National Storage Affiliates Trust

Greetings and welcome to the National Storage Affiliates third quarter 2024 conference call. At this time, all participants are in 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 Huglin, 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 third quarter 2024 Earnings Conference Call of National Storage Affiliates Trust. On the line with me here today are NSA's 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 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, October 31st, 2024. 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 Dave.

Thanks, George, and thanks, everyone, for joining our call today. We are pleased to announce that all of our team members are safe following Hurricanes Helene and Milton. We hope that all affected by these storms remain safe, and we wish them the best as they work their way through this tough recovery period. While several of our facilities in the path of these storms experienced minor damage, largely impacting gates, roofs, and signage, all of our stores are back open for business. We've experienced an uplift in occupancy on the west coast of Florida, primarily in Tampa and the Sarasota-Bradenton area. In these markets where we have 25 stores, we've seen an increase in occupancy of approximately 600 basis points, from shortly before Hurricane Milton until today. That uplift in occupancy is helping to partially offset what remains a very competitive operating environment. Our Sunbelt markets and areas with elevated new supply continue to be more challenging for us. So far, we have not seen an impact to the housing market or customer demand levels as a result of the September rate cut by the Fed. Free rates during the third quarter were down 17% from the prior year period, and we expect that number to widen if yet in the near term, as we seek to hold occupancy levels for the remainder of the year. I would add that we are pleased with the rental activity and occupancy levels in October. We estimate that the average occupancy in October will be down approximately 200 basis points year over year. Our existing customer base remains healthy, and payment activity and length of stay all remaining within our expectations. Despite this office and pricing to new customers, we continue to be pleased with the success of our ECRI program. We have not experienced a material change in customer behaviors. During the internalization of our pro structure, we're making great progress and we remain ahead of schedule on the transition of pro stores to NSA management. We're about 85% done transitioning the web and operating platforms. The remainder will be completed by mid-November. We're almost 70% complete on the transition of operations management, which consists primarily of hiring, onboarding, training, and implementing standard operating procedures. We expect to be finished mid-December with this piece. We've completed about 50% of the initial store rebranding. We also remain on track to achieve the accretion levels that we've previously highlighted. We're encouraged by the early benefits from commonizing the customer acquisitions and revenue management strategies. Overall, we're pleased with how well the transaction has gone to date. Due to the acquisitions environment, we've seen more opportunities come across our desks and the team has been busy underwriting a variety of deals. Successfully closed on two portfolio transactions using our 2023 JV, including a five-property portfolio in the Rio Grande Valley of Texas and a 13-property portfolio in Oklahoma City for approximately $148 million. These two portfolios are in markets where we already have a strong footprint and will improve our overall portfolio quality and increase our operational efficiencies. Although the operating environment will likely remain competitive in the near term, We remain optimistic that the benefits from the internalization combined with an improving acquisitions environment and eventual recovery in the housing market will lead to improving performance going forward. I will now turn the call over to Brandon to discuss our financial results.