Greetings and welcome to the National Storage Affiliate Trust's Fourth Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, George Hoglund, Investor Relations.

We'd like to thank you for joining us today for the fourth quarter 2024 earnings conference call of the National Storage Affiliate Trust. On the line with me here today are NSA's President and CEO, Dave Cramer; and CFO, Brandon Togashi. Following prepared remarks, management will accept questions from registered financial analysts. Please limit your questions to one question and one follow-up, and then return to the queue if you have more questions. In addition to the press release distributed yesterday afternoon, we furnished our supplemental package with additional detail on our results, which may be found in the investor relations section on our website at NSAstorage.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements that are subject to risks and uncertainties and represent management's estimates as of today, February 27, 2025. The company assumes no obligation to revise or update any forward-looking statement because of changing market conditions or other circumstances after the date of this conference call. The company cautions that actual results may differ materially from those projected in any forward-looking statement. For additional details concerning our forward-looking statements, please refer to our public filings with the SEC. We also encourage listeners to review the definitions and reconciliations of non-GAAP financial measures, such as FFO, core FFO, and net operating income contained in the supplemental information package available in the investor relations section on our website and in our SEC filings. I'll now turn the call over to Dave.

Thanks, George, and thanks, everyone, for joining our call today. My thoughts and prayers go out to all those affected by the California wildfires. While our portfolio is not materially impacted, we serve customers and have employees in these areas, and we wish all those affected by these tragic events the best as they go through their recovery period. The fourth quarter capped off what was a very productive year of strategically positioning the NSA for our next phase of growth. We realized several significant accomplishments in 2024, including internalization of the pro structure, which included consolidating our brands from 12 to 7, the onboarding of approximately 250 properties and over 380 employees to our corporate platform. We consolidated our web domain, putting all of our stores onto NSAstories.com. We finished the conversions of all of our stores to a single new property management system. We deployed $150 million of growth capital in our newly formed joint venture. We sold 49 core facilities to third parties for over $270 million and used proceeds to pay down debt and purchase $65 million of properties, and we repurchased $275 million of common shares. It was a very busy year for everyone at NSA, and I would like to thank all of our team members for their hard work and dedication. Now that the heavy lifting is behind us, we can fully concentrate our efforts on maximizing the performance of our existing portfolio using our consolidated operating platforms and upgraded marketing tools, all of which benefit from increased scale and efficiency. This will directly impact our shareholders' returns as we no longer share the upside with our pros. Although the current operating conditions remain challenging due to elevated supply and muted transitory demand from historically low home sales, the medium-term outlook for the self-storage sector and NSA in particular is the best it's been in the past few years for the following reasons. We are near a bottom in the housing market, and when a recovery comes, NSA should realize an outside benefit in that recovery. Housing turnover in the U.S. has fallen below GFC levels and is hovering around the lowest levels in the past 40 years, creating pent-up demand that should contribute to an eventual recovery. Further, our markets have a higher average percentage of homeowners versus renters, which means that our portfolio is more sensitive to changes in the overall level of housing turnover. And supply is coming down. New deliveries across our markets are expected to decline substantially over the next few years with rentable square feet as a percentage of stock going down from 3.5% in 2024 to 2% by 2027, which is well below the long-term national average according to Yardi. Lastly, NSA's year-over-year comparisons become noticeably easier in the back half of the year, which combined with these anticipated improvements in supply-demand variables will likely drive healthy momentum into 2026 and beyond. Now turning to operating trends, it does feel like fundamentals are reaching an inflection point. First, our street rates dropped in October, down about 24% year-over-year, and improved through December to finish down 13%. Second, our rent roll-down peaked at 38% in October and narrowed to 27% in December. Third, our year-over-year occupancy delta also continued to narrow, from down 270 basis points at the end of the third quarter to down 140 basis points at the end of the fourth quarter. As a result, in December, we experienced a sequential increase in contract rates by 30 basis points. We were encouraged by January's trends, which were largely consistent with December. Our existing customer base remains healthy. We continue to be pleased with the success of our ECRI program. The length of stays remain above historical averages, and bad debt expense remains within expected ranges. Moving to the acquisition environment, there remains a healthy volume of opportunities coming across our desk. We successfully closed four assets totaling approximately $40 million during the quarter and have over $35 million of properties closed or under contract year-to-date. In summary, we are finding a trough in fundamentals. The supply backdrop is improving, and the housing market is poised for recovery. While the pace of that recovery is hard to predict, we are well-positioned to take advantage of the improving fundamental backdrop. I'll now turn the call over to Brandon to discuss our financial results.

Thank you, Dave. Yesterday afternoon, we reported core FFO per share of $0.60 for the fourth quarter of 2024 and $2.44 for the full-year at the high end of our guidance range, driven primarily by G&A and management fees and other revenue coming in better than our guided ranges. Same store revenue and NOI growth came in at our guidance midpoint, or down 3% and 5.5%, respectively, over the prior year. For the quarter, same store revenues declined 4.3%, driven by a decline in rent revenue per square foot of 2.5% and a 180 basis point year-over-year decline in average occupancy. Expense growth was 4.7% in the fourth quarter and 3.7% for the full-year. The main drivers of growth in the fourth quarter were property tax, marketing, and utilities. Property tax, in particular, was elevated during the fourth quarter due to expense true-ups based on final known bills. For the full-year, property taxes, marketing, and insurance were the main drivers, partially offset by a year-over-year decline in payroll expenses. Now, speaking to the balance sheet, we have no maturities in 2025 and our current revolver balance is roughly $430 million, giving us over $500 million of availability. During the quarter, we put in place a new $400 million ATM program and a $350 million share repurchase program to provide flexibility with our balance sheet. We've had no activity in either program to date. Our leverage was 6.5 times net debt to EBITDA at quarter end. While we believe our year-over-year same-store performance has bottomed, the near-term negative NOI growth, along with the first quarter being seasonally the weakest, will put additional pressure on leverage for the next couple of quarters. We expect this temporary pressure to ease as our organic growth inflects the positives in the back half of the year, and we anticipate that potential near-term asset sales could aid as a partial offset. Now, moving on to 2025 guidance, which we introduced yesterday. The operating environment remains competitive to start the year, which continues to weigh on rental rates and occupancy; and uncertainty remains regarding interest rates, their impact on the housing market, and in turn the spring leasing season. We've thus factored a wide range of scenarios into our full-year guidance assumptions, which are detailed in the earnings release. The midpoints of key items of our guidance are as follows: same-store revenue growth that is flat, same-store operating expense growth of 3.5%, same-store NOI growth of negative 1.4%, and core FFO per share of $2.34. We have also guided the acquisition and disposition ranges of $100 million to $300 million. In both cases, these dollar amounts represent NSA's share of any JV activity. Now, let me give some color on the larger drivers of our core FFO per share at the midpoint of $2.34 compared to our full-year 2024 results of $2.44. Roughly half of the $0.10 decline can be attributed to interest expense, and the other half can be attributed to negative organic growth, partially offset by accretion from the internalization of the pro structure. Regarding interest expense, although we addressed all of our 2025 maturities last year, at the beginning of this month, we had interest rate swaps mature that had fixed $225 million of our revolver balance at a rate just under 3%. With those swaps no longer in place, that $225 million is subject to the effective rate on our revolver, which is about 275 basis points higher. We also had the expiration of swaps on $250 million of notional in August 2024. The effect of these rate resets, partially offset by our variable-rate debt benefiting from lower short-term rates in 2025 versus prior year, is approximately $0.05 of FFO. Regarding organic growth, as I mentioned earlier, we believe we have troughed on our year-over-year performance and expect to see sequential improvement going forward. Our base case assumes that we begin the year with same-store NOI growth in the negative mid-single digits and that we exit the year with positive same-store NOI growth in the low-to-mid-single digits. The high end of our guidance range assumes a better-than-average spring leasing season, fueled by a recovery in the housing market. The low end incorporates no material improvement in the housing market, with muted seasonality and pricing power. The midpoint assumes a moderately better spring leasing season than last year, characterized by improving pricing power and occupancy through the summer months. While our guidance reflects a wide range of outcomes, at some point the pent-up demand associated with housing and job-related mobility will be unlocked, which combined with an improving supply outlook creates a healthy backdrop for self-storage fundamentals. Thanks again for joining our call today. Let's now turn it back to the operator to take your questions.

Thank you. We will now be conducting a question-and-answer session. Our first question comes from the line of Samir Khanal with Evercore ISI. Please proceed.

Yes. Good afternoon, everyone. Hey, Brandon. When I look at your guidance, you guys are guiding to pretty healthy improvement in revenue growth here. I mean, you're basically going from negative 300 basis points last year, even exiting about 400 basis points down to flat in '25 when looking at the midpoint. So help us kind of walk us through how you get here. Talk about occupancy rate growth. Just want to kind of get a better idea on that. Thanks.

Yeah, Samir. Thanks. It's Brandon. Look, I think I'll let Dave hit maybe some broader themes and then I'll jump in and try to be a little more quantitative in response to your question.

Thanks, Samir. And good question. I think as we looked at 2025 and where we came out of 2024, 2024 for us is a big transition year. We internalized all the pros. We brought all of our platforms to one specific platform. We centralized all those platforms. And so it gives us some efficiencies and some strengths, and really no transition and no disruption if you think about what was going on in 2024. So as we thought about 2025 and the starting point we start at the beginning of the year, we think 2025 will look like a normal seasonal pattern for the self-storage sector. It will peak in the summer months. We're looking at it thinking to ourselves that the seasonal trends will probably have about a 250 basis point improvement at the peak in the summer months versus where we start the year and then level off as you go through the back half of the year. Last year that was only 140 basis points. In a normal year that's typically 300. We just think we're in a little better position where we're starting in 2025 with the strength of the platforms and what we've internalized. Some growth in the pro portfolio and the ability to grow some occupancy in that portfolio. We thought we'd have a better year than we had last year as far as occupancy growth through the seasonal period. I think we look at it, we're starting the year about the first couple months probably 150 basis points on a year-over-year, less than what it was a year ago on the new same store pool as we're modeling it today. We think that gap narrows through the course of the year from that 150 basis points towards the end of the year. We also assume some average contract rate growth sequentially in the low single digits throughout the year. We think the strength of our platform participates in success around our ECRIs and our ability to drive ECRIs and where we're positioned today than where we were a year ago, we'll see low single digit growth throughout the course of the year. In my opinion, to kind of recap, and we have some easier comparisons in the back half of the year based upon where we were last year. We have improved tools, we have improved position, and I think this year we think shapes up to be a little stronger year than what we had last year.

And so Samir, the only thing I would add is just to pick apart the numbers. So the 4.3% negative revenue growth we had in fourth quarter, as you saw, that was made up of 180 basis points average occupancy decline year-over-year as well as being negative on the rent per square foot 2.5%. Both of those metrics we think will tighten a little bit here in Q1 and Dave's earlier remarks at the open kind of hit on that. The sequential improvement in contract rate he just mentioned for the new pool. On average, these first couple of months we're about 150 basis points negative year-over-year so that's tightened a little bit. Hence my comments earlier about we feel like we have bottomed or we're bottoming now, and we like the trajectory as we go throughout 2025.

Thank you for that. That's very helpful. And just on your growth, is it being impacted at all by some of the state restrictions we're seeing due to the fires in L.A. at this point?

Yeah, that's a good question. We have very minimal impact; we only have eight stores in our portfolio, so a very small percentage of our stores that are actually in where there are pricing restrictions, and so we just don't have a material impact there.

Got it. And I guess my second question is on capital recycling. You guys were certainly very active on that front last year. I guess when I look at the portfolio today, how much more is left to do and maybe talk about kind of what you're seeing in the market on transactions, your pipeline, and pricing. Thanks so much.

Yeah, absolutely. We certainly have, as you saw us forecast, we forecasted more dispositions this year, and it's really on par at the midpoint with our acquisitions activity, and that leads to recycling of that capital. As we did last year, now that the pros are internalized, we're going back through that portfolio, and we identified last fall some areas we thought were markets and single assets and markets where we wanted to be more operationally efficient or we didn't think there were the right growth trajectories just evaluated that portfolio top to bottom and we have identified another group of assets that we will look to be when the opportunity is right. Look to sell this year, and we'll be selective about that. But again, with the mission of trying to improve our overall portfolio and improve our overall operational proficiencies around our portfolio. Currently, we do have about $10 million worth of properties under contract to be sold already, and we've identified the rest of that stores and we'll be either working with off-market sellers or working through brokers to work some of these assets throughout the first half of the year on a disposition piece. From the acquisitions activity, as I mentioned in my opening remarks, there's still a significant amount of deal flow coming across our desk. I think we're matching our cost of capital with our acquisition targets, and we're using the JV and using the balance sheet appropriately on where we think we want to pick and look to purchase in the market. But thus far, deal flow and cap rates and all those things just haven't moved around a lot from what we've been reporting in the past couple of quarters. I know there's been some interest rate volatility in some of those pieces, but at this point in time, no real material change around markets and prices of assets and markets and so forth.

Thank you.

Our next question comes from the line of Eric Wolfe with Citibank. Please proceed.

Hey, thanks. You mentioned that your markets are a bit more sensitive to the housing market, and you also said that November and December improved quite a bit from the October bottom, so I was just curious if you thought that sort of improvement was due to increased housing market activity, if you saw that in your leads and your numbers for November and December, or if it was really more just like easier comps and just the year-over-year comparison that drove that.

Thank you for your question. I appreciate you joining us today. We felt confident about increasing our street rates in many of our markets, particularly in November and December. We had just emerged from the pro transition period and were cautious with our asking rate during that time. In November and December, we noticed a renewed confidence in the markets, indicating that we had likely hit a low point in occupancy. The markets responded positively to appropriate occupancy levels, which allowed us to raise our rates. This adjustment positively impacted our rent roll and helped us increase contract rates. The seasonal patterns in occupancy appeared stable, and we believe we are now on more solid ground regarding competitiveness, factoring in the introduction and absorption of new supply, as well as our competitors' asking rents. Additionally, housing activity in November and December picked up in some markets, leading to a bit more job transition housing. While this is a rapidly changing situation, we generally felt more assured in raising our rates, confident that we established a stable occupancy base to build upon.

Got it, that's helpful, and then you partly addressed this in your answer to Samir's question, but I think you said that so far this year, the trends that you saw in December down call it 13% had continued thus far. Just curious by the end of the year how you see that trending? Will we get into positive territory by the time you get into the fourth quarter and that's what's driving the ramp in same store revenue guidance? Just trying to understand the slope, if you will, of where we're starting today in call it February, and where we're ending up by the end of the year in terms of moving rates?

Yeah, I think as we look at it we think we will; occupancy may not be a significant improvement this year. I think we're looking, we'll have some seasonality and maybe we finish through the 12 year period and maybe it's not around a tremendous amount of occupancy gain. We think there's just going to be more strength in asking rent compared to what it was a year ago and the volatility it was a year ago and then our strength in our ECRI program and the efficiencies and the strides we've made in our modeling and how we're deploying that tool now that we have everything under one roof. We have centralized programs around that piece of it. It's just allowing us to operate a little bit better.

Thank you.

Thank you.

Our next question comes from the line of Jeff Spector with Bank of America. Please proceed.

Great, thank you. I just wanted to follow-up on the midpoint and your remarks on what that midpoint reflects. Is it improving market conditions, or is it more to do with what you've talked about in terms of your company and what you've achieved and what you think you can do in 2025? I think as you know we've had a more cautious view let's say on storage, the recovery and what may play out in '25. I'm a bit surprised that the midpoint would reflect an improvement this year, a true improvement in demand. Thank you.

Thank you and good question. I would tell you it's probably a mixture of both. I think we have markets that we're seeing some improvement in. We're certainly seeing some stability in less competitive pricing, less supply pressure as you cycle through the supply that's been added and is being absorbed over time. I also think operationally and our effectiveness to operate in these markets is better as we've done the consolidations and improved our technology and added talent to our bench and really looked at how we're trying to operate in these markets, focusing on the regionalized brands, looking at our digital footprint, where our position is, what our visibility factor is, and what can we do to drive better results out of our portfolio. I would probably tell you it's a little bit of both. I just think we're going to operate better, and I think we are seeing stability and some improvement in our markets.

Okay. Thank you. And then, my second question, I just want to confirm on internalization onboarding. Are you saying now you're fully done, and then which markets have you decided you're going to continue to third party? Thank you.

From the true nuts and bolts of the moving pieces, we are done with all the team member movement, all the platform movement, all of the consolidation of how you think about the NSA storage and what we're doing around the initial rebranding of the stores. That piece is done. The team did a wonderful job. Pros were wonderful through this whole transition. We're very happy that that's completed and we can get focusing on execution. As far as what we left third party managed, we left two pros in place. Mid-Atlantic was what I'd tell you around the Pennsylvania area, which was one of the pros we left in place, and the other one is the pro that's managing a primary market is Puerto Rico and a little bit of through the southeast of the country.

Thank you.

Thank you.

Our next question comes from the line of Salil Mehta with Green Street Advisors. Please proceed.

Hi guys. Thanks for taking my question. I just want to touch base on something you guys mentioned. You guys mentioned you are anticipating a recovery in the housing market. Could you provide a little bit more color of whether a recovery is currently being baked into your guidance and can you also expand on what's giving you this idea that the housing market is recovering based off reports so far? '24 was the lowest existing home sales in the last 30 years. January pending home sales was at an all-time low. Can you provide more color on what you guys are seeing specifically that is giving you guys this sort of optimism and because of that, are you guys expecting some return to normal as well for the peak leasing season?

Yeah, this is Brandon. I'll take that and let Dave chime in as needed. I would say, at the midpoint of our revenue guidance, we're assuming no worse than what 2024 saw in terms of the housing market and the related mobility. So if existing home sales were roughly 4 million homes, we're thinking that 2025 has a similar number or perhaps modestly better. And you're right; it is, depending on your data points, some days it's a little discouraging and as Dave said in his response to Eric's question about the November and December data, you could be encouraged on other days. And so it's going to be a little bit of a volatile year in terms of just reading the month-to-month data. We do think it's not all dependent on housing. So there is just an element of general job-driven mobility, pent-up mobility demands that should unlock over time because of just a gradual burn-off of the lock-in effect that's been in place. And so you're starting to see some of that transition take place. And then on top of that you have the specific to NSA story about how we can move the needle with our pro-stores. And so maybe just to respond to your question and maybe tie it into Jeff's previous question, if we're down on our new same-store pool, 150 basis points that Dave mentioned earlier on occupancy, we had talked last year when we announced the pro-internalization about that subset of stores, the previously pro-managed stores, being less occupied by 300 basis points than our corporate-managed stores. And how we felt like maybe that gap doesn't close entirely but give us a full leasing season, which is the spring-summer of 2025, and we believe we can move that needle meaningfully. And so that will also be part of the closing of the gap from an occupancy delta standpoint.

That's super helpful. That's it from me. Thank you.

Thank you.

Our next question comes from a line with Juan Sanabria with BMO Capital Markets. Please proceed.

Hi. Just a quick follow-on to your most recent comments there, Brandon. So does the midpoint assume that the situation improves or that it's steady from a housing perspective? Because I think you introed with improves, and I just heard maybe flat, so just wanted a clarification there.

Yeah, sure, Juan. So yeah, there is modest improvement at the midpoint, and so sorry if I confused that issue. I just meant to emphasize that it's not worse than 2024, but to be clear, at the midpoint we did assume some modest improvement in demand, which is needed to get to some of those occupancy growth numbers that Dave mentioned earlier. He said we assumed, again you can model this 100 different ways and solve to similar revenue answers, but one scenario would be our occupancy increasing trough to peak, so from now until peak summer about 200 basis points. Last year, for example, we only rose 140, which was below historical levels, so we're still not assuming the typical normal seasonality, peak to trough, but it's something better than last year.

Okay, and then I was hoping you could just maybe talk a little bit about some of that low-hanging fruit on the pros. You mentioned the overall portfolio was down 150 per occupancy versus 300 for the pros, and then I know the ECRIs were also lower, so I guess from an occupancy perspective, how much has already been closed or what's kind of assumed in guidance, and how much do the pros represent of the total pool, just to help us get a sense of how much the pro kind of low-hanging fruit of internalization is helping boost growth?

Yeah, good question. Just to clarify, the 300 basis point occupancy delta is just looking at the spread between pro-managed stores and corporate-managed stores. When we compared that in the middle of last year when we announced the internalization, that was about 300 basis points. That's come in a little bit, not tremendously, and we said at the time we needed kind of a full normal leasing season for that to occur. The pro-managed stores of our same store pool, dollars revenue basis, they're almost 50% of the total dollars of NOI, and so if you think about us closing that 300 basis point gap, that would blend in on basically a 50% effect, so if you close the entire 300, then it would give you 150 when you blend that into your total pool. I think you hit on a critical part in your question, though. The ECRI point and the kind of holistic strategy around starting rates and the ECRI push following a move-in, now that we have all of that decision-making under our rate control, that is a needle mover, and so I can tell you today compared to this time last year, we're stronger and more assertive on that front, and so that is part of what's driving our earlier remarks about the sequential improvement in contract rate and some of these inflection points that we've described.

Thanks. Did you provide some general statistics, and I apologize, or for that matter, for kind of the lead indicators into the first quarter, and just in particular curious how the in-place rate may have changed from down 2.5% in the fourth, because I think some of that was just the aggressiveness in defending occupancy at the beginning of the pro-internalization, which kind of waned, it sounds like, through the fourth quarter?

Yeah, you're right about that, Juan. We didn't give specific numbers. We just said that that 2.5 has started to improve as we go through these first two months in 2025.

Fair enough. Thank you.

Thank you.

Our next question comes from the line of Michael Goldsmith with UBS. Please proceed.

Hi, thanks. This is Amy. I'm with Michael. I was hoping that you could provide a little bit more near-term context around supply, so how should we be thinking about deliveries in 2025 versus 2024, and are you still seeing any significant lingering pressure from lease-ups as well on top of that?

Yeah, great. Thanks for joining. Good question. I think 2024, I think we said, according to, you're already looking at our statistics and so forth, I think we said certainly we were right around 3.5% for 2024. I think as you go into 2025 and as we're heading to 2027, I think you see about a 50 basis point to 100 basis point improvement, from '25 to '26, so maybe if '24 is 3.5%, maybe '25 is 3%, and then you're down to maybe 2%, 2.5% in '26, and then down to 2% in 2027 is how we're thinking about it. Certainly time is what has to happen here around absorption of what's already been delivered and what will be delivered. We talk a lot about markets like Phoenix and Atlanta, which have been very tough markets for us recently, and even the west coast of Florida. The new supply deliveries are coming down, which is a good thing, but it will take time to absorb what was built, and I think that's as we look at it, as we look at how we want to operate in those markets and how aggressive we want to be in those markets, it's just a pure fact that until this new supply gets absorbed; and that takes time to absorb, material movements in those markets are going to be challenging. The good news is new supply is coming down, but we just have to absorb what is already out there today. A good example of that would be, if you look back at our history, Portland is a market we talked about for a number of years. A lot of supply brought in in '18, '19, and '20, and now that the new supply has really gone down to almost not very much being delivered at all, the strength of Portland and the stability of Portland around rates and around occupancy, and we've gone through the worst of it is starting to come back on the other side. I think that's a good reference point as you think about what supply can do to a market and then just working your way out of it.

Got it. Thanks. And then just a quick one on the guidance. Is the G&A guide that you've provided on a core basis, or does that include the severance costs and other aspects?

So, Amy, that guidance relates to how that financial statement will appear in our P&L as we report on 2025. So for 2024, we've had some costs associated with the internalization that have, for the most part, just been carved out of that. There was a little bit of severance costs in 2024 that was in G&A. But by and large, those pro-internalization transitional costs have been segregated both for '24 and for '25. And since you'd not be asked, I'll just expand a little bit on G&A just to give a little color on the guide. So going back to when we announced the internalization deal and the expected accretion, a big piece of the $0.04 impact that we expected from both G&A and tenant insurance, we are very well on track with that. We've realized half of that in 2024, so $0.02 in '24, and we'll realize the incremental $0.02 in 2025. G&A specifically, we guided the savings on an annual basis of $7.5 million to $9 million. And so if you take that midpoint of our G&A guide, both the cash and non-cash piece, that's just under $55 million, and I would steer you to comparing that to an annualized first half of 2024 number, which is just under $64 million, just because that's the best representation of the pre-internalization run rate. And so that's $9 million of savings there, and so that ties back to the $7.5 million that we described in our June announcement last year. So I just wanted to lay that out for you and others.

No, that's really helpful. Thanks, guys.

Thanks, Amy.

Our next question comes from the line of Ronald Kamdem with Morgan Stanley. Please proceed.

Hey, just two quick ones for me. I guess starting with the revenue guidance, just going back to it, I want to make sure I understand it. So on the pricing side, you're assuming sort of modest improvement because you've started to see that start this year. And then on the occupancy side, I think you said peak to trough occupancy up 250 basis points versus 140 basis points last year, if I heard that correctly? Just want to make sure I got that right, and maybe if you could just talk us through what's different about this year, what was unique about last year, where you're expecting that sort of big recovery that would be helpful.

Yeah, thanks, Ron. Yes, you're right. On peak to trough, that's how we're looking at occupancy. And we're seeing what we think is a consistent improvement in contract rate as we go through the year, largely in part of just having good solid footing, less competitive environment, our ability to really execute on our platforms and our programs. I would also tell you just from my seat and looking at how hard this team worked last year, as you transition and you bring on new platforms and new team members, and you teach and train and do all the moving pieces we had, I look at this year as less distractions and more focus on execution. And I think that's really the fundamental difference between 2025 and 2024, is we're more stable and solid footing around the environments we're operating in, and we're just better at it. So that's really how I would describe 2025.

So presumably in two months peak leasing season, we'll get some data points on if that's sort of trending according to the early indicators and stuff. So that's fair. Can I just switch gears to sort of the expense side of it? Just a little bit more color on what the assumptions for property taxes and insurance would be helpful. I had to think about that.

Yeah, Ronald, this is Brandon. So for our OpEx guidance of 3% to 4%, most of the line items I would say are within that range. Property tax would be one of those that's kind of right in that 3% to 4% assumption. Insurance we have in the low single digits. We're going through our renewal process right now. That policy renews April 1, so we'll have line of sight when we report back with our Q1 numbers. Personnel we also have I would say like a low single digit growth side. And then marketing would be the one that's kind of above and beyond that total OpEx range, and that's kind of been the story for these last several years, right, just given the importance of the internet marketing and especially in this lower demand environment, the competition for those customers.

That's it from me. Thank you.

Thank you.

Our next question comes from the line of Wes Golladay with Baird. Please proceed.

Just a quick modeling question on the acquisitions and dispositions. Do you expect any accretion or dilution whether it's due to timing or the spread difference?

Yeah, good question. I think maybe some marginal dilution just if we get property sold and we pay down the revolver and we don't get it re-employed. So it's really a timing thing. It'd just be marginal would be the way I'd answer that.

And it's captured in the range of FFO that we gave.

Okay. And then I want to go back to that comment about seeing less competition. Maybe can you give us an update on the dynamic you're seeing in the market? Are developers getting to a certain leasing level where they may not be stabilized but they're just maybe backing off concessions? Are there more of those markets this year? Do you expect to have any of those markets remaining next year?

Yeah, good point. I agree with that. I think they're farther in their lease up. I think the competitive environment has certainly changed compared to what it was a year ago for a couple of factors. Obviously around the supply dynamic and people trying to fill up. Obviously just within the sector itself, there were some large mergers going on that created some additional pricing pressures in the sector that have moderated as well. I think between those two factors of where they're at and the fill-up of their supply and then just a little more calm, I would say around the sector, I think is why we're encouraged about better stability around pricing this year.

Okay. Thanks, everyone.

Thank you.

Our next question comes from the line of Eric Luebchow with Wells Fargo. Please proceed.

Great. Thanks for taking the question. I wanted to ask, the acquisition guide for the year, what are you seeing for market cap rates right now given there's been a lot of volatility in interest rates recently? How do you think that shapes out over the course of the year and how are you thinking about the acquisition pipeline between doing things on balance sheet versus leveraging some of your JV partners where you could do more kind of lease-up properties?

Thanks for joining. Good question. We haven't seen a material change in really the pricing or the seller's expectations or cap rates throughout all of our markets. I think, if we're looking at secondary or suburban markets, you're probably in the low to mid-sixes. The cap rates that we're seeing a lot of transactions around I think as you get into, this all depends on type of asset, location of asset. There's a lot to this, right? But I think as you get into a more stabilized asset in a primary market, it's more in the mid-fives is probably what we're seeing. I know there's been a lot of interest rate volatility. It's just not flowing through to cap rates at this point in time and it probably won't until something changes and hangs on for a lot longer. I just think there are still people transacting. There are still people buying properties. I think you look at, in an environment today where we think fundamentals have been depressed because of the environment, I think people are looking for optimism in the sector, and as are we, and I think we're trying to pick the right points to buy in markets where we think we have upside, maybe not immediately, but we know long-term it's a good acquisition for us. We're also trying to balance in between JV Capital and balance sheet, and we know our JV Capital is probably our best cost capital today, and it's capital light for us, and so I think we're working through all of the acquisition targets, trying to match it to our cost of capital.

And Eric, what you've seen us do on balance sheet has been very strategic to complement our existing properties in a market, densifying markets. We've also picked up some annex properties which are no brainers where you can add 40,000 square feet to an existing 50,000 square foot property that's just down the road. And so those are the ones that we're being selective about bringing in wholly owned versus otherwise having a bias towards JVs. And then certainly as we do have dispositions, there may be a need to 1031 some of those assets, and if we did that, we'd need to redeploy that on balance sheet so that would also be a driver of putting some things on balance sheet.

Great, and thanks. And just a second question, I believe you said you're being a little more aggressive with your ECRI today versus a year ago, and so maybe you could just dive into like is that coming more from new customers that are moving in at lower web rates, being a little more dynamic with web rates and pulling for the ECRI, both the timing and the magnitude, or is that kind of across the board with some of your longer duration customers as well? Just curious about the dynamics of that shift over the recent history. Thank you.

Yeah, sure. I think all of those things would come into play. I think certainly as you look at where market rates are, entry point rates for new customers, we certainly are finding our way to try to get back to market rate in an appropriate amount of time. I think our tools and our visibility around success and some of the testing we've been doing and have been continuing to do as we measure the success of the ECRI program is giving us a little more confidence to execute maybe a little more assertively in different situations throughout the entire tenant base. So I'd say it's a combination of those factors, moving market rates, and just our confidence and our conviction of what we're learning and how we're executing.

Thanks, guys.

Thank you.

Our next question comes from the line of Omotayo Okusanya with Deutsche Bank. Please proceed.

Good afternoon, everyone. Just curious, again, all the recent market commentary around a softer consumer outlook. What do you guys kind of make of this? Do you think there could be any potential impact to demand within your business or any potential impact to ECRIs if you just kind of have a more kind of economically sensitive customer or consumer?

Yeah, it's a good point. I think we constantly are monitoring all the things that we look at as far as our customer behaviors and trying to really pay attention to strength of the consumer. That leads to a lot of data points from payment activity to delinquencies to length of stays to ability to feed the top of the funnel, all of those things. But it's certainly something that we look at. It's certainly something we're aware of. Fortunately, at this point in time, we have not seen any material change at all in any of those things that I just described. But certainly I think we read the same things you're reading about is from a consumer standpoint, I think consumers are feeling more pressure. I would tell you from the sector history though, if you do start to see some kind of changes in our economic outlook, storage sometimes benefits from consolidation or recession or things that go around that piece of it that forces people to move around for jobs or maybe change their housing location or their renting location. At this point, we see no stress on our customer. At this point, nothing really more to report on it.

That's helpful. And then the commentary in 4Q talking about payroll expenses down. Curious again via the use of technology if you have more opportunity to keep driving that down, or in general, any comments about potential additional opportunities to improve operating efficiency from a technological perspective?

Really good question. Payroll, we've worked really hard really over the last two years or three years and really worked hard on a staffing model that tried to put our team members in the right place when the consumer needed them. And I think we've done a really good job working on that metric. I don't know if there's a tremendous amount of more savings coming in that arena from our perspective because we've run lean historically and we've found a way to run even leaner through the last couple of years. I think we're trying to really right now match the consumer's expectation with when we have our team members there. I know we're working very hard within our customer care center around can we use technology to help route calls? Can we use technology to help answer calls? Can we use technology to let us find efficiencies around when our team members are talking live versus what we can do with automation? I think the team has done a good job finding some paths there. I think that is an opportunity for us long-term to think about how we communicate with our consumer and our internal customers as well, which is our team members, and just finding efficiencies around the way that we work on that. The team is working around our digital platform. We're working around how we help the customer transact with us more and more the way they want to, in which case it seems like today they want to talk less to real people and use a little bit more technology. So I think we're certainly studying all those fronts. We're working in those fronts. We've been testing in those fronts and made advances. So I like where we're headed, and I think there's probably still some more success around some of those areas we just discussed.

Thank you.

Thank you.

Our next question comes from the line of Brendan Lynch with Barclays. Please proceed.

Great. Thanks for taking my question. You talked about the debt leverage being around 6.5 times now, and maybe it's going to come under some pressure. Can you just remind us what the range is that you're targeting, whether you're willing to kind of deviate that even in the short-term, and how you might use the ATM or the share repurchase program to tackle leverage going forward?

Yeah, Brendan. Thanks for the question. So our targeted range of comfort in operating is 5.5 times to 6.5 times. That's been pretty consistent for multiple years now. So the 6.5 times that we ended the quarter at is at the high end of that range, and I do think going back to my comments at the open, just given Q1 is seasonally weaker, and also we're still going to have at least a couple quarters, we believe, of continued negative year-over-year or same-store growth, that will go above our range. Understanding that's temporary, we're comfortable with that. Obviously if market conditions present themselves and there's an opportunity to calibrate that or toggle that, as you said, we will seek to do that, but we're not going to be too reactionary given I think that's a fundamentals thing that we'll grow out of. The other thing I mentioned in my remarks is that some of the potential portfolio coaling, some of these strategic dispositions that Dave described earlier, we may do that in the next quarter or two, and to the extent that gives us some proceeds to bring down leverage, that will be an option for us as well. The ATM, I should say, the ATM and the share repurchase just generally, because I did mention in the open that we stood those programs up, that's just going to be opportunistic. I think we've traded in a band, our stock price has been at levels in the past 12 months where it was attractive to repurchase shares, and it's also approached levels where it would start to make sense to issue, so we just needed to stand those programs up to have that flexibility for us going forward.

Great, thanks. That's it from me.

Thank you.

Our last question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed.

Hi, thanks. Just a couple quick ones. First, related to the internalization and the efficiencies that you're working to achieve, I just wanted to clarify from the comments and guidance whether there's any incremental impact expected with regard to tenant insurance and other fee income or G&A expense that will be realized gradually throughout the year, or is everything essentially in the 4Q run rate as it pertains to the internalization?

Yeah, Todd, thanks for the question. So yeah, the tenant insurance, we really did start to realize those economics from day one going back to July 1, so that is baked into the numbers. You see that in that management fee and other revenue line item that we guide to, so that's notably up over 2024. There are costs associated with that that historically haven't been or not in our line item detail but that line item that's labeled other, which sits below depreciation on our face P&L, that year-over-year will be up from 2024, I think roughly $3 million to $4 million and so those are some of the costs that do offset that top-line growth. We'll obviously have a full 12-month impact in 2025 of both the G&A and the tenant insurance versus only the two-quarter impact that we had in '24, but I do think we're exiting '24 and entering '25 at kind of good run rate levels.

Okay, that's helpful. And then the 300 basis point occupancy gap that you discussed, you talked about the year-over-year gap being about 140 basis points at year-end. I think you mentioned around 150 basis points as you said today, which compares to 300 basis points or more in the third quarter. Were comments around that to suggest that half of that occupancy gap has been realized already or does the guidance assume about half of the occupancy gap is closed during the year? Can you just clarify that?

It's more the latter, Todd. Yeah, we did not mean to suggest that half of that closing of the gap with the pro-occupancy levels has been achieved. I think that's more just comps and markets from where we sit today versus the middle of 2024. So it was more the way you characterized it at the end of your comment there about to be achieved is that closing of the gap.

Got it. And so in terms of the revenue synergies, do you think that the impact to results, will it be greater in 2026 or is the greater impact likely to be felt this year and sort of included and embedded in the guidance?

Good question. I certainly think the back half of the year is where we really start to see a lot of momentum because I think we'll spend the first half of the year really trying to work through some occupancy things, trying to really drive where we want to be positioned and try to close that gap for the spring leasing season. So certainly the back half of the year sees a benefit which leads into 2026.

Thanks, Todd.

Thanks, Todd.

Thank you. There are no further questions at this time. I'd like to pass the call back over to George for any closing remarks.

Well, thank you all for joining our call today and your continued interest in NSA. We hope you enjoy the rest of the earnings season and have a good afternoon.