Extra Space Storage Inc

Good day, and thank you for standing by. Welcome to the Extra Space Storage third quarter 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. please be advised that this call is being recorded. I will now turn it over to Jeff Norman, Senior Vice President of Capital Market. Please go ahead.

Thank you, Hope. Welcome to Extra Space Storage's third quarter 2022 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 filing with the SEC, which we encourage our listeners to review. Forward-looking statements represent management's estimates as of today, November 2, 2022. 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. With that, I'd like to now turn it over to Joe Margolis, Chief Executive Officer.

Thanks, Jeff, and thank you, everyone, for joining today's call. We had another strong quarter with same-store revenue growth of 15.5%, driven by strong rental rate growth, partially offset by lower year-over-year occupancy. We felt expense pressure across many line items, resulting in total same-store expense growth of 12.6% and same-store NOI growth of 16.4%. We continued to be busy on the external growth front, adding 40 stores gross to our third-party management platform, closing over $100 million in bridge loans, and closing a number of acquisitions, most notably the purchase of Storage Express. We view Storage Express as a strategic opportunity to acquire not only an attractive portfolio with operational upside, but a remote storage platform. We believe this will unlock an additional growth channel for Extra Space to acquire and integrate smaller properties that lend themselves to a remotely managed model. Our strong property NOI plus our external growth efforts resulted in core FFO growth of 19.5%. Core FFO includes an add back of 5 cents per share for estimated property damage and tenant insurance claims related to Hurricane Ian. We are happy to report that all of our people remained safe during the storm We are proud of the way our team has rallied around our employees and our customers in Southwest Florida to assist them with cleanup and restoration efforts. Core FFO in the quarter was slightly ahead of our expectations, driven by stronger than anticipated interest income and non-same store NOI, partially offset by lower than expected same store NOI. In September, we started to experience a return of seasonality, putting some pressure on occupancy and new customer rates, which were both modestly lower than our third quarter forecast. As we evaluate our standard metrics to measure demand, we see the moderation we have typically expected in the fall that did not occur in 2021. While traffic is lower year over year, demand is in line with pre-COVID levels. Fundamentals remain strong, just not as off-the-chart strong as they have been in the last six quarters. As a result, we have tightened our same-store revenue, NOI, and core FFO guidance ranges, eliminating scenarios that assumed only minor seasonality on the top end of the range, as well as more bearish scenarios which we do not believe will materialize. This revision results in a $0.05 or $0.60 basis point decrease at the midpoint of our FFO range. We never like the idea of having to reduce our outlook, but we are also careful to maintain perspective. Our 2022 implied same-store revenue growth is the highest in the history of our company, and this is on the back of 2021, which was our second highest revenue growth year. Our implied 2022 FFO growth at the midpoint is 21%. Our balance sheet is healthy, we have access to capital, and our external growth platforms are positioned to grow on an asset-light basis. As we contemplate future potential economic landscapes, including additional inflation and or recession, we are well positioned to continue to produce solid results. due to our resilient need-based asset class, diversified portfolio, and best-in-class team and platform. We are having a great year, and we look forward to finishing strong in the fourth quarter. I would now like to turn the time over to Scott.