National Storage Affiliates Trust

Greetings and welcome to the National Storage Affiliates fourth quarter 2022 conference call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, George Hoagland, Vice President of Investor Relations for National Storage Affiliates. Thank you, Mr. Hoagland. You may begin.

We'd like to thank you for joining us today for the fourth quarter 2022 earnings conference call of National Storage Affiliates Trust. On the line with me here today are NSA CEO Tamara Fisher, President and COO Dave Kramer, and CFO Brandon Tagashi. Following prepared remarks, management will accept questions from registered financial analysts. Please limit your questions to one question and one follow-up, and then return to the queue if you have more questions. 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 nationalstorageaffiliates.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, February 28, 2023. 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 will now turn the call over to Tammy.

Thanks, George, and thanks, everyone, for joining our call today. We're very pleased with our fourth quarter results that capped off another impressive year, delivering growth in core FFO per share for the year of over 24%, the second highest year of growth for us since our IPO, in 2015. Our same store growth for the year of almost 15% culminated a record three-year period where same store NOI is now more than 40% and FFO per share is now more than 80% higher than the pre-pandemic levels of 2019. During the year, we acquired 53 stores valued at nearly $800 million. comprised of 45 wholly owned properties valued at $570 million and eight properties valued at $215 million that we acquired with our joint venture partners. I think it's worthwhile to note that this transaction volume was our third largest year since our IPO based on wholly owned acquisitions activity. To top it off, we also delivered 35% growth in dividends paid in 2022 compared to the prior year. Not only are we proud of being able to deliver record levels of financial growth for our shareholders, we're also proud that 2022 was our biggest year in supporting our communities since our IPO. Through our partnership with Feeding America, we were able to provide a million and a half meals to assist in ending food insecurity in America. Our properties continue to support their local schools and children's charities, and our corporate team thoroughly enjoyed our holiday toy drive for Children's Hospital here in Denver. We were pleased to again step up our support of the Self-Storage Association's college scholarship program. We also continue to enhance our diversity at NSA, where more than 40% of our senior management are women or minorities. Turning to the current acquisitions environment, we're seeing fewer deals come to market and there remains a pretty significant gap between buyer and seller price expectations. We continue to evaluate deals where it makes strategic sense and remain both disciplined and very selective in the face of today's increased cost of capital. Of course, just like we refuse to buy at prices that are not accretive for our shareholders, sellers often refuse to sell given the healthy cash flow they generate. So it's not uncommon for sellers to just pull deals off the market if they don't like the pricing. Overall, the volume of transactions in the market is definitely slowing. In our case, though, we do have the unique benefit of our captive pipeline of assets, which are stores managed by our pros, but that we don't yet own. Because we're on the same team as buyer and seller in these cases, we can cooperate to use structuring that is accretive for our shareholders while also beneficial to the sellers. To that end, we recently entered into an agreement to acquire 15 properties in Florida owned generationally by one of our pros and family members. The transaction is valued at about $145 million and we expect the first year yield will be in the low sixes. In this case, we've negotiated to fund the transaction with the issuance of a new series of preferred equity. beneficial to the PROS family, but still accretive to NSA. We expect the transaction will close sometime in March. This deal demonstrates one of the many benefits of our PROS structure and our ability to continue to grow while being creative with capitalization. We began 2023 with another accretive event in the retirement of Moobit Self Storage, one of our IPO PROS. Move-It managed over 70 properties for NSA concentrated in Texas and the Southeast. As most of you know, we've discussed and anticipated pro-retirements over time. And we expected at the time of our IPO that as many as half of our six pros at the time would choose to retire within 10 years. Move-It is the third of our pro-retirements following Northwest last year and SecureCare in 2020. We'll continue to operate the stores under the Move-It flag. The internalization of Move-It increases the number of stores managed within our corporate portfolio to almost 800 stores, or over 70% of our total 1,100 stores at the end of the year. We estimate this retirement will be one to two pennies per share accretive to Core FFO. I'd like to thank the Move-It team for their partnership over the years. They've been a key contributor to NSA's success. Finally, as today's call will wrap up my final year as NSA's CEO, I'd like to congratulate Dave on stepping up as CEO effective at the end of this quarter. I'd also like to congratulate Tiffany Kenyon on recently being elevated to Chief Legal Officer, and Derek Bergeon, our current Senior Vice President of Operations, on his upcoming move to Chief Operating Officer. I look forward to Dave leading NSA through its next phase of growth and continuing to deliver outstanding results for all of our stakeholders. I'll now turn the call over to Dave. Dave?