Extra Space Storage Inc

Good afternoon, ladies and gentlemen, and welcome to Extra Space Storage third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. And as a reminder, this conference call may be recorded. I would now like to turn the conference over to your host, Mr. Jeff Norman, Senior Vice President of Capital Markets. Sir, the floor is yours.

Thank you, Joanna. Welcome to Extra Space Storage's third quarter 2021 earnings call. In addition to our press release, we have furnished unaudited supplemental financial information on our website. Please remember that management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in the company's latest filings with the SEC, which we encourage our listeners to review. Forward-looking statements represent management's estimates as of today, October 28, 2021. The company assumes no obligation to revise or update any forward-looking statements because of changing market conditions or other circumstances after the date of this conference call. I would now like to turn the call over to Joe Margolis, Chief Executive Officer.

Thanks, Jeff, and thank you, everyone, for joining today's call. Well, we had an exciting quarter. I'm not sure how else to describe it. Among other accomplishments, we celebrated the addition of store number 2000 to our portfolio. We were recognized by Inside Self Storage as the best third-party management company in the industry, and we achieved some of the strongest operating results in our company's history. Same-store occupancy once again reached a new all-time high during the quarter at over 97%, with vacates continuing at lower than historic levels. Our strong occupancy resulted in exceptional pricing power, Achieved rates to new customers in the quarter were 43% higher than 2020 levels and 41% greater than 2019 levels. In addition to the benefit from new customer rates, we have continued to bring existing customers closer to current street rates as state of emergency rate restrictions continue to be lifted throughout the country. Other income improved significantly year over year, primarily due to increased late fees contributing 30 basis points to revenue growth in the quarter. We had modestly higher discounts due to higher street rates, but their impact was offset by lower bad debt. These drivers produced same-store revenue growth of 18.4%, a 480 basis point acceleration from Q2, and same-store NOI growth of 27.8 percent, an acceleration of 760 basis points. In addition, our external growth initiatives produced steady returns outside of the same store pool, resulting in FFO growth of 41.2 percent. Turning to external growth, the acquisition market remains very active but expensive in our view. Our investment team has never been busier and we have found the most success acquiring lease-up properties and or acquiring stores with a joint venture partner. While most of our transactions have been in relatively small bites, the total is adding up, allowing us to increase our investment guidance to $700 million for the year. Also, our approach has resulted in better than market average yields. But we are much more focused on FFO per share accretion than total acquisition volume, and we plan to continue to be selective in the current environment. We continue to look at all material transactions in the market, and we have plenty of capital to invest when we find opportunities that create long-term value for our shareholders. We had an incredibly strong quarter on the third-party management front, adding 96 stores. Our growth was partially offset by dispositions, where owners sold their properties. It is worth mentioning that oftentimes we are the buyers of these properties and they are simply moving from one ownership category to another. In the quarter, we purchased 11 of our managed stores in the REIT or in a joint venture for a total of 30 stores purchased from our third-party platform through September. Fundamentals have remained even stronger than our already positive outlook, allowing us to raise our annual FFO guidance by 28 cents at the midpoint. While we still assume a seasonal occupancy moderation, it has been less than our initial estimate of 300 basis points from this summer's peak. Our revised guidance now assumes a 200 basis point moderation, which would result in 2021 year-end occupancy generally similar to that of 2020. We expect continued strong growth in the fourth quarter to cap off what has been an incredible year for extra space storage. I would now like to turn the time over to Scott.