EXR - Earnings call transcript Q3 2019 | Extra Space Storage Inc.

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Third Quarter 2019 Extra Space Storage Incorporated Earnings Conference Call. At this time, all participants’ lines are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. Instructions] [Operator

like Norman. conference Please now speaker, to hand Jeff Mr. begin, to would over the your I sir.

Jeffrey Norman

Thank Space you, Storage's Extra third quarter Norma. XXXX earnings Welcome to call.

supplemental press have to website. release, addition on our our furnished In unaudited financial information we

Company's prepared in or Please defined differ to your statements Private materially results implied could filings Securities risks forward-looking business. by encourage to uncertainties SEC, and review. Litigation from are contained with and the questions which to forward-looking due remember remarks qualified These answers stated contain statements by the may our that in associated forward-looking Actual those statements Management's the with the we statements cautionary as listeners Company's Reform our latest the Act.

management's The of as call. XX, of revise estimates obligation to changing October today, circumstances Company date this other update or no after represent any statements XXXX. or of the market conference Forward-looking forward-looking because assumes statements conditions

Margolis, over I'd now like Joe to Officer. call turn to Chief the Executive

Joseph Margolis

Many Thank hearing new it. the Space of for the feeling we you, same and seen ever advertising as in headlines season. out everyone. have interest sector us joining have and another your for quarter for Extra our themes The you the is third year. We summer digital are of and for we competitive markets supply, much the been are call of completed coming headwind busy leasing as Jeff. Storage. Thank expensive Hello,

is sector. growth challenging to the into through due External traditional capital acquisitions flows

increase these on quarter another headwinds, property to items, And continue allowing our despite including guidance. solid pressure see line had expense annual also We us to multiple we taxes.

the second was the in the to year, guidance. in we increased our expected, half have started experience which As projected moderation of

resilient. However, our and to platform sophisticated operations be strong diversified continue team portfolio,

power properties. at in-place customers We strong pricing continued have maintained our very our and with occupancies

to growth returns. continue We opportunities actively attractive present also risk-adjusted external explore that

in New the York five lease acquisitions, W.P. previously In announced net new with City we transaction our stores a added addition through platform to to Carey.

$XXX to first year expect with We in also loans over closed in several balances originations held total Space. the and complete million million approximately of $XX by Extra bridge our

we committed is SmartStop. $XXX investment the in dividend significant additional investment senior XX months. a equity an year SmartStop which investment investment common and equity with our after Yesterday, with with has million to for closed begins $XX preferred ongoing a X.XX%, next five. to escalate relationship of amount of This strengthens million The

year-to-date XX Between program have platform remaining JV see strong growth. bringing stores, continues our to and QX third-party a managed we for Our XXXX. to total our exceptional XXX. with managed stores, added stores, management the for third-party XXX we In quarter, pipeline our and

to like CFO. Scott turn time Stubbs, the now would our over I to

Scott Stubbs

hello, Thank you, Joe, and everyone.

projects $X.XX are $X.XX credits per resulting the delays completion of year quarter was once solar will for high FFO credits, Core higher meeting tax of consensus next due expense. Our these to guidance. tax our completed. end recognized the projects below in but the income share, related and This These be in tax several was

and to Like driven rate QX in Rental bounced outperformed was and property providing lower achieved due was expense. at growth and revenue elevated growth in tenant flat insurance increases occupancy back benefit. marketing a expenses primarily Revenue quarter expectations. Year-over-year with year, usage also discount end. same-store were tax by last

our quality types sheet be our to of We and capital. access of balance the with continue pleased to all

used the These revolving an of Year-to-date, to million acquisitions ATM During the average our lines. our funds achieved for equity on balances quarter, we $XXX million and issued share. at per accessed in we and have reduce $XXX.XX over price just slightly ATM. our were $XXX on over

XX-year reduced average transaction third, it completed This the facility. it quarter the term. we X.XX%, in also end, million benefits: quarter, $XXX a it and we property to our interest extended at $XXX cost; to placement converted further the accordion pool. transaction second, feature in enhancing private Subsequent credit unencumbered unsecured; rate the of our provided exercised secured first, During million several debt

to our raised guidance X.XX% revised X% outperformance XX same-store Due same-store basis in at have X.X% expense midpoint. We property to our year-to-date, annual increase our annual These changes X.X%. range result point of a X%, to to annual we of the to guidance guidance X%. an NOI to

to core per our $X.XX share. We guidance FFO are $X.XX also raising to

guidance value-add and of initial stores an unchanged a FFO dilution O of from our $X.XX, additional of total which of includes is Our acquisitions from for C from $X.XX $X.XX dilution dilution guidance.

over turn Q&A. Norma start it With that, to our let's to

Operator

[Operator first Instructions] Our Smedes Citi. Rose from of question comes

open. line is Your

Smedes Rose

wanted just ask kind move-in I and you just quarter? fourth been Hi. move-out the quarter rates and to far the really trending could the so in if about there talk that's of you versus rates Thanks. in how gap

Scott Stubbs

at while when looked we Smedes. we the of basis one occupancy, of things the we that our we're at quarter in we're and a for trying occupancy our focused to bring did was revenue to end always was Yes, performing, looked At to occupancy things couple points. And solving how about quarter, Thanks. the flat. that down XX on back maximize revenue, – and we've of second the

we during our so we decreased occupancy. quarter, and rates increased the And

the points So to from October. the basis being at basis in XX today, XX ahead of end flat we then And quarter. actually down points being went we're

helps. obviously rates lowering So

our the slightly talk rates, achieved the of are At rate I'm today where lower when was year-over-year. we saying rates during end our the about quarter and actually negative Now lowering third actually quarter. is I achieved are

negative of rates low tune to slightly achieved the single-digits. are Our

Smedes Rose

pricing about in-place you forward higher-paying I around strategies going to any order thinking that? retain Okay. are in guess, Or And thoughts in changes, any then customers? your

Scott Stubbs

our Yes. in No our the we significant discounts. the One lose strategy. do benefit changes happen quarter thing will in fourth that is pricing of

the when change us And strategy. the what so we lap for provided discounts have fourth by mean in point for And year. I basis that XX we quarter, a tailwind is that about really

fourth is year-over-year. the comparable so quarter And

Smedes Rose

transaction? a could just then Okay. up lead And about from bought an the Thanks. this attractive before. SmartStop just to You talk investment? return? is Joe, it Or investment Is the similar portfolio them you

Joseph Margolis

mean good Hopefully, we've both. had with a relationship SmartStop. and I long

out, portfolio loan default. connection made bought from in them, that managed almost which pointed they stores We to without them In transaction, large you we paid As and management. we with them for internalized a XXXX. fully XXX until they back

investment we'll and more future. and do from it in with relationship accretive also these strengthens very, know comfortable well. us, feel a This a And for So them We're properties was in we investment. the good a we our with position very this standpoint. company risk hopefully the company very

Smedes Rose

Thank Okay. you.

Joseph Margolis

Thanks, Smedes.

Operator

Thank And Bank from of comes next our you. question Shirley of Wu America.

Shirley Wu

taking for the question. Thanks

first my to So with question guidance. do has

the guidance still but revenues deceleration drastic XQ. midpoint to You've raised revenue both for in implies X.X in XQ sequential NOI and of a and NOI, negative

for more if guidance the it the So end could high of or remainder get cadence the provide some And you color year. ranges? what does this low on wondering I was of take to the

Scott Stubbs

Yes.

the like guidance, the So we would performed and and to look then not we if at feel end that's in take of it October, significant you how year-to-date decrease how into pretty low quarter we're you're a hit fourth do likely. performing correct,

benefit does some quarter, into our If of moderation that basis fourth guidance as you continued at look the XX assume our a as loss well cadence points. discount of

Shirley Wu

second it for question, Okay. to goes And color. marketing. my the Thanks

marketing so seen give using marketing almost strategy could your some forward about reflect is you've and thoughts effectiveness on as So XX%, XQ around you the thoughts up year and us as well? moving strategy into the your you on what this of XXXX

Joseph Margolis

Sure.

return the is didn't more We ROI I more it have thing all get to, we dollars have on leading So our on spend a in very to in marketing. we dollars. the but think sure understand is a first that are marketing we and spending we paying the we rent, marketing them stores wish to folks make good money good

We remain right time is we And bidding in of terms, be drive can our elevated. marketing business the stores. smart on are to as the also expect and dollars in to marketing with terms places, alternatives we to to at right make the possibly sure our finding our right as to Google expense job

Shirley Wu

Joe. Got it. Thanks,

Joseph Margolis

welcome. You're

Operator

with question Jeremy Markets. And our line Capital you. Thank the Metz next comes of from BMO

open. is line Your

Jeremy Metz

Hey, guys.

platform. Just flows deals trying comments more hearing sector. in your for a about challenging Joe, while. the capital to dots through still a we've that over the acquisitions the in the being due lot about you've to share And between opening here, of managed to third-party This your been of connect came is something find time,

it's and but that's a if with little and more up if generally so of return your temporarily dried wondering compelling, a on the here SmartStop therefore, you've fine which, been that just we that? deal maybe and to when deals – where even color therefore same at a and a able from stabilize been buy So little X.XX%, that perspective, compare the O has to any higher, that C even

Joseph Margolis

Yes. Thanks opportunity to for the clarify.

to I relative relative last with risk. First goes your return point, always think

dividend this X.XX% of So of is yes, payment, of amount significant but equity. of common ahead dollars, hundreds it a millions is

So doing as of the return may a risk deal, the but C as less. is be not good O significantly

focused this on point are we in in market And cycle, risk. very the

high difficult bidders, capital it's gets on the So focuses flows to and and marketed bidder for capture Once broker many deal. deal has be finding deals. market on introduction many, deals it, traditional and comments about that and to the my us difficulty think out really the very there's that I

said, third We've we've million purchased end being acquisition the active side. in $XXX the Through been quarter, invested That $XXX the we of very million. acquisitions. on

year. to find million, $XX this other another – $XX to contract have $XX hope million a We million We close couple under deals.

we'll the deal, return. program. little capital loan million did but net in $XXX In good outplay, do no a bridge which addition, lease a has our over We

creative been So good market good while by to or the management front. our we've in having lot the buying growth a been to JV able I plus on from what haven't think deals, things is, purchase finding year relationships, we have, partners able a

Jeremy Metz

or still you out? for sticking for void And that's talk outright today you some loan with program. But previously deal, angle in you're C the of opportunities growth hitting a get to the deals? just Yes. You've about to purchases mentioned underwriting environment a presale-type lease-up here, seeing lot even O wanting developers funding why lease-up seen of or conversely started that – the deals the opportunities you've aren't of bridge can

Joseph Margolis

we – deals – Minneapolis in five four, in in new approved committee our XXXX, O see we'll new return of part risk is few that that That lease-up level Part our view and in store of we the C to of environment. package that O has a around joint in the is Hawaii and one moderation deals C of venture opportunities. – of have and our this so of So development a in take far said, being of acceptable do Minneapolis.

lease-up still we the there there to being in believe On coming brought versus, the gap when right. instances. many I'll say, and But leased and of stores a we'll of is underwrite some we look we participate opportunities the those partially pricing, side, expectations And are Extra market. I of lot up lot them them sellers' pricing a at think there's Space's

Jeremy Metz

Great. Thanks guys.

Joseph Margolis

Thanks, Jeremy.

Operator

our from Sakwa you. comes Thank ISI. next Steve Evercore And question of

Your line open. is

Stephen Sakwa

we going quarter. into of the to it of of X-ish sort velocity seen QX really I if question in and all is which of about kind sort the the revenue little kind you've from maybe revenue down maybe about year throughout relates XXXX? first X% think as just, And the of quarter implied number maybe over guess to growth do to and the low-Xs the of you upper-Xs of for XXXX the around was I'm somewhere exit How year? in kind mid- think fourth Thanks. is the next decel that guide that

Scott Stubbs

seen So not I tell process our you I we're X% of year, quarter. closer we that ready the this deceleration fourth X% and to to the XXXX would in closer and the and think guidance. year the starting implied then ending deceleration have in throughout probably quarter some doing give to you, are budgets But then

portion for supply because actually as a projected at roll XXXX we that think are budgets the the a with will we think into that's supply of XXXX. I I the where take and push up So look

And that so those some until pieces knowing of we without stop have give moving, moving that. kind difficult to it's number of really

in so for look call. And that February the

Stephen Sakwa

kind shift I numbers, of pool kind the – number of items that And just it XXXX have anything a appreciate fundamentals aside? one-time whether that. in same-store there of Okay. And is putting was XXXX just any the XXXX kind versus or can elevated may

Joseph Margolis

years, prior prior same-store the at effect the modest. The is It's year Yes. XX – two you're looking how if the of basis depending shift points. it's pretty or – XX on you to

have doesn't really that the So on effect a numbers. big

Scott Stubbs

Yes.

less the side, expect Steve. basis property look quarter, about the was still expense hopefully taxes I be points, it on then And to XX you elevated, elevated. in if think we but

to budgeted of last years. above expect X% the We're We is down. couple X% be number them that inflation, hoping we to but for

We more but range. it's we're in the to haven't yet, X% hoping finalized our budget X%

Stephen Sakwa

then, advertising? I channel them I'm given Joe, trying were that are just Google paid how And made Google And I Okay. those options? other effective have comment the other of those click the what and become. you kind ways, to find of guess, some has just past? the about you versus how expensive curious, used marketing in the mean,

Joseph Margolis

So small social media is quickly. very about growing pretty now

some went doing we back things others that. interesting some avenue We that last billboards an and like hard in are trying. and So to quarter, actually, that's the

I we be the will avenues, and way and trying So and effective not winners to it's they other be will what what too be winners. think how early are may the say

Stephen Sakwa

Okay. And me. it for that’s Thanks.

Joseph Margolis

you. Thank

Scott Stubbs

you. Thank

Operator

Thank question next And Thomas you. comes KeyBanc our Capital Markets. of Todd from

Your open. line is

Todd Thomas

Hi. Thanks.

terms the in recovery the occupancy. adjustments that question, to late last of quarter First you support price made in

as operate if changes and more or just the time customer I'm made swings nearly you bigger those they when across You volatile competitors traffic at pricing ground saw stores. you gain And from drive look curious platform? to X,XXX that

Scott Stubbs

it's to sure not quarter. I'm specific the

adjusting obviously, new in I year think aggressive we've very prices with the people seen throughout supply. markets and,

Todd Thomas

Okay.

less of a cycles. I we've lower little little And In mentioned, more necessarily? pronounced prior we've also. to of think But really discounting way sort today? it right you discounting, year-over-year. terms quarter, out forward. appears the going it is think Can to it was that be of less smooth bit In heard in is others a than might seen discounting from that down it today seems effective about explain you sort the Or why not bit

Scott Stubbs

had about different slightly to I probably it. And found We're and think right looking correct not typically on than aggressive a year, this we discounting. it’s last we aggressive. effective bit have the pricing more testing. year, now, This And Last at to we've we give and better. little spend more marketing adjusting discounting, less way were a held bit think the with rent. year, rate strategies be year then little

Todd Thomas

Okay.

though, it's response there. still overall the discounting, So from

system? traffic feel can that increase If discounting, you still increase you you customer to the

Scott Stubbs

some year. effective others of an still It's to tool, be but this more we've effective found the

Todd Thomas

of getting? willing to sort the And And to large of Would on outlook – you're then just into kind bridge And the I expect you what And how that going heading rates of last wondering this on if sort is the little question $XXX that year. a loan think do program. bit Okay. just more on bridge XXXX? see book do in with said that was the XXXX? you volume you are can of million I be you you provide program? an grow for would investment? to detail

Joseph Margolis

would Rates plus at would loan in least LIBOR I from range minus expect we get program XXX. I the double XXXX. plus significantly, say, bridge grow to So or

on when coming So empty we it partially started, lots wanted situations out and leased thought be we other stores stores. C/Os we all they'd found folks turns of right with

And XXX. has So some are highest plus rates lower. then LIBOR of rates far our been I so those think

the us to on depends on case XXX. will, use minus up to plus return piece. plus piece, our be which XXX our The you plus we So in LIBOR XXX, a or can to we debt partner LIBOR take if whether

last the that. question will how we – And will much I was think do

to our now debt of different talking reasons to But the the to was right comfortable about of much had capital meant very only of our us seen. a able we avenues this one The that's enhance with capital. for but we're how to we control think is program type volume be program. arranged given in I not partner be returns,

comfortable place. sure in we're So to make we that tools a have

Todd Thomas

Okay. All right. Thank you.

Scott Stubbs

Thanks Todd.

Operator

next And you. with Kim SunTrust. our Ki from question Bin Thank comes

is open. line Your

Ki Bin Kim

Good afternoon.

expenses, should we easier, a and get expenses little things about now. comps right But taxes continued elevated we property as in talking It But obviously, are a expenses, get into next also mathematically. marketing the shouldn't inflation lap big higher So I'm year? as bit expect we surprise. be like

Scott Stubbs

I the expect above come above hard Yes, don't we be maintain would be Bin, in of think to such to Hopefully, part then they've our this will and this last wages, have off that. on couple year, a taxes – property but would years. year, they be Ki been because from Marketing, we see we wages low to I us inflation. expect to pressure where inflation. And of that expect been some is have able very that comp year-over-year that I

Ki Bin Kim

too Joe, I time to in Okay. common you on safetyness the rely but want on don't And made, the being deal, comment also does the money. it much spend SmartStop equity the

SmartStop know don't money that it, of comfortable do the ahead the vintage the you is out, equity pretty the to of that actually you're degree? but I common in So given feel deep portfolio and a in

Joseph Margolis

knowledge they're typical from do we in And in not very internalized a they also company restriction, of well allowed managed long also allowed comfort, out. as have all them almost before these know stores and of a portfolio for of from market lot both do. of we kind the of period what and know to and So company the restrictions SmartStop of management. to and time the our do documents We a

transaction very feel from very, this we comfortable with standpoint. So a risk

Ki Bin Kim

just are what you do for – IRRs of And thanks. type question, you acquisitions? targeting Okay, last

Joseph Margolis

underwrite, long can't do, rates we a to right, have I IRR, hold be period we the And generally XX And at and what XX seven or a in to of very terminal because rate. it's guess whole look of to IRRs, very, run and IRRs or a but cap not have time. years an we what create are going how certainly because for things we years. focus So, you really cap years

So much the more will on seven-year we what look much flows that. a average over at cash period and focus more flows be and cash

Ki Bin Kim

Okay, thank you.

Joseph Margolis

Thanks Ki Bin.

Operator

Instructions] Kamdem Morgan question [Operator next of Stanley. Ronald And our comes from

Your line is open.

Ronald Kamdem

for question. thanks the taking Hey,

the back marketing Just to spend.

terms market more actually much or just is rise broad elevated of per is marketing? even any there cost average? just more increasing versus clicks regions few of in usage is more – areas the the a maybe than or the basically color Just any there And where it's how

Scott Stubbs

difficult Yes. the of tell that inflationary down that. aspect to would aggressive way. primarily It's bids break We to being it and with or our additional rentals from relates fairly the more clicks additional on you, the to us do less and it

Ronald Kamdem

helpful. pretty that you've one great there side? the obviously, that it, to on there a year, low-hanging but opportunities keeping upgrading sort job So Got And of technology automate – last there's payroll sort to any done this is think on platform. tight item? reduce the a then talks just and and of even I of continue Is further line fruits of about was the lot left

Joseph Margolis

of couple things. a So

things can next is that some the think wage do have are unemployment year. improve, to there term, think to in we going being to I I in more But always seeing jobs. least least with to perform override this low pressure to that at short at country we're said, efficient, the technology the centralize get

our the has And or high value in the that are in on business scientists it's the data we operating folks face-to-face put margins. City store with whether people, who high everyday. a the are customer Salt very Lake a we also, and And here

us equation. of in incremental quality customers one it's very of that's an employee easy rentals two versus or the month, a high cost having losing So to a front the

And that's we're our we have trade and And pressure good people wage means we're in we a make. sure to then make to high-quality willing going if want some on the see that stores. side to

Ronald Kamdem

how on provide the last nothing your it I now? has updated don't curious thinking maybe supply – know And are you outlook, if it. about then just but thoughts Got Thank question you. was any changed just guys there, you

Joseph Margolis

thoughts supply. new have don't on lot of a We Sure.

a XXXX, We lease have We'll there'll headwind better believe in some cliff. be that of positions never markets portfolio, course, they also continue positions from situation. to that be but exposure will we'll that our off the not as up. been And worse markets some XXXX diversified falling in some be that see of to supply wholesale lot have broadly will moderation in see markets with and the

believe So XXXX, we pressures to have and will to but continue on the starting deliveries supply to moderate. in we're see happy

Ronald Kamdem

much. Helpful. Thanks so

Joseph Margolis

Thank Sure. you.

Scott Stubbs

Thanks.

Operator

Advisors. Thank you. our next Lumb of Street comes Ryan from And Green question

Your open. line is

Ryan Lumb

Thanks.

other on the the is model? back of based are there sort is you pillar capital going which this with are have asset-light SmartStop? of relationship Going that become one-off a deal, And of similar to preferred horizon or multiple this? the deal, opportunities is to this on the sort that guys to a Or

Joseph Margolis

the seeking to it. But deal, shop. the risk-reward and would certainly company another that a situation, if lease need relationship it. equity I than put former. net provided to had specific the and out of with say in will to the opportunity similar and not we more latter characteristics were a Similar we that hole to at us, a had able return good look had We're start a a we arose fill preferred

Ryan Lumb

any demand is on don't still is think you I anywhere. Joe, view if quarter, last that Or say then in what And just any today? going of see direction you demand, Can sort you your said there's – moderation level and that broadly? Sure. demand color – market

Joseph Margolis

demand. That of strong. that very and not is steady are our very today demand still challenges all to our due is and view is And supply

Ryan Lumb

Sure. Thanks for me. guys. That’s all

Joseph Margolis

Ryan. Thanks,

Operator

And you. our Fargo. next Thank of comes Todd from Wells Stender question

Your line open. is

Todd Stender

Thanks. Hi.

on Just acquisition front. the

to but in-place wholly-owned guess, your wholly growth maybe just and metrics, for joint expectations, of underwriting I occupancy Can not are, the you've portfolio, we some they didn’t joint you stabilize been remained venture, here any the in ventures. but active how You owned? in adequate buy stores in, invest like in

Joseph Margolis

than underwrite in Los for Angeles underwriting Dallas, stronger metrics market, verify would example. rent growth in we So

creating have that a have – off give of X,XXX we can’t assumptions don’t on these based goes on and on a markets. opportunity. I lot the to So we we're lucky stores of all menu basis pick And submarket about that's data what specific deal-by-deal in a our have you

underwrite number With why to for a in So ventures things do we us. accurately. something joint of can very respect feel joint versus a we venture do wholly-owned,

spread they if is risk, One a and investment smaller have we in asset. dollar particular

it get in get One ways. get than the insurance road. to a smaller the investment a enhances We on opportunity fee and XXX% Secondly, returns is management down owned. couple all we base tenant a many promote we or the of earn them

our in joint levels So a return are higher venture.

Todd Stender

were slower a a about maybe a there It expectation your know little up? more but about add I you. growth Thank I on can these leverage appreciate distinguish, in comments how more and these, or you lease how range? particular little you there's

Joseph Margolis

So when it you say puts… these

Todd Stender

Any provide Yes, the little quarter, you sorry. growth are venture, in context expectations. help? the that maybe three, slower can into these you the three joint a Not the might acquired just why went distinguishing

Joseph Margolis

shareholders. that So on wholly-owned these we Mexico provided we that didn't comfortable were three basis risk-reward assets our Albuquerque, for metric a a are in New feel

Todd Stender

Got it.

And the going from categories amongst just tenant others and fees. to just back Okay. peers is They increased. I insurance both guys then your That's differentiate that the management helpful. two think you then income guidance,

around Thanks. both? provide anything you're growth you of Any based can reminder, can we provide that can on kind achieving context as How these hear a for you margins? Just both?

Scott Stubbs

Yes.

portion fee are a our business those adding just has primarily assets. lease-up grown large properties properties management of and So by

earning Many go at their revenues come our fee goes as fee. minimum they just up, on them when management of the are up. day one also So management

so occupied, And make more as money. we, more start they to obviously, get

properties, business, add we tenant In tenant we terms as of insurance. add insurance

ability stores have versus opportunity we lease-up increase to tenant back the don't penetrations typically customers. insurance We go also the from to try of Many penetration. with have have our you one day existing and penetration to our higher the because just increase offer

Todd Stender

got And that that, a Is fair? penetration, X XX the it. higher to tenants lease-ups out X get of for that's

Scott Stubbs

higher than you that. tell it’s little I would a

just is penetration that. north it's overall on XX. typically And Your of higher stores, lease-up than

Todd Stender

Okay. Thank you.

Scott Stubbs

Todd. Thanks

Operator

Thank Rose you. And a we Smedes with Citigroup. have follow-up with

open. is line Your

Michael Bilerman

Bilerman a Michael of last, the front to generation? competitive of tomorrow, you on Smedes. let's can the about It's two bit in improving is talk sense investing I and little front in Hey. here months One call CapEx was and over to really their the fifth relative XX a PSA, fronts. the wondering focus door it, XX with if bigger their on environment their property

really And focus two second markets the being any how is in? management if on and a the just you've big business. asset to And those they from before you seen hadn't impact on done third-party a wondering management the I'm second focus the the that relative compete

Joseph Margolis

and But our performance So REIT stores of we much four program seven-year that a terms we're capital and into JV of rebrand from have more Storage putting we've Public vast in of years number to what stores, rebranded that our of benefited our we a We properties comfortable stores. been doing been think doing. our those have type investments. managed less we're of for And now majority of than all talking capital is now. what about started in rebranding through the years and

manager. to a is how And good management know is They Public the manager. properties. CubeSmart They good run Storage of run business, in a terms properties. know to how

We have remain our competitors pricing our we get growing business good because We competitors every that to able we've business, than but on keep this side. of expensive want we business. is profitable more a piece and which been don't hold to

stores, those platform. purchased lost the quarter. of became the We've on third through but stores just XXX store added gross of XX We've XX, or shifted the net we end XX leases, they so

XX our And stores. we've looks quarters, very going two pipeline added forward. So similar

that in we the at win share of competitors business, good least have to while still our so And we're business. able

Michael Bilerman

the marketplace right, for Right. doing. supply. not something, It's do say is And you just amount others to when of control in anything that the I'm can't what trying wrong we're

assets, to one You their can has but yourselves, invest build. control that have the would decided including an they're all a build, what And if control control on can't you marketplace right, people have lot impact what you what the way change in and right. other you competitor imagine affect you competitors. and can't competitors, capital operating, that could a entire of And

any So really trying was for but sense. impact a competitive It's PSA to it's getting that's year's from well to specific, tougher some environment not where maybe market this part the whether the compete you And of feel better in? in set? understand that I you has performance, had

Joseph Margolis

What comment. fair I that's a think

decide or the I we get systems into they're everything to And is still and to decide doing. management sit understand or business environment fully get think put tougher improve don't to it competitors need environment. compete they pricing it's And in, and to in whatever do. buildings static better capital not their a or their a why our that we we that into

We keyword don't technology, just to to that and systems to do to talk our do catch invest more testing. about or continue we our more as ahead. run it and the as we data we to to if need need analytics, all pricing fast We maybe bidding But refine need continue in And up, competitors we time running enough. stay are systems. need to our to

Michael Bilerman

Salt the in Right, sitting were you've not Lake. in Back which done in January, it's we past. faster,

words Optimus and leveraging You to on being spent pricing. a Prime and to Google search lot reduce individual really able target of really time

that Google your some systems into You out way how start at a talked not to has Has increase to to figure expensive. more been a of all? able little about cut bit gotten

Joseph Margolis

to It I it if very I an believe at money I systems believe been make are it talking and good line bottom because there's very And where impact look sure so has strong about not spending have but the the much that's bidding trying our a proof return. been up. the where careful money it terms not in has we're very think doesn't on a like the impact. to positive the you're increase we're where system pudding we they spending is putting has have. results

Michael Bilerman

was initiatives, and just their UPS Yes. and Last had Atlanta [valley], the I one the it on announced you market. test think

those see sorts quarter, with of the you in had there Mountain. initiatives? up partner impact mix have from been the obviously During that Iron you space any marketplace changing a Has

Joseph Margolis

but the markets look they're and those look units We the operating, if valley rents companies haven't our customer a spite felt in them that nibbling We able we're our the to don't urban edges, where in I traditional just at isn't or that at just getting we yet. the felt impact. and if storage are of it occupancy customer small haven't performance know a at maintain

Michael Bilerman

Thanks the time, Okay. for Joe.

Joseph Margolis

Michael. Thanks,

Scott Stubbs

Appreciate it, Michael.

Operator

showing I'd comments. Mr. questions. further closing like the for no And call back Joe to currently to turn Margolis over I'm

Joseph Margolis

to is I back, joining now, into really we we creative is the this months how knowing year we and new then year headwinds expected. challenges and went us as you Thank to be nimble We out and address would to the face those year for Great. We're today. played would markets. what look me have from into everyone has supply the is gratifying particular XX in

growth to the opportunities. We and that had went due difficult into capital a be would be talked great the went that to we And and And create creative growth done year to year third-party into into the in flows we that a to would about, as expecting just front. knowing that innovative we've year our in business. think have I management continued sector we acquisitions have knowing we've traditional

marketing with two has in and And and year longer us of we've the spite is costs. in those the increase surprise increased growth we've allowed is had had to us to The this expenses. occur. guidance. And the that taking revenue to benefited And surprises performance moderation that higher second been our deal that's maintain

that expect over the happy the machine proud months, to very far, able performance systems put we of so is of remainder and have rest XX environment our So for the to and great very for interest up a and in the you days. been that handled worked, is Thank Space. the year. much looking has then I and their we've teams we back hope the everyone that I'm your Extra

Operator

this Ladies for your and Thank participation. gentlemen, concludes today you conference.

You may now disconnect.

Extra Space Storage (EXR) 30 Oct 192019 Q3 Earnings call transcript