National Storage Affiliates Trust

Greetings and welcome to the National Storage Affiliates first quarter 2025 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. I would now like to turn the conference over to your host, Mr. George Hoagland, Vice President of Investor Relations for National Storage Affiliates. Thank you. You may begin.

We'd like to thank you for joining us today for the first quarter 2025 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, May 6th, 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 will now turn the call over to Dave.

Thanks, George, and thanks, everyone, for joining our call today. Our first quarter results were in line with our expectations, and we are pleased with the 130 basis points of sequential improvement in same-store revenue growth on a year-over-year basis. All but three of our reported same-store markets saw sequential improvement in the level of revenue growth, and two of our top three markets, Portland and Houston, inflected positive in the first quarter, giving us momentum into the spring leasing season. Street rates and contract rates have experienced sequential growth every month this year, which is encouraging. And although occupancy is a bit softer than expected, the rate growth is exceeding expectations, and we met our overall revenue goals. Our existing customer base remains healthy. We continue to be pleased with the success of our ECRI program. The length of stay remains above historical averages, and the bad debt expense remains within expected ranges. Now that we've completed the pro transition, we are laser focused on operations and realizing the benefits from the consolidated operating platforms and upgraded marketing and pricing tools. The benefits are manifesting themselves in better search rankings to drive customers into the top of the funnel, enhanced pricing algorithms to optimize rate decisions, and the use of AI to optimize call flows and staffing hours. These improvements are reflected in our sequential contract rate growth and declines in personnel expenses. We are in the early stages of showing improvement and are building momentum. In fact, moving contract rates in April increased approximately 5% in the first quarter levels. Meanwhile, occupancy increased 20 basis points in April to finish the month at 83.8% occupied. In markets where we're further along in implementing these strategies, you can see the benefits. Portland is a great example of a market where we have some runway behind us and a track record of implementing our strategies and the benefits are showing. We continue to optimize our marketing and revenue management efforts, leading to better results. We've been very successful with our pricing and ECR program. Combined with the benefits of easing supply, Portland is now one of our top performers, delivering positive revenue growth in the quarter. Houston is also experiencing similar trends and generated 2.2% revenue growth in the quarter. Moving to the acquisitions environment, while there remains a steady flow of opportunities coming across our desk, with the broader economic and capital markets uncertainty, we remain disciplined. During the first quarter, we successfully closed on three assets, totaling approximately $14 million. We also sold two properties totaling $10 million. Proceeds from asset sales will be used to pay down the revolver and fund future acquisitions. Our activity is picking up, and we expect to announce more transactions over the next few months. In summary, we believe we've found a trough in fundamentals. We're encouraged by the trajectory of contract rents, and the new supply outlook is improving. While there is plenty of noise around tariffs and economic uncertainty, so far there's been no direct impact on our business. And I will remind all of you that the self-storage sector has proven to be resilient to various operating environments. Lastly, there's still significant investor interest in the self-storage sector, as demonstrated by the recent successful IPO of our newest public peer, SmartStop Self-Storage. I'd like to formally welcome Michael Schwartz and his team to the club. And I'll turn the call over to Brandon to discuss our financial results.