Earnings call transcript Q2 2023

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Operator

Thank you for standing by, and welcome to Extra Space Storage, Inc.'s Second Quarter 2023 Earnings Call. [Operator Instructions]

I would now like to hand the call over to Jeff Norman, Investor Relations. Please go ahead.

Jeff Norman

Thank you, Latif. Storage's XXXX Space call. Extra to second earnings quarter Welcome

remarks defined have press due supplemental Reform Actual Please to In your company's uncertainties prepared with as differ Securities our risks results implied by forward-looking we business. may Litigation stated the remember answers furnished contain questions management's website. addition from to our and those or Private release, our unaudited in statements to on financial that could the and Act. materially information forward-looking statements associated

These in forward-looking our with which statements statements are qualified by encourage the the the cautionary we listeners contained filings to review. company's latest SEC,

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

like call Executive I turn Officer. And to Chief to now Joe Margolis, would the over

Joe Margolis

and for thank joining Thanks, everyone, call. today's you, Jeff,

happened a a had high second have We same-store quarter. occupancy call. through has busy first remained the months and quarter earnings Operationally, lot since three our

customer very also XX.X%. and was levels rental customer quarter, vacates increases muted, steady. a allowing rate June improve remain Although low health remains the ARs year-over-year, occupancy with and sequentially bad at through down to us existing each volume The strong remaining month ending remain healthy debt acceptance of

great to year new year-over-year season. to and sequentially into delta to high order customers. tighten started This maintain the May, effective coming was as to into achieved was negative through rental customers we new power Our we the rates and the enhance strategy strategy pricing and growth occupancy in improved moved to leasing

our in are months meaningfully rates of same-store remain half an have revenue and internal was of high-volume perspective, by we for June miss for the leasing on met not in rental However, same-store us typically June property also offset season. both in The busy new FFO in first second customer the lower-than-expected improved budget and NOI From year. allowing quarter. July, a which to budgets expenses, for the first

the customer summer As expect year. the revenue of we half the on months we back growth look of in forward, rates in lower to the impact weigh new

that into rate assumed new now end Year-to-date, of gap and our that by guidance close the customer year. customer negative gained rate would further through power year-over-year initial growth year-over-year would XXXX. and have customer we be will fully we new that pricing remain growth Our new not rate growth rental positive the believe July, negative

our result, same-store a we expectations. reduced XXXX revenue have As

property higher full curve estimated lower revenue, a core together Our with forward FFO. for our outlook rate also interest year reduced

reduce that leasing this are new Needless Extra are outlook. to said, to the season, storage customers we rental idea we our liked of say, has growth Space having and maintain that and disappointed With sit to today. careful also been where to never about industry we actually rate weaker perspective the

are we below First, XX%, seen. have high excluding remain last ever as years, just couple of occupancy levels as the which

XX% higher remained XXXX rates, as than year, strong customer as levels. new Second, pre-pandemic not last while

added management Third, new cylinders all increasing. fire new XX headwinds and be finally, stores to supply And with XXX future two the additions external through to on quarters. drivers continues quarter manageable our to to continue in growth development our third-party the and are platform

worked our with spanning merger tirelessly today On complete Life over to X,XXX adding merger am proud which over states. teams Storage, XX to who X,XXX and portfolio, stores of create have company. a July portfolio, to both has XX, we stronger closed the our platform stores I

achieve to all focused are a We hard integration. and working smooth

progressing how and with to are unlock synergies. integration create the pleased and seamlessly we is very value ways am how already I far, So finding

have This two over stores to onboarded weeks a already remaining point-of-sale Let of X,XXX provide the employees transitioned with transactions, over LSI In the our stores we and XXX system couple we to trained the examples. me since digital will to marketing and closed us system us these pricing because, point-of-sale allows week. optimize and strategies, to this our follow begin next allow is move our performance to critical among which implement things, at stores. to other platform

BBB+ last week, future cost immediate second, credit will rating to S&P raised our of And Global on and which have reflect an our capital. stronger our larger debt a and to company, benefit

as and we creates for many have opportunities we still realize and shareholders. So the are we Space we know just it Extra future closed this begin while is merger early, to excited our

It in in is be Life to in additional on minimum combined the continue dilution Storage the the I be performance still assets will After believe estimated integration Space time and in will of we optimize believe early towards and as to great rate the XXXX Extra run beyond, underwriting. company least synergy original as our a remainder storage, with updates of the expected future well at progress additional the bright. some our we performance upside XXXX, the synergies. during We underwritten as synergies not of in our we give continue to of and million $XXX quantified short-term remains capture

will turn time I now the Scott. to over

Scott Stubbs

and Joe, Thanks, everyone. hello,

saw June FFO management in customer we property rental beats we and new interest rates in despite and savings The in volume tenant quarter, approximately down and rate As offset averaged X% Joe new keeping another G&A volumes. insurance. internal which lower revenue in and expense saw March, expense customers mentioned, negative July, higher April, then similar year-over-year. interest fees May higher and same-store tightening modest meeting had offset our off approximately on XX% negative to in year-over-year was projections. income, achieved After traction June small slow drove by rental X% in and solid in rates other but We to backed were NOI miss immediately by higher

expectations. expense tax our front, with well growth with minimal and and in On are performing remaining expense payroll line the marketing we property

in renewal of additional June our increases premiums XX%. and average pressure experienced have insurance property premium markets the we in in with approximately expense However, casualty

the revolving $X our bringing for capacity sheet. the bond a merger. a in Storage to approximately preparation completed balance Turning $XXX facility, completed recast in the credit to and offering We million quarter Life of billion

We with also a term pay off that accessed Storage's of of feature private closing placement to we billion on Life draw and credit, delayed a line costs. closed closing $X at loan debt other

with In the last not ranges closed expectations Storage. our growth updated the FFO, which we recently impact night's release, earnings same-store do XXXX for and merger guidance include core Life of

standalone Given details dilution about July from impact the the XX anticipated the with the Extra for the -- closing we the XXXX. tight in merger the between remainder merger separate of excluding on between yesterday's release, closing timing provided Space, guidance the merger and of

the than Despite forward for our and rate forecasted same-store NOI curve. power meeting and in experienced FFO, the pricing interest lower our volume rental upswing internal in core reduced as and the estimates projections given July June well forward-looking have as we

outlook Our same-store revenue include does X.X%. the now for is not growth, LSI assets to which X.X%

same-store We X.X% have payroll a also better-than-expected resulting expense our to X.X% and of X.X%. in tax, range due to revised property to X% range reduced to NOI

Our the back flatten growth continues comparables. to expectation with of year deceleration rate that remains of easing half in the revenue the

primarily reduced is share, range, and anticipated impact revenues FFO rates. driven by higher the core $X.XX lower merger, excluding LSI $X.XX interest to property to the Our of per

$X.XX XXXX we XXXX, anticipated our the we portfolio dilution to the as integrate early to synergies. $XXX million XXXX. and For capture estimate optimize rate Storage at per we run will believe Life dilution initial $X.XX share merger, We that be and in of we estimate in in our

the provided have second our of performance been of of in performance quarter updates Storage and package, forward. the Life Details assets provide LSI going we will on the supplemental

continue diversified even the believe Storage through space. is portfolio for class has outsized platform become is We stronger growth. an the resilient We most Life highly storage REIT our and the believe to and operating asset merger as that among positioned in

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

Operator

from comes [Operator UBS. Instructions] Goldsmith of Michael of Our the line first question

Michael Goldsmith

half a taking half, Good is the metrics? back expected from the of street this for expected my year? is last for which operating in in questions. didn't two, XXXX seems for back converge what It on weighing rates results largest of like the on on the the with And is the One, street year, the so the what's driver lot two-parter impact weigh here. guidance is this back afternoon. assumed half rates results 'XX, that reduced to Thanks of

Joe Margolis

So the easier. half biggest in I the see frankly, year, back difference lot is the see we the think we - of get a comps

of kind see second easier continuation we with So modest comps. Michael? but was growth, What much question, a the of

Michael Goldsmith

weighing on that impact any rates half of see you street XXXX? on impact from is there the any are 'XX, the into So second

Joe Margolis

stupid answer, you 'XX. So not give yet. talking a we - is point But starting your, I'm a to have don't any talking not guidance XXXX to about sorry where we end 'XX are clearly, for as guidance.

be So that impact. will the

Michael Goldsmith

question, of rates to Do have a like just you're Is that clarify Like street that by relative there. first for back you 'XX and any the you in slow to late? just just that expect converge And sometime Like levels half? visibility? mean growth, on early? you 'XX is convergence to the of expecting placement ticking sort

Joe Margolis

think by thought further had XXXX. had have into that conversions We and now point, Yes. July, it's we June, we would

Michael Goldsmith

your you second that driven my What the million of $XXX of driven synergies you in the from are run question a synergies then majority - can that of or And synergies that it. majority confidence Thanks. Got revenue. that early achieve revenue given is a Okay. revenue gives are here rate entire given XXXX? from

Joe Margolis

that XXX-plus as rate comments, overload get plan So do their store, in one, but my on customer-by-customer, started. going and I point-of-sale breeze rate, we very have where has revenue our started a notices stores detailed have to on have we soft street And the mentioned their the last not out. side, any ECRI on is, when they

we'll stores rest because notices of is the we us go work. rates done going rate, time a have and high week, take ECRI out know will that this and the And next send the stores churn notices, where that's time. gives degree We confidence the and all on it And below breeze the those we rate all all we've the want over we of and have ECRI out. them and acceptance have we to the confidence

go a contract side, out. than insurance notice and notices January delay requirements program for which is was existing will the their the on won't new until we're be LSI purchase breeze, provider. with once is LSI's Those On insurance insurance in higher reasons XXXX. both customers regulatory that our And from at rate existing will customers converted and platform,

who confidence segment G&A greatly we savings. G&A third department want will of have of and hired then budgets million And the the is kind we've pencils, now by we to the underwritten increased department the And biggest our sharpened $XXX redone exceed hire side.

Michael Goldsmith

for keeping to apologies going. just that And But ECRIs. the on clarify

said, That them. said the eyes highly I in rates. trajectory easier street are customers you continuing absorb of that the think on can script be to dependent

So impact it street just term? a intermediate to ECRIs going in to that along your is ability near a pass of trajectory rates, is the to

Joe Margolis

be So think significant I that's to don't a going impact.

you're the bone. LSI stores gives street the of the So is right us factor at gap still that there's stores rate between the competitive at a in that's plenty the Extra But that given. the of Space rate meat quantum ECRI that and the confidence rate on

Michael Goldsmith

very you much. Thank it. Got

Operator

Thank you.

line Our question the from America. Bank of Jeff of next Spector of comes

Jeff Spector

Great. Thank you.

you spring the and would for telling systems year? what systems and to - I in did with what that question, to the what the guidance? step a say, new of why the you taking versus understand or happened just close to the comfortable that now the compare you actually early what happened the what back, happen gap saying thought are actually were the First let's would comments listening rest and Like on then guess summer, to you, feel

Scott Stubbs

Yes, Jeff.

seeing So our moving we the seeing we was rates earlier gap we what and achieved seeing consistent that expecting. were rates occupancy new were May. That maintaining street up, customers what was was pretty were we our or through were to year in our steadily

June, As into the rates. July. we maintain continued lower that in we occupancy, we moved found that our needed And into order to

new averaged XX.X% about second July, And were negative into our to the we customers. were X% in quarter, negative so whereas rates

being sensitive rate what more going outlook So shopping forward. just us caused customers that our more in much and change being to is change

Jeff Spector

we said are into guess the say, like months? of you obviously. Okay. of then one in in we the the top seeing your customer what that competitors' think how health August? started head funnel, coming should volumes think new of and And on we guess June Thanks. July, volume of on I to I slowed move-ins, Like about as is record let's into tie comments today, And that seasonality the rental the traffic? we what Scott, as terms comment, I trying rental

Joe Margolis

there right? customers maintain to us the wanted can we larger of and at operators out our can't is we capture, The keep move there's We occupied. plenty power. full. for occupancy Obviously, to rates of level challenge We're stores to. XX.X% not give enough there's that to So type customers sufficient self-storage the pricing

So little second Life our a number. the less in quarter year-over-year but a rentals so were vacates similar comparison down purpose. Storage X% for down were that, also But than were

customers there's our them, So have but we the there, capture pricing can expected. out we power platform don't

Scott Stubbs

a have I And little also while gap be see Jeff, some out of moving it their maybe where there even bit wider what of of have reports them happened some we the is reported And what rental could been they last vary rate new in. that we think a experienced. and some year increases is from what than may other in

Jeff Spector

one I'm into I the this continue then you month time you provide think question easier end on guess, the -- of guess, And frame? sorry, easier And to comps -- I discussed but comps, the a or specific said follow-up can do the Michael's you like year. I just 'XX? into

Scott Stubbs

Yes.

our into year easier continue back the rates of and moderate year. of in 'XX the moderated rates back this do of year it in into half they comps half last So customers, last to to continue new as terms

had In have than year addition, comp easier last this you year. an revenue you from

the was XXXX revenue growth first Our of almost XX%. half

Jeff Spector

you. Thank

Joe Margolis

Thanks Jeff.

Scott Stubbs

Thanks Jeff.

Operator

you. Thank

Sakwa the Our next line question ISI. Steve Evercore comes of from of

Steve Sakwa

in your switch morning. like It can just went changed the of put on July. curious, guess, customer much in pricing off or change to June light seems dynamic guys I'm good what June? And that finger I behavior sort you Thanks. the

Joe Margolis

was good be July, and we I I about don't was. May, I an talked think We really distinct that. odd told you of end and March. at and were figure feeling change I We knew if had the well. it behavior would can, in a there couldn't as in We've that we customer what out June guessing

Steve Sakwa

Is the have do mean related? housing more lack that I less you housing you than maybe demand in would movement it's thought? think creating just of

Joe Margolis

certainly factor, self-storage, right? component housing one I story. of and demand for the important we think housing market is That's a know all

another down, right? economy. gone away. dollars think consumers is in around I all the is pocket, as extra COVID the have much money the were in rate that factor inflation way If don't have floating their savings There's

as I well. consumers think the fewer dollars have

Steve Sakwa

right, I guess, growth of And kind the second revenue the secondly, for my the to compares X.X% year. if X%, did the look of at in If Okay. guidance I'm quarter. you is the to think implied math second you half the which kind X% of I doing

of high the end, do new the kind between think the slowdown you Scott, us - range? are gets drivers maybe, the range Like end Is you it occupancy low gets from upper what more just the help to it you more the of driven? So of what what lower rates, kind in the through to and big think ECRI? like end end the customers, and of the Is

Joe Margolis

when The new terms And in biggest drivers, we we think, I move easier to have customers. of before, comp from year. mentioned an as are achieved last do we positive rates new But new I you little bit customer pricing customers. when where fall rates power to think to and start those positive of that move that guidance in a have you is

Steve Sakwa

is doesn't? for the sorry, there the end the in that back that that it of like at guidance low Or end any assumes high embedded I'm of So, is half the it year? the and

Scott Stubbs

Yes.

of get in end back you the So, high it's that don't the some you in Any pricing pricing to half that the power. power, to later where power year start that see more you start it. of And end of might the start get the - probably pricing end of in benefit low you to the see got August, assumes year. benefit assumes you some the

to December, If see not you you're until get November, power going this year. pricing anything don't

Steve Sakwa

it. Got

Thank you. Okay. it. That's

Joe Margolis

Steve. Thanks

Operator

you. Thank

Our of next Juan Capital line Markets. BMO Sanabria question the from of comes

Juan Sanabria

Hi.

to follow-up rates power you go street start benefiting year-over-year will or Just you're comps pricing decline on is from easier raise more able will When sequentially last question. away? to that the say a and Steve's quick you just

Scott Stubbs

comp. It's more of the year-over-year

move actually year, the year-over-year comp rates but to street through as them made have we've this been We sequentially, able negative. moved has

Juan Sanabria

question. Okay. And then just a regular rate

curious Just you MSA that's high-flying curious, there region around saw like that? could of or by markets? better anything softness provide performing on is commentary cost than the where just - some Or previously Sunbelt you are any the

Joe Margolis

think I Sunbelt markets, it's Miami, averages. Those portfolio the of continue strong are best Some markets. outperform are Orlando, right? continues and much or to be say So, is a too L.A. our to coast of like generalization anything weak to good. Sunbelt Tampa, that, the

the XX% are And some that last growth year. up put weaker of markets, frankly, markets

years it's do hard So, a - that they row. in to several

appear possible. important is weaker. will it's markets the cycle in non-correlated factor of be as thing diversified that, they to So important as And manner. a But because non-correlated I - think to remember

you upswing, markets. that coming and that LSI the we reduces the merger top always markets are like And our have you of our concentration our maybe is it have off on in diversifies upswing. markets portfolio of one So, and the some further are the because some always reasons

Juan Sanabria

note stay, top one seen kind you of then the me. front last anything stay, one out? on two-year humor of length that Anything length just in decreasing one as the or be churn of either impacted worth the if throughout you're funnel demand with terms And seeing of to of or less you've system

Joe Margolis

I so is or length but still one COVID very the in them. one But losing XX% healthy. of low - still stay year slightly. the those we of stay of all are length long-term or some the on two-year tenants, of not the We're XX% decreased think has So two-year and on

is compared average median Our vacating XX is about as Those X.X great to numbers pre-COVID. customer almost months. months, are

Juan Sanabria

Thanks guys. Good luck.

Joe Margolis

Juan. Thanks,

Operator

Thank you.

Thomas from Our KeyBanc the next Todd Capital of Markets. comes question of line

Todd Thomas

about the I how sense around revenue appreciate that portfolio? closed. compares quarter? the bit quite looked before Life happened and the the have disclosure on more sure steps the a first it to speak Thanks. points merger what not in anticipated. quarter you during and Hi. Any to growth X,XXX sequentially was would were we than And on same-store. LSI the integration like stabilizing what there can during Storage but growth NOI It decelerated you anticipating, I'm basis

Scott Stubbs

results, speak maybe the the take and Joe to And I'll can integration piece.

they all, managing of their First were still properties.

and So we in would the we couldn't go clearly, liked manage have them way to.

think what that would attribute saw in we have May too expected, fell than that I to was rates and June. would off occupancy keeping them we more we high and

them, in of the the July of finished When seen month July, they they've around the it lowered XX%. move in direction month you've positive

would it terms have but busy than bump So And they of ticked up not expected. that we Joe? the did then see integration, slightly, season in

Joe Margolis

the bit is a no of we'll integration. there, continue Data well. is going not weeks. So, transmission going do in I do We spoke some but little about That's hiccups. still to something that. to People work can and work systems have couple on just well, a you

And performance things. basics, us the rentals the while if But will improve. will. take all take better do, Life continue and on they'll the way of doing as Storage a managers train They will It our do get better. they to and now you fully can to

Todd Thomas

same-store and you forward 'XX, included going portfolio providing the I of expect until Life same-store the performance it's 'XX? a Okay. through guess, to Do Storage in continue in breakout

Scott Stubbs

best it's it 'XX. likely, have fully the to determined We the improvement. not because think way So probably show is

to them should our our same-store final see no I them to but to think yet. theirs, able likely, on outperforming you due it's systems. decision But compare you If pool being be

Todd Thomas

of forward supply I of some as would disproportionate up an environment as accelerated are guess, likely around it term, your stores. rate new that demand to related then system it over demand amount of supply. which more up lot be for And pandemic. pertains customer had time near this the here the assets leased that stabilized absorption to at outs the COVID added pressure good lower Okay. years, the the a heard Are existing moving during the the before move the new last pandemic here But and pertains Are a from could you've few a behavior product of, in to be in We've customers? that seeing question declining with different for and starts that stores leased or on were of a pandemic? operated you that period than materially I

Joe Margolis

store storage point moved No. and long I opened think customers They moved store into new for right? differently after stabilized been a that's into away. up they if a leave need whether or just don't that their they a pay some for time, goes

new up had supply We going supply, the I be right? thesis think demand of COVID and away that at moderating, more moderation markets we availability. but your new is right, excess that a see same kind see of build that's may creating time, that now

Todd Thomas

some latter guess those a some equilibrium the seeing out? several I demand stores through that more beginning or are that's as a are and XXXX maybe XXXX in were markets, find the you point question. my years, little bit terms in XXXX? just of move that struggling delivered thousand stores challenged? Or last Or assets of Right. to over still those The couple they rate either of renters moderates maybe you made, in even are

Joe Margolis

So, that clearly. I'm didn't if sorry answer question I

lot struggling an of it's during filled It new think, asset-by-asset that Certainly, got COVID. there analysis. supply I a they all are because had are delivered. markets up

demand. lesser there's Now

markets good So pressure. Phoenix are would of And example maybe really that. little I more those a under is give you a

moved the property customers the properties. all It's into all I it's excess regular - COVID the a into new analysis, an customers the moved other like But and asset not think market the analysis. not existing demand

more, customers the struggling that perform sense. makes and new go I similarly. properties hope the the markets everywhere, So, are

Scott Stubbs

are you probably you're Todd, little Yes, it rate seeing occupancy. a in more than bit

to but there. able not occupancy been the those ability rates We the at stores, - push have been newer have to has you maintain

Todd Thomas

you. Okay. Got Thank it.

Joe Margolis

Thanks, Todd.

Operator

Thank you.

from of comes Smedes next of the Citi. question Rose Our line

Smedes Rose

you, for guideline portfolio. of for something implied sort ask I to guys. portfolio - Or is seeing same-store just Hi it wanted you're meaningfully different? that the guidance as through well? could what back LSI your Is for the the half a you similar

Joe Margolis

the begin that better uplift as We portfolio occur. to stores would LSI to expect we platform, get do to our their on

Smedes Rose

Okay.

same-store your the in half is dilution embedded the some called better NOI that you've of through offset for So portfolio back year things that of the out? the

Scott Stubbs

things some there not it is growth two So, is our you bring is but what onto there, happens you Typically, as bring portfolio significant. takes a month or on. things

a And but we of ECRI. would increase, amount to start benefit expect the to those so not significant from stores

Smedes Rose

economics I would of side? then different think your you But ask And Okay. on too you expect most the just board, of I what's Or your will of do just platform, on them I a on to it's management leave? - the - third-party higher if come I'm wanted LSI And tenants. maybe for kind wondering know take you that you outlook soon. into to your share? that your either embedded kind Or some think were

Joe Margolis

Yes.

I think a good description. that's

had is we same So managed better to migrate a levels. run economics, more their LSI program. economics customized And our significantly partners. that which are will expectation LSI's managing program the everyone service on ran and our for kind the managed to program. stores. all LSI Everyone than of is of that talked our their also owners one We of

who not an that most partners goal managed parties. the because program management those our work fine is want of works profitable and efficient to have to some but on with separate for stores, absolutely system, to our that's don't have both will well we And

many, very we'll management anyone faster So, we'll - as else our most, the But in than I think, said. to and I'm continue grow you to continue keep confident we'll industry. platform I lose think,

Scott Stubbs

one make are Life these would quarter. point stores and customers, I some actually to added there lose is, of Storage XX that I some Smedes, during the going there's we other been think narrative

continued add to management through they've portfolio to QX. So, their

Smedes Rose

Okay. you. Thank

Joe Margolis

Smedes. Thanks,

Operator

Thank you.

next comes Wolfe of Our Keegan Carl Research. line the question of from

Keegan Carl

here. Maybe guys. the Yes. picture time Thanks for big

the seems could on walk this for if to you plan a view lot your everyone? had us because it's cut you the more what's wondering do challenging strategy environment a operating ripple year. strategy Two, space. it street It's Just through of time the here the worked? think One, created for last around effects throughout that

Scott Stubbs

I'm not of all, that that create have sure we of to kind kind environment. first power, of

we to maintain we're in existing typically customer react, on data I terms reviewing the pricing and the the rate maintain power of or based occupancy think that our increases.

if look you picture, one earlier the So big move we were at to think ones I rate. of on probably

else the think they And copied thing hubris rates the they eventually, also like I probably but to have to to I occupancy. the think everyone us, think on they that same saw and we'd saw, moved in maintain data we

Joe Margolis

test I we pretty strategies. We don't would these guess we vigorously and also say that at them before implement them keep groups. control

the doing right the if we changed. whether or situation we're know So, thing

have the a executed of confidence, right strategy. high I of because we that, degree So

Keegan Carl

NAREIT. mentioned gears remember the I Okay. results. spend May, in was here that and shifting guys same And you weren't marketing materially seeing you up at

just weren't half back thinking wanted marketing June? in of curious fair you're the seeing how is how that to assume the year? in it that one, So I'm in about and And translated since you July you reduced it drastically results that the spend you

Joe Margolis

Good Yes. memory.

if can't all. case, get happy that going an dollars. And whenever situations them. back. some spend during do, money we So, so we'll to in those we And marketing return, we return time return can incremental spend we're significantly did we reason the run And and get to test tests spent, not to expense, on higher the continue see we always that's at with pulled as we're dollars that what didn't we period on acceptable for no marketing

Keegan Carl

time the for Okay. Thanks guys.

Joe Margolis

Thank you.

Operator

Thank you.

Stanley. line Our next question Kamdem Ronald the comes of of Morgan from

Ronald Kamdem

much. Hi. so Thanks

Just quick me. for two ones

question of back of So sort to the demand. the on funnel top the

not and where talked you but occupancy, of can July, think sort sort of pricing you changing power. I about in June things maintain

sort as or to the you're of So get revenue that how the do you of the sort for the sort or is, three to what same-store going year half stabilize do the when about need tie the Thanks. the trends the the on or of next sort months to of So in that? to potential mean revenue, by I of on back of better think that the see there into downside upside front? conviction we into baked year get of I sort two guidance and what's ranges back half

Scott Stubbs

Yes.

summer think is is demand. what we've early in I seen in the there So, that July,

the You get occupancy the just can't and rate.

move As from year, year. this easier last have throughout we we comparables

confidence - that's to where the be to we've numbers so that that done us it we've gone And gives the able with. with go

think easier new as of this it through terms that customer we gets in rates. We move year

And again, that's some we power. that where quickly as is where confident. And somewhat in going pricing how depend get range to we are before, you on so mentioned we're

Ronald Kamdem

rate And guess have question a just some my - just heart follow-up X follow-up out was conviction here? I because think that range guidance But the to don't you is figure that That's things point of at I I - just quickly. like, like question go was or my of is the Right. there - I'm negative is move to change can't it X%. the trying just just

Scott Stubbs

a you year. of for end the time you the imply does of the if back could I in guidance, at period negative lower that of think So it half the look tick

Ronald Kamdem

to pricing kept initially, just presumably, Got still Or little reiterated the million it. $XX just noticed Has all? want That's I was of. synergies moved expenses, and helpful. outlook have it bit? back go as because same $XX occupancy changed in revenues, the still on to think you sort around explained or trying one, million guidance more maybe revenues sort I you I - million We think to Last understand is well, mix Just that higher. and LSI. they little of mix? shifted $XXX of has Is that Thanks. Because the for sort that a it it that the dip bit? same? the at a

Joe Margolis

question. good a it's Yes,

of We and We if since reduced So, about - Tenant spend. marketing better same. not we'll had the underwriting, underwritten strategy, had decided had that that stayed will like. did we increased feel insurance. had can dual synergies. better piece four than which we insurance we brand We G&A. the initially we we marketing discuss, we has had The revenue, have We G&A had about We pursuing you do store components a achieve. component. tenant

savings in presumed the two more about million revenue the marketing But increase one $XX will rental offset save so than we the or But revenue think be that brand. increase underwritten rebranding from the costs. we'll also and marketing of to brands increase, savings, million was under $XX

tenant won't G&A, in at savings, and property achieve better insurance the level. the same about marketing So in better the

Ronald Kamdem

helpful. Super

But for me. that's to think offline I much. make so I I'll follow-up Thanks sure it that. got just

Joe Margolis

Thanks Ronald.

Operator

you. Thank

next Our Truist. line comes Bin from of the Ki of Kim question

Ki Bin Kim

Thank you.

should the the just year, into to pretty about the that from here understand going runway during Just think year, going the to back think out? improving of size LSI portfolio? about we how curious, it's just topic. guiding like to we should $X.XX given next of that I $X.XX be you're to earnings I'm This dilution. towards helpful people think how on - for

Scott Stubbs

announced be and we just it would accretive under full When million. the Yes. the X% said $XXX assumes that we deal, that

we be you it And assuming dilutive rate next start shouldn't the next should year, X% year. of portion run So early clearly, achieving that hit a accretion.

as others. hit of think, than Now earlier I these, will some mentioned, Joe

will some start increases, achieve immediately. G&A start - The rate and think I we out we of send marketing this marketing, year increases. that achieving to we'll revenue as

them one. day You at can't out all send

tenants rate be tenant Some and increase of a a one X. insurance, is the effective month these ago. then that the And should received last January

Joe Margolis

our also of on us save on and But top this, upgrade, year on which We've anywhere non-underwritten of off this rating And closing, sorry, the starting Scott. obviously, got that books. expenses we've things sold other that our achieved - million immediately will achieve. any borrowings. future team loss interest not were we're we at lots And management We smaller which takes synergies. warehouse that in $XXX to to that

Ki Bin Kim

up to purely up is revenue 'XX further I I'm getting achieved guess, and that just of earlier as get revenues, And since same-store sense in rates I XX%, that than not are trying that you've closer is call, is closer cumulative the XX% mark? are at And Okay. XX% apples-to-apples. the XX% of to revenue mentioned But rates a obviously, higher XXXX street XXXX to XX%, when growth levels. you risk in there look

Scott Stubbs

that rates negative existing customer more today. that have gap we are So your and churn is difference your what's numbers created between XX%, two those than the that's

Ki Bin Kim

you. Okay. Got it. Thank

Joe Margolis

Thank you, Ki Bin.

Operator

Thank you.

Street. comes line Green of from next Our Spenser question Allaway the of

Spenser Allaway

Thank you. Apologies of quantified magnitude have through the stand-alone the if guys you LSI portfolio I missed and then but this, ECRIs for in and EXR XQ July?

Scott Stubbs

per with that potential we've ECRIs to we that is we out that studies the their acquisition. assume that that on done our went have rate the stores initial initial upside. ECRIs said one-third other showed did stores. the two the and with do $XX square fact closed gap. foot of that LSI significant about gap XXX%. million underwriting And not synergies, we as pretty occupancy showed We When not closed there assume the has than had that we we gap well as between we with quantified So, did deck a and We only that the that

Spenser Allaway

Okay.

it did sorry, portfolio? quantify And you ESRIs for

Scott Stubbs

the quantify of not back half ECRI. XQ in anything did of of in terms We terms

Spenser Allaway

then platform the secondary lot this kind to those structural there guys potential LSI's And in call, kind spent in on with some like think from material or superior said won't revenue of NOI guys this around margin markets But have operating maybe there we smaller you LSI just Or as the the concerns you any be able you to expect of know that integration management to I thank differently, portfolio. some near operations uplift a started on demographic scale the provide it or are overcome term? are you, weakness as to time your hope Okay. achieve see of in that just headwinds markets? any any color relates and of you that

Joe Margolis

good a it's So question.

I think is adopted in LSI? I'm sure. we that to there really Buffalo. markets look weren't from going basis. not at be some How And are do? a this on We to we Buffalo long-term going

of But will the increased sure. where Over flows going to have to be stronger, be will in is and take they the some help weaker term, returns. variability just greater from the short cash what out come is volatility is and really diversification all important

do markets So some yes, will better.

long be going company. over will market to the worse the term, markets it's to performance. be a But through Some benefit cycle

Spenser Allaway

Thanks Okay. so much.

Joe Margolis

Sure.

Operator

you. Thank

Jonathan Our next Hughes Raymond question of comes of James. from the line

Jonathan Hughes

Hi. Good afternoon.

But supply, said year are, see think there. ago think, So deliveries the impacted don't is extra-fast street strategy for by few rates the Ki that years. know I really but impacted question your in the you past new you we brand earlier Bin's have normally, implemented second out only I And a the industry. been pretty muted largest

types about have do So of price a and you introspective the my the of coincide seeming when a change. peers, that ones the might agree think an these did in your little certainly more take question careful is, started look I because of more a with bit today strategies running maybe some ago, war future which strategy year be smaller we

Joe Margolis

don't I So in are remember highly cube still and respect. Extra it's a control It's and And the these public though we to markets that largest brands. fragmented think important and even any Space life industry.

competitors many many, mom-and-pops where stores are of have not We all or our REIT. and most

have only REIT competitors. So one two we or

others. produce we to we're shareholders best to So and strategies results what our it care think going long-term continue to about really not that for the does adopt

Jonathan Hughes

is, the - the if different think, drive-up understand mom-and-pop. at X product, than, you fragmented I comparable the of Gen maybe but an Extra I say, think But the look if market, the I nature Space property

consumer, that So product air-conditioned. that's They want legacy they multistory if want and that's property. your target don't your

of that much Your market is share greater.

where I for type think like-for-like so a I the questioning my actual of Extra the We sway type all little know basis, came line you of yes, than think of of the brand. some customer, the own Space think think. that on more you But concentration. maybe industry competing think I from And that do that's overall on I product

that's So my question.

Joe Margolis

disagree. I would respectfully

private systems think the our store operating product competitors regional have us of stores. all. their to are Gen not platforms at from standpoint, very X are There's that older. all new private sophisticated But our is to the I plenty that a comparable same. Their comparable aren't climate tenant operators control and

Jonathan Hughes

Scott. Well, birthday, early for happy me. right. All Okay. that's appreciate it it, I and

Scott Stubbs

Thanks Jonathan.

Joe Margolis

Jonathan. you, Thank

Operator

you. Thank

Capital Juan from comes question next of BMO Markets. Sanabria Our

Juan Sanabria

Hi. Thanks for time. the

Just a follow-ups. couple of quick

how Firstly, is going there Express Storage that rollout any then the the transition is of update strategy? and and on

Joe Margolis

Yes.

and was we So Storage they a a it than put had But with frankly, confident just it. reasons to we systems had Storage on onto accepted program. model the to our life ECRI And put little system their hadn't a Life storages, operating well. saw that for the how program Storage program we on because went we that harder, Express once very working different got through of customers is one everything system, Express, our to we're for with ECRI

a of six were that of very slower than on So scaled integration LSI we of underwriting, year underwrote we is well. ahead merger. in Growth Operating terms as months through back focused the good. while is which little we the

million, less remote smaller stores, foot, year. we X% or a approved $XXX so five So yields bought but for first purchase the five than stores, in we've $XX

to attention this, growing can our excited once full So turn we we're about it.

thought of So would Life our Storage. than ahead to slower integrating we the going turned summary we track just on as well, or track everything be, growth attention

Juan Sanabria

for revenue, a And focused guys the just to you the on And lot have of seemed about and maintaining and has one today importance question occupancy are but me. occupancy more appreciate talked that. I conversation of maximizing

square not know So elegant there. high to it a that the phrase, I hooked maybe mean was occupancy? way just I here. kind there chance I would most of appreciate just is hoping could but you thoughts your you're on the that's

Joe Margolis

Yes.

that the have strong of those of earlier, - So to I our we tests we strategies do. And based a on our that results results led conviction testing make We have as customers, and occupancies. to things come at mentioned ECRI. want both to that expense incrementally of through up have to seek are the initial want try the and higher rate us longer-term of those

apologize we've revenue. much about to tool spoken is I if a maximize So it too occupancy, but

Juan Sanabria

you. Thank

Joe Margolis

Thanks.

Operator

the I turn Joe closing now remarks. Margolis Sir? you. to Thank like to conference would for back

Joe Margolis

as a only everyone, stores but maximizing for today. your combined companies, our performance focused time. you, difficult I our here everyone integrating and is everyone Great. Thank assure to time very that not at at want on the emphasize teams

lease-up about have synergies very, of market will lot ancillary recover, new We from are line, non-underwritten books, lower. housing insurance stores Eventually, stores, to tailwinds the our underwritten will and businesses. the as and grow come We moderating management LSI is given delivery the a from future. hit beyond see XXXX rates dilution that the will excited interest bottom the continue that very eventually will of to in the be loan we given we of bridge and $X.XX that

much. you Thank very

Operator

participating. you Thank This for conference concludes call. today's

disconnect. may You now

Extra Space Storage (EXR) 4 Aug 232023 Q2 Earnings call transcript