National Storage Affiliates Trust Q3 FY2025 earnings call

• Delivered solid Q3 results with sequential improvement in year-over-year same-store revenue growth in 16 of 21 reported MSAs, and core FFO per share beat consensus estimates.
• Contract rates in October were 160 basis points better than last year, occupancy ended October at 84.3% (relatively flat vs September), with positive outlook for self-storage in 2026 and beyond due to expected lower new supply, potential Fed rate cuts boosting demand, and benefits to borrowing costs.
• Focus on executing strategy including enhanced marketing, revenue management, optimized staffing, property improvements, and expense controls. Launched preferred investment program as an earnings growth driver.
• Continued capital recycling through property sales and acquisitions, with $32 million spent on acquiring 2 properties via 2023 JV and $32 million from selling 2 assets, and new preferred investment program allows accretive investment in self-storage deals.

In the third quarter, same-store revenues declined 2.6%, driven by lower average occupancy (150 basis points) and a year-over-year decline in average revenue per square foot (40 basis points). Rental revenue was down 2.2% year-over-year in Q3 compared to negative 3.2% in the first half of 2025, a 100 basis point improvement. Other property-related revenue was a drag due to tough comparables from the prior year when legacy PRO properties were commonized onto the corporate tenant insurance program. Revenue contribution: rental revenue represents over 95% of total same-store revenue, with other property-related revenue being a smaller component.

• Maintained guidance ranges for 2025 same-store growth and core FFO per share. The midpoint of the same-store revenue and NOI guide implies continued improvement in the pace of growth into 2026, building off the inflection seen in Q3.

Actual results may differ materially from forward-looking statements due to changing market conditions. Risks associated with market conditions, interest rate fluctuations, and execution of strategies could impact financial performance.

Q: When I listen to your opening remarks, what makes you confident on a relative basis?

A: We spent years restructuring, consolidating brands, platforms, and centralizing marketing/revenue management. We've inflected, with progress seen in occupancy, contract rates, and execution, and have levers like rate and occupancy to drive growth.

Q: Talk around disposition capital recycling over the next 12 months?

A: We have markets and stores in the market, focus on operational efficiency and maximizing returns, with good success in selling properties and reinvesting capital, including a new preferred investment opportunity.

Q: How do improved street rates flow through to impact same-store revenue growth?

A: We're closing occupancy gaps, positioning competitively, and maximizing ECRI strategy. We're working on 3 things: closing occupancy gaps, street rate positioning, and ECRI implementation to drive revenue.

Q: Should we expect more growth-focused JVs?

A: It's an opportunity, we're pleased with the announced JV in the Mid-Atlantic, and it could lead to more, though no immediate line of sight.

Q: Comment on capital allocation with 45% leverage and trading at a discount to NAV?

A: Everything we're doing is modest, measured, and for long-term benefits, with targeted dispositions, JV activity, and preferred investment program deployed in a disciplined manner.

Q: Update on same-store revenue growth trajectory for 2026?

A: We're in a better starting position in 2026, closing gaps on occupancy and contract rates, and expect to be in the best position in several years with momentum seen sequentially.

Q: Details on recently announced JV properties, acquisition cap rates, IRR?

A: Targeting value-add deals, initial yield may look stable with upside potential, cash flow priority to partners, initial cash flow less than 10% with delta accruing and paid as cash flows increase, yield and exit cap rates dependent on deals.

Q: Update on brand consolidation on single website?

A: Good success, October saw web shopping sessions up 23% year-over-year and conversion rate up 7.1%, showing progress in SEO and marketing consolidation.

Q: Why not narrow guidance in November?

A: Historical approach of leaving guidance ranges unchanged, supplementing with remarks on calls to allow interpretation of results and commentary.

Q: How thinking changes on dividend payout ratio now at inflection?

A: Confident in trajectories and execution, which puts us in a position to start growing FFO again, with the Board thoughtful about future dividend considerations as the business improves.