Q1 2020 Earnings Call
[music].
Greetings and welcome to the National National storage affiliates first quarter 2020 conference call.
This time, all participants total listen only mode.
Question and answer session will follow the formal presentation.
Pretty much require operator assistance during the conference. Please press star zero on your telephone keypad.
This conference is being recorded it is now my pleasure to introduce your host George Hoglund, Vice President Investor Relations for National storage affiliates.
Thank you Mr. hope when do you may now be good.
Good morning, I expect that most people on this call are working from home and spending more time at home in General and you may have found the need to clear out some sales for your home office or if you're like me. Your spouse is made you clean out the garage.
I just want to remind you that self storage is available to help you optimize your space needs with that we'd like to thank you for joining us today for the first quarter 2020, <unk> earnings conference call National storage affiliates Trust.
In addition to the press release distributed yesterday, we filed an 8-K with S.C.C. contained in our supplemental package with additional detail on our results and our 10-Q, which may be found in the Investor Relations section on our website and national storage affiliates Dot com.
On today's call managements prepared remarks, and answers to your questions may contain forward looking statements are subject to risks and uncertainties, including uncertainty related to the scope severity and duration of the cobot 19 pandemic and the actions taken to contain or mitigate a direct and indirect.
Economic impact.
Company cautions that actual results may differ materially from those projected in any forward looking statement.
Additional details concerning our forward looking statements. Please refer to our public filings with the FCC.
We also encourage listeners to review the definitions and reconciliations of non-GAAP financial measures such as at that FFO core FFO and net operating income contained in the supplemental information package available in the Investor Relations section on our website and in our FCC filings on the line with me here today.
Right and assays executive Chairman, Arlon Ortega, CEO, Tim or Fisher, COO, Dave Kramer and CFO brands into Gosh, you only prepared remarks management looks up questions from registered financial analyst I will now turn the call Oversupply me.
Thanks, George and thank you everyone for joining our call today first I'd like to acknowledge and thank our pros in our many team members who demonstrated their commitment and resilience in response to the demand of the novel Covidien 19 induced crisis, which brings with it both health and economic related dimension.
I'd also like to formally welcome Dave Kramer, our new COO the participation in his first earnings call. So welcome Dave you really picked a great time to start.
By the way as many of you know well Dave is technically new tour and as a corporate team. He has decades of experience and self storage. Most recently as CEO of secure care.
Even arlon, we'll both be available to answer questions during the <unk> session.
Now, let me comment on the current environment and our response to the Corona virus pandemic.
Health and safety of our employees and customers is our top priority.
We've been actively addressing the rapidly changing environment and impact on our business driven by the pandemic.
All of our stores are open and operating in a modified matter for safety, including using seat face masks protective barriers and social distancing protocol.
All properties have contact list rental options and we have halted rent increases and suspended auctions for the time be.
Although 40% of our customers around auto pay we remain focused on cash collection and have had good success with those initiatives.
We were very pleased that the year was off to a strong start.
The environment clearly began to change mid March as the pandemic gained momentum and stay at home orders started to spread across the country.
The dramatic economic slowdown that ensued has led to unprecedented job losses and all those self storage has historically proven recession resistant.
It is not recession proof.
Let's stay at home orders and rapid job losses have weighed heavily on our move in volumes.
Walk in traffic during the height of the stay at home orders was all about eliminated.
Course move out volumes have declined significantly as well.
Nonetheless since this has happened during the typical beginning of our busy season.
Move ins year over year from mid March through April are down by 22%.
Overall, the situation is still very dynamic and given that we have limited visibility into the ultimate depth and breadth of these negative forces.
We made the decision to withdraw or 2020 guidance at this time.
We will revisit this decision each quarter as the year progressive.
In spite of the significant challenge as currently facing the economy, we remain bullish on the self storage industry generally and then to say specifically in particular, we believe the industry is better positioned operationally today than we were at the time of the great financial crisis, given the advances.
An internet marketing and sophisticated revenue management platform that provide large operators advantages in capturing and holding market share.
We also think that NFC is well positioned relative to our peers given the downside protection inherent in our unique pro structure or breeders secondary and tertiary market exposure and essentially no lease up exposure.
And finally with just under $40 million, a debt coming due through 2022 and $300 million of availability on our line of credit, we're well positioned to ride out this economic storm.
On the external broke front, we acquired 36 wholly owned properties during the first quarter for a total investment of $223 million and two properties in our joint ventures valued at $12 million.
The acquisition environment has slowed significantly with fewer deals in the market and frankly, many buyers hitting the pause button for now.
Our intention is to remain discipline and strategic and our acquisition efforts with the objective investing when and where it makes sense for us for the long term.
Finally, before I turn the call over to Brandon I wanted to highlight the fifth anniversary of our April 2015 IPO.
We talk then as we have many times then about the strength and the benefits of our differentiated pro structure, which aligns the interests of some of the most successful private operators and self storage with the interests of all of our stakeholders.
Since our IPO, we welcome for new Pros invested approximately two and a half billion dollars in over 350 wholly owned properties.
Formed to joint ventures, with initial portfolio values of nearly $2 billion.
And delivered sector, leading quarterly same store NOI growth averaging about 7.5%.
The combination of our internal and external growth has allowed us to increase our dividend by 74% since our IPO and to deliver sector, leading total shareholder returns from our IPO through the end of April over 170%.
We believe we've demonstrated the benefits of our differentiated structure and as we entered this recession.
I'm, sorry protection inherent in our structure will facilitate continued outperformance.
Now I'll turn the call over to Brandon to discuss operating results and balance sheet activity.
Thank you Tammy.
Yesterday afternoon, we reported a solid first quarter the core AFFO per share of 40 cents, which represents an increase of 8.1% over the prior year period.
This growth was fueled by a combination of healthy same store NOI performance strong acquisition volume.
The first quarter same store NOI increased by 3.5% over prior year, driven by 3% growth in same store revenues.
2.1% growth you property operating expenses.
Same store average occupancy was strong during the first two months, but ended the first quarter down by an average of 30 basis points to 87.2% compared to the same period in 2019.
Same store opex growth for the quarter benefited from a handful of favorable property tax assessments, and appeals, which drove a 1.2% decline in property tax expense compared to last year.
Utilities expense declined 6.8% over prior year.
Driven by milder winter and energy conservation efforts in many of our markets.
These favorable expense items were partially offset a personnel expenses were up 4.4% and marketing expenses that grew 4.8% over the prior year period.
We began to feel the impacts from a pandemic related slowdown in mid March which has had a noticeable impact on our portfolio performance Archie April metrics are as follows.
Same store occupancy at the end of April was 87.1%, which is down a 140 basis points from the end of April 20, maintain and flat sequentially from the end of March.
Street rates, which were relatively flat year over year in the first quarter, we're down about 3% and April.
I'll remind you that we focused on optimizing revenue. So there was always going to be a given take between occupancy and rental rate.
Cash collections in April for approximately 1% to 2% below normal levels has a number of customers are struggling with job losses and business declines.
Same store move in volume in April was 20% lower than during the same period and 29 team move outs also declined 28%.
Oh for specific markets, let me give some examples of what we're seeing.
Our largest market Riverside San Bernardino has performed above portfolio average for several periods now and this has continued in April with storage rental revenue growing about as strongly as it did in Q1.
However, total revenue growth in April slowed from the Q1 rate the primary drag on total revenue in April was lower fee income due to both fewer move ins as well as auction suspensions and other ancillary revenues such as retail sales and truck rentals tied to the move in process.
Similar situation exists for the Phoenix in Oklahoma City markets.
In Portland, our second largest market April operations were impacted more than portfolio average when compared the first quarter results, which is attributable to the elevated new supply in Portland, as well as regulatory restrictions on both auctions and late fee assessment.
Las Vegas is a similar case, we had very strong growth during Q1, but in April we observed a larger decline in performance relative to the portfolio average, which we attribute the negative economic impacts on the tourism and service industries as well as auction and Wifi restrictions.
These are just a few examples of what we're experiencing across markets.
As Tami stated earlier, we have withdrawn or for your 2020 guidance until we have better clarity on the economic impact of the pandemics, including consumer behaviors and stay at home orders are lifted.
And until we have better visibility on resuming auctions and rent increases to in place customers.
Now turning to the balance sheet.
During the first quarter, we issued 125000 shares of common stock through our ATM program at an average price of over $36 per share for gross proceeds of four and a half million dollars.
And issued approximately 230000 Opn SP units at an average price of nearly $31 per unit in connection with our acquisition activity.
Also as we've previously disclosed we issued 8.1 million common shares I'm retired approximately 1 million Opie units and 2 million S. P units in connection with the internalization of secure care.
Our balance sheet is well positioned with $300 million availability on our revolver.
Just under $40 million of debt maturing over the next three years and healthy access to multiple sources of capital.
As favorable position combined with our commitment to maintaining a conservative balance sheet.
As reflected in the recent affirmation of our Triple B flat credit rating with a stable outlook accrual.
Our weighted average cost of debt at quarter end was 3.4% with all borrowings, except our revolver fixed rate or swapped to fixed.
Our weighted average maturity as five and a half years and our net debt to EBITDA ratio was six and a half times at the end of the first quarter at the high end of our target range of five and a half the six and a half times.
We have no immediate need for capital and we'll be opportunistic about accessing the capital markets. This year.
The strength and flexibility of our balance sheet also positions us well to take advantage of investment opportunities as they arise and we believe our well connected network of pros and our ability to offer tax deferred transactions with our own P. unit currency.
Continue to fuel our external growth strategy.
Thanks again for joining our call today, let's now turn it back to the operator to take your questions operator.
Thank you the floor is now open for questions. If you would like to ask a question. Please press star one on your telephone keypad at the time a confirmation total indicate your line is in the question Q you May press star to if he would like to remove your question from the Q for participants do you think speaker equipment.
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Our first question is coming from Smedes Rose of Citi. Please go ahead.
Hi, Thank you I Wouldnt, it's just asked big picture, maybe arlinda or Tammy.
You obviously your company wasn't public in the last downturn, but.
Maybe you could just shed some light on how the kind of assets you before you own a performed in the last downturn and what do you see is kind of the relative advantages or disadvantages I guess to the other public portfolios as we work through.
It looks likely to be a recession cooking going forward.
Yeah, Hi, Smedes this is arlon Oh.
Oh, you that our portfolio as you know is a little more geared towards the secondary and tertiary markets. We do have about a third of our portfolio in the primary markets, but being at a more geared towards a smaller markets. We found in the last downturn actually that the predecessor companies secure care.
Do it predecessor to enter say actually outperformed all of our peers throughout that downturn.
Our worst quarter of revenue declines during the great financial crisis was a negative 2%.
Year over year on same store revenues.
And we only had four quarters during the entire time, where we had negative revenue growth.
The average of those was about negative 1% for that for quarter period compared to our peers that were averaging about negative 3% to 4%.
So it's a little more stable market typically by being a little more geared towards the secondary and tertiary markets.
The other thing I would say about that is that in particular in this call that situation. We are seeing those markets, having less impact with restrictions on movement self storage is generally a.
Necessary business, so we're not forced to close and and we're particularly seeing that in those secondary and tertiary markets. Our business has not drop off as much as in the other areas.
Thank you and you mentioned that rent increases have been halted is that for.
The months is kind of April may June or what's kind of the timeframe that you're thinking about.
Good question. This is Dave we're evaluating that as we as we looked at every community in every market that we're in we don't have a definitive timeline. We've certainly got models run a we're looking it when we think the communities will be ready for rate increases as we go forward optimistically, we'd hope to see some towards the end of the second quarter.
We are beginning to third quarter, but we really just got understand it's too soon to draw that conclusion on how this economy in other markets are going to respond.
And just to point out to see means that that's on our existing in place tenants raising their rates. We can always move our street rates up and down as as necessary based on occupancy and demand trends.
Great. Thank you.
Thank you.
Thank you. Our next question is coming from Neil Malkin of capital One Securities. Please go ahead.
Hey, everyone. Thanks for taking the question I.
I was wondering if you could give a break down how much of your portfolio or demand is a commercial and then also what.
Collections have looked like between the two segment then and how are you planning on collecting.
You know on that delinquent residential side.
[laughter] Hi, Neal this is Terry I about 18 fit 15 between 15 and 20% we usually we usually talk about 18% of our customers are small business owners and.
I think what I would I would say to you is that we're not seeing a real difference in the customer behavior between our residential customers and our and our small business owners.
Brendan do you have anything to add as it relates to cash collections month April well, they well, it's not what they said on the right certainly came in from a collection standpoint, we have been fairly happy with what we've added.
Deferral or at Red decreases as we look across the portfolio. It's been fairly game, we're looking at a one up basis as we go across portfolio with these tenants, but so far so good it's as we've done tremendous pressure there yet.
Hey, good deal just was granted.
All right Neal this is brand into one one clarification I just wanted to mention Neil just because I saw in some of the notes that came through our what we did as we analyzed our total April cash collections.
Compared to last year and after you adjust for for change in revenue, that's where the the 1% to 2% lower levels from last year come in that but that was a total cash collected which includes rent for April. It could include collecting rent going back to March. It could include prepaid rent for me so.
We felt very good about coming in at such a high clip.
On an average basis, we're collecting somewhere in the mid 90% of current month rent in any given month and so that's the number that held pretty steady steady maybe a slight bias to the downside. So just to clarify because I think it. It was maybe it'll worded are afraid slightly different.
All of our peers.
Oh, Okay. So I guess I guess the other thing along those same lines would be.
How do you I guess, how long you know, but delinquency go before you actually write it off as bad debt in other words, you know how when will be reflected in your results.
Yes, so well, we've historically run about 2% to 2.5% of revenue as bad debt and thus far post quarter end, we haven't really seen a material change in that but it's early and so we're not we're not trying to these conclusions right now as part of our process or the customer.
Effectively ages out before they said that that lean process will start to basically record against.
A reverse out their rent charges. So it's not flowing through revenue. So it's a it's an estimated process until they hit that that leaner auction process that started said when they hit 30 day.
Okay great.
He is around external growth acquisitions, a big part of your story, obviously, just wondering how you're approaching acquisition. In 2020, you know given you know I guess leverage stock right.
And then I guess more uncertainty with.
I know why et cetera.
You know you focused on one channel more than others and wondering if you'd be willing to potentially take out some distressed owners that with lease up properties right now.
So I'll start I, Neil I think you know 20 2020 was off to a very good start for us where that with is the volume of transactions. We closed in the first quarter I will say that beginning in March frankly.
The number of transactions.
The market.
Has reduced significantly we're just not seeing as much I would also say that buyers who we have historically competed with many of them have hit the pause button.
We think that our balance sheet is in great shape, we're very comfortable with where we are however.
Hey, I would say that we're waiting to be very very strategic and very opportunistic with respect to our investment choices.
I think one advantage that we had an end Brandon mentioned this I briefly in his prepared remarks is we've been very successful with attracting sellers, but the use of our own <unk> equity and I and allowing sellers to complete a tax free or tax deferred.
Hi transaction and and so our view of of acquisitions is it we're going to keep our eyes open and and we will be very selective, but we we intend to continue to evaluate transactions as they as they become available and with our pro structure. We think we have some.
Opportunities with our pro relationships in their markets and across the sector self storage industry that will give us a slight advantage.
So does that does that more or less answer your question [laughter] Oh, Yeah I was it the other thing I had the back part of the question was just if you look at supply over the last couple of years, obviously very elevated and the lease up timeline has done nothing but extent, so given that and <unk> leverage out there on some of the.
The last well capitalized operators. It I know that you guys aren't big fans of lease up.
Rick but you know just wondering what your appetite would be because of the extremely or more than typical distressed environment with that in that aspect or part of the self storage assets.
Well it as you know that it really has not been part of our core strategy at the risk reward hasn't hasn't really been there. However.
Yeah, I will tell you that where are we are keeping our eyes open to opportunities. It. It's a little too early to <unk> for us to have seen much of anything at this point in time, but we.
I think an M are an agreement with you that that opportunities will present themselves and and I think that I at the rate pricing, we would be we would be more inclined to.
Looking forward that type of transaction I would also say that that historically high the some of the best deals that I. Our you know our Atlanta has talked about Dave has talked about overtime.
Come about in distress times, such as these and however, there aren't that many that many deals to take advantage of but we'll see we'll see where we go what we're we're definitely are open to taking advantage the opportunities as they present themselves.
Appreciate it guys. Thank you.
HM.
Thank you. Our next question is coming from Todd Thomas of Keybanc Capital markets. Please go ahead.
Hi, everyone. This is probably they do on the line for Todd Thomas I'm, just curious in terms of occupancy can you talk about what you're seeing so far and they didn't were at the peak leasing leasing season have any visibility around occupancy gains you achieved throughout the balance of the year.
Hi, This is Dave good question, obviously, the the oxy level than me the trends that we're seeing as far as move into move outs or below historical levels. This is typically a very busy time of the year for our industry, it's very seasonal.
The months of April and May are very peak.
Leasing opportunities for us thus far in May we mailed to hold occupancy coming out of April into May the move in activity has ticked up slightly as well as the move out activity.
So you know to really didn't really tell I think at this time, where we're going to finish at the end of year, let alone the ended the quarter.
But we are.
At this point really able to be toward ideas coming out of April into May.
Okay. Thanks, just one more question Harris Street rates trending in May so far compared to the minus 3% in.
In April.
So far major flat no significant change on our street rates nor in discounts on promotions everything seems to be very flat and stable at this point.
Okay.
Okay. Thanks, so much.
Thank you. Our next question is coming from Ki bin Kim of Suntrust Robinson Humphrey. Please go ahead.
Hey, guys. This is even on what's given or do you just talked about occupancy for may and moving it move outs could you maybe talk about.
What recollection has done so far in Maine compared to this time in April.
Sure.
Again real similar to what the April patterns look like we haven't seen a significant change it into the buckets and we study.
At this point time through the first and Asia May it's real similar to what we saw in April.
Okay. Thank you and Tami in your prepared remarks, you mentioned the downside protection from the SP structure can you give us just some color on how much production is baked into right now I know secured carriers just internalize so.
Maybe there is a little bit less or more protection because a lot.
So about 60 for and that's a very also very good question I would say about 60% of our stores of our portfolio. Our managed by our pros who are co invested in the stores and and are therefore protected.
Oh by the S.P. equity.
Okay.
This is arlon I wanted to clarify one thing that sometimes it's confusing for folks.
About that is because on the S.P. equity, which represents on that portfolio about 60% of our wholly owned assets.
That's about 25% to 30% of the equity on that portfolio, but it absorbs 50% of the downside in any downside so even though.
I know keep then had mentioned that we don't get to the point where are they absorb all the downside until you declined quite a bit if there's any downside at all they are automatically absorbing a disproportionate about two times the normal level downside goes to the SP equity.
Okay. So just to clarify so even if I know I went down this year and Oh, probably spend then for call. It 510 years, they would still absorb some of that right away.
About two thirds, yeah, they will absorb half of that so for example of NOI on a pros portfolio went down by a million dollars half a million of that comes right out of their pocket. The other half a million those to NSC shareholders. So it's a way disproportionate to the pro.
Okay.
That's all for me thanks for the color guys.
Thanks.
Oh excuse me. Thank you. Our next question is coming from Ronald Captain Morgan Stanley. Please go ahead.
Hey, just two quick ones me one is just on maybe can you talk about sort of college student in college student activity, what it would exposure is out in your portfolio and.
Did you did you see maybe outside of activity in one Q.
Hi. This is Dave good question, we have about 15% to 20% of our portfolio has some college influence some of them bigger than others small colleges to major universities.
It's been a really interesting season for us we did see a slight uptick in a few colleges markets in March.
As I really related around spring break and when colleges did or didn't let people come back did they lounge stay the dorms or not we do have 20, 25% of colleges haven't done anything yet and we're not sure they will move students out.
So I'm not really sure how to tell you in the second quarter for going to see any more movement at all or not we I would probably tell you that we've seen all the college movement, we're going to see for the year.
Great that's helpful or the other question I have as Steve noted that I think Los Angeles was added to market that are lagging I don't know you guys touched on that and opening comments, but just curious any color of anything that you're seeing there.
Yeah Ronald it was it was pretty much flat on the revenue growth over prior year and that I think we were 2% plus positive for all of last year as the same 14 properties in last year's pool as is there. This year. We ended ended 2019 with with that kind of flat growth year over year that really has to do with.
The two two to three properties in particular that are dealing with some direct.
New supply competition. So it's it's unfortunate exit brings down the rest, but yes, because it's only 14 properties.
Two or three to really way to them.
That's kind of the main the main driver of what you're seeing in there.
Got it helpful. Thank you.
Yes.
Once again, ladies and gentlemen, if you'd like to register a question you may do so by pressing star one on your telephone keypad.
Our next question is coming from Stephen meat of anchor capital Advisors. Please go ahead.
Yes, hi.
Can we go back to this free rent so those impacts.
As we go forward.
And as your move ins sort of pick up I was kind of wondering what that does forward looking in terms of Oh, no. The average annualized rent per property.
Especially in the.
And the markets would have more supply you know, Oregon or.
No parts of California.
Yes, yes, Steve This is arlon I think the the big thing to remember about street rates is that each typical month, they only affects about 5% of our customers because only about 5% of our customers are moving in any average month.
Chronically, that's now down to about 4% because our move in volume is lower and so those are move out volume. So the street rates themselves have a pretty slow and limited impact on our overall revenue growth what is way more important as the other 95% of our costs.
Customers and can we raised the rates on them and that's what's been hit by this co video more impacted because we are not raising rates on any existing customers right now and we won't do it until at least June.
As Dave mentioned, we might start some in June but more likely some in July and part of that's just because of the impact on people in part of it was state regulated that we could we couldn't do that so that's far more important when we can restart that which were hopeful we'll be able to restart in in earnest in a normal level in July.
The other thing Thats ironic is so that's the street rate impact versus the in place impact. The other part relates to the people moving out and those rates that are usually higher than the rates of the people moving in because they've already had some rate increases.
Ironically, the fact that we have less move outs, then we usually how has made the roll down impact lower than normal because instead of having 5% of the customers moving out we only up 4% moving out so it's all a blend of all of those different factors.
And then during this period.
Do you get any kind of sense of what's going to happen or whats happening to the amount of new permits in terms of the supply situation.
[laughter] so from our perspective, what we're seeing is due to the extent there is a silver lining to that to the current environment I permit permitting is slowing down lenders are slowing down generally speaking, we believe that we're seeing a sudden halt to.
This new development new supply a cycle.
And Steve that's really the best news of this situation. If we can put any good news on it is we were already seeing a really strong January and February. It does we finally started to slow down in the new construction and this is going to put a just a soft do it does nobody in there right mind is going to build a new property now.
When going into this major recession.
And then with the kind of the pluses and minuses of what are going on here as you look at the results in April and May what's the prospect for overall occupancy now you know in sort of the.
Or what should we expect in terms of occupancy.
This is Dave Good question, I think where do we will see a slight uptick just because of the seasonality of our our markets. We're in right now compared to where we're at today.
At this point it doesn't look like and lets move out activity severely accelerates I move that move in activity has been positive.
Positive net moves for April and so far in that in May.
So I think we'll see a slight tick up as we go forward in the near term.
The issue is when you deal with historical levels, it's not going to seemed like the same historical levels that were used to because of these peak seasonal seasons.
All right we are slightly.
Yeah, I think our biggest concern frankly is is that we may in fact completely missed our our.
Annual peak leasing season.
I think theres, where we show the normal big bump, we won't get the big but we'll get a small bump not a big that's right.
Okay and is there a lot difference in terms of geographic in the places that have had less cases, and you know in terms of activity traffic and stuff.
What are some of the most affected markets for you in terms of what cold It has done.
But we certainly the secondary tertiary markets performed better than our larger markets, we've seen that across the board.
Single Portland in Nevada, though I would say that would yeah bungee jumping on them and talking about Las Vegas, Las Vegas has certainly been one has been hardest deal with unemployment Las Vegas, but from a very very hot market to very cold market and it's largely because of the unemployment and what's happened in there, but the lockdown the ability to charge fees and delinquencies and those.
Things in the state in Nevada.
But overall it goes back secondary tertiary markets I'm glad to cover the couple of bit Hot like Arlon mentioned in Oklahoma City has been very good for US Oklahoma in general and good for South Texas has been good for us some of those smaller more rural errors.
Okay. Thanks.
Thank you. Thank you.
Thank you. Our next question is coming from Todd Stender of Wells Fargo. Please go ahead.
Hi, Thanks, I Hope you guys are well.
Good morning scope and timing.
Yeah sure thing your market commentary in the last question was very good I appreciate that with the acquisitions you made in Q1 I'd normally just assume that they'd go onto the ice storage umbrella, but.
The fact that you're keeping this secure care brand, maybe just elaborate on where new acquisitions go if they are wholly owned.
Well, that's a good question I well our plan right now and for the foreseeable future is there's really no change to be honest with you. If we're acquiring a store that isn't a secure care I call. It territory, where we have more refined the secure care flag well brand that store secure care because it just makes all the center.
It's in the World and then theme for the I started stores.
Slide to the extent that we're acquiring stores that that are geographically located in those markets will fly they I storage the I storage flag and you know Dave would you want to elaborate a little bit about some of the things that that you've already been looking at and thinking about my transition standpoint.
Just to get ahead of a question that we might have certainly certainly it's a good point, we've obviously been busy with Duvernay Dean and this transitions got a little bit differently than we would expect given the last six eight weeks, but we.
Actually forces into really looking at efficiencies and looking at how we look at markets and brands and we look at how we manage those markets and brands. We will have a family of brands as we go forward with our pros and with secure Karen I storage, but specifically looking at how we operate our call centers into what the cost at every motoring operating from home now I'm you know what's that live.
To us in the future what that lend posed to have more efficiencies as we look at Neal combining call centers combining locations getting all the brands under one roof.
One of the things that would probably call outlets were just looking at overall structure. The teams have done a great job over cross Pollinization of the teams is working really well will work out to the efficiencies within that.
So you know as busy as we have been we're making good progress and some integration things that we are important to us I.
You know Todd one of the things we've talked about historically about about the local market. The submarket is the value of the brand and I and I think we stand by that thought process. There. The local brand has a lot of value and for now at least a in for the foreseeable future I think we stick with that.
Very helpful. Thank you just to follow from earlier, just make sure I understand it correctly, so with state level restrictions on price increases and auctions.
As states reopened does that mean the state restrictions are lifted or really it's a state of emergency has to be lifted when can you guys go back and not suggesting you're turning auctions back on but just when can you go back to your normal course of business without restrictions, what what needs to be put in place at the state level.
That's a great point, it's a combination of both of what you said decorations emergency. It's also this other restrictions at city of May have imposed.
Besides governments you know governors imposing this thing so we have a list a master list there were keeping.
We will obviously pay very close attention to that and only implement normal policies. As we feel is the regulations that have been lifted and we also feel that it's the right thing to do a meal regulation is one thing also just making sure we're doing the best things we can for our communities. As we go forward will also be top of our mind, but it is a combination of to theirs.
Multiple layers of this that we've been tracking that allow us to raise prices and ethylene auctions process late fees. There's there's been a multitude of variances amongst state and cities on this.
Thank you.
Thank you.
Thank you at this time I'd like to turn the floor back over to Mr. Fischer for closing comments.
Thank you everyone for your interest in NSC, we'll look forward to connecting with you probably virtually in the not too distant future be safe and stay healthy. Thank you bye bye.
Ladies and gentlemen, thank you for your participation. This concludes today's event you may disconnect. Your lines at this time and have a wonderful day.
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