Q1 2025 National Storage Affiliates Trust Earnings Call
Speaker Change: Greetings and welcome to the National Storage Affiliates First Quarter 2025 Conference Call
At this time, all participants are in a listen only mode
A question and answer session will follow the formal presentation.
Speaker Change: 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. I would now like to turn the conference over to your host, Mr. George Hoglund, Vice President of Investrelations for National Storage Affiliates. Thank you, you may begin. Thank you, Mr. George Hoglund.
Speaker Change: We'd like to thank you for joining us today for the first quarter 2025 earnings conference call of National Storage Affiliates Trust.
Speaker Change: Following prepared remarks, management will accept questions from registered financial analysts
Speaker Change: 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 NSAStorage.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 management's estimates as of today May 6, 2025.
Speaker Change: The company assumes no obligation to revise or update any forward-looking statement because of changing market conditions or other circumstances after the date of this conference call.
Speaker Change: We also encourage listeners to review the definitions and reconciliations of non-GAAP financial measures such as FFO or FFO and that operating income contained in the supplemental information package available in the investor relations section on our website and in our SEC filings.
Speaker Change: I will now turn the call over to Dave. Thanks, George, and thanks everyone for joining our call today. Our first quarter results were in line with our expectations, and we are pleased with the 130 basis point of sequential improvement and saved our revenue growth on a year over your basis.
Dave Cramer: All but three of our reported same-store markets saw sequential improvement in the level of revenue growth and two of our top three markets, Portland and Houston inflective positive in the first quarter giving us momentum into the spring leasing season.
Dave Cramer: Street rates and contract rates have experienced the council growth every month this year, which is encouraging. And although occupancy is a bit softer than expected, the rate growth is exceeding expectations and we met our overall revenue goals.
Dave Cramer: Our existing customer base remains healthy. We continue to be pleased with the success of our ECRI program. The link to stay remains above historical averages, and the bad debt expense remains within expected ranges.
Dave Cramer: Now that we've completed the pro-transition, we're laser focused on operations and realizing the benefits from the consolidated operating platforms and upgraded marketing and pricing tools.
Dave Cramer: The benefits are manifesting themselves in better search rankings to drive customers into the top of the funnel.
enhanced pricing algorithms to optimize rate decisions.
Dave Cramer: and the use of AI to optimize cult flows and staffing hours.
Dave Cramer: These improvements are reflected in our sequential contract rate growth and declines in personnel expenses.
Dave Cramer: We are in the early stages of showing improvement and our building momentum. In fact, moving contract rates in April increased approximately 5% on the first quarter levels. Meanwhile, occupancy increased 20 basis points in April to finish the month at 83.8% on the right.
Dave Cramer: The markets where we further log and implement these strategies, you can see the benefit. Okay.
Dave Cramer: Portland is a great example of a market where we have some runway behind us and a track record of implementing our strategies and the benefits are showing [inaudible]
Dave Cramer: We continue to operate our marketing and revenue management efforts leading to better results. We've been very successful with our pricing and issue our program, combined with the benefits of easing supply, Portland is now one of our top performers delivering positive revenue growth in the quarter.
Dave Cramer: Houston is also experiencing similar trends and generate 2.2% revenue growth in the quarter.
Moving to the acquisitions environment.
Dave Cramer: While it remains a steady flow of opportunities coming across our desk, with a broader economic and capital markets uncertainty, we remain disciplined.
Dave Cramer: During the first quarter, we successfully closed up three assets totaling approximately $40 million. We also sold two properties totaling $10 million.
Dave Cramer: Proceeds from asset sales will be used to pay down the revolver and fund future acquisitions.
Dave Cramer: Our activity is picking up and we expect to announce more transactions over the next few months.
Dave Cramer: In summary, we believe we found a trough in fundamentals. We're encouraged by the trajectory of contract grants and the new supply outlook is improving.
Dave Cramer: While there's plenty of noise around tariffs and economic uncertainty, so far there's been no direct impact on our business.
Dave Cramer: And I will remind all of you that the self-steroid sector has proven to be resilient through various operating environments.
Dave Cramer: Lastly, there's still significant investor interest in this Elf Storage sector. As demonstrated by the recent, successful IPO of our newest public peer, Smart Stop Elf Storage. I'd like to formally welcome Michael Sportson's team to the club.
Dave Cramer: And now turn the call over to Brandon to discuss our financial results.
Brandon Togashi: Thank you, Dave. Yesterday afternoon, we reported core of the Voper share of 54 cents for the first quarter. The 10% decline from the prior year period due primarily to a decrease in same-store NOI and an increase in interest expense.
Brandon Togashi: For the quarter, same-store revenues decline 3%, driven by lower average occupancy of 190 basis points, and a year-over-year decrease in average revenue per square foot of 1%.
Brandon Togashi: Hence growth is 3.7% in the first quarter. Main drivers of growth for marketing, R&M, and utilities partially offset by a decrease in personnel costs.
Brandon Togashi: We expect marketing to remain elevated in the near-term given the competitive environment, whereas R&M was higher largely due to severe winter storms during the quarter which resulted in outside snow removal costs. Without such impact, our op-x growth would have been below 3%.
Brandon Togashi: These revenue and off-ex results led to same-store NOI growth of negative 5.7 percent, also a sequential improvement from last quarter, which we expect to continue as we progress throughout the year.
Brandon Togashi: Also impacting the quarter was interest expense which was $1 million higher due to the maturity of a swap in the beginning of February that fixed the rate on $225 million of our revolver balance at just under 3%.
Brandon Togashi: Upon swap maturity, the notional amount was then subject to the spot rate, which was approximately 275 basis point higher. This resulted in a one penny drag on the quarter's results.
Brandon Togashi: Now, speaking to the balance sheet, we have no maturities in 2025 and our current revolver balance is $444 million, giving us approximately $500 million of availability.
Dave Cramer: As Dave referenced earlier, we expect the immediate use of near-term asset sale proceeds will pay down the revolver, which in combination with improving fundamentals will help to bring leverage down.
Dave Cramer: Net that the Yvida was 6.9 times at quarter end, and as I discussed on our call last quarter, the recent trough in your over-year same-store growth, along with the first quarter being seasonally the weakest, put additional pressure on that metric.
Dave Cramer: We expect to be in the 6 to 6.5 range by the back half of the year.
Dave Cramer: Now, I'll conclude our opening remarks with a few comments about our reporting package.
Dave Cramer: We added some new disclosure in our supplemental disc order. At the bottom of schedule 7, we've provided contract rent per square foot on in-place customers and on move-ins and move-outs to provide better clarity on fundamentals and assist with modeling.
Dave Cramer: With regard to guidance, it is still early in the spring leasing season and thus our assumptions are unchanged and are detailed in the earnings release.
Dave Cramer: I'll remind everyone that the midpoint assumes a moderately better spring leasing season than last year, characterized by improving pricing power and occupancy through the summer months.
Dave Cramer: The high end of our guidance range assumes that better than average spring leasing season, fueled by a recovery in the housing market
Dave Cramer: A low-end incorporates no material improvement in the housing market with muted seasonality and pricing power.
Speaker Change: Thanks again for joining our call today. Let's now turn it back to the operator to take your questions. Operator?
Speaker Change: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
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Speaker Change: In order to allow for as many questions as possible, we ask each keep to one question and one follow up. Thank you.
Speaker Change: Our first question comes from the line of Eric Wolfe with City. Please proceed with your question.
Eric Wolfe: Thanks for taking my questions. I think you said that contract rates increased 5% from March, and I can see it's up 20 basis points.
Speaker Change: So I hope you could just put that increase into perspective. Is that a very good April , normal April ? And then how much contract, contract rates up your reader?
Speaker Change: Eric, thanks for the question. I appreciate you having the call today. Sequentially we have seen improvement.
Speaker Change: April and Indomay, we did see contract rate improvement from January [inaudible]
Speaker Change: and if you notice in our new schedule, we actually provided in place customer rate growth and move-in rate growth, and you can see we improved move-in rates sequentially throughout the first quarter and into April , and our move-in rates actually inflicted positive in March.
Speaker Change: State Positive in April and improved in April and improved again in May. And so we've had really good success around the rate program for the first part of the year.
Speaker Change: And as we planned it, that's what we were really looking to do to try to drive more storage revenue and maximize the in place customers through the CI program and maximize the new move-ins that we were getting with improved your rates and really focused on that.
That's helpful, and you've talked about seeing better revenue and...
Speaker Change: I guess, margin opportunities for the pro-properties that you brought onto your platform. I think you previously said there was a 260-basis-point in Arkansas Gap that you could maybe close by the end of the summer, but maybe you're just getting a little bit more from right now. Could you just talk about where you are in the process of sort of achieving those?
Those Revenue Synergies. [inaudible]
Speaker Change: Yeah, good question. You know, really the transition took place, really the third and fourth quarter of last year, the majority of it had taken place really in the mid part to that third and fourth quarter. And so, as you think about rebranding stores, moving stores to a new domain name, NSAStories.com, having consolidated pricing and consolidated marketing efforts.
Speaker Change: We're really starting to see the transition take place and the teams really starting to see some traction around having everything in one place, having a Google good model into one place, having pricing in one place.
Speaker Change: Marketing Tools of One Place. There was about a 250 to 300 basis-point gap when we started the pro-transition. We really didn't expect to close that gap until mid-summer months.
Speaker Change: So I would tell you we're making good progress, we're happy with the rate growth in those portfolios. Aquamancy, we're still working through and we really look for the mid-summer months to really get the traction around the marketing spend and the website to really implement the changes around thatocracy spread.
Thank you [inaudible]
Thanks for joining [inaudible]
Speaker Change: Thank you. Our next question comes from the line of Samir Khanal with Bank of America. Please proceed with your question.
Speaker Change: Good afternoon, everybody. Dave, maybe, you know, tagging along the prior question, just maybe talk about sort of the ramp up. I don't know if you can quantify kind of into the second half. I mean, you guys have done minus 3%.
Speaker Change: in the first quarter for revenue growth. I would assume second quarter will also be down from revenue growth perspective but maybe quantify how much of a pick up we'll see kind of the back half and especially into the fourth quarter. Thanks.
Speaker Change: Hey Samir, this is Brandon, I'll jump in on it. So as Dave said, the revenue number for SameStore was in line with expectations. We hit our goal for the first quarter there.
You may recall, in February , when we introduced guidance, I...
Speaker Change: I said we would start the year on St. Toronto I growth in the mid-single digits negative
Speaker Change: So, slightly worse, maybe the expectations really do to the optics items that I mentioned, you know, if we didn't have some of the winter storm impact on snow removal as well as utilities.
Speaker Change: on the NOI number, but you're right, the trajectory and the pace of the growth and the continued sequential improvement has definitely implied in all the ranges of our full year guidance.
Speaker Change: You are also correct that we still expect to be negative.
Speaker Change: for the second quarter on both revenue and NOI year over year. And then, you know, we didn't get real specific because there's a lot of different things that have yet to play out, but we said at some point in the back half that it was like positive.
Speaker Change: on revenue and then eventually on O.I. follows by the end of the year. When exactly that happens, that's the million dollar question, right? And I think that's what we're so early in the season. We're only starting to see the early remnants of what the leasing season holds for us.
Speaker Change: And I guess my, just to follow up is I know you guys have talked about sort of this month to month improvement you're seeing. I guess how much of that is really just sort of, you know, return to seasonality.
Speaker Change: versus kind of improvements in demand right at this point. Thanks.
Speaker Change: Yeah, good question. I think I'd answer it on a couple of fronts. Certainly the seasonality starts to come into play here. You certainly prof usually around that February month and then you start to pick your way up into the spring leasing season. So, activity wise, we're starting to see more customers at the top of the funnel, more search results, and seasonally it's starting to feel improved.
Speaker Change: But I would also tell you, we really had good success really starting in the back half, really the last couple months of last year around street rate improvement, November and December , have carried that street rate improvement all the way through, you know, the first quarter in April and May, that's not typical. Typical street rates don't increase like in January and February and March and so we had good success around street rate improvement which led to movement rate improvement. And so we had good success around street rate improvement and so we had good success around street rate improvement.
Speaker Change: And then our ECRI program has remained very productive and we've had good results around the ECRI program. So I think we're ahead of schedule on what we thought we'd be on rate, occupancy, you know, the supply and demand pictures haven't really changed much. There's a lot of...
Speaker Change: We did see a tick up in April in occupancy, we've seen a tick up in May so far in occupancy, but both rental volume and move out volume are muted compared to last year, they're below last year
Speaker Change: I would also add to that last year we did grow occupancy, but what we didn't grow was revenue. We did not grow storage revenue in the first four months of last year. This year we grown sequentially.
Speaker Change: Storage Revenue, really in the months of March, April and now in the May. And so while the Occamacy may not as picked up as strong as it did last year, our revenue has picked up stronger than what it was last year.
Thank you. That's it for me.
Thanks, America.
Speaker Change: Thank you. Our next question comes from the line of Michael Goldsmith with UBS. Please proceed with your question.
Speaker Change: Good afternoon. Thanks for taking my question. My first question is around the dynamics of street rates. You can see it seems like street rates have shown some improvement, but I keep seeing it took us like a step back in the first quarter. So, you can walk through the dynamics of your ability to push right in and also bring people in and how you expect us to play out through the decreasing season.
Thanks.
Speaker Change: Michael, thanks for joining. Good question. Certainly, we did, I would agree with you. We certainly had good success around improving street rates.
which led to improved moving rates.
Speaker Change: and all of that with the ECRI program led to improved contract rates sequentially for the last four or five months. So we're very pleased with the progress there.
Speaker Change: The occupancy number, you know, obviously we're working hard on a marketing spend, we're working on top of the funnel, the programs that we implemented with that transition, we have a single platform we're starting to see some traction, so we're seeing...
Speaker Change: and improved velocity at the top of the funnel. But I would also say that from an expectation of the spring, you know, nothing's really changed a lot around some of the transitory factors that just kind of help us drive additional occupancy at the top. So the team has done a really good job.
Speaker Change: Allancing Revenue, and that's what we're trying to solve for. And so, while we'd like to see more occupancy, the more we get better rate improvement, the less pressure we have on the occupancy number.
Speaker Change: And so I think we're trying to mow all those things as we go through the spring season.
Speaker Change: George, thanks for that, David. As a follow-up, you're expecting some acquisitions on some dispositions this year. Just, you know, can you give us a little bit of an update on the transaction market? You know, where are you looking to buy, where are the properties? You know, look up later, you're looking to sell it, and just, you know, if hasn't been any change in the transaction market, you know, over the last month.
Speaker Change: Yeah, a good question. You know, as we talk last quarter, you know, transaction market, we've seen deal flow come across our desk, we're being patient and trying to match deals with our cost of capital and where we think
Speaker Change: It fits a good market where we can add and improve our operational efficiencies and our densities and I think the team is in a good job and we've underwritten a lot of properties but we're, again, being very patient on where we pick our spots we have
Speaker Change: Good cap will be available through our JVs and our JV partners have been very active with us looking at deals and so we're pleased there.
Speaker Change: I think on the disposition front it says we've been very active there I think we're making good progress there I think we'll have some material movement on our disposition to remember we got it to about 200 million dispositions this year and the team has worked hard and we've got some good line of sight on product
Speaker Change: that we will be just, you know, in the disposition pipeline and we'll talk more about that I think after we get to the second quarter, but I'd say progress on that front. Back to the acquisitions side, acquisitions are lumpy. I mean, we're seeing bills and we're underwriting bills I think we're just being patient on where we pick our spots to buy properties.
Thank you very much, good luck in the second quarter [inaudible]
Michael.
Speaker Change: Thank you. Our next question comes from the line of Juan Sanabria with BMO Capital Markets. Please proceed with your question.
Speaker Change: Hi, this is Robin Handeland sitting in Juan. Would Okusanya see a little weaker in the first quarter here? What Okusanya assumptions are you baking into guidance?
Speaker Change: Yeah Robin, so I'd refer you back to what we talked about in...
Speaker Change: February , when we introduced guidance. We talked about last year the same store pool thing.
Speaker Change: Occupancy from bottom to top, get about 140 basis points of increase.
Speaker Change: And we did talk about the midpoint of our guide having baked in something that was greater than that, right? Something closer to what you historically see, you know, up to 250 basis points, for example.
Speaker Change: in our range but that being said in the guide is definitely an expectation and a requirement that we have the man that is like I said in the opening remarks moderately better than last year.
Okay.
Speaker Change: In terms of your question about market and housing and what we're seeing, what I can tell you is we're pleased with what we're seeing.
Speaker Change: from a man perspective in the markets where you would expect it to this point in the year, whether that's housing related.
Speaker Change: Other movements and households, college, season activity in our markets that are a little more dependent on that, that type of rental season. So that's all encouraging, but I'd also qualify it, it's very early still.
Speaker Change: Thank you. And on the pro-internalization, QABS has helped us quantify to operating expense savings that are possible there and more generally we will see additional benefits for our 2025 or most of the potential upside already flowing for numbers.
Speaker Change: Yeah, I'll take that one as well, Robin. So on the pro-internalization, there's a few different things to...
Speaker Change: Highlight and Refresh You On. One is certainly on GNA, you know, that was a clear cut benefit that we started to realize some of that in the back half of last year, you can see it on the year over year, face P&L numbers, close to two and a half million dollars of savings.
Speaker Change: in 2024, and we'll get the other half here in 2025. There was some tenant insurance economics that we started to realize from day one of the pro internalization effective date last July 1. So that's kind of been a good run rate these last couple quarters. We'll get the other half here in 2021.
Speaker Change: including the first quarter of this year. And then at the property level, you know, the savings on personnel costs that I mentioned in my opening remarks on a year-over-year basis.
Speaker Change: You know, some of that was due to just the way we staff the stores versus the way the pros previously managing those properties may have staffed them, the way we leveraged the call center. In lieu of some of those onsite staffing hours, the call center costs are in the marketing line item, so that's also part of the reason for the upward pressure.
Speaker Change: on that marketing expense line item. I think we're fairly good run rates still on a lot of that stuff. It's really started to pick places they've said earlier in the third and fourth quarters, and now we're kind of humming it a pretty good run rate.
George Hoglund, George Hoglund,
Speaker Change: Thank you. Our next question comes from Line of Michael Griffin with Evercore ISI. Please proceed with your question.
Michael Griffin: Great, thanks. I wonder if you can give us some insights into how promotions or discounts are trending for new tenants. It seems like street rates continue to improve, but I imagine getting that new tenant in there I think is important to realize that ECRI increased a couple months later. So, have you been holding firmer on those concessions? Are you trying to get people into the facilities at the expense of maybe a higher concession rate?
How should we think about that?
Michael Griffin: Good question, and thanks for joining. I certainly think concessions are well within the ranges of our expectations and haven't jumped above historical levels. We have seen a little bit more increased use of the promotions within the last two or three months, and I think that is consistent with the fact that we are pushing street rates and repositioning ourselves in the market.
Michael Griffin: And we've opened up the team to use a temporary discount versus really trying to use a lower rate and then bring that promotional rate up. And so certainly, you know...
Michael Griffin: We're happy with what we're seeing as results there, none of the discounting probably would catch us outside of the boundaries while we think they should be, but yes, I would agree we're seeing a little bit more promotional discount usage at the higher rate.
Michael Griffin: Thanks, appreciate the context there. And then the helpful slide you have in your investor deck is just one on kind of search engine optimization with the new NSAStorage.com and how you're seeing improved.
Michael Griffin: You know, kind of rankings on Google searches. I'm just curious, you've done a good job of getting that rank up, but, you know, I just think about kind of Google searches. People probably usually click on you, at least the first.
Michael Griffin: 3 that pop up, so getting from call it that 5th or 6th slot relative to 2-3, is that possible? And then if you drive more traffic that way, just walk us through maybe how possible it is to continue to increase that throughput within search engine results and how that leads to demand.
Michael Griffin: Yeah, it's a great observation and it's very important to us and to answer your question it is possible yes and so there are several ways to achieve that obviously what where you work within Google My Business and how you work with your SEO functions those are more of a, you know, particularly the SEO side of the house is more of a long term continued. Thank you.
Michael Griffin: Work Effort, and you focus on all the things that help you...
Michael Griffin: and allow the search engines to recognize your authority and how you're relevant and where your stores are positioned and what you're trying to get the message across. And so the team has been very, very busy with NSAStories.com, making sure from an SEO perspective, we're doing all the work and that work just takes time. And so that's not as flashy. What we can do to impact that ranking and put ourselves in better position is around the paid search element, and you've seen us increase our paid search spend. And so that's what we're doing.
Michael Griffin: We've, having all of the stores and all of our brands on one domain name has certainly allowed us to be very efficient in use of that paid search and so I think the team has done a really good job using that, you know, that lever at this point in time and putting ourselves in a position where we're increasing our visibility scores. [inaudible]
Michael Griffin: and our visibility position. Now that we have our stores on NSA.com, all of them, and all of the brands there, we have a little bit better visibility. We don't have year-over-year historical averages, but I can tell you top of the funnel-wise.
Michael Griffin: We've seen this significant improvement in how many customers are at the top of the funnel, you know, from really if you look at November , December , timeframe for now, we're up about 25% of the amount of volume that's at the top of our funnel.
Michael Griffin: Also with that it's seasonal too so you have to factor season out on you that but we are making strides.
Michael Griffin: I think that's something that will give us improved performance as we continue through not just this year but years to come and we are really focused on putting ourselves at the right time in that right search ranking, right? That's also part of it as well with the right keywords. There's a lot of keywords you're focused on and a lot of things that we think transact better so there's a lot to it but we are making good progress.
Thank you for joining us.
Great, that's it for me. Thanks for the time.
Thank you.
Speaker Change: Thank you. Our next question comes from the line of Todd Thomas with Keegan Capital Markets. Please proceed with your question.
Speaker Change: Hi, thanks, good afternoon. I just wanted to go back to the discussion around occupancy and rate.
Speaker Change: that you felt or your systems were indicating that lower rates would not have stimulated more demand than it did in the quarter, is at the right rate?
Speaker Change: Todd, thanks for joining. I think you're correct, as we modeled and forecast.
Speaker Change: We didn't think the benefit of a lower rate would drive enough customers through to get the net result we wanted [inaudible]
Speaker Change: And so we reposition ourselves in the market. I would also tell you, coming out of 34th quarter last year, I think we were probably a little under on rate just because of the transition and some of the things we were doing around that pro transition. So that also allowed us to reset rate in November December .
Speaker Change: and positioned ourselves well to have a better entry rate led to a better revenue result.
Speaker Change: Ok, and then the change in occupancy, how did vacate activity trend during the quarter?
Speaker Change: Can you speak to vacate specifically and any change at all in vacate activity since the start of April ?
Speaker Change: And I think that also leads to one of the things we talked about is, you know, until some of this outside pressures around, you know, the supply demand ratios change, we still have markets that have a lot of supply and need to be absorbed.
Speaker Change: and there's still some pieces in our sector, particularly for our portfolio, where we're just not seeing as much customer activity, and so we're managing the environment we're in.
Alright, thank you.
Thank you
Speaker Change: Thank you. Our next question comes from the line of Filio Mehta with Green Street. Please proceed with your question
Salil Mehta: Hi guys, good afternoon, and thanks for taking my question. I guess looking at the marketing spend numbers here, you know, there seems to be a substantial increase year over year, I think it's about like 20%
Salil Mehta: Can you guys just kind of walk us through the decision to push this forward when we're seeing from the other reads a significant pullback in this area and you know it has a new top of Ronald demand continues to be sustained?
Salil Mehta: And sorry if I missed this part earlier, but is this the run rate that we can expect for the rest of the year?
Speaker Change: Yeah, thanks for joining. I think we looked at the marketing spend and the overall marketing cost as we would not deploy it unless we thought we were getting results with it.
Speaker Change: And so for us, I think the year-ever-year increases is where we started, and the starting point from a year ago in previous years [inaudible]
Speaker Change: and then also consolidation to a domain name where we can really deploy particularly on the paid search side and some of the things we're doing around some of the other marketing efforts.
Speaker Change: to really make sure that we get the brand authority and the search engine rankings that we want. And so, comparing us to the peer group, I don't know that we were starting at the same point, year-over-year basis. And so I think for us, it might look a little bit elevated where there's might be a little more, you know,
Speaker Change: maybe year over year flat, but it's also where we started from and what we're working on. So...
Speaker Change: To summarize, we're spending it. We think we're getting the right amount of lift and the right amount of cut-top of the funnel activity and the right amount of customer conversions. And we will continue to use that tool as long as it's effective.
Speaker Change: RenRate, I think the RenRate is probably similar for the rest of the year. Provided we get the, you know, like again, it's a tool. We'll use it where it's appropriate, and if we can cut back on it and submit the results we want, we will. If we want to spend more and we get the results we want, we'll spend more. It should lieu to grab new those.
Speaker Change: The key to that. Yeah, and the growth rate year over year, 20% we saw on Q1, that was within expectations. And I think that growth rate is the right type of growth rate year over year to expect throughout the year.
Great, thanks. That's it for me.
Thank you, thank you You
Speaker Change: Thank you. Our next question comes from line of Ronald Kamdem, with Morgan Stanley . Please proceed with your question.
Ronald Camden: Hey, just two quick ones. Just going back to the Occupancy comment.
Speaker Change: about some of the diesel. Obviously you're solving for revenue, total revenue here, but just curious on the moveouts, is there any sort of common themes or threads? And the question really is, how do you guys get comfortable that the product is still at the right affordability?
Speaker Change: and the market. How do you get comfortable with that risk of mitigating it? [inaudible]
Speaker Change: I would tell you from a move out perspective, we have not seen any change in behaviors. You know, we've certainly bad debt is in check, payment activities where we want it to be. And so, from a consumer point, I don't think there's anything from an affordability the way we're attracting new customers or the way we're working through their life cycle that's really changed. And so, I don't think there's anything really to report on the move outs. It's any different than where we've been. And so, I don't think there's anything really to report on the move outs.
over the last minute.
6, 8, 12, 18 months.
Speaker Change: helpful. My second question is just appreciate the additional disclosures.
Speaker Change: on schedule 7. I guess when I look at the in-place customer, I guess they're paying 1460, so call it 146 on a 10x10.
Speaker Change: How are we supposed to interpret the year-over-year change? Is that just purely due to the spread of moving and moving out or have a change in ECRI as well? Just how do we sort of think about that year-over-year change? Thanks.
Speaker Change: to find better success in our ECRI program than we probably historically have and then we see a continued runway with that piece of it.
Speaker Change: I think as we think about it, that's the area we're really trying to work on [inaudible]
Speaker Change: with the amount of move-ins we're getting and we've seen significant improvement. I mean, if you look at the April numbers versus where we finished, you know, 2-1, I mean...
Speaker Change: Our move-ins were up to $1.38 coming out of $9.89 for the quarter average. You know, in place customers are at 14-70 versus an average of 14-64 so we continue to see strength and improvement as we go into the spring season here.
That's it for me, thanks.
Thank you.
Speaker Change: Thank you. Our next question comes from a line of Robbie's idea with Mizuhu Securities. Please proceed with your question.
Ravi Bhatia: Hi there, I hope you guys are doing well. I wanted to follow up on transactions here with some pretty active capital recycling or capacity of the guide. It's just an opportunity to maybe share some exposure in terms of exposure to a few markets and maybe increase to a few others. How are you guys thinking about Todd?
Ravi Bhatia: Printing of the portfolio, looking at how we can look at markets, our ability to grow in markets, the quality of asset, we had a market
Ravi Bhatia: We really try to tie it to operational efficiencies and make sure that we can really work on margins within markets and so you're going to see us exit as we start to work through the second quarter. We're going to see some dispositions where we're leaving markets where we had a single asset and I think we're going to have...
Ravi Bhatia: A couple states that we also leave as well because we only had one asset in the state, so really looking at the portfolio asking ourselves
Ravi Bhatia: Both sides, where do we want to operate? And if we don't think we can find the economy as we want long-term, we'll look to exit those markets and that could be from market health to ability to purchase properties, to strengthen what we already own there. And then as we continue to expand and recycle that capital, we are definitely looking to improve our position, improve our portfolio and improve our operational efficiencies. Thank you very much.
Got it. That's helpful. One more here.
Speaker Change: What are some of the current demand drivers for self-storage right now? You're being your portfolio, having an outside exposure to homeowners and being more sensitive to home sales? What were you really seeing the growth from and demand from as we enter the peak leasing? It's peak leasing season here for safety.
Speaker Change: Working your way through people who rent a landscaping company or a plumber or whatever they use this for their storage of their tools and their equipment plus they also use this as a small distribution point.
for that product. So there's, you know, a robust...
Speaker Change: The amount of small consumers that we use our product because we're well located and we're certainly affordable for them to use us as a small warehouse.
Speaker Change: You work in your way to the residential side, there's a lot of varieties there for just people who need additional space [inaudible]
Speaker Change: because they live in an apartment, and they store seasonal items there, they store their bikes there, they store stuff that doesn't fit in their apartments. [inaudible] We're going to have to go back to the hotel
Speaker Change: Allaway through people who've used their home for home office now and they're storing the furniture they took out of that home office or if they put a home gym in they've taken furniture out and they just use this because we're very affordable and very convenient.
Speaker Change: I think the pressure is we continue to feel a little bit more in our portfolio on it.
Speaker Change: And that's just missing in the sector because it's, you know, we're at all time existing home cell lows and that piece is missing. It's just a piece that's missing but for us it is a piece where we think we're missing some occupancy in our portfolio because of lack of transition. Thank you very much.
Speaker Change: We think that puts us in a position in the housing market. [inaudible]
Speaker Change: Does start to bounce off of its bottoms and start to reignite? We're well positioned to take advantage of that [inaudible]
Speaker Change: And but at this point in time, we're just using all the other demand factors that want our product and making sure we're visible and we're affordable and able to take advantage of the consumers that need us.
I appreciate it. Thank you.
Thank you.
Speaker Change: Thank you. Our next question comes from the line of Omotayo Okusanya with Deutsche Bank. Please proceed with your question
Speaker Change: Oh, yes, good afternoon, everyone. A couple of times in a commentary I kind of suggested that one of the mentors may be troughing.
Speaker Change: But yet we still have this backdrop of a very tough housing market so I guess I'm trying to reconcile those two things so Dave could just kind of help me a little bit
Speaker Change: with reconciling those two things and why you have such conviction that you know fundamentals may have trust and you have like this kind of better earning as well as profile as the progressives.
Speaker Change: Yeah, hey, thanks for joining and good point and good observation. I think as we look at where we're positioned the amount of supply we're absorbing and now the new supply that is coming
Speaker Change: and, you know, disappear levels around the demands for our needs-based business.
Speaker Change: We don't think the housing market's going to get worse. We don't think, you know, as you look at the markets we study, we had two of our largest markets in Black positive.
Houston and Portland [inaudible]
Speaker Change: We just see strength around the consumer, how long they're staying, the strength of the ECRI program, and then what we're starting to see around Google searches around the top of the funnel activity. It just appears to us that we think we've come through the worst of it. And we started to see it really as we got the pro transition completed that puts us in a better position to be more operationally productive. Thank you.
which is, you know...
Speaker Change: We've had really, as you look at the back half of the year and why we think the back half of the year is going to ramp up for us we had a transition going on last year
Speaker Change: We've got a lot of things on our plate that we're moving around. We now have better technology. We have a team that's focused on execution and we have easier comps as you go through the rest of this year. So that's I think how I would frame it up for you in the fact that we think we have cropped and we're heading in an upwards direction.
Speaker Change: That's helpful. And then as it pertains to marketing, could you just kind of give us a general sense of what's happening in regards to like, you know, ad rates, search rates, and kind of what the research engines are kind of doing on that front?
Speaker Change: We are seeing an increase in consumers shopping for self-storage services, so different types of keywords that Google is tracking. We saw an improvement in February and a pretty significant in spike in March, and so if you look at...
Speaker Change: Folks out looking for self-stories, we did see a definite change in the amount of people searching for the product.
Speaker Change: We're working very hard with our tools and as we develop better tools and new tools that we have today we're making sure that we're appropriately spending and giving ourselves the right visible position so that we're around the key words at the time we want to be around the key words.
Speaker Change: and positioning ourselves with our stores in the markets so that we can have success. But right now the activity at our top of the funnel is increased, which is encouraging and we're also seeing the search engines tell us that there are more people shopping for self storage. Thank you very much, George.
Thank you. Thank you.
Speaker Change: Thank you. Our next question comes in line of Nathan Gwell with Baird. Please proceed with your question.
Nathan Guell: Hey, good afternoon guys. Can you talk about which markets are performing better or worse than expectations so far this year?
Yeah, I think we've hit on them. I mean, certainly the Portland and Houston markets we talked about, we've got a couple others across the
Nathan Guell: The reported MSAs in Schedule 6 that have been positive and continue to be positive
Speaker Change: As Dave mentioned, his opening remarks, all the three of them sequentially improved in terms of the year over year performance.
Nathan Guell: So, broadly, as we said, portfolio performed in line. No major surprises when we are the other, but I think the ones that we've remarked on already have probably been the ones that have had a little bit of modus stop-side surprise.
Speaker Change: Got it. And do you expect terrorists to have an impact on some of your tenants that may use storage for their small businesses?
Speaker Change: They certainly could. We have not had any experience around it or had anybody actually call it out to us. I think we're early in the game yet and too soon to tell, but again I think I'll leave it to that. Probably too soon to tell. We just haven't heard anything yet.
Great, thank you [inaudible]
Thank you.
Speaker Change: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Hoglund for any final comments.
Hoglund: Thank you all for joining our call today. We appreciate your continued interest in NSA. We look forward to seeing many of you at the Reat Week Conference in June and in the meantime we will look forward to the Warriors Nuggets Western Conference Finals.
Hoglund: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.