NSA - Earnings call transcript Q4 2019 | National Storage Affiliates Trust

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Operator

Greetings and welcome to the National Storage Affiliates Fourth Quarter 2019 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, George Hoglund, Vice President of Investor Relations for National Storage Affiliates. Mr. you, Thank begin. may Hoglund, you

George Hoglund

New Good morning. the that earnings of put on our fourth a garages rooms. clean and basements this I would is and those conference for joining started year, like we'd get everyone items time first to of resolutions like and you good out for call those to garages into Since basements Affiliates Year for to it's that, storage. are Trust. Remember, earnings man With are today quarter for National Storage the us and call cars caves remind XXXX and rose thank

In addition at in an the additional which our detail our yesterday, containing supplemental found filed to package our on Web can site on with be internalization X-K an with of on distributed largest and we X-K additional PRO, Investor with results, SEC press the section the detail nationalstorageaffiliates.com. Relations release our

contain your management's On company prepared call, any may differ uncertainties. actual and to cautions today's that materially answers that The projected results remarks to are forward-looking those in risks may subject questions forward-looking from and statement. statements

forward-looking detail public with to SEC. refer For concerning filings statements, our additional the our please

our definitions the relations sections contained on measures, and reconciliations net filings. available the investor We in package SEC in in listeners to operating the FFO, our core also encourage site review of financial income as non-GAAP and such FFO supplemental and information Web

and Nordhagen; Financial Togashi. conference and Today's Officer, by hosted Fischer; Storage Chairman, call is Chief President Executive National CEO, Tamara Affiliates' Arlen Brandon

questions financial management remarks, accept will analysts. prepared registered Following from

over call the Arlen. turn now will I to

Arlen Nordhagen

for all And thank Thanks, joining our you call. George.

my I taking as participation role, the on forward next expect up will on I'd to leading put reduced Conferences my transition my and As at record Executive stellar off to as the as January Chairman and CEO, NSA and that its calls track you Tammy's today's NSA’s through Brandon Investor officially into CEO we've phase by Xst. continuing be effective growth forward. like congratulating CFO, call can With final reporting together. going look start wrap here Tammy over will earnings

engaged and key recruitment. strategy, company PRO actively focused on remain investments I However, overall and

quarter of the wrapped expectations performance, another year peer and top share stellar our same-store XXXX our with results and core per ahead full revenue, with of and again growth once confident we're We at be NOI up group. FFO will that

while earnings step We go also self and dollar-value XX% internalization portfolio PRO. total grew our our made Tammy largest milestone, address conjunction I with in significant our a a and major This year, is details evolution announcement both by I'll into representing a in NSA. Brandon count of let on the of the our storage, SecurCare property on the the basis. release,

an common a of our wouldn't minimum its at units shareholders. NSA's the any XXXX always retirement years five to the those mind. of first PRO of and penalty our likely currently PROs, that keep told would would properties. event at NSA a of for analysts IPO, conversion by internalize and process retirement earliest, would happen approximately PROs we subordinated PRO noted SP the as reached units Since that expected accretive after investors three, IPO, until the One, which few retire is or we stands part for which XX, the consistently IPO. performance the on time in And management things our XXXX, the we've a Two, half be when of our of at

NSA's now? by predecessor to accretive as As leadership first to of which per the founding common a share first setting I'm their which internalize, to an SecurCare the share one be predecessor NSA. is PRO example pleased the ongoing sure SecurCare, to founding begs of announce shareholders company and you the basis. to approximately I'm annual of out retire this how community the company co-founder question, and provide to the on units, per will $X.XX portfolio It was and our the many investment management to internalize PROs I'm process other and why to sense PRO demonstrating and of makes know, will and of play in internalization XXXX branded why and PRO about three a PROs $X.XX the just SecurCare $X.XX that their SecurCare and be overtime. SP of

and number its NSA the Second, why it captive its now? markets has great To local acquisition begin, largely assets a relationship-based where within contributing operates. pipeline of finished into exhausted is SecurCare opportunities

first to pursue allows Additionally, the favorable to departure in Dave timing note first that our from opportunity the want PRO Cramer, internalize Combination the SecurCare. I opportunity SecurCare's also given Steve's CEO the NSA these to an at decision connected the departure SecurCare January that Steve now. to was to factors penalty. conversion X, I'd NSA. join COO, no internalize address is culminated way to any minimum for Treadwell's of into with as internalization like entrepreneurial for of XXXX,

but him contributions saying in does are significant with and we a his move seamless speak the Steve sad he as and passion. him I I've for our timing NSA coincide who as see fortuitously entrepreneurial are well his and on, to thank fortunate worked for pursues over for However, years will transition. COO, we we that, XX Dave, we that of all step ensuring to NSA wish

I'm and NSA's NSA since NSA's NSA's team. self-storage a in the consistently won't served of CEO committee member NSA formation, confident I'm operations of advisory intimately step for familiar I'd staff leadership corporate since over technology in phase with transition. and known and being and SecurCare welcome regarded NSA's new is management highly having excited He best the to brings a and is XX well practices miss of as Cramer group, of and in experience years rest Dave of NSA's and operating PRO inception growth SecurCare providing the industry. this structure, this like to the Dave

to I'll now turn the call Tammy. over

Tamara Fischer

increased investors. address economic faced a see real minutes internalization. fundamentals interest been providing on of and the continues uncertainty spend chug demand very then due and has the to global with SecurCare Thank that estate. a you, properties property other challenges along an by changing rates a I to while types, both events favorable and anytime presidential backdrop the high stocks don't pace, with Further, few for remain combined I'll Goldilocks The economy in by And election few soon. low, Arlen. a at self-storage sector upcoming mechanics

clearly marketing radius effect of our in within from a the are remain is the stores rates accumulative Approximately supply five of our weighing competition up that quarter. last XX% we impacted driven competitor a but street reported are moderating fundamentals has given on healthy now portfolio being XX% Internet front. and average, the mile new intense new On on by

muted. we Portland, which the in growth pressure street finally pressure occupancy West child largest year. to expect properties face increased positive remain are to poster Coast Phoenix prior under Florida But for number Portland in and second in continues compared will also from through a rates our fourth the new is improving we elevated worth revenue XXXX. lease-up. market the of be the continue to in Despite oversupply, and supply and will to growth battle in quarter noting to that happens saw remains Portland and it's the this

prior flat to Competition our our the quarter compared fourth XX.X% supply same-store driving and average in during points was new compared year the for which at is increase year-over-year X% pool from was the up occupancy the Same-store year basis for quarter up XXXX. spend, XX marketing in fourth to full the period.

on We XXXX X% the with lower steady finally street very albeit year but year-over-year a to basis. slowly. improvement end are throughout right started year-over-year to rates Street direction, relatively rates XXXX the saw moving in X% flat

out in rates months were low-single churn because move the fluctuate flat. on in-place to This move-ins remained a tenant. digits on increase to rates high-single roughly in to During Rental the quarter, on on in move-outs between below months volumes summer tends the our ability move digits basis. rates negative percentage winter of and

our customers, we're existing revenue increase no overall driver approximately Meanwhile, be digits year-over-year. key a is high-single seeing of the to growth. in mid- discounting to ability softening continues flat on to in which Importantly, rents

in let MSAs a same-store me San Bernardino, our where Next, on recent growth exceeded comment game. local Riverside, include storage quarter, terms some is specific leading of Similar demand has to in supply markets. Las mind, and last Vegas, growth. Keep growth revenue Atlanta

our to areas headwinds new seeing assets impacted concentrated maybe markets despite an by the Lagging supply. Phoenix in and that portfolio are new often Tulsa, our supply from elevated included supply. Portland, feel So continue level the MSA less in which on

for growth revenue same-store positive and generated MSAs year. fourth XX Top full our of Each the quarter

flat growth our sub-markets. in negative However, of LA reflecting XX where revenue of did markets in the number a realize NOI the quarter impact supply fourth Top in roughly our basis at same-store point, new one of same-store came

XXXX, For MSAs. year growth was NOI Top the in XX full positive our all same-store

managed almost NSA's employees portfolio. rather XXX, mechanics count, our the total to of platform transactions. in to by XXXX. although internalization in of become Based and our of will represent stores current accretion over corporate internalization, will NSA. NOI remain SecurCare PROs Also, is to of effective NSA the will by and they the The managed internally than about budgeted store and Now increase expected SecurCare I'll X properties of will represents on XX% the place, the those become number on then employees shift the which XX% expected same-store from April then

that a of. Regarding few are key the you statement aware items financial there should impact, be

through are in administrative $X.X First, will million XXXX, by which of supervisory Schedule the fees approximately $XX and Those labeled broken were SecurCare expenses was management SecurCare. and paid XX, eliminated. to in in about flow supplemental management our out million fees expense. These be paid G&A

$X what to these of these of we fees, expected generate million elimination is to spend between $X.X savings. assets and operate annualized net to internally The G&A million of expect

SecurCare X acquisition which is management the consideration units receive about the of times EBITDA. of OP prescribed based as on Second, will our for company, XXX,XXX formula

SP common the million of shares converted NSA conversion Third, SecurCare into roughly ratio. X units, units be at will applicable of their series

units shares. SP reflective ratio units retired SP units total, be XXXX, the performance. and million as this total issuance times X X outstanding conversion of of times, the million of SecurCare new X its In will over conversion the approximately average SP X for Although series in historical all end units was transaction of OP at with outstanding ratio approximately of a X.XX common

You can quarters conversion. also to due this for remaining over the expect to the average portfolio SP NSA's decline the units in conversion next ratio few

million $XX included units, package retirement the distributions attributable of in an for in the to by FFO SecurCare in noted all anticipate be annually $X.XX series of unitholders We Schedule will to FFO in the performance the per due SP Fourth, share be $X.XX of on which reduced share subordinated to over supplemental $X.XX net this annualized reconciliation accretion of to is result to will core of transaction approximately the XXXX SP unit. per X basis. FFO approximately

over quarter results, to Brandon and I'll guidance. address sheet call balance now to turn fourth activity year recent full XXXX the and

Brandon Togashi

Thank which store the $X.XX, healthy growing of you, NOI increase by with acquisition fourth platform. fees results Tammy. strong over same share X.X% and quarter for volume solid core JV a from full-year Yesterday fueled we combination, This prior growth of afternoon, represents year reported was period. our an the performance, FFO a per

with X.X% XXXX, for NOI during fourth versus growth benefited points maintenance the favorable property by by year prior fourth expenses unusual the expenses. by the growth that expense items prior taxes which driven grew unexpected repairs quarter, in grew quarter store X.X% the of property OpEx same over the XX just quarter and same-store over For revenues and growth X.X% partially increased in an the year. expenses X% operating decreased from These offset X.X% period. drove Personnel assessments same-store were in over The basis tax X.X% prior year prior period. year-over-year decline property favorable marketing year, costs

NOI historical create challenges assumption XXXX. Notably, our despite a same-store assessments in facing was sector. with X.X% growth operating sector property NOI XXXX, revenue quarter growth contributes property X%, year-over-year were expense currently and the and our was The really comp, elevated fourth averages, revenue full-year growth line in growth the same-store which the the year will X%. for and favorable challenging growth OpEx to the was tax For full just

the seven million. front, fourth of a On the acquisition acquired during we properties total for owned wholly quarter $XX

of accelerated XX XXXX, we and XX the to JV acquired acquired total we've properties. a states which For owned has located total includes owned XX a properties, two across wholly full-year $XXX of million. for properties, pace quarter million, acquisition XX totaling end, Subsequent $XXX and wholly

far is We the not It acquisitions the issued conjunction during the turning in issuances quiet million was just sheet and OP a dollars balance with balance any sheet. as equity $X to quarter of Now quarter. as did debt complete concerned.

For our weighted the our inaugural progress, by revolver we term loans, recasting which made private further our average maturity, significant the opportunistically strengthening facility, full and completing while included transaction, ATM sheet year, tapping our balance extending credit to reducing the our increases placement cost. and

Our balance X.X% our sheet with positioned cost or fix. is quarter swapped at end of average well revolver rate, a weighted fixed with of except to all very borrowings debt

range of times. X.X EBITDA fourth X.X net Our quarter, weighted our average the end at our of ratio lower target and X.X debt to years to the maturity times the is toward X.X was end times of

maturing are next debt a balance maintaining the of to conservative million over and $XX just committed years have we three sheet. We

on moving to guidance. Now

impact that expect away growth will in supply cumulative of elevated on further new the revenue We XXXX.

the expect impact positive XX contrasts the with to same-store XX positive additions which an to the pool store the had the XXXX. same-store a of pool in to impact to in only increase we revenues point We'll portfolio, net the slightly have XXX Additionally, This XXXX. assets. brings basis even

into growth to Core $XXX X% the X.XX%, incorporated to growth X.X% and XXXX guidance impact X FFO transaction of million. of date. into NOI as $X.XX the to of all SecurCare Lastly, as to X% assuming consideration, implies of $XXX per we've April guidance of $X.XX, midpoint, this internalization the follows. Taking owned as growth growth full-year of which of million well volume introduced share X% same-store X%, wholly we our at revenue X.XX% acquisition OpEx in

in are outlined Additional earnings release. guidance assumptions our

Thanks the today. Operator? call to operator the questions. again for to our joining We'll take call your back now turn

Operator

Instructions]. [Operator you Thank

with Please first Our proceed Jon Petersen question. from question Jefferies. your comes with

Jon Petersen

the start on I'll SecurCare. think with question I

the So Chairman of or SecurCare Arlen is CEO and was.

this SecurCare given internalization the internalization preferential any same So with treatment was I'm other as structured just this any if be? curious would or

Tamara Fischer

this recommended it appointed the or independent they beginning they the from When done, transaction end. transaction really all it Trustees financial legal special independent advisor, as the with the the we complete of was to Trustees through SecurCare as So a was an that all as highest to they transaction I trustees. counsel, the And set extent of actually And prescribed. excused that retirement agreement governance it led that the our discussions merger worked on result, special our transaction considering the Trustees they approves committee then and forward negotiated with not our existing advised formulaic the terms a Board The and was from out place. that in to Arlen then Arlen the agreements. committee of the of standards go of and the to corporate under immediately comprised And way, committee said and a the himself soon Board of approved appointed with Board was Board saw transaction. terms events

Jon Petersen

of managed PROs know And you PROs platform you through, the you you more easier a of I to and of to Does XX% past have a the more I'm to how that in internalize platform. or existing some potentially PRO possibility have few XX%. externally goal one just talked add it the you internalize -- one internalize as guys by if maybe talked add you to curious more. ones? more about make XXXX capacity as the a about

Arlen Nordhagen

making that around think as managing easier room because people about is does limited the make you there the table, decision. actually somewhat the together fact at obviously of It and table a it

And mentioned It easier. time. retiring, from definitely I working PROs how about maybe same by the of new it's retired, I practical of becomes the original as half a might talk can many time. be PROs replaced at be PROs well the might So just matter have together over you that

PROs, obviously easier. opening on have it it a some And things always very territories and it control, easier potential pleased decision It the timing So little personal potential by with those the we make we're some new we it's that. never also but that does for like makes prospects up PROs. for

Tamara Fischer

a we've the we'll that of XX probably the to range always three. follow-on, believe probably of still another And that PROs. right in PROs said And number we just I for is have room XX to one think

Operator

next Please Our with from question question. your comes Malkin Neil Securities. Capital One state

Neil Malkin

obviously, what were trending? rates you been acquired been assets know, down, current curiosity, the doing? had been have quarter, at Just first like cap coming but I that the closed those at? transactions they're a for what you yields the in Where

Tamara Fischer

Neil, this Tammy. is

we -- least cap at us continued compression for right, you're basically a So rates. are seeing in

Fourth And to probably will XXXX seeing cap transactional not X.X% of range rates I'm that up from X%. pretty range. looking X.XX% quarter is go Our the X% there. were to into the More we're heading that they in sure in at activity,

Neil Malkin

could just I very there. that. to capital you a new internally out payment transactions lower -- of are need to we PROs, that subordinated to rates trend lot low incremental able so you lower. again continue And level of conversation the guys is per that sort unit you guess take to X% on capital Do raise the start cap a tenure a if the pencil make mean I as holders, regarding may have or you

Arlen Nordhagen

us set and paid The be SP. first way it that the return to up, the our change OP would new that is on both allowed the priority then documents for are acquisitions to

that, down that. are And do allowed so if the market to trend continues we to like

still making it possible Fortunately, to to to it maintain because far, base equity. But approve possible return that. change able have X% so for continued we've that X% down that debt the is to to the Board us rate, achieve for on the come been costs

point I changed downward, it made or if thing date acquisitions applies that to after change. only has that one would Now either ever the future out, upward of

said, down the it applying future would after to it change X.X% that up again. occurring and new that let's that move for they acquisitions be and let’s So say, any back acquisitions the for to example, move rates up go if would until only the change Board be next X%,

for based is return what So future acquisitions on priority always set it's that at.

Neil Malkin

differences do revenue one or obviously urban supply. are then wondering me, just outside is that to suburban versus break or or can ring of growth from at less terms look beltway your the properties I'm concentrated of street portfolio of sort rate you overall And in benefiting if more closer you last kind from centers the out areas. in major the

Arlen Nordhagen

an cycle We secondary do core to look timing they the that average and keep than smaller a see just urban on fast, really have increases seen and in course, of percentage absolute rate it historically on easily a general rate urban we basis, better or markets, the basis, markets foot, cycle seen suburban average interestingly, core quicker, able that. that as cycle But up. of up just good square move can dollars a just They're urban been faster and But particularly lower a it's on can so are issue. per we've is standpoint. markets you move that remember, rates basis flat a percentage on at at And the as as markets. core aggressive in but from a in a we've in the down suburban in

Tamara Fischer

are XXXX. seeing were what street the the sales would places with street and of which across the Portland, basically as rate now relatively are rates is even we add recovered in one they the that negative Board is flat Arlen, encouraging year-over-year beginning to like toward thing I

Operator

Baird. Our Please question RJ your comes state with Milligan from question. W. next Robert

RJ Milligan

markets equity -- the SecurCare, the I'm was in of the to no NOI to wasn't has I there, just confirm, years any the SecurCare's assuming some been guess, there there? on was Just that SP the new couple but of Arlen, any risk supply, so to there wanted risk to allocation subordinated given there growth strong given weakness past allocation? over risk I subordinated that the

Arlen Nordhagen

not, Yes, RJ. is there

performing more really obviously time are best long well quarter this fact, done been oversupplied even run, SecurCare -- PRO have but sometimes they perform do to has and long our the to strongest well. and really throughout continues PROs continue over quarter the to from In other term, better

obviously a in bit standpoint. are lot one, Oregon the So the suspect in general, general, in our Northwest difficult than markets with supply most risky they But the in oversupply. the being less that to new little less of SecurCare PROs, is from a

RJ Milligan

And from? projected can $XXX of then the of are just those for at bucket, external this midpoint acquisitions growth you the where coming million year, sort

Brandon Togashi

is Brandon. RJ, this

$XXX close for from will we've release third-party closed been the always then far over XXXX, saw in so we plan puts if that captive is acquisitions. new yes, if properties somewhere largely deal avenue We close properties that our we have of over And probably $XXX $XX range sheet, a the well million. So, on which report end I come of the pipeline, to say balance in our to in. $X come you million XXX portfolio range. high-end that or in a In range the million pretty that's bottom talked the would PRO billion about of to larger that quickly we hitting you

that mix. going to up rest of kind the that's make So of

Operator

Please comes question Markets. Capital with your next Thomas KeyBanc from Our state Todd question.

Todd Thomas

and the Arlen, little you timing three the given also works ratio, were flow the transaction PRO a So exhausted. if some provide demonstrate are on the with can cash transaction in the insight Why there around that the to the SecurCare largely just so and you attractive? the promoted is now, relationships curious transaction, you first the timing. effectuate if splits I'm captive economics, I mentioned more But a the appreciate back to times provided conversion little leadership the comments bit the pipeline of providing process SecurCare local how

Arlen Nordhagen

leadership it big big the comes to, down factor. Well, a a obviously, Todd, was

giving to came SecurCare factors other personal The to for that down liquidity some other was opportunities shareholders. that related issues

one. important I think an that's

the other management to members. some of Some personal you objectives as relate

of continue to then NSA a be very is strong core And You on in proven that. going now look believe that to at its we saw really the at SecurCare CEO issue NSA level for core favorable that appreciation frankly, you that see timing I NSA's good that's see just growth, opportunities to Kramer, stock. we're joining as the Dave

us those effectively And we're convert get now significant shares in believe so now, that for And made next sense when the years a it to a few see lot share $XX over range. we'll appreciation the above $XX. of we

Todd Thomas

where just year then the XXXX? the IPO, and expecting since in you fifth conversion Are And that given in any we're penalty internalization is transactions now. minimized PRO additional

Arlen Nordhagen

general think SecurCare don't see is before the of I the before that transaction the to the But of any when and for that a end of we'll was PRO took get was that's which XXXX then that formed. it the of XXXX until supposed now special of course committee the the wrapped Board to complex in processes up. notify fairly consideration and end that a did their year, Board

independence with wouldn't be the Some PROs of don't might Board issues because as other being that quite Chairman difficult have. they the me the they have of

personal again objectives. us So so the we'll I But retire. to just have next that's depends that that probably them that's personal we their at see five, say PROs more issues. and this the but year, that, notify of it tied another on always can't And I control or four, up four I'd might -- end to another over might years, PRO

Todd Thomas

PRO margin, ratio on would less accretion it? for thinking think units SecurCare times be mentioned transactions of you just is about at sort SP the that the would again that the that about imply the right accretive three be would the to then way and that And conversion future

Arlen Nordhagen

relative is the largest dollars model. size, in of share, cases a obviously No, percentage a the and same, the the accretion transaction more to therefore our same, large going would cents accretion because accretive accretion the but but be is to the of but only basically because accretion that approach all per more it's formulaic SecurCare last PRO, adds be a percentage

Todd Thomas

of just departure? can the about of on in an more the transition one talk just guess, I and the Treadwell's iStorage you light oversight And platform management of transaction, Steve

Tamara Fischer

with we're pros. fortunate -- this industry Arlen completely experience Steve to in the you've I many very our think Dave, highly Although, have have way and is see self-storage, as from you very Kramer of to certainly take his is disconnected Dave, Dave XX vet in We really leave, it's over industry us. years mentioned, met maybe any an of join plus feel by regarded sad transaction.

Our goal here least effect SecurCare is to both the do transaction members. this to our team way possible in team the NSA members, disruptive and

our is will SecurCare of for is see to verticals, objective -- employees ours. is So we'll that and the to for and seamless. short-term consolidate here time, think Over for this beginning, opportunities of some both operations I objective that in to iStorage really be certainly functions stay but is run not a the two for all we thought entities place and the as will in

Arlen Nordhagen

Steve revenue will all here, marketing, that. the leaving, worked be all will the properties, though doing management, all of team on of will doing that's iStorage overseeing the be all Even all all the continue

on don't out much So we'll ground Dave see really it's really just really, the and whatsoever. stepping level in difference I and think Steve moving

Tamara Fischer

think right. I No, that's

the is, are we involved now evolution on that of he platforms. XXX corporate thing call sets basically The knows two practices the of Dave has have entire stores the unique best He other XXX, and if brand with perspective and managed both portfolio. a team it our iStorage, those SecurCare in and is

be for us. this although hard, that So think couldn't I is honestly change better

Todd Thomas

last to to It last activity. acquisition one going activity the was that like And sounded moderate. acquisition back one, just quarter

You lowered the high down. end of the winding range XXXX last quarter was as

unexpected. was million little able the what million achieve year-to-date a to than changed and was you $XXX and So also be $XXX million $XXX closed having I surprising that you'll guess to think forecast? confidence I the what a gives more little

Tamara Fischer

a line guidance year, we quarter good six we busy pretty -- $XX QX I'll by XXXX million happening off what $XX was $XX Brandon million, is QX closed we adjusted of the first mentioned started and we in of that. So in transaction and months as the with have sight just a to on what in million yet when saying, last start also size had fourth of other and then and we

good I reasonable. our think don't means. is into that feel dunk by we So range think any XXXX heading I a and slam it's

and activity that frequently lumpy that quarter, so talked know have is of kind QX other first to a have what's be slow. because already The we'll good we and thing could we be closed. done acquisition is about

who contributions mentioned, joining make significant guidance don't any high portfolio. frankly our the at of is Brandon good without the As there hit time to I sized much landing NSA of of end can new either a PRO think or another way adding

Operator

Citi. comes with question Smedes question. your next Our Please state from Rose

Michael Bilerman

annual the everything Michael really talked sure I through on distributions -- sort was savings, of you out, transaction true But call can will differential almost It's dividend is $X just and doing sort that from if you million when here net about net wasn't the going Smedes. impact then X.X cash you what laid you the of of net Bilerman just transaction? SecurCare walk for away. cash out the million wondering I the $XX have XX you the million. Tammy, shares, G&A of from just million of it

Brandon Togashi

Brandon. is Michael, this

take me that Let one.

the and longer that makes on $X dividend it So adds kind those shares clean to A. you're going A on to on units, for the savings, but paying, those have units up away we're SP that pretty the easy. the pay Tammy that G&A the new to SP distributions no of for million denominator Class one's $X.X talked The about million our going

kind a that's So of wash.

Michael Bilerman

been the with have I have $X.X would million exchange, thought there some there. exchange, Even the leakage would

Brandon Togashi

going not the effect. is -- minor. million so $X accretion It's that's but into it's cash really that's not to neutral is a a that minimis. that really flow the assure that's the like, set up penalty de million It's actually It's slightly number. on accretive always is $X to set there really No, it model but way conversion

in $X.X it SP organic participation. then the under what for properties So the million is, you it's potential to million that have growth SecurCare is G&A that acquisitions $X the external the through and growth no longer really and the, on sharing the

is that our portfolio. quantify a currently to And little same-store SecurCare a up so makes the over third way of

for the million if SecurCare store you number a could million an same of is growth that take organic you have NOI and take $XX NOI to approaching year, number that. $XXX So the you for

at the of growth million, that SP that X% quick get shared and so you math and as to somewhere on the no And you will there. say $X.XXX. just are that's range. I take that to million. being XX% you And $X.X the that how be you $X.XX PRO the $X.X or that's And on longer $X.XX, million, my how get or And $X.XX if to by million you to $XX is NOI $X between say $X.XXX, $X.XX which G&A, equates that to add

Michael Bilerman

growth have a So you stayed in is guidance really as the today, as been a your forward look or PRO, now been in XXX% this had by of NOI would have have that if would shared, bringing offset growth.

basis, paying talking upfront you're the assets it producing by you're it's from about. for right? current predicated equity, giving accretion essentially savings them effectively those only all less, real the G&A returns on is years So accretion that much would be those a that On straight perspective, the

Arlen Nordhagen

true basis, No, about quite a current basis, a of look-back NSA. there that's million not $X basis going NSA's is is now. additional what on cash cash getting to This versus that's year a on on Michael. a Even

million have X.X Now shares. an extra you

extra you which our the look-forward fully a going and $X.XX. on FFO million $X.XX divided the by So to really $X is look-back a divide shares to by you're diluted million then shares, X.X how on you basis but get million that's you to have effectively additional of share, for basis, now get XXX that where effectively component,

Michael Bilerman

that G&A, $X million. you from? million talked $X.X And is $X.X the is where additional $X about other $X million of to million coming of $X But where FFO your million, that million,

Arlen Nordhagen

penalty SP OP the to From the of OP… versus the SP the equity conversion equity, on the the

Michael Bilerman

at on Is the there a lock-up million X.X shares all?

Tamara Fischer

is. there up. Yes, five-year There is lock a

Arlen Nordhagen

SecurCare. of relates not the shareholders small private only to That insiders, the

Michael Bilerman

holders and I percentage of you anyways? The the of lock would and the the company up what David shares it's that are assume be, primary five-year

Arlen Nordhagen

XX% I and company. about Dave the are Yes, of

Michael Bilerman

compare of or other then the formulas for What what kind to it you're because really no me nor And where David. retiring, is just remind were retiring? one's the an right of those odd called internalization? an option, did the option options not of is how And because the is retirement retirement

Arlen Nordhagen

Formulas are same. the exact

company. formula EBITDA of So the X the the management times is on our retirement

be So than because that's corporate OP running a a say million SP regular a million, and OP And $X this merger is the conversion then right just SecurCare let's haircut, the S now at just SP transaction because as to $X over a year corp. then rather structured on needed and XX% haircut to of to the that's conversion.

this to thing top that retirement the that benefits formulas the to a literally event, remember that people that There are is structure. retiring. we discount on So do we a It call that but PRO. X% doesn't an NSA, of the as imply one equity we it so are event. are retiring same had merger those all extra as of for it retirement SP means really And actual that

to this I continue company, in equity Dave SP And that we're involved retiring the is not both so and but be in retired. case, physically will

Michael Bilerman

FFO lastly then the benefit you value, the $XX paying what of you're a bump OP is while upfront So, to in you're form the those savings, just yes, getting it's million years are that but of for units. consideration And FFO, for in right? effectively savings of G&A giving

Arlen Nordhagen

That's correct. Yes.

Michael Bilerman

for you're sure of as that So not and it growth I'm the that trying assets. to outside not accretion you're make I'm sure EBITDA to effectively It's of but is it the upfront it's be. it. of in accretive, paying beneficial great out

Arlen Nordhagen

the Well, effectively. profitability revenues with see the management grows

benefit those grow. that to So savings revenues grow will or continue as that

Tamara Fischer

that differentiated if lot standpoint, say things our structure about investors little we structure, if like in it, a is benefited certainly benefit but you from step a have I think continue will. more this looking that also and the speaking upgrade is we've about bit traditional spent think from will of corporate from to just I a time also with a analysts of it first one differentiated a our governance and we'll

as So we net-net positive. it see

Operator

[Operator Stanley. from Instructions] with state question. Morgan comes Please Ronald Our next question Kamdem your

Ronald Kamdem

SecurCare, correctly. just on part this speaking to Just want sure understood make I the

was conversion period sort minimum So this conversion. of you times. for X the mentioned ratio the Also, was

I XXXX, version conversion that price more any ratio by that the meaning and So you're when have that? lower impact or expecting accretive, stock price, potentially thinking about is more I be the about guess ratio higher is conversion on should the I Just future less how think does my the question stock accretive? a is

Arlen Nordhagen

the is doesn't conversion all calculus cash upon flow that itself on the SP based of terms accretion going accretion the the bearing In really a that's at those because have to ratio effectively units.

paid So fee million in going look year, management units we're also simple receiving $X of I at distributions, they million SP SP you math, to just mean, over this of if $XX be the SecurCare profitability. over

So million to now gone SecurCare shares to that NSA but has million $X.X outstanding. that's basically have NSA in $XX XXXX would more that's going now

around and stay So ratio it's really is do. average, SecurCare If does can true because but that conversion going math high. they the really, X. PROs keep ratio ratios that's conversion PROs if do than well the higher will PRO just conversion be well, out a their and once other just conversion ratio might it there, it how future of depend up drop on its And will is very

PRO. by varies really it So

Ronald Kamdem

what much? stock anything accretion or the about NSA's And so price into not the play,

Arlen Nordhagen

on that of by SP remember X then that to equity It times is fully NSA schedule it from the to just one in it's equity X of another conversion table diluted ratio supplemental. share divide in put always count EBITDA, because our and for already this equity converts the of form in any where doesn't of and actually X NSA -- get have the we except but the number the management issue it price bearing shares fee the stock part acquisition issued, you

Ronald Kamdem

or a but is had and of? you line I of the branding of transaction is revenue of beyond guys just is potentially beyond either think there other benefit, marketing be whatever, G&A else sort what down anything expense costs, there mentioned, synergies that maybe and we from you haven't touched could net there that then above on thought And this sort above internalizing sort

Arlen Nordhagen

there the I do some we But combination that. have of as that's of that have Those will activities SecurCare any has by accretion I possibilities very more been will our majority that practices so not just branding common are are where implemented. we in additional to say additional we PRO of best and anticipate at but in that in markets practices go overlap, vast of from those the our continue PRO and certain marketing basically can active as future. those markets, that the though best about forecasts. add we put more looking be come long-term in using improve largely in

Ronald Kamdem

switch gears could on a over little expenses I If to bit.

driving growth How sort just So, a a rate on talked terms the the going we the first we property for in should I all normalized expenses. tough about this is sort property of of comp that should what taxes, of in about same-store forward? tax years you think think that the about out year XXXX of for think

Brandon Togashi

Ronald this is Brandon.

where So final tax 'XX assessments and that quarter. in then we the fourth budgeted my bills really higher some year about had expense remarks earlier fourth to benefit which the related maybe quarter, were got both had or

'XX adjustment do of has close year had throughout also 'XX of And But for the of the getting related of with maybe 'XX final that in $XXX,XXX to appeals we the so numbers. to you're part the jurisdictions assessments to the calendar it was really first the an prior. that entirety result for year your where benefits the or year and the

kind artificially number 'XX relates we of And number our same-store comp. low that's kind have pool, that's to of, this $XXX,XXX the that XXXX

XXXX, $XXX,XXX opex this X.X% and X.X% the that for we growth range points. The of tax So to that affects X% points. by to is for that that gave expense number basis to affects opex growth total is XXXX tune XX our numbers the by assumption basis about that X% affected in property XXX

to other a would words, to growth. closer In X% helps. normalized like be X%. That So

Ronald Kamdem

And to I just over switch spend. then if could marketing

terms of you XX% in there any of heard the year-over-year or XXXX Is alleviation sort what pressure I those the sort quarter in about you is out How sort thinking numbers? think I are so in pressures it of guys still are of that and seeing on upward there? forth. and

Brandon Togashi

That to the of half elevated the quarter. was quarter, it XX% compares were which the So both in X% third for from year. first

that in seen spend. So an we have uptick

projecting XX%, growth we're sorry XX% to in the XX% XXXX, For range.

to in So been we've a but currently what's successful there that's sector, across level, you're seeing is and trying that but expectations. our manageable the to keep into pressure that baked

Tamara Fischer

secondary, smaller We we and getting to the keywords competition in that our some ongoing do with we benefit some marketing of which markets don't in And of from see has some platform. the operate. the are tertiary the we think same also of markets evolution and for

Operator

you. Thank

Bin Kim comes question your next state with from question. SunTrust. Please Ki Your

Ki Bin Kim

study Arlen, SecurCare how show by internalization to of your versus personal is own reasons? much or driven of your something was of personal a case PROs kind more the the So of other that more co-founders

Arlen Nordhagen

internalization, doubt leader that is There the the to to was be pros. -- that important demonstrates an that be and of no a part other leader

out the Bin. of probably could broke you in I call be it may think that I'd terms say XX-XX Ki way

Ki Bin Kim

times can't or kind times, And EBITDA a that it's X I management imagine pretty feedback because contract are exactly about the would that it's of being internalization your the what business of part a PRO. of from but you of X accretive prospects remember I other getting PROs

Arlen Nordhagen

You're right.

And so varies by the feedback by general PRO. a lot

an member quite that at their they benefit that give of is to because a two performs. NSA of I you performing think as but if you for looking for versus PRO one the SecurCare that the years I up forward for that wants they also on a remaining stock. fundamentally, in rate other company versus us just don't. when where independent manage you upside, mean get it in on continue the entire convert, thing the then going terms see the the to have PRO we more might personal disproportionate things, if it, the And Obviously, a as has comes timing. family down is situation stock to that business few at opportunities bearing

following OP I'm so entire company having followed being stock, -- company. units I converted entire the SP performance frankly, opportunities the the NSA's very on to for bullish those the units like for And and of

about the looking do I that to better would as opportunity of so just is or it better lot my am individual whole well, of my at on a thinking how I specific the be upside will part analysis do upside, And the company markets. PRO have of focus

And that. so play think into I that into evaluate as come will

Ki Bin Kim

deceleration terms in revenue your type in to And any guidance, of you're of trends. same-store not guiding really

about you that So the items line thinking of more led a provide just to what kind were various maybe good little can color on -- guidance that what you're that you number? pretty

Brandon Togashi

is Ki Bin, this Brandon.

have I revenue talking might Sorry specifically? missed it. You're

Ki Bin Kim

Yes.

Brandon Togashi

to XXXX the put the is relative full right, for year there. midpoint for number you're So we right growth, up X.X% QX of

individual So the what into mean macro we're, build It's was kind of I our through than top PRO their the went frankly our -up we and not that you but budgeting complicated that. and property as down the much view more markets of head. budgets process, it they obviously hit what in on seeing went were

for of We’re next expecting bottom portfolio to can 'XX of the quarter read something XXXX more then our bottoming along the like that's for but kind out, you through look of to fourth which that year. say, that entirety kind

Ki Bin Kim

macro the assume way pros it down, that it a haircut guys would to don't conservative high X at to words the revenue that put So in you correct mouth, haircut but if the I to Same-store want number? budget that work? of you top like up your percent, budget. lead Is said like is approach a level take

Brandon Togashi

of looking No at portfolio. say the pros whole a level, iStorage at have our say we of are would benefit we portfolio that have on. Ki macro At focused wouldn't I the our benefit haircut looking I Bin,

a where So discrepancies our like public our numbers but on topside a PROs, in it's any happens our and or from haircut, obviously see final before that's really dialog the if a continuous our, really operate see market number. just the we operate from where with we there's we finalize not we peers, dialog

Arlen Nordhagen

XXXX, at of before. below At we're the Ki Bin before. year talked on the flat Tammy the rates rates that seeing were seeing be, year Street to to An of would end Street XXXX, beginning example we of the X% about average X%

bottom, we now that we've our at, hit we're in the So opinion. seeing are looking

into the we're bottom believe we whole picture, we're big the going come have the for while, the to not as start of for at We and then hit to a the out XXXX bottom. see get Now pretty off it overall we trends based bottom going stay this in year on to we but much go

Tamara Fischer

very but surprised it's when think said positive done, we'd we realistic. that upside, the like I think be and I positively is guidance mean all our to So on

Operator

Our Stephen Advisors. Anchor state next from with Please your comes Capital question Mead question.

Stephen Mead

the that of within thinking to about of mix smaller kind back was things? Could of versus and sort basically of does we face operators how sort five national say wondering new facilities between that go XX% that chains competition you the your statement I competition estimate XX% is your miles, of or the that impact

Arlen Nordhagen

competitors those we some I definitely are half of have for XX% the five national peers number, most than think have an XX that are aggressive that exact local we of like large us less is, our and where it the a know XX% do but we're and there is have might to to it large XX%, of a national more of don't and who to with probably but up extremely more competing I fill properties really of we because competition pricing on chains that smaller my operator my of is properties. guess guess it's have chain there that or are that, is more some impact than new from change does that example, of if

Stephen Mead

terms bit what more from of you sort So this construction see in I are and new of in relief do the what point? wondering little crossover on of and terms a new supply at of construction standpoint kind was the the new returns point actual of

Arlen Nordhagen

has XX%, Well, definitely a years. we at, in if store remember, a It's three few ago the them it's couple lot things. up. the they because looking construction we're fill the open of been a last lower for and are new longer years than lot were when to returns on taking of say that And a

us that in and 'XX for is pool normal included up curve. in any 'XX So the store opened because fill XXXX, that's

should the know going We think year the we worst, will don't year goes and sometime or down. do I but to XX% that if be worst will this worst this XXXX. hit it then start XX%, if be the

say, quarter, the that So and The and whatever risk. comes then out might the that. peak it returns guys and maybe opinion that it like development down let's be down XX% it going not starts XX% most is, go on justify next getting today do in cases my slowly the are in new

Now, on but obviously personally have in everyone MSA. has going own and not new I we doing development none it, any am their on opinion

profile that new that, have new now that recognizing return few a risk PROs the be under a way risk not self-storage. a few have good projects building development We on still it's but right to

Stephen Mead

X.XX that go were to the does conversion factor And being post then after the roughly? internalization, terms your in about the transaction you what of transaction, talking X.XX

Arlen Nordhagen

go will mathematically to It does to on it around around pull X.XX. each down Roughly, it X.XX. out units depend does, the the PRO do say just we down but those comes how and others as same,

Operator

session. you. Thank Tamara for Ladies I'll turn closing and back today's this question-and-answer concludes Fischer remarks. to gentlemen, it

Tamara Fischer

Okay.

as there we in if are for for you and So be the NSA. encourage the this reach which X-K the questions quarter looking And to promises a filed XXXX, a year wraps up about it transformation of to you additional around have if details SecurCare yesterday for just reminder, and fourth XXXX that. of internalization forward and any growth the and out, we year to we're

in continued seeing Thanks appreciate for coming participating your We NSA. to forward look of in we support our of call Thank weeks. you. you many today. And the

Operator

a day. concludes conference. All Thank disconnect. may today’s great you. parties Have This

National Storage Affiliates Trust (NSA) 25 Feb 202019 Q4 Earnings call transcript