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Public Storage's CEO Discusses Q1 2012 Results - Earnings Call Transcript

With that, I will now turn it over to Ron.

Ronald L. Havner

Thank you, John. First quarter benefited from solid demand, resulting in higher occupancy and better pricing. Our same-store movements were up 2% year-over-year, offset in part by higher move-outs of 5%. At the end of April, occupancy, in-place rents and asking rents were all higher than the same period last year despite lower media spend for the period. In Q1, all of our markets achieved positive revenue growth. Dallas, Denver and Detroit markets led the country with revenue growth over 7%. The Miami market was second at 6.3%. Los Angeles, our largest market, grew 3.5%; and San Francisco, our second-largest market, increased revenues 6% for the quarter.

Given these positive trends in occupancies and rates, we expect our Q2 media spend will be comparable to last year. In Europe, same-store rental revenues were flat to last year, as higher realized rents were offset by lower occupancy. We did improve the year-over-year growth occupancy gap from 1.2% at the end of the year to 0.7% at the end of March. Operating expenses were lower, resulting in NOI growth of about 1%. We continue to expect a challenging operating environment in Europe for the remainder of the year. During the second quarter, we entered into contracts to purchase 4 facilities with about 300,000 square feet for $46 million.

With that, operator, let's open it up for questions.

Question-and-Answer Session


[Operator Instructions] Your first question comes from the line of Christy McElroy with UBS.

Christy McElroy - UBS Investment Bank, Research Division

Just looking at your occupancy trends, in Q4, you averaged 90.2% and then ended the year at 89.6%. So a natural sort of seasonal trend toward year end. But then this quarter, it looks like you were able to reverse course pretty early in the year and actually show a 10 basis point increase average occupancy in Q1 versus Q4, which is pretty abnormal in this industry. You've talked in the past about possibly trying to reduce some of the seasonality in occupancy during the slower months. So I'm wondering, is this Q1 trend reflective of that? And if so, maybe you can provide a little color on your efforts on that front.

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