CK Asset Holdings (01113) H1 2025 Earnings Call August 14, 2025 05:00 AM ET Speaker0Welcome to Teekay Asset Holdings twenty twenty five Interim Results Analyst Briefing. We have with us today two Executive Committee members, Mr. Simon Mann and Mr. Gerald Ma presenting the group's interim results and to answer questions the audience may have. Please submit your questions using the webcast platform and we will handle those during the Q and A session.Thank you, Mr. Man and Mr. Ma.Speaker1Thank you, Sophia. Let ...

Core Insights - Annaly Capital Management (NLY) shares have increased by 10.3% in the first half of 2025, outperforming the industry growth of 5.1% and its peers AGNC Investment (7.6% growth) and Arbor Realty Trust (17.8% decline) [1][7]. Company Overview - Annaly is a mortgage real estate investment trust (REIT) that primarily owns, manages, and finances a portfolio of real estate-related investment securities, utilizing a diversified capital allocation strategy to navigate market fluctuations [2][3]. Portfolio Composition & Strategy - Annaly's investment portfolio totals $89.5 billion as of June 30, 2025, with $79.5 billion in a highly liquid Agency portfolio, which helps lower volatility and interest rate sensitivity while generating attractive risk-adjusted returns [3][4]. - The company is focusing on acquiring newly originated mortgage servicing rights (MSRs) to enhance its MSR business, which tends to increase in value as interest rates rise, offsetting declines in agency mortgage-backed securities (MBS) [5][10]. Financial Performance - Net interest income (NII) surged to $493.2 million in the first half of 2025, a significant increase from $47.1 million in the same period the previous year, driven by improving loan demand [7][18]. - Annaly's dividend yield stands at 13.6%, higher than the industry average of 12.5%, with a payout ratio of 99% [11][14]. Market Position & Outlook - The company has a strong liquidity position with $7.4 billion in total assets available for financing, including $4.7 billion in unencumbered Agency MBS, providing a competitive edge in adverse market conditions [15]. - Analysts have revised earnings estimates for 2025 and 2026 upward, indicating a bullish outlook with expected year-over-year growth of 7% and 2.5%, respectively [21]. Valuation Metrics - Annaly is currently trading at a forward 12-month price-to-tangible book (P/TB) multiple of 1.07X, which is higher than the industry average of 1.01X, suggesting a premium valuation compared to peers [24].

Financial Data and Key Metrics Changes - The company reported a core FFO of $2 per share, representing a 2% year-over-year increase [5][12] - Same store occupancy ended the quarter at 93.4%, an improvement of 100 basis points from Q1 2024 [5][10] - Same store revenue growth was positive at 0.3% [5] Business Line Data and Key Metrics Changes - The company completed $153.8 million in wholly owned acquisitions, adding 12 high-quality stores to its portfolio [7] - The Management Plus platform added 113 stores gross, achieving a net addition of 100 properties, bringing the third-party managed portfolio to 1,675 stores [8] Market Data and Key Metrics Changes - Street rates improved from negative 9% in Q3 last year to negative 6% by year-end, with an average slightly negative in Q1, but flat by the end of the quarter [20][21] - Occupancy in April was reported at 93.7%, a slight increase from the end of Q1 [44] Company Strategy and Development Direction - The company maintains its 2025 guidance, citing the self-storage sector's historical resilience during economic downturns [9][10] - The diversified portfolio is positioned to optimize performance across various economic cycles [10][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of operational metrics, including high same store occupancy and stable delinquency rates [10] - There are concerns about interest rates and economic uncertainty, but the company remains optimistic about its growth channels [9][10] Other Important Information - The company executed two bond offerings totaling $850 million, maintaining a conservative leverage profile with almost 90% of debt at fixed rates [13][14] - The company anticipates continued pressure from property taxes and uncontrollable costs [15] Q&A Session Summary Question: What is driving the improvement in street rates? - Management noted that street rates improved from negative 9% to negative 6%, with a flat trend into April, indicating a positive outlook [20][21] Question: Why did the company not raise guidance despite strong performance? - Management stated that there has been no change in customer behavior and that their systems are set to maximize revenue without needing daily instructions [26][27] Question: Can you provide an update on the impact of former Life Storage assets? - The rebranded Life Storage stores are seeing improved rentals and occupancy, with a 10.4% increase in rentals compared to the previous period [30][31] Question: What is the expected impact of property taxes on expenses? - Management indicated that property taxes and property insurance are expected to remain high, but they are actively managing these costs [50][51] Question: How is the company approaching potential recession impacts? - Management expressed confidence in their systems to optimize performance during downturns, noting that self-storage tends to perform well even in economic challenges [116][102] Question: What is the outlook for acquisitions and joint ventures? - The company has two joint venture buyouts agreed upon, which are expected to be accretive and good uses of capital [97][98]

Financial Data and Key Metrics Changes - The company reported a core FFO of $2 per share, representing a 2% increase year over year [4][11] - Same store occupancy remained at historically high levels, ending the quarter at 93.4%, an improvement of 100 basis points from Q1 2024 [4][11] - Same store revenue growth was positive at 0.3% [4] - Same store NOI decreased by 1.2% compared to Q1 2024 due to a divergence between controllable and uncontrollable costs [12] Business Line Data and Key Metrics Changes - The company completed $153.8 million in wholly owned acquisitions, adding 12 high-quality stores to its portfolio [5] - The Management Plus platform added 113 stores gross, achieving a net addition of 100 properties, bringing the third-party managed portfolio to 1,675 stores [6] Market Data and Key Metrics Changes - The company noted that street rates improved from negative 9% in Q3 last year to negative 6% at year-end, with an average slightly negative in Q1 but flat by the end of the quarter [20] - Occupancy in April was reported at 93.7%, a slight increase from the end of Q1 [42] Company Strategy and Development Direction - The company maintains a diversified portfolio with exposure to various market stages, which helps mitigate volatility [8] - The multichannel approach to external growth, including wholly owned acquisitions, joint ventures, bridge lending, and third-party management, continues to provide opportunities for expansion [7] - The company is focused on maximizing FFO through proven operational strategies and maintaining its industry-leading platform [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the self-storage sector's resilience during economic downturns due to its need-based demand drivers [7] - The company has not seen any change in customer health or behavior to date, with high same store occupancy and stable delinquency rates [9] - Management acknowledged concerns about interest rates and economic uncertainty but remains optimistic about the company's ability to execute its diversified investment strategy [7][9] Other Important Information - The company executed two bond offerings totaling $850 million, demonstrating continued access to public debt markets [12] - The company anticipates continued pressure from property taxes and uncontrollable costs, but expects to manage these through operational efficiencies [12][14] Q&A Session Summary Question: What is driving the improvement in street rates? - Management noted that street rates improved from negative 9% to negative 6%, with a slight average negative in Q1 but flat by the end of the quarter [20] Question: What instructions are being given for the spring leasing season? - Management stated there has been no change in strategy, focusing on maximizing revenue through established systems and processes [25][26] Question: Can you provide an update on the performance of former Life Storage assets? - Management reported that rentals at former Life Storage stores are up 10.4%, with improvements in both organic and local search results [28][30] Question: What are the acquisition yields for the quarter? - Initial yields for acquisitions ranged from 2.3% to 6.5%, stabilizing in the upper 6% to 7% [35] Question: How is the company managing expenses? - Management indicated that controllable expenses were reduced by 1.9% year over year, while uncontrollable expenses increased by 8% due to property tax pressure [12][48] Question: What is the outlook for demand in various markets? - Management indicated that markets absorbing supply, such as Atlanta and some Florida markets, may face more difficulty compared to those with less supply [105] Question: How does the company view international expansion? - The company is open to international opportunities but requires that they be accretive and scalable [129]