National Storage Affiliates Trust

Greetings and welcome to the National Storage Affiliates first quarter 2023 conference call. At this time, all participants are on a 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 Hoechlin, 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 first quarter 2023 Earnings Conference Call of National Storage Affiliates Trust. On the line with me here today are NSA's Executive Chair, Tamara Fisher, President and CEO, 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 details 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, May 2, 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 detail 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 Dave.

Thanks, George, and thanks, everyone, for joining our call today. Before we get started, I'd like to acknowledge the recent passing of a valued member of our Board of Trustees, George Chapman. George joined our board at our IPO in April of 2015, and his contributions are too many to name. We greatly appreciated his wisdom, guidance, and sense of humor, and we will miss him greatly. As many of you know, today is my first training call as CEO. Tammy is in the room with us today, so I'd like to say thank you for all you've done for the NSA over the years, and congratulations on your move to the executive chair role. I'd also like to acknowledge and thank all of our team members here at NSA and our pros for their continued dedication and hard work. This is significant contributions from our team members that drive our continued growth, and we appreciate everyone's efforts. Overall, looking at how the year started, there are positive signs that fundamentals are moving in the right direction. Estuary rates have increased 4% from the beginning of the year through the end of April. Contract rates are also up slightly over that same timeframe. Length of stay continues to increase, with the average length of stay on move outs now up to 17 months, the highest it's ever been for our portfolio. Also, our rent roll down is moderated every month this year, starting at 19% in January, and is now 13% in April. With things moving in the right direction, I'll remind you that we're coming off the best two years of rate and occupancy growth the self-storage sector has ever seen. The comps are challenging as we moderate back to normal levels. Now turning to results for the quarter. We began the year with solid operating performance, delivering same-store revenue growth of 5.7%, which is still above the long-term historical average for the sector. Occupancy ended the quarter at 89.8%, and April finished at 90%. With the headwinds of a slowing economy and a muted housing market, demand levels will continue to feel pressure. As an example, in March, home sales were down 29% year-over-year in both Phoenix and Las Vegas, while occupancy in those markets was down 570 basis points and 790 basis points, respectively. Our teams have done a good job navigating the changing economic environment and remain focused on executing strategies to capture new customers as we progress through the spring leasing season. Keep in mind, it's still very early, so the next couple of months will be key to our full-year growth. Geographically, our Sunbelt and secondary markets continue to outperform, with MSAs such as McAllen, Oklahoma City, Brownsville, and Wilmington all generating revenue growth north of 10%. This reinforces our strategic market focus and continued emphasis on geographic diversity. Turning to the supply environment, we believe that on a portfolio-wide level, supply will remain relatively muted near to midterm, given the many headwinds developers are facing today. That said, there are a handful of markets where we're feeling pressure from new supply, resulting in below average growth, including Portland, Phoenix, and Las Vegas. On the acquisitions front, we had a productive quarter, acquiring 16 properties totaling $160 million. 15 of these properties were previously discussed and were part of a portfolio purchased out of the CaptiPipeline for approximately $145 million. We funded these transactions with $150 million of equity, which Brandon will discuss further in his remarks. These transactions demonstrate one of the benefits of our pro structure, which is the CaptiPipeline, which now stands at approximately 100 properties, totaling $1.4 billion. The acquisition environment remains competitive with a wide gap between buyer and seller expectations. while we remain patient and disciplined, focusing on captive pipeline and off-market transactions. I'll now turn the call over to Brandon to provide more detail on our financial results and balance sheet activity.