EXR - Earnings call transcript Q2 2020 | Extra Space Storage Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q2 2020 Extra Space Storage Inc., Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following the speakers presentation, there will be a question-and-answer session [Operator Instructions] I would now like to hand the conference over to your speaker today Mr. Jeff Norman. Thank you. sir. ahead go Please

Jeff Norman

Welcome Space Oren. XXXX second earnings call. to you, Storage’s Extra quarter Thank

forward-looking our we Securities that press supplemental to defined to differ statements or questions addition In with implied release, materially encourage statements forward-looking Act. on and to as qualified Company’s website. Company’s Actual by risks due and review. stated statements the may remarks the uncertainties listeners could those contain our cautionary from business. financial the the the have our Please forward-looking Reform These prepared remember Private are by management’s in answers in your we statements Litigation with associated our information to SEC, unaudited contained which filings furnished results latest

of other management’s because August date after assumes to Officer. update represent The Company revise as call Executive the or obligation statements of Joe any like conference forward-looking I statements over Margolis, conditions XXXX. circumstances estimates no Chief market would X, to now or call. to the turn this changing today, of Forward-looking

Joe Margolis

and thank Jeff, us for everyone you, Thank on today's joining call. you

character, during And not that of crises character with Space and It said us and to am to personal thankful second Space. not the stress difficult several shown the prouder blocking strengthen All company, these create and presented uncertainty. and Extra optimize do our has work to sheet operate performance. to these to working situations I allows stores, in good months. continue our added to be and but and The all I often industry, day-to-day done customers, team sometimes quarter the our was and country, character. past our grow our unusual to challenges is Extra unique tackling, employees our help our incredibly could service our reveals that does balance family

of XX% country. years. developing retaining focus black not other racial a and is reminder I initiative. our people injustice diverse or in and been This many of recruiting, Approximately presented of that's stark a them also for color, It a teammates company talent quarter our are proud new our of am

company two is and the values-driven me the to have company inclusion do statements last and but with events a taken several of Extra inclusive culture, to concrete can as will Space reinforced values I a we'll that are initiatives months steps, our a better. steps enhanced committed our not am we response, However, or continuing diversity These our temporary consistent be existing and making great company. tragic we to have limited improve steps response substantive. and with and be In

able Turning to quarter second our grow FFO importantly, year-over-year the we to the a quarter. Most performance basis. in were on in

detail. on positive which trends see We have will to provide started several further Scott

able Our high-value to have muted. capture remain platform find and customers. is Rentals vacates normalized and

As is pricing, at auctions. time result, we more can, the occupancy right in Where prices resumed operational have we our have high begun a move and normal and to practices direction. an all

industry specific and impact we effect on its to willingness for to are and and uncertainties respect their the trends However, still risks pay of with macro economic these course consumers its face. not should length positive virus, still the and obscure There storage. the

represents same-store our auction have markets, all been which not approximately our we of XX% NOI. process While high, recently several at to occupancy an in is until the allowed time initiate

basis due is points. By of increased the basis in result June, non-paying to our As of end this inflated auction. of approximately delays tenants a to from July, points at approximately occupancy XXX the end occupancy XXX

our vacates Occupancy behavioral peak-leasing we to point, available regulations. not auctions set we a customers. vacates the activity of putting September, Instead, in the at benefited believe on won't optimize permanent these season auctions emergency which will some see headwinds increase, government outside non-COVID orders from but in personally begin states, now do to we into more XXXX vacant. full not when notice may units. due occupancy, pressure that, most have represents further our and coming actual historically due be present. I the are until states shift of of still lower-than-normal state also We to periods, in will moderation had normal has resume for tools with Also returns, forward or will that re-tenanting moving several are

and delayed delivered, While properties which still are growth. in excess pandemic has depressing planning, and is inventory there the and projects new leasing markets, rate we deliveries is believe still up new reduce being may many

uncertainties So, depending on how while the not remaining and we are be guidance. risks position The to outcomes by broad to enough remain in are results, that for I've too meaningful, we recent a play possible there guidance out. are outlined reinstate encouraged risks

and continue day to have, questions over that will you walk to I through shareholders answer we time We maximizing the may And work like value. remain transparent on I'd will metrics all Scott now, him birthday a hard happy the to be that turn and laser-focused to long-term some continue mentioned. wish every of metrics and on and

Scott Stubbs

Thank hello Joe, you, and everyone.

May. have traffic customers have flow the up a stores safer quarter. updates provide sanitation are to and stantions demand of since our These properties for adding started our open and been fully and pick All partitions, to effective to modified stations by through of as employees. and We been plexiglass experience the direct our operating our

improving to rental the basis quarter. XX% a year-over-year growth, July, at occupancy approximately in gap rebounded points. rentals for were resulting in XX of basis Vacates XXX XX% gap basis April negative Our quarter the year-over-year, the in positive positive X% end from expanded the went a strong rate lower year-over-year delta of end point the At which negative this of at has a XXX to point end June. a from April growth to

price. at a came occupancy increased this However,

states still greater greater we days a XX receivable New running XXX rental working accounts have such California, aged our inflated through XX York, by loss and receivable Accounts than however, from receivable Joe restarted we collections. delayed was which to estimated basis efforts, occupancy levels, back May, auctions based key we points in quarter as have basis customers. to due and levels; for XX on a are the dropped approximately was days In of system. percentage receivable and approximately than accounts on recognized points XXX Our average New accounts less quarter down days achieved rate non-paying historical than than income are have and successful. Jersey collection historical end been the the Today, XX%. higher as our as mentioned,

in back these March, pausing factors half April of with the year. May to on rate of the All will customer together existing temporarily increases drag and revenue growth in continue

to rates rates activity June's rental through to and the street the flow do May positive lower half significantly, And While in not improved it have second will and of growth anticipate same-store year. achieved impact we time take the revenue. of for revenue

parts While we level back be business proactive to and have half the expense revenue, offset with of year, expenses Property but controlling are taxes continue challenged balance will payroll, will marketing being we lower expense. other to our in of pressure and have property performance the are success we from in the strengthened finding continue to sheet.

storage grow to accretively and space. deploy to self externally in We the continue to capital ways find

have with X.X%. XXXX to $XXX to purchased July, yield million close under an closed a and XX anticipated note at In senior loans We another a of year-to-date maturity XXXX. bridge million we in $XXX agreement million with mezzanine in discount

growth, light capital same-store provides platform and insurance providing management third-party tenant non driving Our management fees income.

will swiftly add and We acquisition when value our act we are also transactions pursuing that we shareholders. identify opportunities vigilantly to believe

We our our of continue delayed placement revolving a $XXX will taken transaction debt $XXX facility notes million balance Funds maturity. the transaction the with a increase sheet the credit private new closing to and draw to pay-off our and be addition through during will strengthen convertible quarter. weighted-average million placement from of the private

is COVID-XX As been will good the have Joe it of has and storage to adverse That the said, well-positioned our be had to company our haven't impact pandemic to landscape. to current on the continue we an and is and navigate business. in mentioned, impact immune

continue record climate. to that, shareholders we over ways has a With to execution, find team Our high-level will value of Oran regardless economic it our turn track the of to let's and provide Q&A. consistent to to our start

Operator

question Rick from Yes, from sir. Skidmore first our comes Sachs. And Instructions] [Operator Goldman

Rick Skidmore

the Hi. receivable greater Scott, XX And quarter policy And Good about in and debt you that can amount the days think Company's than morning, Scott. Joe you going about about bad forward? Thanks. expense? think you talk accounts how and a what was the you the expensing? how

Scott Stubbs

Rick. Thanks,

revenue. historically at run X.X% bad X.X% our has of So debt our to

the with that to about was And our the to During that. XX% older and do has higher the expense have that than accounts quarter, primarily things bad auction. gone receivable debt

to past due. is the for more reserve accounts receivable majority all or that Our XX of days policy are

the much due certainly So more debt. days in the has or through of past already days XX almost all flown of what's what's XX and bad in

Rick Skidmore

supply about deliveries shifting see talk challenging delays And are and markets in particularly then and you perhaps maybe that currently? of supply growth in supply. you What to growth growth seeing just Joe particular do terms and supply which

Joe Margolis

we see delivery do product. So, in delays new of

until before. than delayed we that of being versus markets markets changed won't our -- properties of it and projects anticipated in some experiencing Boroughs we the ones. that delivered. was quarter on concerned absolutely have management There with be really that a markets into hasn't respect we're COVID and well, concerned that. with platform, the reasons the later It's we were faced did but York are delays City new supply still new are less seeing taken with little are markets the and One to Texas and both taken the good were products some a year, same Florida, the The like New and with because

Operator

next Citibank. from our comes from Rose And question

Smedes Rose

this bit existing wanted you customer rate the a ask I more increases. to about little

talk rates are June out And that you customers for increases, acceptance in guess get have who in could to XX expected about what of rate rate you in you were just which seen an far can increase is of think been, bit them? What or operating. to push provided were what you've states you XX as out those where you little the receive increases a percentage now? I so update maybe are I rate able

Joe Margolis

from another customer a and ability issuing we're it's our states to XX now of some have case existing high, a six a that and prohibited in then rate States there's is and we exposure few to, notices, increase those is so meaningful limit. percentage percentage limited where meaningless States, where some certain So, there's

any in out response have move seen as to existing increase change far increased notices. in re-instituted behavior. not seen we rate customer those we So notices, We've not have

game. that what Although we're closely unemployment interested something and the you I to out when it's that. would in see we're also runs additional probably insurance factors early We're caution like monitoring still happens

So something Smedes. we're watching closely,

Smedes Rose

the that just And you of, yield that to get a mentioned you that thinking own, then purchased kind how color just or a and by or could Okay. that backed portfolio maybe loan a more talk of mezz there? kind about you bit about assets little are you loan of the is little to more

Joe Margolis

Sure.

XX So portfolio of storage it's a assets. self absolutely

as our capable and know, them up any adding assets, experience and negative You footprint a that's fully us. the we for of they're we're end if we to value, overlay loan having make, in not markets own that operating and with

always to in money risk shareholders' creative smartly with the good are position we for looking invest opportunities posture. our So,

foot. year is first about $XX the in square a position Our

feel we with the about and getting that. risk investment. very comfortable we're a think of good return the So posture fair we're We pretty

Operator

question Bank And America. from Mr. of from Spector next comes your Jeff

Jeff Spector

your in did? introductory think May do into seen, in of afternoon. about March, of say, Good or comments your if during months. risks Joe, the and say, balanced let's the to remarks and versus you. you trying some months we Thank what coming of initially the lessons closings you just different you in many worst the learned coming Would recognizing continue the the months, reopening let's April course Appreciate anything

Joe Margolis

we we that were future. you So, is tell did has that will you tell in apply guess will a portfolio like large and learned things company can't have We we advantage things. the certainly I Space One that I too thing Extra to don't that lessons much has perfect. a an

and these were We learned things many a new in So as with of worked hundred we what was situations. in going, several stores basis tried test quickly were we different didn't. very what and faced

were didn't final make take able us we certainly those best. because get very what with for quickly have decisions And testing lessons culture with We So we faced customer to approach us situation, take new new portfolio. future, the with whole to and that kind situations beneficial, behavior. as well. were performs the also And new of to customer to and we'll in our was

Jeff Spector

just comments, demand. of, outside year to in a happening heard leasing. let's the sectors, other Like, for pent this again, risk. need and maybe trying And, feel and cautious get up them, there's about there's leasing, steady of lot we've just that of auctions, to risk I still particular lot there's the thinking people peak just peak with I'm a in a I And say no be your even that maybe get your the comments September maybe we that mean, comments. leasing, totally here. There's respect comment again,

peak I mean, the was you leasing is expectations fall surprises? coming year, think that could just, into actually we're by or But I the this low. there do think way, pretty the

Joe Margolis

think know. I with you, agree I we don't

in I there for demand there happen if if are the uncomfortable And we we'll steady a reasons rest new of what's traditional the guidance it's year, providing the if the going up to will is of more these patterns. situation. pent because leasing we're And think one know, on unknowns. don't see be or we're there leasing

Operator

from next Todd our comes question Thomas And from Mr. Capital KeyBanc Market.

Todd Thomas

question. first Just

beginning options Following will bad this of to revenue, X.X% basis quarter that up future to third in bad normalize you've some expense, indicated work going that of debt. reserves higher that debt greater points or quarters Is as the and through historically, in on XX% X.X% quarter so trend XX of Scott, you incremental to and XX delinquencies? the the

Scott Stubbs

forward. So, zero ARs, would norms, be historical to on continuing backing basing bit you our what July will think XX going And grow. but look that we to expect would higher, we're -- not is, I a at little they're to if we it they're normalize

your those trend XX that X So continues, assuming to paying. plus, that they continues not if become XX were

to the everything norms historical historical they've that back from back else gone fact so, to And norms, here. goes hopefully,

debt So recognized bad related to July, you've by end the of your of this. majority

Todd Thomas

back you really the this at periods, of back delayed And started Have then or beginning influx as market few in And getting notice increase of that units activity it? going we think you to is Or auction months? in now? that increasing to auction as that's sort ahead. months mentioned, with about and right all the result next that, over not sort is in effective then occupancy. causing is in Is process inflated the rentable of just activities, an it way the supply about coming the the to physical that think

Joe Margolis

So, to opportunity have, auction unit back. the ever of the is delayed negatives the one costs get of nothing the we

the can the in question late of where to that So we'll at to to But to can them get auction to make third we actually is absolutely it. this, see tenants, kind the so majority of earlier, environment will work until with we the won't the go arrangement back some them. try what our have and they to turn similar return unit point, where to back units can done we have have so. us, We And do Jeff's the through process. we'll And quarter. we

Todd Thomas

and then guess just like Are you the bigger, you share or And on can collection Is there right the can off you been that? historically. on I have seeing the rates information you recovery what any here. ARs comment on rates have

Scott Stubbs

on experience norm. if that have been We'll our recoveries happened. continues, so our that's that auctions actually better see Todd, the than have slightly but historical the far been No.

Todd Thomas

do What to? you that attribute

Scott Stubbs

pay problem. be don't they I just having speculation. just may That's might know sure. paying our choosing people of some not true versus these so of a for and late to be Some

Joe Margolis

there's see asset across or to government thing classes you government One have no the you, we is other you to penalties, have the don't when tells pay. if pay, don't you tells

just do Some to people choose not so.

Operator

question And next Evercore. Samir with comes our from Mr.

Samir Khanal

worse trough half and bad is start and or where do headwinds quarter the basis a quarter inflated are going improvement occupancy the things basis up be which tailwinds think we Scott, set get XXX sort a to this you've see where facing debt. you AR, of we negative growth. less get third now bad? we're Is could are points points, the of of better? this think to Or enough about about a back the but before going revenue And then there's talked quarter XXX they as second into to sort year? things Where being of potentially still

Scott Stubbs

already the has So first one a of thing written has of large of off. AR to that just all, that been I think clarify that majority majority

quarter, basically XX days, receivable you to second have reserved for accounts the that So XX for. XX-day the hit especially reserved they it in once been

we in that those be a back So to negative degree We expect expect to potential do it don't was be third for coming quarter second the quarter. us. the the a in to units headwind online

Samir Khanal

And some it to enough what that's less just where you are with revenue improvement tailwinds tailwind, sort up things here of about too right see in to say or of there's to think following negative, kind be early now? growth going

Scott Stubbs

can't I get we other can mean, systems optimize hope economy in enough you we performance, dollar now. there's our always for and we're in confidence but team uncertainties macro that in say going we our tell would for factors I to every that have certain we and

Samir Khanal

applied it's for was growth, maybe you California with a about And little and a a restrictions of growth Okay. me, increase states I getting of states earlier growth some not how And the well. and question or think just year, documented well just really that, bit in have ECRI, you we little I sort of is we should this addressed max year's bit more and guess from push on for the but perspective? and color, the maybe ECRI a the XX% backs But know I were think as about sort another this but we municipalities question what's -- about from think what as should municipalities? how in think next think do other

Joe Margolis

that, would control we be ECRI go we we normal would these restrictions hope practice auctions. Well, prospective operating lifted and that. our But, don't with can to back

control to in the is control and can job and maximize our line So, follow we other place. performance what

Scott Stubbs

a where a Samir, states a or certain either have there be it maybe make but in it to revenues, them your It's add there. especially I limited street in you in does amount, necessarily average, for normal they're this, average that difficult customers significantly would thing below to who not allow grow move them the year, a at are below to other if for is, us don't to difficult going to like the year additive quickly rate rate. more level continue to allow came they them

Operator

And Ryan Green Lumb our next comes Street question Mr. from Advisors. from

Ryan Lumb

you that, or likely the quarter, given deals of you maybe the stress were market. lease in seek about coming of last in Thanks. up good market, to distress, Joe, see said stores to stage number some

be anticipate weeks, still or recent Given some same the do to demand this year coming market next? you to in distressed what in maybe least appears at improvement volume assets, of

Joe Margolis

Yes.

the there's be number or going capital the that think, were stores stabilized owner some lender to I that type of force event. or a of not going to investor is equity the

So I yes. would say,

Ryan Lumb

govern of past of color curious revenue human sort many that, not be operating To management or the or I sort in that system in approached operating you or we your has very still less relationships either and be management to returned of a Okay. and to the And any you've the of March dramatically in were mentioned and applicable sort environment so management approach effective of to revenue revenue normal, sort reworked. think changed April had that then, new great. sort extent to just are would of things? I'm trying different what temporarily rules had

Joe Margolis

little always of trying innovating, always part new guess is a what testing, we're would it seeing sharper Extra say trying works. things. I the answer We're to my I tools make and Space,

of some may learned permanent through just said lot be this may I and experience, some earlier, I be As temporary. which think the we've a lessons

to are terms return We normal more customer behavior. in seeing of

our behavior. So walking at an of that's improved our example and has for some significantly. traffic And govern we metric look important that

Operator

question [Operator Instructions] next our of of Mueller Mike Mr. the JP Morgan. comes And from line

Mike Mueller

phone addressed was had I I've and if this issues, questions couple earlier. A so apologize

the any C First, made? then can you you have investment in disclose changes of market seen that you're meaningful pricing? is most what to rate the working on second, if have today, you if And the O already, deals you

Joe Margolis

rate, a that, in for not C but have yield seem about to is O deal we rate we O I'd is the O have to and even months. new not certainly to approved in of XXXX. us now. the C maturity The think sense make have just, note approved XX certainly on deal deal. The for C XXXX, of doesn't So, pricing base maybe X.X% new the a of on our X.X%

Operator

And our John a next question comes Kim from the Markets. line Capital BMO with of

John Kim

pressure But Scott, permanently given mentioned hours? I ability or can that the the rates. as as potential with well comment unemployment of external touch payrolls, the in either leasing to you think on wondering you available cost employee more interesting, I was alleviate thought was on I this which just

Scott Stubbs

Yes.

year. the a comes the cost payroll last comes, tough payroll count from more So, from on pressure

I actually wonderful quarters, was very we in payroll low year last negative. believe Our were

main So, the is it’s the there. comment comps, tough

and, looking touch we're manner that part important In our consume terms less would of think the We're at to an our sales product looking go and in managers to for we of like they're important, the opportunities what the it. think always customers deliver are we they process.

pre-COVID. So, the you is give example I would

gone rental do online today. about involvement, have and as at, believe, further we've a I involved think are process working a people can units. enjoyed that Managers they with where leasing even telephone. at this with of most a And in successful your has via like Since we no manager am X less their stores of touch expanded to were I that's managers they XXXX manager where happened, very our complete

to So we continue that. evolve

John Kim

also or pursuing on I mentioned acquisition. or mezz products, elaborate you actively can you moved assets, and more more you potential if newly that was opportunities in stabilized if actively wondering has how interesting seeing are investments. you're more And pricing developed Okay.

Scott Stubbs

So pursue acquisitions. in lucky any pursuing grow particularly sense capital seem muted acquisition The to smartly actively We're looking acquisition to present position I mean makes impression always for remarks. market have that where grow all ways I'll to us. always are good company. coming of think didn't this of Company. be acquisitions. that more been We're for we're to smart us in different the things to a we terms But the to somewhat in has always of make And sense. and trying to risk great for to plenty we clarify the my things find give we're a pursuing ways capital sorts market profile to we

has to capital adventures, So because be that's expansions, allocators assets, to low the you self bought. very a smart going understand that from low a self of going not storage it's to if attract just asset, there, stabilized are think stabilized ton are people flow try I alternatives rates acquisitions, as cash reinvesting cap are, stability out market. a for properties, good We're attract storage properties the going of that a they're but in the mezz not and good. acquisitions It's have to the our we just there's cost through bridge in pricing So existing of whether moved buying loan and loans, don't comes rate

much low. of lease more of is view say what difficult to people you which very cap very, say would can uncertain. One’s a timing that that So lease on is and store the Cap views view still have are I on I rates different And is. of rate can and is the of one's up What rate depends on asset. think, pricing

Operator

Ronald And from with our Stanley. a next question Morgan Kamdem comes

Ronald Kamdem

ones just to quick variations geographically. from One bad the peers going was apartment of the Two debt. I sort back me. know

average of curious, Just of I can States versus differences sort the there portfolio about or color you Jersey was there other New notable New like provide? sort York, of California, any the when any think

Joe Margolis

can Some observations we make.

if AR income, highest. to in in at markets household paying is We opposed trifecta But kind credit of state at more cash where cards. customers, a also we there's household income of biggest as and paying lower cash are higher are you you're seeing that if option that's lots the can stores stores, and impact the of customers lower with we the get where have

Ronald Kamdem

understand. it Got

The de-urbanization, urban was, other people are you about tell. tough curious lot we're for your demand of that suburban a just portfolio, into question from suburban the when think or your on urban about portfolio to it’s theme more more more to versus too hearing moving margin the translating you traffic potentially and seeing part the or

Joe Margolis

want I secondary know, having should you and broadly diversified demand trend, characterize you But is and in So early to a And portfolio be of suburban, would across say however occurs. primary position there growth, urban a it that to our a good seeing portfolio. probably it if them we're lot that benefit are we balanced from across Mark, advantages is too if of the good to tell. one of

Ronald Kamdem

July rates as achieved occupancy provide you July mentioned you've did well? And

Scott Stubbs

little April, how rates and were and the July did negative they and me of give effectively Negative May, kind in achieved let progressed. the quarter history flat. a negative achieved XX% of -- through just misses rates, then not June, you are We XX% XX% rates in in

and actually rates comp. in easy you effective And in that through we channel. is renting a camp, July Last highest X Now, walking you increase price July sounds was that occupancy. would seen channel year, an our highest two context, shift our dropped great in July, put the in don't to then more we've in a give it's where coming we've tenants seen and an I context if

probably flat but encouraged in so will of July, So in especially by I July helps May the going that that there. to being we're being think from trend and context negative

Operator

next from Mr. question comes Citi. Our Rose from

Michael Bilerman

you It's in invest which Bilerman Or had Did investment timeline? Michael have add plans which a October SmartStop here. Joe, do on think made million year XXX buy preferred I the the one the that future. $XX you was October, to last you million quarter?

Joe Margolis

we SmartStop take So, money, option the can't that a to decision that's to force take have money. make that them will they

Michael Bilerman

unlikely, with And make will the capital you and that of trending? your way and how that details them sort is which would do or portfolio they any you, going have likely discussions to are draw

Joe Margolis

So I in we and I appropriate want they good monitor them. a manager for if ask the country. be take do want performing to portfolio. the SmartStop managers to would And and other mirror their speak they're the capital to And good think to folks similar don't they're

Michael Bilerman

how smaller you set the opportunities platforms competitive you pretty look in dispersed still the And are Does owners what terms a that do and operators owned when from of landscape. and of challenges? competitive at landscape? of also institutionally sort the larger you, the versus but present What seeing

Joe Margolis

because general, see COVID. difficult now us to financials. accessing our all I occupancy better, question to It's improved. real you because either, smaller customers stores of the take can Michael, can. And think have more, stores of I Really we want lot a they are that they If and just we get as sensors or throw want they're more not clarity management maybe a sell are look it the because of advantages their operators at they through can think there's store stores to better their rates. do In simple small It's sale, We web, can may putting their the has up rate because can of run that. can changed higher as take we for folks anything, behaving. don't and don't than over because when we their at a to know until, some answer, as what how are them

Michael Bilerman

for bit yield about capital And in talk the rates maturity. to five yield capital square the on then but a the value, structure little I you recognize sort seems with they the the a within and are if yield one stack? per said but mezz six can low, -- of the mezz And light. that yield could you about the foot was Where talked stand you

the you talk a maybe So can just bit. through little dynamics

Joe Margolis

Yes.

part -- right I question want about about it's valuation talk talk part of a foot But a $XX you, I question. a that very capital great pretty self to about The storage tell So, of about will I capital we're if are the really the ask, in secure, status. talk it What I think you can't square stack. percentage would portfolio. you? number, secure in can't a really because But,

So...

Michael Bilerman

or talking outstanding, just the maybe talk that maybe of behind through just understand there So that of about other loans the value, front capital you? structure, debt giving how there? Is pieces equity you us is just are much that in are sort to without

Joe Margolis

about of is our there then million a then about junior equity. there's $XXX first, mezz there's there's and $XX So, piece, dollar and million, the

where would to than our mezz to expect is rate. see lower loan a traditional So, you higher value much a interest

Michael Bilerman

Right, junior. of XX

ownership for pretty to getting to got you thing's repaid. this So dramatically position be fall just in versus

Joe Margolis

Correct.

Michael Bilerman

you blow junior to mezz. $XX But got through of that million

Joe Margolis

correct. That's

Michael Bilerman

finding grab you increased them? is on at all? side else valet someone at it as there witnessed Are just maybe goods that pandemic? store let increased to the source people And their competitive from this storage of and Is all, during then, want anything that an you've that sort

Joe Margolis

not We've would that. seen the we say, an observed increased pandemic. I during valet from competition not

Michael Bilerman

certainly being didn't to I would just my people, given was by want into movement but come just I the whether of that know home, used there whether them was others.

Joe Margolis

Yes.

Michael Bilerman

much. very you Thank

Joe Margolis

Michael. Thanks,

Michael Bilerman

Alright, you. thank

Operator

line question Jonathan with Raymond, Hughes James. next from the comes our of And

Jonathan Hughes

morning Hey, good there. out

growth did that a a growth extra one-off? more opportunities. looked external know if We front, transact mentioned you large of guys you portfolios I the see looked at if at the recently one-off lately, or opportunities. one on big you On at it's or always focus curious any portfolio just you have look

Joe Margolis

them brought execute, opportunity every we're acquire We of at fashion, market. we'll the we that, in try see a and if we not, we We of it storage, active because hard an and every we'll and and underwrite year can acquirer all. that go. creative let We're think them in to look

So, that's I feel analyze confident saying and everything that, out we see there.

Jonathan Hughes

think to exposure that NOI Is identical can restrictions? the NOI states prohibiting the or similar Okay. quantify under six option to that are XX% increases? rate those And then I of you maybe

Joe Margolis

less you. get It's the the have I back. than number now. states I'm We a for much XX%. at looking can don't

Jonathan Hughes

Yes.

Joe Margolis

number get to will you. We that

Operator

Steve Evercore from question next Mr. Sakwa comes our And ISI. with a

Steve Sakwa

the macro still new well. high ask to about data being pipeline guess pipeline, wanted I of still relatively and shows as kind of Just future the supply the kind and it elevated

I'm going that which really thoughts just tenfold you hard think of of what forward? kind accurate of that it pipeline got sort like some to but today curious So data if in, do think But, still or of just and materially think new see the know, I the curious seems moving seems that kind starts they you on is your overstate it delayed. completions takes and projects to down? come Because there's

Joe Margolis

Yes.

business. it's So, important is market always a that in interesting. macro remember very, data very we're micro But to

how are more are the you So, many where it's them know interesting of than stores much going. the going facts,

turns market macro is has will other if recover, data been if the shows that development in So, development in over markets. that off marker a supplied, even

them subject available Even hard their still projects take not in think get. that quickly to they have still It's as little they overstated. the substantial still through we that there are killed It's and delays, we're delays. macro to that's be your markets. don't cycle, going a in projects to disagreeing point be not off we're a delivered to criticism. I'm going to is it in something see also with going it's we as get development are So There's operate It information list But data many been could. is years. to non-COVID I

Steve Sakwa

markets? in XX of would expect looking at Is back a as point? half really I of, I kind new a the maybe this of guess mean, your you And sub at follow fall 'XX more I that more like up, just like we guess supply or when off sharper

Joe Margolis

to it's it's deliveries going anymore. all be a is development decline markets gradual supposed there'll think develop, more and in to off I across no be cliff a going fall to

Operator

like at have no Mr. Ladies to would time Joe, any questions. this and further have we last remarks? you gentlemen

Joe Margolis

for thank interest. your Yes, you so everyone

some As headwinds. them. battling have I through We're we said earlier,

regardless control hope focus we I well. what control, thrown will and value, everyone We of families at can our in gets are efforts on their us. enhancing shareholder

you We soon. through want will this time a and get much. very better we Thank

Operator

today's conclude you and does for conference participating. very gentlemen, Thank call. much this Ladies

You may disconnect. now

Extra Space Storage (EXR) 5 Aug 202020 Q2 Earnings call transcript