National Storage Affiliates Trust

Greetings and welcome to the National Storage Affiliates Trust fourth quarter 2024 conference call. At this time, all participants are in a listen-only mode. A 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 you to your host, George Hodlin, Investor Relations. Thank you, George. You may begin.

We'd like to thank you for joining us today for the fourth 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 estimate as of today, February 27th, 2025. 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'll now turn the call over to Dave.

Thanks, George, and thanks, everyone, for joining our call today. My thoughts and prayers go out to all those affected by the California wildfires. While our portfolio is not materially impacted, we serve customers and have employees in these areas, and we wish all those affected by these tragic events best as they go through the recovery period. Fourth quarter capped off what was a very productive year of strategically positioning the NSA for our next phase of growth. We realized several significant accomplishments in 2024, including internalization of the pro structure, which included consolidating our brands from 12 to seven, the onboarding of approximately 250 properties and over 380 employees to our corporate platform. We consolidated our web domains, putting all of our stores onto nsastories.com. We finished the conversions of all of our stores to a single new property management system. We deployed $150 million of growth capital in our newly formed joint venture. We sold 40 non-core facilities to third parties for over $270 million and used proceeds to pay down debt and purchase $65 million of properties. And we repurchased $275 million of common shares. It was a very busy year for everyone at NSA, and I would like to thank all of our team members for their hard work and dedication. Now that the heavy lifting is behind us, we can fully concentrate our efforts on maximizing the performance of our existing portfolio using our consolidated operating platforms and upgraded marketing tools, all of which benefit from increased scale and efficiency. This will directly impact our shareholders' returns as we no longer share the upside with our pros. Although the current operating conditions remain challenging due to elevated supply and muted transitory demand from historically low home sales, the medium-term outlook for the self-storage sector, and NSA in particular, is at the best it's been in the past few years for the following reasons. We are near a bottom in the housing market, and when the recovery comes, NSA should realize an outside benefit in that recovery. Housing turnover in the U.S. has fallen below GFC levels and is hovering around the lowest levels in the past 40 years, creating pent-up demand that should contribute to an eventual recovery. Further, our markets have a higher average percentage of homeowners versus renters, which means that our portfolio is more sensitive to changes in the overall level of housing turnover. And supply is coming down. New deliveries across our markets are expected to decline substantially over the next few years, with rentable square feet as a percentage of stock going down from 3.5% in 2024 to 2% by 2027, which is well below the long-term national average according to Yardi. Lastly, NSA's year-over-year comparisons become noticeably easier in the back half of the year, which combined with these anticipated improvements in supply-demand variables will likely drive healthy momentum into 2026 and beyond. Now turning to operating trends, it does feel like fundamentals are reaching an inflection point. First, our street rates dropped in October. down about 24% year-over-year basis and improved through December to finish down 13%. Second, our rent roll-down peaked at 38% in October and narrowed to 27% in December. Third, our year-over-year occupancy delta also continued to narrow, from down 270 basis points at the end of the third quarter to down 140 basis points at the end of the fourth quarter. As a result, in December, we experienced a sequential increase in contract rates by 30 basis points. We are encouraged by January's trends, which were largely consistent with December. Our existing customer base remains healthy. We continue to be pleased with the success of our ECRI program. The length of stays remain above historical averages, and bad debt expense remains with expected raises. Moving to the acquisition environment, there remains a healthy volume of opportunities coming across our desk. We successfully closed four assets totaling approximately $40 million during the quarter, and have over $35 million of properties closed or under contract year to date. In summary, we are finding a trough in fundamentals. Supply backdrop is improving, and the housing market is poised for recovery. While the pace of that recovery is hard to predict, we are well positioned to take advantage of the improving fundamental backdrop. I'll now turn the call over to Brandon to discuss our financial results.