Q4 2024 National Storage Affiliates Trust Earnings Call

February 27, 2025

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 you to your host George Hoglund Investor Relations.

Speaker Change: Thank you George you may begin we'd like to thank you for joining us today for the fourth quarter 2024 earnings conference call of National storage affiliates Trust on the line with me here today are NSA as president and CEO, Dave Cramer and CFO brand into Gotcha.

Speaker Change: 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.

Speaker Change: In addition 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 NSA storage Dot com.

Speaker Change: 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 managements estimates as of today February 27th 2025.

Speaker Change: The company assumes no obligation to revise or update any forward looking statements because of changing market conditions or other circumstances. After the date of this conference call. The company cautions that actual results may differ materially from those projected in any forward looking statements.

Speaker Change: Greetings, and welcome to the National Historic Distinguished Trustful Supporter 2024 Conference Call. At this time, all participants are in a listen-only mode. The customer may have suggestions for all of these one-off frequencies. If anyone should require operator assistance during the conference, please press star zero on your telephone contact. As a reminder, this conference is being recorded.

For additional details concerning our forward looking statements. Please refer to our public filings with the SEC.

Dave Cramer: We also encourage listeners to review the definitions and reconciliations of non-GAAP financial measures such as <unk> core <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.

Speaker Change: We'd like to thank you for joining us today for the fourth quarter of 2024 earnings conference call of National Storage Affiliates Trust. I'm aligned with me here today for NSA's President and CEO, Dave Cramer, and CFO, Brandon Togashi. Following prepared remarks, management will accept questions from registered financial analysts.

Thanks, George and thanks, everyone for joining our call today.

Dave Cramer: Thoughts and prayers go out to all those affected by the California wildfires.

Dave Cramer: While our portfolio is not materially impacted we serve customers and have employees in these areas and we wish all of those affected by these tragic events the best as they go through their recovery period.

Dave Cramer: Fourth quarter capped off what was a very productive year of strategically positioning MSA for our next phase of growth.

Speaker Change: 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 furnished our supplemental package with additional detail on our results, which may be found in the Investor Relations section on our website at NSAstorage.com.

Dave Cramer: We realized several significant accomplishments in 2024, including.

Dave Cramer: Internalization of the <unk> structure, which included consolidating our brands from 12 months to seven.

Dave Cramer: The onboarding of approximately 250 properties and over 380 employees to our corporate platform.

Speaker Change: 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 will represent management's efforts in curbing COVID-19.

Dave Cramer: We consolidated our web domains, putting all of our stores are the NSA stories Dot com.

Dave Cramer: We finished the conversion of all of our stores to a single new property management system.

Dave Cramer: We deployed $150 million of growth capital and our newly formed joint venture.

Speaker Change: On the line with me here today are NSA's President, CEO, David 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. For additional details concerning our forward-looking statement, please refer to our public file information. We also encourage you to just review the detail on our results

Dave Cramer: We sold 40 noncore facilities to third parties for over $270 million and used proceeds to pay down debt and purchased $65 million of properties.

Dave Cramer: And we repurchased $275 million of common shares.

Dave Cramer: It was a very busy year for everyone at NSA, but I'd like to thank all of our team members for their hard work and dedication.

Dave Cramer: Now that the heavy lifting is behind us we.

Dave Cramer: We can fully concentrate our efforts on maximizing the performance of our existing portfolio using our consolidated operating platforms and upgraded marketing tools.

Dave Cramer: All of which benefit from increased scale and efficiency.

Dave Cramer: This will directly impact our shareholders returns as we no longer show the upside with our pros.

Dave Cramer: Although the current operating conditions remain challenging due to elevated supply immediate transitory demand from historically low home sales.

Dave Cramer: Liam term outlook for the self storage sector and NSA in particular is that the best it's been in the past few years for the following reasons.

Dave Cramer: We are near a bottom in the housing market and then when a recovery comes and if they should realize an outside benefit in that recovery.

Speaker Change: For additional details concerning our forward-looking statements, please refer to our public filings with the FCC.

Dave Cramer: Housing turnover in the U S has fallen below dfc levels.

Speaker Change: We also encouraged listeners to review the definitions and reconciliations of non-capital measures such as FFO, RFO, and Net Operating Income contained in the supplemental information package available in the Investor Relations second audit website and in our SEC file. I'll now turn the call over to Dan. Thanks George. And thanks everyone for joining our call today.

Dave Cramer: Turning around the lowest levels in the past 40 years.

Dave Cramer: Pent up demand that should contribute to an eventual recovery.

Dave Cramer: Further our markets have a higher average percentage of homeowners versus renters, which means that our portfolio is more sensitive to changes in the overall level of housing turnover.

Dave Cramer: And supply is coming down new deliveries across our markets are expected to decline substantially over the next few years.

Dave Cramer: With the rentable square feet as a percentage of stock going down from three 5% in 2024% to 2% by 2027, which.

Dan: We serve customers and have employees in these areas. We sold 49 core facilities to third parties for over $270 million in these proceeds to pay down debt.

Dave Cramer: Which is well below the long term national average according to you already.

Speaker Change: and purchased 6.25 million gallons of properties and we repurchased $275 million in the NSA for our next phase of growth. It was a very busy year for everyone at NSA and I would like to thank all of our team members for their hard work and dedication. The generalization of the pro structure, now that's heavy lifting of the economy, we can fully concentrate our efforts on maximizing the performance of our existing portfolio using our consolidated operating platforms and upgraded marketing, all of which benefits from the NSA's scale and efficiency.

Dave Cramer: Lastly, NSA is year over year comparisons become noticeably easier in the back half of the year, which combined with these anticipated improvements in supply demand variables will likely drive healthy momentum into 2026 and beyond.

Now turning to operating trends it does feel like fundamentals are reaching an inflection 0.1st.

Dave Cramer: First our street rates trough in October.

Dave Cramer: Down about 24% year over year basis, and improved through December if any is down 13%.

Speaker Change: This will directly impact our shareholders' returns as we no longer share the upside with our pros. Although the current operating conditions remain challenging, joint elevator supply and muted transitory demand from the historic New York home sales to third-party medium-term outlooks is up $3.7 million.

Dave Cramer: Second a rent roll down peaked at 38% in October and narrowed a 27% in December.

Dave Cramer: Third our year over year occupancy Delta also continued to narrow.

Speaker Change: And in this particular year, we purchased $275 million in properties for the following year. And we repurchased $275 million in dormitories. We are near a bottom in the housing market. It was a very busy year for everyone in the state. And I'd like to thank all of our team members for their hard work and dedication.

Dave Cramer: 270 basis points at the end of the third quarter to about 140 basis points at the end of the fourth quarter.

Dave Cramer: As a result in December we experienced a sequential increase in contract rates by 30 basis points.

Dave Cramer: We are encouraged by January trends, which were largely consistent with December.

Speaker Change: Housing turnover in the U.S. has fallen below GFC levels, but we can fully concentrate our efforts on maximizing the performance of our existing portfolio by intensifying demand using our consolidated operating platform and upgraded marketing tools.

Dave Cramer: Our existing customer base remains healthy.

Dave Cramer: We continue to be pleased with the success of our <unk> program. The length of stays remain above historical averages and bad debt expense remains with expected ranges.

Speaker Change: Further, all markets that have a higher average percentage of homeowners versus renters. This will directly impact our shareholder's return as we've changed the overall level of housing turnover. And supply is coming down. New deliveries across our market are expected to decline substantially over the next few years with rentable square feet as a percentage of stock going down from 3.5 percent in the past few years for the following reasons.

Dave Cramer: Moving to the acquisition environment remains a healthy volume of opportunities come across our desk.

Dave Cramer: We successfully closed four assets totaling approximately $40 million during the quarter and have over $35 million of property is closed or under contract year to date. In summary, we are finding a trough in fundamentals supply backdrop is improving and the housing market is poised for a recovery.

at 2027.

Speaker Change: We are near a bottom in the housing market, and when the recovery comes, NSA should realize that. Lastly, NSA's year-over-year comparisons become noticeably easier in the back half of the year, which combined with these anticipated improvements in several of the lowest levels in the past 40 years, likely to drive healthy momentum into 2026.

Dave Cramer: While the pace of that recovery is hard to predict we are well positioned to take advantage of the improving fundamental backdrop.

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

Brendan: Thank you Dave.

Brendan: Yesterday afternoon, we reported core <unk> per share of <unk> 60 for the fourth quarter of 2024.

Speaker Change: and beyond to an eventual recovery. Now turning to operating trend, our markets have a higher average of spending on homeowners versus renters. First, our street rates at our portfolio is more sensitive to changes down from the overall level of housing per year basis.

Brendan: $2 44 for the full year.

Brendan: At the high end of our guidance range, driven primarily by G&A and management fees and other revenue coming in better than our guided ranges.

Speaker Change: and improved through December to make down 13%. New deliveries across our markets are expected to roll down and peak in the next few years and narrow 27% as a percentage of stock going down from 3.5% per year over year opportunity delta also continues to narrow at 2027. Down 270 basis points in the third quarter, down 140 basis points at the end of the fourth quarter.

Brendan: Same store revenue and NOI growth came in at our guidance midpoint.

Down, 3% and five 5% respectively over the prior year.

Brendan: For the quarter same store revenues declined four 3% driven by a decline in rental revenue per square foot of two 5%.

Speaker Change: Lastly, as a result, in December, we experienced a sequential increase in contract rates, combined with these anticipated improvements in supply-demand variables, will likely drive healthy momentum in the current 26 and beyond.

Brendan: And a 180 basis point year over year decline in average occupancy.

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

Brendan: The main drivers of growth in the fourth quarter for property tax marketing and utilities.

Speaker Change: Our existing customer base remains healthy, and we continue to be pleased with the success of our ECRI program. Our industry rates dropped, and our growth is down about 24% year-over-year based expected rates, and improved through December to finish down to 36%.

Brendan: Property tax in particular was elevated during the fourth quarter due to expense true ups based on final known bills.

Brendan: For the full year property taxes marketing and insurance were the main drivers, partially offset by a year over year decline in payroll expenses.

Brendan: Now speaking to the balance sheet, we have no maturities in 2025, and our current revolver balance is roughly $430 million, giving us over $500 million of availability.

Brendan: During the quarter, we put in place a new $400 million ATM program, and a $350 million share repurchase program to provide flexibility with our balance sheet.

Brendan: We've had no activity in either program to date.

Brendan: Our leverage was six five times net debt to EBITDA at quarter end.

Brendan: While we believe our year over year same store performance has bottomed and near term negative NOI growth along with the first quarter being seasonally the weakest.

Have over $35 million of property is closed or under contract year to date in summary, we are finding a trough in fundamentals.

Brendan: Additional pressure on leverage for the next couple of quarters.

Brendan: We expect this temporary pressure to ease as our organic growth and flex the positive in the back half of the year and we anticipate the potential near term asset sales could aid as a partial offset.

The backdrop is improving.

And the housing market is poised for recovery.

While the pace of that recovery is hard to predict we are well positioned to take advantage of the improving fundamental backdrop.

Brendan: Now moving onto 2025 guidance, which we introduced yesterday.

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

Thank you Dave.

Brendan: The operating environment remains competitive to start the year, which continues to weigh on rental rates and occupancy and.

Yesterday afternoon, we reported core <unk> per share of <unk> 60 for the fourth quarter of 2024.

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

$2 44 for the full year.

At the high end of our guidance range, driven primarily by G&A and management fees and other revenue coming in better than our guided ranges.

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

Same store revenue and NOI growth came in at our guidance midpoint.

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

Brendan: Same store revenue growth that is flat.

Down, 3% and five 5% respectively over the prior year.

Brendan: Same store operating expense growth of three 5%.

For the quarter same store revenues declined four 3% driven by a decline in rent revenue per square foot of two 5%.

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

Brendan: And core <unk> per share of $2 34.

Brendan: We have also guided to acquisition and disposition ranges of $100 million to $300 million.

And a 180 basis point year over year decline in average occupancy.

Expense growth was four 7% in the fourth quarter and three 7% for the full year.

Brendan: In both cases these dollar amounts represent NSA share of any JV activity.

The main drivers of growth in the fourth quarter for property tax marketing and utilities.

Brendan: Now, let me give some color on the larger drivers of our core <unk> per share at the midpoint of $2 34.

Property tax in particular was elevated during the fourth quarter due to expense true ups based on final known bills.

Brendan: Compared to our full year 2024 results of $2 44.

Brendan: Roughly half of the <unk> decline can be attributed to interest expense and the other half can be attributed to negative organic growth.

For the full year property taxes marketing and insurance were the main drivers, partially offset by a year over year decline in payroll expenses.

Brendan: Partially offset by accretion from the internalization of the pro structure.

Now speaking to the balance sheet, we have no maturities in 2025, and our current revolver balance is roughly $430 million, giving us over $500 million of availability.

Brendan: Regarding interest expense, although we addressed all of our 2025 maturities last year at the beginning of this month, we had interest rates swaps mature.

During the quarter, we put in place a new $400 million ATM program, and a $350 million share repurchase program to provide flexibility with our balance sheet.

Brendan: <unk> $225 million of our revolver balance and a rate just under 3%.

Brendan: With both swaps no longer in place at $225 million is subject to the effective rate on our revolver, which was about 275 basis points higher.

It had no activity in either program to date.

Our leverage was six five times net debt to EBITDA at quarter end.

Brendan: We also have the exploration of swaps on $250 million of notional in August 2024.

While we believe our year over year same store performance has bottomed and near term negative NOI growth along with the first quarter being seasonally the weakest.

Brendan: The effect of these rate resets, partially offset by our variable rate debt benefiting from lower short term rates in 2025 versus prior year is approximately five pennies of <unk>.

Additional pressure on leverage for the next couple of quarters.

We expect this temporary pressure to ease as our organic growth and flex the positive in the back half of the year and we anticipate the potential near term asset sales could aid as a partial offset.

Brendan: Regarding organic growth as I mentioned earlier, we believe we have trough on our year over year performance and expect to see sequential improvement going forward.

Now moving onto 2025 guidance, which we introduced yesterday.

Brendan: Our base case assumes that we began the year with same store NOI growth in the negative mid single digits and that we exit the year with positive same store NOI growth in the low to mid single digits.

The operating environment remains competitive to start the year, which continues to weigh 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: High end of our guidance range assumes a better than average spring leasing season fueled by a recovery in the housing market.

We thus factored a wide range of scenarios into our full year guidance assumptions, which are detailed in the earnings release.

Brendan: Low end incorporates no material improvement in the housing market with muted seasonality in pricing power.

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

Brendan: The midpoint assumes a moderately better spring leasing season than last year characterized by improving pricing power and occupancy through the summer months.

Same store revenue growth that is flat.

Same store operating expense growth of three 5%.

Same store NOI growth of negative one 4%.

Brendan: While our guidance reflects a wide range of outcomes at some point the pent up demand associated with housing and job related mobility will be unlocked.

And core <unk> per share of $2 34.

We have also guided to acquisition and disposition ranges of $100 million to $300 million.

Brendan: Which combined with an improving supply outlook creates a healthy backdrop for self storage fundamentals.

In both cases these dollar amounts represent NSA share of any JV activity.

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

Now, let me give some color on the larger drivers of our core <unk> per share at the midpoint of $2 34.

Speaker Change: Thank you we will now be conducting a question and answer session.

Compared to our full year 2024 results of $2 44.

Speaker Change: As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.

Roughly half of the <unk> decline can be attributed to interest expense and the other half can be attributed to negative organic growth.

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Partially offset by accretion from the internalization of the pro structure.

Speaker Change: Participants using speaker equipment.

Speaker Change: May be necessary to pick up your handset before pressing the stock East mine.

Regarding interest expense, although we addressed all of our 2025 maturities last year at the beginning of this month, we had interest rates swaps mature.

Speaker Change: One moment, please while we poll for questions.

<unk> $225 million of our revolver balance at a rate just under 3%.

Speaker Change: Thank you.

Those swaps no longer in place at $225 million is subject to the effective rate on our revolver, which is about 275 basis points higher.

Speaker Change: Your next question comes from the line of Sameer to now with Evercore ISI. Please proceed.

Speaker Change: Sure.

Speaker Change: Yes, good afternoon, everyone.

We also have the exploration of swaps on $250 million of notional in August 2024.

Speaker Change: Hey, Brian when I look at your guidance you guys are guiding to pretty healthy improvement in revenue growth here I mean, you're basically going from negative 300 basis points last year.

The effect of these rate resets, partially offset by our variable rate debt benefiting from lower short term rates in 2025 versus prior year is approximately <unk> <unk> of <unk>.

Speaker Change: Even exiting about 400 basis points down to flat in 'twenty five.

Speaker Change: When looking at the midpoint, so help us kind of walk us through how you get here talk about occupancy rate growth just wanted to kind of.

Regarding organic growth as I mentioned earlier, we believe we have trough on our year over year performance and expect to see sequential improvement going forward.

Speaker Change: Get a better idea on that thanks.

Our base case assumes that we began the year with same store NOI growth in the negative mid single digits and that we exit the year with positive same store NOI growth in the low to mid single digits.

Speaker Change: Yes, Sameer. Thanks, It's Brandon look I'll, let I'll, let Dave maybe some broader themes and then I'll jump in and try to be a little more quantitative in response to your question, yes. Thanks, Mary and good question I think as we looked at 2025.

High end of our guidance range assumes a better than average spring leasing season fueled by a recovery in the housing market.

And where we came out of 2020 for 'twenty 'twenty four for US is a big transition year, we internalized all the pros.

Oh and incorporates no material improvement in the housing market with muted seasonality in pricing power.

Speaker Change: Right all of our platforms to one specific platform, we centralized all of those platforms and so it gives us some efficiencies and some strengths and really no transition and no disruption. If you think about what was going on in 2024. So as we thought about 2025 and the starting point we start at the beginning of the year, we think 'twenty 'twenty five will look like.

The midpoint assumes a moderately better spring leasing season than last year characterized by improving pricing power and occupancy through the summer months.

While our guidance reflects a wide range of outcomes at some point the pent up demand associated with housing and job related mobility will be unlocked.

Which combined with an improving supply outlook creates a healthy backdrop for self storage fundamentals.

Speaker Change: Normal seasonal pattern for the self storage sector.

Speaker Change: It will be it will peak in the summer months.

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

Speaker Change: We're looking at it thinking to ourselves that the seasonal trends will probably have about a 250 basis.

Thank you we will now be conducting a question and answer session.

Speaker Change: Basis points improvement at the peak in the summer months versus where we start the year.

Speaker Change: And then level off as you go through the back half of the year last year that was only a 140 basis points in a normal year. That's typically 300, we just think we're a little better position, where we're starting point in 2025 with the strength of the platforms and what we've internalized.

As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.

All participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Speaker Change: Some growth in the pro portfolio in the ability to grow some occupancy in that portfolio. We thought we'd have a better year than we had last year as far as occupancy growth due to the seasonal period.

Speaker Change: I think we look at it we're starting to hear about.

Speaker Change: First couple of months, probably 150 basis points on a year over year or less than what it was a year ago on the new same store pool as we're modeling. It today, we think that gap narrows through the course of the year from that 150 basis point towards the end of the year.

Thank you.

Our first question comes from the line of Samir Khanal with Evercore ISI. Please proceed.

Yes, good afternoon, everyone.

Speaker Change: And we also assumed some average contract rate grow sequentially in the low single digits throughout the year, we think the strength of our platform, particularly success around our ECR is and our ability to drive <unk> and where we're positioned today than where we were a year ago will have we will see low single digit growth throughout the course of the year, So kind of in my opinion.

And then when I look at your guidance you guys are guiding to pretty healthy improvement in revenue growth here I mean, you're basically going from negative 300 basis points last year.

Exiting about 400 basis points down to flat in 'twenty five.

When looking at the mid point, so help us kind of walk us through how you get here talk about occupancy rate growth just wanted to kind of.

Speaker Change: Recap and we have some easier comps in the back half of the year.

Speaker Change: Based upon where we were last year, we have improved tools, we have improved position and I think this year, we think shapes up to be a little stronger year than what we had last year.

Yes, you can get a better idea on that thanks.

Yes, Sameer. Thanks, It's Brandon look I'll, let I'll, let Dave hit maybe some broader themes and then I'll jump in and try to be a little more quantitative in response to your question, yes. Thanks, Mary and good question I think as we look at slide 25.

Speaker Change: So sameer the only thing I would add is just just to pick apart the numbers. So the four 3% negative revenue growth. We had in fourth quarter. As you saw that was made up of 180 basis points average occupancy decline year over year as well as the <unk>.

And where we came out of 2024.

For for Us.

<unk> year, we internalized all the pros we brought all of our platforms to one specific platform, we centralized all of those platforms and so it gives us some efficiencies and some strengths and really no transition and no disruption. If you think about what was going on in 2020 or so as we thought about 2025 and the starting point we start.

Speaker Change: Negative on the rent per square foot.

Speaker Change: Two 5%.

Speaker Change: Both of those metrics, we think will tighten a little bit here in Q1, and Dave's earlier remarks at the open kind of hit on that right the sequential improvement in contract rates.

Speaker Change: Just mentioned that for the new pool on average. These first couple of months were about 150 basis points negative year over year, So thats tightened a little bit hence my comments earlier about we feel like we have bottomed or are bottoming now and we like the trajectory as we go throughout 2025.

At the end of the year, we think <unk> will look like a normal seasonal pattern for the self storage sector.

It will be it will peak in the summer months.

We're looking at it thinking to ourselves that the seasonal trends will probably have about a 250 basis.

Speaker Change: Okay.

Speaker Change: Thank you for that that's very helpful.

Basis point improvements at the peak in the summer months versus where we started the year and then level off as you go through the back half of the year last year that was only a 140 basis points in a normal year. That's typically 300, we just think we're a little better position, where we're starting point in 2025 with the strength of the platforms and what we've internalized.

Speaker Change: Just.

Speaker Change: On your growth is it being impacted at all by some of the state restrictions, we're seeing due to the fires in L. A.

Speaker Change: At this point.

Speaker Change: Yes. It's good question, we have very minimal impact we only have eight stores in our portfolio. So very very very small percentage of our stores that are actually in where there are pricing restrictions and so we just don't have a material impact there.

Some growth in the <unk> portfolio in the ability to grow some occupancy in that portfolio. We thought we'd have a better year than we had last year as far as occupancy growth through the <unk>.

Speaker Change: Got it and I guess my second question is on capital recycling you guys were certainly very active on that front last year.

Seasonal period.

I think we look at it we're starting the year.

First couple of months, probably 150 basis points on a year over year or less than what it was a year ago on the new same store pool as we're modeling. It today, we think that gap narrows through the course of the year from that 150 basis point towards the end of the year.

Speaker Change: I guess when I look at the portfolio today, how much more is left to do.

Speaker Change: And maybe just talk about kind of what youre seeing in the market on transactions Youre pipeline and pricing. Thanks, so much.

Speaker Change: Yes, absolutely.

And we also assumed some average contract rate grow sequentially in the low single digits throughout the year, we think the strength of our platform.

Speaker Change: We certainly have as you saw us forecast, we forecasted more dispositions. This year and then it's really empire at the midpoint with our acquisitions activity and that leads to recycling of that capital.

The success around our ECR is and our ability to drive <unk> and where we're positioned today than where we were a year ago will have we will see low single digit growth throughout the course of the year.

Speaker Change: As we did last year.

Speaker Change: Now that <unk> internalized, we're going back through that portfolio and we identified last fall some areas we thought were.

In my opinion to kind of recap and we have some easier comps in the back half of the year.

Speaker Change: Markets in single assets and markets and markets, where we wanted to be more operationally efficient or we didn't think there was right growth trajectories.

Based upon where we were last year, we have improved tools, we have improved position and I think this year, we think shapes up to be a little stronger year than what we had last year.

Speaker Change: The weighted portfolio top to bottom and we have identified another group of assets that we will look to be.

Speaker Change: When the opportunity is right look to sell this year and we'll be selective about that but again with submission of trying to improve our portfolio overall and improve our overall operational proficiencies around our portfolio.

Negative on the rent per square foot.

Speaker Change: Currently we do have some Tim.

Speaker Change: Two 5%.

$10 million worth of properties under contract to be sold already.

Speaker Change: And we've identified the rest of that stores and will be.

Speaker Change: Either working with off market sellers are working through brokers to work some of these assets throughout the first half of the year disposition fees.

Speaker Change: Just mentioned that for the neutral on average. These first couple of months were about 150 basis points negative year over year, So thats tightened a little bit hence my comments earlier about we feel like we have bottomed or are bottoming now and we like the trajectory as we go throughout 2025.

Speaker Change: The acquisitions activity as I mentioned in my opening remarks, so theres still a significant amount of deal flow coming across our desk.

Speaker Change: We are matching our cost of capital with our acquisition targets and we're using the JV and we're using the balance sheet appropriately on where we think we want to pick in and look to purchase in the market, but thus far.

Speaker Change: Okay.

Speaker Change: Thank you for that that's very helpful.

Speaker Change: Just.

Speaker Change: On your growth is it being impacted at all by some of the state restrictions, we're seeing due to the fires in L. A at this point.

Speaker Change: Deal flow in cap rates and all those things just haven't moved around a lot from what we've been reporting the past couple of quarters I know theres been some interest rate volatility in some of those piece of it but at this point in time, no real material change around markets and asset prices of assets and markets and so forth.

Speaker Change: Yes. It's good question, we have very minimal impact we only have eight stores in our portfolio. So very very very small percentage of our stores that are actually in whether our pricing restrictions and so we just don't have a material impact there.

Speaker Change: Thank you.

Speaker Change: Got it and I guess my second question is on capital recycling you guys were certainly very active on that front last year.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Eric Wolfe with Citibank. Please proceed.

Speaker Change: I guess when I look at the portfolio today, how much more is left to do.

Eric Wolfe: Hi, Thanks, you mentioned that your markets are a bit more.

Speaker Change: And maybe talk about kind of what youre seeing in the market on transactions Youre pipeline and pricing. Thanks, so much.

Eric Wolfe: Sensitive to housing market and you also said that that November and December improved quite a bit from the October bottom. So I was just curious if you thought that.

Speaker Change: Yeah absolutely.

Eric Wolfe: That's sort of improvement was due to increased housing market activity. If you sort of saw that in your in your leads in your numbers for November and December or if it was really more just like easier comps and just the year over year comparison that that drove that.

Speaker Change: As we did last year.

Speaker Change: Now that the pros are internalized, we're going back through that portfolio and we identified last fall some areas we thought were.

Eric Wolfe: Yeah. Good question, thanks for joining us today.

Eric Wolfe: I would tell you we felt very.

Speaker Change: Markets in single assets and markets and markets, where we wanted to be more operationally efficient or we didn't think there was right growth trajectories.

Eric Wolfe: Good conviction around raising our street rates in a lot of our markets really November December piece, and all we came out of the transition we were trying to do.

Speaker Change: Mr. <unk> the portfolio top to bottom and we have identified another group of assets that we will look to be.

Eric Wolfe: Be smart around that pro transition. So we're being very careful with our asking rate of our street rates in November and December we saw some confidence in markets that we bottomed in occupancy and how the markets are responding to the occupancy levels that was appropriate for those markets and we brought our rates up.

Speaker Change: When the opportunity is right I'll look to sell this year and we'll be selective about that but again with submission of trying to improve our portfolio overall and improve our overall operational proficiencies around our portfolio.

Eric Wolfe: It obviously helps on the rent roll down it certainly helped us push on contract rate.

Speaker Change: Currently we do have some about $10 million worth of properties under contract to be sold already.

Eric Wolfe: The seasonality of the occupancy felt comfortable to us and we just think today, we're in a little more stable footing around competitiveness in these markets.

Speaker Change: And we've identified the rest of that stores and will be.

Speaker Change: Either working with off market sellers are working through brokers to work some of these assets throughout the first half of the year a disposition fees from.

Eric Wolfe: The amount of new supply that's been introduced around the absorption of that new supply around what our competitive environment is doing as far as asking rents and then I think you would sprinkle in November December housing was a little more active.

Speaker Change: From the acquisitions activity as I mentioned in my opening remarks, so theres still a significant amount of deal flow coming across our desk.

Eric Wolfe: And some of our markets and we felt a little more transition job housing.

Eric Wolfe: And obviously thats, a very quickly moving target.

Eric Wolfe: But broadly we felt more comfortable just bringing our rates up and we felt we funded occupancy putting we were comfortable with to start building off of.

Speaker Change: Got it that's helpful. And then you partly addressed this in your answer this question, but I think you said that so far this year.

Speaker Change: The trends that you saw in December down call. It 13% has continued thus far just.

Speaker Change: Just curious sort of like by the end of the year sort of how you see that trending I mean.

Speaker Change: Thank you.

Speaker Change: When we get into positive territory by the time you get into the.

Our next question comes from the line of Eric Wolfe with Citibank. Please proceed.

Speaker Change: The fourth quarter and Thats whats driving the ramp in same store revenue guidance.

Speaker Change: Hi, Thanks, you mentioned that your markets are a bit more.

Speaker Change: Just trying to understand sort of the slope, if you will of where we're starting today.

Speaker Change: Incentive to the housing market and you also said that.

Speaker Change: And call it February and sort of where we're ending up by the end of the year in terms of moving rates.

Speaker Change: November and December improved quite a bit from the October bottom. So I was just curious if you thought that.

Speaker Change: Yes, I think as we look at it we think we will occupancy may not be.

Speaker Change: What sort of improvement was due to increased housing market activity. If you sort of saw that in your in your lead in your numbers.

Speaker Change: Significant improvement this year I think we're looking at we'll have some seasonality and maybe we finished through the 12 year period, maybe it's not around a tremendous amount of boxes again, we think there is going to be more strength in asking rent compared to what it was a year ago and the volatility that was a year ago and then our strength in our ECR program and the efficiencies and the strides we've made in our modeling and how.

Speaker Change: November and December was really more just like easier comps and just the year over year comparison that that drove that.

Dan: Yeah. Good question, thanks for joining us today.

Speaker Change: I would tell you we felt very.

Speaker Change: We had good conviction around raising our street rates in a lot of our markets really November December <unk>, we came out of the transition we were trying to do.

Speaker Change: We are deploying that at tool now that we have everything under one roof.

Speaker Change: We have centralized programs around that piece of it is just allowing us to operate a little bit better.

Speaker Change: Be smart around that pro transition. So we're being very careful with our asking rate of our street rates in November and December we saw some confidence in markets that we bottomed in occupancy and how the markets are responding to the occupancy levels that was appropriate for those markets and we brought our rates up.

Speaker Change: Thank you.

Our next question comes from the line of Jeff Spector with Bank of America. Please proceed.

Speaker Change: That obviously helps on the rent roll down it certainly helped us push on contract rate.

Speaker Change: Great. Thank you I just wanted to follow up on the mid point.

Speaker Change: The seasonality of the occupancy felt comfortable to us and we just think today, we're in a little more stable footing around competitiveness in these markets.

In your remarks on what that midpoint reflects.

Speaker Change: Is it improving market conditions or is it more to do with what.

Speaker Change: Around the amount of new supply that's been introduced around the absorption of that new supply around what our competitive environment is doing as far as asking rents.

Speaker Change: What you've talked about in terms of your company.

Speaker Change: And then I think you would sprinkle in November December housing was a little more active.

Speaker Change: What you've achieved and what you think you can do in 2025.

Speaker Change: And some of our markets and we felt a little more transition job housing.

Okay.

Speaker Change: And obviously thats, a very quickly moving target.

Speaker Change: I think as you know we had a more cautious view, let's say on on storage the recovery and what May play out in 'twenty five so.

Speaker Change: But broadly we felt more comfortable the springer our rates up and we felt we funded occupancy putting we were comfortable with to start building off of.

Speaker Change: On the <unk>.

Speaker Change: Bit surprised at the mid point would reflect an.

Speaker Change: Got it that's helpful. And then you partly addressed this in your answer to <unk> question, but I think you said that so far this year.

Speaker Change: An improvement this year.

Speaker Change: The improvement in demand. Thank you.

Speaker Change: Yes. Thank you and good question I would tell you its probably a mixture of both I think we have markets that we're seeing some improvement and we're certainly seeing some stability in in less competitive pricing less supply pressures you cycled through the supply that's been added and it has been absorbed over time.

Speaker Change: The trends that you saw in December down call. It 13% has continued thus far.

Speaker Change: Just curious sort of like by the end of the year sort of how you see that trending I mean will.

Speaker Change: Will we get into positive territory by the time you get into the.

Speaker Change: The fourth quarter and Thats whats driving the ramp in same store revenue guidance.

Speaker Change: Just trying to understand sort of the slope, if you will of where we're starting today.

Speaker Change: I also think operationally and our effectiveness to operate in these markets is better as we can and the consolidations and improve our technology and added talent to our bench and really looked at how we're trying to operate in these markets.

And call it February and sort of where we're ending up by the end of the year in terms of moving rates.

Speaker Change: Yes, I think as we look at it we think we will occupancy may not be.

Speaker Change: Focusing on the regionalized brands looking at our digital footprint, where our position is what our visibility factor is what can we do to drive better results out of our portfolio.

Speaker Change: Significant improvement this year I think we're looking at we'll have some seasonality and maybe we finished through the 12 year period, maybe it's not around a tremendous amount of boxes again, we think there is going to be more strength in asking rents compared to what it was a year ago and the volatility that was a year ago and then our strength in our ECR program and the efficiencies and the strides we've made in our modeling and how.

Speaker Change: So I would probably tell you, it's a little bit of both.

Speaker Change: I just think we're going to operate better and I think we are seeing stability and some improvement in our markets.

Speaker Change: Okay. Thank you and then my second question I, just wanted to confirm on internal <unk> Onboarding.

Speaker Change: We are deploying that at tool another way have everything under one roof.

Speaker Change: We have centralized programs around that piece of it is just allowing us to operate a little bit better.

Speaker Change: Are you, saying that you are fully done and then which markets have you decided you are going to continue to third party. Thank you.

Speaker Change: Thank you.

Speaker Change: Yeah, so from the true nuts and bolts of the moving pieces. We are done with all of those team member movement, all the platform movement all of the.

Speaker Change: Thank you.

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

Speaker Change: Great. Thank you I just wanted to follow up on the mid point in your remarks on what that midpoint reflects.

Speaker Change: Consolidation of how you think about to the NSA storage and what we're doing around the initial rebranding of the stores.

Speaker Change: So that piece is done and the team did a wonderful job.

Speaker Change: Is it improving market conditions or is it more to do with what.

Speaker Change: Those are wonderful through this whole transition.

Speaker Change: And we're just we're very happy that Thats completed and we can get to focusing on execution.

Speaker Change: What you've talked about in terms of your company and what you've achieved and what you think you can do in 2025.

Speaker Change: As far as the third what we less third party manage we left two frozen place.

Speaker Change: <unk> mid Atlantic was what I would tell you around the Pennsylvania area.

Speaker Change: I think as you know we had a more cautious view, let's say on <unk>.

Speaker Change: It was one of the pros we left in place and the other one is the pros managing.

Speaker Change: On storage to recovery and what May play out in 'twenty five so.

Speaker Change: Primary market as Puerto Rico, and a little bit of.

Speaker Change: The southeast of the country.

Speaker Change: On the.

Speaker Change: A bit surprised at the midpoint would reflect it.

Speaker Change: Thank you.

Speaker Change: An improvement this year.

Speaker Change: Thank you.

Speaker Change: Through improvement in demand. Thank you.

Speaker Change: Our next question comes from the line of <unk> Mehta.

Speaker Change: Yes. Thank you and good question I would tell you its probably a mixture of both I think we have markets that we're seeing some improvement and we're certainly seeing some stability in in less competitive pricing less supply pressures you've cycled through the supply that's been added and it has been absorbed over time.

Speaker Change: Green Street Advisors. Please proceed.

Speaker Change: Hi, guys. Thanks for taking my question just wanted to touch base on something you guys mentioned you.

Speaker Change: You guys had mentioned you guys are anticipating a recovery in the housing market.

Speaker Change: Could you provide a little bit more color as to whether a recovery is currently being baked into your guidance and can you also expand on what's kind of giving you this idea that somehow.

Speaker Change: I also think operationally and our effectiveness job rate in these markets is better as we've been consolidations and improve our technology and added talent to our bench and really looked at how we're trying to operate in these markets.

Speaker Change: We're beginning with hovering based off our reports so far in 'twenty four and there was a lowest existing home sales in the last 30 years.

Speaker Change: <unk> on the regionalized brands looking at our digital footprint, where our position is what our visibility factor is what can we do to drive better results out of our portfolio.

Speaker Change: <unk>.

Speaker Change: Pending home sales was that all time low.

Speaker Change: So.

Speaker Change: We provide more color on what you guys are seeing specifically that was giving you guys sort of optimism and are you guys. Because of that are you guys expecting some return to normal as well for the peaks before the peak leasing season.

Speaker Change: I would probably tell you, it's a little bit of both.

Speaker Change: <unk>.

Speaker Change: I just think we're going to operate better and I think we are seeing stability and some improvement in our markets.

Speaker Change: Okay. Thank you and then my second question I, just want to confirm on internalization Onboarding.

Speaker Change: Yes. This is Brandon I'll take that and let David chime in as needed.

Speaker Change: So I would say at the midpoint of our revenue guidance, we're assuming no worse than what 2020 for us on in terms of the housing market and the related mobility. So its existing home sales is roughly 4 million homes were were thinking that 2025 has a similar number or perhaps modestly better and you are right.

Speaker Change: Are you, saying now youre fully done and then which markets have you decided you are going to continue to third party. Thank you.

Speaker Change: Yeah, so from the true nuts and bolts of the moving pieces. We are done with all of those team member movement, all the platform movement all of the.

Speaker Change: Consolidation of how you think about to the NSA storage and what we're doing around the initial rebranding of the stores.

Speaker Change: It is.

Speaker Change: Depending on your data points some days, it's a little discouraging and as Dave said.

Speaker Change: And his response to Eric's question about the November and December data you can be encouraged on other days right and so it's going to and that's going to be.

Speaker Change: So that piece is done and team did a wonderful job.

Speaker Change: <unk> through this whole transition.

Speaker Change: And we're just we're very happy that that is completed and we can get obviously on execution.

Speaker Change: A little bit of.

Speaker Change: Volatile year in terms of just reading the month to month data.

Speaker Change: As far as the third what we left third party managed we left two frozen place.

Speaker Change: We do think it's not all dependent on housing. So there is just an element of general.

Speaker Change: Medical and mid Atlantic was what I'd tell you, rather Pennsylvania area.

Speaker Change: John.

Speaker Change: Job driven mobility pent up mobility demands that that should unlock over time because of just gradual burn off of the.

Speaker Change: It was one of the pros we left in place and the other one is the pros managing.

Speaker Change: Primary market as Puerto Rico, and a little bit of Lasalle.

Speaker Change: The southeast of the country.

Speaker Change: After a lock in effect that's been in place since I think youre starting to see that.

Speaker Change: Some of that transition take place.

Speaker Change: Thank you.

Speaker Change: And then on top of that you have the specific to NSA story about how we can move the needle with our with our pro stores and so maybe just to respond to your question and maybe tie it into Jeff's previous question. If we're down on our new same store pool 150 basis points that Dave mentioned earlier on occupancy.

Speaker Change: Our next question comes from the line of <unk> Mehta with Green Street Advisors. Please proceed.

Speaker Change: Hi, guys. Thanks for taking my question just wanted to touch base on something you guys mentioned.

Speaker Change: You guys had mentioned you guys are anticipating a recovery in the housing market.

Speaker Change: We had talked last year, when we announced the pro internalization about that subset of stores previously pro managed stores being less occupied by 300 basis points than our corporate managed stores and how we felt like maybe that gap doesn't close entirely but give us a full leasing season, which is the spring summer of 2025, and we believe we can move that.

Could you provide a little bit more color as to whether you know it.

Speaker Change: Recovery is currently being baked into your guidance and can you also expand on what's kind of giving you. This idea that the housing market is recovering based off in our reports so far 24 was the lowest existing home sales in the last 30 years.

Needle meaningfully and so that will also be part of the closing of the gap from an occupancy Delta standpoint.

Speaker Change: January.

Pending home sales or was that all time low.

Speaker Change: Don.

Speaker Change: Can you provide more color on what you guys are seeing specifically in that.

Speaker Change: That's super.

Speaker Change: That's helpful. That's it for me thank you.

Speaker Change: Giving you guys sort of optimism and are you guys because of that are you guys expecting some return to normal as well as for the peaks before the peak leasing season.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line.

Speaker Change: Juan Sanabria with BMO capital markets. Please proceed.

Speaker Change: Yes. This is Brandon I'll take that and let David chime in as needed.

Speaker Change: Hi, just a quick follow on to your most recent comments that Brendan so does the midpoint assume.

Speaker Change: So I would say at the midpoint of our revenue guidance, we're assuming no worse than what 2024 saw in terms of the housing market and the related mobility, so on existing home sales.

Speaker Change: Yes.

Speaker Change: Situation improves then it's steady from a housing perspective, because I think he Android with improves.

Speaker Change: I just heard may be flat. So just wanted a clarification there.

Speaker Change: Roughly 4 million homes, we were thinking that 2025.

Speaker Change: Yes sure ones. So yes, there is modest improvement at the midpoint and so sorry, if I confused that issue I just meant I meant to emphasize that it's it's not worse in 2024, but to be clear at the midpoint, we did assume some modest improvement in demand, which.

Speaker Change: A similar number or perhaps modestly better and youre right. It is.

Speaker Change: Depending on your data points some days, it's a little discouraging and as Dave said.

Dave Cramer: And his response to Eric's question about in November and December data you can be encouraged on other days right and so it's going to and that's going to be.

Dave Cramer: As needed to get to some of those occupancy growth numbers that Dave mentioned earlier.

Speaker Change: A little bit of a.

Dave Cramer: Volatile year in terms of just reading the month to month data.

Dave Cramer: He said, we assumed again you can model 100 different ways and solve suit similar revenue answers, but one scenario would be our occupancy increasing trough to peak.

Dave Cramer: We do think it is not all depended on housing. So there is just an element of general.

Dave Cramer: John.

Dave Cramer: Job driven mobility, a pent up mobility demands that it should unlock over time because of just a gradual burn off.

Dave Cramer: So from now until the peak peak summer about 200 basis points.

Dave Cramer: <unk>.

Dave Cramer: Last year for example, we only rose $1 40, which was below historical levels. So we're still not assuming like the typical normal seasonality peak to trough, but it's something better than last year.

Dave Cramer: After a lock in effect that's been in place until Youre, just youre starting to see that.

Dave Cramer: Some of that transition take place.

Dave Cramer: And then on top of that you have the specific to NSA story about how we can move the needle with our with our pro stores and so maybe just to respond to your question and maybe tie it into Jeff's previous question. If we're down on our new same store pool 150 basis points that Dave mentioned earlier on occupancy.

Speaker Change: Okay, and then I was hoping you could just.

Speaker Change: Can you talk a little bit about some of that low hanging fruit on the pros you mentioned.

Speaker Change: The overall portfolio was down $1 50 from occupancy versus 300 for the pros and then I know the ECR is where also lower so.

Dave Cramer: We had talked last year, when we announced the pro internalization about that subset of stores. The previously pro managed stores being less occupied by 300 basis points than our corporate managed stores and how we felt like.

Speaker Change: I guess from an occupancy perspective, how much has already been closed or what's what's kind of assumed in guidance.

Speaker Change: How much of approach is representative of the total pool just to help us get a sense of.

Dave Cramer: Maybe that gap doesn't close entirely but give us a full leasing season, which is the spring summer of 2025, and we believe we can move that needle meaningfully and so that will also be part of the <unk>.

Speaker Change: How much of the pro.

Speaker Change: Low hanging fruit internalization is helping boost.

Dave Cramer: Closing of the gap from an occupancy Delta standpoint.

Speaker Change: Gross.

Speaker Change: Yeah. Good question so.

Dave Cramer: That's super helpful.

Speaker Change: Just to clarify the 300 basis point occupancy Delta is just looking at the spread between the two.

Dave Cramer: Helpful. That's it for me thank you.

Dave Cramer: Thank you.

Speaker Change: <unk> managed stores and corporate managed stores.

Dave Cramer: Our next question comes from the line.

Dave Cramer: Juan Sanabria with BMO capital markets. Please proceed.

Speaker Change: <unk>.

Speaker Change: When we compare that middle of last year, when we announced the internalization that was about 300 basis points.

Speaker Change: Hi, just a quick follow on to your most recent comments there Brendan.

Speaker Change: Have come in a little bit.

Speaker Change: Not tremendously and we said at the time, we needed to kind of a full normal leasing seasons for that to occur the pro managed stores of our same store pool.

Speaker Change: Midpoint assume.

Dave Cramer: Yes.

Dave Cramer: Situation improves then it's steady from a housing perspective, because I think he entered with improves.

Speaker Change: Revenue basis, they are almost 50% of the total dollars of NOI and so if you think about us closing that 300 basis point gap.

Dave Cramer: And just heard may be flat so just.

Speaker Change: Wanted a clarification there.

Speaker Change: Yes sure. Once we are there is modest improvement at the midpoint and so sorry, if I confused that issue I just meant I meant to emphasize that it's it's not worse in 2024, but to be clear at the midpoint, we did assume some modest improvement in demand, which.

Speaker Change: And that would blend in.

Speaker Change: 50% effects that could close the entire 300, then they would give you $1 50, when you blend that into your total pool.

Speaker Change: You hit on a critical part of your question of the Cri point and the kind of holistic strategy around starting rates and ECR I push following a move in and now that we have all of that decision, making under our outright control that as a needle mover and so I can tell you is like today compared to this time last year.

Dave Cramer: As needed to get to some of those occupancy growth numbers that Dave mentioned earlier.

Dave Cramer: He said, we assume again you can model as 100 different ways and solve suit similar revenue answers, but one scenario would be our occupancy increasing trough to peak.

Speaker Change: We're a stronger and more assertive on that front and so that is part of what's driving.

Dave Cramer: So from now until peak summer about 200 basis points.

Dave Cramer: <unk>.

Speaker Change: Our earlier remarks about the sequential improvement in contract rate in some of these inflection points that we've described.

Dave Cramer: Last year for example, we only rose $1 40, which was below historical levels. So we're still not assuming like a typical normal seasonality peak to trough, but it's something better than last year.

Speaker Change: Did you provide some statistics and I apologize.

Speaker Change: For that matter for kind of the lead indicators into the first quarter in.

Dave Cramer: Okay, and then I was hoping you could just.

Speaker Change: In particular curious how the in place rate may have changed from down two and a half and the fourth because I think some of that was just the aggressiveness in defending occupancy at the beginning of the pro internalization, which kind of waned it sounds like for the fourth quarter.

Maybe talk a little bit about some of that low hanging fruit on the pro as you mentioned.

Dave Cramer: The overall portfolio was down $1 50 from occupancy versus 300 for the pros and then I know the ECR is where also lower so.

Speaker Change: Yes, you are right about that one we didnt give specific numbers. We just said that that two five has started to improve as we as we go through these first two months in 2025.

Dave Cramer: I guess from an occupancy perspective, how much has already been closed or what's what's kind of assumed in guidance.

Dave Cramer: How much it approach is representative of the total pool just to help us get a sense of.

Speaker Change: Fair enough. Thank you.

Dave Cramer: Of how much of the pro.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Michael Goldsmith with UBS. Please proceed.

Dave Cramer: Low hanging fruit internalization is helping boost.

Dave Cramer: Gross.

Dave Cramer: Yeah. Good question so.

Speaker Change: Alright. Thanks, this is <unk> with Michael.

Dave Cramer: Just to clarify the 300 basis point occupancy Delta is just looking at the spread between the two.

Speaker Change: That you could provide a little bit more near term context around supply. So how should we be thinking about deliveries in 2025 versus 2024 and are you still seeing any significant lingering pressure from lease ups as well on top of that.

Dave Cramer: Managed stores and corporate managed stores.

Dave Cramer: <unk>.

Dave Cramer: When we compare that middle of last year, when we announced the internalization that was about 300 basis points.

Speaker Change: Okay, great. Thanks for joining and good question I think 224, I think I think we said.

Dave Cramer: Come in a little bit.

Dave Cramer: Not tremendously and we said at the time, we needed to kind of a full normal leasing seasons for that to occur the pro managed stores of our same store pool.

Speaker Change: Accordingly, you already and looking at our statistics and so forth I think we said.

Speaker Change: Certainly we were at around three 5% for 2024, I think as you go into 2025 and as we head towards 27, I think you see about 50 50 basis points 100 basis point improvement, 25% to 26, So maybe 24 to three and a half maybe 'twenty <unk> three and then you're done and maybe two two and a half in 'twenty six and then down to two and 2027% is how we're how we're thinking about.

Dave Cramer: Revenue basis, Theyre, almost 50% of the total dollars of NOI and so if you think about us closing that 300 basis point gap.

Dave Cramer: That would blend in.

Dave Cramer: 50% effects that could close the entire 300, then they would give you $1 50, when you blend that into your total pool.

You hit on are.

Dave Cramer: A critical part of your question of the Cri point, and Thats kind of a holistic strategy around starting rates and ECR I push following a move in and now that we have all of that decision, making under our outright control that as a needle mover and so I can tell you today compared to this time last year.

Speaker Change: It.

Speaker Change: I certainly time is what has to happen here.

Speaker Change: Around absorption of what's already been delivered and what will be delivered and we talk a lot about markets like Phoenix, and Atlanta, which had been very tough markets for us recently and even the west coast of Florida.

Speaker Change: The new supply deliveries are coming down which is a good thing, but it will take time to absorb what was built and I think thats as we look at it as we looked at how we want to operate in those markets and how aggressive we want to be in those markets.

Dave Cramer: We're stronger and more sort of on that front and so that is part of what's driving our.

Dave Cramer: Our earlier remarks about the sequential improvement in contract rate in some of these.

Dave Cramer: Flexion points that we've described.

Speaker Change: Just the pure fact that until this new supply gets absorbed and that takes time to absorb.

Dave Cramer: Could you provide some January statistics, and I apologize for that matter for kind of the lead indicators into the first quarter.

Speaker Change: Material movements in those markets are going to be challenging and so the good news is new supply is coming down.

Dave Cramer: In particular I'm curious how the in place rate may have changed from down two and a half in the fourth because I think some of that was just <unk>.

Speaker Change: We just have to absorb what is already out there today.

Speaker Change: A good example of that would be if you look back at our history Portland is a market we talked about for a number of years.

Dave Cramer: The aggressiveness in defending occupancy at the beginning of the pro internalization, which kind of waned it sounds like for the fourth quarter.

Speaker Change: A lot of supply brought in 18 19 and 20.

Dave Cramer: Yes, you are right about that one we didnt give specific numbers. We just said that that two and a half has started to improve as we as we go through these first two months in 2025.

Speaker Change: And now that the new supply has really gone down to almost <unk>.

Speaker Change: Not very much being delivered at all.

Speaker Change: Strength of Portland, and the stability of Portland around rate and around occupancy and where we've gone through the worst of it is starting to come back on the other side and so I think that's a good good reference point as you think about supply can do to market and then just working your way out of it.

Dave Cramer: Fair enough. Thank you.

Dave Cramer: Thank you.

Speaker Change: Our next question comes from the line of Michael Goldsmith with UBS. Please proceed.

Speaker Change: Hi, Thanks, This is <unk> with Michael.

Speaker Change: Got it thanks, and then just a quick one on the guidance.

I was hoping that you could provide a little bit more near term context around supply. So how should we be thinking about deliveries in 2025 versus 2024 and are you still seeing any significant lingering pressure from lease ups as well on top of that.

Speaker Change: G&A guide that you provided on a core basis or does that include the severance costs and other add backs.

Speaker Change: So Amy that.

Speaker Change: That guidance relates to how that financial statement will appear on our P&L as we report on 2025. So for 2024, we've had some costs associated with the internalization that for the most part has been carved out and that there was a little bit of.

Speaker Change: Okay, great. Thanks for joining and good question I think 2024.

Speaker Change: I think we said.

Speaker Change: You're already in looking at our statistics and so forth I think we said certainly we were at around three 5% for 2024 I think as you go into 2025 and as we head towards 27, I think youll see about 50 50 basis points 100 basis point improvement, 25% to 26, So maybe 24 years, three and a half maybe 'twenty <unk> three and then you'd add in maybe two two and a half.

Speaker Change: Severance costs in 2024.

Speaker Change: That was in G&A, but by and large those.

Speaker Change: Pro internalization transitional costs have been segregated both through 24, and 25 and since you're not the ask I'll just expand a little bit on G&A just to give a little color on the guide so.

Speaker Change: In 26 of them now to two in 2027% is how we're how we're thinking about it.

Speaker Change: Going back to when we announced the internalization deal and the expected accretion a big piece of the four penny.

Speaker Change: I certainly time is what has to happen here.

Speaker Change: Absorption of what's already been delivered and what will be delivered and we talk a lot about markets like Phoenix, and Atlanta, which had been very tough markets for us recently and even the west coast of Florida.

Speaker Change: Impact that we expected from both G&A and tenant insurance.

Speaker Change: We are very well on track with that we've realized half of that in 2024. So two pennies in 'twenty four and we'll realize the incremental two pennies in 2025, G&A, specifically, we guided to savings on an annual basis of seven $5 million to $9 million and so if you take that midpoint of our G&A guide both the cash.

Speaker Change: New supply deliveries are coming down which is a good thing, but it will take time to absorb what was built and I think thats as we look at it as we looked at how we want to operate in those markets and how aggressive we want to be in those markets.

Speaker Change: The pure fact that until this new supply gets absorbed and that takes time to absorb.

Speaker Change: Cash and noncash piece, that's just under $55 million and I would I would steer you to the comparing that to.

Speaker Change: Material movements in those markets are going to be challenging and so.

Speaker Change: And annualized first half of 'twenty, four number which is just under $64 million.

Speaker Change: Good news is new supply is coming down.

Speaker Change: We just have to absorb what is already out there today.

Speaker Change: Just because thats the most the best representation of the pre internalization.

Speaker Change: Good example of that would be if you look back at our history Portland is a market we talked about for a number of years.

Speaker Change: The run rate and so thats $9 million of savings there and so that ties back to the seven $5 million to $9 million.

Speaker Change: A lot of supply brought in 18, 19, and 20 and now that the new supply has really gone down to almost.

Speaker Change: And we described in our June announcement last year. So I just wanted to lay that out for for you and others.

Speaker Change: Not very much being delivered at all.

Speaker Change: No that's very helpful. Thanks, guys.

Amy: Thanks, Amy Thank you.

Speaker Change: Our next question comes from the line of Ronald Camden with Morgan Stanley. Please proceed.

Speaker Change: Got it thanks, and then just a quick one on the guidance.

Ronald Camden: Hey, just two quick ones for me I guess, starting with the revenue guidance, just going back to what I want to make sure I understand it.

Speaker Change: G&A guide that you provided on a core basis or does that include the severance costs and other add backs.

Ronald Camden: So on the pricing side, youre, assuming sort of modest improvement because you're starting to see that.

Speaker Change: So Amy that.

Ronald Camden: Start this year and then on the occupancy side I think you said peak to trough occupancy up 250 basis points versus 140 basis points last year, if I heard that correctly I just want to make sure I got that right and maybe if you could just talk us through what's different about this year what was unique about last year.

Speaker Change: Severance costs in 2024.

Speaker Change: That was in G&A, but by and large those but.

Ronald Camden: Sure.

Speaker Change: Where are you expecting that sort of a big recovery.

Speaker Change: Pro internalization transitional costs have been segregated bolster 24 interim 25, and since you're not the Asps I'll just expand a little bit on G&A just to give a little color on the guide so.

Ronald Camden: Apple.

Ron: Yeah, Thanks, Ron Yes.

Ron: Yes, you are right peak to drop that's how we're looking at occupancy and we are seeing.

Speaker Change: <unk> is a consistent improvement in contract rate as we go through the year largely in part of <unk>.

Speaker Change: Going back to when we announced the internalization deal and the expected accretion a big piece of the four penny.

Speaker Change: Just having good solid footing less competitive environment, our ability to really execute on our platforms and our programs I would also tell you just from my seat and looking at how hard this team work last year.

Speaker Change: Impact that we expected from both G&A and tenant insurance.

Speaker Change: We are very well on track with that we've realized half of that in 2024. So two pennies in 'twenty four and we'll realize the incremental two pennies in 2025.

Speaker Change: As you transition and you bring on new platforms, and new team members and Egypt drain and do all the moving pieces. We had look at this year is less distractions more focus on execution and I think that's really the fundamental difference between 2025 and 2024 as we're more stable and solid footing around the environment, We're operating in and we're just.

Speaker Change: G&A, specifically, we guided to savings on an annual basis of seven $5 million to $9 million and so if you take that midpoint of our G&A guide both the cash and noncash piece, that's just under $55 million and I would I would steer you to the comparing that to.

Speaker Change: Better at it so that's really how I would describe 2005.

Speaker Change: An annualized first half of 'twenty, four number which is just under $64 million.

Speaker Change: Presumably in like two months peak leasing season, and we'll get some data points on that sort of trending.

Speaker Change: Just because thats the most the best representation of the pre internalization.

Speaker Change: Accordingly, our the indicators.

Speaker Change: The run rate and so thats $9 million of savings there and so that ties back to the 759 million that we.

Speaker Change: That's fair.

Speaker Change: Switch gears to sort of the expense side of it.

Speaker Change: Just on just a little bit more color on what the assumptions for property taxes and insurance.

Speaker Change: And we described in our June announcement last year. So I just wanted to lay that out for you and others.

Speaker Change: No that's really helpful. Thanks, guys.

Speaker Change: Be helpful. How youre thinking about that.

Amy: Thanks, Amy Thank you.

Speaker Change: Ronald this is Brandon so.

Amy: Our next question comes from the line of Ronald Camden with Morgan Stanley. Please proceed.

Speaker Change: For our Opex guidance.

Brandon Gotcha: 3% to 4% most of the line items I would say are within that range property tax would be one of those it's kind of right in that 3% to 4% assumption.

Ronald Camden: Hey, just two quick ones for me I guess, starting with the revenue guidance, just going back to what I want to make sure I understand it.

Speaker Change: Insurance, we have and the low low single digits.

Amy: So on the pricing side, youre, assuming sort of modest improvement because you're starting to see that.

Speaker Change: Going through a renewal process right now that policy Renews April one so we'll have line of sight when we report back with our Q1 numbers.

Amy: Start this year and then on the occupancy side I think you said peak to trough occupancy up 250 basis points versus 140 basis points last year, if I heard that correctly I just wanted to make sure I got that right and maybe if you could just talk us through what's different about this year what was unique about last year.

Speaker Change: Personnel. We also have I would say like on a low single digit growth side, and then marketing would be the one that's kind of above and beyond that total opex range and that's kind of in the store and for these last several years right just given the importance of the internet marketing and especially in this lower demand environment.

Amy: Sure.

Speaker Change: Where are you expecting that sort of a big recovery out of the <unk>.

Speaker Change: Competition for those customers.

Amy: Apple.

Ron: Yeah, Thanks, Ron Yes.

Speaker Change: That's it for me thank you.

Ron: Yes, you are right on peak to drop that's how we're looking at occupancy and we are seeing.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of with quality.

Ron: <unk> is a consistent improvement in contract rate as we go through the year.

Speaker Change: Please proceed.

Speaker Change: Just a quick modeling question on the acquisitions and dispositions do you expect any accretion or dilution, whether it's due to timing or the spread difference.

Ron: And part of it.

Ron: Just having good solid footing less competitive environment, our ability to really execute on our platforms and our programs.

Ron: I would also tell you just from my seat and looked at our this team work last year.

Speaker Change: Yes. Good question I think maybe some marginal marginal.

Ron: As you transition.

Speaker Change: Dilution, if we get the property sold and we pay down the revolver and we don't get it redeployed and so it's really a timing thing.

Ron: New platforms, and new team members and Egypt train and do all the moving pieces. We had look at this year is less distractions more focus on execution and I think that's really the fundamental difference between $225 four as we're more stable and solid putting around the environment. We're operating in and we're just better at it so that's it.

Be marginal it would be the way I'd answer that and it's captured captured in the range of <unk>.

Speaker Change: So that we gave.

Speaker Change: Okay, and then I wanted to back to that comment about seeing less competition and maybe you can give us an update on the dynamic youre seeing in the market are developers getting to a certain leasing level, where they may not be stabilized, but theyre just maybe backing off concessions are there more of those markets. This year do you expect to have any of those markets remaining next year.

Ron: Describe 25.

Yeah.

Presumably in like two months peak leasing season, and we'll get some data points on that sort of trending.

Ron: Are the indicators.

Ron: Yes.

Ron: Switch gears to sort of your expense side of it.

Speaker Change: Yeah. Good good good point I agree with that I think they are farther in their lease up I think the you can be.

Ron: Just on just a little bit more color on what.

Ron: Options for property taxes and insurance.

Speaker Change: The competitive environment has certainly changed compare it was a year ago for a couple of factors.

Ron: Be helpful. How youre thinking about that.

Ronald this is Brandon so.

Speaker Change: Obviously around the supply dynamic and people trying to fill up obviously.

Ron: For our Opex guidance of.

Speaker Change: Just within the sector itself. There is some some large mergers going on and it created some additional pricing pressures in the sector that has have moderated as well.

Speaker Change: 3% to 4% most of the line items I would say are within that range property tax would be one of those that's kind of right in that 3%, 4% assumption.

Speaker Change: Between those two factors.

Speaker Change: Insurance, we have and the low low single digits.

Speaker Change: Where they are out in the field.

Speaker Change: The fill up of their supply and then.

Speaker Change: Going through a renewal process right now that policy Renews April one so we'll have line of sight when we report back with our Q1 numbers.

Speaker Change: A little more calm I would say around the sector. I think is why we're encouraged about better stability around pricing this year.

Speaker Change: Okay. Thanks, everyone.

Speaker Change: Personnel. We also have I would say like a low single digit growth side, and then marketing would be the one that's kind of above and beyond that total opex range and thats kind of in the store and for these last several years right just given the importance of the internet marketing and especially in this lower demand environment.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Eric.

Eric Wolfe: With Wells Fargo. Please proceed.

Speaker Change: Great. Thanks for taking the question so.

Wanted to ask the acquisition guide for the year.

Speaker Change: Competition for those customers.

Speaker Change: Like what are you kind of seen for market cap rates right now.

Speaker Change: That's it for me thank you.

Speaker Change: Given there's been a lot of volatility in interest rates recently, how do you think that shapes out over the course of the year and how are you thinking about the acquisition pipeline between doing things on balance sheet versus leveraging some of your JV partners, where you can do more kind of lease up properties.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of with quality with Baird.

Speaker Change: Please proceed.

Speaker Change: Just a quick modeling question on the acquisitions and dispositions do you expect any accretion or dilution, whether it's due to timing or the spread difference.

Speaker Change: Thanks for joining good question, we haven't seen a material change in really the pricing or the seller's expectations are cap rates throughout all of our markets I think.

Speaker Change: Yes. Good question I think maybe some marginal marginal.

Speaker Change: Dilution, if we get the property sold and we pay down the revolver and we don't get it redeployed and so it's really a timing thing we'd be marginal it would be the way I'd answer that and it's captured captured in the range of <unk>.

Speaker Change: If you if we're looking at secondary or suburban markets you are probably in the low to mid sixes.

Speaker Change: The cap rates that we're seeing a lot of I think transactions around I think as you get into this.

Speaker Change: This all depends on type of asset location of assets Theres a lot to this right, but I think as you get into <unk>.

Speaker Change: I know that we gave.

Speaker Change: More stabilized assets in our primary market, it's more in the mid fives.

Speaker Change: Is probably what we're seeing and I know there's been a lot of interest rate volatility, it's just not flowing through to cap rates at this point in time.

Speaker Change: And.

Speaker Change: It probably won't until something changes and hangs on for a lot longer I. Just think there are still people transacting. There are still people buying properties I think you look at.

Speaker Change: Yes, good good good point I agree with that I think they are farther in their lease up I think the.

Speaker Change: In an environment today, where we think fundamentals have been depressed because of the environment. I think people are looking for optimism in the sector and as are we and I think we're trying to pick the right points to buy in markets, where we think we have upside maybe not immediately but we know long term, it's a good acquisition for us.

Speaker Change: Competitive environment has certainly changed compare it was a year ago for a couple of factors.

Speaker Change: Obviously.

Speaker Change: The supply dynamic and people trying to fill up obviously.

Speaker Change: Within the sector itself. There is some some large mergers going on that created some additional pricing pressures in the sector that have moderated as well I think between those two factors.

Speaker Change: We're also trying to balance in between JV capital and our balance sheet and we know our JV capital is probably our best cost of capital day, and it's capital light for Us and so I think we're working through all of the acquisition targets try to match it to our cost of capital.

Speaker Change: Further out in the field of Philip of their supply and then just.

Speaker Change: A little more calm I would say around the sector. I think is why we're encouraged about better stability around pricing this year.

Speaker Change: And Eric I think what you've seen us do on balance sheet has been very strategic to complement.

Speaker Change: Okay. Thanks, everyone.

Speaker Change: Thank you.

Speaker Change: Our existing properties and our market densify markets. We've also picked up <unk> properties, which are no brainers, where you can add 40000 square feet to an existing.

Speaker Change: Our next question comes from the line of Eric will.

Speaker Change: <unk> with Wells Fargo. Please proceed.

Speaker Change: Great. Thanks for taking the question so.

Speaker Change: 50000 square foot property, that's just down the road and so those are the ones that were being selective about bringing in.

Speaker Change: I wanted to ask the acquisition guide for the year.

Speaker Change: Bringing in wholly owned versus otherwise kind of having a bias towards <unk> and then certainly as we as we do have dispositions there may be a need to 10 31, some of those assets and if we do that we need to redeploy that on balance sheet. So that would also be a driver of of putting some things on balance sheet.

Speaker Change: What are you kind of seen for market cap rates right now.

Speaker Change: Okay, great. Thanks, and just a second question.

Speaker Change: I believe you said, you're being a little more aggressive with your <unk> today.

Speaker Change: Thanks for joining us good question, we haven't seen a material change in really the pricing or the seller's expectations are cap rates.

Speaker Change: Today versus a year ago, and so maybe you could just dive in delight is that coming more from new customers.

Speaker Change: All of our markets I think.

Speaker Change: Moving at lower web rates.

Speaker Change: If you if we're looking at secondary or suburban markets Youre, probably in the low to mid sixes cap.

Speaker Change: Youre being a little more dynamic with web rates and pulling forward the cri.

Speaker Change: Cap rates that we're seeing a lot of I think transactions around I think as you get into this.

Speaker Change: Both the timing and the magnitude and or is that kind of across the board with some of your longer duration customers as well just curious about the dynamics of that shift over the recent history. Thank you.

Speaker Change: This all depends on type of asset location of asset there is a lot to this right, but I think as you get into.

Speaker Change: A more stabilized assets in our primary market, it's more in the mid fives.

Speaker Change: Yes, sure I think all of those things would come into play I think certainly as you look at where market rates are entry point rates for new customers. We certainly are finding our way to try to get back to market rate in an appropriate amount of time.

Speaker Change: Is probably what we're seeing and I know there's been a lot of interest rate volatility, it's just not flowing through to cap rates at this point in time.

Speaker Change: And.

Speaker Change: I think our tools and our visibility around success in some of the testing we've done been doing and have been and continue to do as we measure the success of each of our program is giving us a little more confidence.

Speaker Change: To execute maybe a little more assertively in different situations throughout the entire tenant base.

Speaker Change: So I'd say, it's a combination of those factors moving market rates and are confident that our conviction of what we're learning and how we're executing.

We're also try to balance in between JV capital on our balance sheet and we know our JV capital is probably our best cost of capital day, and it's capital light for Us and so I think we're working through all of the acquisition targets try to match it to our cost of capital.

Speaker Change: Okay. Thanks, guys.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Tayo Okusanya with Deutsche Bank. Please proceed.

Speaker Change: And Eric I think what you've seen us do on balance sheet has been very strategic to complement.

Tayo Okusanya: Hi, yes, good afternoon, everyone.

Speaker Change: Our existing properties and our market densify markets. We've also picked up <unk> properties, which are no brainers, where you can add 40000 square feet to an existing.

Tayo Okusanya: Just curious again, all the recent market commentary around.

Tayo Okusanya: A softer consumer outlook.

Tayo Okusanya: What are you guys kind of make of this.

Speaker Change: 50000 square foot property, that's just down the road and so those are the ones that were being selective about bringing in.

Tayo Okusanya: There could be any potential impact.

Tayo Okusanya: So demand.

Tayo Okusanya: Within your business, so any potential impact.

Speaker Change: Bringing in wholly owned versus otherwise kind of having a bias towards <unk> and then certainly as we as we do have dispositions there may be a need to $2 31, some of those assets and if we did that we need to redeploy that on balance sheet. So that would also be a driver of putting some things on balance sheet.

Tayo Okusanya: If you just kind of have a more economically.

Tayo Okusanya: Economically sensitive.

Tayo Okusanya: Customer of <unk>.

Tayo Okusanya: Yes.

Speaker Change: It's a good point I think we constantly are monitoring all of the things that we look at as far as our customer behaviors.

Speaker Change: Okay, great. Thanks, and just a second question.

Speaker Change: And trying to really pay attention to strength of the consumer and that leads to a lot of data points from payment activity to delinquencies to length of stays too.

Believe you said, you're being a little more aggressive with your <unk> today.

Speaker Change: Today versus a year ago, and so maybe you could just dive in delight is that coming more from new customers.

Speaker Change: Ability to feed the top of the funnel all of those things, but certainly something.

Speaker Change: Moving at lower web rates.

Speaker Change: We look at it certainly something we're aware of Fortunately at this point in time, we have not seen any material change at all in any of those things that I just described.

Speaker Change: Being a little more dynamic with web rates and pulling forward the cri.

Speaker Change: What's the timing and the magnitude and or is that kind of across the board with some of your longer duration customers as well just curious about the dynamics of that shift over the recent history. Thank you.

Speaker Change: But <unk>.

Speaker Change: Certainly I think we read the same things you are reading about is from a consumer standpoint, I think consumers are feeling more pressure.

Speaker Change: I would tell you is from the sector history, though if you do see to start to see this.

Speaker Change: Some kind of changes in our economic outlook storage, sometimes benefits from consolidation of recession or things that go around that piece of it that forces people to move around for jobs or maybe change their housing location or theyre running location and so.

Speaker Change: I think our tools and our visibility around success in some of the testing we've done been doing and have been continue to do as we measure the success of ECR program is giving us a little more confidence.

Speaker Change: At this point, we see no stress at our customer.

Speaker Change: And at this point nothing really more to report on it.

Speaker Change: Okay. That's helpful.

Speaker Change: To execute maybe a little more assertively in different situations throughout the entire tenant base.

Speaker Change: And then.

Speaker Change: The commentary for Q talking about.

Speaker Change: Kind of payroll expenses down.

Speaker Change: So I'd say, it's a combination of those factors moving market rates.

Speaker Change: Im curious again via the use of technology to have more opportunity.

Speaker Change: Our confidence in our conviction of what we're learning and how we're executing.

Speaker Change: To keep driving that down or in general any comments about that.

Speaker Change: Okay. Thanks, guys.

Speaker Change: Thank you.

Speaker Change: So.

Speaker Change: And opportunities to improve operational efficiency from a technological perspective.

Our next question comes from the line of Tayo Okusanya with Deutsche Bank. Please proceed.

Speaker Change: Yeah really good question payroll, we've worked really hard really over the last two or three years and really worked hard on our staffing model that tried to put our team members in the right place and the consumer needed them.

Tayo Okusanya: Hi, yes, good afternoon, everyone.

Tayo Okusanya: Just curious again, all the recent market commentary around.

Speaker Change: A softer consumer outlook.

Speaker Change: And I think we've done a really good job working on that metric I don't know if there is a tremendous amount of more savings coming in that arena.

Speaker Change: What are you guys kind of make of this you think there could be any potential impact.

Speaker Change: So demands.

Speaker Change: From our perspective, because we ran lean historically and we found a way to run an even leaner through the last couple of years I think we're trying to really right now match the consumer's expectation with when we have our team members. There I know, we're working very hard within our customer care center around.

Speaker Change: Within your business or any potential impact.

Speaker Change: If you just kind of have a more economically.

Speaker Change: Economically sensitive.

Speaker Change: Our customer often xena.

Speaker Change: Yes.

Speaker Change: It's a good point I think we constantly are monitoring all the things that we look at as far as our customer behaviors.

Speaker Change: How do we can we can we use technology to help route calls can we use technology to help answer calls can we use technology to let us find efficiencies around with our team members who are talking live versus what we can do with automation I think the team has done a good job fighting some past there I think that is an opportunity for us long term to think about how we commuted.

Speaker Change: And trying to really pay attention to strength of the consumer and that leads to a lot of data points from payment activity to delinquencies to length of stays too.

Speaker Change: Ability to feed the top of the funnel all of those things, but it's certainly something that.

Kate with our consumer and our internal customers as well, which is our team members and just finding efficiencies around the way that.

Speaker Change: We look at it certainly something we're aware of Fortunately at this point in time, we have not seen any material change at all in any of those things that I just described.

Speaker Change: We work on that the team is working.

Speaker Change: Around our digital platform, we're working around how we help the customer transact with us more and more of the way they want to do in which case. It seems like today, they want to talk less to real people and use a little bit more technology. So I think we're certainly studying all of those fronts were working in those fronts. We've been testing in those firms have made advances and so I like where we're headed.

Speaker Change: But <unk>.

Speaker Change: Certainly I think we read the same things you are reading about is from a consumer standpoint, I think consumers are feeling more pressure.

Speaker Change: I would tell you is from the sector history, though if you do see to start to see this.

Speaker Change: And I think theres, probably still some more success around some of those areas. We just discussed.

Speaker Change: Thank you.

Speaker Change: At this point, we see no stress at our customer.

Speaker Change: Thank you.

Speaker Change: And at this point nothing really more to report on it.

Speaker Change: Our next question comes from the line of Brendan Lynch with Barclays. Please proceed.

Speaker Change: Okay. That's helpful and then.

Speaker Change: Great. Thanks for taking my question.

Speaker Change: <unk> common, saying <unk> talking about.

Speaker Change: <unk> talked about that.

Speaker Change: Kind of payroll expenses down.

Speaker Change: Leveraging around six and a half now and maybe it is going to come under some pressure can you just remind us what the ranges that you were targeting whether you're willing to.

Speaker Change: Curious again via the use of technology, if you have more opportunity.

Keep driving that down or in general let me comment about the puts.

Speaker Change: Deviate that even in the short term and how you might use.

Speaker Change: Potential additional opportunities to improve operational efficiency from a technological perspective.

Speaker Change: <unk> ATM or this share repurchase program.

Speaker Change: Two taco leverage going forward.

Brendan Lynch: Yes, Brendan thanks for the question.

Speaker Change: Yeah really good question payroll.

Brendan Lynch: Our targeted range of comfort and operating is five five to six five times thats been pretty consistent for multiple years now so the six five times that we ended the quarter at the high end of that range and I do think.

Speaker Change: Worked really hard really over the last two or three years and really worked hard on our staffing model that tried to put our team members in the right place and the consumer needed them.

Speaker Change: And I think we've done a really good job working on that metric I don't know if theres, a tremendous amount of more savings coming in that arena.

Brendan Lynch: Going back to my comments at the open just given Q1 is seasonally weaker and also we're still going to have a couple of quarters, we believe as of <unk>.

Speaker Change: From our perspective, because we ran lean historically and we found a way to run even leaner through the last couple of years I think we're trying to really right now match the consumer's expectation with when we have our team members. There I know, we're working very hard within our customer care center around.

Brendan Lynch: Continued negative year over year same store growth that will I will go above our range.

Brendan Lynch: Understanding thats temporary we're comfortable with that obviously as market conditions present themselves and there is an opportunity to.

Speaker Change: How do we can we can we use technology to help route calls can we use technology to help answer calls can we use technology to let us find efficiencies around with our team members who are talking live versus what we can do with automation I think the team has done a good job finding some past there I think that is an opportunity for us long term.

Brendan Lynch: To calibrate that or toggle that as you said, we will seek to do that but we're not going to be two reactionary given I think that's a fundamental thing that will grow out of.

Brendan Lynch: The other thing I mentioned in my remarks is that some of the.

Brendan Lynch: Potential portfolio, calling some of these strategic dispositions that Dave described earlier, we may do that in the next quarter or two and to the extent that gives us some proceeds to bring down leverage.

Speaker Change: About how we communicate with our consumer and our internal customers as well, which is our team members and just finding efficiencies around the way that.

Speaker Change: We work on that the team is working.

Brendan Lynch: Will be an option for us as well.

Speaker Change: Around our digital platform, we're working around how we help the customer transact with us more and more of the way they want to do in which case it seemed like they wanted to talk less to real people and use a little bit more technology. So I think we're certainly studying all of those fronts were working in those fronts. We've been testing in those fronts made advances and so I like where we're headed.

The ATM I should say the ATM and the share repurchase just generally because I did mentioned in the open that we stood those programs up.

That's just going to be opportunistic I think.

Brendan Lynch: We've traded in a band our stock price has been at levels in the past 12 months were.

Brendan Lynch: What's attractive to repurchase shares and it is also approached levels, where it would start to make sense to issue. So we just needed to stand those programs to be to have that flexibility for us going forward.

Speaker Change: And I think there is probably still some more success around some of those areas. We just discussed.

Speaker Change: Thank you.

Thank you.

Brendan Lynch: Great. Thanks, that's it for me.

Speaker Change: Our next question comes from the line of Brendan Lynch with Barclays. Please proceed.

Brendan Lynch: Thank you.

Brendan Lynch: Okay.

Speaker Change: Last question comes from the line of Thomas with Keybanc Capital markets. Please proceed.

Speaker Change: Great. Thanks for taking my question.

Speaker Change: Talked about the debt.

Speaker Change: Leverage being around six and a half now and maybe it's going to come under some pressure can you just remind us what the ranges that you were targeting whether you're willing to.

Thomas: Hi, Thanks.

Thomas: Just a couple quick ones first related to the internalization and the efficiencies that you are working to achieve.

Speaker Change: Deviate that even in the short term and how you might use.

Thomas: I just wanted to clarify from the comments.

Thomas: And guidance, whether theres any incremental impact.

Speaker Change: ATM or this share repurchase program.

Speaker Change: Two taco leverage going forward.

Thomas: <unk> with regard to tenant insurance and other fee income or G&A expense that will be realized gradually throughout the year or is everything essentially in the four <unk> run rate.

Speaker Change: Yes, Brendan thanks for the question.

Speaker Change: Our targeted range of comfort and operating is five five to six five times thats been pretty consistent for multiple years now so the six five times that we ended the quarter at is at the high end of that range and I do think.

Thomas: As it pertains to the internalization.

Speaker Change: Yes, Todd Thanks for the question. So yeah. The tenant insurance, we really did start to realize those economics from day, one going back to July one so that that is baked into the numbers.

Speaker Change: Going back to my comments at the open just given Q1 is seasonally weaker and also we're still going to have a couple of quarters, we believe us.

Speaker Change: You see that in that management fee and other revenue line item that we guide to so thats, notably up.

Speaker Change: <unk> negative year over year same store growth that will I will go above.

Speaker Change: Over 2024, there are costs associated with that.

Speaker Change: Our range.

Speaker Change: Understanding that's temporary we're comfortable with that obviously if market conditions present themselves and there is an opportunity to.

Speaker Change: Historically, Havent then or not.

Speaker Change: Our line item detail, but that line item thats labeled other which sits below depreciation on our face P&L.

Speaker Change: To calibrate that or toggle that as you said, we will seek to do that but we're not going to be two reactionary given I think that's a fundamental thing that will grow out of.

Speaker Change: And that year over year will be up from 2020 for I think roughly three years $3 million to $4 million and so those are some of the costs that do offset that.

Speaker Change: The other thing I mentioned in my remarks is that some of the.

Speaker Change: Potential portfolio, calling some of these strategic dispositions that Dave described earlier, we may do that in the next quarter or two and to the extent that gives us some proceeds to bring down leverage on that that'll be an option for us as well.

Speaker Change: Top line growth will obviously have a full 12 month impact in 2025 of both the G&A and the tenant insurance versus only the two quarter impact that we had in 'twenty four but I do think we're exiting 'twenty four and entering 'twenty five that kind of good run rate levels.

Speaker Change: The ATM I should say the ATM and the share repurchase just generally because I did mentioned in the open that we stood those programs up.

Speaker Change: Okay.

Speaker Change: That's helpful and then.

Speaker Change: That's just going to be opportunistic I think.

The 300 basis point occupancy gap that you discussed you talked about the year over year gap.

Speaker Change: We've traded in a band our stock price has been at levels in the past 12 months, where it was.

Being about 140 basis points at year end.

Speaker Change: Was attractive to repurchase shares and its also approached levels would start to make sense to issue. So we just needed to stand those programs up to be to have that flexibility for us going forward.

Speaker Change: I think you mentioned around 150.

Speaker Change: As you sit today, which compares to 300 basis points or more in the third quarter were comments around that to suggest that that half of that occupancy gap has been realized already or does the guidance assume.

Speaker Change: Great. Thanks, that's it from me.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Last question comes from the line of Tom Thomas with Keybanc capital markets. Please proceed.

Speaker Change: Half of the occupancy gap has closed during during the year can you just clarify that.

Speaker Change: It's more the latter Todd, yes, we did not mean to <unk>.

Tom Thomas: Hi, Thanks.

Tom Thomas: Just a couple quick ones first related to the internalization and the efficiencies that you are working to achieve.

Speaker Change: Just that.

Of that closing of the gap with the pro occupancy levels has been achieved I think thats more of just comps in end markets.

Tom Thomas: I just wanted to clarify from the comments.

Speaker Change: Where we sit today versus the middle of 2024. So it was more of a the way you characterize that.

Tom Thomas: And guidance, whether theres any incremental impact.

Tom Thomas: <unk> with regard to tenant insurance and other fee income or G&A expense that will be realized.

Speaker Change: At the end of your comment there about to be achieved as is that.

Gradually throughout the year or is everything essentially in the four <unk> run rate.

Speaker Change: Closing of the gap.

Speaker Change: Got it and then so in terms of the revenue synergies do you think that the impact to results will it be greater in 2026 or or is the greater impact likely to be felt this year.

Tom Thomas: As it pertains to the internalization.

Tom Thomas: Yes, Todd Thanks for the question. So yes, the tenant insurance, we really did start to realize those economics from day, one going back to July one so that that is baked into the numbers.

Speaker Change: Sort of included and embedded in the guidance.

Speaker Change: Good question I, certainly think the back half of the years, where we really start to see a lot of momentum because I think we will spend the first half of the year.

Tom Thomas: You see that in that management fee and other revenue line item that we guide to so thats, notably up.

Tom Thomas: Over 2024, there are costs associated with that.

Speaker Change: Really work and try to work through some occupancy things trying to really drive where we wanted to be positioned and try to close that get to the spring leasing season. So certainly the back half of the year sees a benefit which leads into 2026 right.

Tom Thomas: Historically, Havent then or not.

Tom Thomas: Our line item detail, but that line item, that's labeled other which sits below depreciation on our face P&L.

Speaker Change: Okay alright, thank you.

Tom Thomas: Not year over year will be up from 2020 for I think roughly.

Speaker Change: Thanks, Tom Thanks, Ed.

Speaker Change: Thank you there are no further questions at this time I would like to pass the call back over to George for any closing remarks.

Tom Thomas: $3 million to $4 million and so those are some of the costs that do offset that top line growth.

Tom Thomas: We will obviously have a full 12 month impact in 2025 on both the G&A and the tenant insurance versus only the two quarter impact that we had in 'twenty four but I do think we're exiting 'twenty four and entering 'twenty five that kind of a good run rate levels.

George: Well. Thank you all for joining our call today and your continued interest in MSA. We hope you enjoy the rest of the earning season and have a good afternoon.

This concludes today's teleconference.

Tom Thomas: Okay.

Connect your lines at this time, thank you for your participation.

Tom Thomas: Helpful and then the.

Tom Thomas: 300 basis point occupancy gap that you discussed you talked about the year over year gap.

Tom Thomas: Being about 140 basis points at year end.

Tom Thomas: I think you mentioned around 150.

Tom Thomas: As you sit today, which compares to 300 basis points or more in the third quarter were comments around that to suggest that that half of that occupancy gap has been realized already or does the guidance assume about half of the occupancy gap has closed during that during the year can you just clarify that.

Tom Thomas: It's more of the latter Todd Yes, we did not mean.

Tom Thomas: To suggest that half of that closing of the gap with the pro occupancy levels has been achieved I think thats more just comps in end markets.

Tom Thomas: Where we sit today versus the middle of 2024. So it was more of a the way you characterized it.

Tom Thomas: At the end of your comment there about to be achieved as is that closing.

Tom Thomas: Closing of the gap.

Tom Thomas: Got it and then so in terms of the revenue synergies do you think that the impact to results will it be greater in 2026 or <unk> or is the greater impact likely to be felt this year.

Tom Thomas: Sort of included and embedded in the guidance.

Good question I, certainly think the back half of the years, where we really start to see a lot of momentum because I think we will spend the first half of the year.

Tom Thomas: Really work and try to work through some occupancy things trying to really drive where we wanted to be positioned and try to close that get to the spring leasing season. So certainly the back half of the year sees a benefit which leads into 2026 right.

Tom Thomas: Okay alright, thank you.

Speaker Change: Thanks, Tom Thanks, Ed.

George: Thank you there are no further questions at this time I'd like to pass the call back over to George for any closing remarks.

George: Well. Thank you all for joining our call today and your continued interest in MSA. We hope you enjoy the rest of the earning season and have a good afternoon.

George: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

George: Okay.

George: [music].

George: Yes.

Q4 2024 National Storage Affiliates Trust Earnings Call

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