National Storage Affiliates(US:NSA)2020-11-06 23:25Financial Data and Key Metrics Changes - Core FFO per share increased by 10% in Q3 2020 compared to the same period last year, reaching $0.44, driven by robust acquisition volume and the internalization of SecurCare PRO [13][22] - Same-store NOI increased by 0.2% year-over-year, with same-store occupancy averaging 91.1%, up 100 basis points from Q3 2019 [23] - The company reinstated its full-year 2020 guidance, expecting core FFO per share of $1.66 to $1.68, representing 8.4% growth at the midpoint over the prior year [29][30] Business Line Data and Key Metrics Changes - The company acquired four wholly owned properties for a total investment of $24 million during Q3, with two additional stores valued at $9 million acquired post-quarter [18] - Same-store revenues remained flat, while property operating expenses declined by 0.4%, contributing to the increase in NOI [23][25] Market Data and Key Metrics Changes - The company noted a shift in customer demand for storage due to pandemic-related factors, including remote work and increased household projects, leading to higher occupancy rates [11][12] - Move-in volume continued to be higher year-over-year, while move-outs decreased, resulting in an occupancy rate of 92.4% at the end of October, an all-time high [27] Company Strategy and Development Direction - The company is focused on acquisitions, with a solid pipeline of about $300 million in properties under contract or LOI, expecting to close nearly half by year-end [17][19] - The management emphasized the strength of the self-storage sector and the benefits of their differentiated PRO structure, particularly in secondary and tertiary markets [15][16] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the fourth quarter and 2021, citing strong demand trends and the resilience of the self-storage sector despite the pandemic [20][21] - The company is prepared for potential challenges from new supply in certain markets but believes current demand is alleviating some pressure [16] Other Important Information - The company has a net debt-to-EBITDA ratio of 6.0x at the end of Q3, down from 6.3x at the end of Q2, indicating a strong balance sheet [34] - The company plans to use proceeds from a recent equity forward sale agreement primarily to fund acquisitions [32] Q&A Session Summary Question: Can you elaborate on the assumptions for the implied growth in Q4? - Management noted that occupancy improvements and positive street rates contributed to the optimistic outlook for Q4 [42][43] Question: Are you seeing any trends in migration from higher-priced coastal cities? - Management acknowledged anecdotal evidence of migration but did not see substantial data to confirm significant trends [46][47] Question: Can you discuss the pricing and composition of the $300 million acquisition pipeline? - The pipeline consists mostly of one-off deals with some smaller portfolios, with pricing around the six-cap range [49][50] Question: What are the prospects for internalizing more PROs? - Management indicated that while there are no immediate plans, the success of the SecurCare internalization could lead to future opportunities [91][92] Question: How is the company thinking about funding acquisitions? - The company plans to use a combination of equity and revolver funding for acquisitions, maintaining a net debt-to-EBITDA range of 5.5x to 6.5x [66] Question: What is the outlook for occupancy as the world normalizes? - Management believes that the diverse portfolio and various demand drivers will help maintain occupancy levels even as conditions normalize [86][87]