Q3 2022 CubeSmart Earnings Call

Today's call all lines will remain muted during the presentation portion of the call with an opportunity for questions and answers at the end.

If you would like to ask a question. Please press star one on your telephone keypad. It is now my pleasure to pass the conference over to our host Josh Shapiro Vice President of Finance Mr. Schultz Sir. Please proceed.

Thank you for them and good morning, everyone. Welcome to <unk> third quarter 2022 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, which was issued yesterday evening supplemental operating and financial data is available under the Investor Relations section of the company's website at Www Dot <unk> 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.

The risks and factors that could cause our actual results to differ materially from forward looking statements are provided in documents the company furnishes to or files with the Securities and Exchange Commission specifically the form 8-K, we filed this morning.

Together with our earnings release filed with the form 8-K, and the risk factors section of the company's annual report on Form 10-K.

In addition, the company's remarks include reference to non-GAAP measures a reconciliation between GAAP and non-GAAP measures can be found in our third quarter financial supplement posted on the company's website at www Dot <unk> Dot Com I will now turn the call over to Chris.

Thanks, Josh welcome everyone. Thanks for participating in our third quarter call I'd like to start off by thanking and recognizing all of our cube smart teammates who lead by example and demonstrated.

Genuine care and serving our customers during the hurricane.

Really all of our teammates are safe and we are working diligently to repair the physical damage that we experienced.

I know all stakeholders of <unk>.

<unk> smart are our cube smart proud of are truly world class customer service teams and we are deeply appreciative of all of their hard work.

Turning to the quarter and business.

I would say it was a very positive quarter across all segments of our company.

Our markets are experiencing.

The expected gradual return to more normal seasonality.

I will say, albeit at a.

Slower pace than we would have expected as we entered the year. So that's a positive.

While conditions have normalized.

The baseline is so much higher and operating metrics and cash flows.

A substantial leg up over pre pandemic levels.

If you look at a few facts comparing same store in the third quarter of 22 to the pre pandemic third quarter of 2019.

Our occupancy is up 130 basis points.

Our asking rates are up 36%.

The percentage of our customers, who have been with us for more than two years is up about 640 basis points.

And the percentage of our stores impacted by new supply has declined by about 15%.

Our customer behavior continues to be quite positive our.

Our receivables and write offs in the third quarter have continued to normalize but still remain at or below our Q3 2019 levels.

Turning to look at specific major markets.

The MSA is in Florida continue to be very strong.

Given the timing of the third quarter results did not see any impact from customers as a result of the hurricane. However, overall demand trends during the quarter were very solid.

The New York MSA benefited from a relatively easier comp comparing to the third quarter of 'twenty one.

And consumer demand trends remain very solid.

The Washington D. C. MSA continues the battle with new supply and it is certainly weighing on results.

Overall as embedded in our guidance for the balance of the year as we continue to normalize and the quarter over quarter comps become more challenging.

We expect same store revenues to decelerate across all of our markets in Q4 and throughout 2023.

The highlight of our investment activity during the quarter was the significant shareholder value that we delivered through the sale of the assets in one of our joint ventures.

Acquisition activity was muted during the quarter and we expect it to remain so for the balance of the year as buyers and sellers are in a period of price discovery.

Our balance sheet is in excellent shape plenty of capacity and low leverage and we believe this sets the table nicely for us to take advantage, if and when opportunities are presented to create accretive external growth.

Certainly economic conditions are unsettled.

<unk> smart as lean and agile with a great balance sheet and an experienced management team who has been cycled tested.

Historically self storage has been a relative outperformer during the weak economy and we are confident we are well positioned entering 2023.

With that I'll turn the call over to our Chief Financial Officer, Tim Martin to go into some more detail about the quarter, Tim Thanks, Chris and thank you to everyone on the call for your continued interest and support.

As Chris touched on results in the third quarter continued to reflect a very constructive backdrop for strong operating fundamentals all of that in the context of a slow return to more normal seasonality.

Our results for the quarter were a bit better than our expectations, leading to an improved outlook for our performance through the end of the year.

Headline results included same store revenue growth of 12, 2% expenses grew four 3% and NOI growth was 15, 4% for the quarter.

This quarter marks the sixth consecutive quarter of double digit same store revenue and same store NOI growth.

Same store occupancy levels remain very healthy while continuing to return to more normal seasonal patterns throughout the year, averaging 94, 4% in the third quarter and ending the quarter at 93, 8%.

Same store expense growth at four 3% for the quarter was in line with our expectations and.

<unk> continues to be driven by pressure on real estate taxes utilities and property insurance.

Offset by efficiencies in personnel costs and lower advertising spend.

We reported <unk> per share as adjusted of <unk> 66 for the quarter, representing 18% growth over last year.

On the external growth front, no surprise and not unique to our sector. We've certainly seen a slowdown of transaction activity over the last couple of months given interest rate volatility and macroeconomic uncertainty that said our investments team remains very busy underwriting a good number of opportunities.

We acquired one store in Atlanta during the quarter for $27 million, but from a transactional perspective as Chris mentioned the most notable activity for us during the quarter was related to the sale of the assets in one of our joint ventures.

Back in March of 2020, we were looking at a 14 store portfolio that was on the market and determined that it wasn't a great fit for our on balance sheet investment strategy, given the markets and in asset quality, but we did see a good bit of upside that we could capture by bringing those stores onto our platform.

So as we've done many times, we look for accretive solution and ended up acquiring the stores along with a partner with <unk> being the minority 10% of the equity.

And the structure that gave us a promoted interest opportunity.

Roll the calendar forward then to this past summer our partner agreed that it was a good time to bring the portfolio back to market as we had reposition the assets pushed rents and improved occupancy levels.

Ultimately we closed on the sale of all 14 assets to an unaffiliated third party buyer in August .

From a return standpoint for our position in the transaction we've invested back in March of 'twenty, We invested $5 $6 million. Ultimately, we received $51 5 million of distributions through and including the sale in August of 'twenty, two for net cash to us of $45 $9 million over a two and a half year period.

Yeah.

Of course, those gains don't show up in our same store results. They don't show up in our reported <unk> numbers, but obviously, it's a transaction that created a meaningful tangible value for our shareholders and provides additional capacity for us to be opportunistic as we look forward.

On the third party management front.

We added 39 stores in the third quarter and ended the quarter with 663 third party stores under management.

Our balance sheet position remains strong as we continue to focus on funding our growth in a conservative manner, that's consistent with our triple BBB <unk> credit ratings.

Subsequent to quarter end actually just two days ago. This Wednesday, we closed on a new expanded revolving credit facility.

The size of the revolver grew to $850 million. The maturity was extended to February of 2027, and the pricing improved from from our standpoint 17, five basis points based on our current credit ratings and our current leverage levels.

The new revolver further improves what was already a really solid balance sheet position as this pushes the revolver maturity from 24% to 27%, leaving only about $30 million of maturities in each of 2023 and 2024.

And then we don't have another maturity until the very end of 2025 on our 25 senior notes are scheduled to mature.

The revolver recast went smoothly and we genuinely appreciate the support we received and for the relationships that we have with the banks and our bank group.

Details of our 2022 revised earnings guidance and related assumptions were included in our release last evening.

Based on continued strong operating fundamentals, we've increased our guidance range for full year <unk> per share by <unk> <unk> at the midpoint.

We also provided an improved outlook for our same store revenue growth for the year with a <unk> of 12, 5% growth over 2021 levels.

And an improved same store NOI range with a new midpoint of 16% growth.

Yeah.

We believe we're set up really well to wrap up a strong 2022 and are really well positioned heading into the uncertainties that 2023 might bring.

With our high quality platform, our high quality portfolio, and our high quality conservative balance sheet.

So thanks again for joining us on the call. This morning at this time for them when we open up the call for some questions.

Certainly if you will.

Like to ask a question. Please press star followed by one on your telephone keypad.

For any reason you would like to remove that question. Please press star followed by Tim again to ask a question Press Star one as a reminder, if you are using a speaker phone. Please remember to take up your handset before asking your question first.

First question comes from the line of Michael Schmidt Goldsmith.

Goldsmith with UBS, Michael Your line is now open.

Good morning, Thanks, a lot for taking my question.

Same store revenue growth in the quarter was strong, but decelerate at about 180 basis points from second quarter, that's a tad more than what you saw in the deceleration from the first quarter to the second quarter the guidance for the fourth quarter.

Implies anywhere between eight 9%. So I think that implies a larger deceleration of the same store revenue growth. So I'm, just trying to better understand kind of the cadence and magnitude of the deceleration in some of the operating metrics going for.

Forward.

Okay.

Yes, Michael Good question I'll take the beginning part of that obviously for 2023, we're not at a point here too.

Delve into details of expectations, but your math is correct and so youre going to see.

Youre going to see that DSL embedded in our guidance across all of our markets from the third quarter to the fourth quarter. Its driven by the fact that while occupancies are down and our expectation I think as of yesterday, we were 85 somewhere between 85% and 90 basis points below.

<unk>.

Below last year at this time, so occupancy has stayed pretty consistent in that range. We've talked before we don't guide to occupancy, but our expectation by the end of the year is.

Somewhere between 100 150 basis points below last year, so youre seeing that occupancy.

Come down which.

Which causes some of the deceleration and then from a rental rate perspective, net effective rates for new customers.

Year over year during the third quarter across all markets, we were down high single digits.

I think the good news is thats about where we were as of this week. So it really hasnt deteriorated further.

But you would expect that as the comps become more difficult given that last year was up was the abnormality in terms of limited seasonality that deceleration will continue I think the pace will.

We'll not be consistent I think youll see some quarters again youre looking at growth rates. So some quarters will be a little bit higher than others, but we're optimistic because we are going to start 2003 as you implied.

In that high single digit same store revenue growth. So that momentum will continue into the first quarter and I guess to some degree into the second quarter of next year and we're still working through the details on our expectations and what's going to happen with the economy et cetera, but macro if you think about a 20 year average of same store revenue.

Growth I think there is a case that can be made that.

<unk> thousand 23 results when they are all in will will.

Very possibly be.

Higher than the than the 20 year average, but certainly decelerating from where we've been.

This year and last year I made a point just to pile on Chris I made a point in my prepared remarks to talk about our our sixth consecutive quarter of double digit same store revenue growth.

Because I might not get a chance to say a seven.

So those levels of growth double digit for six consecutive quarters are clearly not sustainable I think the question is a great one and it's the question probably on everybody else's.

Mind Thats on the call is trying to is trying to delve into 'twenty three guidance and try to figure exactly the pace of that and.

I would say that that looking back and Chris touched on in his opening remarks, I think looking back the pace of deceleration throughout this year has been a pleasant surprise to us and I think for the balance of the industry.

That's really helpful color guys and just.

Follow up right.

We've seen street rates sort of moderate and.

We are seeing street rates moderate.

The revenue growth.

Finally been driven a lot by <unk>, So I guess like the <unk>.

Question here is can we continue to push <unk> at a similar intensity that you have been.

In a more moderating.

No.

And maybe pressured street rate environment. Thanks.

Yes, I mean again another great question then comes into the inputs as we try to get our minds around 2023 here and do our bottoms up budgeting all.

All of these things we're thinking about the consumer as I mentioned, the health of the consumer today remains very good.

And all of our key metrics that we use to evaluate that remain.

A very good spot.

Think as we as we look out.

Part of the question is going to be household savings.

Obviously, you can listen to the Ceos of the major banks, who who believe that that savings is.

Going to be there at least through the third quarter of next year. If that's the case and we continue to see strong employment.

And we look backwards at how storage has performed during brief recessions I think the industry has is pretty well positioned to put up results that on a relative basis will be.

We'll be very good.

And that's kind of where we are at this point, but plenty of.

Plenty of data yet to come here for November and December as we continue to refine our expectations for next year.

Operator, I think we're ready for the next question.

Okay perfect.

Next question comes from the line of Juan Sanabria with BMO your.

Your line is now open.

Hi.

Harping on the back of Michael's last question just on the <unk>.

How do you think about street rate growth and ECR is the interplay between those two.

Seems like over the last couple of years ECR is had been.

Larger than average keeping you had some room to catch up existing customers.

Big increase in street rates, but that seems to be waning. So just curious kind of trying to.

A second go here at the Cri question.

<unk> naturally come down just because you've closed that gap and street rate growth.

Slowed and therefore that will be part of the normalization looking out 12, 18 months or any color you could provide there would be helpful.

Great question why historically.

We would think about decoupling.

The street rate environment from the existing customer rate increase environment. It is an input.

It is not an over weighted input and that certainly the only input you think about that.

That specific customer in that specific cube, and how long they've been with us what the occupancy is at the store the market in that cube size.

The pattern of their behavior as it relates to payment.

You think about the size of the cube they are in and so the absolute dollar amount that they are paying on a monthly basis and there are various other factors that go into the <unk>.

Aldo rhythms to determine the most appropriate.

Timing.

Timing and amount of increase for that specific customer certainly what are joining <unk>.

Customers may be paying or when a new customer coming in may be asked is is there an element.

But with with pricing strategies related to potential length of stay related too.

And input.

The varying types of discounts or incentives we may provide.

It is not an over weighted input and not certainly the only input you think about that.

It's challenging for our customer to do a pure kind of apples to apples comparison, and obviously as we've talked about AD nauseum customers are not particularly inclined to move from one storage facility to another so I think the thesis that.

That specific customer in that specific cube, and how long they've been with us what the occupancy is at the store the market in that cube size.

The pattern of their behavior as it relates to payment.

You think about the size of the cube, they're in and so the absolute dollar amount that they are paying on a monthly basis and there are various other factors that go into the <unk>.

As economic conditions potentially tightened.

As household savings are depleted.

We have the potential for perhaps some increased unemployment.

Aldo rhythms to determine the most appropriate.

The current <unk>.

<unk> levels may naturally start to come down, but I think it is too soon to say that and I don't think its magnitude as we sit here today, we would not expect that magnitude debate.

Timing and amount of increase for that specific customer certainly what a joining husk.

Customers may be paying or when a new customer coming in maybe asked is is there an element.

But with with pricing strategies related to potential length of stay related too.

To be overly overly.

Overly material in any given sequential month.

The varying types of discounts or incentives we may provide.

Thanks, and then just as a follow up.

Could you just talk about geographic.

Challenging for a customer to do a pure kind of apples to apples comparison, and obviously as we've talked about AD nauseum customers are not particularly inclined to move from one storage facility to another.

Performance at <unk>.

Assuming youre getting some benefit from hurricane Ian.

In the southeast in particular, the middle of the state of Florida.

So that would be part one second question and then secondly are you seeing any impact in the slowdown in the housing market and some of the hot hot market cooling off at all.

So I think the thesis that.

As economic conditions potentially tightened.

As household savings are depleted as.

I think Boise is like a portion of a poster child there.

As we have the potential firs, perhaps some increased.

So when you think about when you think about the hurricane and the timing.

Unemployment.

The current E Cri levels may naturally start to come down, but I think it is too soon to say that and I don't think its magnitude as we sit here today, we would not expect that magnitude to be.

Hi.

And the overall Occupancies pre hurricane in our Florida MSA is we didn't have a lot of vacancy to begin with.

And the timing is such that we are certainly beginning to see customers, who are coming in who had wind damage possessions or still.

To be overly overly.

Overly material in any given sequential month.

And in good shape, but the physical structure of their home or a residence is not.

Thanks, and then just as a follow up.

Could you just talk about geographic.

So that will that will definitely be a.

Performance.

Seasonal benefit.

I'd assume you're getting some benefit from hurricane Ian.

The latter part of October and into November here, and that's in our expectations.

In the South East in particular, the middle of the state of Florida.

So that would be part one the second question and then secondly are you seeing any impact in the slowdown in the housing market and some of the hot hot markets cooling off at all.

From a.

From our rest of the country and the housing market.

Markets that saw.

Significantly above average growth in same store revenues in occupancy and in and in net effective rates like a.

I think boyd's means like are poised to have a poster child there.

So when you think about when you think about the hurricane and the timing.

Like a phoenix or a Tucson.

Hi.

Those that are coming down then in the deceleration part of the curve much faster.

And the overall occupancies pre hurricane in our Florida.

MSA is we didn't have a lot of the agency to begin with and the timing is such that we are certainly beginning to see customers, who are coming in who had wind damage the possessions or still dry and in good shape, but the physical structure of their home or.

Then you are slow and steady markets like Chicago.

Or or in New York.

So that's kind of the trends that we're seeing at the moment.

Yeah.

Thank you Chris.

Thank you for your question. Our next question comes from the line of Smedes Rose with Citi.

Our residents is not.

So that will that will definitely be.

Your line is now open.

A seasonal benefit to.

Hi, Thanks, I wanted to ask you, maybe just on the advertising and marketing side of the business.

The latter part of October and into November here, and that's in our expectations.

As you know trends kind of decelerate into next year and get back to more normalcy would you expect that.

From a.

From our rest of the country and the housing market.

Markets that saw.

Can you just to start ramping up again back to more kind of like kind of pre COVID-19 levels.

Significantly above average growth in same store revenues in occupancy and in and in net effective rates like a.

Yes that one is.

Is a challenging question, because we're making decisions on a week to week basis here.

Like a phoenix or a Tucson.

Those that are coming down then in the in the deceleration part of the curve much faster.

Just on a return on each invested dollar in particular on each incremental dollar when it relates to paid search I think I think we look at it.

Then you are slow and steady markets like a Chicago.

Yeah.

Or or in New York.

The levers are sort of intertwined you have.

So that's kind of the trends that we're seeing at the moment.

How we think about net effective rate to the new customers, So that street rate and that that discount our offer if one is made.

Yeah.

Thank you Chris.

Thank you for your question. Our next question comes from the line of Smedes Rose with Citi.

What channel the customer is coming through and then we look at that as a lifetime value opportunity and then what's going on in the.

Your line is now open.

Particularly in the paid search market I think as Youre seeing softening.

Hi, Thanks, I wanted to ask you, maybe just on the advertising and marketing side of the business.

As I'm sure you've seen in the headline results with.

As you know trends kind of decelerate into next year and get back to more normalcy, but you expect that.

With Google and Facebook and others from an advertising perspective more globally.

Can you just to start ramping up again back to more kind of like kind of pre COVID-19 levels.

Created some opportunities to be a little more efficient and to see some.

Lower costs in the bid market, that's offset by what.

Yes that one is I is a challenging question, because we're making decisions on a week to week basis here.

Our our peers, both larger and smaller choose to do market by market with their spend so as we look out into the fourth quarter and next year again, I think that will be up a little bit more of a volatile number than some of our other expenses which are more.

Just on a return on each invested dollar in particular on each incremental dollar when it relates to paid search I think I think we look at it.

You know that the the levers are sort of intertwined you have.

Easily predictable and consistent quarter to quarter, we would certainly expect to see some growth next year.

How we think about net effective rate to the new customers. So that street rate and that you know that discount our offer if one is made.

Marketing.

Spend.

But not necessarily outsized.

What channel the customers coming through and then we look at that as a lifetime value opportunity and then what's going on in the <unk>.

Thats our thesis at the moment again, the whole 23 planning processes is in process.

Particularly in the paid search market I think is you're seeing softening.

Okay, and then I wanted to ask you at least on the data that we get it looks like.

As I'm sure you've seen in the headline results with.

The supply.

With Google and Facebook and others from an advertising perspective more globally.

The pipeline it looks like it's actually sort of picking up a little bit, which I thought was kind of surprising I was just wondering if youre seeing that in your markets. Maybe you could just kind of talk about <unk>.

It has created some opportunities.

To be a little more efficient and to see some.

<unk> supply additions that you are looking at coming on next year.

Lower costs in the bid market, that's offset by what.

Yes, we are.

Our our peers, both larger and smaller choose to do market by market with their spend so as we look out into the fourth quarter and next year again, I think that it'll be up.

We're not seeing that in our top 12, Msas I think were seeing delays so without a doubt you're seeing deliveries that we would have expected at the beginning of the year. The timing continues to get pushed out I think that's a positive.

A little bit more of a volatile number than some of our other expenses which are more.

Easily predictable and consistent quarter to quarter, we would certainly expect to see some growth next year in marketing.

Because I think it is allowing for a.

Better piece.

Which is creating an opportunity for the stores that do come on to get leased up a bit before the next one comes on instead of deliveries happening one right. After another so I think that's been a positive this year I think that trend will continue next year.

Spend but.

But not necessarily outsized.

That's our thesis at the moment again, the whole 23 planning processes is in process.

Okay, and then I wanted to ask you at least on the data that we get it looks like.

But as we look out it's.

The supply the.

It's slightly down right now in terms of our expectation going from 22 to 23 in our top markets in terms of deliveries.

The pipeline it looks like it's actually sort of picking up a little bit, which I thought was kind of surprising I was just wondering if youre seeing in your markets. Maybe you could just kind of talk about competitive.

We will have a better sense of what these delays and how many fourth quarters get pushed out into next year, Although I would say about the same we would expect that pushed from late 'twenty three 'twenty four so I think I think it's still a constructive supply them in the major markets I think the data that some of the.

Competitive supply additions that you are looking at coming out of her next year.

Yeah, we're we're not seeing that in our top 12 MSA is I think we're seeing delays so without a doubt you're seeing deliveries that we would've expected at the beginning of the year. The timing continues to get pushed out.

The high quality folks.

Producing that track supply nationally.

I think that may paint a different picture given that what we're seeing on the ground from our third party owners is that those.

That's a positive.

Because I think it is allowing for a.

Better piece.

Those markets that may not have seen.

Which is creating an opportunity for the stores that do come on to get.

New supply in the last cycle the more secondary markets are starting to get more and more attention.

At least up a bit before the next one comes on instead of deliveries happening one right. After another so I think that's been a positive this year I think that trend will continue next year.

Okay. Thank you I appreciate it.

Thanks. Thank you. Thank you for your question. Our next question comes from the line of Samir Khanal with Evercore ISI Sameer. Your line is now open.

But as we look out it's.

It's slightly down right now in terms of our expectation going from 22 to 23 in our top markets in terms of deliveries.

Thanks, so much.

We'll have a better sense of what these delays and how many fourth quarters get pushed out into next year, Although I would say about the same we would expect get pushed from late 'twenty three 'twenty four so I think I think it's it's still a constructive supply them in the major markets I think the data that some of the.

Chris Good morning.

On the expense side.

I mean, you've certainly done a good job controlling expenses sooner I guess how sustainable.

And these sort of low expense growth numbers into next year item and I'm looking at sort of efficiencies that you've done on the personnel side I.

I mean, how much more is there that you can do on that and just trying to get a better hold it.

The high quality folks.

That's sort of expense trends over the next sort of let's call. It <unk>.

Producing that track supply nationally.

Six to 12 months.

I think that may paint a different picture given that what we're seeing on the ground from our third party owners is that those.

Hey, Sameer it's Tim.

Question, I think I think trends in expenses.

Those markets that may not have seen.

Our expectation from a high level is that most of those trends are likely to continue.

New supply in the last cycle the more secondary markets are starting to get more and more attention.

And the next year short of providing guidance here I think the.

Our expectation is that Youll continue not only for us but for others continue to see pressure on the on the property tax line.

Okay. Thank you I appreciate it.

Thanks. Thank you. Thank you for your question. Our next question comes from the line of Samir Khanal with Evercore ISI Sameer. Your line is now open.

Chris Chris just explained marketing as marketing is going to be opportunistic as we look at that from a personnel standpoint.

We are still balancing.

Thanks, so much.

Chris Good morning.

Were still balancing the fact that there is pressure on wage.

On the expense side.

I mean, you've certainly done a good job controlling expenses sooner I guess, how sustainable are.

It continues to be a challenge too.

To staff in certain markets, although not nearly the challenge that it was a year 18 months ago.

And the sort of low expense growth numbers into next year, right and I'm looking at sort of inefficiencies that you've done on the personnel side.

But some of those pressures.

I mean, how much more is there that you can do on that and just trying to get a better hold.

And on health care costs.

But a lot of those pressures, we continue to find ways to be efficient with technology to be efficient with how we staff the stores.

Sort of expense trends over the next let's call it.

Six to 12 months.

Hey, Sameer it's Tim.

To offset that somewhat and I think we'll be able to continue to do that but overall.

Good question, I think I think trends in expenses.

Our expectation from from a high level is that most of those trends are likely to continue.

The lower hanging fruit on that tree.

We're going to get pretty well picked.

And our next year short of providing guidance here I think.

Expect to see continued pressure on utility costs as we as we think about our planning for next year. So I would say from a high level standpoint, more and more of the same would be what we would expect over the next six to 12 months.

Our expectation is that Youll continue not only for us but for others continue to see pressure on the on the property tax line.

Chris Chris just explained marketing as marketing is going to be opportunistic as we look at that from a personnel standpoint.

Okay, that's great color Tim. Thanks, So much and then I guess just to shift over to New York.

We are still balancing.

When you look at sort of revenue growth and NOI growth is certainly trending better than we thought I think sort of going into the beginning of this year.

We're still balancing the fact that there is pressure on wage.

It continues to be a challenge too.

I guess, Chris can you elaborate a bit more on sort of what youre seeing from a demand side and even maybe extend to talk a little bit about supply trends youre seeing that market.

To staff in certain markets, although not nearly the challenge that it was a year 18 months ago.

But some of those pressures.

And how do you think that landscape sort of plays out over the next 12 months. Thanks, so much.

<unk> health health care costs.

But a lot of those pressures, we continue to find ways to be efficient with technology to be efficient with how we staff the stores.

Yeah. So on the on the demand side as you can see with the physical occupancy print.

To offset that somewhat and I think we'll be able to continue to do that but overall.

I think we're down 10 to 20 basis points in the MSA.

It is it has been at least through <unk>.

The lower hanging fruit on that tree.

Point during the third quarter, our only major market, where occupancy was running a bit higher than last year.

We're going to get pretty well picked.

Expect to see continued pressure on utility costs as we as we think about our planning for next year. So I would say from a high level standpoint more more of the same wood would be what we would expect over the next six to 12 months.

The stores that we have opened in new Jersey and.

And long island, Westchester and the boroughs, both both cube and third party managed.

Okay, that's great color Tim. Thanks, So much and then I guess just to shift over to New York.

Have leased up really nicely.

Ahead of plan.

When you look at sort of revenue growth and NOI growth is certainly trending better than we all thought I think sort of going into the beginning of this year.

From an occupancy perspective so.

The consumer demand in the MSA as a whole and in.

I guess, Chris can you elaborate a bit more on sort of what youre seeing from a demand side and even maybe extend to talk a little bit about supply trends youre seeing that market.

In the more urban areas, specifically continues to be good we didn't see in the.

MSA the same.

And how do you think that landscape sort of plays out over the next 12 months. Thanks, so much.

Level of rent growth in 2020, one as you would have seen in say.

Yeah. So on the on the demand side as you can see with the physical occupancy print.

Tucson or Phoenix.

I think we're down 10 to 20 basis points in the MSA.

So youre just not seeing the same day.

It is it has been at least through a point during the third quarter, our only major market, where occupancy was running a bit higher than last year.

Deceleration in that metric.

At the same rate.

And some of the <unk>.

South and southwest markets.

From a supply perspective.

The stores that we have opened in new Jersey and.

We continue to be cautious and we will caution everyone, particularly on Brooklyn and Queens.

And long island, Westchester and the boroughs, both both cube and third party managed.

That there is an impact and there will be an impact, but I will say I am getting.

We have leased up really nicely.

Head of plan.

More and more confidence that we will be able to.

From an occupancy perspective so.

The consumer demand.

Navigate through this.

The MSA as a whole and then in the in the more urban areas specifically continues to be good we didn't see in.

Just fine I think when you look at the specifics.

Store by store market by market, we have.

The MSA the same level of rent.

One new competitor.

Who is going to open in a crowded long island city market.

Both in 2020, one as you would have seen in say a.

Directly next to.

Directly across the street from Us.

Tucson or Phoenix.

One of our stores impact two of our other stores so that that one store.

So you're just not seeing the same.

May be problematic, it's been under way for years and years.

At the same rate.

You are in some of the south and southwest markets.

It looks like it's finally going to get built and open so that will put some pressure on that particular little pocket.

From a supply perspective.

We continue to be cautious and we will caution everyone, particularly on Brooklyn and Queens.

We have.

Store that.

As opposed to open late 'twenty, three and Galanis Brooklyn.

That there is an impact and there will be an impact, but I will say I am getting.

That will have an impact on our owned and managed stores in that market, where it's exactly situated.

More and more confident that we will be able to.

It's likely to draw customers from a segment of that market that.

NAV again through this.

Just fine I think when you look at the specifics.

Frankly for New York have to travel a bit of a way to get to us. So I think that impact will definitely be there, but but the geography may be a bit helpful to us.

Store by store market by market, we have.

One new competitor.

Who's going to open in a crowded long island city market.

And then there is another store in Brooklyn that will impact.

Directly next to.

Yes.

That will impact us at one of our stores.

So directly across the street from Us.

One of our stores impact two of our other stores so that that one store.

That's pretty adjacent so that will that will have an impact, but youre talking about.

May be problematic, it's been under way for years and years.

607 stores in the entirety of our borough exposure that that should have a comp that that will present, a little bit of a challenge for us late in 'twenty, three and thats against our portfolio in those three boroughs of 50 ish.

It looks like it's finally going to get built and open so that will put some pressure on that particular little pocket.

We have a.

Store that.

As supposed to open late 'twenty, three and Galanis Brooklyn.

Stores, when you think about or more when you think about our owned and managed so so it's going to be there.

That will have an impact on our owned and managed stores in that market, where it's exactly situated.

But I think we're going to be okay again, as we as we navigate through this.

It's likely to draw customers from a segment of that market that.

Frankly for New York have to travel a bit of a way to get to us. So I think that impact will definitely be there, but the geography may be a bit helpful to us.

Okay.

Thanks, so much.

Thank you for your question. Our next question comes from the line of Todd Thomas with Keybanc Capital markets Hi. Your line is now open.

And then there is another store in Brooklyn that will impact.

Alright. Thanks.

<unk>.

That will impact us at one of our stores.

I wanted to ask about investments a little bit <unk> been a little bit more conservative or disciplined I guess on the investment front can you just talk a little bit about the pipeline of deals that youre looking at today, what deal flow looks like in general and in terms of underwriting investments whether.

That's pretty adjacent so that will that will have an impact but you are talking about.

607 stores in the entirety of our borough exposure that that should have a comp that that will present, a little bit of a challenge for us late in 'twenty, three and thats against our portfolio in those three boroughs of 50 ish.

Or not.

Changing your IRR hurdles and how youre thinking about.

Underwriting deals today, whether whether theres changes in sort of your market rent growth forecasts or otherwise.

Stores, when you think about or more when you think about our owned and managed so so.

Hey, Todd its Tim Thanks for the question.

It's going to be there.

But I think we're going to be okay again, as we as we navigate through this.

As you would expect.

And as.

As I mentioned in the pre remarks here.

The activity has certainly slowed.

Okay.

Went for it went through I would say the middle part of the summer, where there was quite a bit of price discovery, but.

Thanks, so much.

Thank you for your question. Our next question comes from the line of Todd Thomas with Keybanc Capital Markets', Todd Your line is now open.

And the the buyer pool started to shrink a little bit, but you still have a handful of folks seemingly on every deal that were there.

Alright. Thanks.

We're still pursuing pretty aggressively and then as you got later into the summer and into the early fall started to hear some rumblings about some deals that were that were starting to fall apart.

I wanted to ask about investments a little bit you know <unk> been a little bit more conservative or disciplined I guess on the investment front can you just talk a little bit about the pipeline of deals that youre looking at today, what deal flow looks like in general and in terms of underwriting investments whether.

And folks walking away a re trading youre walking away from deposits and again not unique to our sector I think that makes a lot of sense when there's the volatility that we've seen.

Broadly in the capital markets I think I think than where you are is absolutely in a period of price discovery, well, where sellers have grown accustomed to.

Or not.

Changing your IRR hurdles and how youre thinking about.

Underwriting deals today, whether whether there is changes in sort of your market rent growth forecasts or otherwise.

To what the market looked like six months ago.

And buyers are trying to adjust to where they think the market is going to be in six months from now and so I think <unk> seen a little bit of a slowing down of.

Hey, Todd its Tim Thanks for the question.

As you would expect.

And as I mentioned in the pre remarks here.

Of opportunities that have come across our desk to underwrite.

The activity has certainly slowed it went for it went through I would say the middle part of the summer where there was quite a bit of price discovery, but.

I think what we have seen is a continuation throughout 2022 that the opportunities that we have looked at or just not of the same quality that we saw in 2021 and that's been consistent throughout the year. There are a handful of deals that are super attractive to us based on market and physical quality, but overall the opportunity set has been low.

And the the buyer pool started to shrink a little bit, but you still had a handful of folks seemingly on every deal that were that were still pursuing pretty aggressively and then as you got later into the summer and into the early fall started to hear some rumblings about some deals that were that were starting to fall apart.

Sure quality this year, which has been a big driver and.

And our appetite and the volume that you've seen from us.

Folks walking away a re trading you're walking away from deposits and again not unique to our sector I think that makes a lot of sense when there's the volatility that we've seen.

I think I touched on most of your question, but was there was there anything else that you wanted to talk about it.

Have you changed your return requirements. I mean are you seeing can you talk a little bit about price trends cap rates.

Broadly in the capital markets I think I think than where you are is absolutely in a period of price discovery, where sellers have grown accustomed to.

I guess.

Going in cap rates are not always relevant obviously, but maybe IRR hurdles and what youre seeing.

To what the market looked like six months ago and buyers are trying to adjust to where they think the market is going to be in six months from now and so I think <unk> seen a little bit of a slowing down.

In the market and how you've adjusted your underwriting.

Sure the underwriting the underwriting itself.

The opportunities that have come across our desk to underwrite.

Is actually over over the past year or two has actually gotten to be a lot more fun.

What we have seen is a continuation throughout 2022 that the opportunities that we have looked at.

It used to be fairly simple to underwrite a storage facility and then several years back when you start to get into that.

We're just not of the same quality that we saw in 2021 and that's been consistent throughout the year. There are a handful of deals that are super attractive to us based on market and physical quality, but overall the opportunity set has been of lower quality. This year, which has been a big driver.

The heat of the development cycle that we're now in the tail end of that created some complexity in the variables that go into underwriting and opportunity.

Throw on top of that.

The.

Volatility that we've seen an asking rate growth.

Our appetite and the volume that you've seen from us.

Largely coming through the Covid demand trying to calibrate your underwriting to think about where rate growth will continue to go or how it will moderate.

I think I've touched on most of your question, but was there was there anything else that you wanted to talk about it.

Have you changed your return requirements. I mean are you seeing can you talk a little bit about price trends cap rates.

So the process of underwriting and opportunity Hasnt changed the.

The variability in the volatility of the inputs certainly has which makes it more interesting to go through certainly from a return standpoint, we are.

I guess.

Going in cap rates are not always relevant obviously, but maybe IRR hurdles and what youre seeing.

We've adjusted.

In the market and how you've adjusted your underwriting.

The returns that we're requiring across the across the spectrum of early stage lease up all the way through stable based on our cost of capital both equity and debt.

Sure the underwriting the underwriting itself.

Has actually over over the past year or two has actually gotten to be a lot more fun.

It used to be fairly simple to underwrite a storage facility and then several years back when you start to get into that.

We look for we look for opportunities that are perfect infill high quality complementary to our existing high quality portfolio and we have the luxury and the flexibility of having very low levels of leverage and a lot of availability of capital.

The heat of Av.

The development cycle that we're now in the tail end of that created some complexity in the variables that go into underwriting and opportunity.

Throw on top of that.

That we don't necessarily have to look at the stock price everyday for a one or two or three asset portfolio, but we're very disciplined we will be patient and we think that that there.

The.

Volatility that we've seen an asking rate growth.

Largely coming through the Covid demand trying to calibrate your underwriting to think about where rate growth will continue to go or how it will moderate.

There are likely to be some some great opportunities for us.

In the coming months and quarters.

Okay.

Okay can you share how asking rents trended during the quarter and through October on a.

So the process of underwriting and opportunity Hasnt changed.

The variability in the volatility of the inputs certainly has which makes it more interesting to go through certainly from a return standpoint, we are.

Year over year basis, and then can you talk about what kind of market rent growth.

Right.

We've adjusted.

<unk> is reasonable to expect in 'twenty three in any sense.

The returns that we're requiring across the across the spectrum of early stage lease up all the way through stable based on our cost of capital both equity and debt.

Hey, Todd it's Chris So as I mentioned earlier.

Any or for new customers in the quarter was down.

We look for we look for opportunities that are perfect infill high quality complementary to our existing high quality portfolio and we have the luxury and the flexibility of having very low levels of leverage and a lot of availability of capital.

Down.

High single digits, and Thats, where we are across markets.

As of this week, so Fortunately I think positively hasnt.

Hasnt declined further as we've gotten here into October .

That we don't necessarily have to look at the stock price everyday for one or two or three asset portfolio, but we're very disciplined we will be patient and we think that that they are likely to be some some great opportunities for us.

But as we've gone through the year and the comps from last year, which had no seasonality just get tougher and tougher that's gone from down.

3%.

5% and now we're kind of averaging in that.

In the coming months and quarters.

In that high single digits as we look out.

Okay can you share how asking rents trended during the quarter and through October .

And try to underwrite as Tim said for for the future, it's really market specific so I.

On a year over year basis, and then can you talk about what kind of market rent growth.

I think it's fair to say over the near term as we try to <unk>.

Try to get back into a more normalized trend of seasonality and customer behavior and you look at the comps to last year and into the first quarter of this year. It will be it'll be challenging comps as you think about trying to project out but thats really.

Mike.

Think is reasonable to expect in 'twenty three.

<unk>.

Hey, Todd it's Chris So as I mentioned earlier.

Are there any or for new customers in the quarter was <unk>.

Down.

Since we're doing everything at an asset level here it depends upon where were seeing the opportunity what stage of lease up that asset is in.

High single digits, and Thats, where we are.

Cross markets.

As of this week, so Fortunately I think positively hasnt.

And what.

What we see unique about that particular market or sub market.

Hasnt declined further as we've gotten here into October .

As we've gone through the year and the comps from last year, which had no seasonality just get tougher and tougher that's gone from down.

Okay alright, thank you.

Youre welcome.

Thank you for your question. Our next question comes from the line of with Epo Aitken with Bank of America Lazy. Your line is now open.

Two 3%.

Four 5% and now where we're kind of averaging in that.

On that high single digits as we look out.

Hi, good morning, Thanks for taking my question.

And try to underwrite as Tim said for for the future, it's really market specific so.

I wanted to ask about that.

New expansion on the revolving credit facility.

I think it's fair to say over the near term as we try to.

And I believe you said.

A discussion with the bank.

Try to get back into a more normalized trend of seasonality and customer behavior and you look at the comps to last year and into the first quarter of this year. It will be it will be challenging comps as you think about trying to project out but that's really.

Just wondering what Eric.

Aaron in terms of.

Going out in obtaining financing.

How tough.

Market conditions are.

On for.

<unk> you know I guess, how are your discussions with the banks going now.

Again since we're doing everything at an asset level here it depends upon where were seeing the opportunity what stage of lease up that asset is in.

What are you kind of see with and in your relationships with them.

Hey, listen thanks for the question, yes. It was.

And what.

What we see unique about that particular market or sub market.

In a normal course for us given the 2020 for maturity for the revolver.

Okay alright, thank you.

And I would say different more normal less volatile times, we probably would have waited to recast our facility for.

Youre welcome.

Thank you for your question. Our next question comes from the line of MS. <unk> Li Chen with Bank of America Lindsay Your line is now open.

Probably until the middle part of 2023, but looking out and always having a view on.

Hi, good morning, Thanks for taking my question.

Derisking.

Derisking that side of the business when we feel like it's appropriate to do so we had we started the process.

I wanted to ask about that.

In your expansion on the revolving credit facility.

I believe you said.

Several quarters ahead of when we normally would just in case the market continues to move.

And discussions went well with the bank.

I'm, just wondering what or not.

Move in a direction, where where lenders are a little bit stricter I'll have a little bit less flexibility or it is just frankly not not as much of a borrower's market as it has been and so we have very strong very long standing relationships with with a really high quality Bank group.

Aaron in terms of.

Going out and obtaining financing given.

How tough.

Market conditions are.

On the first.

First the you know.

How are your discussions with the banks going now.

What do you kind of see with <unk> and <unk>.

And your relationship with them.

And work hard to have great partnerships with those institutions and I think as a result of that we had a fairly smooth process at a time.

Hey, listen thanks for the question, yes. It was.

In a normal course for us given the 2020 for maturity for the revolver.

I do believe that obtaining financing is getting in is going to get more challenging here in the coming months coming quarters. So we're happy to have closed up here earlier. This week and again, just derisk and not have to really worry about our maturity schedule here until very late in 2025.

And I would say different more normal less volatile times, we probably would have waited to recast our facility for.

Probably until the middle part of 2023, but looking out and always having a view on.

Facing down some uncertain times, we feel like that's a pretty good position for us to be in.

Derisking.

Derisking that side of the business when we feel like it's appropriate to do so we had we started the process.

Yes.

That's great color. Thank you.

And then I just wanted to ask about.

Several quarters ahead of when we normally would just in case the market continues to move.

The.

The sale.

The <unk> JV.

Moving the direction, where where lenders are a little bit stricter I have a little bit less flexibility or it's just frankly not not as much of a borrower's market as it has been.

How are you thinking about.

Okay with regards to capital allocation.

And particularly with Houston.

And so we have very strong very long standing relationships with with a really high quality Bank group and.

<unk> venture partnership.

I guess.

What makes enough sense does it kind of depend on the opportunity.

Specifically I know with STR asset, where you said they were not in line with what's been on your balance sheet.

And work hard to have great partnerships with those institutions and I think as a result of that we had a fairly smooth process at a time, where I do believe that.

Wanted to kind of get better understanding that.

How would you gauge opportunities with partnerships.

Obtaining financing is getting in is going to get more challenging here in the coming months and coming quarters. So we're happy to have closed out here earlier. This week and again, just derisking and not have to really worry about our maturity schedule here until very late in 2025 and facing down some uncertain times.

Yes, I'd say it starts for us with with we have had.

We believe a very very.

Well articulated and consistent strategy as to what we want to have on our balance sheet. Our desire is to have.

The highest quality portfolio in the highest quality markets and so when we find opportunities to do that especially on stabilized assets our preference.

We feel like that's a pretty good position for us to be in.

Yeah.

That's great color. Thank you.

As to is to buy those on our own 100% owned simple capital structure easy for shareholders and investors to understand.

And then I just wanted to ask about.

The sale.

The Sun five JV, how are you thinking about your forecast with regards to capital allocation.

Once you get past that.

Then we have found many opportunities for many different reasons to look at it.

And particularly with the euro.

Co investment vehicles, ranging from more recently, having having ventures that are focused on stores that are in early stage lease up because we've had we've had a lot of opportunities to bring third party managed stores from our platform.

Joint venture partnerships.

And I guess.

And I think kind of depend on the opportunity.

Specifically I know that's D. All of the assets, where you said they were not in line with what's been on your balance sheet.

On to our balance sheet in some way, but frankly and early stage lease up in a venture structure. We can bring on five and adventure for everyone that we could bring on balance sheet and to manage the dilution ideally set that up in a way that when those stores stabilized our partners hold period, we will have in lines up pretty well with when they stabilize and then.

I just wanted to kind of get better understanding of.

How do you gauge opportunities with partnerships.

Yeah, I'd say it starts for us with with we have had.

We believe a very very.

Well articulated and consistent strategy as to what we want to have on our balance sheet. Our desire is to have the <unk>.

Ideally we would then have the opportunity to buy in their position.

Highest quality portfolio in the highest quality markets and so when we find opportunities to do that especially on stabilized assets. Our preference is to is to buy those on our own 100% owned simple capital structure easy for shareholders and investors to understand.

And achieve our original and overall objective in the case of the one that we just exited as you touched on it was unique in that it didn't really fit that category, but we found we found an opportunity.

So, bringing it onto our platform add a lot of value in it and it worked out fabulously, partially due to great timing.

Once you get past that.

Then we have found many opportunities for many different reasons to look at.

But we've had co investment structures for a variety of different reasons.

Co investment vehicles ranging from <unk>.

And we would expect to use them going forward for similar reasons.

More recently, having having ventures that are focused on stores that are in early stage Lisa.

Great. Thank you.

We've had we've had a lot of opportunities to bring third party managed stores from our platform.

Okay.

Thank you for your question. Our next question comes from the line of David <unk> with Green Street, David Your line is now open.

Onto our balance sheet in some way, but frankly and early stage lease up in a venture structure. We can bring on five and adventure for everyone that we could bring on balance sheet and manage the dilution ideally set that up in a way that when those stores stabilize our partners hold period will have in <unk>.

Good morning, I wanted to touch on the New York market again, as you mentioned something about occupancy being a bit stickier relative to other markets, but rent.

Rent growth on a relative basis lagging a little bit compared to some other markets.

Lines up pretty well with when they stabilize and then.

Wanted to touch on that phenomenon is that just a length of stay difference in New York compared to other markets and what does that difference look like.

Ideally we would then have the opportunity to buy in their position.

And achieve our original and overall objective in the case of the one that we just exited as you touched on it was unique in that it didn't really fit that category, but we found we found an opportunity.

Yes, I think I think broadly it's.

Just the consumer in many of our stores in and all of the boroughs.

So, bringing it onto our platform add a lot of value in it and it worked out so fabulously, partially due to great timing.

Who is in the neighborhood and uses the product on a.

But we've had co investment structures for a variety of different reasons.

And would expect to use them going forward for similar reasons.

I'll call it a more regular basis. So it does just tend to be attractive to folks living in very small.

Great. Thank you.

Okay.

Thank you for your question. Our next question comes from the line of David <unk> with Green Street.

And very small residences.

Who will use.

<unk> smart.

David Your line is now open.

And visit us frequently as opposed to just.

Good morning, I wanted to touch on the New York market again, as you mentioned something about occupancy being a bit stickier relative to other market rent.

An overwhelming customer base at a particular store that is just the typical mover. So I think as a as a result.

Rent growth when you kind of relative basis, lagging a little bit compared to some other markets.

You just get a stickier customer.

Wanted to touch on that phenomenon is that just a length of stay difference in New York compared to other markets and what does that difference look like.

<unk>.

And again I think just the phenomenon we saw in not just in New York, but across all of our all of our urban stores in.

Yeah, I think I think broadly it's it's.

In most markets is that you just didn't see.

Just the consumer in many of our stores in and all of the boroughs.

You Didnt see quite the rent growth in 'twenty one.

Who is in the neighborhood and uses the product on a.

As you would have seen again in <unk>.

The more suburban or as I pointed out some of the southwest markets that saw big shifts in population.

I'll call on a more regular basis. So it does just tend to be attractive to folks living in very small.

Yes.

Great with that occupancy being a bit can you would you expect moving forward the extent, we see a lot of the the.

And very small residences.

Who will use.

The hot market slowed down would you think that the positive rent growth trends in Europe might be a bit stickier than some of those other markets.

<unk> smart.

And visit us frequently as opposed to just.

Okay.

An overwhelming customer base at a particular store that is just the typical mover. So I think as a as a result, you just get a stickier customer.

Yes, yes, I think as you see again the decline in the deceleration in some markets.

On a relative basis wouldn't expect in the urban markets to see it at the same rate.

And again I think just the phenomenon we saw not just in New York, but across all of our all of our urban stores in.

Yeah.

Got it. Thank you and then just shifting back in return rates can you remind us what that typical sort of peak to trough decline in move in rates in a normal year looks like from say the peak summer months the slower winter months.

In most markets is that you just didn't see.

You Didnt see quite the rent growth in 'twenty one.

Yes.

As you would have seen again in <unk>.

It's a pretty wide range when you just think about <unk>.

The more suburban or as I pointed out some of the southwest markets that saw big shifts in the population.

Time and B markets.

Call it in that 10% to 20% range.

Great. Thank you very much.

Great with that occupancy being a bit can you would you expect moving forward the extent, we see a lot of the b.

Yes.

Thank you for your question. Our next question comes from the line of key then Kim with <unk>. Your line is now.

The hot market slowed down would you think that the positive rent growth trends in Europe might be a bit stickier than some of those other markets.

Okay.

Thanks, and good morning.

Okay.

Just one more question on the New York City supply.

Yes, yes, I think as you see again the decline in the deceleration in some markets.

Opex.

When you look at some of the data providers out there.

Sure.

Showing about 19%.

On a relative basis wouldn't expect in the urban markets to see it at the same rate.

Figure on supply growth, obviously that includes thought that would never get built plenty of that.

Yeah.

And then I try and marry that versus some of your commentary you're providing that supply risks.

Got it. Thank you and just shifting back a median rates can you remind us what that typical sort of peak to trough decline in move in rates in a normal year looks like from say the peak summer months the slower winter months.

Not bad.

Can you help us bridge that gap and I know, it's not your Jonathan what other data providers the thing, but it just seems to.

We are pretty widespread between what youre seeing and what some of these data providers are joined.

Yes. It is.

It's a pretty wide range when you just think about <unk>.

Yeah. Thanks, Steven one I think and again. This is this is again.

<unk> time, and B markets, but call it in that 10% to 20% range.

I believe when when Youre looking at that data. It is the the MSA not not the boroughs, particularly so youre picking up.

Great. Thank you very much.

Yeah.

Yeah.

Thank you for your question. Our next question comes from the line of Keith and Kim with <unk>. Your line is now.

All of Jersey Long Island, Westchester as well as Manhattan, Brooklyn, Queens, and Staten Island. So.

Okay.

Again, when you look at that supply and its competitive impact, particularly on Q, but.

Thanks, and good morning.

Just one more question on the New York City supply topic when.

Many of those stores that are going to open or just end markets Submarkets, where we don't have a presence so when I'm looking at it I am specifically looking at what we know is.

When you look at some of the data providers out there.

Sure.

Showing about 19%.

Figure on supply growth, obviously that includes both that would never get built.

Hi.

Plenty of that.

Entitled and either under construction or some signs of movement that tells US is it's actually going to get done in the next 18 months or so.

And then I'm trying to marry that versus some of your commentary youre, providing that supply risk doesn't look that bad.

Can you help us bridge that gap and I noticed on your Jonathan what other data providers the thing, but it just seems to be a pretty widespread between what youre seeing and what some of these data provider for Julien.

In markets.

It will create some competition to cube.

So when I think about that and I answered the question relative to Brooklyn, Queens and.

Yeah, Thanks, Keith and one I think and again. This is this is again.

In the Bronx, There is as I said, one store in long Island city wanting galanis.

I believe when when Youre looking at that data. It is the the MSA not not the boroughs.

One in East New York and one.

Kind of on the very edge of the Atlantic Avenue that will have.

All of Jersey Long Island, Westchester as well as Manhattan, Brooklyn, Queens, and Staten Island. So.

Assuming they get completed here at the latter part of 'twenty. Three we will have will be competitors in one way shape or form to queue again, given the dynamics of New York City. They will also be competitors.

Again, when you look at that supply and its competitive impact, particularly on Q, but.

Many of those stores that are going to open or just in markets Submarkets, where we don't have a presence so when I'm looking at it I am specifically looking at what we know is.

I think each of the other.

Each of the other public Reits, who also own a store manager the store in that same general area.

Hi.

Entitled and either under construction or some signs of movement that tells us that it's actually going to get done in the next 18 months or so.

As we get into <unk>.

You get into New Jersey Long Island, Westchester, It's a lot obviously.

Much larger area in stores and debate.

In markets, where it will create some competition to cube.

Not clustered as they are in the boroughs.

So when I think about that and I answered the question relative to Brooklyn, Queens and.

Yeah.

Great. Thanks, and the second question.

Going back to the topic about expenses and how we should think about that for next year.

In the Bronx, There is as I said, one store in long Island city wanting galanis.

Texas, and Florida with some of your biggest markets and we've seen property taxes go up a lot maybe more for homes and maybe a forest product but.

One in East New York and one.

Kind of on the very edge of the Atlantic Avenue that will have.

I was curious.

In your thinking for next year. If you are what are you expecting for property taxes in markets like that.

Assuming they get completed here at the latter part of 'twenty. Three we will have will be competitors in one way shape or form to queue again, given the dynamics of New York City. They will also be competitors.

We're expecting them to go up for sure I think some of it some of those some of those areas, we're still waiting to finalize to say what the impact is here for 2022 as we're finally getting bills in for some of those so.

I think each of the other.

Each of the other public Reits, who also own a store manager the store in that same general area.

It's hard to hard to.

Hard to look at exactly where those those are going to be but those are certainly markets that are under pressure that have been and are likely to continue to be in.

As we get into <unk>.

You get into New Jersey Long Island, Westchester, It's a lot obviously.

We will try to provide some color on that next quarter when we when we provide 23 guidance.

Much larger area in stores and debate.

Not clustered as they are in the boroughs.

And Kevin I think if you look around the state tax expense.

If you look at real estate tax expense growth over the last.

Yeah.

Great. Thanks, and the second question.

Four years or five years the range of growth.

Going back to the topic about expenses and how we should think about that for next year.

Hasnt has been fairly consistent and I don't think as you look forward right now at least our expectation is that's going to change all that much.

Texas, and Florida with some of your biggest markets and we've seen property taxes go up a lot maybe more for homes and maybe self storage product but.

Yeah.

And if I can squeeze a third one here.

Just curious.

What other promote opportunities are there in your JV.

In your thinking for next year. If you are what are you expecting for property taxes in markets like that.

Yes.

Many of many of our JV is if not if not most have some type of promote either either in our favor our partner's favorite oftentimes on our development ventures, our partner actually has a promoted interest so it's a fairly common.

We're expecting them to go up for sure I think some of those some of those areas, we're still waiting to finalize to say what the impact is here for 2022 as we're finally getting bills in for some of those so.

It's a fairly common component to too many of our ventures and we can be on either side of it.

It's hard to hard to.

Hard to look at exactly where those those are going to be but those are certainly markets that are under pressure that have been and are likely to continue to be an.

This one obviously that we touched on that.

The way.

And we'll try to provide some color on that next quarter when we when we provide 23 guidance.

Monetized here this quarter was one that we were on the side of <unk>.

We were in a position to be the.

And Kevin I think it would be linked around the state tax expense.

The big value add by bringing it on and doing all the hard work too.

Yes, if you look at real estate tax expense growth over the last.

To get the stores pretty it up and professionalized and leased up and so that was a that was a great opportunity that we were on that side of the equation, but it can be it can go in either direction, depending on the opportunity.

Four years or five years the range of growth.

<unk> has been fairly consistent and I don't think as you look forward right now at least our expectation is that's going to change all that much.

Yeah.

Okay. Thank you.

And if I can squeeze a third one here.

Sure. Thanks.

What other promote opportunities are there in your JV.

Thank you for your question. Our final question comes from the line of Michael <unk> with J P. Morgan Chase Michael Your line is now open.

Yes.

Many of many of our JV is if not if not most have some type of promote either either in our favor our partner's favorite oftentimes on our development ventures, our partner actually has a promoted interest so it's a fairly common.

Ergo.

Just have one.

One question has there been any change to the percentage of customers that have been in place over a year and over two years anything material.

It's a fairly common component to too many of our ventures and we can be on either side of it.

This one obviously that we touched on that.

Sure.

Sure.

We.

So.

Monetized here this quarter was one that we were on the side of <unk>.

Question in the factual answer is for the.

We were in a position to be the.

For the greater than one year that change has been minimal so those customers both greater than six months and greater than one year, it's been pretty consistent.

The big value add by bringing it on and doing all the hard work too.

To get the stores pretty it up and professionalized and leased up and so that was a that was a great opportunity that we were on that side of the equation.

For those that are greater than two years. It has gone up about 5%.

But it can be it can go in either direction, depending on the opportunity.

And that's over what time period.

That is comparing it year over year or two.

Okay. Thank you.

Sure. Thanks.

Year over year.

Thank you for your question. Our final question comes from the line of Michael <unk> with JP Morgan Chase Michael Your line is now open.

Got it okay.

That was it I appreciate it thank you.

And now I appreciate it thank you. Thanks.

Thank you for your question.

These are all the questions we have registered in the queue.

Yes.

One question has there been any change to the percentage of customers that have been in place over a year and over two years anything material.

This concludes our question and answer session I will now pass back to Chris Marr for closing remarks.

Alright, thanks, everybody for sure.

For a very good call I really appreciate the interest and the questions enjoyed sharing our thoughts with you.

Sure.

Sure.

So great question and the factual answer is for the.

As I said, we the team is in good shape.

The greater than one year that change has been minimal so those customers both greater than six months and greater than one year, it's been pretty consistent.

We have.

Have the appetite to find external growth.

The balance sheet capacity to execute on that appetite, but we'll we will remain disciplined we will remain <unk>.

For those that are greater than two years. It has gone up about 5%.

Focused on finding opportunities that.

And that's over what time period.

Are accretive to our portfolio to our customer base to our earnings.

That is comparing it year over year or two.

And so we will be patient.

Year over year.

As we try to look out into 2023.

Got it okay.

That was it I appreciate it thank you.

Certainly the change in the debt capital markets.

And now I appreciate it thank you. Thanks.

And potentially some changes in economic conditions could create some attractive opportunities for us and if thats the case.

Thank you for your question.

These are all the questions we have registered in the queue.

This concludes our question and answer session I will now pass back to Chris Marr for closing remarks.

We are ready to take advantage of them.

Meanwhile, from an internal growth perspective.

Alright, thanks, everybody for sure.

I think we're confident that storage and cube will continue to perform well.

For a very good call I really appreciate the interest and the questions enjoyed sharing our thoughts with you.

As I said, we the team is in good shape.

We're confident that our portfolio is well positioned.

We have.

On a relative basis to achieve that performance and the team certainly is focused so.

Have the appetite to find external growth.

The balance sheet capacity to execute on that appetite, but we'll we will remain disciplined we will remain <unk>.

Thank you all for your attention and participating in the call look forward to speaking to many of you in person out in the West coast here at NAREIT and looking forward to speaking to you again, when we report end of year and produce our expectations for 2023, Thanks again take care.

Focused on finding opportunities that.

Are accretive to our portfolio to our customer base to our earnings.

And so we will be patient.

Yes.

As we try to look out into 2023.

This concludes today's keeps my third quarter 2022 earnings call. Thank you for your participation you may now disconnect your lines.

Certainly the change in the debt capital markets.

And potentially some changes in economic conditions could create some attractive opportunities for us and if thats the case.

We are ready to take advantage of them.

Meanwhile, from an internal growth perspective.

I think we're confident that storage and cube will continue to perform well.

We're confident that our portfolio is well positioned.

On a relative basis to achieve that performance and the team certainly is focused so.

Thank you all for your attention and participating in the call look forward to speaking to many of you in person out in the West coast here at NAREIT and looking forward to speaking to you again, when we report end of year and produce our expectations for 2023, Thanks again take care.

Yes.

This concludes today's keeps my third quarter 2022 earnings call. Thank you for your participation you may now disconnect your lines.