National Storage Affiliates(US:NSA)2023-03-01 02:45Financial Data and Key Metrics Changes - The company reported core FFO per share of $0.71 for Q4 2022, an 11% increase year-over-year. For the full year, core FFO per share was $2.81, representing a 24.3% increase over 2021, driven by strong same-store performance and healthy acquisition volume [25][38]. - Same-store revenue growth for 2022 was nearly 15%, with same-store NOI increasing over 40% in the last three years [38][41]. - The company experienced a weighted average effective interest rate of 4.6% on loans, which increased to 5.2% pro forma with swaps as of December 31 [26]. Business Line Data and Key Metrics Changes - The company acquired 53 stores valued at nearly $800 million in 2022, with 45 wholly owned properties valued at $570 million and 8 properties valued at $215 million acquired with joint venture partners [38]. - Occupancy peaked at 95.3% in Q2 2022 and finished at 90.5% in December, with contract rates growing every month, finishing 12.7% higher than 2021 [23][24]. Market Data and Key Metrics Changes - The company noted that its Sunbelt markets, including North Carolina, Florida, Georgia, and Texas, outperformed the portfolio average in revenue growth [44]. - The company expects revenue growth from its Sunbelt stores to outpace non-Sunbelt stores by about 100 basis points [71]. Company Strategy and Development Direction - The company is focusing on strategic acquisitions while being disciplined and selective due to increased capital costs and a slowdown in transaction volume [21][22]. - The company plans to continue operating under multiple brand names to maintain market presence while exploring efficiencies [30][49]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2023, indicating that occupancy and street rates have bottomed out in February and are expected to improve as the spring leasing season approaches [3][24]. - The company anticipates that higher interest rates will pose an earnings headwind in 2023, projecting interest expense of over $150 million for the year [71][124]. Other Important Information - The company reported a 35% growth in dividends paid in 2022 compared to the prior year [20]. - The retirement of Move It Self Storage is expected to be accretive to core FFO by one to two cents per share [22]. Q&A Session Summary Question: What is driving the weakness in the markets? - Management noted traditional seasonal patterns and indicated that February showed signs of improvement, suggesting a positive spring leasing season ahead [3]. Question: How are you planning to fund incremental acquisitions during the year? - The company is evaluating balance sheet initiatives to finance acquisitions, including the retirement of existing debt and the issuance of preferred equity [11][120]. Question: Can you provide more details on the acquisition environment? - Management highlighted a significant gap between buyer and seller price expectations, with fewer deals coming to market [21][73]. Question: What are the latest demand indicators? - Management reported strong customer activity and effective marketing strategies, indicating a positive outlook for the spring leasing season [60][108]. Question: How does the company view the impact of higher interest rates? - Management acknowledged that higher interest rates would be a headwind for earnings in 2023, but they remain optimistic about maintaining positive growth [71][124].