National Storage Affiliates(US:NSA)2022-05-06 21:17Financial Data and Key Metrics Changes - Core FFO per share for Q1 2022 was reported at $0.68, representing a 39% increase year-over-year [20] - Same-store NOI increased by 22.2% in Q1 2022, driven by a 16.6% revenue increase and a 3.1% increase in property operating expenses [21] - Full-year 2022 guidance was updated to core FFO per share of $2.80 to $2.85, reflecting a 4% increase from previous guidance and 25% growth over the prior year [23] Business Line Data and Key Metrics Changes - Same-store occupancy averaged 94.7% during Q1 2022, an increase of 250 basis points compared to the previous year [21] - Street rates averaged 22% higher in Q1 2022 compared to the same period last year [16] - Rent roll-up remained positive at about 1% in Q1, increasing to slightly above 5% by the end of April [16] Market Data and Key Metrics Changes - The percentage of stores with new competitors within a 3- and 5-mile radius decreased to 27% and 45%, respectively [18] - Rising interest rates and inflation are driving up construction costs, further restraining new supply in the market [17] Company Strategy and Development Direction - The company plans to slow down acquisition volume in 2022 to focus on digesting the $2.2 billion of assets acquired in the previous year [11] - The company is integrating Northwest Self Storage assets into its corporate managed portfolio, which is expected to enhance growth [12] - The company continues to engage with high-quality private operators for potential partnerships, although no immediate changes are expected due to the current rate environment [63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the self-storage sector's resilience, noting that fundamentals remain strong and demand is durable [60] - The company has not experienced significant pushback from customers regarding rate increases, indicating effective revenue management strategies [29] - Management acknowledged the potential impact of rising interest rates on new supply but remains optimistic about the overall market dynamics [39] Other Important Information - The company issued $17 million of OP equity during the quarter and closed a $125 million tranche of a private placement [24] - Kroll Bond Rating Agency upgraded the credit rating of the operating partnership to BBB+ from BBB flat, reflecting a conservative balance sheet [24] Q&A Session Summary Question: What changed to raise NOI guidance significantly? - Management indicated that Q1 performance exceeded expectations, leading to increased confidence in the remainder of the year [28] Question: Is there any pushback from customers regarding rate increases? - Management reported minimal pushback, with high occupancy levels and effective revenue management strategies [29] Question: How is occupancy expected to trend for the remainder of the year? - Management anticipates a seasonal spike in occupancy during summer months, followed by a normal seasonal pattern [31] Question: Are there concerns about inflation impacting rent increases? - Management does not foresee significant concerns regarding inflation, as self-storage remains an affordable option for consumers [35] Question: What is the impact of rising interest rates on new supply? - Management noted that rising interest rates are putting pressure on new supply, with fewer projects being approved and completed [39] Question: How are the recent acquisitions performing relative to expectations? - Acquired assets are performing 5% to 10% above initial underwriting expectations, contributing to revised guidance [49]