National Storage Affiliates Trust Q2 FY2025 earnings call

• Macroeconomic conditions remained challenging with elevated interest rates and affordability issues. - Interest rate and inflationary environment impacted interest expense and repair/maintenance. - New supply in several markets pressured performance. - Pro internalization faced delays in realizing benefits due to revenue management, brand consolidation, and procedures. - Occupancy increased sequentially but still had challenges. - Sold 10 properties in noncore markets, exited 4 states, acquired 1 property in Texas and an annex in California. - 2023 JV acquired 2 properties. - Increased marketing spend and concessions, focusing on portfolio improvement.

No specific product segment financial performance detailed; overall, same-store NOI and core FFO per share fell short of expectations due to macroeconomic challenges, interest rate/inflation, new supply, pro internalization delays, and concessions. Same-store revenues declined 3% due to lower occupancy and revenue per square foot, while expenses grew 4.6% with drivers like property taxes, marketing, R&M, and utilities.

• Adjusted guidance for 2025: same-store revenue growth -2% to 3%, same-store OpEx growth 3.25% to 4.25%, same-store NOI growth -4.25% to 5.75%, core FFO per share $2.17 to $2.23. - Expect some expense pressures to ease and sequential improvement in year-over-year revenue growth.

• Macro-economic conditions not improving as expected. - Interest rate and inflationary environment challenging, affecting interest expense and repair/maintenance. - New supply in markets having greater impact than expected. - Pro internalization taking longer than expected to realize benefits. - Elevated use of concessions as a near-term drag on revenues.

Q: On updated guidance, how does it relate to macro expectations for the back half?

A: Brandon explained revised guidance is based on year-to-date actuals and 6 months of operational data, with less dependence on macro improvement than initial guidance.

Q: Given market pressures, how is ECRI strategy addressed?

A: Dave said ECRI program has seen no significant changes, but team has dialed in more assertive areas.

Q: Thoughts on dividend given AFFO payout ratio?

A: Board is thoughtful about dividend policy, currently above earnings.

Q: Move-in rent as indicator of long-term in-place contract rate?

A: Brandon said move-in rate not necessarily an indicator, as street rates and ECRI power affect long-term rates.

Q: Competitive landscape and new marketing strategy?

A: Dave said new supply peaked in markets, leading to more stable asking rents; Brandon added marketing spend on rebranded markets and technology is improving top of funnel demand.

Q: Color on pro internalization delays?

A: Dave said pro transition had delays due to rebranding, market challenges, and need to work through customer backlog.

Q: Properties earmarked for sale and cap rates?

A: Dave said has properties earmarked, sold 10 properties in noncore markets sub-6 cap rate.

Q: Portland market demand drivers?

A: Dave said Portland market stabilizing after overdevelopment, showing sector strength when supply-demand balances.

Q: Acquisitions guidance?

A: Dave said acquisition environment competitive, focusing on portfolio reinvestment.

Q: My Storage Navigator and AI opportunity?

A: Dave said My Storage Navigator rolled out, AI still too soon to put numbers on aggregate opportunity.