Q2 2021 National Storage Affiliates Trust Earnings Call
Greetings, and welcome to the National Storage. Affiliates. Second quarter 2021 conference. Call at this time, all participants are in a listen-only mode.
Question. Answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
David. It is now my pleasure to introduce your host George Hoglund, vice president of investor relations for National Storage, Affiliates. Thank you, mr. Hogan. You may begin.
We'd like to thank you for joining us today for the earnings conference. Call of National Storage Affiliates. Trust on the line with me here today, RNs a CEO Tamara Fischer, SEO. Oh, David Cramer and CFO Brandon Togashi following prepared. Remarks management will accept questions from registered financial analyst in addition to the press. Release distributed yesterday, we furnished, our supplemental package with additional detail on our results, which may be found in the
Investor relations section on our website at National Storage Affiliates.com, on today's call management, prepared remarks and the answers to your questions. May contain forward-looking statements that are subject to risks and uncertainties and represent Management's estimates as of today, August, 4th 2021, the company assumes. No obligation to revise or update any forward-looking statement because of changing market conditions or other circumstances after the date of this conference call.
The company cautions, that actual results May differ materially from those projected, in any forward-looking statement for additional detail concerning our forward-looking statements, please refer to our public filings with the SEC. We also encourage listeners to review the definitions and reconciliations of non-gaap financial measures, such as fo core ffo and net. Operating income contained in the supplemental information package available in the investor relations section on our website. And in our SEC filings, I will now turn
Paul over to Tammy, thanks George and thanks everyone for joining our call today before diving into our cute to results and our revised full year 2021 Gaiden. I'd like to acknowledge and thank the entire Ms. A team, including our pros, and their team for the dedication and effort that allowed us to deliver such exceptional. Second quarter results. I'd also like to thank our shareholders for their ongoing support, which allowed us to complete a very successful upsized equity.
Raise a few weeks ago.
Results. We announced yesterday including growth in same store, noi of 21 and a half percent in growth in core. Fso per share of just over 34% were consistent with flash numbers. We provided in conjunction with our recent Equity offering healthy fundamentals, inactive transactional environment, which led to a strong first quarter really kicked into high gear. During the second quarter and these positive Trends continue into the third quarter.
We're at record high levels of occupancy, street. Regrowth is dynamic. And to top it off, we're seeing unprecedented volume of assets. Come to Market on the acquisition front. We've been very busy this year and we expect the pace of deals coming to Market to remain elevated in the second half during the second quarter, we invested 270 million dollars in twenty properties. Bringing first half the volume 243 properties valued at 435 million dollars.
And you're done.
We've closed or have under contract, a hundred plus properties valued at nearly 900 million dollars, cap rates on these deals range from about 5% to 7% and Vary based on location source of the deal. Whether it was marketed off Market or from our captive Pipeline and if there's a portfolio premium or some element of lease-up involved, but the weighted average cap rate on all of our transactions closed in under contract is in the mid to high 5 Jeffrey.
Change. We continue to see meaningful competition for transaction. And the amount of capital seeking to establish or expand the position and self-storage continues to drive cap rate compression, especially on larger portfolios. Fortunately though, about two-thirds of our deals closed and under contract this year have been off market for from our captive pipeline where we tend to buy at cap rates, slightly above Market or exceptional, second quarter results, and our outlook for the remainder.
Of the Year, give us confidence to increase guidance, on key metrics, including year-over-year growth, and same store, and Ally of 16%. Rosin core ffo per share of 24% and increased expectations for acquisition, volume to over a billion dollars. Brandon will provide more color on a revised guidance in his comment.
It's in summary and it probably goes without saying it's a great time to be in self-storage. We continue to benefit from our commitment to secondary and tertiary markets as well as are differentiated Pro structure which were able to leverage to drive results and take advantage of the robust transaction volume that we're seeing this year. I'll now turn over the call today for eye color on what we're seeing on the ground. Dave,
Thanks Tammy. Since the start of the year we've seen Improvement in almost all key metrics and my 20-plus years and the Self Storage business. I've never seen fundamentals quite this strong occupancy levels, continue to reach new highs, which has allowed us to implement significant increases in our street rates, which ended in July about 28 percent. Over the previous year. We continue to be very sturdy by rent increases to in place tenants, when you're averaging High single to low double digits,
Now we all know that 2021 comparisons, 2.20 are distorted. So I want to provide some additional color last year, our street rates at the lowest point, only declined about 6 percent. So the current year increase of 20%, at the end of July would apply it by the twenty percent career. A growth and 2019. We ended the second quarter with record occupancy of 96.7%, which further increased to 96.9% at the end of July.
It's on the current strength. We are seeing it appears though. Occupancy will remain elevated relative to the last year that the next 2 months will give us a clearer picture or guidance assumes the seasonal decline of 2 to 2 hundred fifty basis points in the back half of the year. We do want to reiterate that we do manage to optimize total revenues and not occupancy.
We were.
Impressed by the strength and sustainability of consumer demand, as we've discussed in our past, couple of calls, consumer demand for storage is driven by change. In this current environment. That includes job transition, a very strong housing, transition Lifestyle Changes, adding a home gym, adding a home office, all of these, which we believe will continue.
Turning to new Supply, we've yet to see a meaningful shift and development activity in any of our markets. However, we are hearing a more developers looking for projects given how strong fundamentals are.
We do expect to live at development activity to pick up construction and land costs have risen meaningfully and the entitlement and permitting process will remain slow and very cumbersome.
We expect to continue to face headwinds from new Supply in Portland Phoenix. And in certain submarkets of Dallas Atlanta and West Florida currently. Approximately point 9 percent of our portfolio has a new competitor. In the three-mile radius, approximately 48 percent within the 5 mile radius. These figures are flat to slightly down from your in 2020. And currently robust demand is mitigating the negative impact and Supply in these markets.
I'll now turn the call over to Brandon to discuss Financial results and balance sheet activities and it. Thank you Dave, yesterday afternoon, we reported core, ethical per share, 55 cents, for the second order 2021, which represents an increase of 34 percent over the prior year period. Second quarter, same store, noi increased by 21.5 percent over a prior-year driven by a 16.3% revenue. Increase combined with a 4.3 percent increase in property operating expenses
James or occupancy, average, 95.4% during the quarter and increase of 760 basis points compared to 2020. All, this is the highest growth for same store, revenue and noi, as well as corfo per share that we've ever recorded during our six-year history. As a public company, I think it's appropriate to look at average growth across the last 2 years. I was removing the noise from the impact of the pandemic or to cue the two-year average. Same store, revenue and noi. Growth is 7 point 6 percent in 10.
Point 2 percent respectively, and core ffo per share growth. Over those same 2 periods is 21%. All very impressive levels.
They've hit the highlights on operating Trends, but I wanted to point out a few additional details regarding top-line Revenue. Add that remains below historical averages in fee income has recovered from last year. It Still Remains below historical Norms regarding effects. It seems to our growth accelerated in the second quarter to 4 point 3 percent due to the challenging year. Over your comp partially offset by an ongoing focus on cost control specifically Personnel costs increased 5.6% Euro.
In part due to more normal store, hours and Staffing levels, this past quarter, versus the reduced levels. We experienced last year, additionally, repairs and maintenance crew..9 point 8 percent in the second quarter, largely due to the challenging calm. As we had pulled back on all, but absolutely necessary expenses and the second quarter last year. Property taxes also increased 1.4 percent
Tenth. These increases were partially offset by utilities that decline 3.6 percent and marketing costs that were down 6.4% clearly with the elevated occupancy and strong, demand, that we're experiencing. There is a reduced need for marketing spend now moving on to guidance as Tammy touched on earlier the strong fundamentals and acquisition activity. During the second quarter combined with everything we're seeing so far in the third quarter. Give us confidence that this positive momentum will carry throughout the second half of the year, what?
previously, highlighted as
Drink second half comps. Now don't appear as challenging given the strength we're seeing in occupancy and regrowth. We are thus increasing full year 2021 guidance as follows. Poor ffo per share increases to arrange, 2 dollars and 11 cents to 2 dollars and fourteen cents, or twenty 4 percent growth over prior year at the midpoint, and an 11% increase from the prior guidance. Midpoint for same store Revenue growth of eleven point 7.5 to twelve point 7.5 percent
Went with the midpoint implying that the second half of the year should be just as strong as the first half.
I'll fix growth of two-and-a-half to three-and-a-half percent and I know I grow a 15 to 17 percent expected. Acquisition volume goes to a new range of 1.1 the 1.3 billion dollars additional assumptions regarding guidance, are outlined in the earnings release. Now turning to the balance sheet, we were active in the second quarter and subsequent the quarter. And on the capital front, utilizing our ATM to raise over a hundred and forty million dollars of equity. We also access the private placement marketing.
Issue a hundred eighty million dollars of notes. And of course, most recently, we completed a very successful follow on Equity offering 10..1 million shares at 51 dollars and 25 cents per share from that proceeds of approximately 500 million dollars. We were very pleased with the execution of the transaction was upsized. And the green shoe was exercised in full. All of the proceeds from these Capital raises were used to repay borrowings on our revolver and will fund our acquisition activity. Our balance sheet is well positioned.
Ian with no maturities through 2022, a fully available, $500,000,000 revolver and approximately 450 million dollars of cash on hand at the end of July, our leverage profile, but then that that the Eva died ratio of 5 point 4 times. At the end of the second quarter, and these recent transactions, clearly demonstrates our commitment to maintaining a strong balance sheet, with access to multiple sources of capital. Thanks again for joining our call today. Let's now turn it back to the operator, to take your questions, operator.
Ladies and gentlemen, we will now have our question-and-answer session. If you like to ask a question please press star 1 on your telephone keypad, a confirmation total own. The case that your line is in the question to you. You may also press start to if you would like to remove your question from the queue.
1 moment, please only now Poll for questions.
When's our first question comes from Neil Malkin with Capital..1 Secured, please proceed with your question. Hello everyone. Good morning and fantastic. Fantastic quarter Brandon. Congratulations. I believe you. Recently had the birth of your daughter, so that's great. And that congrats.
Thanks Neil, appreciate it sure. So yeah, first question, can you just talk about what your roll up spreads were or the the gap between move-ins and people who moved out in the quarter and then kind of what what what trends are you seeing in to into July and you know in the third quarter or what do you expect for Street rates and similarly, that that
Roll up.
Red.
Yeah, and the old, it says, Brandon. Thanks again for the first comments. And, by the way, we just wanted to say, I know some people had trouble getting into the call may be starting as early as 30 minutes ahead of time. So if you ran into that or anyone else, apologies, there there were some technical difficulties on your question. We talk on our last call about the spread between move in rates for new customers, relative to move out rates. You know, you know, decreasing such that it was near flat in the end of q1.
and actually flipping positive for second quarter, that spread was about a 6 percent, roll up and hear through the early part of the recorder that has only increased when you look at year over year,
Very strong momentum recorder.
Yeah, fantastic maybe just on acquisition Market, you talked about more things coming to Market, you know, as the month progresses you know just higher and higher deal activity. Can you just talk about maybe some of the larger assets of portfolios? We've heard from a couple Brokers that there are, I think a couple billion dollar portfolios or very large portfolio.
Out. There can use comment on that if those portfolios could be potentially split up or, you know what, what the process looks like. For you guys just giving your very, very low cost of capital. Sure, Neil. Thanks for the question. We I think it's probably safe to say that we see every, you know, portfolio of any size that comes to Market and we've heard the same as you that there are a number in that billion-plus up.
The 2 billion dollar value range coming. We I can't really comment on it right now. I guess the 1 thing I could say is that to the extent, these portfolios are in markets that we like that are in good. Geographic this for us we you know, we'd be keenly interested and in terms of how we might think about putting it together, we could probably do it on balance sheet if it's up to a billion dollars. Anything over that we might look for a joint venture partner.
To work with. But I think probably the safe thing to say here is that when a portfolio like that hits, the market will take a good hard look.
Look.
Okay, great. Well that's all for me. Thank you. And again, great quarter.
Thanks man.
Thank you. Our next question comes from Juan Sanabria with BMO Capital markets. Please proceed with your question.
Hi, good morning. Just hoping you could talk a little bit more about the, the cap rate environment. I think you talked about mid to high fives for the transactions or the Acquisitions today, but just curious, if that is a going any old or stabilize the old, and if it's a stabilized, the old, what what what the going in number is, and kind of the path to get there.
Yeah, he won. This is Brandon. So the 5/8 that Tammy referred to, that's a year 1 going in. So for us, that's that's noi before the with our structure, there's a management fee. Percent of Revenue management fee, that is paid to the pros but that's before that the cost. But it's that noi year 1 over the total investment. And so there is, you know, for us, historically, we're acquiring stabilized assets. We have talked recently in the past few quarters about
Having some appetite. Sure. Those deals arise. And so there is some some assets here and there that, you know, we would consider nonstabilized, they're going to be in that number in that year..1 going in 5.8.
Very impressive. Okay. And just on the cost side, just hoping to talk to a couple of line items..1 being marketing, you guys were up year over year despite kind of the record occupancy. So just curious on how we should think about that, going forward and second would be on personnel with you, some large declines from some of your peers, able to leverage the kind of rent, now, or you rental programs or however you want to
Name them, or call them just curious. And how you guys are seeing that line. I missed all the the wage pressure and difficulty finding labor,
Yeah, sure 1 it's Brandon again. So on marketing costs they were down. Same store costs were down year over year for the second quarter, just over 6 percent. And then, and also in the first quarter, I believe that number was down, you over a year about 4 percent. So your to date, 6 months, same store marketing costs are down. And so, I think that's more in line with maybe what you'd expect given the strong occupancy, the strong customer demand. I think last call, I made the comment, you know, if we don't need to spend the money, we're certainly not not going to spend the money, and that's been the case with the
Cast on Personnel, you know I think it were experiencing a lot of the same things as our peers. We cut hours and cut Staffing quite a bit last year. So there's a comp that I would point out for us are our actual dollar spend in the second quarter for same store was actually down from q1 sequentially. But that increase year-over-year of 5.6% that's really you know up against a Tough Cop from Q2.
Of last year. So, you know, when you're, when you're serving across the other companies, I just think you have to consider anything, they might have done with regard to Hazard pay or when they really / their hours and how they manage their Staffing. So just that's 1 heads up and then but then going forward I would just say we're certainly seeking a lot of the same efficiencies and we have been over the last year. I think there's been a lot of lessons learned we've proven we can run stores at lower hours them and we realized we could pre-pandemic and I should probably pause here and let Dave chimed in on
The other potential efficiencies were exploring here. I think what I would add 1 it you know, as you look at going forward with payroll stuff, you know, with the
Numbers were putting up as well, our employees have an incentive program and so when you have Revenue, numbers are off the charts. Like we have some of those Personnel costs. You're seeing, you know, the comp is 1 piece of it. But we're also, you know, having a bonus program backing that up and so we're proud of the results and we're proud to obviously pay the incentive programs as we look for going forward. You know, it's very competitive for personnel. It's a very tough environment to hire. And so we're looking at always, you know, online rentals, online, payment systems ways that we can run our stores, more efficiently, and
Lee, look at our store hours overall and our headcount overall I think the unique, you know, part about our business positions, as well as we couldn't read a little leaner or maybe a little short-staffed in this, very tough hiring environment, it doesn't impact our business. So we're flexing team members around. We're probably use a little bit more over time, they were historically, used to using, but we're making doing the environment we're at. And so our line online leasing programs about, you know, mid mid to high 20s on leasing, you know, twenty 6, twenty 7 percent an online rental.
Across the portfolio came through our online platform. We continue to work on that customer journey and improving that platform. I'd like to see those numbers increase, which obviously leads to a patient sees around the call center efficiencies around our store personnel. And, you know, the brand is a lot of lessons learned and there's a lot more runway for us here. I think to improve. And then 1 last thing, Brandon again. So for the 6 months same-store, payroll and related costs were up 2 percent. And so we do expect that to be a little
higher of a growth rate in the back half for the full year. Growth rate. I would I would put it probably close to the high end of that total loss, affects growth range that we gave of two-and-a-half to three-and-a-half.
Thank you very much. Great calling
Thank you.
Thank you. Our next question, comes from westgard a with bared. Please proceed with your question. Hi, everyone. When we look to the back half of the year, what do you think is the biggest moving part for occupancy? Is it purely the decision to push rate will be items? Such as maybe students, going back to school. Taking your stuff out of storage or other items like that.
That's a great question. I think. First of all, we thought we'd have a little College Student Activity in April. We had a pretty significant gain in occupancy, we saw some good rental velocities. And so, as we look at the back half of the year, we got it towards 200..250 basis. Point decline in occupancy by the end of the year. You know, some of that surround that seasonal what we thought was a little more seasonal pattern college students, a little bit of Summer transition and so that we think we will see some of that towards, you know, August September. As you mentioned, when you start pushing
It's and you start really applying some very assertive increases that could cause some movement. I think the positive is right now, the rental velocities are super strong and so as we're moving folks out there, moving right back in and you know, we're sitting here still at 97, almost 97 percent occupancy is that point in time, this should be the peak of the Season that should start to deteriorate a little bit from here, but it's not going anywhere quickly. You know, we're very, very pleased with the fundamentals. We don't see anything in the future, of the back, half of the other. It's going to really knock those fundamentals off, you know?
1 big wall if you want to call it.
Coming. There's just a lot of strength because of a lot of reasons. Great. And then I think you mentioned, you had about 48 percent of your portfolio have Supply within 5 miles. Do you think this number will move? I guess lower, as we go out the next 12 months.
I certainly think it could, you know, the new deliveries are slowing and we've been talking about that over the past few calls. Deliveries, you know, are declining since 2019 and what the 2020, you know, pressures of the pandemic and stuff, slow the 2020s into 2021. And so those are delivering. Now there's a lot of certainly a lot of act you know interest in our product and a lot of people you know, liking our product but you know it's hard to buy metal right now. It's hard to buy wood right now. It's hard to get planning done right now. So I think you might see that number.
Little bit in the next hole. Yeah, I think the only thing I'd add to that. Dave is that the secondary and tertiary markets where we're focused or less attractive to new developers. Now that may not always be true, but the returns just historically, haven't been there. The rents are in his high and you know, the risk isn't that much different. So so the least historically, we've been somewhat protected from the new Supply cycle. You got it. I think, in the prepared remarks you mentioned yet, unprecedented it seen unprecedented amounts of assets coming to.
Market. Can you maybe talk about how your conversations with potential proses is going on right now? Are they eager to sell or transact ahead of potential tax changes?
But you know, I think for our Pro with our potential Pros, we continue to have conversations with private operators, who would be good adds to our to our group of participating Regional operators? But it is, I will say, this is a case where change it tential changes in tax law. Don't seem to be moving the process along that much faster. I think that it's a big decision and I think operators are making a decision to sell or stay in the business.
Us and continue to grow. But but, you know, basically selling all of your assets and into NSA. And becoming part of a team, is a very big decision. So I just said, it's not really changing the Cadence of our discussions.
Great. Thank you.
Thank you. Our next question comes from Todd Thomas with keybanc capital markets. Please proceed with your question. Hi there. This is Ravi daily on the line for Todd Thomas. Can you talk a little bit about the Self Storage Market in Puerto Rico? Can you comment on how the pricing and demand for self storage is different between Puerto Rico, and Stateside. And do you have a long-term Target about how much exposure you would?
To Puerto Rico.
Well, thanks for the question, I appreciate it. And, and I'll start by saying that Puerto Rico has been a fantastic market for us. We really like the supply demand Dynamics, and I in, and frankly pricing, is a strength down there. In the case of the aportfolio that we just acquired in the second quarter did that portfolio, was sourced off Market by our Pro who's built strong relationships down there, and what we liked about adding to our portfolio there.
Ability to build scale.
And and so on the whole, we know we like Puerto Rico and and we see it as a good long-term play.
Perfect. That's it for me. Congrats on a great quarter.
Thank you.
Our next question comes from Steve Sacco, with evercore, is I please proceed with your question.
Ian, great thanks. So most of my questions have been asked and answered but I'm just curious as you're thinking about ecri is given that you're sitting is you know almost 97 percent occupancy, are you sort of changing the pricing strategy going into the back, half of the year? How are you sort of managing the business a bit differently?
A great question Steve, you know with with the strength of what we're seeing and then the continued strength of rental velocity and our ability, you know, with the rent roll up and and all the things that are going right now for us, we've been a little bit more aggressive. I think particularly going through, you know, July and August, as we look out, and even into September. And so, I would say, we're very much on the assertive end. We're looking at a broader base of tenants, we're looking at, you know, maybe where our potential capsule, where we may have kept out of not done, looking back at that.
Revenue management platform which is fully implemented. About 12 months ago is really starting to pay dividends. We've got to know some really good logic built in behind it and it's really challenging us to really think about how we maximize the situation we're in. So, at this point in time, I would say we're probably being a little bit more assertive in amount and how quick we're implementing the rate changes.
And is there anything you can tell on customer Behavior about rent increases? You know, is there a sort of a threshold, which you see, maybe higher, move out rates, or any kind of change in behavior? That would kind of limit how far you can push rent increases.
We haven't come across anything yet. Like I said, we're looking at some of those upper boundaries and what I mean by that is maybe the total of dollar amount. You know, we may have a cap set on a dollar amount that we met field would be uncomfortable to tenant. So we're pushing some of those boundaries today but we haven't come across anything and anywhere across the country. My mind you in all of our municipalities and all of our communities. We've been testing a lot of different projects and nothing standing out that what we're doing is is caused any type of change in Behavior at this point.
Great. Thank. That's it for me.
Thank you.
Thank you. Our next question comes from Smitty's. Rose with Citigroup. Please for your question.
Hi, thanks. I just wanted to follow up on that a little bit. You mentioned the revenue management platform that was ruled out about 12 months ago. So I mean you were on, On Target, I guess to have over a thousand properties now between wholly owned and unconsolidated. What are are they all on that platform now, or as I recall, the pros have the option to be on the platform or not, and it's just wondering kind of, is there an opportunity there to add more to the platform and of where do you stand on that?
that's a great question, you know, and 1 of the things we've been very pleased with
Through our best practices and through are really a lot of our conversations over the last 12-18 months, is the acceptance level of some of these platforms that are Pros, are doing a wonderful job and they have built some really great teams but they have, we figure right now, A little over 80% of our stores are on the platform and, and taking advantage of it, in the pros of really built some great talent inside of that too. So the pros of getting much better now than they've had and they're getting much better results. And so we're very pleased there. So you would expect kind of incremental take
yep, I guess for that 80%
I would think so. Yes. Yeah, it's means this is Brandon. The 1 thing I would say is that, you know, the, the pros that maybe have an onboard run to our specific in-house built platform. I mean they're still running certainly Revenue management strategies, similar things that they may be done as private operators and so they're still pushing rent increases to customers and and so they're still but I do believe there is opportunity. I just wanted to make that clear
Okay, thank you.
Thank you. That's a reminder to our audience. If you would like to ask a question please press star 1 on your telephone keypad.
Add, our next question comes from Ronald, Camden with Morgan, Stanley. Please proceed with your question.
Ian. Hey, congrats on the just the thinking about, you know, historically, there were a couple of markets at that. I've been oversupplied Portland. For example, comes to mind. Can you just help us contextualize just the amount of demand that we've seen in the last, you know, 18 months and so forth. You know, you're looking at, you know, same store numbers that are double digits. How many, you know years, did we gain sort of during that period before we get to eat?
How should we think about what these last 18 months is done for those markets?
It's a great question and I'm not sure we have a clear line of sight of how many, maybe years of Supply. We've shaved off with the economic, you know, all the drivers that are going on right now, Portland and Oregon and a couple of other markets, Phoenix, being 1 of them have just seen tremendous results. So you look at these all throughout Oregon. They're just at the top of the list and so we look at it this way is, you know, they're still certainly still pressure there. If you look at Portland's overall occupancy, it's still about 3 points less than the overall portfolio. Which
No, that is kind of the presence of there is some competition there. But the team has done a wonderful job really maximizing where they want to be positioned, how they will, how many Realms they want to get, how many consumers they want to get in and done a great job, driving occupancy, and revenue and all the other things that come with that. So I don't know that I could really answer, how many years do we think we've, you know, shaved off. But, you know, those currently certainly, the demand factors are mitigating some of that competitive pressure and so, you know, for Oregon or the food, these other places numbers for solid and it
Ronald that plays into the answer of Wands earlier question as well about you know that 48 percent we talked about on the 5 Mile and that's someone that we didn't say in our responses. The fact that that's some of what's happened in the past year is certainly accelerated the absorption. So you're hitting on the right thing. It's just it's tough to put a number to it as they've said,
Got it.
And then, you know, not to beat sort of the acquisition question to death, but you know, you double the, you double the guidance, right? And I think you talk a little bit more. Just there's just more activity going on. Is that like is that really the biggest change in the biggest drivers for 3 to 6 months ago? Just you're getting a look at a lot more deals than you. Thought your closing, maybe a lot more than you thought or is this your is this a view of just being more aggressive into an accelerating Market or maybe a little bit of both just just color. There would be helpful.
I think it's a couple things run, and it's good question, but what we saw in the first quarter, frankly, just continued to accelerate into the second quarter. And what we're seeing right now. And as I mentioned in my earlier comments, we've also been able to Source a number of portfolios either off Market. Or, you know, you might call it pocket marketed. And, and I think that's given us a benefit. We've been able to leverage our Pros relationships and our captive pipeline so it's a
I guess I'll say it's a little bit of all of the above. I I would add that. I think we're being extremely disciplined in our underwriting. We like what we're seeing it. Just so happens that I don't know, we'll see another year like this, but but but it clearly is unprecedented potential volume.
Super helpful. Thanks again.
You bet. Thank you.
Thank you. Our next question comes from Jobe Dempsey with truth. Please proceed with your question.
Hi. Good afternoon, everyone, and thanks for taking the questions. First of all, I just wanted to Circle back on the acquisition topic. Again, can you talk a little bit more about in depth about the type of assets? You're targeting the quality? I know you spoke a little bit about Yale, I guess. Ultimately, you know, how do you sort a balance more activities in the markets and more assets for sales versus the higher prices that you're seeing now?
So I guess I'll start and Dave can jump in here, but but I would say that our is that our approach to underwriting in terms of geographic location, quality of the asset. And as, you know, as you know, we're perfectly happy with single-story Assets, multi-building in secondary and tertiary markets, I think that gives us a slight Advantage. It's just well with our geography and and for that reason, the khepri
Might be a little higher than what others are seeing. But I'll tell you that in addition to that, we are also looking at newer assets that are in stabilization there, they're not quite stabilized yet, if we see assets like that, that are well priced and fit. Well, with our geography in a place where we want to be long-term will, you know, will go for it. And, and so I don't know if that answers your question, or if there's any other color, I can provide. I don't think it's
Has changed too much, our focus on secondary and tertiary.
Marcos Remains the Same and I guess the 1 thing I would add is that we've talked historically about being focused on stabilized assets. But to now to the extent we're seeing nonstabilized we are open to underwriting an acquiring those asset.
1 thing that's Brandon. The 1 thing I would add is is geographically everything that we have that we spoke about that's ahead of us to close is very nicely complemented with the existing portfolio. That's right. Okay great great.
Do they have like longer length of stay shorter or is it? They're pretty consistent with the traditional customer base.
It says, if you could be a variety of answers it, but I'd say, overall, fairly consistent. What we're seeing now that without hot tight housing market, how long they're out of house. So you sold and you can't get to your new house in. Maybe the time you were thinking about we're seeing something around housing pressure as far as pricing, and so maybe I wasn't able to afford the type of house. I was thinking of the size of house I was thinking about. So maybe I'm buying a little bit less square footage of house, which may lead to longer storage needs. And, you know, if you look at our product
We think that's very encouraging because it's very affordable and it's a great use of space and so as this housing market in this red-hot rental market play out, we think you know for us we're in a very good position to have some good success around. You know, this really tight housing transition that's going on
Okay, perfect. This is just last week from me, I figured I'd ask what the Delta variant cases, beginning to rise across the country and any noticeable difference in consumer Behavior over the past few weeks,
nothing to speak of. I know we've gone back and, you know, we've kept all of our protocols, you know, in place. So we have a lot that that piece going on. We're seeing a little bit more, you know, noise around some of our communities about masking mandates, but nothing that we can really depend only say he's going to, you know, push economy, 1 way or the other, you know. Keep in mind, you know, we're able to navigate the, you know, the pandemic last year very successfully. And so I don't know, even if the Delta very really flares or puts pressure on communities, this can have a significant impact on us.
We were demon essential business last year, and I think that will continue. Should this thing really Claire.
Okay, thank you.
Thank you.
Thank you. They are no further questions at this time. I'd like to turn the floor back over to Tamara Fischer for closing remarks.
Thanks again.
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