Q4 2023 National Storage Affiliates Trust Earnings Call

Operator: Greetings. Welcome to National Storage Affiliates' 4th Quarter 2023 conference call. At this time, all participants are in a listen-only mode.

Greetings and welcome to National storage Affiliates' fourth quarter 2023 conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star.

Operator: A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, George Hoglund, Vice President of Investor Relations for National Storage Affiliates. Thank you, Mr. Hoglund.

Zero on your telephone keypad.

As a reminder, this conference is being recorded.

Now my pleasure to introduce your host George Hoglund, Vice President of Investor Relations for National storage affiliates. Thank you. Mr. Hoglund you may begin.

George Andrew Hoglund: You may begin. We'd like to thank you for joining us today for the fourth quarter 2023 Earnings Conference Call of National Storage Affiliates Trust. On the line with me here today are NSA's President and CEO, Dave Cramer, and CFO, Brandon Togashi. Following prepared remarks, management will accept questions from registered financial analysts. Please limit your questions to one question and one follow-up and then return to the queue if you have more questions. In addition to the press release distributed yesterday afternoon, we distributed our supplemental package with additional detail on our results, which may be found in the investor relations section on our website at nationalstorageaffiliates.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements that are subject to risks and uncertainties and represent management's estimates as of today, February 29, 2024.

George Andrew Hoglund: We'd like to thank you for joining us today for the fourth quarter 2023 earnings conference call of National storage affiliates Trust on the line with me here today are N S as president and CEO, Dave Cramer and CFO Brandon to Gotcha.

George Andrew Hoglund: Following prepared remarks management will accept questions from registered financial analysts.

George Andrew Hoglund: Please limit your questions to one question and one follow up and then return to the queue. If you have more questions.

George Andrew Hoglund: Vision to the press release distributed yesterday afternoon, we furnished our supplemental package with additional detail on our results, which may be found in the Investor Relations section on our website at national storage affiliates Dot com on today's call management's prepared remarks and answers to your questions may contain forward looking statements are subject to risks and.

George Andrew Hoglund: Uncertainties and represent managements estimates as of today February 29 2024.

George Andrew Hoglund: The company assumes no obligation to revise or update any forward-looking statement because of changing market conditions or other circumstances after the date of this conference call. However, the company cautions that actual results may differ materially from those projected in any forward-looking statement. For additional details concerning our forward-looking statements, please refer to our public filings with the SEC. We also encourage listeners to review the definitions and reconciliations of non-GAAP financial measures, such as FFO or FFO and net operating income, contained in the supplemental information package available in the investor relations section on our website and in our SEC filings. I will now turn the call over to Dave. Thanks, George.

George Andrew Hoglund: The company assumes no obligation to revise or update any forward looking statement because of changing market conditions or other circumstances. After the date of this conference call.

The company cautions that actual results could differ materially from those projected in any forward looking statements for additional details concerning our forward looking statements. Please refer to our public filings with the SEC.

George Andrew Hoglund: We also encourage listeners to review the definitions and reconciliations of non-GAAP financial measures such as <unk> or if that's all <unk> and net operating income contained in the supplemental information package available in the Investor Relations section on our website and in our SEC filings I will now turn the call over to Dave.

David G. Cramer: And thanks, everyone, for joining our call today. The fourth quarter capped off a busy year here at NSA. We made significant progress in our people, process, and platform initiatives. I'm very pleased with all that we accomplished in 2023 to strategically position us for the next phase of growth. On the people front, we made a handful of key moves to enhance our team, including hiring Will Cowan to join NSA in June as chief strategy officer.

David G. Cramer: Thanks, George and thanks, everyone for joining our call today.

David G. Cramer: Fourth quarter capped off a busy year here at NSA and made significant progress in our people process and platform initiatives.

David G. Cramer: I'm very pleased with all that we've accomplished in 2023 strategically position us for the next phase of growth.

David G. Cramer: The people front, we made a handful of key moves to enhance our team.

David G. Cramer: Hiring willpower to join NSA in June as Chief strategy Officer.

David G. Cramer: Will's hiring is notable as he is leading our portfolio optimization plan, which includes asset sales and joint venture transactions. And, as detailed in our release, we've been busy. We invested in additional talent in many areas, including our data science and customer acquisitions team. Our teams focus on enhancing our processes through the utilization of artificial intelligence and machine learning in our revenue management models.

David G. Cramer: Those hiring is notable as he is leading our portfolio optimization plan, which includes asset sales and joint venture transactions and as detailed in our release we've been busy.

David G. Cramer: We invested in additional talent in many areas, including our data science and customer acquisitions teams.

David G. Cramer: He is focused on enhancing our processes through utilization of artificial intelligence and machine learning and our revenue management models.

David G. Cramer: This has improved our customer rate decisions and elevated our intelligence in paid marketing and front-end pricing models. We also invested in new and upgraded platforms in 2023, including a new property management system, data warehouse, and customer web platform. These upgrades position us to have enhanced intelligence, a better customer experience, increase conversion rates, and facilitate more sophisticated revenue management and marketing strategies. Let's just say I'm very proud of what our team accomplished in 2023, and they worked diligently to position NSA to deliver enhanced growth over the long term. Attorney-to-Operations for the Quarter. There were several puts and takes in the fourth quarter, but on the whole, the quarter played out modestly better than our expectations. Teams focused on balancing rate and occupancy to maximize revenue, but we remain focused on expense control. The quarter remains challenging on an asking rate front. Competition for new customers remains high, especially in markets where we also have supply pressures.

David G. Cramer: This has improved our customer rate decisions and elevated our intelligence in paid marketing in front end pricing models.

David G. Cramer: We also invested in new and upgraded platforms in 2023.

David G. Cramer: Our new property management system data warehouse Aster, our web platform.

These upgrades position us to have enhanced intelligence, a better customer experience and conversion rates facilitate more sophisticated revenue management and marketing strategies.

David G. Cramer: Needless to say I'm very proud of what our team accomplished in 2023.

David G. Cramer: And then he worked diligently to position NSA to deliver enhanced growth over the long term.

David G. Cramer: Turning to operations for the quarter.

David G. Cramer: There were several puts and takes in the fourth quarter, but on the whole the quarter played out modestly better than our expectations.

David G. Cramer: He was focused on balancing rate and occupancy to maximize revenue.

David G. Cramer: Remain focused on expense control.

David G. Cramer: Quarter remained challenging on an asking rate Brad Albin.

David G. Cramer: Nation for new customers remains high, especially in markets, where we also have supply pressures are improvements in team and technology are certainly aiding us in navigating the challenging environment our.

David G. Cramer: Our improvements in team and technology are certainly aiding us in navigating the challenging environment. Our existing customer base remains healthy, but we would like to stay above historical averages. Continued ability to implement ECRIs is allowing stability and achieve rates while we wait for demand conditions to improve. Keep in mind that the seasonal drop in rates and occupancy tends to occur in the first couple of months of the year, and we're seeing evidence that February likely ends up being the bottom.

David G. Cramer: Our existing customer base remains healthy with length of stay above historical averages.

David G. Cramer: Continued ability to implement easier is allowing stability is cheap rate, while we wait for demand conditions do improve.

David G. Cramer: The mind that the seasonal drop in rates and occupancy tends to occur in the first couple of months of the year and we're seeing evidence that February likely ends up being the bottom.

David G. Cramer: Lastly, looking at our different markets, the Fed Belt is currently facing demand challenges due to muted housing markets and new supply, with MSAs like Phoenix, Arizona, and Las Vegas all performing below their portfolio average. However, longer term, we remain very confident in the growth prospects of our Sunbelt markets due to the broader population and migration trend. Now turning to our portfolio optimization strategies, we had a very busy fourth quarter and a start to the new year, including the following. First, we sold a portfolio of 71 properties to a large private storage operator for a gross price of $540 million.

David G. Cramer: Lastly, looking at our different markets does that build is currently facing demand challenges due to muted housing market and new supply.

David G. Cramer: But the Msas like Phoenix, Arizona, and Las Vegas, all performing below portfolio average.

David G. Cramer: Long term, we remain very confident of the growth prospects of our Sun belt markets and the broader population migration trends.

David G. Cramer: Now turning to our portfolio optimization strategies, we had a very busy fourth quarter and start to the new year, including the following.

David G. Cramer: First we sold a portfolio of 71 properties to a large private storage operator for a gross price of $540 million.

David G. Cramer: The sales straddled gears, with half of the portfolio closing in December, and all but one of the remaining properties closing in February. The portfolio consisted of assets that were generally smaller than our portfolio average, with lower margins, and were geographically less concentrated. The assets and markets also generally had lower growth prospects than our portfolio.

David G. Cramer: The sales straddled year end with half of the portfolio closing in December and all but one of the remaining properties closed in February.

David G. Cramer: Portfolio consisted of assets they were generally smaller than our portfolio average with lower margins and where geographically less concentrated.

David G. Cramer: Yes, its a markets also generally had lower growth prospects in our portfolio as such sale enhance operational efficiencies improves our long term growth prospects generates capital for our balance sheet initiatives.

David G. Cramer: As such, the sale enhanced operational efficiencies, improved our long-term growth prospects, and generated capital for our balance sheet initiative. Second, we contributed 56 assets totaling almost $350 million to a newly formed joint venture in February with one of our existing JV partners. We chose these properties because they had revenue-enhancing opportunities that we felt were best unlocked off the balance sheet and a joint venture structure. We've retained a 25% interest in this JV and the right of first offer on the asset. These are assets and markets that we want to own long term, so we maintain the flexibility to bring these assets back on the balance sheet in the future. Third, we also formed a new joint venture with an existing partner. The AV has $400 million in total capital commitments with a maximum allowed leverage of up to 60%, which implies up to $1 billion of buying power.

David G. Cramer: Second we contributed 56 assets totaling almost $350 million to a newly formed joint venture in February with one of our existing JV partners.

David G. Cramer: We chose these properties because they had revenue enhancing opportunities that we felt were best unlock our balance sheet and a joint venture structure.

David G. Cramer: We've retained a 25% interest in this JV and the right of first offer on the assets.

That's a market we want to own long term. So we maintain the flexibility to bring these assets back on balance sheet in the future.

David G. Cramer: Third we also formed a new joint venture with an existing partner JV is $400 million total capital commitments, our maximum allowed leverage of up to 60%, which implies up to 1 billion of buying power JV.

David G. Cramer: JV provides additional growth capital to take advantage of acquisition opportunities that we think will start to materialize in 2024 and into 2025. And last, we raised $250 million of capital through a debt-private placement. By completing these activities, we're able to repay our entire revolver balance and eliminate all of our exposure to floating rate debt. We also bought back $27 million of common shares in the fourth quarter and an additional $93 million due to date.

This JV provides additional growth capital to take advantage of acquisition opportunities and we think will start to materialize in 2024 and into 2025.

David G. Cramer: And last we raised 250 million of capital through a debt private placement.

David G. Cramer: Completing these activities, we were able to repay our entire revolver balance and eliminate all of our exposure to floating rate debt.

David G. Cramer: Also bought back 27 million of common shares in the fourth quarter and an additional $93 million year to date.

Brandon S. Togashi: We've delivered on what we've been messaging over the past few quarters. The net impact of these transactions is reduced risk, better portfolio concentration and quality, improved operational efficiencies, and ShareCal to enhance FFO growth going forward and generation of investment capital and dry powder for future acquisitions. In short, we've strategically and significantly improved our balance sheet position, enhancing our growth prospects over the long term. I'll turn the call over to Brandon to discuss our financial results. Yesterday afternoon, we reported COREF of Oprah's share at 68 cents for the fourth quarter of 2023 and $2.69 for the full year, at the high end of the guidance range we revised in the middle of last year, driven by same-store NOI growth coming in higher than the guidance midpoint. These core FFO per share amounts represent a decrease of approximately 4% over the prior-year period.

David G. Cramer: We've delivered on what we've been messaging over the past few quarters.

David G. Cramer: Net impact of these transactions are reduced risk.

David G. Cramer: At a portfolio of concentration of quality improve.

David G. Cramer: To improve operational efficiencies.

David G. Cramer: We do share counts do enhance F O girls going forward and generation of investment capital and dry powder for future acquisitions.

David G. Cramer: In short, we've strategically and significantly improved our balance sheet position on enhancing our growth prospects over the long term.

I'll turn the call over to Brendan to discuss our financial results.

Brendan: Thank you Dave.

Brendan: Yesterday afternoon, we reported core for vote per share 68 cents for the fourth quarter of 2023 and.

Brendan: The $2 69 for the full year.

Brendan: High end of the guidance range, we revised in the middle of last year.

Brendan: Driven by same store NOI growth coming in higher than the guidance midpoint.

Brendan: These courses per share amounts represent a decrease of approximately 4% over the prior year period.

Brandon S. Togashi: Driven primarily by an increase in interest expense which overshadows same-store performance and NOI from acquisitions. Partially offset by a reduction in weighted average shares outstanding, which is contributed to our shared buyback program. For the quarter, revenue growth was flat on a same-store basis, driven by growth in rent revenue per square foot of 3.6%.

Brendan: Driven primarily by an increase in interest expense, which overshadow same store performance in NOI from acquisitions.

Brendan: Partially offset by a reduction in weighted average shares outstanding attributable to our share buyback program.

Brendan: For the quarter revenue growth was flat on a same store basis, driven by growth in rent revenue per square foot and a three 6%.

Brandon S. Togashi: However, this was offset by a 380 basis point year-over-year decline in average occupancy during the quarter. Occupancy ended the quarter at 86%, down 410 basis points year-over-year, while January occupancy finished 390 basis points below last year. Expense growth was 4.8% in the fourth quarter and 4.7% for the full year.

Brendan: Offset by a 380 basis point year over year decline in average occupancy during the quarter.

Brendan: Occupancy ended the quarter at 86% down 410 basis points year over year.

January occupancy finished 390 basis points below last year.

Brendan: Expense growth was four 8% in the fourth quarter was four 7% for the full year.

Brandon S. Togashi: Similar to the past couple quarters, the main drivers of growth were property tax, marketing, and insurance, partially offset by payroll efficiencies that resulted in lower spend versus the prior year period. However, marketing expenses remain elevated due to increased competition for customers and a tough comp. While insurance expense growth will continue to be at this high level until our policy renewal comes up on April 1st, as Dave mentioned earlier, it was a busy quarter and start to 2024 on the asset sales and joint venture front. We also continue to evaluate acquisition opportunities and purchase two assets during the quarter totaling $25 million. One of these assets was from our captive pipeline, and the other asset was sourced off-market by one of our pros, utilizing their local relationships in the industry.

Brendan: Similar to the past couple of quarters main drivers of growth for property tax marketing and insurance.

Brendan: Actually offset by payroll efficiencies that resulted in lower spend versus the prior year period.

Brendan: Marketing expenses remain elevated due to increased competition for customers and a tough comp.

Brendan: Insurance expense growth will continue to be at this high level until our policy renewal coming out people first.

Brendan: So as Dave mentioned earlier, it was a busy quarter and start to 2024 on the asset sales and joint venture front.

Brendan: We also continue to evaluate acquisition opportunities to purchase two assets during the quarter totaling $25 million.

Brendan: One of these assets was from our captive pipeline in the other asset was sourced off market and one of our pros utilizing their local relationships in the industry.

Brandon S. Togashi: This brought our full-year acquisition activity to 20 properties, totaling $230 million, all through our captive pipeline or off-market channels. Looking at the portfolio sale and JV contribution that they've discussed, our net proceeds from these transactions were approximately $835 million, which we've used to repay our revolver in full, repay $130 million of Term Loan B that matures in July, and to buy back approximately $120 million of common shares since our last earnings call. These transactions have allowed us to significantly enhance our strategic capital position as of today by eliminating offloading rate debt exposure, bringing up all the capacity on our revolver, sourcing additional growth capital through the formation of a new joint venture, and reducing our share count due to our discounted valuation, which will create greater FFO per share growth over time. Needless to say, we have positioned ourselves to take advantage of opportunities as they arise. Turning to the balance sheet, I won't summarize all the details of our debt private placement or share buyback activity, the specifics of which you can see in our disclosures.

Brendan: This brought our full year acquisition activity to 20 properties totaling $230 million.

Brendan: Through our captive pipeline or off market channels.

Brendan: Looking at the portfolio sale and JV contribution that Dave discussed our net proceeds from these transactions were approximately $835 million.

Brendan: Which we've used to repay our revolver in full.

Brendan: We paid $130 million of term loan b that matures in July.

Brendan: And to buy back approximately $120 million of common shares since our last earnings call.

Brendan: These transactions have allowed us to significantly enhance our strategic capital position as of today by eliminating all floating rate debt exposure.

Brendan: Bringing up all the capacity on our revolver.

Brendan: Additional growth capital through the formation of a new joint venture and.

Brendan: And reducing our share count due to our discount evaluation, which will create greater <unk> per share growth over time.

Needless to say, we have positioned ourselves to take advantage of opportunities as they arise.

Brendan: Turning to the balance sheet.

Brendan: I won't summarize all the details of our debt private placement or share buyback activity the specifics of which you can see in our disclosures.

Brandon S. Togashi: But I will highlight that at quarter end, our leverage was 6.1 times net debt to EBITDA, and pro forma with the asset sales and debt repayments, our leverage at year end would have been 5.7 times. Now, moving on to our 2024 guidance, which we introduced yesterday. The operating environment remains very competitive to start the year, which is weighing on rental rates and occupancy. And uncertainty remains regarding interest rates, their impact on the housing market, and, in turn, the spring leasing season.

Brendan: But I will highlight that at quarter end, our leverage was six one times net debt to EBITDA and pro forma with the asset sales and debt repayments our leverage at year end would have been 5.7 times.

Brendan: Now moving on to 2024 guidance, which we introduced yesterday.

Brendan: The operating environment remains very competitive to start the year, which is weighing on rental rates and occupancy.

And uncertainty remains regarding interest rates their impact on the housing market and in turn the spring leasing season.

Brandon S. Togashi: We've thus factored a wide range of scenarios into our full-year guidance assumptions, which are detailed in the earnings release. The midpoints of key items of our guidance are as follows: game store revenue growth of negative 2 percent. Same store operating expense growth of 4%. Same story on the Y growth of negative 4%.

Brendan: We've not factored a wide range of scenarios into our full year guidance assumptions, which are detailed in the earnings release.

Brendan: The mid points of key items of our guidance are as follows.

Brendan: Same store revenue growth of negative 2%.

Brendan: Same store operating expense growth of 4%.

Brendan: Same store NOI growth of negative 4% acquisition.

Brandon S. Togashi: Acquisition volume of $200 million and core FFO per share of $2.48. The high end of our guidance range assumes a return toward typical seasonality fueled in part by a normalization of the housing market. Below End incorporates continued downward pressure on rate and occupancy due to muted customer demand, and the midpoint assumes a modest level of seasonality, with occupancy remaining relatively flat throughout the year.

Brendan: The volume of $200 million in core <unk> per share of $2.48.

Brendan: High end of our guidance range assumes a return toward typical seasonality fueled in part by a normalization of the housing market.

Brendan: Hello, and incorporates continued downward pressure on rate and occupancy due to muted customer demand.

Brendan: And the midpoint assumes a modest level of seasonality with occupancy remaining relatively flat throughout the year.

Operator: While our guidance reflects a wide range of outcomes, at some point, the sluggish demand for home purchases will be unlocked, which combined with an improving supply outlook, creates a healthy backdrop for self-storage fundamentals. Thanks again for joining our call today. Let's now turn it back to the operator to take your questions. Operator?

Brendan: While our guidance reflects a wide range of outcomes at some point the pent up demand for home purchases will be unlocked, which combined with an improving supply outlook creates a healthy backdrop for self storage fundamentals.

Speaker Change: Thanks again for joining our call today, let's now turn it back to the operator to take your questions operator.

Speaker Change: Okay.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: Thank you if he would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Information tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue and for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star. He is our first question is from Todd Thomas with Keybanc capital markets. Please proceed.

Operator: You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question is from Todd Thomas with KeyBank Capital Markets. Please proceed. Hi, thank you.

Speaker Change: Yeah.

Todd Michael Thomas: Hi, Thank you few questions first I guess, you know on the progress you've made with the portfolio optimization process, Dave you commented.

Todd Michael Thomas: A few questions. First, I guess, you know, on the progress you've made with the portfolio optimization process. Dave, you commented that you've made significant progress toward the company's strategic initiative. So, you know, first, is there more to do beyond what has been announced?

Todd Michael Thomas: That you've made significant progress on towards the company strategic initiatives. So you know first I guess is there is there more to do beyond what has been announced.

David G. Cramer: As we think about, you know, moving forward from here, and then can you also talk about the implied pricing for the portfolio sale? Yeah, sure, Todd. Thanks for joining us today.

Todd Michael Thomas: As we think about you know moving forward from here and then can you also talk about the implied pricing for the portfolio sale and the joint venture contributions.

Speaker Change: Yeah sure Todd Thanks for joining us today.

David G. Cramer: I think the majority of the heavy lifting, as you think about positioning ourselves from, you know, the sale of assets and the formation of JVs, puts us in a place where we can now grow. Our balance sheet is well positioned to take advantage of opportunities that we think are going to come towards the back half of this year and into 2025. And so, what we set out to do last August, the majority of that heavy lifting is done, and the team worked extremely hard, really, in the back half of last year and early part of this year, and I'm very, very proud of the accomplishments that they've made.

Speaker Change: I think the majority of the heavy lifting as you think about positioning ourselves from the sale of assets and the formation of <unk> puts us in a place where we can now grow our balance sheet is well positioned to take advantage of opportunities that we think are going to come towards the back half of this year and into 2025, and so what we set out to do last.

Speaker Change: August the majority of that heavy lifting is done and the team worked extremely hard really to the back half of last year early part of this year and I'm very very proud of the accomplishments that they've made and so from that aspect. If you think about additional pruning of the portfolio to be at on a more selective basis not nearly the magnitude that we just went through.

David G. Cramer: So from that aspect, you know, if you think about additional pruning of the portfolio, it'll be on a more selective basis, not nearly as extensive as what we just went through. And so from that piece of it, you know, I would tell you on the two sales, or the sale, let's talk about the sale of the portfolio first, the 71 assets, you know, the cap rate on that was right at a six cap on those assets. We really studied our portfolio top to bottom and asked ourselves, where could we find better places to recycle that capital? And that had a lot of things around that piece of it. So if you think about the 71 properties, if you broke it down, it was in 14 states, really through the Midwest and the Southeast, a little bit, you know, were the primary pieces of that.

Speaker Change: And so from that piece of it you know I would tell you on the two sales or the sale, let's talk about the sale of the portfolio first the 71 assets the cap rate on that was right at a six cap.

Speaker Change: On those assets was 71 assets, we really studied our portfolio top to bottom and ask ourselves where could we find a better places to recycle that capital and that had a lot of things around that piece of it. So if you think about the 71 properties. If you broke it down it was in 14 states really through the Midwest and southeast.

Speaker Change: You know it was the primary pieces of that if you think about it over 80% of the markets had two assets or less and then if you think from that aspect. We had probably two major my arm two bigger markets, we exited which was St. Louis in Augusta and so as we looked at where we could.

David G. Cramer: If you think about it, over 80% of the markets had two assets or less. And then if you think from that aspect, we had probably two bigger markets we exited, which were St. Louis and Augusta. And so as we looked at where we could, you know, find operational efficiencies, where we could really take our portfolio and take that capital and redeploy it in a better position long-term for growth, again, I think we did a really good job just combing through the portfolio at a time where we weren't having a lot of external growth. And the team did a really good job executing the strategy around that sale of asset. The JV, a little different scenario there.

Speaker Change: I'll find operational efficiencies, where we can really take our portfolio and take that capital redeploy it in a better position long term for growth.

Speaker Change: I think we did a really good job combing through the portfolio at a time, where we weren't having a lot of external growth.

Speaker Change: And then the team did a really good job of executing the strategy around that sale of asset.

Speaker Change: The JV a little different scenario there those are assets that we do want to own long term, but we thought there was some ability to drive additional revenue through some revenue enhancing projects on those facilities and so we did team up with an existing JV partner.

David G. Cramer: Those are assets that we do want to own long-term, but we thought there was some ability to drive additional revenue through some revenue-enhancing projects on those facilities. And so we teamed up with an existing JV partner, and we spun those into a JV to, one, unlock some capital for us to use more effectively in the future, but also to put some dollars into those assets that will improve performance and improve the overall market position of those properties and allow us to come back at a point in time and buy those assets back into our portfolio. So I think both those strategies were executed very well. The timing was good for us.

Speaker Change: And we spun those into a JV to want to lock some capital for us to use more effectively in the future, but also to put some dollars into those assets that will improve performance and improve their overall market position with those properties and allow us to come back at a point in time and buy those assets back into our portfolio. So I think both of those strategies executed very well timing was.

Speaker Change: Good for US both of the participants the buyer of the assets on the sale did a great job working with US they were a great partner and working through the transition of that and we're very appreciative of that and then our existing JV partner, obviously, a good relationship there and looking forward to that future.

David G. Cramer: Both of the participants, the buyer of the assets on the sale, did a great job working with us. They were a great partners working through the transition of that, and we're very appreciative of that. And then our existing JV partner, obviously a good relationship there, and looking forward to that future. Okay, the JV portfolio was a low six. Sorry, I had to leave that out of Kansas City, and we love you for finding things like this for your children.

Speaker Change: Okay, the JV assets.

J B portfolio is a low six I'm, sorry, I left that out from a cap rate.

Speaker Change: Got it that's helpful and and then you know for the the two joint ventures can can you just talk about what the fee structure will be like and can you discuss what the tenant reinsurance income.

David G. Cramer: So thank you. I got it. That's helpful. And then, you know, for the two joint ventures, can you just talk about what the fee structure will be like, and can you discuss what the tenant reinsurance income, you know, sort of arrangement will look like between NSA and the joint venture partners? I probably won't get a lot of detail there. I tell you, they're very similar to the previous JVs we've had set up in structure.

Speaker Change: You know sort of arrangement will will look like between NSA and the joint venture partners.

Speaker Change: And I, probably won't get a lot of detail there I'd say, they're very similar to the previous JV as we've had setup and structure and so you know a similar you know the same partner that we've used in the past. So the JV structure themselves are very similar in their in their design and their makeup.

Speaker Change: And so that would be around sharing of tenant insurance and fee structures that we've had with previous JV, but I'm just not going to get a lot of the details there.

David G. Cramer: And so, you know, similarly, you know, same partner that we've used in the past, so the JV structures themselves are very similar in their design and their makeup. And so that would be around, you know, sharing of tenant insurance and and fee structures that we've had with previous JVs, but I'm just not gonna get a lot of the details there. Okay, alright. Thank you. Thank you, Todd.

Speaker Change: Okay alright, thank you.

Speaker Change: Thank you Doug I appreciate you joining us.

Speaker Change: Our next question is from Spencer I'll away with Green Street capital.

Speaker Change: Please proceed.

Spencer: Thank you.

Spencer: Make sure I understood your comments correctly. The 56 assets that were selected for the JV I think you mentioned they have revenue enhancing opportunities that would best be achieved in the JV structure, but if you guys are managing the operating those assets. It doesn't seem like that's an operational play them can you just talk about.

Spenser Bowes Allaway: Appreciate you joining us. Our next question is from Spenser Allaway with Green Street Capital. Thank you very much.

David G. Cramer: Thank you. Thank you. Just to make sure I understood your comments correctly, the 56 assets that were selected for the JV, I think you mentioned they have revenue-enhancing opportunities that would best be achieved in the JV structure. But if you guys are managing those and operating those assets, it doesn't seem like that's an operational play. Can you just talk about what those revenue-enhancing opportunities are, and is there something to be done on the CapEx front? Yeah, I think you're touching on it, Spencer.

Spencer: Sure.

Spencer: What does revenue enhancing opportunities are and is there something to be done on the Capex front.

Speaker Change: Yeah, I think you were touching on expenses and thanks and thanks for joining the Navy. We certainly there's we've put significant capex dollars on the front end of that JV to go in and improve the properties unit Reconfigurations are the way we look at the properties from St Appeal and a few things like that and so there was a eight amount of dollars that was put upfront for upfront capital.

David G. Cramer: And thanks, thanks for joining today. We certainly there's, we put significant CapEx dollars in the front end of that JV to go in and improve the properties, you know, reconfigurations, the way we look at the properties from, you know, street appeal and a few things like that. And so there was an amount of dollars that were put up front for upfront capital to be deployed really in zero to 12 months and really work hard on getting the properties improved within their competitor sets. And so that's really what that piece of that unlocking of that revenue enhancement looks like. Okay, great.

Speaker Change: Do you know.

Speaker Change: Deployed really in the zero to 12 months and really worked hard on getting.

Speaker Change: The property has improved within their competitor sets and so that's really what.

Speaker Change: That piece of that unlocking of that revenue enhancing looks like.

Speaker Change: Okay, Great and then when you mentioned lower margins and lower growth prospects in the portfolio. Divestment. You made are you willing to share a little bit more in terms of like specifics in terms of how those margins fared relative to the portfolio average as well as kind of how you thought about the growth prospects.

Spenser Bowes Allaway: And then when you mentioned lower margins and lower growth prospects in the portfolio divestment you made, are you able to share a little bit more in terms of like specifics in terms of how those margins fared relative to the portfolio average, as well as kind of how you thought about the growth prospects? So Spencer, this is Brandon, like so far our existing portfolio, our NOI margins in the low 70s, 72, 73. And the portfolio sale assets were in the high 60s, so a mid-high 60% NOI margin. Great. And sorry, just the last one.

So Spencer this is Brandon so for our existing portfolio, our NOI margins in the low 70 70 273.

Brandon: And the portfolio sale assets were in the high <unk> so mid to.

Brandon: High 60% NOI margin.

Speaker Change: Okay great.

Speaker Change: Sorry, just last one so you mentioned also that you feel like you made great progress on the portfolio composition and the balance sheet certainly in last few months, but.

David G. Cramer: So you mentioned also that you feel, you know, you guys have made great progress on the portfolio composition and in the balance sheet, certainly in the last few months, but you did comment that you feel that you are well-positioned to grow and look at certain acquisitions as you move through 24. However, given your cost of capital is still fairly impaired, trading at a double-digit NAV discount. How do you think about financing and growing given that dynamic? It's a great question.

Brandon: But you did comment that you feel are well positioned to grow and look at certain acquisition doesn't mean that they're 24. However, given your cost of capital so fairly impaired trading in a double digit any of the discount.

Brandon: How do you think about financing and growing given that dynamic.

Speaker Change: It's a great question, we certainly think there's a couple of things going on with the market. We think as we starting to see portfolio or our stores and portfolios and small portfolios.

Speaker Change: We think the Jv's probably offer the best opportunity to get started with a capital light of course for us and that's the best way to get started I think as things start to turn we are starting to see properties come a little bit more realistic in pricing and so we're pleased about that and so you know as the market conditions improve.

David G. Cramer: You know, we certainly think there's a couple things going on with the market. We think as we're starting to see stores and portfolios and small portfolios, we think the JVs probably offer the best opportunity to get started with. Capital Light, of course, for us, and that's the best way to get started, I think, as things start to turn.

Speaker Change: The JV is a great place for us to start and then I do believe the team will find one off assets in some of these markets, where we can buy our balance sheet as well.

David G. Cramer: We are starting to see properties come a little bit more realistic in price, and so we're pleased about that. And so, you know, as market conditions improve, the JVs are a great place for us to start. And then I do believe the team will find one-off assets in some of these markets where we can buy them on the balance sheet as well. Thank you. Our next question is from Jeff Spector with Bank of America. Please proceed. Hey, everyone, it's... I just wanted to go back.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question is from Jeff Spector with Bank of America. Please proceed.

Jeffrey Alan Spector: Hey, everyone.

Jeffrey Alan Spector: On for Josh.

Jeffrey Alan Spector: Just wanted to go back to comments from the beginning.

Jeffrey Alan Spector: I'm seeing evidence that February likely ends up being the bottom I'm just wanted to clarify was that was that referring to a new customer.

Jeffrey Alan Spector: Thank you for your comments from the beginning. Seeing the evidence. Glory. Glory. Glory.

Jeffrey Alan Spector: Our occupancy and maybe can you can you give some more color on.

David G. Cramer: I just wanted to clarify, was that referring, Holler, to the kind of trends you're seeing in February? Yeah, great question. Thanks for joining us.

Jeffrey Alan Spector: The kind of trends you're seeing them into February.

Speaker Change: It's just giving you that.

Speaker Change: Confidence.

Speaker Change: Yeah, Great question and thanks for joining what we really as we come out of the fourth quarter, we really saw from a net rental activity.

David G. Cramer: You know, as we came out of the fourth quarter, we really saw from a net rental activity, the quarter itself was not, you know, it was an overly dynamic force in the fourth quarter, there was a lot of competitiveness, and our team focused very much on looking at the revenue end result. And so, you know, as we looked at street rates, and as we looked at competitive sets, and where we wanted to position ourselves, I think we were really patient in the fourth quarter, trying not to dip our finger into a really competitive rate environment. What we've seen in January and February is improvement. January's rental volume and move out volume; move out volumes are down compared to last year, but rental volume improved compared to last year. And in February, what we've seen is rental volume and rental volume above last year, and move out volume below last year. So we are actually gonna have a net rental month in February.

Speaker Change: The quarter itself was not you know.

Speaker Change: It wasn't overly dynamic for us in the fourth quarter, there was a lot of competitiveness.

Speaker Change: Our team focus very much on looking at the revenue and result, and so as we looked at street rate and as we look at competitive sets in where we wanted to position ourselves I think we were really patient in the fourth quarter trying not to dip our finger into a really competitive rate environment. What we've seen in January and February is improvement Januaries.

Speaker Change: Rental volume and move out volume move out volumes were down to last year rental volume improved compared to last year in February of what we've seen is rental volume and rental volume above last year and move out volume below last year. So we actually are going to have a net rental months in February so.

David G. Cramer: So we're encouraged about the change in the trend coming out of the fourth quarter and into the first two months of this year. We think, you know, the street rate environment is still very competitive, but we've definitely seen move activity pick up in the conversion rate. That's more help.

Speaker Change: We're encouraged about the change in the trend coming out of the fourth quarter to the first two months of this year, we think.

Speaker Change: The street rate environment still very competitive, but we've definitely seen the move activity pick up in the conversion rate pick up.

Speaker Change: Okay. That's helpful. Thank you and I was wondering if did you guys did disclose a like cap rates and cap rates for the portfolio sales made in December and another 38 properties sold in February.

David G. Cramer: And I was wondering if you guys did disclose a cap rate. Cap Rates for the Portfolio Sales made in December, February, and separately, or any other..., around.

Speaker Change: And separately is there any expectation.

David G. Cramer: Yeah, as I just kind of talked to Todd's question, we, you know, on the sale of the properties, the cap rate we said was right around a six. You know, and that's for the full 71 assets, which are going to be really three closings, right? You have one that closed last year, and then we, as a closing right for this year, we have one asset that will close in March, and so that'll be the end of that.

Speaker Change: Around dispositions activity this year the rest of the year.

Speaker Change: Yes.

Speaker Change: Talk to Todd's question, we get all that.

Speaker Change: The sale of the properties with the cap rate, we said it was right around six and that's for the full 71 assets.

Speaker Change: They're going to be really three closings right you haven't closed last year and then we actually closing already this year and we have one asset that will close in March.

Speaker Change: And so that'll be the end of that as far as you know a sale of assets this year.

David G. Cramer: As far as, you know, the sale of assets this year, we're going to be selective. There are still areas we're looking at. There are still some properties that we know and have identified that we will probably transact on this year from a sale perspective. But again, the heavy lifting was really done last year through this really, you know, concerted effort to position ourselves to be ready for growth this year, the back half of this year. And then Lizzie, on the JV assets, Dave did give earlier a low six cap rate on that.

Speaker Change: We're gonna be selective there are still areas. We're looking at there is still some properties that we know and they have identified that we will probably transact on this year from a sales perspective.

Speaker Change: Again, the heavy lifting was really done last year through this really concerted effort to position ourselves to be ready for growth. This year the back half of this year.

Speaker Change: And then Lindsey on the JV assets, Dave did give earlier low six cap rate on that that's after the fees to the office manager of those assets.

Brandon S. Togashi: That's after the fees to us as manager of those assets. And just as a point of reference, we, you know, put $210 million of debt on that portfolio via the JV at a 6.05 interest rate. And so it was important for us with our JV partner to kind of clear that from a yield perspective, but then also in terms of what we were getting out of it to be inside of the immediate use of proceeds, which is paying down our line of credit at a 6.07 rate. Thanks for the interview. Our next question is from Samir Khanal with Evercore ISI. Please proceed. Yes, hi, good afternoon.

Speaker Change: And just as a point of reference we put two and $210 million of debt on that portfolio of via the JV at a 6.5 interest rate and so it was important for us with our JV partner to kind of clear that from a yield perspective, but then also in terms of what we were getting out of it to to be inside of the immediate use of proceeds versus paying down our line of credit.

Speaker Change: At a six seven or eight.

Speaker Change: Thanks for the color.

Thanks for the Q.

Speaker Change: Our next question is from Samir Khanal Evercore ISI. Please proceed.

Yes, hi, good afternoon, Hey, Brandon just curious on revenue growth guidance and he spoke a little bit about that.

Samir Upadhyay Khanal: Hey, Brandon, just curious about revenue growth guidance. You spoke a little bit about that. It's a pretty wide range. So help us understand kind of what's the biggest swing factor here to kind of get you the top end or the low end. Is it the housing market? Or is it something else?

Samir Upadhyay Khanal: It's a pretty wide range, so help us understand kind of what your.

Samir Upadhyay Khanal: But what's the biggest swing factor here to kind of get to that top end or the low end is that the housing market or is it is it something else.

Brandon S. Togashi: Hey, Samir, thanks for joining us. Yeah, I mean, I would say it's largely, you know, interest rates and their impact on housing. I mean, obviously, transition and mobility generally are important for our business. But rewinding a year ago, I think, and having to revise our beginning of the year guidance for 2023 in August with our second quarter report, I think, in hindsight, when we look back on it, we underestimated a little bit the severity of that impact on rates. And so, you know, when we look at this year, certainly, there's a general consensus that rates will come down, but when exactly that happens, and, you know, a lot of people think in midyear and beyond. So I just, I just don't think there's a lot of confidence that we're going to see a meaningful impact in the spring.

Brandon: Hey, Samir thanks for joining yeah, I mean, I would I would say it's largely.

Samir Upadhyay Khanal: Interest rates and their impact on housing I mean, obviously transition and mobility generally is important for our business, but rewinding a year ago, I mean, I think in having to revise our beginning of the year guidance in 2023 and in August with our second quarter report I think in hindsight, when we look back on it we underestimated a little bit.

Samir Upadhyay Khanal: Are there any of that impact on rates.

Samir Upadhyay Khanal: And so you know when we look at this year certainly there is a general consensus that rates will come down, but when exactly that happens in and yeah.

Samir Upadhyay Khanal: Lot of people think in mid year and beyond so I just I just don't think there's a lot of confidence that we're going to see a meaningful impact in the spring and so that's certainly baked into our expectations. So at the midpoint of our guide Sameer, we're really assuming that occupancy is relatively flat from where it is right now.

Brandon S. Togashi: And so that's certainly baked into our expectations. So at the midpoint of our guide, Samir, we're really assuming that occupancy is relatively flat from where it is right now throughout the rest of the year and not really, you know, maybe a modest improvement in the spring and summer, but not really a tremendous lift. And then rates, similarly, kind of assuming that rates really just kind of tread water and stay relatively flat from where they are. And when you run that out versus the prior year comp, that's kind of what gets you to the negative 2% midpoint. Okay, I got it.

Throughout the rest of the year and not really maybe modest.

Samir Upadhyay Khanal: <unk> in the spring summer, but not really a tremendous lift and <unk>.

Samir Upadhyay Khanal: And then rates similarly kind of assuming that rates really just kind of tread water and stayed relatively flat from where they are.

Samir Upadhyay Khanal: And when you run that out versus the prior year comp that's kind of what gets you to the negative 2% midpoint.

Speaker Change: Okay got it and then I guess Dave.

David G. Cramer: And I guess, Dave, I guess, how should we think about occupancy in 24? I mean, you're, when I look at occupancy today versus maybe sort of pre-pandemic, you know, 2019, you're about 100 basis points lower. You know, I know you have to find the right balance between rate and occupancy. But help us think through kind of how you think occupancy could trend through the quarters in 24. Yeah, great question.

Speaker Change: I guess, how should we think about occupancy in 'twenty four I mean, you're you're you don't like when I look at <unk>.

David G. Cramer: Compare occupancy today versus maybe sort of pre pandemic 2019 year about 100 basis points lower.

David G. Cramer: I know you have to find the right balance between rate and occupancy, but help us think through kind of how you think occupancy could trend through the quarters and 24.

Speaker Change: Yes, great question I.

David G. Cramer: I personally think we could see some occupancy improvement. You know, I do think that with the competitive nature of what happened, really, in the back half of 2023, there was a substantial push to hold occupancy in a lot of markets, and that came at the expense of rates, and there were some really competitive rate environments going on. I think that's going to ease.

Speaker Change: I personally think we could see some occupancy improvement.

Speaker Change: Do think that with the competitive nature of what happened really in the back half of 2023, there was a substantial push to hold occupancy and a lot of markets and that came at the expense of rate and there was some really competitive rate environment going on I think that's going to ease I think object.

David G. Cramer: I think, you know, objectives are being met, and I think, you know, from our standpoint, we're testing a few more occupancy-based models where we're testing a little different rate strategy, and we're seeing some success around that. We need to obviously test it and prove it out that it is the best revenue model, but, you know, I look at where we sit today and where we can go. To Brandon's point, as he was talking about earlier, to get to our higher points will be around occupancy, and I think there is an opportunity for us, you know, if conditions improve, to move on. And Samir, maybe just a little more color, like I'll give you an example.

Speaker Change: These are being met and I think from our standpoint, we're testing a few more occupancy based models, where we're testing a little different right strategy and we're seeing some success around that.

Speaker Change: Obviously tested prove it out that proves to the best revenue model, but I look at where we sit today and where we can go.

Speaker Change: To Brandon's point he was he's talking about earlier to get there are higher points will be around occupancy and I think there is an opportunity for us.

Speaker Change: You know if conditions improve.

To move on occupancy.

Speaker Change: Samir maybe just a little more color like I'll give you. An example in a market like Portland, right, our second biggest market.

Brandon S. Togashi: In a market like Portland, right, our second biggest market, we're actually about 800 basis points more occupied for those stores than we were in late 2019, prior to, you know, the craziness of multiple years throughout the pandemic. And that's come at the cost of rates. I mean, rates are lower than they were then.

Speaker Change: Where we're actually.

Speaker Change: Oh, not 800 basis points more occupied.

Speaker Change: Are those stores than we were in late 2019 and prior to that.

Speaker Change: The craziness of multiple years throughout the pandemic and that's come at the cost of rate I mean rates are lower than they were then and so that's the situation, where we clearly have not been bashful about moving rates to try and drive occupancy where we can but it's just it's market by market and so we're making those decisions on a market level, where we think we yield the best returns.

Brandon S. Togashi: And so that's a situation where we clearly have not been bashful about moving rates to try to drive occupancy where we can. But it's just, it's market by market. And so, you know, we're making those decisions at a market level where we think we yield the best returns. That's right.

David G. Cramer: You know, if you pointed to the opposite of that, if you look at Oklahoma City, which is down a significant amount of occupancy but still carrying one of the largest revenue increases in the portfolio, that's why we think it's a balance, Samir. And so, you know, we do hope that, you know, the worst is behind us as far as dynamic rate competitiveness is concerned, and hopefully, from just a macroeconomic condition, transition around the country improves a little bit, and that'll help us grow occupancy. Thank you. Our next question is from Eric Wolfe with Citi. Please proceed. Hey, thanks. You mentioned that you're expecting occupancy to stay sort of at current levels around 86%, which I think, you know, if you're going to get to sort of the midpoint of your guidance, would imply that revenue per occupied foot needs to be sort of flattish and slightly higher. I guess first, is that right?

Speaker Change: If you pointed to the adverse to that if you look at Oklahoma City, which was down significant amount of occupancy even still carrying one of the largest revenue increases in the portfolio. That's why we think it's a battle with Samir and so we do hope that the worst is behind us as far as the the dynamic rate competitiveness and hopefully from a just a macro economic conditions.

Speaker Change: Transition around the country improves a little bit and that'll help us grow occupancy.

Speaker Change: Thank you.

Speaker Change: Thanks.

Speaker Change: Our next question is from Eric Wolfe with Citi. Please proceed.

Eric Wolfe: Hey, Thank you.

Eric Wolfe: You mentioned that you expect.

Eric Wolfe: <unk> occupancy.

Eric Wolfe: Sort of a current levels around 86% what do you think.

Eric Wolfe: Get the sort of the midpoint of your guidance would imply that revenue per occupied foot would be sort of flattish to slightly up year over year. I guess first is that right and then second can you talk about what are you sort of need to see for Google to terrorize and churn to get there.

Speaker Change: Yeah, Great question, and yes, you're right I mean, the achieved greater contract rates pretty much flat as we carry our way through the year. The arcane existing consumers, we talked about our opening remarks is remain super stable in there and Theyre very durable right now and so our ECR program is really helping us achieve the stability around contract rate RK.

Eric Wolfe: And then second, can you talk about what you sort of need to see from moving rates, HRIs, and churn to get there? Yeah, great question. And yes, you're right. I mean, the achieved rate or contract rates are pretty much flat as we carry on through the year. You know, our existing consumer, as we talked about our opening marks, is remaining, you know, super stable in there, and they're very durable right now. And so our ECR program is really helping us achieve stability around the contract rate. Our cadences are remaining the same, and our effectiveness in the lift we're giving our customers is very stable. And so the upside, if we're trying to get to the upside of our guidance, would be around street rate improvement and coming off some of the really, you know, tough roll downs that we're in right now.

Speaker Change: <unk> remaining the same they are affected Lewis and the lift we're giving our customers is very stable.

Speaker Change: And so to the to the upside if we're trying to get to the upside of our guidance would be around street rate improvement.

Speaker Change: Off some of the really tough roll downs that we're in right now.

Speaker Change: These are really again I think if history rate environment proves that allows us to lift our street rates and we can also lift from occupancy as we come through the spring season with some changes around the transition of the country.

Speaker Change: You know if everything stayed the same as Brandon said, that's what gets us to the midpoint.

Speaker Change: And that's really how we've looked at the year. It is.

Eric Wolfe: You know, you know, these are really, again, I think if the street rate environment approves, that allows us to lift our street rates. And we can also lift some occupancy as we come through the spring season with some changes around transition in the country. You know, if everything stayed the same, as Brandon said, that's what gets us to the midpoint. And that's really how we've looked at the year. It's really hard to have some clarity right now.

Speaker Change: Really hard to have some clarity right now we've had two good months, we're encouraged by January and February.

Speaker Change: But really until we get through the spring leasing season.

Speaker Change: That's when we'll really know did we get an occupancy lift that we were able to push on street rates in the spring, but if we're able to do that then that's going to push us above the midpoint of our guide, but until we know that it's really hard to have clarity and conviction around not just having a more mid point here.

David G. Cramer: We've had two good months; we're encouraged by January and February. But really, until we get through the spring leasing season, that's when we'll really know if we got an occupancy lift. Did we're able to push some street rates in the spring? If we're able to do that, then that's going to push us above the midpoint of our guide. But until we know that, it's really hard to have clarity on and conviction around not just having a, you know, more midpoint here. Got it, that's helpful.

Speaker Change: Got it that's helpful. And then just a clarification on the on the cap rate you mentioned, 6% around six for that.

Speaker Change: So the disposition the holding on to assets and then most fixes for what she contributed to the JV I was just curious does that put him on a nominal cap rate than historical basis or does it include capex as a forward looking just trying to understand how it's calculated.

Speaker Change: It's it's really at a nominal and a historical NOI.

Speaker Change: NOI basis, depending on what it is.

Speaker Change: Eric with the JV and it was the one the one thing I'll add is on the JV adjusting for the fees to us as manager right. Just because you know we continue to be a partial owner and most of that's the way we have to look at that.

Eric Wolfe: And then just a clarification on the cap rate. You mentioned 6%, around 6% for the... For the disposition, the holding on to assets, and then low sixes for what you contributed to the JV. I was just curious, is that sort of on a nominal cap rate historical basis? Or does it include capex? Is it forward looking? I'm just trying to understand how it's calculated. It's really on a nominal and a historical NOI basis, turning in NOI basis.

Speaker Change: Got it thank you.

Speaker Change: Thank you.

Speaker Change: Our next question is from Juan Sanabria with BMO capital markets. Please proceed.

Speaker Change: Oh this is robin <unk> sitting in for <unk>.

Robin: Maybe you have some easier right.

Juan Carlos Sanabria: Follow up there how do you how do you expect the bumps to impact 24 growth Philip it's free.

Juan Carlos Sanabria: Is the pace and magnitude changing year over year any update there.

Juan Carlos Sanabria: Oh Heck do thanks for joining yes stability, we have we're actually probably a little more assertive on the percentage of rate increase now than we were the first half of last year. We really are tools really allowed us to look at how we were looking.

Brandon S. Togashi: Eric, with the JV, one thing I'll add is the JV adjusting for the fees to us as managers, just because, you know, we continue to be a partial owner in those. So that's the way we have to look at that. Thank you. Our next question is from Juan Sanabria with BMO Capital Markets. Please proceed. Hi, this is Robin Hale. I'm sitting in Suquam.

Heck: Looking at our customer base, and what percentage of the customer base, where we're heading and what percentage increase and so you know the first half of the year, we werent as dialed in as we are now so.

Heck: I think it's stable I think in the first half of the year, we might be a little more a little more frequency or enough frequency, but on a few more of our customers might see a rate increase just based upon what we've learned through the back half of the year, but no real change I guess is what I'd, probably end with as far as our conviction about the program and how the program is working.

Juan Carlos Sanabria: Maybe just an ECRI follow-up there. How do you expect the bumps to impact 24 growth, fill up to the smooth three? Maybe just an ECRI follow-up there. How do you expect the bumps to impact 24 growth, fill up to the smooth three, to pay for magnitude changing year-over-year, or any update there? Thanks for joining us.

Speaker Change: Okay, and you mentioned in your prepared remarks.

Speaker Change: Are seeing supply pressures could you maybe just quantify if you know what percentage of the portfolio that's exposed to supply and 24 versus 23, and maybe if you have visibility into 25 at this point.

David G. Cramer: Yeah, you know, stability. We have, you know, we're actually probably a little more assertive on the percentage of rate increase now than we were the first half of last year. We really, our tools really allowed us to look at how we were looking at our customer base and what, you know, percentage of the customer base we're hitting and what percentage increase. And so, you know, the first half of the year, we weren't as dialed in as we are now.

Speaker Change: Oh I would tell you I would start with we do think new start our new additions or new completions are certainly less year over year, and we'll have the outlook looks like it's going to be less for our portfolio all of our markets. The way we really look at it is if you think about the rings that we study.

Speaker Change: Around our properties of new competition. Each one of those is having a declining percentage of impact from new competitors. So that means the ones that were built they are starting to fill up again come to maturity and less of them are being added in the score in our rings around our properties and so we look favorable as far as new supply impacting our portfolio.

David G. Cramer: So, I think it's stable. I think, you know, the first half of the year, we might be a little more, you know, a little more frequency, or not frequency, but a few more of our customers might see a rating increase just based upon what we've learned through the back half of the year, but no real change, I guess. I think that's all I can probably end with as far as our conviction of what the program is and how the program works.

Speaker Change: In 'twenty four 'twenty five.

Speaker Change: But there's still markets like we discussed in the opening call, where particularly in the Sunbelt, where there was a lot of population growth. We had a lot of success during COVID-19, but theres been a lot of product that was built during that time that was masked by the COVID-19 pandemic. Because we had these phenomenal operating results that are now coming back to their there and we have to go through the fill up cycle.

David G. Cramer: Okay, and you mentioned in your prepared remarks that some markets are seeing supply pressures. Could you maybe just quantify, if you know, the percentage of the portfolio that's exposed to supply in 2024 versus 2023, and maybe if you have visibility into 2025 at this point? Oh, I would start with we do think new additions or new completions are certainly less year over year, and the outlook looks like it's going to be less for our portfolio. All of our markets, the way we really look at it is, if you think about the rings that we study around our properties of new competition, each one of those is having a declining percentage of impact from new competitors. So that means the ones that were built are starting to fill up and come to maturity, and fewer of them are being added to our rings around our properties.

Speaker Change: So Phoenix will be a great example of that it will grow itself out of it but there is a lot of product to be absorbed and that will just take time.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question is from Keegan Karl with Wolfe Research. Please proceed.

Keegan Grant Carl: Yeah. Thanks for the time guys. Maybe first I was wondering if you could give some color on how you're going to differentiate your acquisition opportunities between your wholly owned strategy in your newly formed Jbs.

Keegan Grant Carl: Okay.

Keegan Grant Carl: Question I think a lot of it is going to be around.

Keegan Grant Carl: What the the property type is in the cost of the property.

David G. Cramer: And so we look favorable as far as new supply impacting our portfolio in 24 and 25. But there are still markets, like we discussed in the opening call, particularly in the Sun Belt, where there was a lot of population growth. We had a lot of success during COVID, but there's been a lot of product that was built during that time that was masked by the COVID pandemic because we had these phenomenal operating results that are now coming back to, they're there, and we have to go through the fill-up cycle. So Phoenix would be a great example of that. It will grow itself out of it, but there is a lot of product to be absorbed, and that will just take time.

Keegan Grant Carl: JV will have an opportunity to I think it'd be a little more aggressive around buying properties at in this timeframe at the pricing that's out there in the markets, we want to be and it's a great opportunity for us to tap into those and all the stuff that we're gonna look to probably wholly owned will be probably a little more patient with and we're going to have to find those opportunities that fit.

Keegan Grant Carl: And accretion level, we want.

Keegan Grant Carl: And that will probably take a little bit more time, so having the JV is available to US. We think is a great advantage and it allows us to get started sooner than if we didn't have the JV.

Got it and then shifting gears one for Brandon here, obviously, you guys have done a ton regarding your balance sheet could you just maybe help us a little bit with wasn't expected range of your interest expense would look like this year and what sort of assumptions are underlying that.

Keegan Grant Carl: Thank you. Our next question is from Keegan Carl with Wolfe Research. Please proceed. Yeah, thanks for the time, guys. Maybe first, I was just wondering if you could give some color on how you're going to differentiate your acquisition opportunities between your wholly owned strategy and your newly formed JVs. That's a great question.

Brandon: Yeah, Kian so I.

Brandon: I don't have a specific dollar amounts necessarily to share with you, but I can tell you the sofa assumption that we're using for the year as an average of 5% and so you know on our variable rate that puts you close to a six three to six four depending on whether youre talking about our revolver or some of the.

David G. Cramer: I think a lot of it's going to be around, you know, what the property type is and the cost of the property. The JV, we'll have an opportunity, I think it would be a little more aggressive around buying properties in this timeframe at the prices that're out there in the markets we want to be in. And it's a great opportunity for us to tap into those. And the stuff that we're going to look to probably wholly own, we'll probably be a little more patient with, and we're going to have to find those opportunities that fit, you know, an accretion level we want. And that will probably take a little bit more time. So having the JVs available to us is a great advantage, and it allows us to get started sooner than if we didn't have the JVs.

Brandon: Term loan facilities.

Brandon: And carry a variable rate if we haven't hedged them.

Brandon: What's really going to move it it's just deployment of capital so going back to maybe the earlier question from Spencer what we could have added to that response is just you know the timing of the acquisition volume that we have guided to I guess, they've got hit on it earlier, we biased that towards the back half of the year and I would also caution you know that 100 to 300 million.

Brandon: And that's really.

Brandon: Kind of the transaction dollar amount that we are guiding to closing on and to the year.

Brandon S. Togashi: Got it, and then shifting gears, one for Brandon here. Obviously, you guys have done a ton regarding your balance sheet. Could you just maybe help us a little bit with what the expected range of your interest expense would look like this year and what sort of assumptions would be underlying that? Yeah, Keegan, so I don't have specific dollar amounts necessarily to share with you, but I can tell you that the SOFR assumption that we're using for the year is an average of 5%, and so, you know, on our variable rate, that puts you at close to 6.3 to 6.4, depending on whether you're talking about our revolver or some of the term loan facilities that can carry a variable rate if we haven' What's really going to move it is just the deployment of capital, so going back to, I think, maybe the earlier question from Spenser, what we could have added to that response is just, you know, the timing of the acquisition volume that we have guided to. I guess Dave did hit on it earlier.

Brandon: Previous question that could take place on balance sheet or that could be through a JV in which case, we own 25% share for us and so that's really what's going to move the needle the most.

Brandon: More immediately though I will acknowledge we've been active on the share repurchase program. These first couple of months and if our share price stays at the level that it's been that you.

Brandon: You can expect us to continue to execute on that to the extent that we've got that capacity remaining on the 275 million that we established in December.

Brandon: So that's also baked into our numbers for the year and that will include some immediate use of the line of credit as we go forward over the next couple of months.

Speaker Change: Got it thanks guys.

Speaker Change: Thank you thanks Kim.

Speaker Change: Our next question is from Keybanc Kim with <unk>. Please proceed.

Ki Bin Kim: Thank you.

Kim: Just going back to some of the asset sales you mentioned that tie in the JV you might have an opportunity to buy them back I was just curious if there is any kind of contractual option language with some type of set pricing that's in the contracts or is it just more of a role for.

Keegan Grant Carl: We biased that towards the back half of the year, and I would also caution you that $100 million to $300 million is really kind of the transaction dollar amount that we are guiding to closing on. And to your previous question, that could take place on the balance sheet or that could be through a JV, in which case, you know, it would be a 25% share for us, and so that's really what's going to move the needle the most. More immediately, though, I will acknowledge that we've been active in the share repurchase program these first couple months, and if our share price stays at the level that it's been at, you can expect us to continue to execute on that, you know, to the extent that we have got that capacity remaining on the $275 million that we established in December, and so that's also baked into our numbers for the year, and that will include some immediate use of I got it.

Kim: It's more of a row for Theres no notifying pricing there.

Kim: Moreover, over similar to our other other similar to our other jv's keep in it.

Kim: You know we have the ability to be very involved at the end of that process, there's a either a marketing or some kind of evaluation process. That's involved and then also similar to our other ventures. There's a you know based on the returns that we've provided to our partner promote opportunity that would help reduce the.

Kim: Purchase price to us at that point in time.

Speaker Change: Okay and.

Speaker Change: I think the total sales are about like 850 million or so just roughly speaking like what percent of those proceeds or are you thinking about to use for a repurchase versus paying down debt versus buying assets.

Speaker Change: Okay.

Speaker Change: Yeah, I would characterize it this way. He then we've as Dave said at the beginning.

Speaker Change: We really kind of defined last year middle of the year a strategy that we've been executing on over these past couple of quarters.

Ki Bin Kim: Thanks, guys. Thank you. Our next question is from Ki-Bin Kim with Truist. Please proceed.

David G. Cramer: Thank you. Just going back to some of the asset sales, you mentioned that in the JV, you might have an opportunity to buy them back. I was just curious if there is any kind of contractual option language with some type of set pricing that's in the contracts, or is it just more of a roofer?

Speaker Change: Hi, Neil paying down our line of credit freeing up some dry powder, taking advantage of dislocation in our stock price through the repurchase program and then obviously executing on some of these portfolio improvement.

Speaker Change: Strategies.

Speaker Change: So if you say 35 number that you mentioned that we disclosed.

David G. Cramer: It's more of a roafer, there's no defined pricing there, but yeah, more of a roafer. However, similar to our other JVs, Keevan, we have the ability to be very involved at the end of that process. But there's either a marketing or some kind of valuation step process that's involved. And then, also, similar to our other ventures, there's, based on the returns that we've provided to our partners, a promotion opportunity that would help reduce the purchase price to us at that point in time. Okay. And I think the total sales are about $850 million or so. Just roughly speaking, like what percent of those proceeds are you thinking about using for repurchase versus paying down debt versus buying assets? Yeah, I would characterize it this way, Keegan.

Speaker Change: You go back to six months ago, when we started getting really active under our repurchase program. We've done about a little over 300 million, we've got a little less than $200 million available on the.

Speaker Change: Recently established program, if we exhaust that that would be about $500 million of share repurchases and and the rest would be debt pay down and that gives you a 60% equity 40% debt mix, which is not dissimilar from.

Speaker Change: The capitalization of the company prior to all these these executions and so that.

Speaker Change: Those numbers are deliberate and kind of hang together with with a path that we sat down on of course that can change.

Brandon S. Togashi: You know, as Dave said at the beginning, we really kind of defined last year's, middle of the year strategy that we've been executing on over these past couple quarters, on, you know, paying down our line of credit, freeing up some dry powder, taking advantage of the dislocation in our stock price through the repurchase program, and then obviously executing on some of these portfolio improvement strategies. And so the 835 number that you mentioned that we disclosed, if you go back to six months ago, when we started getting really active under our repurchase program, we've done about a little over $300 million. We've got a little less than $200 million available under the recently established program. If we exhaust that, that would be about $500 million of share repurchases, and the rest would be debt pay down.

Speaker Change: Market conditions change if acquisition opportunities become more favorable in the next few months then the share repurchases and we'll switch and pivot, but that's that's kind of how we foresaw this playing out and so far it's played out that way.

Speaker Change: Okay, and then I'm not sure if I missed it but did you guys talk about what the right four odd year over year change in <unk> and how that trended in January February.

Speaker Change: Are you talking street rate or I'm, sorry, excuse.

Speaker Change: Sure you're right.

Speaker Change: Spirit.

Speaker Change: We ended the fourth quarter about negative 14, two year over year fourth quarter pinch down to just a this is a shade above 10.

Speaker Change: And so far this year it hasnt kept up much the spread hasn't changed much.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question is from Eric <unk> with Wells Fargo. Please proceed.

Eric Wolfe: Alright, great. Thanks for taking the question I wanted to touch higher level, Dave on the technology side I know you touched on this on the investments Youre, making are are you looking to perhaps be even more dynamic in how how you price your units from a revenue management perspective, and then I know you've talked in the past about unit reconfiguration.

Brandon S. Togashi: And that gives you a 60% equity, 40% debt mix, which is not dissimilar from the capitalization of the company prior to all these executions. And so those numbers are deliberate and kind of hang together with the path that we set down on. Of course, that can change if market conditions change, if acquisition opportunities become more favorable in the next few months than share repurchases, then we'll switch and pivot. But that's kind of how we foresaw this playing out, and so far, it's played out that way. Okay, and I'm not sure if I missed it, but did you guys talk about what the rates were on the year-over-year change in 4Q and how that trended in January and February? Are you talking street rates or what? I'm sorry.

Eric Wolfe: That could be a source of occupancy upside or is that something that you know we should see throughout the course of this year or kind of a longer term aspiration.

David G. Cramer: Yeah, great questions. Thanks for thanks for being with US today, we really really invested heavily with team and technology and we're starting to see that pay off particularly around revenue management from the strength of the ECR I program as we talked about earlier and our conviction around what we can do with attendance and what the successes we've had there and so that's.

The immediate first and then we've actually implemented a couple of the front end pricing models that we're testing it could look a little bit more around the ideal occupancy and street rate mix and so those models are just been stood up and they're actually in the testing mode in several markets and we're starting to see different iterations come out of that.

Ki Bin Kim: Street rate. Yeah, that's great. So, you know, we entered the fourth quarter about negative 14.2 year-over-year. The fourth quarter pinched down to, this is a shade above 10, and so far this year, it hasn't crept up much.

David G. Cramer: The spread hasn't changed. Okay, thank you. Thank you. Our next question is from Eric Luebchow with Wells Fargo. Please proceed.

David G. Cramer: Along with a an automated Google good models. So we're actually looking at how we take the technology and apply it to when we're spending AD dollars. How we're spending that dollars what we do with that investment when do we get the best return out of it and so all of these things that we've been working on are really starting to put themselves in play and that's what gives us.

Eric Thomas Luebchow: All right, great. Thanks for taking the time to answer the question. You know, I wanted to touch on a higher level, Dave, on the technology side. I know you touched on this in the investments you're making. Are you looking to perhaps be even more dynamic in how you price your units from a revenue management perspective? And then, I know you've talked in the past about unit reconfiguration, and that could be a source of occupancy upside. Is that something that, you know, we should see throughout the course of this year or kind of a longer-term aspiration? Yeah, great questions. Thanks for thanks for being with us today.

David G. Cramer: Good outlook I think longer term as we learn and as we adapt and as we get better, particularly in competitive markets, but as we come out of this competitive market, where we can really do to drive our business forward and the last thing that we didn't talk a lot about is we have a.

David G. Cramer: A lot of time around our customer service center, we've really added on a tremendous amount of talent in that organization and team members in that organization. So as you think about our payroll model that we've been working on about staffing hours and reduction of staffing hours and having satellite properties and remote properties.

David G. Cramer: Yeah, we've really, really invested heavily in the team and technology. And we're starting to see that payoff, particularly around revenue management, from the strength of the ECRI program, as we talked about earlier, and our conviction around what we can do with the tenants and the successes we've had there. And so that's been the immediate first. And then we've actually implemented a couple of front end pricing models that we're testing, you know, to see if it could look a little bit more around the ideal occupancy and street rate mix. And so those models have just been set up, and they're actually in their testing modes in several markets. And we're starting to see different iterations come out of that. And along with an automated Google bid model.

David G. Cramer: Customer service centers really become an important piece.

David G. Cramer: So that the consumer can deal with us digitally and they can deal with us over the phone.

David G. Cramer: So the new operating platform, we stood up in the fourth quarter allows all of this customer service center, a seamless integration to all of the platforms and it really helps us conduct business remotely and so yeah. It's a it's it's.

David G. Cramer: Look at what the team went through in the back half of the year.

David G. Cramer: With this strategic initiatives, but it's not to be underscored how much of a lift it was to get the technology pieces in place.

David G. Cramer: So we're actually looking at how we take, you know, the technology and apply it to when we're, you know, spending ad dollars, how we're spending that dollars, what we do with that investment, when we get the best return out of it. And so all of these things that we've been working on are really starting to come into play. And that's what gives us a really good outlook, I think, longer term, as we learn and as we adapt, and as we get better, particularly in competitive markets. But as we come out of this competitive market, what we can really do to drive our business forward. The last thing that we didn't talk a lot about is that we spend a lot of time around a customer service center.

David G. Cramer: It's I'm proud of them.

And looking back on it you know a year or two from now we're going to be really really happy with what we completed.

Speaker Change: Great and then just just wanted to follow up I know you touched a little bit on the CRA program right.

Speaker Change: I believe you said in some previous periods of kind of the average increase was somewhere in the 13% to 15% range across your portfolio. Just wondering if you know or are you are you having success, especially for some of the lower red customers over the last year, pushing a you know a much higher magnitude rate increase.

Speaker Change: Earlier in the cycle, and then perhaps slightly lower rate increases for your longer tenured customers or how do we kind of think about that dynamic are embedded in your guidance. Thanks.

David G. Cramer: We've really added a tremendous amount of talent to that organization and team members to that organization. So as you think about our payroll model that we've been working on about staffing hours and reduction of staffing hours and having satellite properties and remote properties, the customer service center has really become an important piece so that the consumer can deal with this digitally; they can deal with this over the phone. And so, you know, the new operating platform we stood up in the fourth quarter allows all of this customer service center seamless integration into all of the platforms, and it really helps us conduct business remotely.

Speaker Change: I think youre thinking about it the right way we are learning you know, particularly on the the new entries that we can we can certainly push harder and as you work your way further to the lifecycle.

Speaker Change: Maybe it's less of a frequency or less of an impact of a rate increase but yes. The technology is certainly teaching us to be.

Speaker Change: We can have a little different approach to newer customers given today's environment to where they are coming in at a pretty discounted rate. If you think about environment.

Speaker Change: We certainly are being a little more impactful on that first rate increase.

David G. Cramer: And so, yeah, you know, it's a... It's, I look at what the team went through in the back half of the year with the strategic initiatives, but it should be underlined how much of a lift it was to get the technology pieces in place. And, you know, I'm proud of them.

Speaker Change: Thank you Dave.

David G. Cramer: Okay. Thank you.

David G. Cramer: As a reminder, the star one on your telephone keypad, if he would like to ask a question. Our next question is from Michael Goldsmith with UBS. Please proceed.

Eric Thomas Luebchow: And looking back on it, you know, a year or two from now, we're going to be really, really happy with what we have. Great. And just one follow-up. I know you touched on this a little bit in the ECRI program. I believe you've said in some previous periods that the kind of average increase was somewhere in the 13 to 15 percent range across your portfolio. Just wondering if, you know, you've had success, especially for some of the lower-rent customers over the last year, pushing a much higher-magnitude rate increase earlier in the cycle, and then perhaps slightly lower rate increases for your longer-tenured customers? Or how do we kind of think about that dynamic embedded in your guide? Thanks.

Michael Goldsmith: Good afternoon, and thanks, a lot for taking my question, Dave you mentioned that.

Michael Goldsmith: February move ins were up move outs were down making a net rental month, but what does your data.

Michael Goldsmith: Surveys show, that's driving the improvement or what's the thesis behind the improvement in February.

David G. Cramer: It's a good question and there are surveying is actually showing a little bit more tenants moving a little bit now maybe theyre moving an apartment department and maybe not to house the house, but we did see a little more uptick in people who are moving in so that's encouraging and that's just an exit surveys Michael as we poll customers coming and going new rentals and people who are moving out.

David G. Cramer: I think you're thinking about it the right way. We are learning, you know, particularly on the new entries that we can we can certainly push harder. And as you work your way farther through the life cycle, you know, maybe it's less of a frequency or less of an impact of a rate increase. But yes, the technology is certainly teaching us to be, we can we can have a little different approach to newer customers, given today's environment to where they are coming in at a pretty discounted rate. If you think about environment, we certainly are being a little more impactful on that first rating. All right. Thank you, Dave. Hey, thank you. As a reminder, there's star one on your telephone keypad if you would like to ask a question. Our next question is from Michael Goldsmith with UBS, please proceed. Good afternoon.

David G. Cramer: And so that's encouraging because I think that's really the larger part of our business is missing right now and the demand factors around that transition.

David G. Cramer: The rest of the metrics really not a whole lot of change about what were serving I would say that's probably the point that we saw a little more positive impact on.

Speaker Change: Thanks for that and Brendan just thinking about the asset sales.

Speaker Change: The facilities that you sold tend to have lower revenue growth lower margin profiles.

Brendan: Is there any framework to think about how the what sort of benefit you'll see without these facilities in New York.

Speaker Change: In your portfolio. For example, you sold 70 properties its about 10% of the same store portfolio and if they were growing 250 basis points slower than it should be at about a 25 basis point benefit to same store revenue growth is there is there any way to kind of frame that out on the impact on the whole portfolio. Thanks.

Michael Goldsmith: Thanks a lot for taking my question. Dave, you mentioned that in February, move-ins were up, and move-outs were down, making it a net rental month, but what does your data or your surveys show that's driving the improvement? What's the thesis behind the improvement? It's a good question.

Speaker Change: Yeah, Michael so.

Michael Goldsmith: I think the best way for me to give you a sense of just.

David G. Cramer: Our surveying is actually showing a little bit more tenants moving a little bit now; maybe they're moving from apartment to apartment and maybe not to house to house, but we did see a little more uptick in people who are moving. And so that's encouraging. And that's just on exit surveys, Michael, you know, as we pull customers coming and going for new rental properties and people who are moving out. And so that's encouraging because I think that's really the larger part of our business that's missing right now in the demand factors around that transition. Other the rest of the metrics, really not a whole lot of change about what we're surveying. I would say that's probably the point where we saw a little more positive impact. Thanks for that. And, Brandon, just thinking about asset sales, the facilities that you sold tend to have lower revenue growth and lower margin profiles in the core portfolio. Is there any framework to think about, you know, how the, you know, what sort of benefit you'll see without these facilities in your portfolio?

Michael Goldsmith: Some of those assets, we obviously completed the sale in the fourth quarter. So I don't have like a full year of of numbers for those properties others were held for sale and I do but I know when I looked at it through 930 for example, like the nine months year to date.

Michael Goldsmith: And our old same store pool was 834 stores and then as you saw we revise that down to 724 that did that did help to improve the performance of that remaining 724 stores. It wasn't numbers are going to knock you out of your seat. It was maybe 10 basis points on revenue, maybe 20 basis.

Michael Goldsmith: On NOI, where that growth profile of the remaining 70 724 was.

Michael Goldsmith: Better than that.

Michael Goldsmith: The 834 that still have the blended effect of no assets that we have now sold.

Michael Goldsmith: So I think it's modestly better in that regard obviously, we talked earlier on the call without the NOI margin, that's a more meaningful impact.

Brandon S. Togashi: For example, you sold 70 properties, that's about 10% of the same store portfolio. And if they were growing 250 basis points slower, it should be about a 25 basis point benefit to seeing store revenue growth. Is there, is there any way to kind of frame that out on the impact on the whole portfolio? Yeah, Michael.

Michael Goldsmith: And then I think also just hits on some of the other things that Dave remark economy, Theres, just a lot of operational efficiencies in terms of where those assets are located in just in markets, where we didn't have a tremendous amount of scale and so there's there's a lot of benefit that you maybe don't quite see in the numbers I just cited but from a running the portfolio running our regions and divisions, there's a lot of efficiencies there.

Brandon S. Togashi: So I think the best way for me to give you a sense is just, you know, some of those assets, we obviously completed the sale in the fourth quarter, so I don't have like a full year of numbers for those properties. But others were held for sale. And I do.

Speaker Change: Thank you very much good luck in 2024.

Speaker Change: Thanks, Michael Thanks, Michael.

Brandon S. Togashi: But I know when I looked at it through 930, for example, like the nine months here to date, and our old same store pool was 834 stores. And then, as you saw, we revised that down to 724. That did help the performance of the remaining 724 stores. But those weren't numbers that were going to knock you out of your seat.

Speaker Change: Our next question is from Ronald Camden with Morgan Stanley. Please proceed.

Ronald Kamdem: Hey, Danielle wrong I definitely see a quick question.

Ronald Kamdem: Your line is sharing that isn't that occupancy rates year over year.

Ronald Kamdem: So as of today and I know you have a few hours of finished February but.

Ronald Kamdem: Curious about that.

Ronald Kamdem: So gena on occupancy.

Brandon S. Togashi: It was maybe 10 basis points on revenue, maybe 20 basis points on NOI, where that growth profile of the remaining 724 was, you know, better than the 834 that still had the blended effect of, you know, assets that we have now sold. So I think it's modestly better in that regard. Obviously, we talked earlier on the call about the NOI margin, so that's a more meaningful impact. And then I think, you know, it also just hits on some of the other things that Dave remarked on.

Gena: We don't want to really speak too much about February just because you know there is some movement towards the last few days of the month, but in my opening remarks, I mentioned that the spot occupancy at the end of January was 390 basis points down over prior year that has tightened a little bit in February I think is we're going to probably be closer to 380 basis points just on based on the last two.

Gena: Days of year over year, So that goes hand in hand, with what Dave said earlier about February having some some optimistic read throughs.

Brandon S. Togashi: I mean, there's just a lot of operational efficiencies in terms of where those assets are located and just in markets where we didn't have a tremendous amount of scale. And so there's a lot of benefits that you maybe don't quite see in the numbers I just cited. But from running the portfolio, running our regions and divisions, there's a lot of efficiency. Thank you very much.

Speaker Change: And then street rate I don't have in front of me on February but David If you do so yeah, yeah, I mean, the street rate itself I mean, it's we talked about we came out of street rates down about 10, 5% in the fourth quarter Street rates. You know in February were similar to same spirits, you got maybe a point point and a half.

Speaker Change: You know a little bit worse compared to where they were a year ago. So maybe closer to 12 12, 5% down year over year.

Michael Goldsmith: Good luck in 2024. Thanks, Michael. Our next question is from Ronald Kamden with Morgan Stanley. Please proceed. Hey, it's Jenny.

Speaker Change: And that I think largely that's because we are testing some markets around you know can we by improving our rate can we drive some better occupancy and trying to figure out a better revenue model, so a little little deterioration in year over year Street rate.

Ronald Kamdem: I just have a few quick questions. First, would you mind sharing the exact occupancy and street rates year-over-year change as of today? I know we still have a few hours to finish February, but, Thank you for that. So, Jenny, on occupancy, you know, we don't really want to speak too much about February just because, you know, there is some movement towards the last few days of the month, but in my opening remarks, I mentioned that the spot occupancy at the end of January was 390 basis points down over the prior year. That has tightened a little bit in February, but I think we're probably going to be closer to 380 basis points just based on how the last few days have looked year over year.

Speaker Change: Thanks, so much and how should I think about pricing power this upcoming peak season.

Speaker Change: First as you can see our endorsed or something like that.

Speaker Change: That's a really good question.

Speaker Change: We all approach last year thinking we could raise street rates and habit occupancy lift and I think in our markets. We've lifted street rates and we saw no change in occupancy.

Speaker Change: We're gonna be able probably a little more cautious around the street rate lift.

Speaker Change: See what we can drive an occupancy as we go through the first couple of months of the spring leasing season. It also it really market by market store by store comparisons on what the competitive set looks like.

Ronald Kamdem: So that goes hand in hand with what Dave said earlier about February having some optimistic read throughs. And then street rate, I don't have in front of me for February, but Dave, if you do. Yeah, yeah, I mean, the street rate itself, as we talked about, we came out of street rates down about ten and a half percent in the fourth quarter. Street rates, you know, February were similar to same-street rates. We got maybe a point, a point and a half, you know, a little bit worse compared to where they were a year ago.

Speaker Change: There are certainly things, we can't control and if it remains very competitive then we will not be able to drive any type of street rate lift.

Speaker Change: If we think the competitive sets are moving up will move up with them.

Speaker Change: Makes sense I kind of just squeeze another one I just thought Oh asset cell phone like do you plan to sell additional bathrooms.

Speaker Change: For like after this one to recycle some capital.

Speaker Change: All right.

David G. Cramer: So maybe closer to twelve, twelve and a half percent down year over year. And then I think largely that's because we are testing some markets around, you know, can we, you know, by improving our rate, can we drive some better occupancy and try to figure out a better revenue model? So a little, little deterioration in the year over year street rate makes sense. Thanks so much. And how should I think about pricing power this upcoming peak leasing season compared to last year in your specific market? That's a really good question.

Speaker Change: I certainly think we're not done looking at the portfolio optimization I don't think the large lift is over and so now I think it can be a little more selective.

Speaker Change: It may not you may not come in chunks. It may just be you know singles ones and twos or maybe some doubles here, but probably not logged large chunks at this point.

Speaker Change: Okay. Thanks, a lot.

Speaker Change: Before.

Speaker Change: Hey, Thank you thanks for joining us.

Speaker Change: We have reached the end of our question and answer session I would like to turn the conference back over to George Hoglund for closing remarks.

David G. Cramer: You know, I think we all approached last year thinking we could raise street rates and have an occupancy lift. And I think, you know, in our markets, we've raised street rates, and we saw no change in occupancy. I think we're going to be a little more cautious around the street rate lift and then see what we can drive in occupancy as we go through the first couple of months of the spring leasing season. But it also, really, market by market, store by store, depends on what the competitive set looks like.

George Andrew Hoglund: Thank you all for your continued interest in NSA. We're excited about the opportunities that lie ahead in our current position to be able to take advantage of those opportunities. We look forward to seeing many of you next week in Florida.

George Andrew Hoglund: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

David G. Cramer: You know, there are certainly things we can't control. And if it remains very competitive, then we will not be able to drive any type of street rate lift. If we think the competitor sets are moving up, we'll move up with them. It makes sense. I kind of just squeeze another one, like, just on assets to sell from, like, do you plan to sell, like, an additional batch of assets in 24, like, after this one to recycle some capital? Or is that not something in your mind?

George Andrew Hoglund: Yeah.

George Andrew Hoglund: [music].

George Andrew Hoglund: Yeah.

George Andrew Hoglund: Yeah.

George Andrew Hoglund: [music].

David G. Cramer: I certainly think we're not done looking at portfolio optimization. I don't think the large lift is over, and so now I think it's going to be a little more selective. It may not come in chunks.

David G. Cramer: It may just be singles, ones, and twos, or maybe some doubles here, but probably not large chunks at this point. Okay, thanks so much. Good luck in 2024. Thank you. Thanks for joining us. We have reached the end of our question and answer session. I would like to turn the conference back over to George Hoglund for a closing remark. Thank you all for your continued interest in NSA. We're excited about the opportunities that lie ahead and our current position to be able to take advantage of those opportunities. We look forward to seeing many of you next week in Florida.

George Andrew Hoglund: Yes.

George Andrew Hoglund: [music].

George Andrew Hoglund: Yeah.

George Andrew Hoglund: [music].

George Andrew Hoglund: Yeah.

George Andrew Hoglund: [music].

George Andrew Hoglund: Yeah.

George Andrew Hoglund: [music].

George Andrew Hoglund: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation, www.

George Andrew Hoglund:

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