but we track it by our top 30 markets. And as I mentioned overall nationally, 2019 is likely to be pretty similar to 2018.

Okay. And then just one more question if you wouldn’t mind, what are the net straight rates you guys got on for the third quarter and the trend today so far in the fourth?

So, we disclosed in the 10-Q what the per square foot rates were for the quarter. For move-in rates, we are 14.76 per square foot on an annualized basis. As we get out of the summer and into the fall seasonally we have rates that will lower. As you would expect, we are a seasonal business, where there is more demand in the spring and summer months given the used case for our product for many customers who maybe moving in the summer months between school years and things like that, college students, etcetera. So rates as we go through the fall and into the winter do decline. And so we are seeing that as you would expect. I think from a trend standpoint, if you are asking year-over-year trend I would say pretty consistent into the October month compared to the third quarter.

Thank you.

Our next question will come from the line of Smedes Rose with Citi.

Hi, thank you. I just wanted to ask you a quick follow-up question. Your on-site payroll and supervisory payroll year-to-date has been essentially flat even slightly down. Could you maybe just talk about your expectations there and how you’ve been able to maintain so much, I guess, discipline there? The other industries that I follow that have a lot of, like I guess, lower skilled, maybe lower hourly cost labor, that worker is getting a real bid here? And I am just wondering how you are managing that in that kind of broader context?

Yes. Smedes, there is no questions that there are pressure points. We are in a very challenging employment arena. We do and have found opportunities to look for efficiencies, productivity, ways of optimizing again our employee base. I give a lot of credit to our operational teams throughout the markets, where from again both supervisory and then on an hourly basis, we continue to look for ways of optimizing use and size, and again, the burden that takes place relative to the tough environment that we are in. That said, there’s no question we can’t avoid and have not avoided what plays through relative to the competitive nature that’s out there. So a lot of markets continue to raise wage rates that we need to deal with and we have I think a very vibrant and effective way that our HR team as well assist us with that. So we continue to look at a lot of ways of, again, optimizing and creating levels of productivity that to a degree can help balance that. Going forward it’s going to continue to be a challenge and we’ve got, again, a great team of leaders throughout our markets that are helping us find very sensible ways of dealing with this environment, and we’re going to continue to work through that as we play forward into 2019, which again, is likely to be with everything we’re seeing in today’s economy very tough unemployment environment.

Okay, thank you.

Our next question comes from the line of Eric Frankel, Green Street Advisors.

Thank you. One of our follow-up questions was already asked, but maybe if you could talk about some market-specific data. It looks like your two weakest markets were Chicago and Dallas. And so Dallas is understandable that seems to be experiencing a lot of supply. But we are under the impression that Chicago is recovering and there hasn’t been as much supply in the market or as much inventory coming online recently. So maybe you can just comment on some of the trends there? Thank you.

Yes. Sure, Eric. Yes, your point on Dallas is correct. Again, the burden of supply deliveries over the last couple of years has been particularly pronounced there. Again, that was the market that I highlighted that we hope to continue to see fewer deliveries. The statistics point to that relative to 2019, but it’s still fair amount of product that needs to be absorbed. Chicago is showing some signs of improvement. Again, not as many deliveries going forward and fingers crossed, hopefully, some degree of economic recovery there as well. But we’re only one quarter or two into that change, but we are hoping that there is some sustainability there and we are going to see, hopefully, fewer deliveries as well. It’s stack rank is pretty low relative to deliveries going into next year. So, again, we hope the pressure eases on that front too.

Is it fair to say that the big NOI hit was principally due to property tax increases there?

Yes, that’s right.

Okay, thank you.

Thanks, Eric.

Our next question will come from the line of Steve Sakwa, Evercore ISI.

Thanks. I guess still good morning out there. I just was hoping you could maybe talk a little bit more about kind of the occupancy trends sort of throughout the quarter. I know the average was down 64 to the third quarter. I guess Tom, maybe could you just walk us through how July, August, September played out? And then maybe give us some kind of look into October and where we are just about the start on November?

Sure, Steve. So, in terms of occupancy throughout the quarter, as you highlighted, the average is down 60 basis points. As we have talked about on prior calls, we’ve seen over the last year more move-outs toward the end of the month that leads to a tougher comparison at the period-end number compared to the middle of the month comparison on an average basis. So that’s part of what’s driving that differential between average and period-end. The other thing is the hurricane as I highlighted before. So if you exclude the hurricane markets, the period end numbers from June to September improved sequentially compared to prior year, and would have finished down 80 basis points for the 9/30 print. As we look through July, August, September, pretty consistent occupancy throughout those months. As we got into September in particular, in Houston and then in Florida, we saw a much tougher occupancy comp. So, to give you a sense, at 9/30 occupancy in Houston was down crica 600 basis points. And as we’ve moved through October, that has eased, lower a little bit, but still a meaningfully difficult occupancy comp in Houston. Across the rest of the portfolio, as I highlighted earlier, occupancy trends have been improving through the year. So, as we look at the non-hurricane impacted markets today, we’re down about 40 basis points in occupancy year-over-year, again, comparing to that average 60 basis points in the third quarter and the period-end down 80.

Okay. And just to be clear, that down 40 basis points is kind of blended with the Houstons and the Floridas?

No. The down 40 basis points is excluding the Houstons and the Floridas. If you include the Houstons and the Floridas, you are down 70, 80 basis points in October.

Got it. Okay. Thanks very much.

You are welcome.

Thank you. I will now turn the call back over to Ryan Burke for closing comments.

Thank you, Holly and thanks to all of you for joining us today. We look forward to seeing many of you next week.

Thank you for participating in today’s Public Storage conference call. You may now disconnect.