Core Insights - Talonvest Capital, Inc. arranged an $11,900,000 bridge loan for a Class A storage facility in North Las Vegas, NV, on behalf of Madison Capital Group, highlighting the strength of their strategic partnership [1][2][3] Group 1: Facility Details - The storage facility is located at 345 East Ann Road and includes 661 climate-controlled units and 60 non-climate units, managed by Madison Capital's in-house company, Go Store It [2] - Go Store It aims to achieve a physical occupancy rate of 90%-92% while driving rent growth over the next five years [2] Group 2: Financing Structure - The financing was negotiated with a life insurance company lender, resulting in a non-recourse, 5-year fixed-rate bridge loan with no lease-up covenants, providing stability and flexibility during the lease-up phase [3] Group 3: Client Relationship - Madison Capital's Chief Investment Officer, Evan Stephens, expressed confidence in Talonvest's ability to navigate transactions efficiently, emphasizing the smooth experience of working with them [4] Group 4: Company Overview - Talonvest Capital specializes in sourcing capital programs and advising on capital market trends for various property types, including industrial, self-storage, multifamily, office, and retail [5] - The firm leverages over four decades of experience and a unique boutique approach to deliver tailored capital solutions for clients [5]

Financial Data and Key Metrics Changes - Same store NOI declined by 3.7% in the fourth quarter [12] - Same store revenue growth was negative 1.6% for the quarter, with occupancy levels dropping 120 basis points compared to last year [13] - FFO per share as adjusted was reported at $0.68 for the quarter, with a 2% increase in the quarterly dividend to an annualized $2.08 per share, representing a 4.9% dividend yield [14] Business Line Data and Key Metrics Changes - The year-over-year same store occupancy gap narrowed from negative 100 basis points at year-end 2024 to negative 50 basis points as of February [7] - Rents for new customer rentals improved their year-over-year negative gap from negative 10.3% in the fourth quarter to negative 7.4% recently [7] Market Data and Key Metrics Changes - Lower beta urban markets are outperforming the Sunbelt, with New York City expected to remain a bright spot [8] - The impact of new supply is expected to compete with approximately 24% of the same store portfolio, down from 27% last year [19] Company Strategy and Development Direction - The company is cautiously optimistic about the long-term health of the business, focusing on creative methods to grow externally [9] - The recent acquisition of an 80% interest in a joint venture is seen as a strategic move to bring properties onto the balance sheet [10][17] Management's Comments on Operating Environment and Future Outlook - Management noted that the last two years have been marked by overly optimistic forecasts regarding housing market improvements [9] - There is no near-term catalyst expected to sharply reaccelerate organic growth in 2025, with a focus on gradual improvements [8][9] Other Important Information - Real estate taxes grew by 17.5% in the fourth quarter compared to last year, influenced by significant refunds and tax reductions received in the previous year [13] - The company raised $85.6 million in net proceeds during the quarter through its ATM program to fund acquisitions [18] Q&A Session Summary Question: Inquiry about the JV transaction and future opportunities - Management indicated no imminent opportunities for other joint ventures, as the partner had a need-based motivation for selling [25][26] Question: Discussion on catalysts for demand acceleration - Management highlighted the need for clarity in mortgage rates and economic conditions to boost consumer confidence [32][34] Question: Concerns about potential street rate wars in 2025 - Management expressed cautious optimism, noting recent improvements in rates for new customers but emphasized the need for consistent trends [42][44] Question: Update on occupancy and performance trends - Management confirmed that occupancy levels have improved, with a negative gap of 50 basis points compared to last year [60] Question: Clarification on operating expenses and inflation - Management acknowledged that operating expenses are expected to run at inflationary levels, with no significant operational efficiencies anticipated [116]

Financial Data and Key Metrics Changes - The company achieved core FFO of $4.21 per share in Q4 2024, reflecting a 20 basis point increase year over year and a strong sequential improvement from a 300 basis point decline in Q3 2024 [15] - Same store revenues declined by 60 basis points year over year in Q4 2024, improving sequentially from a 130 basis point decline in the prior quarter [16] - Same store expenses increased by 90 basis points year over year, driven by property taxes, but offset by staffing optimization and additional expense controls [16] Business Line Data and Key Metrics Changes - The company reported that nearly all markets showed operational stabilization, with same store revenue growth improving sequentially for the first time in over two years [7][8] - The non-same store portfolio and ancillary businesses contributed positively to the overall performance, indicating strong operational fundamentals [7] Market Data and Key Metrics Changes - The company noted that move-in volumes were up 5% at the start of 2025, while move-in rates were down about 8%, indicating a net improvement in activity [27] - Occupancy was down about 40 basis points year over year, showing a slight improvement from an 80 basis point decline at the end of 2024 [27] Company Strategy and Development Direction - The company completed the "Property of Tomorrow" program, a multi-year investment of over $600 million aimed at rebranding its portfolio, which is expected to increase annual retained cash flow from $400 million in 2024 to approximately $600 million in 2025 [10] - The company is focused on digital transformation, with 85% of customer interactions now occurring through self-selected digital options, up from around 30% in 2019 [11] - A $740 million development pipeline is planned for delivery over the next two years, with expectations for increased acquisition activity in 2025 [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stabilization of the industry and portfolio fundamentals, expecting sequential improvement to continue outside of Los Angeles in 2025 [6][10] - The company anticipates a core FFO per share guidance of $16.35 to $17 for 2025, with a slight decline in same store revenues expected due to pricing restrictions in Los Angeles [17][18] Other Important Information - The company is actively rolling out a solar program, achieving a 30% reduction in utility use across nearly 900 properties, which benefits both financial performance and environmental sustainability [12] - Management highlighted the importance of navigating competitive customer move-in dynamics while driving improvement across the portfolio [13] Q&A Session Summary Question: Can you talk about the assumptions on street rate? - Management noted that move-in rates are expected to be down 5% year over year on average, with occupancy down 10 basis points on average, reflecting improved demand stabilization [25][29] Question: What is driving the broader stabilization in markets? - Management indicated that moderate but improving market demand is a positive trend, with increased Google searches and optimized conversion techniques contributing to this stabilization [30][32] Question: Can you discuss the impact of the 100 basis point negative impact on same store revenue in Los Angeles? - Management explained that the primary driver of this impact is rate restrictions due to a state of emergency, with occupancy remaining healthy in the market [36][37] Question: What are the current cap rates for acquisitions? - Management stated that cap rates are settling around 5% to 6% for stabilized properties, with variations for lease-up assets [50] Question: How do you view the impact of consumer sentiment on demand and pricing? - Management observed that while retailers are experiencing a softer consumer, storage customers have remained resilient, and overall demand is expected to be similar to last year [116]