Q4 2020 Life Storage Inc Earnings Call
And welcome to the life storage fourth quarter, 2020, and self install.
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Oh, and now I'd like to turn the conference over to David Dodman Senior Vice President Investor Relations and strategic planning. Please go ahead, Sir good morning, and welcome to our fourth quarter 2020 earnings Conference call, leading today's discussion will be Joe Sapphire, Chief Executive Officer of life storage and Andy Gregory Chief Financial Officer.
As a reminder, the following discussion and answers to your questions contain forward looking statements. Our actual results may differ from those projected due to risks and uncertainties with the company's business.
Additional information regarding these factors can be found and the Companys SEC filings.
A copy of our press release and quarterly supplement may be found on the Investor Relations page and life storage Dot com.
As a reminder, during today's question and answer session. We ask that you. Please limit yourself to two questions to allow time for everyone who wishes to participate please re queue.
Follow up with any additional questions thereafter at this time I'll turn the call over to Joe.
Good morning, Thank you for joining this morning's call.
I'd like to open my remarks by acknowledging our cofounder and former executive Chairman Bob <unk>.
Sadly passed away in December from a short illness.
And I was a true visionary from guidance sovereign into self storage back and 1985 and he will be very mixed.
So we are pleased to report fourth quarter and full year 'twenty and 'twenty results that I believe Bob would be very proud of.
And I think back to where we were in late March and early April last year I cannot be more pleased with how our business has performed and how we are positioned as we begin 2021.
And the early days and the pandemic.
And our priority was the safety and health of our roughly 2000 teammates and more than 500000 customers. This.
Visits remained with a keen eye on our core values.
Work.
<unk>.
Accountability integrity, and innovation and I believe that our favorable operating results reflect that.
We grew adjusted funds from operations and 2020 by five 9% despite the global pandemic.
Operationally, we continue to maintain record same store occupancy for this time of year 92, 8% as of the end of January and almost 370 basis points higher year over year.
I believe customers are attracted to our online rental platform and its differentiated and innovative features such as tiered pricing.
<unk> represented the H eight straight months, where we were roughly 30% of our move ins came via our self serve platform.
I am proud that we were the technological leader and early adopter of the online and self serve channel.
And.
And though we continue to see robust demand throughout our network. A few regional highlights include our Metro New York City, New England, and Boston regions, which were each up more than 500 basis points and occupancy and 900 basis points and revenue and the fourth quarter year over year also strong where St. Louis Sacramento.
And Tampa.
As it relates to investments, we continue to be very active and acquired nine stores and the quarter for almost $115 million.
Our total investment for the year was just over $530 million with the acquisition of 40 stores 32 of which were managed by US as part of our joint venture portfolio and as such our and markets we know well.
We grew several existing key markets by adding stores in the Greater New York City area, Philadelphia, and Los Angeles, Tampa, Miami, Atlanta, and Dallas among others.
'twenty and 'twenty, one is off to a good start with 13 stores closed or under contract, thus far and representing a total investment of roughly $200 million.
We remain focused on building, our portfolio and markets with attractive demographics and rates per square foot greater than our portfolio average.
Our third party management business had one of its strongest years as more and more owners recognize our leading same store performance and innovative technologies and <unk>.
Net basis, we added 66, non joint venture stores to our management platform, representing 38% growth for the year.
With regards to warehouse anywhere, where we now have three micro fulfillment centers and Atlanta, Las Vegas, and most recently Chicago and are actively working with our partner deliver on the next three to six locations.
We believe our warehouse anywhere platform uniquely positions us to leverage our self storage real estate assets to capitalize on the consumer shift towards E commerce and last mile delivery.
And finally, we have reinstated guidance with a slight broader range than normal primarily due to the COVID-19 related uncertainties as they relate to ongoing demand this year.
I'll now turn it over to Andy to walk through the details of the quarter and our outlook for this year.
Thanks, Joe.
Last night, we reported adjusted quarterly funds from operations of $1 seven per share for the fourth quarter and increase of 11, 5% year over year.
Fourth quarter same store revenue accelerated significantly to four 9% year over year.
And from just a one 2% increase and the third quarter.
Revenue performance was driven by a 310 basis point increase in average quarterly occupancy.
Considering that we started 2020 with occupancy that was 30 basis points lower year over year to finished with the year with 330 basis points higher and maintenance.
Growing occupancy has been a priority for us and our team has done a tremendous job, adding customers to our platform.
Net occupancy is augmented by positive rent rollout and.
In the quarter, our move ins were paying 4% more than our move outs, which is a significant improvement from the rent roll down of roughly one five per cent that we experienced and the same quarter last year.
Same store operating expenses increased only 1% year over year and the fourth quarter.
Increases and repairs and maintenance payroll and benefits office and other operating expenses were offset by decreases and real estate taxes utilities and marketing.
Payroll and benefits included the impact of a $300000 onetime bonus payment during the fourth quarter to select store team members, who have been with US since early 2020 and worked tirelessly to adapt to rapidly changing operating procedures to keep their fellow fellow teammates and customers safe and <unk>.
<unk>.
Absent that payment payroll and benefits would have increased only 70 basis points and the fourth quarter.
The net effect of the same store revenue and expense performance was an increase and net operating income of six 8% for the quarter.
Importantly, our balance sheet remains strong.
We supported our acquisition activity and liquidity position by issuing approximately $140 million of common stock.
Our continuous equity offering program and the fourth quarter.
We also filed a new $500 million continuous equity offering program late in the quarter.
In early January 2021, we issued approximately $94 million under the new program to fund expected first quarter acquisitions.
Our net debt to recurring EBITDA ratio decreased to four five times.
I am sorry to five four times and our debt service coverage increased to a healthy four seven times at December 31.
At quarter, and our $500 million line of credit was almost fully available and we have no significant debt maturities until April of 2020 for $175 million becomes due.
Our average debt maturity remains over seven years.
Regarding 2021 guidance.
Same store revenues to grow between 375% and 475% point that 2021 fiscal year.
Excluding property taxes, we expect other expenses to increase between two 5% and three 5%.
While our property taxes are expected to increase 675% to 775%.
The cumulative effect of these assumptions should result in a 375% to 475% growth and same store NOI.
Consistent with our past practices, we are not including in our same store group any stores acquired in the early stages of lease up that were less than 80% occupied at market rates as of the beginning of 'twenty and 'twenty.
Our 2021 same store pool is expected to increase by 16 stores from 515 to 531 stores.
And we do not expect this change to have a material impact on same store growth rates.
We anticipate general and administrative costs to be between 56 and $57 million.
Growth and G&A related primarily to improvements to talent and additional teammates to support our increased store portfolio, which grew by eight 5% from 2012.
As a reminder, we allocate cost associated with management of our <unk> portfolio to G&A.
Anticipated investments for 2021 include approximately $400 million of acquisitions.
Expansions and enhancements of roughly $45 million.
And investments and joint ventures to be between 20 and $25 million.
Based on these assumptions, we anticipate adjusted <unk> per share for the 2021 year to be between $4 18 and <unk>.
$4 28.
And with that operator, we will now open the call for questions.
Thank you we will now begin the question and answer session.
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Today's first question comes from one from <unk> with BMO capital and fill them up.
And good morning, guys.
Hope you're doing well.
Firstly, just curious if you could give us a sense of.
And.
The same store revenue trajectory over the course of the year may be a first half second half split and.
And in particular, and maybe how you expect occupancy and rate to.
To trend throughout the year from a same store perspective.
Sure Juan.
And we had a strong fourth quarter. So we expect to start the year strong with occupancies at the level, they're at rates are moving nicely, meaning street rates.
And would expect the first half of the year and be very strong second half of the year is where we expect it to return to normal so our model we expected a return to normal.
The second half, we would see occupancy actually below and the model below where it ended 2000 and 'twenty.
Rates will be strong first half of the year, what happens and the second half again, we assume we go back to a normal seasonality, where we see occupancy declines from the summer months. Some about 200 basis points from July to December so that would be our expectation and that's how we built it through the guidance.
And so hopefully that helps you out.
And where do you I guess considered normal in terms of.
Right and kind of talked about the occupancy decline.
And just give us a little bit more from one hello.
Sorry, I was just average on mute that story of 2020, continuing into 2000, and if you could just give us a sense of what normal rate growth means.
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And if you can please.
Good question. Thank you.
Hi, guys, sorry about that.
I was just curious Andy.
And if you can give us a little bit more color on what normal means in terms of your rate expectations. You gave us some sense of occupancy with the seasonality in the second half, but any more color on the rate would be helpful.
Yeah.
Yes, and on the rates, where we saw them and the fourth quarter was where we saw rates up almost 5%.
And coming customers and we see them up 9% in January we would expect and the second half and of the year that those to be more normal levels up to three 4% and that range. So it's a net low single digit numbers is what we're assuming for rates and the second half of the year.
Great and just my last question in terms of G.
Geography performance, Joe you gave a little color to be getting better.
Uraeus on what Youre seeing from some of the cities and maybe are ahead of the curve in terms of reopening and.
Terms of the demand and importantly move outs and any kind of lessons in terms of the return to work how that's how that one boiler.
No.
And this one I think we've said it for the last couple of quarters now it really has been.
And a coast to coast in terms of turns of strength I mean, given our lower lowest markets in terms of move ins Atlanta, and Miami were up 11%. Each so that gives you a sense.
Of just how robust the whole industry has been so it really is a matter of who are the best performers versus where the weak ones are because it really has no weakness it's been pretty strong.
Since obviously things started to reopen and September October and it's remained that way.
Thank you guys.
Alright, thanks, sorry about that.
Okay.
Okay.
Our next question today comes from Todd Thomas with Keybanc Capital markets. Please go ahead.
Hi, Thanks, good morning.
And then just following up there just about your comments there, suggesting a more normalized environment, I guess and the and the second half of 'twenty, one in terms of occupancy and and move ins and rates.
Does that does that imply that you might anticipate a good amount of demand.
You know that materialized during the last several months to vacate.
And are you are you expecting same store revenue and same store NOI growth to potentially.
Sort of flatten out or perhaps go negative and the second half of 'twenty one.
Hey, Todd we don't expect negative and the second half, we do expect low single digits.
And the second half, it's a tough quarter and we just had a great quarter. When you look at four 9% revenue growth and six 8% and while we have a tough quarter, obviously on our investments and technology paid off early and how we were early adopters and we think we gained more than our share. This year. So we had a great second half of the year and.
And we just think when you returned to normal and those students that have been with US now a year. Those students are going to move out rate. So we're going to we're not going to have that again, how much of the housing activity was pulled forward we have to assume some of it. So that's what we did and the model and so youll see we expect and the model and the second half of the year to be very low single digits.
But we expect to stay put and that for the second half.
Okay and and <unk>.
And what's been a you know it's been just a short period here, but what's been the impact.
And Fannie related to the recent storms and the winter weather in Texas, and some other markets and the south and and sort of some belt I guess do you anticipate any impact and demand or pricing as a result.
Typically from this type of activity, we will see some demand. We did have some day I mentioned, we had some customers will see some customer goods claims we had some place pipes burst some sprinkler systems and nothing.
Nothing significant but we do have some customers that obviously will be covered under their insurance our insurance program. So we'll have some extra claims there, but no significant damage to the buildings, we haven't seen the uptick in move and Jess it's pretty early.
But we would as is typical and situations like this we would expect to see some of that.
Okay got it and just a last question around the C of O portfolio.
You know I had it had a big quarter and the overall NOI yields right around 3.5%.
You know there were some pretty strong occupancy gains and in the quarter. You know a number of those facilities are now well into that 80 and 90 per cent range.
And even a few that were I guess delivered just about a year ago or so and in 2019, how are the C of O deals tracking versus your original underwriting overall and and what's the expected stabilized yield expectation on that $300 million of spend.
So they're really performing well from a physical occupancy point of view above what we had thought now rates were low most of 2000 twenty's and so they were definitely coming in at lower rates than we expected and Thats why youre not seeing the yield there yet when we get the occupancy and rates.
Rates stable, we believe there's over 6% yield on those C of O deals.
Okay, how much yield upside do you anticipate in 'twenty and 'twenty, one from from that CMO portfolio.
I don't have and in front of me Todd.
So I can't answer that question and obviously, we expect improvement and the yield but we're not going to go from three five to six but I think you'll see some decent improvement and there, but I just don't happen and from it.
Yes.
Okay alright, thank you.
Alright, Thanks, Tim.
And our next question today comes from Lou I ask you about buying from them.
And so.
Good morning, guys. Thank you for taking my questions today, and so I just wanted to ask a little bit more on the expense side and now you guys have talked about.
Higher increases and taxes.
And last year, but.
Can you just talk about which markets are driving those increases and how we should think about the other expense item or will there be and you really from marketing since occupancy is holding on Sean.
Sure from a from a property tax point of view, we had some great wins in 2020 to end the year for a full year of only three 1% much below what we expected.
And we challenged property taxes, and in Texas, and Florida and won some nice appeals, where not only did we receive a reduced assessment, but we received more than $1 million back and assessment challenges from 2019 and that the cash was received this year. So we had a great year from challenges, which makes it much tougher going forward. So that's why you see.
That bigger number in the property taxes in 'twenty and 'twenty, one where we're expecting six and three quarters of seven three quarters, just a tough comp. So that's part of what Youre seeing there from a property tax.
<unk> wise I think you saw it in the fourth quarter, where we were then.
Marketing was control, we would expect and the first half of the year and our model. We believe we can control marketing expense and the second half if we do see a fall off and occupancy you would see is the increase that spending again, so overall relatively flat on the marketing a slight slight uptick.
Nothing like the over 20% what you saw in 2020.
Got it.
And our expense line.
Alright go ahead, sorry, and I you know.
I don't think it's pretty much normal you know we've increased.
<unk> increased our employees pay 3% at the store level.
And we're looking at 3% increase so we're doing some other initiatives to control other line items, but.
But overall, we think it's going to cut those other expenses have come in and then.
Two and a quarter to three and a quarter per cent range.
Got it Okay, and then just a little bit more on the warehouse anywhere and the deliberate partnership. So what markets are you guys. Looking for next or are you looking to expand more locations and the current market that you guys are already operating in.
Hi.
We are definitely looking at new markets. One the one market. We are in right now Atlanta that one and we're looking to expand it was a smaller micro fulfillment center.
And a reach capacity and we'll probably expand that one zone.
And two with Vegas, and Chicago was really just up and running.
And we have some capacity so the next markets where it that's what we're working on.
But I would expect them to probably be somewhere Dallas L. A new York, Seattle or some of the cities that we're looking at and we will probably have some clarification and the next couple weeks, if not sooner and.
And probably look to rollout one or two in the next couple of months and hopefully with.
3% to six by the end of the year.
Got it and then will you guys be providing a little bit more disclosure around this going forward like when can we expect to see some more about that.
And the warehouse anywhere fees.
Or just.
And while you're getting there.
Yes.
It's still a very small part of our business warehouse anywhere being.
Fee income and total is about $6 $6 million and the rent from that programming, but it shows up and the rental income line is about little over four and $5 million at that growth, we will break it out when it makes a more material impact on our results.
Okay got it thank you.
Welcome and I don't know next force.
Our next question today comes from Smedes Rose with Citi and so on that.
Hi, Thanks.
I just wanted to ask you a little more about your acquisition activity.
And pretty active.
And what are the key and.
Could you.
And we'll talk about your thoughts around and stabilize versus lease up and I think in the past you focus more on stabilized more recently and what you're seeing on the category from and tools and their expectations around finance and expedition ship and so it's kind of a 50 50 split.
Yes for sure Hi, it's made for sure.
You'll continue to see the 50 50 split that equity for acquisitions, Yes, we've had that we had a very good year, we have been very active.
And you've seen the results of what we've been able to close a lot of it is hard work we've been a lot of this that we've just announced as onesie.
Onesie Twosies.
Roughly 90% of them are off market, 30, and 40% and from our third party management owners. So a nice mix I think there is a mix of stabilized versus lease up.
And I think some of the properties that we that maybe qualify the stabilized we're probably seeing a little bit of opportunity with expansion. So.
And they are stabilized, but we look at kind of the potential that we can build and with some of our expansion and enhancement project, but overall I think a lot of these are north of stabilized cap rates north of 6% you know some of them, reaching 7%. So a good mix, but I think the majority of them are mostly.
Stabilized, but we have been added and a few opportunities with lease up.
And maybe one or two C of O deals, but yes, it's a good mix and I would expect 2021 to be similar and vigor.
Our underwriting and our model shows kind of a year, one cap rate of four and and have there been any growth and then obviously you're growing from there.
Okay, and then you added 66.
And adds to your third party management system, which I mean would you look for kind of a similar number across the course of 2000 and.
<unk> 'twenty 'twenty, one or would you just expect it to be higher or lower.
I would hope so this means I think we're obviously gaining traction and.
Our performance our brand the technology has really raised a lot of opportunities for us, we're definitely be and noticed and we're winning a good share for ourselves and.
And would hope that that would continue I would think between 50 and 75 net is a reasonable goal for us from 2021.
Okay. Thank you Beth.
Hello.
And our next question today comes from keeping from.
Sure.
Go ahead.
Thanks, Dan and good morning, just wanted to return back to them.
Returning to normalcy topic.
And when you look at the types of customers renting storage space from you guys I'm curious, if you're able to discern any trends and perhaps you know what percentage of customers, who would think might.
Relatively quickly stopped using self storage once the vaccine and our rolls off further and the world returns back to normal.
Yes, and keep it and it is quite difficult even even with you know.
Pre COVID-19 days customer to come in and we ask questions, how long and going to be there they might say three months and they end up staying for three years, it's pretty pretty unusual you never really get a straight answer.
You know this.
This sort of extended demand and.
You know higher occupancy levels is obviously something we're all benefiting from we expected you know that this would this would linger as we said in earlier calls that this would linger up until.
Hopefully our peak season and.
And stay around for a while but then it gets a little murky we're not sure.
And that's what was part of the reason why we weren't able to reinstate guidance earlier.
And just so many moving parts.
For our model, we assume that there will be returned to normalcy starting in the second half of the year, maybe we're going to be wrong hopefully we are.
But really there's so many reasons why customers are using a lot of it is home related.
Our renovations.
Business activity. So and then obviously, there's there's businesses that are that are using us for things such as.
And our restaurants that may have shutter doors, they may reopen and so the good thing is it's diversified and it's and it's across all our MSA.
Msas.
But we do expect some return to normalcy and the second half of the year maybe.
And maybe it will be wrong, but yeah.
It's it's not that easy to ascertain how long some of these new customers will stick around and we'll see.
Got it and.
And when you look at your cities that had net migration and.
Over the past year versus and cities that had net migration out is there any kind of and <unk>.
And I will try and in terms of how your portfolio.
Trended.
Not really I think.
And I guess, if you're talking about net migration now if that's a new York or and L. A obviously, our new York has been doing an excellent. So maybe there was some folks who left the city for a while but they they store their goods and New York and not bringing with them. So that means theyre going to return.
Leaving California for Texas.
You know our la market is doing fine so really nothing we can concretely point too.
In terms of that except that there has just been tremendous demand for all sorts of reasons right a lot of change people moving.
And all the reasons, we've talked about the last couple of quarters.
Okay. Thank you.
And then.
And our next question today comes from Sameer, It's and all with Evercore. Please go ahead.
And you are good morning, just calling up on the previous.
Question on transactions and how much of a compression in cap rates have you seen especially in secondary markets over.
Over the last year I mean, you hear a lot about the primary markets are you seeing evidence of cap breakeven below sort of 5% and some secondary market for sure.
Yeah for sure Samir I think you are seeing more and four handle.
Interest rates starting to move up so that might that might help help the cause there but.
There's been an awful lot of demand and there was some big portfolios out there with four handles on them and we have seen some compression, but we've been able to find some still some good opportunities.
You see a large portfolio go off and sometimes that there. Obviously is a typically 25 50 basis points premium, especially of our platform's involved. So you got to have to take that kind of away from the comparisons.
But we're still able to find some good stabilized opportunities and with a five handle on them but.
Overall I think we.
You just need to be competitive and if it pencils out and it makes sense, where your cost of capital is.
And there's still some good opportunities, especially and some of the more desirable markets with higher rates and better demographics like we.
See my forecast.
Got it and and I guess my second question is can you just provide an update on your current views on supply.
It sounds like that's great and sort of a back seat at this point price demand remains strong, but just curious on kind of what youre thinking.
Yeah.
2020 was a good year in terms of new supply and we expected 2020 was going to be a good year for us heading into a pre COVID-19 2019 was the peak for our markets and.
And for sure that held true not not a ton of deliveries some are delayed because of COVID-19.
What we're really trying to keep an eye on is the planning you know what.
And what is what is going to become new planning given given where the industry is.
We're starting to see some some indications of some new planning, but nothing that worries us, but I think we'll be watching that more than new deliveries.
And.
But overall I still our top market Houston is we're not seeing much change there still obviously absorbing some supply there and it's nice to see street rates move.
The New York City region.
It's been not a lot of deliveries and our markets maybe too.
Last year, but we would expect that to accelerate we've been watching a number of facilities that are supposedly been and construction.
Hi, Hi.
<unk>.
And we'll see if those become deliveries in 2021.
Chicago is still has been a pretty good market for US you know quick counting taxes kind of scares many away, but again with occupancy where it is if we do see a return to normal like we expect.
And the second half of the year, then and maybe we shouldn't worry too much about new planning.
But if it's an extended period of demand and some of this new demand and become sticky and.
And I would I would expect the planning to increase but it's something we watch right now and think 'twenty and 'twenty, one will be a pretty good year for us in terms of new deliveries.
That's it from me thanks, guys.
And our next question today comes from Jonathan Hughes with Raymond James. Please go ahead.
Hey, good morning.
And going back to expense growth guidance ex property taxes, that's expected to be up almost 3% this year.
Have you captured all the low hanging fruit in terms of expense optimization and strategic efficiency initiatives that have been implemented over the past few years I'm just trying to decipher how much of that guidance is conservatism how much due to tough comps if that's possible to separate from too.
We're obviously hi, Jonathan we're obviously.
Striving to to continue to be more efficient and everything we do we still have our strategic initiatives.
So that that low hanging fruit again some of that.
It might be true and toured some of the things, we did with repair and maintenance and provided some new controls on that business and and revisit it but there are a lot of new things that we've been doing related to right now.
ESG such as more solar.
And you know going paperless and things like that because they're going to continue to evolve.
We have some other projects that we're working on that I believe will help us control costs and the future.
So we're never done.
We're obviously and an innovative company and we have some and some other things that we feel we can continue to bring to the industry that where we're looking at.
But I think we feel good about the the estimates that we put in for or expense still control.
Yeah, and I think Jonathan and we are here and so we saw some good go ahead Jonathan.
No you go ahead Andy.
And I was just saying the pressure we see is <unk>.
<unk> property insurance, and we see some pressure on and our policy and the new soon so we expect an increase there.
Yeah, like Joe said, where we're controlling.
Very well.
Payroll and some of the bigger line items and you can't control property taxes, and we will fight them as we did in 2020 and hopefully we can have some good results, but and we have a tough tough comp there, but otherwise there's not any significant increases were expecting and any particular line item outside of insurance even.
<unk> and internet advertising can be pretty well control.
Okay, Yes, I mean, I don't mean to Ted.
Not appreciate what's been done and the past couple of years I mean, the same store expense growth ex property taxes have been down.
One, 5% last year, and 2% and 2019. So I know there are tough comps that have been created so that's why I was trying to gain some more color there, but and I appreciate the details sticking with expenses.
Can you just break down the G&A guidance and a little more detail do you expect that to be up eight 9%. This year after being up about 12 last year, I guess, what would that increase or what would G&A expected to be if you excluded third party managed G&A expenses.
So the third party is about a 40% margin business and I think when you look at our three PM revenue, you talk and the $17 million and show and management fee income. So you can back into how much of the G&A was related to a third party managed cost.
The growth in net line is really the talent, we're adding and the personnel and.
To cover those additional stores and we do have our area managers are and our G&A.
So you see as we grow store count and you will see increased G&A from just the store count growth.
Okay.
Alright Thats it from me thanks for the time.
Thanks, John.
Our next question today comes from Spenser <unk> with Green Street. Please go ahead.
Thank you and thanks for the color on rate and occupancy expectations for 'twenty, one, but can you guys provide a little bit of color on the portfolio turnover, you're expecting for the year and do you expect there to be a lot more elevated move outs or demand for personal and coming out of 'twenty.
Yes, it's been through you know what the move outs being down.
No 10000, less move outs, we had on same store basis from 2020.
We have to.
Assume that we're going to see and returned to normal. So you would we do expect more move outs as we go through the year, we haven't seen it yet.
With the increases and move ins for the last 10 months same store and been up we really haven't seen that move outs yet.
It'll we're predicting that at some point this year, we do see elevated move out there's not a whole lot more occupancy left to gain we do have some there. So I think it's a tough comp as we go through the year.
You can expect occupancy to remain remain at 93% from July through December and into January as we did over the last seven eight months. So I think thats, what youre, what we would expect and that's how we model out the guidance.
And then just going back to the discussion on the significant kind of uptick in COVID-19 related demand from last year do you guys like life underwriting like a significant significantly greater move out or demand reversal and some of the larger.
Markets versus some of your smaller ones as people kind of return to apartments, and and normalize the working environment.
And it was so widespread and 2020 that we would expect it to be widespread when it reverses. So we don't see any particular markets, where we're seeing any activity that would tell us it yeah and theres a hint here that we're going to see some move outs and this market first that market and so it was widespread coming in.
Our expectation is it would be widespread.
If it does return.
Okay that makes sense. Thank you.
Thank you.
And ladies and gentlemen, as a reminder.
And I used to ask a question. Please press Star then one.
Today's next question comes from Todd Stender with Wells Fargo. Please go ahead.
Hi, good morning, Thanks, and back to the strength portfolio if rates begin on the low side just for the C of O deals.
You're driving occupancy to those properties issue rental rate increases sooner.
And then your stabilized stores.
The year over year occupancy, we're pretty meaningful just seeing how you either let those run or do you raise rates into strength.
The rate, we do raise the rates pretty typically probably a little bit slower than we do and our overall portfolio, meaning that first rate would go and six months after move in.
And then some 10 months thereafter.
So it's not significantly different a little bit slower on the <unk>.
And we wanted to get that momentum and make sure that occupancy has great momentum before we start raising the rates.
And very similar but.
Probably a few months delayed I guess, if you look at the overall, how we treat the CMO.
Stabilized star.
Got it Okay, and then on the acquisition front.
Indicated going in yields and the force.
But you can stabilize those into the six's and even maybe reach seven what kind of growth.
And your underwriting and then how about the metrics compared to JV deals that youre doing.
And I think on the.
And the growth rates, if it's a stabilized store, we look at growth rates and the 3% range when youre seeing anything where you see a six 5% to 7% yield on stabilization. That's a property that we bought and early in the lease up our CFO you won't see us buying a stabilized store at four and three quarters and getting into seven and that's not going to happen and.
Stabilized store.
3% growth, it's those cielo stores or early and the lease up where we see that.
Significant benefit and the backend.
The yield increases as we fill up those stores and make stabilized.
And then for GE vs, what kind of growth rates for GBS as well.
And that nothing unusual and that our JV and we did buy a lot of storage out of our JV and so we were earning management fees out of those 32 stores that we bought through from our JV and 2020.
The growth rate and our JV is very similar and the stabilized JV is very similar to our overall portfolio and typically our JV at this point and the cycle will be more from the under development side.
We don't do development as you know Todd and.
We'll see how early lease up our C of O deals you know and we have some pretty good JV partners that are and more appetite for that type of asset book will put those in and similar to a lease up store Shouldnt really change again and JV, our JV activity is not as active as.
Previous years, just given where we are with our cost of capital if we combine to the REIT that's going to be the priority number one but theres. Some cases you know.
Early lease up new development that we will put into a JV.
Great. Thank you.
And ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Joe So far for any final remarks.
Well, thank you everybody.
And I wish everyone.
<unk> spring and hopefully we're seeing the wave at the end of the tunnel and we'll all get vaccinated. Soon until then we will we'll speak and a few months. Thank you.
And thank you Sir This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.