Q2 2025 National Storage Affiliates Trust Earnings Call
Greetings, and welcome to the National Storage Affiliates Trust second 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. If you 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, Vice President of Investor Relations. Thank you. George, you may begin. We'd like to thank you for joining us today for the second quarter 2025 earnings conference call of National Storage Affiliates Trust. On the line with me here today are NSA's President and CEO, David Cramer, and CFO Brandon Togashi. Following prepared remarks, management will accept questions from registered financial analysts.
Please limit your questions to 1 question and 1 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.
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, August 5, 2025.
The company assumes no obligation to revise or update any forward-looking statement because of changing market conditions or other circumstances after the date of this conference call.
The company cautions that actual results may differ materially from those projected in any forward-looking statement.
For additional details concerning our forward-looking statements, please refer to our public filings with the SEC.
We also encourage listeners to review the definitions and reconciliations of non-GAAP financial measures, such as FFO, core FFO, and net operating income, contained in the supplemental information package available in the Investor Relations section on our website and in our SEC filings. I'll now turn the call over to Dave.
Thanks, George, and thanks everyone for joining our call today.
During the second quarter, we generated sequential improvement in occupancy, moving contract rates, and our rent roll down spreads.
However, our same-store NOI and core FFO per share results fell short of our expectations.
For several reasons, including, first, there has been no meaningful improvement in the overall macroeconomic conditions.
Including housing transition as interest rates remained elevated and the portability remained challenged.
Second, the interest rate and overall inflationary environment have been more challenging than what was contemplated in our guidance.
Which is weighed on interest expense and repair maintenance expense.
Third.
There's continued pressure from new supply, and several of our markets are having a greater impact than expected.
Forth. It is taking longer to realize the benefits and the pro-internalization as we work through the changes to revenue management, strategies, Grant, consolidation, and management procedures.
Finally, the elevated use of concessions during the quarter was a near-term drag on revenues.
Taking all these factors into account, in addition to our assumptions that we will now be a net seller of assets for the year.
We've adjusted our guidance ranges accordingly, which Brandon will detail in his remarks.
Moving to the transaction environment, we sold 10 properties.
Which were all former pro properties in non-core markets, where we did not have scale and were therefore inefficient to manage.
We exited four states with this transaction, making a total of five states that we've exited year to date.
We also acquired one property in Texas and an NX to an existing property in California, which was completed as a 1031 exchange.
During the subsequent quarter, our 2023 joint venture acquired two properties: one in New York and one in Tennessee.
After acquisitions, net proceeds of $40 million were used to pay down the revolver.
Although there remains a steady flow of opportunities coming across our desk,
We remain very disciplined in the use of our capital and our focus on improving our balance sheet metrics.
We remain confident in the outlook for NSA.
We still expect to realize the full benefits and the pro internalization.
As the housing market loosens, we expect to realize outside benefit given our geographic exposure to Sun Belt and suburban markets that will be more impacted by a housing recovery.
Lastly, new supply is projected to decline over the next few years to levels well below historical averages.
Which will support an improving supply-demand factor out.
We continue to focus on improving our portfolio and occupancy position with increased marketing spend and the use of concessions.
We've increased repair and maintenance spend as we address needs in the portfolio that will enable us to improve performance.
Although these actions add nearer in near-term pressure with the revenues and expenses, we believe these are the right decisions in light of our current operating environment.
With that said, I do believe that we've hit bottom in fundamentals and that we're just starting to hit our stride operationally.
Some of the positive trends that we saw in the quarter ending in July are as follows.
Occupancy increased 140 basis points sequentially during the second quarter, finishing at 85%.
And further increase in July to 85.3%.
This is a noticeable difference from July last year, when we lost 40 basis points of occupancy from the current same-store pool.
The year-over-year occupancy has narrowed to 150 basis points at the end of July, down from 220 basis points at the end of June.
Grip path is grown for five consecutive months, ending in July.
With the year-over-year delta improving down from 4.2% in February, to 2.2% in June, and now down to 1.6% in July.
On the same star in basis, two of our reported MSAs, Houston and San Juan, inflected positive for the quarter.
That debt expense approved on a year-over-year basis and remains in line with historical averages. We are seeing the benefits of technology in our call center, with 15% of our total incoming call volume now handled by AI, and the evolution of our paid search model is driving more opportunities and leading to higher value rentals.
Further, our existing customer base remains healthy. We continue to be pleased with their overall success of the EC program, and the link to Stay Remote remains above historical averages.
While the pace of our progress was slower than expected in the first half of the year, we are encouraged by the positive trends that we experienced in June and July.
We're focused on maintaining that momentum throughout the rest of 2025 and into 2026.
I'm out there in the call over to Brandon to discuss our financial results.
Thank you, Dave.
Yesterday afternoon, we reported Cora Foer share of $0.55 for the second quarter.
An 11% decline from the prior year, primarily due to a decrease in the same store NOI and an increase in interest expense.
For the quarter, same-store revenues declined 3%.
Driven by lower average occupancy of 240 basis points.
And a year-over-year decline in average revenue per square foot of 30 basis points.
Expense growth was 4.6% in the second quarter.
The main drivers of growth were property, taxes, marketing, repairs and maintenance, and utilities.
Partially offset by a decrease in personnel costs.
Property taxes were elevated mainly due to a tough comp, as we had successful appeals in the prior year period.
Marketing was up 39% versus the prior year, given the competitive environment and targeted spend on markets with rebranded stores.
R&M was higher, largely due to cost inflation, addressing deferred maintenance, and some weather-related items.
These revenue and Opex results led to the same store NOI growth of -6.1.
Going forward, we expect some of these expense pressures to ease, and we anticipate sequential improvement in the year-over-year revenue growth, which is reflected in our guidance.
now, speaking to the balance sheet,
We have ample liquidity and maintain healthy access to various sources of capital.
We have no maturities of consequence until the second half of 2026.
And our current revolver balance is $400 million, giving us approximately $50 million of availability.
As Dave referenced earlier, we expect to be a net seller for the year, and the use of near-term asset sale proceeds will pay down the revolver, which, combined with improving fundamentals, will help to bring leverage down over time.
Net debt to EBITDA was 6.8 times at quarter-end, down slightly from 6.9 times in Q1.
Earning the guidance.
Based on year-to-date actuals and taking into consideration the factors impacting performance that they've highlighted in his remarks.
We have adjusted our guidance ranges for 2025 for same-store growth and core of a full crew share.
And now we expect same-store revenue growth of -2% to 3%.
5 to 4.25%.
Same-store NOI growth of -4.25% to 5.75%.
Core FFO per share is projected to be between $2.17 and $2.23.
Additional guidance and assumptions are detailed in the earnings release.
Thanks again for joining our call today. Let's now turn it back to the operator to take your questions.
Operator.
Thank you. You'll now be conducting a question and answer session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
So that we may address questions from as many participants as possible, we ask that you limit yourself to one question and one follow-up. If you have additional questions, you may request them, and time permitting, those questions will be addressed.
1 moment, please while we pull for questions.
Thank you. Our first question comes from the line of Michael Goldsmith with UBS. Please proceed.
Good morning takes off for taking my question. Uh my my first question is on the updated guidance. You know, when you started the year you you laid out kind of the different scenarios underpinning. Uh you know the the midpoint and the higher end at a low point just based on this updated range, can you kind of walk through the the scenarios contemplated to to hit the different uh the high-end and low-end the midpoint and and what sort of macro uh expectations for the back half is required to to kind of fall within that range thanks.
Yeah, Michael. This is Brandon, thanks for the question. Um so you know our revised all anchor, my comments really to the same store Revenue growth because that was you know from a magnitude, the largest change um which flowed through obviously the same store on AI and that's the biggest driver of the the total core of the share adjustment and our ranges. So regarding same store, Revenue in terms of the operating fundamentals. What's assumed that the midpoint is, you know, us being at or near the top of of occupancy as you typically would seasonally this time of year and then having sequential decline as we progress for the back half of the year, you know, Dave mentioned for at the end of July we were down 150 basis points and occupancy. So we are forecasting at the midpoint and occupancy Trend, that is not too dissimilar from what we experienced last year. Which was, you know, some of that typical
Seasonal sequential drop off such that, you know, we would, we would hover around that year-over-year, Delta um of minus 150 basis points plus or minus. And then similarly, you know, we would see some uh, seasonal sequential decline in Street rates uh, that would have its own impact on the rate, roll down between movements and move outs, but generally like our contract rate we're estimating will um follow a similar pattern as last year, you saw in the documents year-over-year. We were flat on the in place contract rate uh to last year. And so if what I just described plays out, you know we would remain relatively flat on a year-over-year basis.
And then you, you have the impact of, you know, higher discounts and concessions, which we talked about earlier as well. Uh, and we expect that to on a year-over-year basis to continue. So that those are the, the big building blocks that get you to the the back half of the Year being down 2% year-over-year. Which combined, with our first half negative -3, gets you to the midpoint for the full year of that negative -2 and a half. And then, you know, on the the high and low end, it's really obviously, you know, things being better or worse than than what I just described. But that's, um, you know, I wanted to focus my comments on on really that that core midpoint
The last part of your question, I would say.
There's a lot less dependent on the macro um with this midyear revision as there was at the beginning of the year. I mean, we obviously have 6 months of reported information. We've got 7 months of operational data. In front of us 7, excuse me, 7 months of operational data in front of us with July. And so, you know, you're only projecting 5 months of the year and and you've really um seen what's going to transpire in in the key spring and summer leasing season. Whereas at the beginning of the year, you know, there was a lot more predicated on on some macro Improvement.
Thanks for all that printed. Just as a follow-up, you know?
There was a little bit of a maybe lower volume of acquisition, so maybe you could walk through the capital allocation thought process between share repurchases and acquiring new properties. Thank you.
Yeah, sure. I mean, look, the the opportunity to to repurchase our own shares is there for us. We have an a plan that we reestablished late last year, certainly the, the stock price. Today we view as very attractive and, and at, quite a discount to, to, uh, um, you know, a fair value, uh, but you hit it on the head, you know, we're going to balance those decisions with uh, our Capital plans and sources and uses the acquisition environment, you know, Dave touched on. He can expand on it further, but it's very competitive. And so the prices that are required to, to win single deal, single property deals, uh, versus making a more Diversified investment into your own company that you, you have, you know, uh, better underwriting on. I mean, I think those are all the things that factor into those decisions. But we're going to be, you know, judicious and and disciplined about it and keep, um, our balance sheet metrics in mind as well.
Thank you very much. Good luck in the back end.
Thank you.
Thank you. Our next question comes from the line of Shamir Canal with Bank of America. Please proceed.
Yeah, good afternoon, everybody, I guess. Brandon or Dave, given some of the pressures you've talked about in the markets. Um,
You know, whether it's Atlanta or Phoenix, how are you addressing your ECRI strategy? I mean, have you seen any...
Sort of, um, customer behavior changes and maybe even an increase in turn. Um.
I guess just around your ECRI strategy would be helpful. Thanks.
Yeah, thanks for the question, and thanks for joining today. Um, I'd say, on a whole, we've seen no significant changes in the program. The acceptance of the level of expected turned created by the ECI program and then that Ed net output of the, you know, the the revenue gains we're getting out of it as a whole, uh, no changes. Uh, we've actually dialed in and, and a little more areas where maybe we could be a little more assertive on, maybe a magnitude, just based on risk factors and things like that. I would tell you as we went through the pro transition, the back half of last year and really the first quarter of this year. Um, the team worked very hard at working through the that you know, that backlog of customers that hadn't had a rate increase. And so we pushed quite a few rate increases through really the last couple of months of last year in the first part of this year um and and had good success there. But I think we learned a couple things just as we work through the magnitude of those customers and and how many rate increases we pushed and understanding. You know what that
Turn look like we we were able to dye them all in a little bit more in our risk scores about maybe pushing some longer term tenants in that in that existing probase. Um but we're happy with the outcome. But again every time you get more data points you you learn but uh the program as a whole is is still very stable and doing what we needed to do.
Got it. Thanks. And another topic that has come up is is the dividend, right? I mean, given we'll see. We're we're we're our numbers shake out for next year, from an afo perspective, but how should we think about the the dividend given where the afo pay out ratio is thanks.
Yeah, good question. We we certainly know that we're at a higher pay rate ratio we've ever been, and we're currently above the payout that we're earning and and you know, I would tell you our board's very thoughtful. Um, as we are as a leadership team and how we evaluate the dividend policy and the payout ratio, you know, you know we we routinely discuss the current state of our business as well as the near and long-term outlooks. Um, you know, that, you know, our board has insights to our initiatives, our strategies, uh, you know, the what the companies deploying. They have very deep knowledge of of this Self Storage sector and the Dynamics of this health storage sector. Uh, I would tell you, I think, you know, the board understands the long term plan, as well as the impact of the cycles of the sector. So, you know, I I think it ALS plays into our ability to really make a meaningful Improvement in a relatively short time frame because of the short contract rates that we have the short month-to-month leases, we have. Um, and I think our board has a, a long-term View, and as a good understanding of where we're at, and where we're headed.
Thanks a lot. Dave, I appreciate the color.
Yeah, thank you.
Thank you. Our next question comes from the line of Eric Wolf, City Bank. Please proceed.
Hey, thanks. Um, for your moving rent data on page 21 of your update, um, I was just curious if you could tell me sort of what, you know, concessions or promotions are included in that number and whether you think that changes, um, and that number are good for an indicator of where your average annualized rental revenue will eventually go. So, eventually, you know, if we look at the sequential or year-over-year changes, um, and there's moving rents, does that kind of eventually tell us where you think that annualized rental revenue will eventually go?
This is Brandon. So um,
You know, I don't have a specific adjustment to that move-in contract rate number since that's an annual number on the discounts. You know, the way that we...
Uh, look at the discounts. Internally is just kind of like, on a on a total dollars basis. And historically, we've talked about it as just, you know, how much are discounts as a percent of total revenue that we're earning. And and that discount percentage, you know, was lower for for a long period of time, you know, during the pandemic. And, and when fundamentals were much stronger and basically, we've been returning back to, to more normalized levels of discount. So, so something in like, the the 2 up to 3% of Revenue range. Um, you know, I think our use of discounts
More recently. Yeah, I I would tie that together with Dave's cam earlier comments about ecri as well. I mean, we've strategically been using discounts, uh, in part to kind of lessen the amount of ECR that we maybe have to push most immediately. So if a customer especially in this tough environment, over these last few years, you know, the narrative there's been a lot of
You know, reputational risk that I think has been introduced to the the industry and to certain operators with the way those are processed. So it's a it's a you know, just what we're testing. A lot of different ways of acquiring the customer and then um, moving their their in place, uh, rates up. The second part of your question. I would not say that the move in rate is an indicator of where the
The long term in place, contract rates, necessarily going to go just because of how Dynamic the the street and move in rates can be as well as just the the power of the ecri. So the, you know, the way we think about it, now that we started disclosing the move in and move out rates that are on that page, 21 or Subs schedule. 7, you can see the rate roll down and and you can also see that we've been stable on the contract rate. Um, if not improving a little bit, these last several quarters and that's just through the power of the ecri. So I think you can still maintain, um, long term, you know, a strong in place contract rate, even if those Street rates are, um, below that and you know, the moving rates are below that.
Understood and then I think it's sort of a follow-up. I think in the opening remarks you I could have had it wrong but I think you, you went through monthly. But the revenue per available, uh, available square foot was. And I think it was accelerating through the second quarter and reached negative 1.6% in July, I think rev path is usually a pretty good indicator for sort of Revenue growth, but maybe there's there's a difference, um, but I just want to make sure that I sort of understood it correctly, that, you know, effectively your same store Revenue.
was getting better throughout the second quarter and reached, call it, around negative 1.6% in July.
Yeah, you you heard it correctly? This is Dave, Eric and you're right, we were down 4.2 in February down, 2.2 in June and and then the 1.6 in July. And so for us, rev path is a pretty key ingredient to the overall Revenue output. Obviously your your comment about you know what's happening with concessions, plays into that. And and that on to what Brandon was talking about earlier is, um, you know, 1 of the things we've done with our asking rents and position in the market is we try to position ourselves to get, um, a little easier manageable rent roll down, and then also keep the customer count where we want it and and attracting the right customers. And so, adding in a discount is short-term, I mean, so if you're getting a little bit better asking rent and you're keeping the move in volumes, you want and use that that 1 time once a month or half off for the first month, it just burns through but that does not show up in the rate. I mean it's it's just a pure drag on Revenue, um, but we, we do like to position of the, you know, our rent roll Downs, pinching down to like 20. Now versus, you know, our high point last year, was it 38 in October? So we certainly are working on
Finding the right path to ensure that from an ECR perspective, customer account perspective, and the use of discounts, we're attracting the right customer we want and getting the value we want out of that rental.
Yeah, thank you. That helps. Our next...
Thank you. Our next question, Council, is from Juan Sabria with BMO Capital Markets. Please proceed.
Hey, this is Robin Handle, and I'm sitting in for Juan. I'm just curious if you could discuss the competitive landscape from public peers and institutional portfolios in your markets?
Yeah, certainly. This is Dave. Thanks for the question and joining. Um,
Rents... Um, this, you know, we'd say the first six months of this year, um, and really into July has been a little more stable, um, around the competitiveness of asking rents. Um, it appears that, you know, a lot of the occupancy levels maintained through the first six months of the year. So I think got a lot of everybody have just a little bit more pricing position as far as that stability. Uh, and we've certainly seen that in our portfolio, as well. Um, for us, we actually were able to grow occupancy in July, which is something we didn't do last year. And we actually, uh, you know, had street rates maintained and improved. And, you know, for us, the street rates will flip positive on a year-over-year basis in the months of October, and September, and August—those three months—just because of competitive, you know, comps from last year. But I would tell you overall, we're happy with the stability in the asking rents that are and the way we're able to position those asking rents in the market.
And, um, could you elaborate on the green shoots in your new marketing strategy and what gives you the, uh, the confidence on the implied second half? Same for revenue. Um, to accelerate.
Yeah. It's a it's a good question. You know part of the pro pro transition um you know we rebranded in a lot of markets and 1 we introduced NSA storage.com so that is a singular domain name for all of our Brands lived. And so anytime you start fussing around with domain names and rebranding and rebranding of stores. Uh there's certainly an element of disruption within your position and how Google sees you and and how your visibility scores.
Coming your ability to really be seen by the customer overall. And so from our marketing perspective, we've really spent more dollars. Really targeted around those rebranded markets. A lot of those were in the Pro markets and we've really elevated, you know, from a a paid search perspective um where we're positioning our ads, how we're positioning our ads, and really using a little more Automation and a lot more technology that was used in the past. It's led to the elevated marketing, spend, but I can tell you what we're seeing is top of the funnel demand. Um improving significantly. And now we're working that top of the funnel demand through the actual funnel and working on conversion rate. Uh, and I I tell you some of the green shoots of that is the fact that we did grow occupancy in July. I mean, it's something that didn't happen. Last year, we put more customers into our portfolio, at the back half of June and the first and the full month of July. And so far in August early in August, we we're very happy when with the stability, we've seen in August. So all those things combined, um, we we believe that we're in a better position, um, you know, to attract
and find new customers.
And Robin, I just want to add, um, just about your question regarding our confidence and what's implied in the back half. I'll apply it to what we were just discussing with Eric, just to make a clarification point. You know, that rev path year-over-year negative number of 1.6 that we were talking about, you know, that's a good example of, um,
If you know, not not that number doesn't include concessions. And so I don't expect the year-over-year revenue growth in July to necessarily be uh, negative 1 6. It'll be something worse than that because of the the use of discounts that that rev path number also doesn't include a bad debt and some of the fees and other ancillary income. Um, but I do expect the July year-over-year, Revenue growth, to be better than the negative 3 that we posted for the first 6 months. And so I just, I just want to give some specific data points. Um, in combination, with what Dave said, just to give you a sense of why we feel good about the general Trend, and that sequential Improvement,
Thank you very helpful.
Thank you.
Thank you. Our next question comes from the line of Michael Griffin with Evercore ISI. Please proceed.
Great, thanks. Uh, maybe you can give a little more color on, maybe just kind of the, you know, delayed, uh, not necessarily implementation but the pushing back some of the benefits of the pro transition. Uh, I mean, it seems like the the properties are all kind of centralized on 1 platform. So it doesn't necessarily seem like they're competing with each other from a revenue perspective. But I mean, is it, is it back end synergies? You know, I'm just trying to figure out what is what is sort of delaying, you know, the benefits that that that you are expecting maybe earlier in the year.
Yeah, thanks for joining. Good question. It really, in our opinion, um, we really got the nuts and bolts buttoned up, really, December of last year. Um, I can tell you from our team's perspective.
Them to centralized portfolios and change all the technology out. Um, I think why we're, you know, as I look at it, we thought maybe we'd be a touch farther ahead because of, uh, conditions that were out of our control. Uh, the economic conditions, the housing turn a lot of these grow stores are in the Sun Belt Market. Those Sun Belt markets are also very challenging. You've got Florida Gulf Coast of Florida, West Coast of Florida. You've got Phoenix. Uh, we're a large position in these stores, where you got Dallas Fort Worth, which was a large position of these properties, Las Vegas. So a lot of these Pro stores are in very challenging markets. And as we talked about in the last question, the rebranding takes time. It takes effort, takes a lot of effort. I think the teams executed. Well, uh, I think there's still room for us to improve, uh, and we will continue to focus on that and gain more traction. But, you know, a new domain name, consolidation of Brands consolidation of new brands in markets. All those things combined, I think it's just put us a little bit behind where we thought we'd be.
Thanks Dave, appreciate the context there. Um and then I know you mentioned that at least in your call center, sort of trying to leverage uh AI to see some benefits. They're going to be curious from a customer acquisition standpoint. I mean, I imagine that that most of your inbounds are still through kind of traditional Google search means. But are you able to kind of see, you know, any impact or benefit from searching with AI tools? Whether it's chat gbt, or, or anything of the, like just wondering kind of how that that customer is uh, is attracted to potentially renting a, uh, a storage unit.
Yeah, it's it's a really good question. Um I think it's early to really understand all of the implications of chat, you know? And and AI technology on how the consumer shopping certainly the consumer, you know, has changed their shopping patterns because they speak to their phone now and ask more sophisticated questions and and obviously the technology has to have a a better answer to more. Sophisticated answer, I will tell you from our seat, our team has spent a lot of time and is continuing to spend a lot of time analyzing how what, what you know, how do you get to the end result? I mean that's what Google ultimately wants to do. Is they want to listen to what you say to it and get you to the end result. And so we're spending a lot of time going back through our content that sits on the website, how it's worded, what it's worded like, is it chat friendly? Um, are we doing the right things? To make sure when a customer is looking for a storage facility, we have the ability to show up. Well, um, I think it's evolving and it's evolving quick and and it's going to be very Dynamic. Um, and for us, um, you know, I think, you know, we'll do our best
To stay on top of what's going on around that arena and adapt to it. I also say, within our company, we are very happy with our use within our own platform and the fact that the call center was able to contain.
You know, through our our agent, we call our Alexis. Um she was able to contain 15% of all the phone calls that came to our call center and actually solve an end to results. So we what we mean by contain is that that agent or that, you know, that platform actually solved the consumer's question and and handled the call without it going to somebody else. Uh, we think there's room to grow there which gives you efficiencies and also keeps your people focused on the the real calls that need a personal touch. Uh, we like that. And then we also launched at our stores of what we call my storage Navigator where you can walk up to the store, you can take your cell phone, you can scan a QR code and you can completely transact with us 100% without having a manager at the store. Um it's right now running in a web-based solution but that can also be turned on as an app that's downloadable. Um and so we are certainly focused a lot around how the consumer wants to transact with us and modifying our technology to adapt to it.
Great. That's it for me. Thanks for the time.
Yeah, thank you.
Thank you. Our next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed.
Hi, thanks. Um, I just wanted to follow up on a few things related to the pro transitions and the consolidation of banners with regard to the, um, you know, the web search. And, you know, some of the comments that were made. Where are search rankings and conversion rates today, relative to where they were before the pro transition? Can you give us a sense? How far?
Uh, maybe some of those metrics fell off and sort of where they stand today.
Free range and I statistically we're moving nationally to that piece of it, but we've had like, Florida be an example where maybe our visibility score would have been before the transition almost 11. If you think about the metrics around the visibility score and now it sits at 6. So we're certainly making improvements in the markets. We want to make it's a process. It's not all about paid search. It's about all of the things that go into being found and it's review scores and it's, you know where you are at in around the map process. The Google my business process. How you work on your organic treatment? And so we are making significant improvements there. Um, because we switched platforms, we don't have all Consolidated data from, you know, the Old Pros websites to ours. But I can tell you that in our own platform of where we had visibility. We're driving about 13 14% more people to the top of the funnel today than what we were doing a year ago. So that's an improvement that we like, that means we're being found more and more folks are coming into our website and and looking for a shopping experience with us.
That's led to about about a 6 to 7 percent Improvement in Opportunities. So top of the funnel to opportunity which would be like a reservation of quote, that's up about 7% on the stores that we have year-over-year data on. And so I I think all the things we do in our improving and so we're happy with it. We certainly need to be better. We want to continue to refine, um, and get better. You know, as we learn and go through it.
Okay, and then um with regards to the uh use of concessions and and discounts did that increase throughout the period and into July, or have you now been able to ease up a little bit? And, and was the implementation and, and response from the use of concessions was was that, you know, more broad-based across the portfolio or was it primarily in the markets? Um, you know, that remain a little bit softer?
I, I think certainly it was in the markets that were softer. We we were certainly more assertive in in those markets. Um, I would also tell you the last couple of months as we talked about in NY, we were, we were very specific about a unit type and a unit size as we were having not only a, you know, a, you know, we focus on the price, we are rolled down, but we were actually having a square footage roll down of about 5 or 6 square foot per rental. I think we talked a lot of you at n about it. So we got very specific around concession, use around type of units and size of units. And we actually ran some sales on our website around
Particular unit sizes, and we were very happy that it worked. I mean, we certainly found some traction, and we were able to rent and target, you know, specific unit types and sizes. A lot of the concessions were around that piece of it.
Okay, thank you.
Thank you.
Thank you. Our next question comes from the line of John Peterson with Jefferies. Please proceed.
Great. Uh, thank you.
On the, uh, same-store revenue, guidance cut of about 250 basis points, are you able to parse out how much of that is related to the housing market being weaker than your initial forecasts? And how much of that would you describe to the pro internalization challenges?
It's tough, John, as you can imagine. But what I will say is that when we introduced guidance in February, we did talk about the low end of guidance, assuming...
You know, no, no meaningful Improvement in housing and and demand still being, you know, kind of more muted on a relative level versus like the midpoint and high end of our guidance assumed much stronger occupancy gains. If you recall, I think of the midpoint, we said, 250 basis points in lock. You can see again Peak the trough, which, which we obviously didn't, um, experience this year. So that alone, I would say, you know, the macro, hopefully, we were clear enough in February.
That, you know, if you're looking at the existing home sale data, as 1 data point, right? Of course, not all of our demand is, is coming from that Source. But using it as a correlated data point, um, based on all the, you know, 6 months of information that's been reported, we all know that that that hasn't the materially improved. So I think that alone you're you're at at least at the low end of of our previous range and then I think you compound that that environment with some of the you know unexpected elongated challenges that they've described on the pro transition front and that's kind of that walks you the rest of the way to our our revised range now. Okay. All right that's really helpful. And then I guess on the pro internalization challenges
Is it specific pro portfolios that are harder than others maybe to integrate? Or would you describe the challenges as more broad-based across all the pro portfolios?
It's probably more Market driven than it is particular Pro properties. Um, you know, if you think about, uh, as I mentioned earlier, some of these, these portfolios, a larger concentration of pro stores are in very challenging markets and then you throw on a Rebrand on top of Phoenix for an example. Um, you know, we, uh, did not only had 2 stores down there that we operated, you know, as a corporate. And then the rest of those stores were managed by pros. And so we had to go down and obviously bring our, you know, we hired as many of the team members as possible, but we had to bring in leadership into that.
Market. And then go through a rebrand to establish ourselves in the rebrand. And, on top of it, it's a tremendously competitive market, right? There's a lot of new supply and a lot of things going on in Phoenix. Um, and so I think all those things couple it, so I wouldn't categorize it as, um, you know, one particular pro set of stores where it's more challenging; it's probably more market-based. Um, I think is what we would say. Okay, all right. Thank you.
Thank you.
Thank you. Our next question comes from the line of Spencer Gilmer with Green Street. Please proceed.
Thank you. Um, maybe just one for me. I'm a disposition, Frank. Can you just talk about how many properties you currently have earmarked for sale, um, just over the near term? And then where is pricing? Then, in terms of cap rates on recent acquisitions or dispositions, excuse me.
Yeah. Hey, thanks for joining. Appreciate the question. Um we do have a list of stores um that we have identified. In addition to that we're evaluating for either some kind of disposition strategy or can we spend some capital on them improve you know, the way they're positioned in the market? Um, I think we'll have probably some more color on that in calls to come. I we're still working with our board and our leadership, team around a strategy around, you know, how do we reinvest in the portfolio? How do we, uh, you know, really think about the portfolio as as long-term health and long-term success? And then how do we position that with the assets? We have? So we'll have some more coming out on that. Um, I would tell you the, the stuff that we are selling, we're having great success with I mean, uh, we just sold a total of 10 properties, that were very, uh, single Market properties, a lot of them or in locations in states where, um, you know, not large markets. Um, and not a lot of scale for us to have and, and, you know, those properties sold sub 6. So, I mean, it's out of trailing basis. That's, we're just having
Good success around what we're selling and the type of asset we're selling and the attraction of people who want to buy it. Um, and so lots of buyers out there looking for a lot of the product that we're working on. Um, and so, you know, we're happy with that piece of it.
Okay, great. Thank you.
Thank you.
Thank you. Our next question comes from the line of Ravi Vaja with Meizuho Securities. Please proceed.
Hi there. Hope you all are doing well. I wanted to ask a bit about the Portland market. It really stood out as a positive signature revenue growth, and maybe I just wanted to know, what are some of the demand drivers here and what led to that outside result versus maybe some of your other markets that are inflected with higher supply.
yeah, good question, Robbie, um, is Dave um you know I I think Portland is, is really a, a story if you think about self storage as a sector and and what happens in Self Storage, uh, we have
A lot of well positioned assets. Uh, it's a market we've been in for a long time, starting back with the original bro and Northwest Self Storage. A lot of knowledge there, a lot of success there, but Portland went through an overdevelopment cycle. Um, just prior to Coe there in 19 where there was just a tremendous amount of new Supply built. And you know the supply got out in front of demand, and, you know, it's Portland had to cycle through um, Co helped mask it for a couple of years. But Portland really had to cycle through a tremendous amount of new Supply. Um, the reason I say that is this, it shows you the strength of the sector when everything comes back in Balance um, Portland itself as a market seems to be stabilizing and and and you know, it seems to be a little more healthy than
Maybe it has been in the past 2 or 3 years, but what really has come back in balance is the supply bet demand ratio of product and consumer looking for product and and it's allowed us to obviously, get occupancy back. It's allowed us to have some pricing strength, uh, not just us. I think everybody if you heard calls reported that you know Portland was 1 of the markets, that was starting to perform well. So um you know I I probably why I like this sector. I mean if you keep supply and demand in Balance um things work very well and and when you get it overbuilt it and if building slows down like a cycle, we're going to head into or new Supply is starting to come off its highs. This, the sector will grow into itself and you'll have good output when you're done.
I guess I’m wondering why you would lower it right now and maintain the disposition guy. And why not match fund the two of them? Or do you see better opportunities to use the disposition capital at this time? Thanks.
Yeah, good question. Um, you know, I think there's a couple of things going on. We're certainly being very, very patient and disciplined with our capital.
When we buy, if we find the right properties. Absolutely. Um,
You know, we see a lot of deals that come across the desk. We underwrite a lot of things.
Just given today's environment, it's been very challenging to match our cost of capital with the type of products that we're seeing come across our our desk at this point. As I mentioned earlier on the previous question, we are also looking at reinvesting in our portfolio and, and what can we do within our portfolio to make sure that we can optimize performance within our portfolio? So we start thinking about investing Capital dollars and matching it to the best investment. Uh, some of the the money will be used to invest in our portfolio and and that will be a better return than trying to buy a property on the outside that you don't know.
Um, we will be, we're going to be very active with our JB wanting to buy properties. That's a good source of capital for us; it's a good cost of capital for us. I think the JB will remain active. I think the balance sheet piece just is a little more challenging at this time.
Got it. Thank you.
Thank you.
Our next question comes from the line of Ron Camden with Morgan Stanley. Please proceed.
Hey, just two quick ones. Going back to sort of the pro and generalization, can you just remind us what the sort of the occupancy and rent delta was that you were trying to close? I can appreciate that it may be a little bit delayed, but how far along are you on this? Are you 20%, 30% of the way? I'm just trying to get a sense of how much more upside there is to go.
Yeah, Ron, thanks for joining. Good question. Um, I'll start with the occupancy. We've not been able to meaningfully close the gap on Auction C yet. Um, you know, broadly, we've had some markets where we've had success. But overall, uh, as you can see, you know, from our initial guidance to where we're at today with our full portfolio, we did not see the spring leasing season we thought we'd see in volume, and obviously, the pros are more challenging markets. So, obviously, a lot of pressure around building occupancy there. So, I think there's a lot of upside as things turn and as opportunities present themselves, and you know, the conditions change to, uh, close that occupancy gap. We still believe in that; we still believe there's room to grow there. Um, and you know, the marketing spend and the rebrand starts to take hold. Some of those things will start to help that.
From a rate perspective. We did a a good job getting through the existing tenant base and we're able to work fairly well through the ecri piece of that, you know? And so we're able to move contract rates in those, uh, particular, you know, Pro Stores and move rev paths in those stores because of the existing tenant base. So I'd say we're probably 70% through with the first wave of that. And then we'll start to roll them into to the traditional platformer where you have Cadence and magnitude following what our our platform is. So more upside on occupancy, but still some to go on rate.
Really helpful. And then my, my second question was just on expenses. Um, I think we've you've talked about sort of the marketing spend but maybe just, uh, update your thoughts on just property taxes and any other sort of line item. I know it was a pretty small move on the same store expenses, but, um, just any color there,
Yeah everyone. So on um property taxes. You know, I mentioned in my opening remarks, we had a a difficult comp because there was a 1-time benefit in the second quarter numbers last year. So if you if you strip that out the 8 and a half percent year-over-year growth on that line item, that we reported for the, the second quarter, it would be closer to 3%. And then for the 6 months, I think we reported nearly a 7% increase year-over-year. But again, if you strip out that 1-time benefit in the prior year period, it's closer to like a 4%. And so, at 3 to 4% range is, is kind of, in line with what we're projecting still for the full year, uh, meaning on a year-over-year basis. You know, that that growth will come
Here on that line item.
Really great. Thanks so much. Yeah, and Ron, Ron actually sorry, 1 last 1 on Personnel, I did I did want to add um and you saw that line item um be lower in 2025 versus prior year. Some of that was adjusting Staffing levels of the Legacy pro-manage stores.
Uh, that we, you know, started that effort last July and then some of it, and then we also, through taking over those stores, you know, we just had a little bit of attrition in the employee base. And so we kind of got fully staffed at the beginning of this year. So as we enter the back half of the year, and you see this on the trailing five-quarter data in the back schedules of the supplemental, the comp becomes tougher. So we were negative growth in the first half of the year on personnel. It'll be, I expect, low to mid single-digit positive growth in the back half of the year.
Got it. Makes sense. Thanks so much.
Yep, thank you.
Our next question comes from the line of WestGold a day.
Beard, please proceed.
Hey everyone, I just want to go back to the My Storage Navigator. Has that been rolled out at all the properties? And what is your goal for that over the next 2 or 3 years for a percentage of leases done through that system?
Yeah. Good question, Wes. Uh it it has been rolled out and is it just in its infancy and and and right now I can tell you, you know, just watching the we're really studying customer Behavior. How many times they walk up to the door? You know, different office hours different times of the day. I do believe that is a goal or a tool that we can use to really offset, um, how the customer transactions with us. I mean, I think, you know, if we looked at it right now, I think that tool could probably do, you know, 4 or 5% of our rental volume, at the store level, uh, here in the next 6 months. So people who went to, the store will use that tool probably, you know, 4 to 5% of the time, and I think that could grow substantially more than that. It's it's easy. It's easy to use its effective, uh, and really the consumers are telling us, that's, you know, more the way we want to transact today. If if you think about where we're at preco till now, you know, preco we weren't leasing at all online and today, you know about 65%.
Of our total rental volume is coming through, some touch point on that, you know, digital platform where it's never reaching the store at all. And about 40% is just pure customer doing it all by themselves. So, we, we do think there's a great opportunity there.
Okay. And then 1 more on the the AI is it still too soon to put numbers on the the aggregate opportunity? Whether it's the cost savings from the call centers or the the leasing. When you just you just talked about what are you thinking about a as as far as a total opportunity?
Uh it's it's too soon. I I'm excited about it so I'm going to be careful here. I I just think it's too soon. There's so many things you can do with it from you know just you know pure call volume success, a call volume having it step in and you know, help your call center agents, do a better job. Your store personnel, do a better job. Um, I think we just let's let's watch it evolve and we'll keep trying to give you the Tibbits of stats, we see, but I, I think it's just too soon to where that can go.
Okay, thank you for the time.
Yeah, thank you.
Our next question comes from the line of Tomeo or Vanna with Deutsche Bank. Please proceed.
Hey guys, this is, uh, Sam on for Tayo. I hope I didn't miss this, but can you guys talk about how synergies come in versus the initial expectations as it relates to the pro integration?
Yes Sam thanks. Thanks for joining. Uh, you know, I think we've packed quite a quite a bit through the call about um we we've had good, you know, if you think let's start with operations and costs, we've had good payroll savings. Um, we, it certainly experienced the DNA savings. We thought we'd see around the pro internalization and so some of those, you know, nuts and bolts. Right off the bat. We we were pleased
With I I think from an upside synergies around really revenue and noi Improvement. We have not realized, uh, yet what the potential is there, and that that stims a lot around from a rebranding, how long the rebranding is taken to catch. Hold obviously market conditions, a lot of these markets are still very challenging. So we haven't been able to significantly move the needle around that revenue and noi Improvement. Uh once that does happen, you know that that is a meaningful chunk of our noi. Those stores are they're probably close to 40 45% of our noi. So there is an opportunity for us to see that. But at this point in time that that Revenue, noi synergies is just not materialized as at the pace we thought it would yet.
Got it. That's, uh, all I have on my end. I appreciate the time, guys.
Yeah, Sam. Thanks for joining.
Thank you. Our last question comes from.
The Brendan Lynch.
Please, please proceed.
Great, thanks for taking my question. You had a lot of good color in there about my Storage Navigator, AI agents, and the new website. When you think about your technology suite as a whole and your data analysis and the algorithms.
How effective do you think it is now versus where you want it to be? At some point in the future, when it's honed to perfection, for lack of a better term, like what is the gap between where it is now and where you're trying to get it?
Um, it's a really good question. I, I always use a baseball term here. We're in the beginning to Middle Innings on a lot of that stuff. Having the tools built is a huge, huge check mark for us and having it behind us where we're not developing is a huge check mark for us. Now when you put data to it and let it learn and you, you know, adapt and you modify and you tweak, uh, is where you really get the performance. And so, you know, in some of those ways, um, even like our our paid search bid model is new, I mean. Um, and and so, I just think there's a lot of opportunities yet for us to realize around all of the things you just mentioned, website, AI technology around the call center, and particularly how we, how we are found and how we transact on the internet.
Maybe just to follow up on that. If I understand correctly, it sounds like what you need more so than anything else now is data. Given the size of your portfolio, is it just data collection over a longer period of time relative to maybe some of your larger peers that can collect a wider swath of data at any given point in time? Are you going to be able to catch up to them just with the passage of time?
Yes. And I think, you know, I think in today's world we'll catch up quicker because of the, the systems that are available, you know, if you, if we were doing this 10 years ago, you would not have the sophistication of modeling sophistication and machine learning and that we have today. So yes time will help every time you run a month worth of paid search and you watch the keyword results and the, the success of the results and where your money went, that model adapts and it learns and it learns at a very fast pace. So, yeah, time will certainly help us and, and it's always beneficial to have an extra data point, but I think we can close the gap. Very rapidly versus if we were trying to do this 10 years ago.
Great. Thanks for the call today.
Yeah, thank you.
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.
Thank you all for joining our call today. We look forward to seeing many of you at the various conferences in September.
Conference, you may disconnect your lines at this time. Thank you for your participation.