Q4 2021 CubeSmart Earnings Call
Okay.
[music].
Okay.
So.
Good morning, and thank you for attending today's acute smart fourth quarter earnings call. My name is design and I'll be your moderator for today's call all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end if you'd like to ask a question. Please press star one on your telephone keypad.
I'd now like the past conference over to Josh <unk>, Vice President of finance with keeps smart.
Thank you Jason Good morning, everyone welcome to <unk> fourth quarter 2021 earnings call participants on today's call include Chris Marr, President and Chief Executive Officer, and Tim Martin Chief Financial Officer, our prepared remarks will be followed by a Q&A session.
In addition to our earnings release.
Was issued yesterday evening supplemental operating and financial data is available under the Investor Relations section of the company's website at Www Dot keeps smart dot com.
The company's remarks will include certain forward looking statements regarding earnings and strategy that involve risks uncertainties and other factors that may cause the actual results to differ materially from these forward looking statements.
Risks and factors that could cause our actual results early from forward looking statements are provided in documents the company furnishes to or filed with the Securities and Exchange Commission specifically the form 8-K, we filed this morning together with our earnings release filed on the form 8-K, and the risk factors section of the company's annual report on Form 10-K in <unk>.
The company's remarks include reference to non-GAAP measures a reconciliation between GAAP and non-GAAP measures can be found in the fourth quarter financial supplement posted on the company's website at www Dot <unk> Dot Com I will now turn the call over to Chris.
Yeah.
Thank you all for joining us at the end of what has been a very unusual and turbulent geopolitical week in our world.
We are proud to announce our fourth quarter and year end results last evening. It was an extraordinary quarter for our company wrapping up a truly memorable year.
Our strong operating fundamentals continued in the fourth quarter.
Sequentially from the third quarter, we grew realized rent of 170 basis points, posting 16, 1% growth.
We were all alone at the top of our sector and generating sequential same store revenue growth, gaining 20 basis points from our third quarter results.
All of our markets continued to perform well.
Pandemic induced trends seem to have normalized first in the ESL a corridor.
Outlook for 2022 assumes a gradual return to more traditional seasonality across most of our markets.
In my 27 years in our industry 2021 stands out as one of <unk>.
If not the most remarkable periods experienced from all aspects of our business.
Many of our customers informed us that they wish to be served in a more personalized manner than we have historically.
Our teammates desire more flexibility in how and where they do their work.
Operating fundamentals across all metrics surpassed previous record highs.
Investment opportunities, where the most plentiful I can recall seemingly surpassing even the $19 $94 1997 period of rapid consolidation in the post <unk> world.
Attractive debt and equity capital with readily available to fund that external growth.
Overall, it was very rewarding to see the industry be recognized as a great business.
To be able to serve our customers and help relieve the stress that they feel in their life events.
And for our cube smart teammates to be able to deliver the positive results. We are all here to speak about today.
It is an exciting time to be in our industry.
Endemic has introduced us to new customer segments.
We have matured as a sector.
This has resulted in many new shareholders institutional investors and entrepreneurs entering our space.
Many of these are our customers our competitors and sometimes both.
I believe we are living through a turning point and the perception of self storage.
In this time period will be viewed historically as the shift from a niche business to a respected core remember the real estate industry.
Thank you and I will turn the call over to Tim.
Thanks, Chris and thank you to everyone on the call for your continued interest and support.
As Chris touched on the fourth quarter wrapped up what was by almost any measure the best year in the history of the self storage sector.
Our team at <unk> Smart was busy across all aspects of the business and our strong team platform and portfolio put us in a position to capitalize on the opportunities that.
That incredibly strong operating fundamentals presented.
Same store performance for the quarter included headline results of 15, 8% revenue growth for 2% expense growth, yielding NOI growth of 26% for the quarter.
Average occupancy in the fourth quarter was 93, 8% and we ended the quarter with occupancy of 93, 3%.
Same store revenue growth at 15, 8% continued to be very robust with our markets in the southeast and southwest parts of the country, leading the way we continue to see the ability to push rental rates across the portfolio to achieve our growth.
Strong operating fundamentals also led to solid performance across our non same store portfolio and our third party management business during the quarter.
All of that internal growth along with external growth, we reported <unk> per share as adjusted of <unk> 58 for the quarter, representing 23, 4% growth over last year.
We remain active and disciplined in our pursuit of external growth opportunities in the fourth quarter was a very busy quarter for our team on that front during the fourth quarter. We closed on the $1 $7 billion acquisition of <unk> limited the owner of the storage West self storage platform.
This 59 store portfolio concentrated in Arizona, California, Nevada, and Texas was a great strategic fit for us as it enabled us to acquire high quality, well positioned stores and to diversify our portfolio into several markets that we've historically been underweight in.
Also during the quarter, we acquired five additional stores for $85 8 million opened a development store in Massachusetts for $20 8 million acquired a store in New York for $33 1 million and one of our joint ventures, and we sold a store in Texas for $5 2 million.
Integration of all of these acquired stores is complete and went incredibly smoothly.
So a very active quarter on the investment front, then not surprisingly leads to a very active quarter on the capital raising front, we funded our growth in a manner consistent with our conservative investment grade balance sheet strategy during.
During the quarter, we completed an equity offering of $15 5 million common shares at $51 a share raising net proceeds of $765 million.
We also issued over $1 billion of unsecured senior notes in two tranches.
A $500 million issue of 10 year bonds with a two 5% coupon and $550 million of seven year bonds with a coupon of two 5%.
Proceeds were used to fund our investment activity and also to redeem $300 million of notes that were due in 2023.
So thats, obviously, a lot of moving pieces pieces, we detailed all of this in our supplemental package that we released last evening, but importantly, it all adds up to us being in a great position from a balance sheet perspective entering 2022.
We funded the meaningful growth we experienced at the tail end of 'twenty, one and are prepared to be opportunistic going forward. If we can identify attractive opportunities that will allow us to continue to execute on our disciplined growth strategy.
Looking forward details of our 2022 earnings guidance and related assumptions were included in our release last night.
R 22 same store property pool increased by 17 stores.
Consistent with prior years, our forecasts are based on a detailed asset by asset ground up approach and consider the impact at the store level, if any of competitive new supply delivered in 2000 22021 as well as the impact of 2022 deliveries that will compete with our stores.
Embedded in our same store expectations for 'twenty two is the impact of new supply that will compete with approximately 35% of our same store portfolio.
So from a trend line perspective, you'll recall that when we first introduced this metric back in 2017, we had 25% of our stores being impacted by supply.
That 25% grew to 40% in 2018 vendor again grew again to 50% in 2019.
We then started to see the impact decline as impacted stores fell to 45% and 20, 40% last year and now in 2022, we see that coming down to 35%. So we're continuing to see signs of a lessening impact from new supply as we move forward.
Our <unk> guidance does not include the impact of any speculative acquisition or disposition activity as levels of activity and timing are very difficult to predict.
So wrapping up prepared remarks.
To all of our hard working talented teammates who helped lead us to the successful execution of our business objectives across many many fronts in 2021. It was indeed, an extraordinary year for the sector and for our company and we're energized and ready for 2022.
Thanks again for joining us on the call. This morning at this time, Jason Let's let's open up the call for some questions.
Thank you.
If you'd like to ask a question. Please press star followed by one of your telephone keypad. If for any reason you'd like to remove that question. Please press star followed by two again to ask a question press Star one.
If you're streaming today's call please dial in into Star one.
As a reminder, if using speaker phone. Please remember to pick up your handset before asking your question, we will pause briefly as questions are registered.
Our first question is from Juan Sanabria with BMO.
<unk>. Please proceed.
Thank you and good morning in Philadelphia.
Curious what you guys are seeing with regards to the geographic trends post Covid you mentioned.
Hello corridor kind of normalizing first.
So just curious if you could maybe just elaborate a bit on that and what you are expecting any in the other regions as we get further along into 'twenty two.
Sure This is Chris.
As I as I mentioned and when you think about.
Do you think about those markets, Boston, and Connecticut, New York, Philadelphia, Washington D C.
They all.
Seemingly in about the second quarter of last year returned to more normalized seasonality.
And we started to see more typical.
Consumer trends there.
And obviously sooner than what we have experienced in the sunbelt and the west coast markets. So as we think about.
Going into 2022 embedded in our range of guidance is an expectation that.
That we will see.
Those west Coast and Sun belt markets also begin to demonstrate more typical seasonal patterns.
And we expect.
We expect those to join the club I guess in that respect so that sort of underlies how.
How we think about things. So again when you think about what does that mean market by market. Those those markets that have been slower to return to the normal more normal seasonal patterns and also have the toughest comps.
Would expect to see their growth rate in 'twenty to slow.
Potentially add a little bit of a faster rate than those in the Acela corridor that have already had a couple of quarters of that more typical experience under their belt.
Thank you and then just.
Hoping you could kind of give us an update on the supply picture in New York.
Whether you have any visibility into 'twenty three and have that.
How that's changed over the last couple of years.
And when do you think that market too.
Becoming a strength at one point again hopefully soon.
Yes. Thanks for the question so again it's.
It is I think most helpful to look at that.
By sub market. So again, a couple of data points not to overwhelm folks with numbers, but it is it is it is unique and different by borrow.
And then when you when you consider Westchester long Island, and Northern Jersey as part of the MSA. So the Bronx.
The Bronx saw the supply more rapidly than the other boroughs going all the way back to 2016, we had.
We had six.
New openings and then it began to decline from there we didn't have anything open in 2020, I think there was one new store in 'twenty, one and expectation of $1 82 in 2022. So you go out to 'twenty three at the moment.
Nothing on the on the docket. So I think that's at one end of the analysis.
When you think about then Brooklyn and Queens.
Really more impacted at the moment so in Brooklyn.
We've seen quite a number of stores being introduced consistently over the last three years running at a pace of about five new openings a year for 2020, 'twenty one 'twenty two expected.
And then again as we look out into 'twenty three.
Don't see much if anything again opening in Brooklyn, assuming again these 22 stores.
The four so that are on the docket get finished.
Queens.
Very modest rate hardly anything in a one store in 2018 two stores in 2020.
Right now there are a total I believe of 10, new openings expected in Queens and assuming they all open in 'twenty two we see a sharp drop off again, there in 'twenty three queens, a little bit unique in that from a zoning perspective than just that.
The way the borough is.
The way the boroughs laid out.
That new supply in Queens does not have as much of an impact however.
On the existing stores given that you you have some stores in Queens that are opening in pockets that don't currently have.
Either acute smart or much self storage supply.
Westchester Long Island Northern Jersey.
I think you see a.
I think youll see a pretty sharp increase in stores there over the last couple of years running and that entirety of those three.
In those three areas running in the 25 to $35 per year delivery pace.
Expect that to continue into 'twenty two so I think from from the borough perspective, we think that impact in the Bronx is behind us to some degree of the impact in Brooklyn, and Queens is likely most acute this year and then declining.
The impact in Westchester Long Island, and North Jersey likely will be felt.
Into 'twenty three so we're we're optimistic we think our team in New York is best in class, we think our.
Our team is maximizing the opportunity in New York.
And in the MSA more broadly it's held up quite well in spite of the supply in spite of the fact that arguably New York City was impacted most acutely by the pandemic.
So we're pretty proud of the performance we've been able to do there and are very optimistic as we look out into 'twenty, three and 'twenty four that.
This impact, particularly of supply will be behind us and we will start to see.
The benefits of that decline in supply.
Thank you very much Chris.
Thank you one for your question.
Our next question is with Elvis Rodriguez Analyst. Please proceed.
Thanks, Congrats on the quarter and year guys just to follow up on <unk> question can you speak to the demand picture I know you said, it's sort of stabilizing but the New York city demand relative to what Youre seeing in the sunbelt and given the tougher comps and some of the sunbelt markets is it that tenants are now some of these.
Perhaps population shifts have happened to the sunbelt are starting to return back to New York as a result of things opening up or is it.
Some other things that are driving demand in New York.
Yeah. Thanks, Thanks for the question so the demand trends in New York.
Have been very positive here over the first two months certainly.
2022 .
When we think about <unk>.
Our rentals.
Versus last year in those markets.
We're up we're up pretty well.
In terms of the performance here.
In the first couple of months.
So from that perspective.
The demand has been there I think the general overall behavior in New York has that been flowed quite frankly with with Covid.
We saw a period certainly late last year.
When the variant was most.
Acute where we just saw very little movement in the boroughs. So rental volume was was lower vacate volume was lower effectively our in place customers. We're staying put we were seeing some new but not not anywhere near that typical churn.
Things have.
Things have started to come back.
To be a little bit more normalized here as.
Is that variance seemingly has is in the rearview mirror and we're starting to return to more normal we look at.
We look at housing in New York.
And the trends are quite positive.
You are seeing there.
We're seeing pretty good movement in rental rates on the multifamily side <unk> seen good movement like you've seen in the rest of the country in terms of home values.
And if you're walking around particularly in Manhattan or in the outer boroughs. There are while there is a limited return to the more typical in person in office.
Population on the street is moving.
Things are seemingly returning to some more normal patterns. So I think we saw in Q2 of last year again in that Boston is down to Washington D. C.
And then we saw it over the course of the summer or a bit more of the more normalized pattern of behavior and as I said in my opening remarks, we expect that to.
Gradually returned to the rest of the country as well.
Thanks, and if I could just follow up I think you mentioned that things are going well here, maybe in New York and in the region can you share occupancy to date, perhaps relative to last year at this time in New York City, and then as a whole from our portfolio.
Yeah. The occupancy again, obviously, we have a change in the same store pool, so on a on a.
On a relative to last year in terms of.
Basis points changes the overall same store pool as of yesterday is up 10 basis points in physical occupancy over where it would have been at this point last year, so a little bit of improvement from the flat we were at at the end of the year.
In New York, we are up over this time last year.
Close to 75 basis points in physical occupancy versus where we were yesterday last year.
Great. Thanks, guys for the uptake.
Yes.
Thank you Alex for your question.
Our next question is with Todd Thomas from Keybanc.
Todd. Please proceed.
Hi.
Thanks, Good morning.
First question is around the guidance for storage West I appreciate the breakout there of the expected accretion in the guidance.
Has anything changed regarding the outlook for that portfolio since.
Since the initial deal was struck in you underwrote the portfolio just given the the.
The lifting of <unk>.
Price restrictions.
The magnitude the magnitude of the accretion that we've that we talked about when we first announced the deal in the end.
What's embedded in our guidance is unchanged I would say the only thing that has changed.
As our increased confidence in.
In that guidance given the fact that we now have the stores integrated into our systems.
Have all of our teams in place and we have a couple of months of performance under our belt. So.
<unk> unchanged confidence level is higher.
Okay, and how much of the portfolio is operating in markets that were price restricted.
Just curious if you could discuss that and maybe break out the portfolio a little bit to help us understand.
On storage west or the broader portfolio.
Storage west.
On storage West, Yes, very very little was under specific restriction at the time that we acquired there may have been there may have been a little bit that had impacting the prior owner.
Earlier in 2021, perhaps in some of the some of the California market, but it certainly was not a a a meaningful.
Component of our underwriting I think what we saw across the board and we talked about.
Couple of months ago with the transaction announcement is is that this was a it was a well run it was a well run portfolio by the by the prior platform, but what we saw was an opportunity where they had pushed rates in some markets 10 or 12% in those same markets for our similar stores, we'd push rates, 18% to 20%.
And so what we saw and what was embedded in our underwriting certainly for the first year and then perhaps even more so as we think about 2023 is the fact that we think that under our platform.
There was a little bit of opportunity that a push on rate.
Little bit more than it had been pushed on throughout 2021, but not so much Todd specifically too.
Governmental restrictions.
Okay. That's helpful and then.
Wanted to ask about the third party management platform.
Realized activity can be can be chunky.
Quarter to quarter, and Theres, a lot of transaction activity that that's impacting.
Some of the ins and outs, there, but I just wanted to see if you have.
Visibility around.
Stabilizing and growing the platform.
And what your goals are in 'twenty two for that.
Yes, our goal. Thanks for the question our goals are to continue to.
To do a great job, providing the services that we've been hired to do and in some cases, especially for some of the stores that we have on boarded onto our platform over the past two to three or four years that were development.
Stores or or lease up stores.
The market has been very supportive, but our platform and our teams have done a really good job at leasing up those assets stabilizing the value in helping to create.
To create a good backdrop for some of our third party owners to bring their stores to market and transact.
We would love to acquire.
Many of them as we can.
But we'll obviously do so only a price that makes sense and fit our underwriting criteria. So what we know we want to do is to continue to provide that great service. When you try to translate that into how many stores do we think are going to add to the platform. How many stores do we think youre going to leave the platform awfully difficult to predict obviously.
But we do think and we started talking about this probably a year or two ago that we certainly started to expect that we're going to see a churn.
Given given how deep we are in the development cycle and that as we've talked about is we've been adding about 200 stores a year to the platform for a couple of consecutive years and Youll recall that 50% to 60% of those stores were newly developed stores that was going to lead to opportunity and also lead to churn down the road.
And that's what we experienced in 'twenty, one and we're pretty confident that we will continue to experience that into 'twenty two.
So we had a good year onboarding new stores that we can control from a from a new business development standpoint from a referral standpoint, and our team continues to do a great job to demonstrating.
Two new potential customers and to existing customers to expand and add more stores to our platform. We are a platform of choice that can that can add an awful lot of value to their platform that we can control and I think we can continue to add.
Well over 100 between 100 200 stores a year under the platform continues to seem to be achievable at the stores coming off the platform that we don't have a ton of visibility.
Right got it and so the 35% to $32 5 million.
Property management fee income that's in the guidance what does that.
I assume.
Sure.
Okay.
Total third party management contracts throughout the year is there is there any change from from year end what was reported.
Our guidance assumes that there is some churn in that there is some change.
In some stores coming on some stores coming off and so there is a range there from.
What would be.
A flattish type of year four.
For change in store count to slight growth.
Okay, Alright, great. Thank you.
Thanks Todd.
Okay.
Thank you Todd for your question.
Our next question is with key Bim, Kim and shoes.
Please proceed.
Thanks, and good morning.
Just wanted to go back to your comments about <unk>.
<unk> normalization, that's L a corridor.
If I kind of look at what's happening not everyone's back office quite yet.
So as that moves further along.
If you can give more color on what that might eventually it looked like that more people will go back to the office.
And what that might mean for some of the pricing trends you're seeing in that corridor.
Yes.
It's an interesting question came in because I am not it would help at the margin in terms of some of our small business customers having.
Visibility into their businesses reopening their businesses in some instances the folks who make a living.
As a result of folks being in the office be a big positive for them.
I think again are our assessment from the folks on the ground and talking to our customers.
And this is this is probably more true in Manhattan, because of the sort of the ins and outs there and the nature of the work there than it is in the outer boroughs.
Most most of these folks are living there.
I was wandering around.
The Chelsea market meat packing area, and you think about that 1 million square feet that Google.
Leases in that area not very many people are in the building, but they certainly all seem to be out on the street or in the coffee shop, so they're there.
Which I think is a positive.
I think the I think the.
The opportunity to get a bargain on an apartment seemingly looks behind us and so.
As we move forward.
Does that create again an opportunity for storage.
As folks think about having to take a roommate or potentially something smaller I think that's a positive so the reopening of the offices and the commutes.
<unk> creates movement, which ultimately is always positive for our sector I'm not sure of that.
Like a seminal event, that's going to create some sort of sudden change.
Got it.
And can you provide some details around what's happening with the D C market, obviously being up.
I think it was 8% or so fantastic not as great as some other markets I was wondering if it's a supply or some other peers kind of stabilized assets issue or something else.
Yes. Thanks for the question so again at the sub market. It's a submarket issues. So if you think about that MSA being Maryland, which for US is primarily Prince George's County, and then Northern Virginia suburbs, and then Washington D C itself.
<unk> is performing pretty well.
Over the last fourth quarter into this quarter, they're still saying low double digit same store revenue growth, Washington D. C. We have five stores every single one of them has at least one new competitor.
So that is the that is the drag for that MSA those five stores.
Embedded in our guidance there is little to no same store revenue growth for 2022.
And we certainly experienced the impact of that competition in Q4. So that is that is that one and PG county in the Maryland suburbs at the other end Northern Virginia, depending upon your pocket.
Is sort of somewhere in the middle we've got.
We've got new supply impacting us in Fairfax County in Arlington County.
And then some of the other areas.
Northern Virginia.
Are doing really well they will have that supply impact, but but at the bottom.
The overwhelming the answer to your question is is the five stores in DC proper.
Okay. Thanks, Chris.
Yes.
Thank you Kim for your question.
Our next question is with Samir Khanal with Evercore.
Please proceed.
Yes, thanks, so much I'm, Chris just on kind of the normalization turned out.
To office, I mean, what's sort of baked into your guidance from a when you think about the seasonal moderation that you will have in the second half how that summer peak to the end of the year.
How much of a decline in occupancy you are taking for the overall portfolio.
Quantify that and especially as it relates to New York.
Yes. Thanks for the question when you think about what.
Underpinning our guidance is that the the.
The overwhelming majority of our growth.
And same store revenues is going to be derived from our rate.
So when we think about occupancy across the portfolio and it's really not materially different.
<unk> by market.
Obviously some of the West coast markets at our 90, 697% occupied we think are going to decline, but for the markets that are normalized I think that occupancy trend is again, its always going to be predicated upon what's the opportunity that presents itself on any given point in the cycle, but we would expect to see.
Occupancy versus last year.
Point in time could be up 50 to 75 basis points could be down 50 basis points, but moving within that range and again typical seasonal pattern is what we expect so we see occupancies.
Moving in a positive direction rates moving in a positive direction basically from this coming Monday through the end of July and then we would expect that the back half of the year you would see that more typical seasonal pattern of.
Yes.
Some occupancy pullback and some rate pullback so not obviously, we do a ground up budgets different property by property market by market, but.
Overall, I think the normalization as I said has been there.
In the East coast, and we expect it to gradually retire the rest of the country.
Got it and then I guess my second question is around sort of the marketing expenses.
For this year I know you guys are still spending on marketing others sort of cutting back last year.
How do you think about marketing for 'twenty two.
When you start to see some of the benefits come through this year from the spend you did last year.
Yeah. So again, that's one of those one of those variable costs that.
It is certainly.
It is certainly variable depending upon how we see the returns.
If you think about what's embedded in our expectation for this year.
It would be for some pretty good growth given where we were in the first quarter of last year, So really as a comp.
In the first quarter, and then seeing that normalize as our current expectation too much more modest growth as we get into the second third and fourth quarters of the year. So overall for the year, we don't expect it to see the same sort of.
Overall increases on a percentage basis that we experienced in 2021.
Again, I have to caveat that one with we make decisions on that.
And it really on a weekly basis as it relates to where there are opportunities some of that will depend upon.
Consumer behavior, we are starting again to see this shift away from what had been a return to desktop and back to mobile, which I think is just indicative of a gradual reopening of society.
Again also where our competitors choose to.
Choose to play we saw some good opportunity last year, where some of our competitors were out of the bid market and we thought we could take advantage of that spend a little bit more on the marketing side, but get higher rate and.
And again I think when you look at our realized rent.
For the year in our same store revenue growth quarter by quarter going back to the second quarter of two.
<unk> 2020, I think those those decisions paid off well for us.
Okay.
Got it thank you.
Thanks.
Thank you for your question.
Our next question is with David balance <unk> with Green Street, David You May proceed.
Good morning, just wanted to touch on lease duration within the portfolio and how thats changed since pre COVID-19 levels or are there any numbers that you can share with us on average lease duration would you expect that to revert back to normal with normalized seasonality patterns.
Okay.
Yes, great question. So so.
I think one way to think about.
Customers.
Perhaps is is trying to draw an analogy in this might be the best one I have been able to come up with or the team has been able to come up with between.
A natural.
Natural disaster, so to speak and the and the pandemic. So when you think about a hurricane sort of oriented customer in South Florida.
We see a big surge in demand when the storm is approaching some of those customers are simply bringing outdoor furniture to storing and when the storm passes.
Go back and they take their good data storage in and bring them back to their house. So theyre very short term customer we have.
Other customers, who experienced some sort of damage Unfortunately in and bring their their dry possessions to us and store them and then they tend to stay longer obviously than that short very short term customers. Some of them tend to stay very very long as maybe they buy new items or.
It takes longer than expected to get the insurance claims settled and get all the damage fixed et cetera, I think I think we have a little bit of an analogy to that to the pandemic customers some of them.
Came to us had some shorter term needs.
And were with us for a short period of time.
There is.
Have either found the.
The product would be very helpful to them have changed how they think about their residential options.
And have stayed with us for a lot longer than perhaps we would have expected at the beginning of the pandemic. So if you think about it just from a.
From a numbers perspective about about 60% of our customers have been with us greater than one year and thats up about 600 basis points from.
<unk>.
From prior numbers and about 40% of our customers have been with us for over two years, which is up about 400 basis points from prior levels. So we're starting to see some.
The customer has definitely been with us for a longer period of time, but but it is starting to trend back to a little bit more normal behavior. We are seeing a pickup in some of those 30 day type customers.
Got it. Thank you that's helpful and wanted to touch on National supply I don't know how closely you follow the data providers out there but.
But delays it just seems like there is opportunity here for sort of double counting in the national supply data that's out there.
Just with what <unk> seen on the ground is that.
Accurate.
Meaning meaning deliveries that were expected in the fourth quarter of.
Or in 'twenty, one bleeding over into 'twenty two.
Yes, it just seems as AG track sort of national data around supply deliveries.
We're here with development delays it just seems like perhaps some deliveries are being double counted some of that were expected in 'twenty, one that are delayed into 'twenty two.
Perhaps the 'twenty one figures our revised so just wondering if you if you had any color on that from your perspective.
Yes.
Yes, I would agree we don't we don't spend a ton of time on the national we spend a lot more time, obviously looking at our at our top 12 markets, but conceptually, yes, we would agree there was quite a bit of delay.
In the back half of 'twenty, one pushing things to open in.
And 'twenty two.
As we think about is why we tend to look more at the rolling three years, because whether it gets delivered in November or December of 'twenty, one or it gets delivered in January February and March of 'twenty, two the impact to the surrounding properties is the same so no doubt there was.
There is always a there's always that slippage.
I think it was likely as you suspect pronounced in 'twenty one.
Great. Thank you.
Okay.
Thank you for your question.
Our next question is with Smedes rose with Citi.
Please proceed.
Hi, Thanks.
Just wondering if you could maybe talk a little bit about what youre seeing.
For property taxes in 2022, and how you think those will increase.
And if there's any particular these days so much.
Worse than others.
It's the typical cast of characters.
And markets that we always talk about and it really feels like the same answer that we have provided now for gosh five straight.
Straight years.
Which is you continue to see continue to see pressure.
Across many many markets primarily driven by the fact that you have you've had significant growth in NOI, you've had cap rates that have either held or compressed and you. Just have you just have a lot of evidence for <unk>.
For tax assessors to look at increasing the assessed values and so we're seeing.
We're certainly not seeing any relief anywhere.
Do you have.
We've been talking now for several years that that an expectation for the sector.
Increases in that 4% to 7% range has been where we are heads have been here for the past several years and our expectation for our portfolio in 2022 is in that range.
Towards the higher end of that range. So.
We continue to look to challenge those assessments, we have some successful results.
Here and there, but the typical cast of characters Cook County is certainly a standout.
On the high end, but it's fairly broad based where youre seeing pressure.
Great. Okay, and then I was just wondering if you would.
Look at the acquisition.
In 2022 would you focus on building out our rail or the storage west.
We've been pleased to build incremental sort of critical math four or more.
Would that not be the case.
I think that gives us a great opportunity to look to continue to add and look for infill locations in all of those markets. I think once we know that we have established a deeper presence in each of those markets. I think are Intel's better I think our underwriting is better I think we are a more natural buyer for many of those opportunities and then obviously.
We see the efficiencies of adding a store in those in those markets.
Increases so.
We've always looked in those markets. We will continue to look in those markets I think perhaps.
Perhaps we'll find a few more opportunities now given our deeper presence.
Then we had in the past.
Okay.
Thanks.
Thank you for your question.
Our next question is with Mike Mueller from Jpmorgan.
Please proceed.
Yeah, Hi, Chris you made the comment about customers wanting I guess more personalized services and I'm wondering how does that tie with the trend where you've seen more online.
Online overtime, the contactless rentals.
Is that dynamic.
Yeah, Great question, so they're not mutually exclusive so when we think about that personalization.
It is both that the customer who prefers a digital experience and that customer who is still prefers to come into the store.
So we have quite a number of initiatives that we are.
Exploring this year that.
That are designed to be able to meet.
The customers desires at both ends of that spectrum. So it's.
It's thinking about it is thinking about the funnel on the web site and how do you help the customer in a more personalized way.
Be able to select the appropriate size for them in the in the store and Theyre sub market that meets their needs. The best how do you think about offering them.
Alternatives that they may or may not intuitively understand in terms of the location of the cube within the store how do we make it a.
A more seamless experience in a more personal experience in terms of how they are.
How they are introduced to the store if they come through the digital platform how do they access the store, it's basically saying how can we may get.
Generally.
A similar experience to the old the old pre pandemic of our teammate walking out into the parking lot with a bottle of water in a handshake.
Can we do that in a digital experience as well and we have an array of some exciting things that we think.
Will differentiate our service delivery in the future and I think both create some opportunities for some incremental revenue growth as well as taking some costs out of our platform. So it is it's a great question, but it really comes down to how do you.
Make the digital experience a very similar personal one to what we.
While we've been able to do over our history.
Got it that makes sense.
And second can you give us.
Sense as to what the move in rates versus the move out rates were in the quarter.
Yes give us one one second here I think the pattern from a big picture perspective, as we shifted last year from.
From that anomaly, where we were seeing customers.
Move into the portfolio.
At a.
At a higher rate than those who are moving out.
We began.
In the latter part of the third quarter fourth quarter of last year to see that typical churn where the.
Move in customers down a bit from the from the move out customer, but less than what we had seen.
More normally so you're in that.
5% to 7% type.
Hi.
<unk>.
Delta between the move in and move out on the downside, which is about 60 basis points better than what we had seen.
Got it that was it thank you.
Thanks.
Thank you for your question.
Our next question is with Kevin Stein with Stifel.
Kevin Please proceed.
Good morning.
I know that's been a challenge in the New York City area. So just wanted to ask you.
C&I and changes there.
Any impact for the store performance there.
<unk>.
Yes, thanks for the question so.
Hi.
Continues to be.
<unk> continues to be a challenge in terms of the sourcing.
Attracting and recruiting new teammates in the stores our.
Our our existing team made population.
<unk> continues to give us great.
Service continues to serve their customers quite well.
So it is.
I'm not sure if the if the overall marketplace.
Is any better or worse than it was a few months back I think we have just more likely gotten used to this being the new normal and our our internal teams, our recruiters et cetera have.
Found different ways.
Tracked.
New teammates and have certainly adjusted to the pace at which one has to move the candidate through the process and either make them an offer or move on because they have so many other alternatives. So I think from a cost perspective again, we were.
We were a.
Total reward pay order to our store teammates at the higher end of our peers. So we have not seen the need to perhaps move right or do some things.
Some of our other peers that had to do on a larger scale.
Got it thanks.
Thank you for your question.
There are currently no further questions registered at this time, so as a reminder to ask a question press star one.
There are no further questions waiting at this time I would now like to pass the conference back over to the management team for closing remarks.
Okay. Thank you everybody great call really appreciate the thoughtful questions as I said, we are incredibly excited.
As a company incredibly excited as a management team or 2022 and for really everything that is happening in our industry I couldnt be more proud of how the team has performed.
Be more excited about the opportunities that lie in front of us and we look forward to updating you on our progress as we move throughout the course of 2022.
To be safe and we look forward to speaking to all of you in a couple of months take care.
Okay.
That concludes the Q smart fourth quarter earnings call.
Thank you for your participation you may now disconnect your lines.
Okay.