National Storage Affiliates Trust (NSA) 3 Nov 222022 Q3 Earnings call transcript

Company Profile

Participants

George Hoglund	Vice President of Investor Relations
Tamara Fischer	Chief Executive Officer
David Cramer	President and Chief Operating Officer
Brandon Togashi	Chief Financial Officer
Juan Sanabria	BMO Capital Markets
Neil Malkin	Capital One Securities
Smedes Rose	Citi
Michael Goldsmith	UBS
Wesley Golladay	Baird
Ronald Kamdem	Morgan Stanley
Todd Thomas	KeyBanc

Call transcript

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Operator

Greetings, and welcome to the National Storage Affiliates' Third Quarter 2022 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 Hoglund.

begin. You may

George Hoglund

to the thank National us like for Affiliates you quarter XXXX for third of today earnings Trust. We'd joining conference Storage call

Fischer; today On Brandon CFO, NSA's me line COO, here the CEO, Cramer; with Togashi. Tamara President and and Dave are

The update conditions management in questions detail our or statements because furnished actual found risks prepared management's any answers of may Investor In results may uncertainties that with financial contain additional Instructions] market as may our represent on at projected any from supplemental of analysts. results, forward-looking subject materially our be call. forward-looking we remarks, obligation changing your those to call, nationalstorageaffiliates.com. after Following circumstances that and and to this to yesterday company the to in afternoon, registered revise assumes conference Relations forward-looking section company On [Operator The no from X, on statements statements. questions or of date which and addition management's the the press will are accept XXXX. release distributed other estimates website remarks today, prepared differ package November today's cautions

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

encourage the Investor the and will now net income in I contained operating on to listeners and call reconciliations supplemental as and FFO package our over Tammy. of section the available in also to We definitions filings. our such in review core non-GAAP turn financial SEC FFO, measures Relations information website the

Tamara Fischer

hurricanes, a our to and compassion by today. of of subsequent our thanks, hurricanes. our Ian addressing and although and stores, a all were team working and to are operational. in who and joining impacted of process that quickly members pleased other, it our and the affected assess our normal resume primarily in the for certain report George, to the and Florida are all degree their out of call safe terms you, our number by also I'll storms. the each to the start both currently for Thank for team response stores were so for customers for open our thank of expressing the accounted to taking care call Fiona I'd damages, extraordinary to cleanup operations. We're watching And all like storms, recent everyone, underway

delivered of per XX.X% another Now core We with FFO of great growth moving XX.X%. share on growth NOI same-store to in results. quarter and

moderate by out who product, close comps the asset for to housing. challenging historically more seasonality. Further, recession we As new storage square is pressures mind in have various quite convenience a household of record our class return XXXX what results in moderation even also well to that the enter and tougher and be inflationary to from an face levels may year-over-year consumer environment XXXX, as on normal continue expected, and keep fueled macroeconomic necessity-based a The more we by realized demand has factors, countercyclical time demand The and particularly the contraction driven per be sector economic to cost customers benefits affordability proven unique cycles. relocations. and in introduced of from pandemic including the foot increasing resilient the sell through self-storage

confident our in geographic NSA's benefits broad Finally, future differentiated prospects. exposure, remain structure of with we and the PRO our very

fast-growing Texas, stores are third the Sunbelt portfolio an properties, South in our investment activity owned in quarter. at of acquired and great X.X%. XX $XXX Georgia wholly of to XX Carolina, We existing for these million cap turning Florida, a rate Now average investing in markets. fit

face definitely still last seller buyer bid-ask deals from we're increased relatively continue expectations. in being to where it sense. cost pace, between a to record slowed is capital. still seeing the significant year's and come we're makes There has evaluate we But of today's market opportunities market, gap of very transaction the selective While and

will QX on front. that quiet expect we be the relatively So transaction

with Going to eye third operations. head self-storage line value to I'd I'll as forward, the new and NSA we with over call over creating operating long as turn and our for quarter trends in our positioned expectations. moderating will dynamic The remain year. Dave shareholders specifically Overall, discuss sector remain the opportunistic performance always current investment environment to term. our with an fundamentals with now characterize well respect capital and the strong to the navigate Dave? the and we to into strategy,

David Cramer

Tammy. Thanks,

from strength self-storage continued in The benefited third fundamentals. quarter

normal to year-over-year returning highlighted a being clearly by are are we seasonal patterns, challenging which However, comp.

XX.X% Third quarter in combined a year, increase with by property expenses. operating a increase last same-store revenue X.X% over driven increased XX.X% NOI in

rates year. the the year, continue quarter XX% return the contract see we prior end third up Consistent were up which from through continue Our rates to street were our we street XX% in to expect rates, of in seasonality, to while the with normal moderation year-over-year.

to a same-store and compared normal points the was reflects now remain basis XX.X%, Our of the basis prior XXX quarter Same-store following the year-over-year to the year. related seasonality concessions spend and averaged XX.X% an down occupancy last is increased Occupancy returns quarter last historical change We occupancy during trends. we've compared the third and marketing our customer seasonal net ended the normal. to year. rent abnormal quarter as comp Discounting year. directly for roll-up normal to to activity quarter, and XXX flat down averages the for below return points acquisition with

pre-pandemic to we're we're of Although moderation than out points it's portfolio, in XX% rates and about where were about stabilize QX XXXX we worthwhile rents on across QX contract I a think track X XXX give are ago, years in-place were experiencing sense about the Occupancy that X you also higher. above To XX% XXXX is versus levels. point higher. higher to basis

has for customers from The XX% have stay Our has of to increased that of have XX.X XX%. with months years, from for percent us tenants average to length that X out than moved increased stayed XX.X months. longer

these of points our fundamentals remain support healthy. views that data All

portfolio Wilmington, Looking Florida, such market and the and well. all average portfolio Savannah Sunbelt Orleans, strategic activity. and New now continued states Oklahoma Carolina, on with are generating call outperforming focus Georgia, growth. performance. as markets City, Brandon continues diversity. provide more The emphasis and Texas on I'll geographic of financial at our to our to to reinforces average smaller above such as This Several geographic revenue our North balance sheet the over outperform as turn detail

Brandon Togashi

This of growth a was Yesterday volume of year our Dave. acquisition combination healthy double-digit share per same-store which robust driven represents you, of third growth for quarters.. FFO we XX% continued increase of afternoon, year-over-year Thank the past by X the core the prior quarter period. XXXX, an reported over $X.XX and over

a results record that seventh consecutive growth. quarter third achieved same-store we NOI quarter double-digit Our represented

Additionally, very approximately mostly we're XX% which for encouraged eligible underwriting our to in XXXX. pool, same-store in of acquired inclusion were be and the portfolio beginning outperformance for wholly these will XXXX relative owned in our by is non-same-store properties, and

Regarding expenses. operating

third X.X% in economy as reflected values. pressures that seeing increases quarter driven growth property self-storage property Our inflationary well taxes we're of significant as by across the

XX.X% grew Florida, and X.X%. just in same-store property primarily a taxes in increase in a grew increase Repairs quarter to X.X%, and by marketing utilities increase X.X% and third Georgia Texas, XX.X% driven due spend. personnel a increase costs maintenance in is OpEx The while

QX XX%, decline spend the of last While about marketing was over is of experienced the increase X-year in year, significant in X%. we a so increase average

Turning to sheet. the balance

net range was quarter, XX-year quarter Xx X.XX%. of and we end, on X.Xx. right million the placement the leverage At private X closed $XXX of a our During targeted a in middle EBITDA, debt our with debt unsecured fixed of rate to

revolver. rate availability healthy million is We which to consists We're loans half million are over on at subject we to Approximately of of committed and through X our sources million term a our with what debt comfortable will and the variable profile mature XXXX maintaining the to address which sheet we conservative scheduled over multiple XXXX, And of few very in no of leverage of $XXX $XXX end. access with the exposure, capital. of quarter balance months. maturities XX% had revolver to is $XXX

moving on Now to guidance.

trends quarter, driving into and and move we Dave Tammy seen toward a seasonality historical on, is touched same-store back quarter have the funnels moderation as in fourth third continuing gradually return averages. and in normal long-term NOI As the which of we throughout

expected, However, our expense I mentioned bit inflationary previously regarding higher as before growth pressures. property taxes and is we than trending a

of basis up growth XX%. As revenue X.X% Expense a of XX% to from X.XX% or of with result, previous to midpoint of estimate XX.X% for of while prior the midpoint. range XX.X%, points the X.X% full midpoint than year X of and guidance XX.X% below the and growth XXXX, XX%, tighter the growth the NOI XX keeping range a we same-store to previous

we'll the per to today. FFO and per represents an XXXX. for year of share pressuring and rates in tax updated interest XX% adjusting in FFO two-year FFO XXXX $X.XX again The weigh the on joining combined share strong rise per to core core a $X.XX factors an our full Thanks during The expense, rapid guidance our $X.XX. these above share quarter, of $X.XX. income $X.XX charge XX% is approximately combined with us call down range midpoint midpoint the Additionally, results our of in The interest impressive by over growth our combination which for third increase XXXX. results by

to take your back Operator? Let's to now it operator questions. turn the

Operator

Thank you.

[Operator session. Our first Juan We come your Capital will proceed Sanabria conducting questions. now question-and-answer the with questions of Instructions] BMO line Please Markets. a be from with

Juan Sanabria

sounded much last of pre-COVID. continued increased, some A pre-COVID the place seems on like question there's for good Hi, maybe it morning. room ECRIs. in increases of how years kind levels. both gave rates that ECRI rates you or have and since over above street And couple like It

it your in in been kind view able we versus think how on ECRIs 'XX of that's Just 'XX? fact, to curious if, through about accurate achieve should what on and you've

David Cramer

you, really Dave. reaction Juan, But It's activity remain the tenant certainly thanks, point yet. increases as going David, third which as quarter, and to to Yes. cadence encouraging. I not The of the rate stable well. this tell those XXXX and increases looked to amount remain was our our Good can at stable, is we very question.

lot do at us. little just private find rent at have in around street. on move to as finishing the what bit, numbers to as all amounts revenue had back be a over this, in pressures able is still upcoming So maybe now as at tell as happens were been financial the what We're goal much, excuse rent pieces the a continuing one pretty in great as when the just deter right rates facing customer didn't behavior we're looking times us may few year in-place program look look But program. back at financial street have the I with our running. to And Maybe the we're we'll forward, our rent they can IPRC still period, how the I've We've way looking in-place that we occupancy customer of confident even economy We're and at the years about much, and really part in were at we'll not And was in-place out from facing, or looking a and still may we And we that at you, not move monitor the have to to of discussion be confident this I form may be look the if but we now. We're through we looking were the look I and satisfying of the do really at we period, cadence. XXXX. as the puzzle. SecurCare then we changes behaviors for we're some been we'll didn't model -- mean, it we're upcoming changes. change occupancy, me. -- concessions. changes tenants had we toughest that really

Juan Sanabria

technology secondary you you or and/or and markets tertiary efficiencies a think are as just to in more assets competition or you're result -- management? result you improve do then store Curious a going in as of the there, assets go transaction that as to there software seeing is question. use remote your second subquestion, maybe opportunity think the of see and or the the look to at and to either more for if kind guys continue And do a a or Storage Express

David Cramer

Yes.

product this good time time. We've well. for a for Another around very known develop him long good that been question. a model Jefferson worked and long a extremely We've lets

And so lot he we're to familiar different on of accomplish.. able from a was of what points view

or annex remotely storage running now. running either are as that We aids just to purely in that. we an us even And do technology storage have We're remotely. place

around you that think, we at we as headcount. can run piece. and smaller very overall take look savings hub-and-spoke-type to We for this been payroll two, also quite properties on that three those around question, are the floating good. for for them years future, for are have that, markets while maybe the headcount. our at But certainly you It markets. the within operators less from competition working And a have maybe done there that's over could improve, perspective and care a demonstrated of of nicely We us of this been certain your concept, with number hours and we've technology where operators now, in a ability And our have last that properties allows improvements more you our you we've stores buy away fit effective to running a that where some that years. people to part room through and other as look and in is introduce buying that store markets as person

it know point. significantly landscape don't I so at if the this And changes

Juan Sanabria

of street in And -- occupancy quick us rates or the versus give then and one. in compare sense third you trends levels? trends October to Could a could I third maybe the sneak sorry, quarter quarter third any if the

David Cramer

was third of think for growth an the October, its us. to experience down where obviously the but to me let September sign October. occupancy is still month increase, positive October occupancy is year-over-year continuing where did off -- And is the as reduce which come I to coming levels came mean a we in it's XX.X%. It We off to did rate I continued quarter, -- give levels. down number you of straight the in year-over-year end you about

down from at XX.X%. quarter end dropped quarter and finished we the it So XX%, average third the to into

reduction continued we in did October. have So levels a in occupancy

Juan Sanabria

you very much. Thank

David Cramer

Thank you.

Operator

you. Thank

your Our line come the One next Securities. from Neil Capital questions. with proceed questions with Malkin of Please

Neil Malkin

thanks Hi, everyone.

like a you it's you that Just the pretty of be then slowdown versus significant in sticking slowed, quarter. looks sort that short versus for versus last That And previously that peak expect October. third going from for outlined occupancy again, on saw I peers. most the question. to -- the It deterioration QX. of well you average occupancy, That a, September think, the

sort It So what maybe what it seems more like? us look occupancy leading can understand Is is fall markets? current concessions, your to to and levels? out you like new in to on kind comfort significant that? IPRC large versus help you small how versus of model of it we at expected much pushing that the the Is on post-COVID occupancy in too play continuing any like comments not see enough level

David Cramer

mean, there's but they've gain. And gains. the where occupancy have Atlanta I you Sarasota, had I if XX%, markets certainly XX% Riverside question. pieces revenue still of posting this. that at Good or very X% a had have Florida, to come loss, still lot on posting mean, revenue they're occupancy, off large we looked

So it's we the puzzle. of as the of look it one at pieces

our in than our you plan. comfortable portfolio, fits It in and we've ran little lighter historically, revenue If our peers. that. It always our with our in it look We're markets. a fits at business models fits

where comp occupancy discount, versus rate last a in together, this big where trying so modeling puzzle. waters and were challenging rate, all as want to revenue fits occupancy street really fit land, looking with we're it really that we at in-place our and we're navigate the And of to year, it's

I steeper our we point, in than we're to where rate, to and quicker little adjustments occupancy adjustments going rates. I strategies. making and think was street making the little really valve positioned the do we're So We're discounting thought, a a to within markets acknowledge, marketing to your and be street

it, I fine. just we're markets, in so of in aware And we're markets, -- certain think good we're certain adjusting

we But in of pieces maybe the little drop just a lot So that that had there's that second we forecast look occupancy probably quarter. on a puzzle the quicker of had just at.

Neil Malkin

Yes.

just on pricing, a eroding marketing, faster guess, comfortable that rates, feel a rate continues at pressure going or, comment at just fair you net expect least maybe until kind discounting further guess, little is more I I And it net or higher of the occupancy would Okay. more to you than you made, thought? on stops have

David Cramer

overall Yes, bit fair. market levers. drag looking Keep up by Portland We're will those it, got that's I it the here Portland we're those is the at Mark talk that to all your of and mind, think to But spend affects for things. look also we different. little market doing of And at in you point, portfolio. to shortly. a is was a quarter. about in Marketing have all

pretty year-over-year. the was have marketing a you Peer quarter third So high, did as not we average saw XX% significant but

clearly, marketing and We'll piece had go and We're that around quarter. on we rate on positioned to year, sailing into a where marketing easy more. start we're certainly in So as the lean more last year, we the this expense. we look market. lot had And street to fourth

The very discounts third quarter were of X.X% low, revenue. very,

into with for to our XX% is which that We play. that, big around very some that acknowledge to piece to contract And we to well. these factors we're but of have think what quarter was growth, problem also find still rate continue about, we if overall, the other come you a as right So occupancy the use revenue. opportunity happy discounts, math is want lever

the offset piece. a nice to So occupancy it was balancing

Brandon Togashi

is Brandon. this Neil,

on too color little a Just that.

quarter, marketing XX%. the growth in last mentioned XX% Similarly, year-over-year. like were spend, my in negative remarks were negative the opening QX, year, marketing fourth the I we So on on we

and also this our going spend challenging against some then QX So really comps. it's as to to and going year, increased continue compare that's into we have

absolutely on So be that's basis. a to going year-over-year elevated

Neil Malkin

just Yes. stock, at do think and how of to one general? you you Okay. you're helpful. also your sort seller. in traditionally But leverage potentially a the not allocation That's neutral Other are Or you have capital about uncertainty buybacks? is if performance closer of me about for looking look at thought balancing macro

Tamara Fischer

question, Good Neil.

of make looking portfolio I on and assets. capital our use the our of evaluating case, capital. of that disposing -- any really we're at to selectively sources It's us looking sure and that in think at

haven't seller, been really of as we'll not a As in capital. we that don't we see but you said, big an We're seller. alternative we're not a big -- be think -- sourcing I terms

question of the So your I cap you'll all But answer what where off we in XXX I property think environment could our it do than I think redeploying like that will own that anything think shares some to us the the portfolio better the is, frankly, selectively, certainly and we can see this look the to we still prune and yes. repurchase that. what capital otherwise in -- raise world. rates in way don't taking and capital portfolio sell are, the sense makes or

Neil Malkin

Okay, thank you.

Operator

you. Thank

the your with America. of questions questions. Bank Please come proceed next Our line with of [indiscernible] from

Unidentified Analyst

as little in of bit street seeing a really which Thank you. and still Great. I adjusting in on certain others. Can where increases taking kind as prior and in level follow seeing adjusting of Portland. some of drag? others the drag point comment had I just you're mentioned markets markets wanted haven't this on you about to you up know rate maybe down made well

give could on your just update So if markets. an you

David Cramer

Southeast. Yes, in in strong the yes, the We're absolutely. still Sunbelt very

Keep those having last extreme on now And good we're and and very coming full and and through markets pieces, and those Atlanta in I some highs. XX% year, both the they're so rate. Georgia through down mean mind, of off XX% XX%. running you contract Texas, success were in we're still street look Carolinas and around

paper so look that that very, And may occupancy daunting. very headwind while

pressure. Phoenix, calls some through a pre-pandemic. markets we're certainly in those that social pandemic still of it will realize feeling and us, maximize some -- at some in for has a that what and to of to not normal. down migration going portfolios kind on that some to of some back want of makes on Portland bunch is We're come bit be, right continue is. bunch is past, something be very on that is are slowing to there. of in pandemic to the start economic some For the previous supply. There a little and returning show through Portland supply a going rate at war We're new a back maybe to in in the there. pressure Portland to stores mean those and market supply things starting may of We've them Plus number go supply talked you down bit We'll new or where now paying us. that we those right supply little MSA operates see of masked try pressures and try market bit and housing comfortable. of are the got going now and that a slowing those Phoenix that little -- has really is I a operate in and Portland. the there brought to bit, about going how starting more of we and was impacts like things new challenging look of also and to to was pressure. on and that to are there in some of have going is smart. Portland pandemic the is that little where we're the operate things level come there had that, of kind just we're Phoenix settling

a is of And there's manage perspective. we a Occupancy us challenging perspective, rest rate discount going Phoenix really call really go to into then lot markets, level for be the to how we not XXXX. so street And from as out.

of the steady we're the in historical From but like doing Oklahoma again well above but certainly pandemic perspective, piece average, doing are in We portfolio how what they're operating over City have over they're And Heartland them and and highs kind have and well. eddies, perform. of the level is, and how we they're the stable performed not just and and the they a of they're that call some lows just that but very didn't just markets over very it. -- the comfortable doing Tulsa

Unidentified Analyst

Okay. And move-ins And the Or for my could more volume this to second and your pre-COVID? that Has movement of to move-outs kind versus how maybe I'm your question, signs curious hear comment about from expectations? as that being that of rate trended and the if did how compares you below well. any expectations down? you of slowed on see

David Cramer

Good question. Yes.

to So year. move-ins comparing move-outs and are less more, expected. are certainly, and that's to that's be year the And last last

we year the probably to we activity would look are to expect. the stable which very we pandemic, most both look really move-in back XXXX, and to is move-out can the before As patterns similar

a how shopping portfolio, to So tenants you would add the the to portfolio? occupancy our on more, averages that the to would point touch where there. base? so are changing. it's more also taking in that lift today. convert move around more is people What points taking you to consumer have And And get based and it's I I that's of It's historical returning patterns of we many expectations metrics think what's tenant

conversion much rates. the marketing with is one we're doing So focused of really spend on what the things very and we're

to levers. we and at dollar really bring street driving think has quarter, as looked using we will so the are that normal I conversion conversion as that we we're continue Where our into sure we team and doing what dialed That effectively. of rates. make boost are And XXXX times to to very with closing? through how into sure that do well, we play back is are ahead How rate, efficiencies that with need that's at positioned discounting? the look I well so really make the And rate other we're

Unidentified Analyst

move-out like is And I what see on Great. move-in, how the do into move-in activity up -- follow if October? you could

David Cramer

October, mean, -- occupancy at of pace. we XXXX, It's last the quarter, looking the comp. to in in very year in where where at were slight fourth a actually with it I the saw happy fourth come we We September. tough comfortable. was off again, quarter a historical grew occupancy really,

we one was line what is like. that's so thought it's XXXX we looking of very And in a year-over-year, tough it comp things the were much look at but with

Unidentified Analyst

you. All right, thank

David Cramer

Thank you.

Operator

Thank you.

from with come the your question Rose proceed Smedes with line Please of next Our Citi. questions.

Smedes Rose

thanks. Hi,

Just you sticking kind do occupancy I you little exit year maybe pronounced of the your where front? did kind seem occupancy And on to with to which relative was certainly wondering of expectations. declines, and just more expectations might our the a now the think

David Cramer

think I flatten to we'd a occupancy. it lose like looking not is expectation our to internally, more We're lot out.

holding our and growth there's and I going a consumers job out obviously, street so And conditions on thought we contract third rate with did navigate. there and to good quarter. in have economic tightening the stuff we that

occupancy you'll to and on I more us will allow think a which that pressure flatten little on pressure the street little discounting, piece. more a quarter in see fourth that

every And balance problem on. and that store we're where is. working find are every so on to market teams The working that's really But... math the

Tamara Fischer

optimize of you out really to Dave, you've it do know a objective about a questions that's revenue for long here that. strategy think I remarks And lot. called is we'll I our today. But to growth, continue know the and think, time, that. and talked our We've this don't and been But I in occupancy. here earlier your we And manage some -- to Smedes,

deliver us out gap our hundred out set between same-store is occupancy higher view and peers. settles than us, revenue. couple outstanding our basis probably And to think still of I that points a a pre-pandemic growth yet in we but levels for

Smedes Rose

it's I inherently like mean and it as you we've secondary view I you commentary just there your I more got for but rate. what's you're you is you occupancy, mean, I from rates mean, -- they that's you, would to do I that wanted from hold it's feel boxes doesn't of that fair do like with rates in water? think mean like think exposed not to operators going say. can't I mean, appreciate where to tertiary some something markets, -- others it. to and demographically I economy? protect empty be -- do occupancy running point to a on a raise to maybe just around on you mean, like you sensitive -- that more other I that I and pivot ask mean, the more I Or there's just the heard just And would customer you're not guess some

David Cramer

that's have don't think and at happening, Miami is issue L.A. the and thing some because we an some of of of out, maybe exposure tailwinds I these our And that is some and peers I that York of do think a of all. other years. didn't we New didn't though, couple we for X markets have had of were rate restrictions there. the our

into Tammy's to markets. for a back in levels, normal which think us. portfolio. And our excellent result To little for did driving abnormal going pre-pandemic year-over-year level drove markets. think words, the so also last an for And back an I is revenue portfolio. the that settling job what you I think year we use results. bit year, a this as we was occupancy our us We In we level overheating an to think through of was our that excellent on my above weighs think job, half about objective I it's it point, be we're

We're think And it's don't I secondary or we are just things comfortable think tertiary settling a considered, very all I what feel back into market question. normal. so

Smedes Rose

million did follow come repurchase. mean, bought think just higher and to I at I $XX you wanted share up, you can back to prices. then back the considerably And Okay. I I

interested to I as you head how stock year -- more on be that you're through So the that maybe the kind Or given of mean, aggressive just presumably, how maybe in you getting back about program? and go thinking here? decline front would we in price the

Tamara Fischer

that current very it this about so not free we say capital But as of ago. I maybe in and or will we are a was best where ago, being six capital others even think achieve we cost with as think is about as environment, and opportunistically. But the will I where returns. high deploy it's very, months year selective, also access can capital we probably, along all deployment, is

better if where building great value. we think $XX, for you and about us I answer think done, long-term investment Smedes, all that we your and But but just an we it's it as white it and a the an think I even can a at are black is But it's shareholder don't I today. about will don't yes to there's consider And are we question. I and thought deployment. thinking term have all imagine, certainly for it's said no long white -- or we alternative when investment was capital a and answer you, strategic black delivering

Brandon Togashi

Smedes, And is this Brandon.

equity and was at change. I The on add in they've taken we've would about through $XX change, almost other thing -- that price activity saw just XXX,XXX OP and at today, contributors thing repurchases -- I the $XX we issued add the the and a properties, other you we would and units, did of common that's the that is

was "Hey, impact the there of able that of some issued this earlier the had part in to -- equity of our were guiding dilution was, we So neutralize year. of some on thought we

so reference was And the point in a through that execution. us of for also thinking

Smedes Rose

that. for Thanks great. Great,

Okay, Appreciate thank it. you.

Brandon Togashi

you. Thank

Operator

you. Thank

come Michael Please with of Our with line next the from UBS. Goldsmith questions questions. your proceed

Michael Goldsmith

topics the inflationary discussed. I'm talking and Thanks them and And maybe entered that different have the together converting Good morning. But afternoon, the good for of on you already taking into to to a call you going all call, try tenants. to been tie a they've about started off difficulty question. my Tammy, bit the customers who channel more the touched pressures have little later been converting then on in couple consumer.

more I the inflationary it moving the when How they about on is the sensitive frequent -- increases? are negatively other they're is So do of how of Like are think vacating at just more because impacting just rate impacting Are it more food Or guess kind things? responding and because trends? rate just consumer? money how your you more a in? being price pressure -- spending out they of customers

David Cramer

with we do see you through. to any I'll last in economic cover change question, questions. your as have It's went that To to still Good move-out don't patterns need-based. try conditions. around

when the time up And is for so you is about up, the them. time as think

your you moving unit your house If a you're store and rent because out. you're at done, remodeling is house

perspective, why is has -- The in and housing well. moving well. happening significant of there's resilient. through hotter what's conditions significantly. what's housing they're it's this of changing do, sector we But tenant off a down they're love economic we a that haven't cooled We customer market, Would base. stay think economic do pattern of things an change still why Yes, on, that's now the surveying in through our will and lot things out. a we From have anything changed. that don't housing length not moving right a we We've have the we're or we or proven market have recession there's in that around to market? going The does our seen

have piece, As now. out the this people period is more to of street convert a happening right the around, with what's convert of at. time of that rates rates. we trigger this really with get them street happening dramatically to monitor want pretty I figure of now what's cutting far think, our There lot conversion sector that's at is and use best a is in what's right discounting And to of we where all as the and rate levers point to the

rate, things little concession, street path less it's a hit. numbers We in chosen a the goal have between the balance we've and held revenue still about done goal all little rate, those that. that is talked discounting, the the mix, a generating and run firm not bit We've and firm to the we've we're occupancy, held we run always revenue aim that

bit and more I pattern, think we to may on the street a a discounting. and little on that have more from conversion little a assertive will rate be change assertive little

Michael Goldsmith

on question my keys kind the Dave. helpful, just And is of second That's of growth. the revenue same-store

in XX.X% quarter. reported the You

a So implies of X% by slowdown. revenue the in would at that the points, growth kind basis actually your about step quarter. fourth was guidance midpoint same-store about up down in suggest We XXX the

cadence much XXX this the of affect altering like, can I'm moderation about it So about I like to and how based to of some guess, points approaches, better about going you can of kind kind talked the deceleration? of you think how we forward? basis rate understand just much the current just sequential should And trying how -- moderation slow on the of

Brandon Togashi

it's Brandon. Michael, Hey,

to you the QX, pre-pandemic, right same-store a me comp Look, I it's to the guide year that declining the purpose, QX, decline absolute for X% of Last QX think fourth couple about quarter was dollars So has not It full-year rate. closer midpoint revenue the would was for X.X%. just our okay? It increase The to level. that QX to around be growth So last it things important to hit like there. X.X% try yes, on for from X.X%. 'XX. us implies QX quarter a get from year, very let of to is uncommon remember really what's from fourth a abnormal

So that that speaks to how comp is. challenging

spoke just the more which is to is. trying really about on strategy, it to, It's to not the comp or the and what Dave we're So executing comp manage cadence.

have sense. that at ratable. is just people dramatic. a moderation for look and It's done to I another If not the as two-year that thing is across that So us stack, think makes that sector more and lot

Michael Goldsmith

does. more that can No, one If in. I squeeze

been have of may you topic in the Texas play year. the out property pressure the this taxes, coming tax property how visibility years? any Do you've doing On into from

Brandon Togashi

three-year you, annual total X% average like Coming start on guide a Michael, an X% XXXX, had tax on of X% we'll I to increase February. rate property mean X.X%. we OpEx and increase Coming into every tough, year I'll years tell is with in we growth assumption. average an

So we've last dodged it years. few the

we with came higher that year so and we're And assumption experiencing into it. this

So think full-year, months, for something are QX will comp you see more for challenging. be property nine numbers little similar a taxes our the and I to

fourth the it maybe So for closer to quarter year-over-year, X%. full-year something X%, closer number to it puts comes in but

But have high the update this We'll for the year X% about where in best the full-year right X% that would range. we of would February in with 'XX. is guess now to So kind of entered be end it what we're assuming expectation.

Michael Goldsmith

it. in Good Got very quarter. you luck the fourth Thank much.

Brandon Togashi

Michael. Thanks

Operator

Thank you.

Wes Our your line come Please is the questions. next from with Golladay question proceed with Baird. of

Wesley Golladay

of when average us you operations? your give year on it next view your you Can a everyone. look supply at Hey, versus this impact from the year weighted of

Tamara Fischer

and Brandon of somewhat start, view think that in. Dave can can this -- supply it our it it been will I Sure. remain year has will muted. I is jump and But

projects are they'll they'll for that construction, go I forward, that think under delivered. be

yet hearing least will seeing approved are financing, from very So Yardi at and our our that for and Pros secured and what is we're good have the they certainly, projects being. that from at projects not yet friends that fall chance out not that time

updated who view with only not operating and don't at Pros on impact, to markets the we'll but in that start are keep through on supply closely, looking Yardi, know, probably we're will our that when probably, where with but So potential XXXX you potential seeing pretty remain we'll our I mid-XXXX, muted is it that. early We track the threat.

Wesley Golladay

it then may the demand you proven And and you the on to pickup had business, can comment comment are if be seeing But last be over has all-cycle the that then the abating. an some at it. XX earlier, maybe XX, demand years. cyclical Got it's of moment? And that countercyclical you the

David Cramer

Yes.

sector coming look think -- the I we're part cooled is will hard us for up that. now and factors And think I off, you're off -- certainly down self-storage heading we lot as of conditions the which through. at as recession. the pandemic, had talked pandemic on very into looking that if off we the we're And a as just had mean and obviously maybe are. and And We economic a there maybe tough this matured housing through of success uncharted coming be nicely we the about, highs. cycle unbelievable historic. the other navigated we pick a you markets went barrel of waters I ourselves

us. owners this they market well and for business space We'll all through renter again we're versus just prove then pretty all the out. forward look afford happens much housing with think longer. maybe do our market resilient a sector of to coming what's as our will off, and think house option we've how things as cools I for at and that the that a could. out People our the warehouse stays -- and owners portfolio And continue seen What they If and us. I much business will nice so can't recession business play through things be how history.

Tamara Fischer

think And replace source I is up, of dries the demand talked and over we've one that's that about Yes, mean one it. seems change flourish to another demand. what when years drives right, I Dave.

don't that know, probably our the XX through is months to I view So of, next XX housing.

Wesley Golladay

Sorry about that.

at Okay, well, this the a if pretty increased in. Variable What loan I price. million did quarter, debt one get last a $XXX and you attractive is have appetite could one for move people up cash variable flow, maybe more some parabolically, to some get you want dispositions free of time through rate Is self-included. something debt? so rates it over did down almost

going so just And rate how maybe to navigate you challenge? the variable are

Brandon Togashi

right now. a don't think I I us you dramatically higher. also expect that is is we're at cut this X level going Brandon. think exposure we're comfortable to that opening don't I should Wes, go be mean either Yes, to to with remarks.

XX% our is is of variable mention that heard half of that half revolver. total You our of a me debt

replenish time, permanent over because that long-term going revolver balance capital, exclude capital, fixed rate with we're that we So debt. to

kept -- about rates exclude it, moved right. got without you that and of we debt, When sharply. bank couple And and move you're variable. so of loans XX% of when mean rest think it term you've we've I with when the a you our

be during down, raise things did us come opportunistically X% we be will mentioned, quarter with capital. for Like that short-term will we coupon opportunity headwind. the debt a you when So that to there But placed. a

Wesley Golladay

everyone. Thanks Great.

Brandon Togashi

Wes. Thanks

David Cramer

Thank you.

Operator

Thank you.

Kamdem proceed questions. your with Please of Our is Stanley. Ronald from the line next Morgan with question coming

Ronald Kamdem

Hey, just of a ones. couple quick

intensity? this the little a back sense couple just past actually drop, the give where of I you a off was of going sort of peak watching a trade-off, what of see think think the us sense? quarters can When potentially Just go that as as we're ECRI in the does intensity out to makes to about if I and sort there's but figure that mixing And come of you trying how the your you down, over point it of occupancy you're think is occupancy, sort ECRI bit -- much is ECRI. because occupancy

David Cramer

And seasonal Yes, it in makes sense. activities really the trends, peak peak, historical thanks. its summer ECRI typically, And the months.

We summer. couple have months a in -- the was of there

was and rate percentage tenants act. the percentage what's percent very similar. if team as to last right over balancing a at in our tenants most were active customer we that The of the we rate been the think looking studying rent at now look the increases percentage quarter The seeing of percentage to percent normal loss is of we've the third a attribute of we XX month We we last the cadence. a I we've what to May was as mentioned dollar gone customer what back It change months. changes, we far with of much XX customer line the hit. very largest of many amount to very instilled is hit increase tenants. in you percentage was is our kept the the rate But quarter, quarter, versus how sentiment increase and appetite can We've of is. given rate where had largest some caps. what and third already number that

of us to is us. it's point yet monitor big do stuff are increase is give that And remained to the come? what We'll this But to it. to not. were older a to in puzzle. this a steady shift tenant fairly is and We rate back the us steady. quarter that going our or we're very a have in But there's time, or they practices a told that nothing we risk dial third the in us consumer allow lot So to there October. What's again, we telling some really monitor, At causing dramatically.

your but -- that hope question. answers I So

Ronald Kamdem

super was That Yes. helpful.

expense Just same-store guidance, expense -- guidance on -- moving the excuse same-store on to the next expense one the NOI me. for is just

it little both some it in just more it could does chance half out? I Like of taxes you and was and Just the more than break half how we expected? bit pressures. some inflationary of dig that taxes, because Thanks. color into of it mentioned other? property any is on is came a higher like you Any think higher color what

Brandon Togashi

the OpEx mean, two Yes, in it's largest to one tax just a addition I given line personnel. piece, big is Ronald, items of

little the the managed the personnel months growth closer the X% it costs flat year-over-year. So full-year a right, for to really it's quarter, coming X% under well, call for nine we've but growth, in for

blend combined those those our And so up like for out they making X% kind of items. growth line almost of XX% OpEx, two

that contributors in the were go really, then you quarter. utilities remarks. up in my mentioned So what We costs opening is I second other have seeing

there to elements that of little and those talked baked were some So would we you costs early rates it in into ago. when August. already higher increases than in the and a we bit expected our in in expectations three But came I say came months

also have upping we in to more fourth the a quarter, in to spend is bit fact was again spoke costs, lever to think we that one that contributor bit. might going on August. guide increase again, open. little we thought that's on the early marketing fully told questions to I that earlier that then So a expected the the but that, be elevated little a of I And mentioned OpEx than

a higher. bit one So on a is couple items, credit key margin of the little came processing card the another in that those fees were

Ronald Kamdem

square when guidance, XQ, then the set. if revenue same-store revenue XQ to else, a at what guys trying I'm just same-store rate maybe think trying Great. portfolio -- the just math you peers? what last sort do growth because in just And we're guys you're the seeing how -- of my is right? one of exposures your it different peer square think Is your sort implies versus LA you at Like to in where of about ratios of I How sort about markets rent-to-income others sort look of do do But I think just versus coming all? sort you the from was correctly. that mid-Xs doing everybody don't it have for you

Brandon Togashi

dynamics. we mean I different math into hard in when second do know speak because I X-year going were that of the right? that peers last growth year, it's play Ronald, to highest portfolio comp. you to the the in So that's Yes. to the stack has on revenue QX everybody's

as point I I thing sequentially what same-store remarked to was is just as kind about to we grew unusual. of And revenue part had much occupancy would the on not other very The abnormality and occupancy. Michael QX, where that's and last earlier year the we of in gaining were well or what off to that either because trading XXXX that QX comparable

last that we're midpoint absolute to implied decline but the have expecting at occupancy year, does, pre-pandemic it So if QX or revenue growth would you it to at QX look year, the it with be QX. as any declining seasonally of by didn't QX, not absolutely uncommon to this what's We least have dollar that's guide. year,

what because another of at as raw X.X% It's X.X%. comp. with the you of like on this I math between the actually hear this of coming the growth a you're And implies up that So all at I a our of way simple dollars others and think really the kind quarterly is doing remark and average challenging saying it's midpoint. difference looking some X.X%

the look it, QX X.X% revenue the and the is The X.X%. end dollar at math, look it's we our high So point growth when X%. at of implies if of low specific guide midpoint we is

comp And so unusual we fourth quarter the we last to challenging in speaks that of year. or that comp just have have the the that

Ronald Kamdem

you. Super Great. helpful. Thank

Brandon Togashi

Ronald. Thanks

Operator

is with Our questions. come line Please Thomas the question Instructions] next [Operator of from KeyBanc. Todd your with proceed

Todd Thomas

in now the year is the pointed last to I change end Dave October, talked seasonality to of promotions And last a the year-over-year then street at the occupancy of to occupancy? implementing, looks and little in change or XQ of that XX.X% regards comp it and that discounting data in I'm like is and see With result? grew expected tough having out stimulated a XQ year. that and also, rates times you demand that about intended bit starting you spread the what you're curious Brandon, response? both point abnormal from guess, some the are Or the more and maybe number occupancy

Brandon Togashi

Yes, I'll Todd, success rate and take first that. I'll speak the discounting the promotions to and part, let and Dave on

around was stabilize XX% above saying, said right we've maybe number just you more -- basis about XX%. to that to. we while normal I the And we're to to it's negative end as Tammy Dave, some into XXX somewhere heard the a point points. same-store low we And long that a Dave at to been occupancy are it's to look, open, basis going So think revert year-over-year Dave But bridge XXX that XXXX and on level. for above think occupancy of going from on now a back spoke commentary of going COVID point late

at completely that So XX%.

mischaracterize to what want don't said we I So here.

But discounts? occupancy. mischaracterize it's guide basis, big I the want hit surprise stayed same. a a said Dave that us. gone it in necessarily happening what's want on what our true, as by that earlier the to some the quicker. to it's maybe though but even a mean surprised we're the not revenue We're was at you midpoint not of little to if I daily certainly think I don't is much Dave, reacting comments quicker,

David Cramer

third way to it's to We closer year, discounts. you running X.X%. was this be Yes. about X.X% of to quarter our the work At might Trying talked X%. low, historic through time

ourselves the as the I think And conversion far think navigate step how so in as I we going where at this is we're that we rates. into street place then that rate market as piece -- to balance this look after, and as we

I Contract held minimal was third We on and solid. rate rate growth decline was think that contribute. the through all purposely was quarter. Street things those purpose.

markets but we're quarter get headwind not a to our Again, think how year is worried our this where just worried drag to this So where last occupancy our long we're lands. looking but to at with this portfolio about. the over, I term. We're tough about that's is and next portfolio quarter, And this react. compared not going what we're

our in. fits the in of things the customers, find markets, long experience we our the revenue so markets finding And history all number with right balance these to that long operate

Brandon Togashi

certainly negative be challenge the year. this of And year I in well for going the comp screen, on occupancy headwind, everyone's should to next be as this just Todd, it's as going be QX to a there. quarter fourth it's mean of

lap QX Just until of kind we this comp, don't until really next it year. of that abnormal lap we

Todd Thomas

for there's as of the to helpful. conditions with the That's it. then are with ahead, you and so portfolio, kind you little budgets consumer maybe, next for -- macro terms of you to discuss differently any -- I sort clearly, you are a sort your guidance guess, around Got little regards with And of little small vice a Or business of forth. Okay. ahead just of kind throughout it's are and to for coming in really a And of the and year evolving the about or curious, with bit and think bit year year, bit? uncertainty today? budgeting can work reforecast, they forecasts you looking communicating I'm versa? Tammy, more they PROs in and PROs the set are you looking how the are

Tamara Fischer

budgeting sure. Sure, XXXX, the into for well process Todd. We're

the -- end starts middle quarter. process to And of starts toward third so the the it the

our of We have not regular is handful PROs, fronts. conversations a this and with different

what year process, we what Planning he have we're consistent far that very who so portfolio. with and financial say that our up I and their our corporate and across And VP says runs ends Chief person, a hearing this the of of seeing pretty PROs close would is our to we being. whoever PROs from So Analysis, are Financial kind

I are think -- everybody communications cautiously is optimistic.

Our respective PROs business operating markets. for years the have and their been in XX-plus in

than they So I'm understand better well this concerned. or anybody frankly as far as as

there. country. I It's think stores corporate unique that to managed not is really seeing the moderation we're across the that

generally had, for lot be It might going communication terms meeting or will more The markets over broad point with of for every happens geographic because down, afternoon years, to the travel things the another others. talked we've up. us. than Monday of we've affected we one don't continue or communications is on that I just have a or us, true that is or earnings And our in are and something. our that I five PROs. speaking, a that two releasing we at And four what three Monday three be Todd, going when there maybe think that we are of Some see or are a but about other diversification, like different touch being levels, go little barring and what principles, know, markets countercyclical

do with quarter, PRO. a least, have Monday deep dive with then a And at the PROs. each we We a once call

what a So group but little PROs longer a new what and expectations their term they're short rather are, performance, in that's with seeing on not a dive and term. of call, they're what bit big supply the both deep seeing the market,

and Dave mentioned best so also have are we So leads what And to staying operations biweekly markets meeting, -- I in a in me. their they're practices. touch then operations operating the seeing on just think

an have you yes. to want we and we didn't where even together that know probably much. then and meeting bring But everybody annual -- So

Todd Thomas

Sorry. Go ahead.

Tamara Fischer

and to collaborative. the No, think, just no. it was is think productive be, that I and very I continues I was up. saying, communication wrapping I really just thorough frequent and

So...

Todd Thomas

alternatively, how also work you roll their you I'm them input wrap do to budgets forecast for guess you wondering they're corporate them I and the of have up on much But much kind or do the budgets for as How year? REIT's up Or budgets? you Okay. on the to do their the year? sort do or that the of take setting

David Cramer

question. Good

items. first the to that set them the actually, line we answer let ability that all And through it. and up changes so we in. at and up the we back to take is a -- software historicals has We on parameters, set We have the make a all come we it stab

and have a then look involved So budgeting would we in it. that goal listed we into next our have bottom-up a land overlap and markets we year, like it's expectations, that as feedback we at We in solicit mind certainly process get that where the plays well. heavily approach. We

along pushing that in it's collaborative. in, talking are some that So negotiations go there process. Yes, in

great we process. so of And budget in the lots experience, are it, working on but minds involved lots of definitely,

Tamara Fischer

out strongest from companies we and their experience, who I've how involved run where builds way and forward. is in are know not we And it the and eventually, up who it with know are, different the being my terms from very maybe that there suing guys other the starts foot been we of it sandbaggers then

the push fall And will question so -- be we in.

David Cramer

sandbagger. a You call me

Tamara Fischer

Sandbagger in charge.

Todd Thomas

pipeline how That's last makes slow that that quick expected of What's put the one sort to I those the think pipeline right. do around of will maturities slightly other sense. helpful. maybe asset that the from markets. in I But capital I ask near status realize markets-related what some around term, transaction All environment. you to you're acquisitions a sort And here There's real billion, or on just captive activity and expecting think activity captive just today? I debt from at all should just together higher. wanted and volatility pipeline one capital pricing about recap. environment current of of stood place were the lot pipeline, and given the look take which to investments believe and $X.X because to the And lending when about alongside we the it the PROs captive be

curious So where the should forth? be and what rates given just about just lending are environment thinking we and so there interest

Tamara Fischer

things a a in don't may capital I handful financing know there full assets. we'll an a that's be think looking of who them reach answer assets cost have with that yet. and much markets. for And permanent until stabilization has they developing that those too of they our there. but don't of of -- of assets or The up, whether bit change capital too. as approach already they're our PROs I the We on acceleration And because gone stabilization. see financing to the little are contributed

with it operating. where and for quality a opportunity of to and PROs think So that side. assets high are us maintain good pricing acquisitions acquisition at that I But markets will remain resets that an pace off-market expectations prices our solid on in we're currently

it don't line So of might XXXX. we'll a that yet, but that it's on I have have sight ahead bet in accelerate assets good I see some think otherwise a where we may of bit.

Todd Thomas

Great. right. you. Thank All Okay.

Operator

you. Thank

line questions. Our Steve next Sakwa the question Please from with proceed your Evercore ISI. is of with come

Unidentified Analyst

is just question. Laura I [indiscernible] Hi, from team. This follow-up have Evercore. a quick

this feature, and So bad And pressures is bad so pertaining trending the far? customers is of what's level relatively debt what informed more to I rate guess -- through the geographically towards demographically, and your and the national how your to are expectations 'XX? year-end sensitive debt

David Cramer

question. Thanks it the certainly returned Bad the pre-pandemic really in Yes. really third third second to Yes. debt the for the question. Good quarter in has and return to quarter. levels. started returning -- and

us? what what to We're far we're levels used sequences processes to to hard not operating are we as back normal And collections are are levels at work under. this everywhere. be. not So These The point. as would that back concerning on teams of the Is having it auction. that's No, units at to see those more seeing things XXXX. really would of

bit could are lower that. whole, that. point. this a a -- as than again, markets a But returned to a concern average. market be But is little have We that it's little at little higher no The than

Unidentified Analyst

any rate to growth level manage is and certain bit start a to that occupancy? cautious Okay. there makes you such try And on maybe the

David Cramer

of you this. looked and land we And the think move-in the marketing going fee rates at are and we markets. spend activity. at of at third you piece drive is at Certainly, marketing reason look So how throughout want we where certainly, occupancy where quarter, talk all I in looking use is wanted and to our to to only discounting. a more We it. spend look we tried We're to through

harder part little markets that's bit want the math some that more is that So if There and yes, puzzle. will certainly we piece think right some drive revenue a react will to of a we we problem. the of occupancy, be the

we what work And on. would that's so

say, drive more very markets have that are couple also performing we and a can performing points of we're well. into well very markets that We that are occupancy going back

balance mind all we certainly these spend negative use rates, it's balance how pieces we So that we not money, a to we thing on where where finish. where our always we how trying we're our about and

Unidentified Analyst

appreciate I Thanks. color. Okay. the

David Cramer

questions. the thanks Yes, for

Operator

no you. call are hand the this at for Tamara There closing time. questions back over to Thank further comments. like I'd to Fischer any now

Tamara Fischer

a Well, the comps, thanks, we're optimistic of we about of today everyone, and rest for XXXX. and into quarter, interest NSA. great for and time and Even in your the year had tough moderating third with fundamentals your very and support

years. its day. demonstrated seeing As have forward best, I the economic a couple best property type Thanks, great perhaps Francisco many to and the of past resilience mentioned times has in of one in challenging and earlier, XX the self-storage performing over weeks. you a is look San in We of

Operator

does Thank today's teleconference. conclude you. This

you of the your participation. this You your time. your disconnect at rest may Thank day. lines for Enjoy

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