Q3 2019 Earnings Call
Good morning, everyone and welcome to the keep Smart third quarter 2019 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then too.
Please note this event is being recorded.
I would now like to turn the conference over to Charlie place Director of Investor Relations. Please go ahead Sir.
Thank you Chad Hello, everyone. Good morning from Sunny Malvern, Pennsylvania.
Welcome to keep Smarts third quarter 2019 earnings call.
Participants on today's call include Chris Marr, President and Chief Executive Officer, and Tim Martin Chief Financial Officer.
Paired remarks will be followed by acuity section. In addition to our earnings release, which was issued yesterday evening supplemental operating and financial data is available under the Investor Relations section of the company's website at Www Dot keep smart dot com.
The company's remarks will include certain forward looking statements regarding earnings and strategy that involve risks uncertainties and other factors that may cause the actual results to differ materially from those forward looking statements the risks and factors that could cause our actual results could differ materially from forward looking statements are provided in documents the company furnishes to or.
With the Securities and Exchange Commission, specifically the form 8-K, we filed this morning together with our earnings release filed with the form 8-K, and the risk factor section of the company's annual report on Form 10-K .
In addition, the company's remarks include references to non-GAAP measures reconciliation between GAAP and non-GAAP measures can be found in the third quarter financial supplement posted on the company's website at www Dot Cubesmart Dot com.
I will now turn the call over to Chris.
Thank you Charlie [laughter] solid quarter, given the challenges we knew we were facing in the quarter from difficult expense comps and the impact of new supply on our topline growth.
Our thesis on supply remains unchanged.
We continue to expect new store openings in our top 12 markets to peak in 2019 and decline in 2020 .
Based on our internal analysis, we currently see a slowdown in deliveries in each of our top 12 markets.
With the most significant declines in Chicago, Miami, Dallas and Houston.
Markets that experience the impact of new supply early in this cycle.
So while we expect a reduction in 2020 deliveries.
Given the fact that the average length of a customer stay is about 13 months.
We expect the impact of supply and its related pricing pressure will continue to weigh on topline growth into 2020.
Albeit at a gradually reduced rate of deceleration.
We remain encouraged by the resilience of our portfolio in the face of new supply.
Sequential improvements in the same store revenue growth in Dallas Houston in Miami, We believe are indicative of the performance of high quality real estate one operated by a focused team.
After several quarters of cautioning about the impending impact of new supply in Brooklyn, We finally began feeling its effect during the quarter.
The good news is that after spending a day driving the market touring the new comps and speaking to operators demand as solid as evidenced by our portfolio, having 120 basis points higher year over year occupancy and the newly opened competitor stores appear to be leasing up nicely.
The reality is we have outstanding real estate relative to the overall competitive set and therefore, we expect Brooklyn to absorb the supply much like our experience with the earlier wave of new construction in the Bronx.
We continue to have success in growing our funds from operations per share recent transactions that reduced our weighted average cost of capital while continuing to strengthen our very conservative balance sheet.
We remain disciplined in deploying capital continuing to utilize joint ventures as an additional means of external growth and our third party platform continues to be about the source of services revenue as well as a platform for acquisition.
Our consumer remains healthy.
We currently operate 230 stores that are in various stages of lease up and demand remains very solid.
Significant near term pressure on prices largely confined to supply impacted markets and we believe it in the long term value creation, our high quality platform and portfolio will produce.
Thank you for a listening to my comments and I'm now pleased to turn the call over to our Chief Financial Officer, Tim Martin who will expand.
On various successes up the quarter Tim.
Thanks, Chris and thanks to everyone joining us on the call for your continued interest and support.
Other solid quarter report, we Rick ported third quarter 2019 results last evening, including a headline result, a 44 cents per share of FFO as adjusted which was at the high end of our guidance range.
1.5% growth in same store revenue and 5.3% growth in same store expenses.
That same store NOI growth of 0.1% during the quarter.
As Chris mentioned, the impact of new supply on operating fundamentals continues into the back half of 2019, consistent with our expectations. We continue to see pressure on rental rates, while continuing to maintain solid occupancy levels.
Same store occupancy ended the quarter at 92.5% and we averaged 93.1% during the quarter.
Expense growth of 5.3% was driven by continued pressure on real estate taxes timing of repair and maintenance costs compared to last year as well as the impact of a fairly significant increase and the cost of our property and casualty insurance compared to last year.
Following our big transaction last quarter external growth was more modest in the third quarter on a wholly owned basis, we acquired two stores during the quarter for just under 18 million one in Atlanta, and one in Charleston, South Carolina.
Year to date, we've invested 189 million into wholly owned store acquisitions and have another $88 million under contract. So.
So we continue to find good opportunities to grow and expanded our target market.
Our HBP for venture that is focused on lease up acquisitions added two more stores during the quarter for 46 million and we expect to add another two stores during the fourth quarter to that venture for around 34 million.
During the quarter, we opened one of our development projects in the Boston I must say, we also added a new development to our pipeline and King of Prussia, Pennsylvania as detailed on page 23 of our supplemental information package. We currently have five projects and our development Q with deliveries expected through 2021.
Our third party management platform continued adding stores on a meaningful way as we added 48 stores in the third quarter, bringing our third party platform to 652 stores under management.
This growth allows us to further leverage our operating platform expand the keep smart brand and likely will provide some attractive acquisition opportunities in the future.
On the balance sheet front, we've been active and raising both debt and equity capital during the quarter, We issued 1.8 million shares under our aftermarket equity program, raising 61.2 million at an average price of $34, a 93 cents per share.
And subsequent to quarter end, we accessed the public bond market for the second time. This year in early October we issued 350 million in senior unsecured notes the bear interest at 3% and mature in 2030.
Proceeds from the offering were used to repay amounts drawn on our revolving credit facility as well as to fund acquisition development activity.
Combining all of this activity along with our new $750 million revolver. We discussed on last quarter's call, we're well positioned from a balance sheet perspective, and have capacity to execute our external growth strategy and to fund that growth in a manner thats consistent with our investment grade credit ratings.
Our revised earnings guidance and underlying assumptions are detailed in our release for last evening.
Highlights include a narrowed full year range of AFFO per share as adjusted of $1.67 to $1.69, which as I have to any raise at the midpoint.
As well as narrowed ranges for our outlook for same store revenue expenses and then Hawaii.
We introduced fourth quarter FFO per share as adjusted guidance of 41 to 42 cents.
So thanks again for joining us on the call. This morning at this point Chad why don't we open up the floor for some questions. Certainly we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if you're using speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press star.
Into at this time, we'll just pause momentarily to assemble that roster.
And the first question comes from Smedes Rose with Citi. Please go ahead.
Hi, good morning.
I wanted just to ask a little about about the change and the guidance, particularly at the top end I noticed your prior guidance had.
Had indicated some deceleration through the back half of the year and it seems like I think relative to a lot of forecast. It was a little steeper than expected in the third quarter was that mostly due to what you saw in Brooklyn, you kind of called that out or is there something else going on.
That would that change I guess from your prior outlook.
Asked me this is Chris now I mean, the Brooklyn.
The results in New York have actually been better than we would have anticipated throughout 2019 based on what we saw at the end of last year and are expected timing of deliveries.
Again, we're just providing a range of outlook, we create that range in the fall over the year before and we're still operating within that range. It just became obvious that the that everything breaking in Norway and all the markets across the country to hit the high end was was going to be mathematically channel.
Being based on where we are through the nine months and so we adjusted that top and accordingly.
Medically smeets the our previous high end, given our third quarter print.
Would have mathematically suggested a reacceleration in the fourth quarter, which we do not anticipate which is why we took away the high end of that range.
And then you just you had mentioned that in some of the markets. That's all development early on in the cycle.
You.
Sounds like maybe a little more optimistic on but which which one sort of specifically maybe as you look into 2020.
Maybe perhaps would see some sort of re acceleration.
Yes, I think it again, it's those ones I rattled off in the prepared remarks that that saw the impact of supply earlier in the process. So when you look at what right now is on our radar for deliveries and 2020, you see the sharp declines in Dallas in Chicago.
And in Houston.
To some degree in Miami, although still.
More anticipated than 20 in Miami, then in Chicago, or Dallas or Houston.
And I think again Austin would also be in that category. So those are the markets, where you're starting to see some green shoots we saw some some good outcome in Q3 from that perspective. Our occupancy is are there. We're just starting to see rental rate climb back from.
From its lows.
And gives us some some optimism as we go into 2020 that those markets will.
We'll continue to show improvement.
Okay. Thank you.
The next question will be from Jeremy Metz with BMO capital markets. Please go ahead.
Hey, good morning, guys.
Just sticking with supply.
Yes, you had mentioned you're continuing to hold your expectation that supply peaks. During 2019 in starts to decline in 2020, I guess is we stepped back and take more broadly about just the lingering impact here.
Mentioned at weighing on 2020, but what would what does it typical lag as you think about it between peak supply in peak supply impacts.
Yes, I think.
I think you're in that.
Academically kind of that nine to 13 month range as.
As that sort of the churn in the customer base and that's again as it relates to to a decline in price based on that supply.
I think the rate at which that impacts you slows. So I think the impact as we get here later in this impact of supply cycle will be less pronounced than the rate of impact as we experienced it earlier this year through the third quarter.
If thats helpful to sort of answer it in that two into in two ways there.
Yes, I know Thats fair.
And just switching gears to the expenses I look at the advertising spend.
But I mean, clearly there is 4%, but nothing crazy at least relative to what we're seeing from some of your peers are you just not seen as much incremental demand with additional spend such that you're not ramping that even harder or is it just better faith in the systems to be selective on bidding and no need to really crank up that span just from a dumb.
Finishing returns on additional cautious trying to think about how you're valuing the increase AD spend from here.
So the focus is on achieving our objectives, while while paying very close attention to the cost of that incremental customer relative to the lifetime value of that incremental customer and in Q3.
We certainly actively looked at spend we're willing to spend.
But we are able to achieve our objective is in the quarter continuing to be.
Yes, again with that I on that incremental customer and their value relative to the spend as we look forward the landscape hasn't changed it is incredibly competitive not only from.
From the larger competitors and their spend but also from the regional and non traditional storage folks who are who are also ramping up paid you have to you have to focus in on the fact that that paid search.
In in of itself produces the least amount of customers for us and so thats only one components of the overall I think to be fair as we look at the landscape and we look out into Q4 and into 2020 , our expectation would be that we will continue to find ways to use.
As other channels and to be.
Able to generate that incremental customer at a reasonable cost that will cause us to spend at at a rate in excess of inflation.
Now how high does that go.
Stay tuned and will will articulate that when we provide guidance for operating expenses for next year, but I continue to anticipate that our spend will continue to grow at a rate more rapidly than than what it has in the past and certainly more rapidly than the rate of inflation.
Got it thanks.
Thanks.
Next question will be from Todd Thomas with Keybanc capital markets. Please go ahead.
Hi, good morning.
Just sticking with expenses can you comment on the increase in property taxes, almost 8% in the quarter.
Is that level of growth and property taxes expected to persist for a period of time or was this quarter a bit more elevated than you would expect going forward.
Hey, Todd said, there's a couple things going on there it is a little bit of a difficult comp because we had some good news in last year's number we had the benefit of a handful of.
Of of assessments challenges that came back in our favor last year to create a little bit more difficult comp that said, though.
Oh boy, it's hard to get too excited about about seeing meaningful decreases in that level of of growth and property taxes.
Feels like a broken record we've been talking about this for three four years now but.
For us in the quarter, we saw significant pressure on growth and taxes in Chicago.
Usten, San Antonio Cleveland Nashville to name a few that worth of the bigger impact.
Mmm phase.
We're in the midst of preparing all of our outlook for 2020 and as Chris mentioned, obviously, we're not sure on that on this call but.
We continue to expect.
Pressure in the real estate tax range, we've experienced as you know over the past couple of years anywhere from 4% to 8% of course quarters can go up and down but.
I would certainly anticipate that that at least into 2020, and possibly a year beyond that that the continued pressure on real estate taxes, not going away anytime soon.
Okay, and you mentioned, San Antonio and we saw 168% increase in operating expenses. There I realize it's just for four stores, but was that predominantly due to the property taxes and do you expect to see any other.
Sort of big Pops, and other markets like that that protect that particular market.
Was was significantly impacted by a successful.
Refund last year.
So so there was an increase in the and the general real estate tax Bill and San Antonio and in the 2019 period, but the 2018 period was helped meaningfully by.
By a tax refunds, that's a really difficult comps I wouldn't read too much into that one.
Okay, and then just shifting over so the labor day sales that many operators held during our August in the September did that have an impact on traffic and activity across your portfolio and was that expected or was that that new this year or or or at least more impactful than in prior years.
Hey, it's Chris.
It was not new this year.
Certainly for.
A few of our larger competitors, it's a recurring theme.
I think what was new this year is duration.
You saw some variation of a sale.
Regardless of what it was branded that lasted longer into September certainly from one of our competitors. It lasted significantly longer in September .
So thats new I.
I think I think anytime you have something like that.
It puts some pressure on the rentals it certainly works from an occupancy perspective.
It puts additional pressure on on price, because you're giving away.
An additional concession there now some of that is offset by changes in face rate that you make in advance of the sale but.
I would say.
I would not read into that that it was anything different than the norm as I said the only thing I would say is different is the duration was a little bit longer in terms of keeping that in place than what we would have seen in the in the last couple of years.
Okay alright, thank you.
The next question will be from Jonathan Hughes with Raymond James. Please go ahead.
Hey, good morning.
Have a related question you guys running any revenue management experiments with rates or discounting during the quarter and.
And if so on a realist might be tough, but do you have a sense of what revenue growth would have been hedging not made of potential change yeah.
So so great question. We are we are running experiments and tests constantly.
We are playing around with a bunch of different things all year.
Some of which again quarter to quarter can have can have an impact that can swing obviously both ways.
I think some of the things we were doing leading into the third quarter put some pressure on quarterly revenue growth, but not.
I would not say it was overly meaningful.
But but certainly put a little bit of pressure on.
Obviously, obviously with a belief that the long term revenue growth from those customers is going to be.
It's going to be better into our advantage.
Right, So maybe trading just counting for higher rate.
Or or various other tools, but but yes directionally yes.
Okay.
And then and you mentioned earlier, but just want to confirm you're not seeing any change in existing tenant behavior. Despite any.
Any of the broader and broader macroeconomic choppiness.
Now I mean, our self storage customer as I said continues to remain very healthy.
Demand is healthy I mean, what again my point.
The stores that are new and again, it's it's.
It's we own or manage over 200 stores that are in some degree of lease up.
By the physical occupancy is fine.
And most of the stores, our leasing up quite nicely.
It's just in those markets with heavy impact of supply you're seeing.
You are seeing an awful lot of pressure on price and again to go back to the and not to be the broken record the stable stores only need to backfill the five or 6% of the customers who vacate every month, so you're not chasing.
That customer down to the bottom, but but we have stores in market.
Where you've got competitors that are face rate.
25% to 50% below.
What I would say our market rents.
We don't have that change some to that point, but we continually see call it somewhere between two and a half in 3.5% down.
In effective rents relative to where we where last year and last year was down relative to the year before so it's pressure in the markets with supply.
Im confident that this too shall pass.
Okay.
Thats helpful and then just.
One last one from me you ended the last call bye.
Looking at priming the balance sheet ahead of an interesting time period for the sector and you executed on that what the debt and equity raises since then.
Are you finally, starting to Steve.
More properties come to market as maybe some owners and other operators find out this business is tough underperforming below expectations and may look to monetize before things could get even tougher.
Hey, it's Tim I mean, we always see opportunities there is always a market for folks that are looking to dispose of there.
Of their self storage.
Holdings I don't know that I would go so far as to characterize it the way that you laid it out that folks are trying to call up.
Shipped in the market.
We continue to work hard to.
To focus on deals that come to market, we continue to focus on existing relationships largely through our third party management platform, but not exclusively and.
Weve underwritten a tremendous amount of of opportunity. This year, many much of which there is just the disconnect between between buyer and seller expectations, but.
Obviously, as we've increased our activity and our.
And our guidance on on external growth modestly we're finding opportunities. We continue to be optimistic that opportunities will will come I don't I wouldn't characterize it though is some type of market shift if somebody is trying to call the top end.
And they're trying to sell in advance of that that said a lot of folks as we've talked about for several calls a lot of folks who built their stores had built them based on a pro forma that they established many years ago.
That didnt anticipate another store being built or two more stores being built in that market. Many of those stores are not performing to their underwritten pro formas.
And many of those many of those builders or investors were short term focused anyway.
So, they're certainly going to be some.
Some activity that we're going to see that is a result of.
That type of activity, but again back to our comments for the past couple of quarters. We don't think that folks are in distress I think I think folks are going to be modestly disappointed compared to where they thought they were going to be and I think that probably provide some opportunity for us or for someone.
To make a good investment here in the in the coming to over 24 months.
Okay. Thanks for the time.
Thanks.
The next question will be from surely rule of Bank of America. Please go ahead.
Okay. Thanks for taking the question. So we'll follow up on New York and as you.
The impact of supply in the back half of 19 could you talk to the cadence that supply over the next few quarters and what you anticipate getting to Lindbergh.
And ill Halifax on the streets anything.
We can.
Sure so.
I think as you look at new development impacting each of the boroughs.
Start with the Bronx, as we think about the Bronx.
There's 123 deliveries left for 19, and then right now what we're looking out for 20 is.
As one store.
Thats on the docket to open in 2000, so I think again, you're starting to see.
The opportunities for supply there.
Dropping off pretty significantly in Brooklyn.
Again, I think you've got a similar construct most of the deliveries our schedule of either already have happened so Brooklyn.
Just like every other borough in New York, you can build the stores, where the zoning is and.
So we have.
We have four stores out of our same store pool in Brooklyn.
Who are currently experiencing.
Eight.
Brand new comps impacting them, if you take away those four stores out of our overall Brooklyn same store pool. The other stores in Brooklyn are actually performing pretty nicely and have same store revenue growth that's quite healthy.
So it's a concentrated impacted which is just the reality of life and in the boroughs and so.
I think the significant impact in terms of deliveries.
In Brooklyn, large layer coming now we there are some of the third quarter or will seem in the fourth Queens just not much happening I mean, it's.
Theres a delivery here or there again, it's a different cat.
Those deliveries tend not to have as much of an impact as they do in Brooklyn and Bronx.
We have the one property in Manhattan, it's on affected.
We are starting to see supply in long island in North Jersey.
Westchester again, I think the Bronx opportunity set is dissipating quickly and so folks who want to continue to find opportunities in the New York MSR moving out into that.
Into the suburbs.
Our Staten Island store, which is just a spectacular site continues to chug along yes.
They're very nicely.
That helps our yes that's helpful.
And can you also talked to what you're seeing in terms and then second Frank.
Yes.
Starting from the end of two ceiling moving into the back.
And then what you're seeing going into October .
Yes, no sharp changes again, we continue to be in as I said to a previous question we're in that.
We're in that somewhere between down one down five.
In net effective rents.
And I know Thats, a pretty big gap, but again, it's a story of the supply and no supply more as the markets Las Vegas as a great example that aren't seeing the impact of new supply we've got.
Very very solid asking rent or net effective rent growth similar in many of the California markets, while it's slowing relative to what we had seen in the Hay day, it's still it's still nice growth those markets and we know where they are that are saying supply.
We're down to some degree worst in our portfolio is Houston.
BARDA all of Florida is.
He is seeing some pressure from supply it's now not only Miami as the it's the west coast to Florida up into Orlando and then even Jacksonville. This on degree. So it's this is the song remains the same.
And we'll do and will and will be until we get into next year and start I think see us a diminishing impact from the supply.
Okay, so there isn't a little bit wider than expected.
If you were to come up.
Hello and weighted.
Sure.
Okay.
Your net effective rent.
Great be closer to high end or low at that range at right in the middle shortly.
Thank you.
Our next question comes from Ki bin Kim with Suntrust. Please go ahead.
Thanks, Hi out there.
Can you go back to that supply topic, you said, you're seeing pipe, peaking next year, but trying to get a sense of what that really means. So if there were like 2000 properties being delivered and next will be down to 1900, it probably doesn't mean much.
Patrick was 1000, obviously, a more meaningful just trying to get a better picture.
And so these numbers are range Ki bin because again some of these deliveries that we would anticipate coming in to 2019 will obviously not get completed and will open in January February 2020 equal number by probability will not open in 2000 and will move into 21, but an order of magnitude for us.
And again this is just our top 12 markets, which is about 70% of our revenue you're going from a range in 2019 of expected deliveries in those top 12 markets of somewhere between 300, and 360 going to a range of somewhere between 110 in 100.
50.
Well, that's a pretty big drop off.
And when you look at.
Maybe permitting data is that a similar.
Don't or is that a little bit different yes, I think I think all of its sort of holds together I mean, we're we've got our own proprietary work that we do internally we utilize the the the various entities that are out there doing a similar amount of work we look at and again and this is in the top 12, I just think year you're running out.
Of opportunity that makes sense economically I mean, the rental rates that you would need to have a new development makes sense and certainly in the top tier markets are well in excess of what today is rental rates are and I think given the experience that people are having who did open in the last 18 to 24 months, you're just not seeing as much.
It's moving that into the second tier markets. So I think there still is opportunity.
It's going to largely be away from from those markets, where our portfolio is heavily concentrated.
Okay and earlier you said there were no changes to customer behavior, when they get a rent increase but how about for new customers any kind of incremental changes then.
And shopping patterns are how sensitive the after prices maybe that highlighted by the average time visit or spend on your website, if thats changed at all things like that.
I just think there are more options right. So no change I, just think again given the amount of new supply the customer is finding.
They're they're finding more options and so therefore, we need to be more efficient on getting those customers we need.
To to meet our objectives at the at the stable stores.
Okay. Thank you thanks.
Next question is from Eric Frankel with Green Street Advisors. Please go ahead.
Thank you.
Third party matching business plus the AD format stores. This quarter, if I think the net new additions is all about for us and maybe just comment on the story that came out for platform.
Sure happy too so you'll recall that last quarter we.
We talked about our HBP three transaction, where we acquired 18 stores.
And sold 50 stores as part of that as part of that transaction, the new operator, the new owner of those stores.
I was looking for a transition period for us to continue to manage for short period of time, while they staffed up their operations ultimately their intent is to self managed those stores and so during the quarter or more than the majority of the stores that came off the platform where stores that we transitioned off of our platform to the new owner.
And then the balance of the stores that left the platform or more.
Various little chunks of stores thing were sold in the biggest chunk was was a sale.
To another.
Not in acute correct.
Got you okay.
Yes, but one other question with growth in New York again.
One of your.
I guess people call when your competitors.
Purchasing pretty sizable portfolio in the market there that pretty well.
Overall pretty aggressive price when you get its touch upon.
Why you wasting the New York pulp tools at all.
Fundamentals mobiuss softened a little bit.
Sure I mean, I think I'll start by I'm not sure there I'm not sure there a self storage competitor, but but time will tell.
The.
The values in New York, Yes, clearly continue to be.
To grind a little bit tighter I mean, it's just a very very attractive.
Market long term for storage.
We're proud to have identified that eight years ago and be the market leader there.
But when you're looking at when you're looking at valuations across the country I think your historically for last 25 years, you always looked at California and everywhere else.
I think that shifting a bit to to to some of the east coast markets being perceived on equal footing.
Okay. Thanks to step back in the Q.
Thanks.
Next question comes from Todd Stender of Wells Fargo. Please go ahead.
Thanks, and just to stay with New York.
Looking at your Brooklyn Development project, the opening date slipped into Q4 and Theres a lot to get that investment total up to the final estimate I Wonder if you could just speak to this specific project just because of its size.
And maybe you still have a good not too to get that up to that 43 million. Thanks.
Yes, so the difference between the.
Where we are and where we ultimately will be is that that development deal structure similar to many of our deals where our development partner has the right too.
To put their position to us in the future. So we we put in our total investment number there what we ultimately expect including their put.
So that will come in one big chunk.
And tied I was just there again as I said I spent the day in New York touring.
And that site is an extremely challenging site.
We are under.
The elevated train line right next to it.
And interestingly enough I think we've talked about this site, where about 14 inches from a competitor store that they've just they've just finished and our leasing up right now and actually leasing up really nicely.
Two basements, so it's a complicated construction.
The delays are our days and weeks not months.
We try to predict as best we can win the stores will open but.
Thats store should open here before the end of the year and we're Super excited about it really underserved market and.
We look forward to being very good competitor to our peer.
And in something like that.
Is the lease up period expectations still three leasing seasons or are you really like it and it's like two heading.
Yeah for a size of that store I think the underwriting would be more like for.
I will say based on and.
Based on where the where the market is today.
We're pretty we're pretty pleased with being able to get that store delivered but yes, it's going to be.
More like for.
Got it okay.
And then just switching to disposition guidance just at the high end of the range that came way down was there a group of assets or a market that you might have been looking to exit.
Or just the fact that you tap the bond markets already here in Q4 in your plenty liquid so you don't need any.
Proceeds right now how do you think about that I wish there were some great answer that we started the year with a with a zero at a $50 million range, because we're exploring a couple of opportunities and as we sit here today, we know we know what the answer is.
So we sold the one we sold the one store.
In Texas here subsequent to quarter end and thats likely to be the the.
The disposition activity for the year.
Was that.
Three small asset for 4 million Bucks it sounds.
Tiny side, it was $4.1 million worth of asset.
Okay.
Thank you.
Ladies and gentlemen, this concludes our question and answer session I'd like to return the conference back to Chris Marr for any closing remarks, alright, well. Thank you everybody for.
For for listening in.
But trust me.
We're going to navigate through this impact of supply just fine the customer remains very resilient our business continues to be extremely solid.
It's a challenge here going forward I think for a few quarters as we go quarter to quarter, but for those of you with a longer term outlook on our industry and our company.
Feel extremely confident we're moving in a good direction and as the new supply impact begins to wane will come out the other side stronger for it. So thank you all four listening look forward to seeing many of you in Sunny Los Angeles, California.
And we'll look forward to speaking to everybody on our yearend call have a great weekend. Thanks.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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