National Storage Affiliates Trust

Greetings and welcome to the National Storage Affiliates Trust second 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 you 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 Hugland, Vice President, Investor Relations. Thank you, George. You may begin.

We'd like to thank you for joining us today for the second 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, August 5th, 2025. 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. During the second quarter, we generated sequential improvement in occupancy, moving contract rates, and our rent roll-down spreads. However, our same-store NOI and core FFO per share results fell short of our expectations for several reasons, including First, there's been no meaningful improvement in the overall macroeconomic conditions, including housing transition, as interest rates remained elevated and affordability remained challenged. Second, the interest rate and overall inflationary environment have been more challenging than what was contemplated in our guidance, which has weighed on interest expense and repair maintenance expense. Third, there is continued pressure from new supply in several of our markets that is having a greater impact than expected. Fourth, it is taking longer to realize the benefits from the pro-internalization as we work through the changes to revenue management strategies, grant consolidation, and management procedures. Finally, the elevated use of concessions during the quarter was a near-term drag on revenues. Taking all these factors into account, in addition to our assumptions that we'll now be net seller of assets for the year, we've adjusted our guidance ranges accordingly, which Brennan will detail in his remarks. Moving to the transaction environment, we sold 10 properties, which were all former pro properties in non-core markets, where we did not have scale and were therefore inefficient to manage. We exited four states with this transaction, making a total of five states that we've exited year to date. We also acquired one property in Texas and an annex to an existing property in California, which was completed as a 1031 exchange. During and subsequent to the quarter, our 2023 JV acquired two properties, one in New York and one in Tennessee. After acquisitions, net proceeds of $40 million were used to pay down the revolver. Although there remains a steady flow of opportunities coming across our desk, we remain very disciplined in the use of our capital and are focused on improving our balance sheet metrics. Overall, we remain confident in the outlook for NSA. We still expect to realize the full benefits from the pro-internalization, and as the housing market loosens, We expect to realize outside benefit given our geographic exposure to Sunbelt and suburban markets that will be more impacted by housing recovery. Lastly, new supply is projected to decline over the next few years to levels well below historical averages, which will support in improving supply demand backdrop. We continue to focus on improving our portfolio and occupancy position with increased marketing spend and the use of concessions. We've increased repair and maintenance spend as we address needs in the portfolio that will enable us to improve performance. Although these actions add near-term pressure to revenues and expenses, we believe these are the right decisions in light of our current operating environment. With that said, I do believe that we've hit bottom in fundamentals and that we're just starting to hit our stride operationally. Some of the positive trends that we saw in the quarter and into July are as follows. Occupancy increased 140 basis points sequentially during the second quarter, to finish at 85%, and further increased in July to 85.3%. This is a noticeable difference from July last year when we lost 40 basis points of occupancy from the current same-store pool. The year-over-year occupancy has narrowed to 150 basis points at the end of July from 220 basis points at the end of June. Redpath has grown for five consecutive months ending July, with the year-over-year delta improving down from 4.2% in February to 2.2% in June and now down to 1.6% in July. On a same-star NOI basis, two of our reported MSAs, Houston and San Juan, inflected positive for the quarter. Bad debt expense improved on a year-over-year basis and remains in line with historical averages. We are seeing the benefits of technology in our call center, with 15% of our total incoming call volume now handled by AI, and the evolution of our paid search model is driving more opportunities and leading to higher-value rentals. Further, our existing customer base remains healthy. We continue to be pleased with the overall success of the ECRA program, and the length of stay remains above historical averages. While the pace of our progress was slower than expected in the first half of the year, we are encouraged by the positive trends that we experienced in June and July. We are focused on maintaining that momentum throughout the rest of 2025 and into 2026. I'll now turn the call over to Brandon to discuss our financial results.