Core Viewpoint - Brookfield Asset Management and GIC have proposed to acquire National Storage REIT for an estimated valuation of AUD 4.02 billion, indicating a significant interest in the self-storage sector in Australia [1][2]. Group 1: Acquisition Details - The proposed acquisition offers investors AUD 2.86 per share, leading to a 19% increase in National Storage's stock price, closing at AUD 2.70 [1]. - National Storage has allowed the bidders to conduct exclusive due diligence until December 7, aiming to reach a binding agreement by that date [1]. - National Storage operates over 270 storage centers across Australia and New Zealand, making it the largest self-storage provider in Australia [1]. Group 2: Market Context - The potential acquisition could revitalize transaction activity in Australia, which has seen a decline in significant deals, including BHP's failed attempt to acquire Anglo American for USD 43 billion [1]. - The total merger and acquisition activity involving Australian companies has dropped to approximately USD 70 billion, a 30% decrease compared to the same period in 2024 [1]. Group 3: GIC's Position - GIC, one of the largest sovereign wealth funds globally, is estimated to manage assets worth USD 936 billion, although it has not publicly disclosed its asset management scale [2]. - GIC indicated in July that real estate valuations might be bottoming out, presenting attractive investment opportunities [2].

Financial Data and Key Metrics Changes - The company reported FFO per share as adjusted of $0.65 for the quarter [7] - Same-store revenues declined by 1% year-over-year, with average occupancy down 80 basis points to 89.9% [8] - Same-store operating expenses grew by 0.3% year-over-year, leading to a negative 1.5% same-store NOI growth for the quarter [8][10] - The company updated its full-year guidance, raising the midpoint of FFO per share and improving same-store revenue growth expectations [10] Business Line Data and Key Metrics Changes - The company is under contract to acquire three stores in the fourth quarter, indicating external growth momentum [9] - The joint venture development in Port Chester, New York, was completed and opened during the quarter [9] Market Data and Key Metrics Changes - Top-performing markets include urban areas in the Mid-Atlantic and Northeast, while some Sun Belt markets are still stabilizing [5][6] - The East Coast of Florida is experiencing stabilizing trends, with overall demand levels remaining stable but not significantly growing [5] Company Strategy and Development Direction - The company is focusing on maximizing revenue from each customer while balancing rate and occupancy [14] - The management anticipates continued gradual improvement in operational metrics without expecting a sharp reacceleration [4][11] - The company is exploring opportunities for development in New York City, although it faces challenges due to high costs and reduced tax incentives [56] Management's Comments on Operating Environment and Future Outlook - Management noted that the year has played out better than expected due to diminishing impacts from new supply and a healthier consumer environment [4] - The company expects to be on improved footing heading into 2026, with gradual stabilization trends anticipated [11][74] Other Important Information - The company successfully issued $450 million of 10-year senior unsecured notes, with a yield to maturity of 5.29% [9] - The net debt to EBITDA ratio was reported at 4.7 times at quarter end, indicating conservative leverage levels [10] Q&A Session Summary Question: How is the company balancing rate and occupancy in the current environment? - The company is focusing on maximizing revenue from each customer, with variations by market [14] Question: Can you provide insights on October trends? - The occupancy gap has contracted, and average rent-on-rentals is around 1.92% [17] Question: What percentage of leads are AI-influenced? - AI-influenced leads are currently less than 1% [18] Question: How is the company viewing the acquisition landscape? - The company has three stores under contract and sees a more constructive seller side in the market [28] Question: What is the outlook for same-store revenue growth? - Management conservatively expects positive same-store revenue growth to occur in the back half of 2026 [24][32] Question: Are there any changes in customer behavior regarding rate increases? - Customer health remains good, and there has been no significant change in behavior regarding ECRIs [42] Question: What is the outlook for development supply in the coming years? - Supply recovery is expected to be gradual, with elevated costs and cautious lending from primary lenders [66] Question: How did the move-in trend behave during the quarter? - The move-in trend was consistent with historical patterns, peaking in July [70]