JCAP - Earnings call transcript Q3 2017

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Operator

Welcome to the Jernigan Capital, Inc.

Third Quarter 2017 Earnings Conference Call. Today’s conference is being recorded today, Thursday, November 2, 2017. At this time, all participants are in a listen only mode. The floor will be open for your questions following management’s prepared remarks.

Securities remember may prepared defined securities contain SEC the please to and by laws. begin, of in questions Act your forward-looking Private we that other remarks management’s answers the XXXX Before and Reform federal Litigation statements as statements the Actual forward-looking Company’s materially business. by differ and risks could those stated to results implied uncertainties or from our due associated with encourage in you statements These review. SEC, by the contained Company’s qualified statements the latest are forward-looking which cautionary we to with filings the A earnings reconciliation to GAAP non-GAAP financial call is measures this of the provided included press on in our release.

You over call reports and on to and Chairman Dean find to Capital, is audio conference at press website pleasure this It Jernigan; http://investors.jernigancapital.com. CEO of can release, Jernigan our now of our floor webcast Inc. the SEC my replay turn

begin. You may

Dean Jernigan

Thank this us for you. morning. everyone. morning Good Thanks joining to

excited We first have. Kelly What want the of new in be these -- to thought old in, this supply are to in let associates line would where wonderful platforms have about yes, cycle companies their CubeSmart, old with today the thought with companies we both their about I most are results now development on I Space for Extra that that reporting exactly were that’s -- back. I jump thought congratulate that leave board associates me results that with REITs I have that associates had third all, to to quarter. quarter -- is year, my their talk were today about. outstanding. this talk I’ll I talk come John we and fantastic to of we our that of want you I and at and to good

on did and really daily and new of supply job Space tackling Extra think I spite a in them basis. the Cube

an in put by Chief top And proxy the I interested exceptionally on is the President in -- of think, a country. of and the the night, top XX John our I most Yardi growth what way, Good, are Matrix Officer, Last supply us tip for markets Operating in. thought XX So, with them. out and markets, good that supply good supply the hat to existing piece

As in understand understand, all are collectors, And to between it. markets XX% in point encourage you XX Yardi those top that the the be this Matrix like the assets going on well data and I two match-up numbers a that and anyway, of markets. our the professional led I’m new piece I about But, STR. I put I think out owned REIT top on by the sector supply. is that has nice conversation I am piece, STR as started read conversation companies. to thrilled XX nicely -- from has

no big data. goes And so, really up. IPO years Capital X.X taking around when anticipating for it were scrambling data And to our I am -- to to back with development had public it work documents with, to and little ago back were started really no virtually in very cycle and course data we use Jernigan a of we we

everything personal to made to I going commitment that I time was at a that. I so, that do correct And could

to giving and the good I into to and it, so, start and talk been meet Anyone our talk happy professional it, them data meeting with encouraged everyone with And that was time, since us wanted space data. I collectors. to about I’ve have who come about

create are to create they to are So, these to profit job are out and relates the best reason. most market others sell thrilled free enterprise, or as working to the it I happened -- I The has And for most know to data. that alive that hard anyway. with am have companies that [ph] the companies well two good motive unbiased. there there and customers this data as is completely data Their these

that thrilled is I’m So, this happening.

for at working some been quite this time. we’ve So,

happy X% data piece but we in John’s with Austin, we an growth and degree growth in basis. have Miami the happy markets with going that to was high bottom-line me. a other most data absorb lot opinion on give be those growth will and I annual do night are our last markets to and seen, And interpret and think some are sector. storage. for markets encouraging have Denver, I’m We of building agree tsunami overbuilt like So, the my to Read of markets, that to that no others have you what population I’m that piece the nationally will Dallas, population some is they of is carefully X%

this so, do And to I think going be is orderly.

in a piece, do his overbuilding a just sector. in in going this this is you says to to sure. think talked is now there soft as is it few data we and One refined, significant any there become is I’m think the good we why going to cycle John reasons exceptional I’ll about, As don’t self-storage give I’ve is landing. it And be going is be

generation sizes ever built more and gen to in The deal As deal reason vertical. than is than the million past One about we more type these this much the developer anything one, The we’ve it, broad V the the Jernigan call constraint buildings want on size, complicated debt I buildings much capital, $XX before. I’ve just basis. in at up. a buildings, professional minute multistorey construction, on said And to a creeping in are more last side past, is V are of much for gen are especially average larger, the and that’s V we our a is have talk these V, cycle. the Capital starting

case. stick-built, metal home could you know, storey, the That’s drive-up, have any sometime build can roofs, builder X/XX metal construction, of most pitched one. As there single been no longer doors, sometimes

around builders into sell have building as about we country, the And I think market developers these. have at in to the them So, said level past, first stabilization. building the professional are I of XX% do merchant

no significant overbuilding markets. market, on supply growth now, tsunami, I absorbed normal high And markets expect right to select and the be basis. are no a that except few would for So, those

a Take soft landing here So, for turn our sector. good, we away, are over I’ll predicting John. that, John. at With to JCAP it it

John Good

I, am and Dean, good on to morning, delighted Dean, Thanks, quarter. strong everybody. another comment like

and on closed prior estimated million our to investment reflected our we’ve we million guidance what from development investment XXXX XXXX, commitment to and million. million $XXX today, between to to of $XXX pleased of of raise As been range able are accordingly in $XXX.X million have $XXX $XXX

by executed Our continues over term term to be Those pipeline robust, we be exceeds year, sheet. XX of will sheets but development partially currently with this over do million deals represented the of of to closed of $XXX XXXX million balance $XXX least term an thus, development million $XXX have new with estimate enter of And to at we $XXX investments. guidance million expect of million next preliminary self-storage executed issued sheets. into year going $XXX

begin release you -- In cycle. properties in enhance sub and end completed than interest as XXXX. XX intend MSAs. study even underwriting issued XXXX, move and development anticipate product afternoon, in toward announced As lead supply, we of markets properties in an that we and growth an for that XXXX a also opportunities a through more on have bridge move Dean by will new to And as off-market we loan cycle increased to the that selective we further in last the believe watch as release the top toward soft see Dean do Moreover, off-market rollout this we and XXXX and press more we move our which a as list we new developer exhaustive self-storage acquisition night stabilization. said, of issued yesterday we development utilizing and new we and largely deliveries data, regard Yardi experience new issued in made. danger evaluating data, been to into mentioned, cycle a Matrix, -- landing will of in supply more can sites the become will and provided Based we many of acquisition of acquisitions new the to our these we as

development a minute for also last our two applying last a we in mentioned comment I in the the how done release self-storage really submarket is we’ve specific night, As on to art. and years. want over art half And

pool right very with now, of of XX average in that are lies population our time since XXX,XXX a submarket people. initial IPO, our investments, of of development excess in an the the As average in investment pleased we

So, in high-density locating we’re areas.

these XX and XX top also we self-storage What is per the for in MSAs. have team developers our our weighted underserved We X.X which fast-growing is have average top very of of and in growth we also reflects of average to in submarkets, the large, sites the strong the is MSAs. JCAP who stats excess square markets which the ability square rate efforts the the below for it averages demonstrate of underwriting weighted growth are X.X%, And locate feet, footage capita proud. of population average of

process ability Our reflected of leasing team statistics. in the are our site-picking underwriting JCAP and developers’ underwriting also

Tampa XX% XX% X projects, the has two in of occupancy. we occupancy project Tampa than XX Island that over Jacksonville underwrote. our months, project that reached As has reached XX Fleming Island XX% day, months in significantly months our in XX have the initial hit and quicker and we have occupancy Fleming

adding month month, on-balance per XX occupancy. our rate on occupancy X% of to Our a XX-month compared XX% sheet facilities of an lease-up average underwritten rate X.X% assuming to per physical are

of to loan provide opportunity long-term our outright. these combination from of which cost, third-party which results lease-ups the produces the into management development our facility which and also are our of coverage lease-up, success these our facilities CubeSmart, developer XX us doubling partner’s hit with rate interest earlier and The cost that in expert quicker In target an Quicker comprise be provides payments usage locations on-balance great properties X They cash at XX% the adding occupancy expected but that and to X.X% do to which investments number. earlier in of a per of which facilities are and venture benefits facilities. month, is initial have need are joint our end so lease-up. year, these that business our an include reserves on interest average opened less of believe to the lower XXXX bodes at to acquire in budgets sheet an by Those X.X% healthier own than clip are flow addition, our facilities of for interests the operating facilities. projects. operating potentially well you that’s for even yields, We lease-ups Heitman of the are higher predominantly quicker month, first built of most in

That’s Kelly first projects quarter I’ll did impacted second, of hurricanes. thereafter. fair and value We I things discuss we the pleased increase in crews sum project toward of a our brothering remarks, and are the the to our been at those all doing our did, hurricanes, well. to estimated our who am very back two comments completion. disruption. they account over a project that two by to more Houston of Kelly issued on and to expect half feel for And will are the we XXXX damage to only turn that for the in Hurricane shortly on As the damage has sorry to pushing open just lot we shift than and happy we space capital and that report be whole major fortunate fourth results construction And some repaired were for are operating permits had back to to for position. now up all any Jacksonville are had also to day begin have and we from my

Kelly Luttrell

good quarter primarily QX John, stronger driven results. and announced by we morning, for exceeding per high for $X.XX, operating Last share, by Thanks, of of expected than adjusted our a the guidance the $X.XX everybody. night, earnings end

updated year. XXXX, of compared preliminary quarter quarter business our guidance our of our while of we GAAP full quarter and effectiveness revenues the G&A our strong earnings of scalability improved relatively issued range $X.XX per fourth also to increased night, last demonstrate And total elements year, doubled of over flat last and and to adjusted compared of the Last platform. XXXX as certain management the guidance fees XXXX the remained $X.XX the earnings range share X% XX% quarter second to of issued operating excluding $X.XX model third of $X.XX. of by operating results business. third the guidance from the we year nearly with to share and quarter and per XXXX on as expenses relative These to second Our the

as days we these in first pushed As that and of result are recognition. in to half release, of things hurricanes John in one and Harvey our these ultimate XXXX key of one timing quarter delivered. a significant the the projects our shifted recognize and projects, expected detailed we fair-value Both XXXX. fair that mentioned in Houston his expected to we permitting comments had experienced in of construction Jacksonville in two and the to delays and construction portion appreciation Accordingly, are value of be back a Irma drivers fourth as

next those value would our stated our of venture, $XX.X joint the On projects. million and within closed value to our provided million to to impacted expect investment we year are and full significant of adjusted also $XX.X full appreciation impacted that John way our investment our activities fair XXXX to mentioned, range and our we which, of And as range range Jacksonville million today, fair to Heitman we of fair directly Houston progress corporate cities results previous have a our directly $XXX our completed $XX.X this recognize only investment of value of in XXXX, late expected $XX be XXXX We have during we range $XX.X is XXXX appreciation as million. million updated $XX an by of appreciation XXXX construction calls, Accordingly, and million. be year results made investing XXXX for that including on portion million, activities from between occurred by year. that will the approximately gains in

just first stabilizes our and lease a reflect be the over owning so fair in investment Ocoee, our fully XXXX a underlying asset investment the and only this on investment. of This once our towards it’s of full facilities Florida developer’s yield to has wholly investments This our self-storage by very consolidated that well the new brand initial first we our has our how was quarter and build enabling is acquisition updated up city IPO, guidance facility attractive yields. interest to Ocoee after model portfolio owned been facilities underlying investment to ultimately The the shareholder closing a facility will X%. self-storage step acquisition expect business in Our year primary at asset. top first also continued third generating remaining example goal us our was value of is of Class and markets A is

item Before to highlight, capital, our to wanted related I guidance I in there on is fundings. one move discuss to that

included amount. amount to For the of time the in underlying that fund, commitment to plus due about CO, project are operating Q&A. interest the XX are months begins am as leases our XX over following with reserves it sheet over I then its total to and turn These costs operating few cover for minutes I’ll commenting deployed every reserves, total we interest typically and mentioned and cost which both the up that commit a going of facility remaining investment funded at property spend close attains now and the to John of the we balance in have our XX% the on total our income. commitment

closed match $XXX little of that fund really sufficient on base call, is we development us borrowing our noted our provides over on XXXX. quarter, up $XXX secure of and accordion previous feature end that line with of allows a which during expansion cost the of to by have for third to the we secured hasn’t capital investments. a to credit allows expect As million it to us This million,

the two Additionally, benefitted per of loss the with this paid debt earnings. modification diluted which added rolled $X.XX on to our a and In during at from the third five as then balance share incurred outstanding closing quarter, transaction, of this facility we down was we senior $XXX,XXX and to adjusted participations or back zero. conjunction

balance on of facility. quarter end, outstanding credit our no had we As

We we that We July agreement us our our of agreement million of the our shareholders and Capital, with prepared that intend earnings million of week, last these in all value pursuant XX% with Highland with ultimately in sunset preferred accordance form the additional $X accretive time. $XX Finally, date, must issue we nearly to more remarks. at and we terms is cost leaving issue series preferred concluded stock to this is purchase is million this the the have remaining the the our of as by shares stock best kept A issued to an of agreement. the end at of in currently of XXXX. That’s interest book $XXX

so, Q&A. will to over And it turn I

Operator

comes David Thank with Riley. Instructions] your B. from you. Our [Operator question. the of next line question Corak with Please proceed

David Corak

bigger Hey. with Good start before same question items. morning. into getting specific I JCAP’s the will picture a

the And piece more way what you development deliveries occurred the in it? talked of less maybe the changed pushed or next And back because the XXXX. inning have supply in of all, recent been has call some last are cycle? view in say of And three the are on another it, of words? at supply is in asking light just quarter, about your that we during years we peaking at would over now other getting Dean, of of supply has all, events that You kind and

Dean Jernigan

his little last John like bit with with looks on thought it has has But, it’s with us -- comment John Matrix his work. work piece let out a we for and the different point all with Intuitively, stepper XXXX. at that would And, night, in there. done Yardi peak that what done I’ll we put it little a

John Good

question. for the seeing three a crest to into what already And was of planning. significant what data thanks look and you year. be based has is We delivered our beginning next our fall likely and then, when will what’s is will is projections, upon end going this that right out all are a we as year, this the year. of over of be then and David, there last September. projecting year deliver relatively the the of Okay. believe what is slightly get just taking really we we this behind months when out But of XXXX And something at drop-off, now like to feel planning in what’s in XXXX,

and go you than country in planning at of move available first dynamics all, two has of started is downtime. facilities was around half of the As is various or also it you year and to a the years look then, there But and dynamic financing less the the ago the markets, number perhaps ago.

actively the completely loans. certain banks of have part in first banks back development the couple of making markets. into think lending maybe initiatives Furthermore, know you I very that that any XXXX pulled not anecdotally more are self-storage regulatory They we -- out. were construction additional in of XXXX, have

the And example are going in that’s last one there. going under And to things built the approved on have and construction under most be nine of which or the wire, the just the but Atlanta. an in is Buckhead that to all Atlanta, We months we to country. beltline nothing under along over were build in in that else located able great a is was property desirable seen so location the imposed get an initiative, moratorium probably

the decline. big coming a time items of on that’s to are planning there’s the what’s be And at the a built. in when So, going ultimately drop-off

being off to So, it years kind co-peak drop XXXX. going ahead that, XXXX to But with we after be significantly. starts like then, pretty XXXX feel of slightly of are XXXX and

analogies, we’re better wants like if lot a I’m. And that, kind top of I’m, But, in of it maybe. the Dean to. let are these he half as seventh or disagree inning So, than baseball with I’ll feels the

Dean Jernigan

that’s good. No,

developer I reduced spoke country. in this I probably David, most about John. cycle is across a two to who And had now, XX if prolific country anecdotally. want other a only week think in one the developer just I with markets. across not markets. and they they to which supply. are looking They whole right, of are probably self-storage that the now last add thing, at in is whole two least down the They’ve XX markets scope they scope, because their were

the So, feeling about really we taking. good are we are position

David Corak

So, are trough peak when here? would point, at we but would if fundamentals the given maybe peak thus year, of some deliveries next fundamental delivering in in deliveries that’s to kind next that in -- think are lease-up peaking XXXX, you for we year relation If trough?

Dean Jernigan

going I we much there’s say What that is disruption that I be today. think all would the supply kind to out along of there from don’t see

in that put that’s to You X% really up platforms, are are every see strong. markets public Cube, and of the X.X%, the day. facing Space Extra in supply they these QX, light These companies

since you talking it’s will. if trough, drop as blow going functioning far think certainly companies top-line So, not see It’s averages how are much XXXX. sure. negative, to in flow when growth. I we a certainly had exactly on again, think going much X% deep are it to Xs, you I of will see about that to we I I are being to to if get don’t we our down that I public into able not performing pick to best-performing be light some new when really XXXX, going to are about as we’ve going the well And said, -- are drop be, going that’s don’t not of go out but XXXX are mean, go I’m maybe Like to supply. companies well, is, going that this, as we

David Corak

All right.

company smaller top the do markets, guys look the switch more some Are XX more stuff. As to any assumptions starting underwriting promised, And at XX see you markets? to MSAs? in over you those maybe in opportunities to specific I’ll of differently

John Good

in growth, and markets, development people City, respects a high the Louisville, by income than in opportunities those markets like some great seeing are many good thus lot Dave, cycles. far Minneapolis, there we Kentucky, Kansas of overlooked David, of markets,

to markets. So, more we’re asked into and seeing look they lot finding we’ve a sites some markets to actually in for are sites. of opportunities developers those And prolific go good our those of

the yes. So, of the is, to question answer that part

our the to the supply the at because existence that the little whole In we’re less haven’t hit is trying is come And of one had X% we’ve that terms like underwriting, Company, of new also, thing that the lot lease-up find development same throughout hurdles land a be looking still for that on, in three-year of markets bit And that, you lease-up a expensive. looked you times are likely hurdle. to time.

think So, hitting going the that consistently those feel be we’re to for development yields XX with developed we we usual like just as business projects to JCAP. as we’ve today, going do it’s

David Corak

this can some product? you’re And the into then, a expect to how did would does Storage on to you line bit? model this basing details do little Is a play potential bridge give on? And down you this get? USA? this big And REIT” loan us like transition you Dean, how the this then, there product anything at “equity

Dean Jernigan

let I’m answer. discussion. back mind? and how David, in around into now a right you with some But, jump give That’s that to with else you come question? questions long about, Do going somebody will

David Corak

Fair enough, Dean. Thanks.

Dean Jernigan

All right.

little bit loan another some from question Let’s the But, back bridge just get question. questions some to take more a later. other let’s I’ll come folks.

Operator

KeyBanc. your proceed with Please question with from of Todd question. next Our comes line Thomas the

Todd Thomas

And it still are impact sense Is I cycle significant what look pertains the as today some on markets. prior existing that your to to your landing certain are is and this in little soft occupancy bit. growth? seen pressure in it that Dean, around the commentary the development landing, a does back that soft comments facilities versus or mean, cycles Just the delivered revenue a being like, then, disproportionate having case? We’ve developments not

Dean Jernigan

and so different and who some think talking should were all companies few of have there I small be that have and less that’s see, mean, differently. a different companies we only, side, different think I assets And public about, of platforms about, we five are country, minutes talking I ago. mean, and again, out the the not assets, I entrepreneurs I Yes. talked equity much platforms. the I can five functioning have around all but. those They different ages out

are all not equal. So,

is And so, quarter quarter, NSA And idea, and I well. yet to functioning an what they’ll tend it that this think are I as I the on good to have have companies focus well. appears report, a are quite and

So, the see years. companies cycle to below down functioning well. on three are next them development anytime really X% I the in basis to two this don’t same-store the get a during having

end. bit the that’s kind I’ve think go so, And it because platforms, it of when top-line growth, bottom of X% will back, of historic the before And X.X% comes said NOI that little the I norms a above growth.

development going are market entrepreneurs, small the assets. I to and in stabilized share continue buy going XX from think are They market to to take it are going they the because absorbed. that, after continue is could to be basis points better to they than continue

and be lining assets with this out is gen in about Now, are that I’ve REITs before, silver wonderful talked V a the going upsides. buying to going be to that cycle this of is there lot there tremendous development

to is be external big starting think a for going I so, factor the And next growth year, REITs.

so see. They’ll very that’s occupancy. high still are of operate at today. where they And their They’ll occupancies kind what operate I

that see much. don’t I So, changing

And of today revenue as to others. sector the best still than the any are to choppy. think that’s better what You putting other this get best outstanding know compared rough, a in past. expenses, there waters I outperform, because first will anymore. about question, as than best when little perform environment But, X.X% much even is to But to going the in performers characterize the Yes, continue our are are expenses where are the the what’s boats I better how -- kind different up. this can to the companies again, X% we cycle ships get waters about talk and and in starting I far that’s or perform growth see in your we don’t turbulent better waters,

Todd Thomas

just And seeing developers you’re consolidate just you to of about there today? potential additional or XXXX, the with the you thinking to having are can properties, in what conversations that terms ahead then talk pipeline

John Good

Yes. I’ll I’ll take take that one. one. that Todd,

have We move those toward these arise of facilities now opportunities starting as right to some stabilization.

starting Island, comments, leased, while developer leased in from are will we XX% as And mentioned future. suspicion to up. And too we the heard my I XX% probably projects my yet, Fleming project is getting are not conversations. As that XX% to in Florida is haven’t have distant we our those

how to a to really is yield to And They be want profits want developers are it’s but stabilization. and maximize of it our we to want developers. close fair to on function maximize So, them cost of we earnest as it them people. a with into number that’s dance a and projects, in it’s going we plays And where ultimate we move of see XXXX just do will start to with out. their we

documents years our occupancy. with the a after a to of in a we the safeguards [ph] later have developer out project, the and actively rofer closed causing actually of our three on We property chief keep decision certificate until that a commitment or years from developer marketing investment after and going to us make have two

have discussions. to in XX going to hard but months. next that’s will to now many over going But properties degree do, to XX in play know the So our right those we’re we is the put some it don’t that first -- predict how

Todd Thomas

that to think of pricing. your the expectations your where would that detail you relative loan will volume to to to there speak, program? bridge Okay, guess great. are expect maybe loans some I and XX XX and sort Dean, to stack could roll out, be within What the the then, next, we new how product on loan those current months capital lastly, fall say you just for helpful And maybe about, should over

Dean Jernigan

I’ll this cycle. some parameters. happy basically doing development too be give what can you developed started able Sure. XXXX, The to When just beginning product through. still in tell But, be of you the following was with company with general so cycle not the this going and program to I it to get I’m is you. we’re being development specific is

those other we country properties. own well rolling give there, were far And only as in development will go may are as to were a those loans, bank a developers their but bank through those have to going developers are as the our be cycle, not matured today this capital we around and to lease-ups stack, have going loans. hoping, going not loans well, many bank we payout as we cycle, be in them the As we come this bank And capital may who due. developers and company, the on they loans out they those going to be developers, higher give position

need are to will about be may going able the be up reserve. that developers way there so in partners longer interest to. higher to by give properties they be want capital taking We there in their of more little will if bit and stack And to lease the

We are help that. to going to with be able

going are and going be we know our entrepreneur are to there shareholders’ that some totally we needs. sector with in we a So, to to be capital understand help

coupons ideas they to now because we development we’ve general plan coupons of how So, again capital up forward higher this range, from which that reason priced won priced would to into VPs that, the it’s we be business. APs on good and consideration on It’s some in do is I we in go it the for the to in it’s be example. our and be going rofers be those since plan our rate. to takes to high good plan. are similarly stack, and will how nice not what now loan We [ph] to get would It think plan getting priced a loans stack, which capital a be will go X.X% something wavered we a and have because if don’t according do. our we some

excited on gen And so this developers cycle in about on markets. following providing to V capital assets through good good we development are

at to We some a the are, to future. own into don’t that again, going we making any not asset be point loan want bridge on

employee be a And quarters at more might out some more that’s so more with it. the have next we by generally NAREIT specifics. call, will certainly we’ll specifics. lot And coming We have

in guess buying this far no at concerned, as time. As is point

this there information much we in that then, bigger you. with that’s brokers, IPO product And we be the beginning. to like with to with imagined loan demand know to mortgage our to down brokers, did expectations right out going space demand happy think done had have Company, develop. will in We brokers we share for we be be developers a much, is what for vetting well-received. a than my X.X I’m keeping enough this years going kind that I it’s now, and of And the waiting ago to But that

Operator

Baird. with Our proceed Milligan of next question Please with line from the question. your comes RJ

RJ Milligan

that noticed October. issued preferred $XX you of A million Series the guys I in

more I of funding? and more think how Can the left you us, guidance includes issuance. timing much that you remind have expected XX

Kelly Luttrell

RJ, morning. it’s Kelly. Good Hi.

We the of total stock are purchase million. to agreement $XX required minimum purchase under a

planning going multiple full remaining So, now, issue through are we currently, million. to $XXX right after scenarios, the various

currently That’s total to million of as at outstanding every we’re assess issue as of commitment. issue So, look XXX we But, sources. today, XX all have XXX that of planning that’s required our are to day, something to we the $XX remaining continuing we we more. capital full are the

RJ Milligan

couple expect And talk you the as and how about then, full the ownership, you bring over the to revolver, sheet do on years? change balance can you balance next of on sheet assets

Kelly Luttrell

lifecycle over to looking balance construction. other and credit And to The we are the the the our consistent REITs. credit way leverage sheet -- low very with as occurs stated we our to before, level utilize actual of a as line we to fund we of line pretty match us the is, are funding one, view the it’s helpful it allows that of development

and so keep going base ultimate that leverage range. grade investment XX%, facilities our unsecured to ratings, to Our is low as goal we asset XX% our grows, in are get

intend definitely we levering of So, don’t to a up anticipate use the returns shareholders significant very to amount. to maximize our but line credit to

RJ Milligan

million you fair XXXX anticipated the value final have some quarter, into talk $XX have And waiting Can guidance and expect year? that time ay sort fourth been question of the on of million from back the then, first pushed about second the is of of any timing my do particularly to to obviously $XX adjustments. of you quarter those? I we know

Kelly Luttrell

value time supplement, our fair this the at look properties. what example. of occupancies the we on one key drivers and of you Key timing of experienced construction drivers is dependent certificates of of If is progress recognition this quarter, -- and obtaining

And expected the table CO so, we in date. in we and supplement, of our developments start and construction our CO the process, with date, our put date have

how of So, accretion to the year. come the you and during indicator that those give expect we two quarters an next year line on

John Good

you XX is. XX by RJ, what project you our pages and Yes. can look supplement, estimate the gives of project at and that

Operator

next Our proceed of the Please from question Jonathan line Raymond with question. James. Hughes with your comes

Jonathan Hughes

questions. my taking for Thanks

earlier, be Following loan up or you this. there will Dean, all stabilized think the bridge facilities mentioned from But, on developments past if don’t and you is to financing something the I or providing in for if have leases-up and or three? used that and assets done

Dean Jernigan

Yes. Good past. not this the in morning, I done have Jonathan.

at over that to four-year -- loan, just a two four that capital know the at are that at Storage this some liquidity say, program being reaching are to will is built JCAP. Our the running USA stabilization. of would would needing providing end program presently to assets be a the extension that, developers we need I to the the This we’re capital limited was three of toward -- be bridge period, that years. natural would next

we in point program assets have are to this a that at so, not stabilized. time, do And address

typically be that a been would this COed. is has property -- So,

evaluate that’s be have underlying likely they’ve development price XX% with and just loans rofers. on the out, lease-up lease-up, out or in easier loan going it and is take be a we’ve if timing we It their to XX% assets. So, risk. certainly there the we at after can risk eliminated accordingly just is [Ph] the partner But, of their something who most some construction stalled get XX%. of like And XX%, the them so case, if got our can for somewhat eliminated achieved some let’s perhaps there what and perhaps has the to reached, would we is from CO. lease-up stage is would running XX% and I we are lot But, been a think our get to that’s running or

Jonathan Hughes

whether preferreds And for should that with use book price, then, you value, not trading, we $XX Kelly. share million when one the the your go above draw? about and think you How above Highland modestly required

Kelly Luttrell

the only also structure looks analyses all and based solution this every like now, we’ve right accretive like. lot looks the honestly, and on our time capital to equity stack Highland earlier, markets, capital most what response accretive, evaluating our the the -- to in is most preferred multiple on is our common spend the of our in that issuance running and window the quarter based mentioned value. I conclusion but we in detriment, the day, not of our a sources to And earnings full scenarios of like So, what book

the Highland our balance preferreds. of full right issues of action the So, remaining now, to main course

Jonathan Hughes

And XXX you what, would be is million? the that, open cap to above I think going

Kelly Luttrell

a XX. is and XXX of total Right. required to issue The maximum we’re

Jonathan Hughes

the danger to be than I to commentary, and greater inventory it list? one to going thresholds list, Okay. from for switched for the And are still you’ve are for the those included, maybe as the markets be back was then, supply danger just past X% to other, clear, XX% on watch the they markets the the think list watch refined months? over growth And several which have it and

John Good

I and three maybe -- was last Jonathan, back or haven’t two think we ago. time months looked list gone I a our at the issued

a movement. looked a I It’s more percentage. little just at the setting complicated And than haven’t so,

will bit over all XX% supply. per upon amount that rates. are the we on cutoff, of that list at some the in. of beginning absorption amount vetting north not little would but the can rapid. lists. right just looking understated, watch danger now, of of at propensity have also zone a of not are danger you to eight those those as looking these the the XX% we’ve the line and in or arbitrary looking considerations undersupply capita in the I it also it on new of to storage, comprised footage also, ranges X% growth of be those based -- to And population weigh are have And therefore, eight for markets, But, at square at more the all that are undersupply in we from based list new north these -- seven be And tell positive that north indicate other markets But not We’re list of that populated XX%. the we the or market, existing factored the market the supply on coming only market, put little cycle or utilize supply the propensities on

Jonathan Hughes

-- supply or supply that do does warehouses big estimates include box conversions, And your stores? retail

John Good

in be conversions include they Yardi, extent to from and up and know to to warehouse if that that’s I is we or a be the self-storage old box that’s both, property STR belief going understanding there to report. to them. property that there’s is an industrial an if self-storage, our changed going think Well, that retail converted that about And a shows the

So that be are facilities. What’s additions existing included included. to not would

in new the units likely some extra that XXXXs put early those that gen they not captured. focused that being are are V adding on more is you the if urban are everybody’s being have on. that land facility a example, in that extra some infill areas land; not and have buildings For that most so and built But, was

Jonathan Hughes

list, are due in going are investment any the money of optically last forward markets And that danger markets? parameters, defined of they your on to one, redlined from deploying self kind

John Good

Yes.

of danger all extremely zone the said submarket business. new look all I’ve the are some at one underserved. very demographic, We there competitive, carefully all in since night, of been focused even within submarkets. of we And that As are still day last dynamics supply submarkets the the an our piece markets, of supply have

these. some about that it talked worth Nashville hard right really convince would haven’t in going that submarkets we us be many tell -- And can very so, now, that to being be I one. you can developer you are but would pressed markets there Without into find a

a in us idea the probably couple a would now have that but developer be there likelihood, with of came that. Raleigh-Durham We Texas right us is facilities -- pretty The doing of remote we markets, a in to if another in one said list more on the have Dallas, as in are many one markets one. those one our since we’ve near and over to unlikely going calls, is had do we term. And we Houston. Austin basically day that In

Denver Denver. Denver mind. in are could some one actively those and there that could projects few certainly and to there. look looking a markets Denver, stand is that submarkets we we not have another come developers active But, So, And there project. more in right be to we are are pretty encouraging now not

are those to markets. So, add that. And some want may to Dean

Dean Jernigan

exactly No, John. your right, I it think I’m you got good with answer.

Operator

Our next proceed question your George comes from Please with Jefferies. of line with question. Hoglund the

George Hoglund

and the to are over following X% question growth, last kind of inventory timeframes what those? on quick one increases Just The one there. up XX%

John Good

what vetting are evidence amount a supply vetted Well, now, on. under those a amount in and our right that things of lot that’s process. construction is that through both is project our of prospective go new and vetted going planning an is estimate that’s some We proposed there of just there George,

when compare -- supply, you our that you there. at when we metric the are using what that’s so, to as and take look existing And you it verified,

George Hoglund

just board? you to percent them early are risk exit one might to a just early, other be off that looking When have the opposed ballpark you of and properties who those recycle money capital developers take as then, and one. to reduce to developers And into in some looking buy may new what project conversations the looking with where

John Good

Dean, your estimate that I’ll let, and you on with can I’ll give Dean. you. or disagree agree

Dean Jernigan

in merchant anybody for at they’re These I reason. first now. know time. The the is for exactly their who capital that’s builders. to, a was know recycling are they in all market interested one that point in interested ones think I this I all the I professional talked that right in don’t boat, are done And

yet. on no of horizon So, any the our developers boats for

John Good

I with a answer agree Yes. And and think I that’s great it completely.

Operator

Thank you.

floor Mr. end back I over question-and-answer would like session. the turn for now We closing comments. the have reached the to you of to Jernigan,

Dean Jernigan

a Thanks See today. to speaking you great. that’s Enjoyed Okay. everyone lot, soon.

Operator

teleconference. gentlemen, today’s and does this Ladies conclude

participation disconnect may time. your you for day. a lines this have your and Thank You at wonderful

Jernigan Capital (JCAP) 2 Nov 172017 Q3 Earnings call transcript