LSI - Earnings call transcript Q1 2019 | Life Storage Inc

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Operator

Good morning, and welcome to the Life Storage First Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to David Dodman, Vice President of Investor Relations. Please go ahead.

David Dodman

to quarter welcome call. earnings and morning, our XXXX first conference Good today's Saffire, Andy Storage; Officer. Joe will Gregoire, Executive Financial Leading be Life Chief discussion Officer of Chief and

questions discussion answers following the reminder, statements. a to As your contain forward-looking and

projected actual and to uncertainties Our business. risks company's due from the may differ results those with

found be at regarding our quarterly and press can the on Investor SEC page found be Relations the information Additional factors filings. company's lifestorage.com. release supplement in these A of may copy

question-and-answer today's yourself At during with As we to ask time call limit reminder, a questions who this re-queue please you session, turn the participate. over to allow thereafter. that I'll any follow-up Please questions to two time, wishes Joe. for everyone to

Joe Saffire

quarter late reported first end provided and the Thanks, Dave. Good of of morning yesterday I'm achieved guidance everyone, $X.XX first call. quarter pleased solid earnings and per results high FFO our our welcome of adjusted we share, February. that We in to

just right I'm and to jump York to England Buffalo, Las Operationally Metro markets perform into New continue going of New well. Vegas largest City, So our very it.

that revenue list begin growth the markets We strategy demographics challenged Austin. the continue to comps rotation better execute early due difficult regard on quarter more until exposure our Chicago supply particularly to been not by portfolio, by performance XXXX. hurricane-driven with newer increase in properties stabilized and to improving to Houston, normalize watch to year-over-year on new did remain elevated Dallas markets to our impacted that With and continue in higher also and attractive were we and to which demand, prospects. of be cycle second to with regard asset our and are markets Houston has seeing impacted With trends Miami supply.

Midwest Southeastern During $XXX and acquired million. acquisitions on in in call. April And of February were Mid-Atlantic, properties, $XX in we on disclosed City totaling XX on which closed million Island we for under markets, Tampa. announced our remain the and two Three February Long properties in we contract these quarter,

properties of We remaining the expect to close the on XXXX. third in quarter

subject further conditions and assurance contemplated the mature these year. that be closing properties they purchased therefore terms. due continues to diligence to according acquisitions, will these given of be To to this currently $XXX However, of remain guidance can our million the include finance assets no sale and

strategy While our program asset with will benefit we some rotation shareholders. our short-term long-term believe minor comes dilution, the ultimately

the including the is we Having as few joint added a Our in two gaining has Greater Toronto progress very am expansion only entire stores properties our pleased in with traction area, in operating we for operating there Canada team venture surrounding third-party I which been made. investments. managed six months, minority made

using this report the from move-ins for already to of our be who role. we We self-serve prefer that to more counter. the FedEx Anywhere us. welcome his will expense with operating platform, Steve to platform, efficiencies Warehouse Syverson has regard new Supply running leadership X% With of believe of on Chain. we average our our sales hit in Steve With that sign achieved. enables industry-leading ground I'm to Now, flexibility excited which platform fully by on rental digital happy Rent to completed remain lease and this the technology, investments. rollout prospective the platform our Now we've a for customers customers, skip

expense keenly new summary, and to XX,XXX focused and our delivery as challenges revenue businesses many network control. Our their and support technology supply continue unique In facilities storage and though how to pipeline remain, growth demand. drive solve we demonstrate continues development we grow last-mile of can remain on to

it and demand head season. into will we the peak now across customer we hand to continue I are rental to as We the see portfolio encouraged Andy. over

Andy Gregoire

Joe. Thanks,

quarterly funds $X.XX night. adjusted reported per share Joe from we As last operations of mentioned,

was combination a controlled of Our revenue expenses. growth by growth same-store and by performance NOI achieved X.X%, of highlighted

same X.X% period driven average of rose a point was over partially basis over realized year-over-year which XXXX. by revenue X.X% the occupancy, same-store first Joe Houston last Rate Specifically, offset impacted foot that rates year, noted. growth the by quarter the by difficult that decline comp XXX in per increased in was square

First increasing quarter first quarter controlled basis same-store were extremely again XX over expenses outside of XXXX. the well property taxes of only points

this same-store is expense teams a great on efficiencies the stores the job are store doing our side. showing Our – improving at up and

anticipated, property the for we taxes quarter. As increased X.X%

product of program to it will insurance a and supplemental X. relates as greater as a provide captive believe transitioned third-party to solution customer program revenue We our margin. from April Additionally, our same-store we financial reporting, this

from As in virtually no insurance-related customer removed our no reporting. revenue that very feat same-store proud transition, our a executing transition this team and was project result a coverage for resulted we been This of are seamless has attrition. small of insurance

see to grow. these the In trends in occupancy still have at of the portfolio, at or stores same-store quarterly performance purchased our room lease-up we that lease-up consistent addition occupancy, very to early significant strong XX.X%, properties of the we certificate With growth continue stage. of to

quarter overall reflected, other increase a operating first increase XX.X% in in the management by income also fees. Our third-party increase driven revenue

continue had opportunities, end, we Our return of requirements. $X.X investment we hand very million on line on $XXX sheet on they cash balance have remains our credit. capitalize when solid of and million our significant to attractive to meet available quarter At and flexibility

until maturities debt XXXX. of no June have We

is years XX% maturity average debt X.X rate. fixed and Our debt total of our is

coverage healthy X.X service X.X was a debt ratio our EBITDA debt-to-recurring and times net times. was Our ratio

pool, the trends of in supply. to continue we new impact cautious we remain although to due guidance, positive same-store our Regarding achieve

of and will for quarter, expect the adjusted therefore increased that our be first annual With $X.XX range we between and better-than-expected performance the the FFO in per to questions. our $X.XX open low year. have share operator, the now Given FFO we call for end $X.XX

Operator

comes Smedes [Operator our Please Instructions] And from first Citi. go of question Rose ahead.

Smedes Rose

of of, little a in-house. ask the incremental, you think more guess doing you do more maybe to strategy tenant can you I some just about that that? want profits around sort just bringing of I reinsurance realize? thoughts And program what, the Thanks. Hi. around Kind

Andy Gregoire

There's a Good couple as at program. morning, the It's, look customer Smedes. for the insurance we strategy reasons Andy.

reinsured through As walk we $X revenue years at we've before see that greater this We're the look we've on grown from of pretty off if third-party bigger, the much flat-lined. can potential just the looking We with -- additional at it’s product. that the of platform has we you solution. catastrophe of done gotten margin we can conservatively the seen with and the that some we to We over did the like first could revenue revenue and program. the year risk and run program. year We've what million the some first risk NOI pass captive

think, better that a for and we look we it to little our when So, for The it's there's product. look offer couple the that's a customers. bit and better better things our shareholders better to better I product at line should more bottom for customers meaning that pay willing they're

Smedes Rose

portfolio other I just before other than the three, frame the and time And assets Okay. I just terms third to wanted seen balance -- seems you also a closed we've what closed. around then XXXX. quarter the in guess ask the in you of That XX portfolio had of a three where of like the getting longer timing

or timing -- what's just maybe Just sort this about of the why around so long. complicated more wondering deal color some the is maybe

Joe Saffire

Yes. Thanks, Smedes, it's Joe.

a its and the it's You We've XX-pack we've due the been that's And XX very delayed so finished believe diligence. contract having July there more the has related. early deal that's and seller their some is side. signed. believe -- July smoothly. that's with situation to and on I know, of actually I -- tax -- one The going been closing

gone that to that stores. Class They're as earlier, looking markets forward we and very the kind said future all we ahead. the smoothly like. these than bring other look of to we're years everything forward Andy has A will in And in upside So those

Smedes Rose

Okay. Thank you.

Operator

Merrill Our Shirley Bank from America ahead. of Please next go question Lynch. comes of Wu

Shirley Wu

guys. taking the Thanks Good for morning, question.

new your mentioned you Canada for two you So joined market, JVs. that

terms deals up maybe of So Ontario potentially ramping they're of strategy see more mostly about and or so doing in whether set could talk -- acquisitions? pre-management or going you're JV you in to even the

Joe Saffire

it's Joe. Shirley, Hi, Yes. Thanks.

we and familiar lot with and the work the different going we countries. all for right there's earlier get we familiar of We and on regulations to there only our looked been years great close them up for there we have years. year, in found head with in of for and kind the at up before we to office walk run, a said Toronto. rules with the get several was It's and worked the very and a As the We landscape, timing get partner would in they've said in U.S. number a Bluebird together. us

months. will There if So on well, we'll up matter work we what could just work -- year, probably we end XX that to these own accomplishing We'll We that and six opportunities, been third And for a of ultimately them already few definitely next should see far more see guys as by and parties of how this with doing all do more next but be there within have continue stores have believe good our we're upwards operating going partner. again in early pretty been with months. And few we some up nine the we very we're a that the year, a over then have pleased opportunity there. the we've with to us. do goes we or we're of other little with we bit exclusively.

Shirley Wu

Got it.

markets. rates talk maybe run And April? little also year-to-date notable what on color you about maybe of so in my and second sector for another could maybe bit a for question, XQ And side Street also in and

Andy Gregoire

New Hi, were X% similar It's slightly effective very Net hurricane-driven were down pretty QX Houston basis April, QX-over-QX market like it XX%. is demand last but market-by-market. on Houston just QX Sure. up were then very markets average up pretty similar street obviously or Andy. push points the in -- year see were -- with Vegas When but XX X% see down QX, we down and X% flat, trend. York, you Shirley, rates you to in they it's Vegas rates down well. could in

on So the being now. drag right biggest down overall that Houston slightly,

Shirley Wu

so do -- would it. XQ for Houston? for as you that well Got And normalize

Andy Gregoire

year. last won't quarters. Rates high will still Occupancy Rates Houston. take were couple will normalize in QX pretty more a normalize. Yeah. to begin They in

Shirley Wu

the for Thanks color. Okay.

Operator

next comes go of Our Jeremy Markets. ahead. Capital from Metz Please question BMO

Jeremy Metz

you in Hey, Obviously starting more year? the you broadly Can outlook mentioned supply look you to sticking hurricane comp mentioned give your the little bit abate as the Houston. XQ. you into a Obviously just guys pressures. with just here

revenue think what to through there as to see we start I we quarter. X.X% negative. -- see revenue been the had start all was if that at Should should in go the year? we You in the growth improvement

Andy Gregoire

Jeremy Houston same-store I think the in Last see don't QX year improvement. revenue positive growth. you'll X.X% QX, were in we

see you what So we're it was tell switch. to going strong for moving like negative a more But moving quarters going QX occupancy-wise. is stay should pretty to Houston. and It's Rates it's to hard we yet. in some normalization. a Occupancy are it's fast quarter. seeing to few how start not

But out So play right that we through season. going tough sit as we it's we'll year. now, to go positive for as say it's to turn the have the to busy

I quarters. we're another at of negative least going think couple to for be

Jeremy Metz

it rate And blender then growth. between the give into produce look you and and But one like a if occupancy other. one all to goes for willing result the revenue that right. at being up here, know you're split obviously to All this seems I here

side. look we just with the continue how see wondering we expect to on you're focus should rate and the more the this season, As busy onto feeling

Andy Gregoire

Yeah.

it's go occupancy. our for half strategy got that's revenue. get you slightly. the year. May the in and got we rates always I employee -- But about Net maximizing a Street well. the last effective compared down big a about not all to year. us, very busy we're it's of little will second Pre-rent to easier revenue. there a to It's be think if comp little month not going working easier as yet, season is maximizing We've

those revenue So go the levers maximize the year. to that we pull through we're going as

Jeremy Metz

All right, thanks.

Operator

comes from Fargo. of question Jason ahead. next Our Please Belcher Wells go

Jason Belcher

Good morning.

those the Just growth. quarter strong wondering little what's color same-store that double-digit on a you maybe us more several give NOI performance? outsize you in driving markets really posted guys that Could had

Andy Gregoire

Yes.

really we've expense in tax and Expenses there -- look if tax driver. and we got are revenue and where New and Syracuse. is at there's New property got markets I Vegas if it the see and is are -- And really property line. growth on you Yorks rates some great that is pressures. in well, think Rochester you it it's strong under occupancies the Buffalo normally the York still any But expense traction -- holding outsize the

issue occupancy push So there's spot our markets an good not is current new we and can acting in increases. where are staying our supply customers and is the rates well and with

there's combination, market. but markets versus others. it's that's So it's affecting magic no new in a sauce Many supply that times certain

Jason Belcher

Okay. this, quarter? you the cap acquisitions but I Thank missed in you. rates then if were on the And sorry the completed what

Joe Saffire

relatively you. cap Thank -- three years X.X a going-in Yes. let's Island ones sub-X% stabilization our believe early we That one Jason. lease-up again there be Tampa stage, a we already out. well It's relatively that's was X% the Well as of on should a the north the we well store should at new hit stabilization believe City. cap opened XXXX. see cap first and in feel a year but was well. projections -- was very probably closed that there but cap new it rates and I it That's X% in doing Long around store a hit

Jason Belcher

Great, lot guys. thanks a

Operator

ahead. will next Please Instructions] from Sakwa Evercore. go question Steve come [Operator our And of

Steve Sakwa

given It the new peaked wondering Thanks, different supply developers you had new we've or of results on the about I has talk when peak across could speaking how of about a and on sort kind will generally thinking if distress talk looking the periods? like although lease-up of in lease-ups just of good and sort certainly of seem sort We've morning. taking developers And there's impact was system views private having the got just that's are in slowing projects. developments doesn't Joe country. pullback entrants you are market? do as how and some I'm curious of the you starts to just And of a survey big the at are sense new new longer. they lot that the some

Joe Saffire

concern -- we out seeing see don't any Yes. real any definitely Hi distressed not Steve We're properties. It's thanks. there.

before be own We not really same our development in XXXX in we really it believe have our internal We a the to supply for year should said and that We've slower, don't strong XXXX. believe see the Steve. new monitor deliveries. ways it's from XXXX. getting markets. any was accelerating We

could But be what's really -- planning we a think planned monitor to we're I try couple being years out. out it. and there we're that watching

is terms us kind kind construction strong. of of Economy also down can You to much of get And every slowing to management. manage. out seem the look quarter in of one is REIT at see much. platforms, third-party how And that coming still very those doesn't to and deals very to be open

should -- not yeah, monitoring. but monitor similar we're what And slowing to with markets. be our we So, in feel on we what's XXXX it's down what's really again, XXXX

we're Some of the Portlands the not hotspots where and Denver Nashvilles those. exposed -- and to really

slowing that's been but hot not So, have sure if I'm ones. down, really the those

supply. be Texas, there's going think some new to I So always

Houston concern that are fared to But construction -- really that going going lot There up. well. a is in think still is is be our more said few we're of a It's very biggest monitoring I on. going absorption But Dallas. we Phase.

Steve Sakwa

to Okay. I And to Rent about Now just then program. comment back go your the wanted

And or the can accept I over I walking you could different too could think does, how app using that about to or the you kind or that program. to might lack the just ability customer think trend it's curious negotiations call-in early compare time? rent we're that of And do maybe kind thereof? new you of how somebody mean or levels in? you said you of -- move-ins if but using I'm talk behavior, X%

Joe Saffire

pretty are said, it behavior But mean we differences. Steve. regional monitoring I that -- early kind has little it; with country of changed I a the customer around is if think look bit Yeah. you

I although, sub-X% and so we'll high probably the of see we've more move-ins XX% far population. on think where end XX% Texas Florida, seen that's aged at whereas youthful, more it's

they center. So or in lease in not is hours. in things We're we than the the at call of the signing noticed. not -- get be night. the insurance take-up middle the those of in they're walk-ins that's normal no people may middle one what different The who coming coming night, the in but of the seeing call of from in They're we've

still and work we And in with they're buy So with merchandise the them. some talk purchased go and can And able work to concern do the store we with managers. wrong to what there's size as any they them. if such

it's again, by Sundays we still this. to people do If doing some this. or We and moment have the still on of people those on advertise. show the millennials manager at because is closing lease we're -- there Sunday so think by we're little rent do pinpoint of is signs But But are they very we overall, So it. sort but from get and but a a stores our no Now can savings there's at early of are XX can it's million to testing Rent things we actually call What testing. and want up encouraged of very strong. the center we that's the Again those types can still encouraged it. actually

wouldn't entering they they'll the we of in users a Some But They're are that lot into concern that paying storage be years. They that are of terms of was mobile seeing do. the are users. their of type big more also millennials higher work it.

into is something their own. is do to millennial that to they expect that's self-served. again they that And They expect. on expect well to are They be something this So And play to consumers. things big this able really going sector. be

Steve Sakwa

me. that’s it Thanks. great, for Okay

Joe Saffire

Steve. Thanks,

Operator

back remarks. for question-and-answer This turn to over to any would Joe session. like I Saffire concludes the conference our closing

Joe Saffire

Yeah.

many We everybody at And for NAREIT you in. you seeing of look have week. great to So, forward in a dialing June. thank

Operator

The conference presentation. concluded. attending Thank has now today's you for

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Life Storage Inc - Registered Shares (LSI) 3 May 192019 Q1 Earnings call transcript