Earnings call transcript Q1 2023

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Operator

Good morning, everyone, and welcome to the Life Storage First Quarter Earnings Release. [Operator Instructions] Please note, this call is being recorded.

I will now turn the conference over to your host, Mr. Brent Maedl. Brent, you may begin.

Brent Maedl

you Earnings us Storage. Conference thank First for and XXXX Quarter Call morning, for today joining the Good of Life today's Gress, Joe Life be discussion Executive Leading of Officer Saffire, Storage; Financial Chief Chief Alex Officer. and will

questions Following registered regarding financial financial and from prepared operational will Storage's analysts management results. remarks, accept Life

The the represent and that XXXX. this answers reminder, conditions conference to call. risks assumes management the subject May after are as company and your today, questions date a changing other or to update As and obligation to following discussion uncertainties estimates of of circumstances because market statements revise contain forward-looking any no forward-looking of X, or the statements

SEC filings. Additional found information regarding these public can factors be company's in the

distributed be found website the on to furnished detail at Instructions] press we lifestorage.com. additional with section addition our on may our package the financial which [Operator our on release yesterday, Investor Relations results, supplemental In

At to this time, I'll over Joe. turn the call

Joe Saffire

and good performance across Thanks, quarterly pleased business. of our we segments strong morning, report am Brent, another all delivered everyone. I to

see operating While above to asking levels. remain to pandemic, occupancy the of continue environment and rates compared normalize pre-pandemic the we height as the

growth. trends. highlight of double-digit and income same-store revenue I'd notable like the net net quarter straight challenging income marks eighth respectively, We a achieved year-over-year and results despite growth to revenue and XX.X%, same-store XX.X% few operating of comparison. operating This and

capitalize strategy regional solid past performance the growth. markets strong years, highlight normalizes, over remained These our XXXX revenue portfolio achieving trends. us has of allowed few of the As greater top our the value to which with or on environment has broad-based XX X% our results

X% April finished the for March. up quarter Move-ins accelerating with nearly X.X%, over

time us as cautiously to continues this into more. years we or basis year. the with peak a resilient keep is X customer of us Recent optimistic leasing Our base stayed customer points and show up resilience from XXX last season. trends customers That XX% having our with base head

Jersey, additional in to end, These New stores the one For portfolio and joint X we a future partner. invested highly Subsequent acquisitions completed we with current quarter, we investment. quarter million complementary are which acquisition in with area upside invested in venture $XX.X in the our $X.X New City York moderate million. joint our with venture capital the

half announced I hand brief close provide want which perspective to I Extra over year. the X expect second and with call Alex, merger was the to a Before on the we on of Space Storage to April the in which

to Life about I'm appreciation my like express and am have the all we together incredibly and would gratitude to I achieved entire the opportunities very excited I of First, Storage proud team. what ahead.

with working combined potential the Extra on our focused capitalize complete merger of Space the and significant on team are We to platform.

over the that, quarter. with call the I for And color performance hand will who to Alex, provide our additional will on

Alex Gress

guidance. The Thanks, last first night, the FFO of end above result of of adjusted Joe. a robust strong year, funds an the was over adjusted share and the quarter, results our per from increase same and XX.X% Last we $X.XX quarterly acquisition of quarter for high performance. reported same-store performance operations

rates XXXX, increased and of year. the growth First quarter over over by a same-store primarily driven XX.X% XX.X% quarter first achieved revenue last

asking averaging environment points XX its XX.X% rates from As we optimistic pre-pandemic with remaining levels. peak enter and cautiously move-ins right the in remain basis level and during no highs season operating off but normalize as direction. with the leasing heading surprise, above to quarter the We continues occupancy same-store

fees estate resulting and XX.X%, growth quarterly same-store same-store was primarily of XX.X% for and benefits. performance taxes, in driven that and NOI a card for the Our basis same-store by XXX same-store quarter. revenue margin versus point first to operating operating the X.X% year-over-year expansion in expense income credit effect of The year expenses net grew quarter and the payroll real net only prior

noted, consecutive this Joe marks As our eighth same-store NOI quarter double-digit of growth.

the sheet. to balance Turning

is is at comfortable the at EBITDA up a quarter X.Xx from Our end. end, X.Xx which slightly net debt very previous recurring to ratio quarter

Our debt of X.Xx at a XX. March service is healthy coverage very as

years We significant rate April have weighted average no to until maturity when debt $XXX of average becomes our quarter debt at end. due, X.X% is continue maturities million XXXX, with our X.X and

as March our XX, fixed of addition, of In was debt XX% rate.

were earnings our in XXXX last assumptions our and Details release night. of included guidance related

Our with the forward guidance late year remains consistent for guidance February. the we provided

transaction be will with pending additional Extra providing regarding Instructions] the [Operator Space. not commentary We

open With questions. the please that, for call operator,

Operator

first of Allaway [Operator question Street. Spenser Instructions] Your Green is coming from

Spenser Allaway

would noted opening quarter. arrive rental you be Can your understand you trended move-in in rate at you XX.X%? in in to the really can rates provide us help impressive and growth through remarks, And XQ trended just April ECRIs As then X how helpful? how color metrics had those any that on

Alex Gress

just And definitely Consistent comments, give on get and increasing stronger of into Sure, we the indications opening seeing of we It's environment operating early as April, to view to Alex. It's continue macro March, Joe's normalize. Spenser. the quarter. with seasonal what kind trends. a said, we're

very mean, you and February interesting but consistent about Overall, tale what up I on for March. And to X.X% it the with from talk down worlds. it's move-ins from But quarter, was a was the heard of side strong the then in -- volume move-in certainly QX we specifics. X it's other an record move-in quarter. some slowed January. almost certainly were REITs,

Now we still February, saw quarter, that a but we had record March. in slowdown

what accelerate of April, expected, that we're only into certainly into continues -- and changed -- and trend and strength a days saw and trends of May, I but couple we that shifted in that that continues. as that early to began Now said move-ins seasonal

accelerated So move-ins accelerating March up X%. April to from

So that's there. trend the

theme. higher. little quarter Move-outs overall up a quiet. March what similar in crisis being theoretical be world January A economic the seemed for backdrop and an The the pretty February, challenging I month in X%, banking first they a just then being and expected. perspective. Very were for in everybody we March much about very mean for the higher totality quarter, little to just from

So flat. March just seemed

look at March are we comparing we move-outs going They're April. move-outs actually X.X% April As March from down. to to saw month-over-month, and April, in down what going

expected. exactly what that's So we

early signs strong. So are

Joe Saffire

Spenser, year, get target it’s year. do Joe. try obviously the I expected with seeing asked the so Yes. that ECRI surprised program. pleasantly we to well, despite would the first you what what track the the ECRIs in of half just as on the move-outs, And pleased with of far we’re add, results. we typically we’re them we’re done obviously, for pretty and the We to about feel good on most and much and about were with and

Operator

Kim Securities. from question is next Ki coming Your Bin Truist from

Ki Bin Kim

I in XX-plus Joe, about quarter? the the clarify you first were percent just you saying So rates made rates. achieved to move-in year-over-year comments that up wanted Were the

Alex Gress

clarify. me was our let that in the Bin, our first year Ki was rates. this paying, No, up That's What customers XX.X% XX.X%. and what quarter of were are up achieved 'XX

ECRI drives that's rate what the Now our that? Obviously, a program. of growth lot from

Joe Saffire

the about for Ki were down asking Bin, Yes, rate, rates, XX%. the quarter, actual street

Ki Bin Kim

trend that please? how And into did April,

Joe Saffire

range. from But XX%, March. year-over-year, about April, actually still X% slightly XX% up down

Alex Gress

I'd just And add Yes. to that.

year-over-year all us street the rates expect basis. year. tough, of We for That's right? last Because that, path of think on really tough a about a comparison

street commented down So season. that April, asking rate mid-teens are that, Joe in to into seeing even what rate we're expect. add or leasing on an on as we on what Street perspective, in get while we rates we're is increasing peak

Joe Saffire

another we're May, nice we're street It's seeing some but or in X% Yes. indications. seeing pick early continued up in growth to so. And nice month-to-month some rates

we season. So for what that's peak the expect leasing

Ki Bin Kim

That compared to to that bucking second you guys showed some makes trend deceleration. here more And sense. Okay. question, of lot your a obviously, the more have seems be my peers

Or made of your So I incremental quarter pricing curious, sense I'm a from just a to do like -- just changes previous your contribution to this guys bigger what you kind makes ECRI what any you trying in high see differences? contributed of than quarters? get to was philosophies? level,

Joe Saffire

No.

and of But necessarily real since Similar year, pretty decided and had much percentages I – year as and we the be as much first well. year, maximize levels for this same we occupancy, no last pretty planned. the revenue first changes. for similar the not ECRIs think, honest, of start strategy as to to last

Operator

next question Your coming is from Michael of UBS. Goldsmith

Michael Goldsmith

customer do of -- your then prices on Guys, price some the sensitivity the there did Clearly, bit of during of you And rates quarter? through the you your clearly was similarly Do the And a a ECRI did you in slowdown side, you think of March. see adjust price sensitivity? kind was quarter. right, any a testing. street that result

in is the trying So to is get now price-sensitive self-storage the more been in of, than customer they the sense have -- a past?

Joe Saffire

improve do we testing, lot continued especially that of ECRIs. obviously, We've Michael, strategy. with a to

in to year-over-year in said -- opening kind our down think, my just first again, question, April, seasonality. normalization getting a to They is looking the increases. nice thing can some we're sticky. being customers which pleasantly take As shows see. with It are rate the And at I move-outs I surprised and of back

our May. looks demand, pleased obviously, the adjust well, unusual what now. But forth. street pretty pretty we with like rates promotions what for seeing. see coming we we're nothing accordingly, Obviously, so it's and right And into like holding We're up

Alex Gress

Michael. us, retention Yes, continues be Yes. really for And positive. Joe's just customer to to I'll comments, really briefly add I our mean,

XX.X at what customer for earlier that's about months it than months. we XX.X retention, currently and was levels, higher in So saw where we're or XXXX certainly

To our and or year XX% customers the about talked certainly and in that's we've from And we quarter. up more, XX% past. data the staying stay more As years question, see in X are your the not to did X of more. an or past, impact add

of space. indications and us customer think those really the and we stickiness are self-storage So likely for entire resilience the good the of

Michael Goldsmith

and helpful. of the take with a February just then to rectified there? of you have invigorate April? What around Did wasn't in kind you which And slower of sense rate? question That's around also, street happened. your in it, to cut may at given on demand? kind back ECRIs you of thought what what to do demand did my actions the took in trying think as you Just second get then Did actions that result hold strategy that? process or demand also a order back the March. caused And any has slowdown your do adjust you all, And that

Joe Saffire

January, do on Again, of I But kind for peak Yes. stay go the -- March, promotions. in competitive of think to no, I mean, season, obviously, obviously, leasing us. lease -- we scraping. at we've slow look gearing the which rates, street lot competition. peak up follow reactions. Obviously, upon knee-jerk -- pricing, year. crazy we're of part February, didn't got February No a We is

But nothing unusual, Michael.

far. so and worrying seeing I are think we're kind in on pleased nothing going little a now. kind given the we may of housing economy down right of be expected, And that bit, what that's with what's and up us but

Alex Gress

Yes.

mean, space. As of of kind challenging the kind know month said earlier, the what Michael, outside was storage I we of environment, happening March a we given backdrop the for was

a saw think lot March. slowness I people So of general just in

to to program. specific, ECRI our But we be stuck

that first our the for We growth continued same-store certainly rev up on in that program, that saw you quarter. and we put

We I everything bit in expected shows a March, March, down just flat was as rates, that It and QX slowed and to move-ins see in we pushed and that we of to that move-outs. little it interesting accelerate on was did. think kind move-outs in

Operator

from Sanabria question next Juan Your from BMO Capital coming Markets. is

Unidentified Analyst

for in markets seeing markets geography, softness Juan. a housing not that across [Robin bit? sitting are that cooling Hanlon] previously any are had and had On any you

Joe Saffire

compared Well, the other some markets. markets, actually, on pretty seeing Northeast. Sunbelt to I some we're think bullish we've from the separation such of the as markets those And been

well Northeast. kind the Phoenix, such from Florida's So the too But markets very themselves very, again, for a some the doing significant. of nothing West separate of other Coast, bit us, as

Unidentified Analyst

Also follow-up, bridge And higher gap? to Space tends the higher as occupancy points operating it. any? path XXX Got what's to rates. your above a the with strategy Extra Has basis run influenced this

Joe Saffire

occupancy. we don’t Again, strategy on we and on been purely a and We change. revenue, to focus maximizing don’t for expect that our it’s focus while,

Operator

is next from Khanal [Operator from question coming Instructions] ISI. Your Evercore Samir

Samir Khanal

mean, Joe see if a Is I or was at theme occupancy seeing is -- housing? I I I or supply? just think Phoenix, there look that occupancy across it of so normalizing, Alex, Atlanta, your XXX it from we those When drops bps Is markets, some like are get things these just I that. common drops? sort I to anything of markets? up you're were pick it curious. year-over-year. right, But wanted know there's can Vegas,

Alex Gress

Sun where continue the in there. market, in. softening in expect we Obviously, it's And to relative really we maybe little we unusual, specifically But Vegas and -- yes, maybe Phoenix did just know where happen. the and we've that there. I we Belt of a Samir, see to be expected, as parts Alex. some mean parts out. more some of we Obviously, supply touch market. to like Phoenix, -- Yes. a outperformance Northeast coming think nothing may expects that obviously call that saw But Vegas invested I that's part into and them like the quarter But that

Samir Khanal

line pressures the think little Got it. the there a Any anything of -- bit than on out coming budgeted side I you there expense you're year? upside And any that's the follow-up, higher seeing? about or -- maybe are we the are that's call sort to anything the of for guess, as year a balance on the in maybe that to as components items

Alex Gress

first very line expenses our No. you could guidance. our came in that much all, I see of mean, with in

nothing transaction-related expenses below core we’re Obviously, FFO, absolutely the taken our So that to. line expect unusual. as not would us are everyone facing are which impacting

no, out in of we guidance very February, and reaffirmed line but outside – night. with that, in our So last set much that

Operator

Thomas Your next from of Capital question Todd is Markets. coming KeyBanc

Todd Thomas

I guess X questions.

just comment could to I on wanted if occupancy. you First, see

more and a through end on missed curious XX peak down trended anticipated. was but the if if bit recently quarter that season? little part occupancies quarter from I comment early Sorry average, was basis of could this, was and points I And the the if just April rental you how about

Alex Gress

flat. No, as and a happened we we expect QX down and move-outs Alex. of -- March on mean it's the through expected occupancy little then was pushed Yes, very be Todd. I to much yes, those course rates to that come bit going

earlier, more focus really So not think not we surprised comments as prime there, Joe's that's revenue. prime, and our optimizing about

as will we be to and would be set months, seasonal normalize, how up, go continues get June trends But know the expect where specifically, consistent that's of May we environment pick see And a will that of up to but into QX. kind there guidance. that slope start upward strengthening April that more in and with May play And our we and and and kind continued we've strong through see -- out. occupancy June we we'll

Todd Thomas

merger guidance. Extra realize wanted with here. then Space I that's to And Okay. I ask pending about a you're under agreement

know don't but had I impact, originally first if $XXX quarter So to guided you million. that the an for to $XXX million

the range So pennies, slowdown you above end of and of sort came in February few discussed. that you that despite $X.XX March a the high in

budget of or just I relative pertains comment could around a And and itself provide little curious as sort bit year the full was additional balance guidance? of the about if you to the quarter outlook your commentary of to it original

Joe Saffire

or say, with pleased quarter with we're last early, Yes. move-in Yes, would in week I of rate Pleased and obviously, volume Thanks, seeing we're in so activity. very what Todd. the results. terms

comfortable we year good the summer. over achieve out that. now, what's a to regard peak about we obviously, with next judgment the the have felt I going progresses leasing with I to with be then adjustments right we season and and what some have make able on should But feel sticking as months few make the would want would think guidance feel into that. to what we say after we But there, see

Todd Thomas

same-store above relative guided variances you main otherwise, I guidance, positive that the $X.XX, first to range sort that the drove guess, midpoint quarter But were of what to? Okay. $X.XX you the whether of or the

Alex Gress

expense – a not, a but QX. pennies, I QX. said much far with of in it’s in I Obviously, – so clearly think very couple And relative a in more guidance. get And budget to I’ll the beat specific as Yes. is our budget. not outside again, it little earlier, line of side, on

and in we think we though was I out. Even said flat, March very were pleased. move move

remains. comments to rate back and the ability consumer ago, very remains self-storage resilient to the sticky, very few those a absorb much we minutes Going increases, and ECRI, said the

certainly more higher growth out pool. that upside than little same-store so a way, of and what year-over-year we gave bit a which little but of a beat And in was achieved a XX.X% bit the coming to good rates had us our thought,

And in the I that then not are our underwriting secondly, acquisitions perform would say, not pool continuing slightly to same-store above, with, if our consistent assumptions.

budget. more So of a QX those a of combination bit to relative little us the give probably a beat factors

Operator

question Keegan from next Wolfe coming Carl Your Research. of is

Keegan Carl

what thinking given your Apologies if but going in kind how demand seeing spend I forward, your missed marketing should this, of you're be mean we I just funnel? about

Alex Gress

go pretty first, what of when for the reservations. that think our the us, And it for growth. you on continuing spend X%. we're with look I'll Maybe in into traffic very on can just true conversion in, And much north to us came the line Yes. pool, good Obviously, expect, everybody, comment. marketing we growth same-store of I Joe see and advertising, and to at that challenge traffic continues remain website our

But is the up it, we the simple the achieved doing us kind if was at X.X%, -- of math, one the per just ways year-over-year move-in so first look for which in at we move-in every quarter. that look for sub-X% I only cost way of

that resilience of trade I that stickiness, because our So we the like -- earlier base. we've customer on so like commented the

on think year. rest we as the to the I think the that of levels expect about and so those path, And to be that's continue we

Keegan Carl

yields then quarter on stabilized end, and I of did sort first, and quarter those? subsequent Okay. the what at? you your the are on in cap you're to expected volume-wise you And what market JV the And then acquisitions I guess in are from where side a of guess, seeing transaction rates things, seeing

Joe Saffire

penciled bit a right spread is Yes, now. bid-ask of the is wide. pretty obviously, market Keegan, The down a

not So to many we and the more transactions. XX-year, debt I stability see see some markets you’re specifically think so in the going

of to the kind think think, some a the terms exactly, of year, I management, we anticipated second – case. stabilized bulk still but trying and are the guidance X%, Our – upside The that’s mature the with City yield. be feel about decent probably deals in some of X.X% half New those assets of would any the York portfolio, JVs in

Operator

Joe turn you Thank time, no At very going more to now remarks. to there questions. much. this any are over closing it I'm for

Joe Saffire

everybody, we’ll a talk you call. you. today’s Thank and soon. thanks, have good for I So day, hope joining

Operator

Thank today's you, everybody. This does call. conclude conference

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

Life Storage Inc - Registered Shares (LSI) 3 May 232023 Q1 Earnings call transcript