National Storage Affiliates(US:NSA)2022-02-22 23:41Financial Data and Key Metrics Changes - In Q4 2021, core FFO per share increased by 39% year-over-year to $0.64, marking the highest quarterly earnings growth in the company's history [17][18] - Same store NOI growth was over 20% in Q4, with full-year NOI growth at 19.8%, the highest in the self-storage industry [7][18] - Total shareholder return for 2021 was 98%, with dividends raised by 29% throughout the year [8] Business Line Data and Key Metrics Changes - The company achieved acquisition volume of over $1 billion in Q4, bringing total acquisition volume for 2021 to $2.2 billion, the highest in its history [7][9] - Same store occupancy averaged 95.5% in Q4, an increase of 360 basis points compared to Q4 2020 [17] - Revenue increased by 17.4% in Q4, while property operating expenses rose by 6.5% [17] Market Data and Key Metrics Changes - Street rates averaged 25% higher in Q4 compared to the previous year, with contract rates improving by about 12% [13][14] - Occupancy levels remained high, with a slight decline of 190 basis points from June to February, aligning with seasonal trends [14][36] - The company expects competition from new supply in certain markets, but overall supply impacts are anticipated to remain muted through 2022 and into 2023 [15] Company Strategy and Development Direction - The company plans to maintain disciplined underwriting and focus on acquiring assets that add long-term value, despite increased competition and compressed cap rates [11][33] - The internalization of the Northwest self-storage PRO is expected to be accretive to core FFO by approximately $0.02 per share in 2022 [9][20] - The company anticipates double-digit same-store NOI growth and 20% growth in core FFO per share for 2022, building on the momentum from 2021 [11][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong fundamentals of the self-storage industry, despite potential moderation in growth rates following a record 2021 [12][14] - The company is cautiously optimistic about 2022, with a significant number of transactions still in the pipeline, but is being selective due to market conditions [33] - Management noted that while the cost of capital remains attractive, it is not as favorable as in the previous year, leading to a more cautious approach to acquisitions [33] Other Important Information - The company reported a leverage ratio of 6.1 times net debt to EBITDA, which is expected to adjust to about 5.7 times when accounting for the full period effect of recent acquisitions [22][64] - The company has significant opportunities for growth and efficiency from integrating the record number of assets acquired in 2021 [11] Q&A Session Summary Question: Can you share details on the internalization of Northwest self-storage? - The internalization involves converting subordinated performance equity to OP equity, eliminating management fees, and is expected to be accretive to FFO [24] Question: What is the current performance of the portfolio? - The portfolio has maintained strong occupancy levels with only a slight decline, and street rates remain positive [25] Question: How do you view the acquisition guidance for 2022? - The company is seeing significant activity but is cautious due to compressed cap rates and the need to integrate previous acquisitions [33] Question: What is the expected impact of new supply on the market? - New supply is expected to remain muted, with some pressure in top MSAs, but overall impacts are not anticipated to be significant [15][72] Question: How is the company managing rent increases? - The company has been assertive with rent increases, maintaining frequency and magnitude similar to the previous year [59] Question: What is the outlook for occupancy throughout 2022? - The company expects to see some seasonal trends but anticipates maintaining a positive year-over-year occupancy spread [36]