Q1 2020 Earnings Call

The day, everybody and welcome to the cubes Mark first quarter 2020 earnings call. All participants will be an eight let's an old remote should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

After today's presentation, there will be an opportunity to ask questions to ask a question you may pressed start then one on your Touchtone phone.

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Nope today's event is being recorded I would now like to turn the conference over to Mister <unk> Senior director of Finance. Please proceed sir.

Thank you <unk> Hello, everyone and welcome to accuse March 1st quarter 2020 or in call.

Participants on today's call include Chris <unk>, President and Chief Executive Officer, and Tim Martin Chief Financial Officer.

Are prepared remarks will be followed by a cure nice session.

In addition to our earnings really which was issued yesterday evening supplemental operating at a financial data is available under the Investor Relations section of the company's website W.W.W. Dot com smart Dot com.

The company is remarkable includes certain forward looking statements regarding earnings them strategy that involve risk uncertainties and other factors that may cause.

The actual results to defer materially from these forward looking statements the risk factors that could cause our actual results to defer materially from forward looking statements are provided in documents accompany fresh as to what files with the security an exchange Commission specifically the form eight K.. We filed this morning together with our earnings released wildly.

The form eight k. and the risk factors section of the company's annual report on form 10 K.

In addition, the company's remarks include reference to non got measures.

Reconciliation between gap and non got measures can be found in the first quarter financial supplement perch posted on the company's website W.W.W. dot keeps mark Dot Com I will now trying to call over to correct.

The morning.

Thank you to everyone participating and listening to this call. We're thinking of you during these difficult times.

Our thoughts and prayers are with you and our keeps smart teammates their families and friends our customers and our communities.

While this pandemic is impacted our lives and loved ones in many difficult and challenging forms.

We are lifted up by the courage compassion and innovative spirit that we have witnessed in our over 3100 teammates and 600000 customers.

Personally I'm confident that our mission our values and are incredible team mates are going to endure through this time and make us stronger together.

It's happening already.

The world is changing around us and we're adapting with those changes.

We're simplifying the challenges created by this life events.

By coming together, creating innovative solutions.

Liberating unparalleled service and holding each other up.

Genuine care.

Well it seems a lifetime to go.

Our first quarter was off to an extremely solid and encouraging start.

Same store rental volume through the end of February was running ahead last year and our plan.

Same store physical occupancy at the end of February was 50 basis points ahead of last year.

Net effective rate on rentals.

Slightly higher compared to 2019 during January and February.

We had a positive bias on customer demand fitting into the beginning of the busy rental season.

All of this changed in March.

It's stated in our earnings really same store average occupancy for the first quarter was up 20 basis points over last year, while quarter ending same store occupancy at 91, eight was down 20 basis points over last year.

While student rentals as a result of school closings benefited occupancy during the first two weeks of March.

We experienced a significant decline relative to both last year and playing during the last two weeks of the month.

March with same store rentals down 11% last year.

In mid March.

Pause both rate increases to existing customers as well as our delinquency procedures and later in the months suspended customer use of rattled trucks.

April results reflect the full month of altered policies and procedures as we adapted to it new manner of operating and working within each municipalities unique orders.

Same store occupancy ended April it 91.8% consistent with March and 50 basis points below last year.

Same store rentals were down 28 per cent compared to April 2019, while same store Vacates were also down significantly 26% below April of last year.

The same store average net effective rate on April rentals was 13% below April 2019.

I must say that what is encouraging is the more recent rental trends.

The early days of stay at home orders brought very low levels of activity in our stores, but the last two weeks have seen a steady uplifting rental volume.

Over the last seven days, specifically same store rentals are only down 12% compared to last year, a significant improvement from April trends.

When examining recent activity by region, the trends that Ben consistent with Dallas, Phoenix, Houston, Philadelphia, and Fort Meyers, Florida, performing the best and the balance of our remaining M.S. days, all performing relatively the same.

This unprecedented time has been called a generation defining moment.

We it keeps smart believe it will also be viewed as a company defining moment.

How we respond to the crisis matters most.

We have completely transformed our service the litter delivery in a matter of days and weeks.

100 per cent of our rentals have been contact lists since we rolled out that capability nationwide on April 2nd.

The investments we quietly made over the last few years in our technology are point of sale systems in our people.

Laid the foundation for us to pivot and rapidly introduce smart rattle, our contact was completely online process for our customers.

On April 27, we introduce smart rental nationwide.

Smart rental awareness has been rapidly increasing over the last 810 days and we are extremely pleased with the customer adoption rate.

In New York City, our customers now have the option to access gates and keypad access doors contact list food, they're smart phones.

We are working on several other innovative technological solutions that will be rolled out over the next few months.

We are confident that when this pandemic is viewed through the lens of hindsight.

Our ability to combine our award winning customer service culture within a ray of cutting edge technological solutions, and and amazingly compressed time wine and under extraordinarily challenging circumstances will further solidify our position as an industry leader and preferred Brad.

I'd like to now trying to call over to to Martin Our Chief Financial Officer.

For him to share his thoughts on the quarter and moving forward Tim.

Thanks, Chris and thank you to everyone on the call for your continued interest in support.

Hoping you and your family friends and colleagues are all healthy safe.

And not going to stir crazy and your new work environments.

Picking up on Christmas comments, the first quarter was certainly not one and well it does feel at times like this.

Emergencies locked down stay at home environment started months and months ago.

It's all still pretty new and didn't really start to impact are behaviors until mid March.

We started adjusting several of our operating practices by stopping Arlene sales and pausing on our rent increases to existing customers among other things.

Those actions are clearly going to have a financial impact, but from a timing perspective.

They didn't have much of an impact on first quarter results the impact will come in the second and the third quarter results and possibly beyond.

Overall for the quarter, we reported results in line with our expectation.

Share 41 sense.

I'm still revenue growth of 1.7%.

Same store expense growth of 3.8%.

<unk>, 0.8%.

Here today from an external growth perspective, we closed on three acquisitions for 74.7 million.

And during the quarter, we added 66 doors to our third party management platform.

Oh that said clearly investor focus is less on what happened in the first quarter and more on two things first what's gonna happen next for our second quarter results and on through the rest of the year and second how strong as the company's balance sheet to provide flexibility and capacity to navigate through all of this uncertainty.

Taking those in order, let's start regarding the major challenge that we and many many other companies had this quarter.

Is that there's simply too many unknowns and uncertainties to factor and.

To provide a range of estimates per our normal practice.

Major question impacting forward guidance include.

How long until we're able to fully get back to normal operations, including conducting when sales and passing along rate increases to existing customers.

What will demand look like for the self storage customer when we come out the other side of that.

How successful well we'd be in collecting pass through rents from our customers.

And what happens overall with the U.S. economy. These are all questions of course that at this time no. One has the answers to as as <unk> begin to lift stay at home orders, we are starting to reinstitute delinquency prophecy.

And rate increases to existing customers on the market by market basis as regulations allow but will continue to monitor the situation and address is necessary.

All of these factors will be meaningful drivers of our financial results in common quarters.

So as a result of all this uncertainty we along with many others elected to not provide forward earnings guidance at this time.

And then the second main area focuses on balance sheet strength, that's an area that we can provide quite a bit more certainty in confidence.

We are extremely well positioned to weather the storm, we have another secure credit facility with 750 million of capacity. It at the end of the quarter and we have very little DAT maturing through the end of 2021, only 3% or 56 million of our data's coming due to the end up next year.

In addition quarter and our leverage levels remain conservative 39 per cent that's gross asset.

Debt to either that was 4.9 times.

Fix charge coverage ratio was 5.5 times.

As many companies are dealing with major issues and the dressing upcoming maturity funding their operations and paying their dividend.

Focus on how to position ourselves to be nimble an opportunistic.

King are strong balance sheet and using it to grow our company as we come out of this in the quarters ahead.

We also have the benefit here Q. smart of having a team that has been through tough times before.

As a team are collaborative culture, our experience or compassion or customer service focus and our ability to innovate what position as well to differentiate ourselves in the industry and to do so in a way that set the thought for years of continued success.

Thanks again for taking the time to join US for today's call at this point Air why don't we open up the line for some question.

Thank you we will now begin the question and answer session.

Ask a question you may across starred then one on your Touchtone phone.

If you're using a speaker phone please pick up your handset before pressing the keys.

Draw. Your question. Please press start then too.

We will pause for one moment to assemble our roster.

Our first question today will come from Jeff Specter with Bank of America. Please proceed with your question.

Hi, guys. This was a little ask <unk>. Thank you for taking the question I was wondering if you guys can just talk a little bit about expenses going fine.

Taxes, or how you're thinking about marketing in this situation and then maybe something on payroll and how we should look at that.

The coming months.

Oh sure happy to this is 10, thanks for your question.

All the things of that have happened here since all this started though the the consistency is that is that expenses aren't really impacted much at all so we when we had provided guidance previously and talked about our thoughts about 2020 and thinking about real estate taxes are are the biggest.

Barrier pressure, we expect that they will continue to be the the largest line item.

From an expense standpoints for us and there's nothing in the in the near term that would change are expected trajectory of of those expenses from a marketing perspective.

We've continued to ramp up our marketing spend.

Our team does a great job of of adapting and evolving in continuing to find attractive ways to spend marketing dollars to to continue to attract customers and we're still seeing good returns on our marketing investments from a payroll perspective, we worked very hard and our teammates worked very hard to keep our stores open.

To continue to staff them in a way that we conserve our customers.

And so from a payroll perspective again, we didn't see much of an impact.

Looking back in the first quarter and don't expect much of a much of an impact versus what our expectations would have been.

The 19 crisis.

Okay, Great thing cannot question on the smart rental so how do more rentals in the past few days have been coming from that time for him.

Yeah. So this this crap platform was introduced as I said only about eight days ago and turns on the smart rental product permitting that customers to be able to complete their entire process online earlier in a in April as I mentioned, we went to contact lists process.

And at 100 per cent of the rentals were coming through that so in the last eight days, we've seen smart rental broke from zero yesterday 17 per cent of our rattles came through that platform. So the growth.

Has been exponential in the last eight or nine days and we expect that to continue as brand awareness and and the awareness for that option.

Permeates throughout our customer base.

Okay, great. Thank you.

Thanks.

Our next question won't come from Smithies rows of city. Please proceed at your question.

Hi, Thank you I wanted to ask you just on the contact was program as it grows are there any kind of margin assumption ferreting tease. It does it cost to last to run that program.

So Hayes meats.

As we think about the delivery model for us.

Certainly we have a new paradigm.

Concepts such as.

Greeting the customer with a bottle of water in the parking lot you know our stick that is one of them. We shake. So we've had to revamp that model fairly significant way I think as we move forward.

You know our intention is to continue to deliver a high quality customer service experience.

And that likely will continue to require our store teammates to be an integral part of that but just perhaps in a different way.

So if we lucked out over time and again, we're gonna have to figure out how this new normal continues to to change business offerings. I think we're prepared to check continued offer a a low touch or no touch experience or or frankly go back with.

Thing more traditional if if if if helped conditions permit so too early to tell but certainly I think again the optionality that we have I think will serve us very well to be able to pivot between both ends of the spectrum as we move forward.

Okay and that just I wanted to ask you.

You look back to the to the last to the last recession.

What's fall out was there I got it in terms of the pipeline.

The must've been elevated attrition rates and do you think that there's something that could be similar going forward now.

I'm, sorry, just to clarify the question.

Blind in elevated attrition rates relative to customers.

No just in the last recession, you know I think it was a period, whether it's been a lot of deliveries and a lot deliveries on Dec as well and I'm. Just wondering you know at that time, we able to track kind of what.

<unk> ultimately declined to are contracted and I got you expect kind of a similar situation now.

In terms of supply.

Yeah.

Potential.

I think the difference that makes it a challenging comparison is is is the majority of the supply that was calming had been delivered.

Sort of immediately before the great recession, and so the volume in the pipeline you got into kind of Oh nine wasn't.

Quite as a as deep I think and we're already seeing it through the third party platforms.

You have a couple of things going on one obviously unrelated to code it 19, but in New York City.

The legislation that was passed eliminating the ability for self storage to use I caps.

In our opinion will bring self storage development in New York City basically to a whole.

It just makes underwriting.

Two a yield that makes any rational offends almost impossible.

Back that those deals that are able to cross the hurtle and have a C.O.R. on so I have a building permit before July one we'll get finished and we will see a grind to a halt in New York and the rest of the country. It's a mixed bag those who.

Those who have the ability to.

Either pause or reevaluating projects, what we're seeing through the third party platform, they're absolutely doing that you know those deals that are under way you know Unfortunately, and we feel horrible form and many municipalities, they're they're not allowed to continue construction so they're sitting in other areas where you.

Can can continue construction progress continues so I think I think.

I I think no doubt.

This will have a.

Impact of reducing the pipeline of new supply as we move forward to what degree again I think is is really difficult at the tail at this point.

Okay, making.

Our next question will come from Jeremy Mets with B.M.O. capital markets. Please proceed with your question.

Hey, guys.

Chris in your opening you you mentioned being encouraged by reducing mental activity or can you talk about the trends on the other side in terms of move out.

Turns out movies also started care happen in then any color <unk> rents here as well in that same contracts versus.

What's your notes or April in terms of God, but 13% fall off.

Sure in terms of Ah you know in terms of.

Rentals that that has been as I said incredibly encouraging over the last seven even 14 days the trend in Vacates relative to April really has not changed so we have not seen any significant increase.

In that in that level of vacation, which which has been as I mentioned quite significantly below last year in terms of of rate.

Great net effective rates on rattles I would say of GAPT out. In addition, all all at 400 basis points from from that percentage I quoted April.

Excellent helpful.

The latest screen came here.

Probably on New York.

You know, what's going on and given that supply that's still in the pipeline.

<unk>.

More grass on rain gauge counting against Mark. It then maybe some of the broader or you know comments or trend a hardware occupancy rates are trend did cross april across or company.

No I would say again, a shout out to to our team mates and to our customers and and to the population of the boroughs.

New York has been extraordinarily they should be extraordinarily proud in our team mates are extraordinarily proud the the customers have been great. We continue to see traction, albeit you know.

Much less than.

Then last year, but if you look at New York relative to say Miami.

Or.

The Chicago Orlando.

He then to some degree match Metropolitan Washington, D.C. performance has been as Ben about the same collections have been about the same customer behavior has been about the same. So again I think they're resiliency of the population of New York is going to be.

A real positive as we've gone through this.

Are great last ones for me you know, Tim you've always brought up that the master remapping thinking about deceleration et cetera.

The question.

This year.

Oh, my God fall off or not.

<unk>, you know quite a bit here used cars God.

Art program, you know you're scope.

Why are you married shouldn't be expected.

You know, we got a lower starting point you just wrap all right together.

Meaningful fall off here.

And it would points or something worse than what we saw that you get too so.

Do we think about.

You know what sort of gold pause or how can you.

Should we be thinking about a potentially sharper re check what would be someone are portrayed cake. So.

Thanks.

K, Jeremy 10 checks the thanks for the question I am I'm, a big fan of math and I'm, a big fan of Ah reporting results in providing good color on guidance the challenge of course.

Is that for all of those things, even trying to set goalposts with within any reasonable range or so incredibly dependent upon.

All of the factors that you mentioned.

Big Big ones, including getting back to pass along rate increases to existing customers.

What what level demand do we continue to see what pricing what level of discount.

The biggest one is tight as how long does this.

How long does this continue and so for something like the the rate increases the existing customers.

It's a compound the impact every month that you don't do it.

Builds and builds and builds until such time is you're able to than start to to go back and reinstitute those rate increases and so.

Yeah, providing guidance is is is all mathematically based and and and it's so I was trying to address in the opening remarks and of course, it's no surprise everybody else's seeing the same things are just such a wide range of potential outcomes, primarily due to the biggest input as to how long does this last but when can we were booked.

Normal operating procedure, so I wish I had some nasty provided but it's all in hair on why we why we put our guidance and our providing at at this time.

Yeah, I, I think Oh fair and I guess.

And opinion, then be gifts two year old crushed can do you feel better today I mean is that then you get back there in just about.

Central here or there again is there's so much uncertainty and it's it's hard to see you feel better or worse, you you actually feel a little worse Howard everything is happening.

Yeah, <unk> I think I think it's different.

But frankly I think we feel we feel better about where we are because again, we're able to offer the customer.

An opportunity to use our product on a contact lists basis, which.

Which is pretty unique relative to almost every other business so to be able to provide the customer with an opportunity to use self storage.

In in that manner, I think creates an opportunity for us to meet the demand that is there.

You know fundamentally our behavior patterns gonna change et cetera. They are I could give you a glass half full approach which is.

All sick and tired of looking at the same four walls that we now work and eat in clay and socialize in the.

Virtual methods and that if my apartment lease was coming due in the next couple of months that I hadn't ordinarily thought about moving I may want to move just for a change of scenery, if I've been home for 14 weeks organizing.

And finding a different use or maybe I need a room in the house now for for my homework that I think is going to be in some longer time period, or I may need a safe and secure contact free place to be able to store my possessions and we can deliver on that for that cost.

So there's an option here again, depending upon the timing.

That you could see a a relatively nice bounce back in demand.

Over the next weeks and months, but it's gonna largely depend upon what happened by municipality and so you know I think about those states that are reopening and in those states. We are beginning to start to go back to normal in terms of our operating process working with the customers who are in arrears then.

And focusing in on on rate increases to those existing customers at some point over the next couple of months. So again I think I think if we continue to reopen the country in a safe manner. Then I think we can get back to something in this new normal over the summer, but it's just impossible to tell how this is going to happen.

Thanks to computers.

Thanks, Jeremy.

Our next question will come from taught at Thomas was key Bank capital markets. Please proceed with your question.

Hi, Thanks to the morning, Hey, Chris sticking with some of the comments that you you just made and thinking about New York, specifically, you know where you sound encouraged by the trends in New York that you've seen in the near term, but it's a relatively large and outsized exposure for the company any preliminary thoughts on on how.

This pandemic may or may not change consumer unemployment preferences, and and how that you know those changes might impact the way you think about allocating capital longer term.

Yeah. Thanks, how great question. So I think I think Marty mcfly from back to the future. It was the first one to confuse density in destiny.

And I will say statistics do not show a consistent connection between big City and Corona virus impact.

So if you think about if you think about the world's most heavily several places Hong Kong Singapore.

They've provided they proved to be a four very formidable containing the virus wall small towns in Georgia in Louisiana Supper.

I think about New York City, as an opportunity for urban planning.

To use this and and as we have done in our country. Since day, one we are incredibly innovative.

And can do society.

And I think I think ultimately the New York City issue is isn't density it's crowded you.

You know many people think it's the same thing, but it's not right density is how many people live in work and how much land you know how how many people living work on how much land crowding.

Routing is literally how close everyone is to one another at any given time and place so.

You think about New York and and and Unfortunately.

The most dense portions of New York City has fared better than Staten Island. The least that's in terms of impact of coded per per capita so again I think density done well supports the existence of quick emergency responses walkable services et cetera, and that's what makes cities attractive again I don't.

Do we don't view this as something that is going to ultimately make cities viewed as less attractive you know I can point to know number of no small number of cities.

Around the world, who have who have been able to to plan to in a way.

That paints a very rosy picture going forward, so I I'm still a and we're still all in on on the on New York City on on on the urban nature of our portfolio and ultimately believe that that planners, we'll find a way to create less crowded.

And and well I'll continue to make city is attractive for all the reasons that they always habit.

And then from just from a fact checking standpoint. It was it wasn't Marty Mcfly. It was his father George met fly too confused density with Destiny.

Okay. That's that's helpful.

And and appreciate the the detail on the rental trends and and that effective rents, but can can you tell us what the average spread in in rate is between move out and move into during during the first quarter and how that trend. During April you know or more recently, if you have that information.

Yeah as you know the first quarter just by seasonality always had the the largest spread between the the move in the end move out.

Oh by our business and in the first quarter of this year relative to the last several years that spread widen doubt about 5% more than than usual, so a little bit a little bit whiter than what we had seen but again I think when you look at the net effective rents on.

The on the rentals themselves relative to last year pretty tight so I would say you know overall, given what we're working with here.

Pretty satisfied with how that's played out.

Okay. Just one last one if I could you know in terms of the you know you've been successful grown the third party management platform and.

You know I'm wondering with regard to the tenant insurance income that that program generates and and and sort of your 10 insurance efforts. Overall, you know is it appropriate to consider thinking about transitioning to a captive solution. What's the the current thinking there.

Hey time, it's a good question it is the balance and the tradeoff for our current approach compared to a a captive approach or something that we that we look at.

Every year and think about the economics, and the economics of and I want to risk adjusted basis for.

For the tradeoff between our current approach on a captive approach and again it it'll be something that we continue to look up to date.

We have not found a compelling.

Time or opportunity or facts that on a risk adjusted basis to to transition to a captive it's something that we're very knowledgeable on and continue to look at and and and we'll see what future brands.

Okay alright, thank you.

<unk>.

Our next question will come from the key been Kim with Sun Trust. Please proceed with your question.

Thanks, Good morning out there.

Going back to the existing customer rate increase program could you through mine does.

Any given your <unk> 10 pays get to rent increase.

And if there's a seasonality aspect with though does it have been more in the summer versus daughter quarters.

Yeah. So a simpler to think about a key then is that we our practice has been to pass along in normal times are practice practice is then.

Pass along a rate increase to a customer who has who has been with us for six months and then every 12 months thereafter, and so with a medium length of stay for us that hubbard's right around six and a half months.

That means you know roughly half of our customers are going to get that rate increase have new customer will get that rate increase and then you layer on top of that.

60% of our customers I've been with us more than a year 40 per cent lived up north 40 per cent I've been with it for more than two years.

So you you think about all of that manifest as to who and how many folks are getting it.

From the seasonality perspective, given move and trends are more weighted towards summer movie ends that means there are more people than that come up on that six month, Mark in the fall and winter time, So we see a little bit more in the way of a rate increases, it's a little lumpy or in the fall in the winter given given our practice.

Okay, and alright, it's the basic math.

We know that you see our <unk>, our I program doesn't really address.

Growth rate because you're doing it every year bite you stop podwika, you'll notice that bigger impact. So is the basic math that you know it's half your customers are getting it and rent increase their 989%.

That's basically the math have how much to analyze it would be at risk.

Yeah, <unk> versus the customers, who will be receiving that particular <unk>. So it would be it would be eight or 9% of of some set of the population and then the biggest while cart to all that that is what I mentioned and an earlier response, which is.

It's going to it's going to depend.

It's going to depend <unk> materially on how long this impacts because if you don't do it for one month, that's a little bit if you don't do it for the second month, it's more.

And then it continues to build from there and then it gets really complicated when you try to model it out because.

Six months from now if all of this continues.

They are moving volume as a little bit lower so there'll be less people in six months that would be exposed to it because they're less folks moving in so it's it's not the easiest thing to model out Needless to say it is of all of the variables. It is it is probably in the short term here, it's probably the biggest variable that would impact how results here in the near term.

Okay and as a last question <unk> alright.

How do you start to open up Alright, <unk> are you thinking about <unk> implementing dot E.C.R.I. program in lock step basically or are there other things that word maybe car from more called <unk>.

Yeah again, it's.

Consistent with what you heard from others were actively monitoring.

Stayed home order state of emergency orders and.

And behaviors within markets and and ultimately, we we want to get back to business as normal as soon as we get.

We want to get back to <unk> to to sending out rate increase letters to to customers pull our normal practice and or monitoring all of those things.

Find the appropriate time to do it and then of course will have to continue to monitor because.

You know things things could things could revert as we all know so we'll we'll we'll carefully stay on top of it as we have been since all this started so difficult difficult forecast our goal would would be to get back to business as normal as quickly as we can't.

Okay.

Thanks.

Our next question will come from a <unk> J.P. Morgan. Please proceed with your question.

Hey, guys I was wondering how mature <unk> and <unk>, hi, you're not doing a locker auction score delinquency rate.

<unk>.

Uh-huh.

Hey, it's crap I would say that it's about 50 basis points of occupancy is probably a conservative number relative to the lack of auction.

God. Thank you.

Our next question will come from Jason Belcher with Wells Fargo. Please proceed with your question.

[noise] Yeah back on the acquisition front I'm just wondering if you could provide a little more detail on those three facilities fever acquired here to date and it'd be just tell us what markets there and how mature they are what what size. They are in times square feet.

Yeah happy to do it. So we we closed on one acquisition during the quarter as you as you saw on the release.

That's store was in San Antonio It was Lisa Lisa.

Stored that we are very excited about and then <unk>.

Subsequent quarter, and we had two stores under contract both with long standing existing relationships, one and Jessup, Maryland.

And one in Hoboken, New Jersey and are those are great additions to our portfolio they fill in really nicely with our existing assets.

Again deals that we've done with two separate parties, but but folks that we have longstanding relationships with him and are are familiar with with taking over.

Those stores and were incredibly excited in each of those cases also those are stores that are they were each and.

<unk> 65, 70% occupied range, so not not early stage, Lisa, but still in lease up and so all three assets for us or a great fit and consistent with our investment strategy and then you probably also saw that we.

That we in a in bested yeah.

A a joint venture that close that joint venture.

That Jim joint venture in both 14.

Six in Atlanta, three in Charleston, and then one in Tampa and one in Fort Myers and so that's another coinvestment.

And.

We've made that that allows us to expand our management platform I have a steak and and some of these assets get a leverage return from our perspective from a management be standpoint, and there are some opportunities for us to do some nice work there to to add those store so our platform.

And create we believe some pretty significant that either.

Thank you and then the on that J.V., the new J.B. is that a a new che these structure with an existing partner a new J.B. partner altogether, and then could you just remind us how many T.V. partners until you have now.

Yeah. So that is a new joint venture with with an with a partner that we have done joint ventures with many times.

And so that portfolio was was such that it was [noise].

Put into a separate venture has debt specific Tibet bench or.

From an overall standpoint, we have we have joint ventures with a handful folks.

Largely driven by.

On on development projects.

We have multiple multiple of the stores that you see in our in our development pipeline that those five stores. They they have four separate partners on on and unconsolidated drunk <unk>, they're all consolidate but their own development joint ventures, and then we have we have one part of that we've done a lot of other ventures with.

Great. Thanks, a lot.

Thank you.

Our next question will come from Steve <unk> Evercore I.S.I. Please proceed with your question.

Thanks, just a quick question or a couple of what first what is the percentage of auto pay that you currently have [noise].

Are you, saying a meaningful difference in the pay between the auto pays in the cash Bay.

Hey, Steve So we we have a right around 50% of our customers wrong auto pay.

And we're not seeing a I mean, obviously auto pay customers pay that's hence the auto right.

But for the balance of our customers, who pay it'd be a credit card, but not on on on auto pay and cast customers. We're not seeing a material difference and in in those collections collections of extra going pretty well I think some of the numbers that you know that have been shared by others are are there can be meaningful impacted by compare.

Who are first of the month and companies who are anniversary date, but you know at this point, we're we're pretty pleased with where we are especially because we have not been actively.

Pursuing collection efforts and so as we as we start to as as as things he's up here a little bit.

I feel pretty good about where we stand as we resume and and start to approach getting back to something normal operating procedures.

Right what is I mean, when you sort of look back historically, you know when a person gets delinquent by I don't know if it's 60 days 90 days hundred and 20 days you know what is the.

You know what what's the point of kind of know return where you. Just you know don't feel like keeping collect or the goods aren't worth what they oh, you mean, what what sort of that day of wracking and you know how far out the asked to get or keep that before you start to run into a bigger collection problem.

Yeah, I I'm <unk>. The simple answer that question would be would be probably at the 60 day more but what's really difficult today is to think about that that historical answer and how to necessarily apply it to today because as we have been trying to exercise genuine care for our customers and trying to be understanding.

Of the situation that many are in with what stay at home orders and unemployment and and the like we've been we haven't been.

We haven't been performing lean sales, we haven't been going through the normal delinquency process. So.

If the answer was 60 days six months ago I'm not sure that the same behavior, what's gonna happen because we haven't been.

You know we haven't been doing the same things that that that we had been doing before so I expect that we'll collect some things over 60 days that we wouldn't have previously because because of what we've been doing but hopefully that's helpful to answer your question.

Okay tanks, and then lastly, Christian you know this new joint venture I'm. Just curious you know, there's a lot of capital and wanting to get into self storage.

You guys have a very good platforms third party management can take advantage of that I'm. Just curious how do you evaluate you know new transactions today I realize that the market is probably not that fluid, but how do you sort of go about underwriting new deals today, given the uncertainty over rates and and occupancy trends.

Yeah, it's extraordinarily Ah, it's extraordinarily challenging which is why you've just seen sort of pretty sharp slow down and.

Inactivity, you know the deal that that were brought to market kind of at or around mid March you know a couple of them have.

Gone under contract.

And I would say you know at at pretty robust prices. So there's there's no shortage of.

Of capital out there, particularly private capital, who who remain very bullish on the long term prospects and are willing to trends Act.

You know, we are taking and I think we see it across our peers, a a very cautious approach and I think at this point frankly, you know most folks are going to wait until they can get a better handle on what buyers and sellers a better handle on what you know reopening looks like.

And how that may translate into operating fundamentals before we start to see much about.

Of a restart I think on the as I mentioned to a previous question on the development side.

You know I think that's even more difficult I think if you haven't started construction or you're not committed you know our senses that that most of those folks are.

Definitely pausing and waiting to see what happens obviously, a blending institutions are also getting more cautious.

Okay and then last question just on back on the smart rental and and you know the industry kind of moving more online that kind of that here out of necessity. You know how do you see that sort of changing just overtime staffing needs and and levels and you know what does that due to.

On site, you know personnel costs down the road.

Yeah, I think again.

Not to sound like a broken record, but I think it depends I think it's going to depend upon.

How much what we're experiencing today is a paradigm shift in how you know and how people like to operate.

You know J.F.K. didn't wear a hat.

And and all the sudden that sales and American men went a went down the toilet. So the handshake thing in the past is the.

Finishing up customer service kinda radically change here. So I you know I think it depends it certainly gives us the optionality to <unk> self service contact free approach with with more direct customer service and to be able to pivot between the two.

Depending upon the market the store, a and where we are in in battling this pandemic. So no long answer and basically say unsure at the moment, but the Optionality is there a and we always said about you know online rentals that if it made sense for us to do it.

We in the industry certainly compared to many of our peers believe we had a technology stack that would allow us to pivot and do that in a very short period of time I don't think we thought it would be weeks, we thought it would be months, but the team pulled together and and we introduce something.

Pretty unique in a in a couple of week period of time I think as we go forward. If we have to shift back and forth between different service models I think we've proven we have the platform to do that.

Okay. That's it for me thanks.

Our next question will come from Spencer I'll away with Green Street Advisors. Please proceed with your question.

I think yeah, and he didn't mention the free cleaner opening remarks, but can you just a lab brain a little more on the refunding passengers high cat and how that's what impact your views just one near fundamentals longer term maybe typically this on how you can get to the impact here, but I'm afraid.

I think you know picking up on some of course is comments earlier.

I caught legislation effectively makes deals that are already permitted or or or don't get permitted by July one.

It changes the economics in such a meaningful hey that it's hard to imagine anytime in in the medium term that it doesn't effectively have the.

The impact of shutting down any new developments in the in the boroughs for for years to calm and so.

Obviously.

As as a company has participated and a lot of development and and we build an incredibly valuable portfolio of Ah you know of of assets in New York, It's it's not great that that shut down from from a developer standpoint from from existing operator and from the company that has to know largest market share.

So.

The numbers of New York from that perspective, it's it's really compelling positive news in that wants to this new supply that's underway guess least up their effectively will be no more and so one would think than that in the years to calm once the existing stuff gets please stop.

Our ability band to to be in an environment that we would expect would continue to have good steady demand demand growth.

You know won't have the other side of of that in in supply growth should position and.

Chris Marr.

For any closing remarks.

Thank you very much for participating in the call. Please stay safe and we look forward to speaking with you again on our second quarter earnings call take care.

The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect.

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