Earnings Call Transcript - NSA Q4 2025

Operator, Operator

Greetings. Welcome to National Storage Affiliates Fourth Quarter 2025 Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, George Hoglund, Vice President of Investor Relations for National Storage Affiliates. Thank you, Mr. Hoglund, you may begin.

George Hoglund, Vice President of Investor Relations

We'd like to thank you for joining us today for the Fourth Quarter 2025 Earnings Conference Call of National Storage Affiliates 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 26, 2026. 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.

David Cramer, CEO

Thanks, George, and thanks, everyone, for joining our call today. The fourth quarter provided further confirmation that our portfolio performance has inflected in a positive direction. We are benefiting from the significant operational efforts executed by our team over the past few years to position NSA for outsized growth. We produced solid results for the quarter and delivered wins in several areas, including all but 1 of our 21 reported MSAs saw improvement in same-store revenue growth versus what we reported in Q3. Same-store revenue growth was down 70 basis points in the fourth quarter compared to down 260 basis points in the third quarter, a substantial improvement. We experienced sequential improvement each month of the quarter. Year-over-year occupancy also continued to improve, finishing the year down 70 basis points. Remember, we were down 140 basis points at the end of the third quarter. Our core FFO per share results came in at the top end of our guidance range, beating consensus. Looking at the full year, we delivered a handful of notable accomplishments, including we consolidated another brand, reducing the number of remaining brands to 6 and an additional growth driver with the formation of our preferred equity investments platform, we continue to execute on our portfolio optimization program by exiting 5 states and selling 15 properties totaling $97 million. We also acquired 10 properties totaling $75 million across our joint ventures and on balance sheet. And most importantly, we exited the year on solid footing with positive momentum that has carried into 2026 as January end-of-month occupancy was up 20 basis points year-over-year. We've clearly turned the corner. The tremendous efforts undertaken by our team to internalize the PRO structure, dispose of non-core assets, upgrade and centralize our marketing, revenue management and operations platforms, along with the consolidation of brands and the move to one web domain are paying off. Looking at 2026 and beyond, the backdrop for self-storage is improving. First, new supply is currently stable and is projected to decline over the next few years to levels well below long-term historical averages, with the impact becoming more meaningful in 2027. Second, there is momentum in the current administration to address home affordability, which could provide a boost to the housing transaction market and self-storage demand. Lastly, increased stability in self-storage pricing practices could lead to rising street rates, providing a near-term lift to revenue growth. Now let me comment on our relative position within the sector. Our portfolio fundamentals have inflected positively, and we have the most to gain from a recovery in the level of housing turnover. Our enthusiasm is supported by the fact that we're starting the year with strong rental volume, an inflection from negative to positive year-over-year occupancy and an encouraging trajectory of same-store revenue growth while we remain focused on disciplined expense controls. As we enter the spring leasing season, we will continue to focus on driving internal growth with increased marketing spend, competitive position in terms of rate and promotion, solid execution from the sales process and remaining assertive with our ECRI strategies. Meanwhile, we continue to improve our portfolio through capital recycling and reinvesting in our properties while also growing our portfolio through expansions and acquisitions. I'll now turn the call over to Brandon to discuss our financial results.

Brandon Togashi, CFO

Thank you, Dave. Yesterday afternoon, we reported core FFO per share of $0.57 for the fourth quarter and $2.23 for the full year, at the high end of our guidance range as our focus on operational improvements is starting to be reflected in our results, with same-store revenue and NOI coming in for the high end of the full year guidance ranges. For the quarter, same-store revenues declined 70 basis points, driven by lower average occupancy of 120 basis points, partially offset by year-over-year growth in average revenue per square foot of 100 basis points. This is meaningful improvement from the 2.6% revenue decline in the third quarter, with 9 of our reported 21 markets delivering positive revenue growth. For the full year, same-store revenues declined 2.3%. Expenses declined 80 basis points in the fourth quarter while growing 3.1% for the year, slightly below the low end of our full year guidance range, benefiting from our meaningful expense control efforts. Most notable savings came from payroll costs that were down 4.1% in the quarter and 2.8% for the year as we continue to find efficiencies with hours of operations and staffing. Meanwhile, marketing was up 37% for the quarter and 31% for the year as we continue to invest in customer acquisition spend in markets where we clearly see the benefits. Outside of same-store operations, the lighter tropical storm season led to favorable results within our insurance captive, where we retain a portion of the property casualty coverage for our stores. This resulted in lower expense in the other line item within operating expenses compared to the run rate from the first 3 quarters. Moving to the transaction environment. We completed the sale of 3 assets during the quarter for $24 million. And subsequent to quarter end, we sold 3 additional properties for $21 million and acquired 1 wholly owned property for $10 million. Our portfolio optimization program will remain active in 2026 as we prioritize scaling in markets while generating proceeds for deleveraging and funding attractive investments through our JV and preferred equity programs. Our on-balance sheet investments will largely be to fulfill 1031 requirements. Now speaking to the balance sheet. We have ample liquidity and maintain healthy access to various sources of capital. We have $375 million of maturities this year, consisting of a $275 million term loan that is due in July and $100 million of unsecured notes due in May and October. We have optionality and we'll most likely address these maturities with a new term loan. Our current revolver balance is approximately $400 million, giving us $550 million of availability. Our leverage continues to come down with net debt to EBITDA of 6.6x at quarter end, just slightly above our 5.5 to 6.5x target range. Now moving to 2026 guidance, which we introduced yesterday and the full details of which are in our earnings release. The midpoints of key items of our guidance are as follows: Same-store revenue growth of 90 basis points, same-store operating expense growth of 3%, flat same-store NOI growth and core FFO per share of $2.19. We have also guided to acquisition and disposition ranges of $50 million to $150 million. In both cases, these amounts represent NSA's share. With regard to same-store revenue, we foresee the year-over-year growth steadily improving as we progress through these next couple of quarters. As Dave mentioned, our occupancy is slightly positive year-over-year at the end of January, and that spread has continued into February. At the midpoint of our guidance range, the $0.04 decline in core FFO per share is due to growth in G&A of approximately $0.02. This growth primarily comes from assuming target level cash incentive compensation as the same expense in 2025 for our corporate team was below target levels given company performance. The remaining $0.02 is attributable to a combination of headwinds from debt refinancings and the tough comp for our insurance captive based on my earlier comments regarding the favorable results in the fourth quarter of 2025. Thanks again for joining our call today. Let's now turn it back to the operator to take your questions.

Operator, Operator

Our first question is from Samir Khanal with Bank of America.

Samir Khanal, Analyst

I guess, Dave, when I look at your guidance, you're calling for a healthy improvement here in revenue growth. down about 70 basis points in 4Q, getting to about 1% at the midpoint. I think this sort of puts you even above the peers here. So maybe help us kind of walk through kind of how you get there. Talk about the breakdown, let's call it, occupancy through the year, rate growth, move-in rate growth and even ECRIs, how are you thinking about all that?

David Cramer, CEO

Thank you for the question, Samir. I’ll begin and then Brandon will discuss the cadence. The key difference between now and a year ago when we provided guidance is that our transition is complete. Our platform is functioning very effectively, and our synergies and strategies are aligned. We've finished the improvements to our people, processes, and platforms, eliminating any distractions. Presently, compared to last year, we are not focused on occupancy issues. In January, occupancy increased by 20 basis points year-over-year, which is a positive change we haven’t seen in a while. This gives us confidence that we can continue to improve occupancy throughout the year. The rate environment remains stable, with good contract rate growth in the latter half of 2025, and we expect that to continue in 2026 backed by the strength of the ECRI program. We are approaching the market more aggressively than in the past due to our confidence in our marketing and customer acquisition strategies. We are witnessing very high rental volume, finishing the fourth quarter with an 11% increase in square footage year-over-year, although this was affected by a 10% decline in October due to hurricane impacts. January and February have shown even stronger performance. Overall, we are pleased with our rental results from the top of the funnel through to actual rentals. RevPath, occupancy, and contract rates are all trending positively, and our platforms are functioning well. Given our background and current standing, we feel very confident about how 2026 will unfold. Now, I’ll let Brandon elaborate on the cadence for the year.

Brandon Togashi, CFO

Yes. I think the main thing I would add, Samir, and you touched on it in your question, the negative 70 basis points that we delivered in the fourth quarter, Dave remarked in the opening about how that improved. So it was more negative to start the fourth quarter, and it got less negative trending towards flattish as we got to the end of the fourth quarter. And then based on the data points that we've given for end of month January occupancy, in my remarks about how that's continued into February, we just feel comfortable that we're starting the year within the negative 30 to positive 210 revenue range, whereas a year ago, we were delivering a quarter and starting the year that was, frankly, well below the low end. So it required much more of an improvement than what's required now.

Samir Khanal, Analyst

And I guess just as a follow-up, maybe as we're talking about the guidance, maybe you can hit on expense growth here, right? I mean you have about 3% for this year. Maybe talk kind of the components to kind of get there as we think about '26.

Brandon Togashi, CFO

Yes, Samir, the most significant line item is property taxes, so we'll start there. We're assuming a range of 3% to 5%, which aligns with multiyear averages for our portfolio. Regarding personnel, we experienced good success in that area, both in the fourth quarter and for the full year '25, and we expect similar outcomes going forward. I anticipate that line item will be relatively stable in 2026 compared to '25. Beyond those two items, the largest percentage increase will likely be in marketing expenses. Although we won't see the 30-plus percent growth we experienced this year, we expect it to still be in the teens for year-over-year growth. The majority of other line items will generally fall within the low to mid-single-digit range, in line with our total operating expenses guidance, with the notable exception being insurance. We believe we are in a better market; our renewal was on April 1, and we are forecasting a year-over-year decrease in that cost.

Operator, Operator

Our next question is from Michael Goldsmith with UBS.

Michael Goldsmith, Analyst

First question is on the January occupancy being up 20 basis points. Can you talk a little bit about what's driving that? I think you talked a little bit about strong rental volumes. It seems like marketing spend is up, but can you walk through some of the moving pieces? Are you cutting rate to drive that occupancy higher during the slower season? Just trying to understand the moving pieces and context around the occupancy improvement.

David Cramer, CEO

Yes. Sure, Michael. Thanks for the question. Thanks for being here. I think it's a combination of all those things. Clearly, we committed to a higher marketing spend really through the back half of 2025, and that was based upon our conviction that we were seeing the activity at the top of the funnel and our ability to convert those into rentals. And so we've done a really good job looking at the sales process all the way through the funnel and our conversion rates. And so that would include how you use discounting, where you're priced in the markets, the amount of marketing spend and when you're spending that money. This is where AI and some of the AI technologies and the modeling we have are really starting to pay off and the fact that the teams are doing a really, really good job as we model our marketing spend and model our dynamic pricing and use of discounts to really work on that closure within that funnel. And so we've seen a significant improvement in our ability to really work the conversion rates through that funnel. So I would tell you, from a pricing standpoint, we're keeping the same competitive position we've kept through the back half of the year. We did a good job holding occupancy and not having the seasonal trough that you normally would have, and that's a function of marketing spend pricing, discounting and then use of call center and staffing hours and those things. So I think all those things in place. We're not undercutting markets. We're not trying to go out and try to move markets one way or the other. We're just staying within the appropriate competitor set to get the results we want.

Michael Goldsmith, Analyst

Dave, and as a follow-up, like where do you see yourself to the point of actually having pricing power, right? Occupancy is improving, you're improving operationally, you're talking about strong rental and volume. So is there a certain level of occupancy where you think you would have pricing power?

David Cramer, CEO

It's a great question, and the answer really depends on the market and the store. We have some markets experiencing good success, such as Wichita, Colorado Springs, and even Portland, where supply and demand are well balanced. These markets are responding positively to street rates, market pricing, and the ECRI programs, which are proving to be very effective. Overall, our portfolio contains many stable markets that are benefiting significantly from the changes and adaptations we’ve implemented within the company. However, in other markets like Phoenix, Atlanta, and the Gulf Coast of Florida, we are facing supply issues. Until we achieve better balance and a stronger demand profile to fill these stores, it will be challenging to gain pricing power. Additionally, we've observed the importance of examining the specifics of unit sizes. While it's useful to look at overall property performance, certain subsets of unit types are showing pricing power in some markets because their supply and demand are balanced for those specific units.

Operator, Operator

Our next question is from Juan Sanabria with BMO Capital Markets.

Juan Sanabria, Analyst

Congrats on the successes on the post PRO internalization. Just hoping for a little bit more color on kind of the move-in rate trends throughout the fourth quarter and into January as well as kind of how the quantum and or cadence of ECRIs has changed maybe year-over-year or however you could help us contextualize that?

David Cramer, CEO

Sure. I'll start, and then Brandon will add in. What you have seen and will continue to see from us is that our move-in rates narrowed year-over-year as we moved through the fourth quarter. This is because, two years ago, when we were internalizing the PROs, we significantly adjusted our street rates in the fourth quarter of 2024, keeping them elevated beyond the competitive range likely until April or May of 2025. Therefore, our year-over-year comparisons for the first five to six months of this year are more challenging due to the move-in rents. However, we are obtaining the rental volume we desire and are effectively positioned price-wise in the markets. You will likely notice us going negative on move-in rates during the first four to five months of the year, followed by a return to a more neutral to positive position starting in June or July. We are indeed experiencing significant rental volume. I want to emphasize that we are not undercutting the market; we have just adjusted our competitive stance to focus on customer count and achieve a better revenue outcome. I apologize; I seem to have lost track of the second part of your question.

Juan Sanabria, Analyst

ECRIs and how that's changed the quantum or cadence.

David Cramer, CEO

Yes. Thanks, Juan. Sorry about that. The cadence hasn't changed. So we're still hitting the ECRIs around the same timing that we have been hitting them. I do know our magnitude of rate increases has increased on a year-over-year basis. All of the testing and the things that we're doing and our confidence in the ability to attract new customers and drive additional rental volumes is allowing us to be more assertive on the rate increases through all of the steps, whether it be first, second, third, fourth across the board. And so that's also helpful as we look at our revenue projections this year.

Juan Sanabria, Analyst

Great. And then I was just hoping you could comment on when you're leasing units if the size or the number of square feet that is being taken up has changed. I know at one point, I think it was last year that has gone down for a bit. But curious on kind of the latest thoughts around how many square feet people are actually leasing today and how that's trending.

David Cramer, CEO

Yes, that's a good question. This time last year, we were experiencing a decrease of about 5 to 6 square feet per rental. However, we have since recovered, and most of our rentals are now back to the same size or slightly larger. This improvement is helping to stabilize occupancy and attract customers for the units we have available. We're optimistic about the progress we've made, which began to change in September of last year and has held steady through February.

Operator, Operator

Our next question is from Todd Thomas with KeyBanc Capital Markets.

Todd Thomas, Analyst

I appreciate the detail on January and some February data with regards to occupancy and move-in rents. It seems you've recovered a lot of ground. You described '25 as sort of a tale of 2 halves, first half being a little weaker, followed by an improvement in trends in the second half. Is 2026 from sort of a revenue growth standpoint also expected to be sort of a tale of 2 halves? Or do you think you can continue to recover in the back half of the year when some of your comps begin to normalize?

Brandon Togashi, CFO

Yes, Todd, this is Brandon. I do think that we'll have the benefit of some easier comps in the first half of the year and partway through the third quarter as well. The fourth quarter will be the tougher comp. We see the year-over-year same-store revenue growth steadily increasing as we go throughout the year until maybe we plateau a little bit because of what you touched on, it does get a little bit tougher of a comp starting in the back half of the third quarter and then really for the entirety of the fourth quarter.

Todd Thomas, Analyst

Okay. And then Brandon, Dave, too, I think you both touched on reducing leverage as a priority. And I just wanted to ask whether the guidance includes any sort of deleveraging initiatives really primarily, I guess, outside of organic EBITDA growth? And do you have a leverage target for year-end '26?

Brandon Togashi, CFO

Yes. So our 5.5 to 6.5x range remains kind of the long-term target for us just outside the top end of that at the end of 2025. Based on the midpoint of the same-store NOI guide, Todd, as you know, flat on that metric and FFO being relatively flat, it's really calling for leverage to stay fairly neutral, a little bit of seasonality depending on which quarter you go through, because the metric is calculated on an annualization of the given quarter, as you know. But outside of that, I would say by the end of '26, it's going to be fairly similar to the end of '25. Capital deployment will affect that. You saw the guide on acquisitions and dispositions at the midpoint of each, we're saying that, that would be neutral. Obviously, changes month by month based on the deals that we're seeing, the success we're having on some of the disposition initiatives, any of the particular deals in front of us that we're underwriting for acquisition largely through the joint ventures, as we said earlier. So the timing and the success on those fronts could drive it and move it a little bit. But generally, at the midpoint, you're seeing it stay pretty constant.

Operator, Operator

Our next question is from Salil Mehta with Green Street Advisors.

Salil Mehta, Analyst

Just a quick one here to start off. Sorry if I missed this before. I know you guys mentioned January and February occupancy, but did you guys provide any color on where move-in rates are thus far in 1Q?

David Cramer, CEO

Yes. Thanks for joining, it's Dave. We discussed that our move-in rates will likely be negative for the first four to five months of the year due to a more challenging comparison from 2025 and our market positioning. We aim to maximize our funnel flow, conversions, and customer count to reach our revenue target. Therefore, you can expect negative move-in rates until around June, after which we anticipate a shift back to a more neutral or positive rate for the latter half of the year.

Salil Mehta, Analyst

Thanks for that insight. And given the roughly, I guess, 1% move-in rate growth and overall rental rate growth in the quarter, how are you guys balancing the trade-off between occupancy and rate growth going forward? Is one going to be a bigger priority than the other? You guys kind of mentioned that you guys aren't chasing occupancy. Does that mean that you guys are happy with where occupancy levels are at currently?

David Cramer, CEO

Yes, I believe you're addressing an important point. It's about finding the right balance between marketing spending and the use of pricing and discounts to improve conversion rates, which ultimately drives occupancy and revenue. We feel we're at a stage where we can effectively leverage these strategies to boost customer numbers, increasing our occupancy. Starting the year on a positive trajectory year-over-year, we believe we can continue enhancing our occupancy, which will generate additional revenue for us. Looking ahead, we expect that by the end of 2026, our occupancy will be higher than it was in 2025.

Operator, Operator

Our next question is from Michael Griffin with Evercore ISI.

Michael Griffin, Analyst

Dave, I'm curious if you can touch a little bit on sort of organic customer demand. Obviously, I think it's a positive seeing the same-store revenue growth inflect into next year, but it feels like that's more an enhancement of marketing initiatives and capturing more of the top-of-funnel demand as opposed to the pie maybe expanding a bit. So can you talk a little bit about organic customer trends? How are new customers versus renewals? And really is the inflection driven by, I guess, capturing more of the pie of customers out there rather than expectations for more customers to come back to the market?

David Cramer, CEO

Yes. Good question. Thanks for being here. I would agree with your premise. And I think we're approaching 2026 with a mind frame that the competitive environment will be very similar to what we face in 2025. Nationally, we know that new deliveries are coming down. But that number takes a while to be absorbed. And so I think as you think about our stores that are facing competitors in a 3- and 5-mile ring, we don't see a material change in the number of stores facing that competitor set in 2026. So we're going to be very focused on just executing and trying to take more of the pie. And certainly, every month, you go deeper into absorbing new supply, it helps, but we did not, in our guidance at our midpoint, really model in any catalysts or anything that's really materially different in the way we're thinking about how the competition is going to look for 2026.

Michael Griffin, Analyst

That's certainly some helpful context. And then maybe just on the external growth opportunities. It seems that particularly the acquisitions component of that might be more in kind of the JV structures that you've laid out. But can you give us a sense of what kind of product type you're targeting with those whether it's going in cap rates, your yield requirements? Just maybe give us a sense of kind of external growth priorities and the investment pipeline for the year ahead.

David Cramer, CEO

Yes, that's a great question. We're focusing on markets where we can expand our portfolio, achieve better synergies, and improve operational efficiencies. This has been part of our portfolio optimization program for the past couple of years. We're particularly interested in markets where we anticipate good efficiencies and successful property acquisitions. We're currently less interested in markets that are struggling and prefer to wait until those areas improve before investing. However, we have several markets where we've seen success and positive momentum, and we are actively pursuing acquisitions there. Our preferred method of financing right now is through joint ventures and the new preferred equity structure, which we will continue to utilize this year. We also may make purchases on our balance sheet if necessary, mainly to meet 1031 exchange requirements as opportunities arise from our property sales. While we are ready and willing to invest, we are being very cautious with our spending right now, as it's crucial to be smart and diligent with our investment decisions.

Operator, Operator

Our next question is from Ravi Vaidya with Mizuho Securities.

Ravi Vaidya, Analyst

I wanted to ask about the rent per occupied square foot. You've seen strong improvement there on both a year-over-year basis and a quarter-on-quarter basis. How do you see this metric trending in the first quarter of 2026 and throughout the rest of 2026? Do you think it will remain stable, accelerate, or decelerate?

David Cramer, CEO

Good question. Thanks for joining. We approach 2026 with continued improvement in the achieved rate. It becomes more challenging when you have bigger roll-downs like we're facing today. So our rent roll-downs are in the low to mid-30s at this point. And so the strength of our ECRI program and the improvements we've made around how we implement the ECRI program will help offset that rent roll down. But we did throughout the year, show modest improvement in the achieved rate as we went through the year.

Ravi Vaidya, Analyst

And I wanted to ask another question about the guide. I know that you mentioned that we don't have any housing-related catalysts or any other demand catalyst for achieving the same-store revenue guide. But what are some of the potential levers of maybe upside or elements of conservatism that might be baked in given that the broader operating environment remains a bit choppy.

David Cramer, CEO

Yes. Good question. I'll start and then Brandon, if you want to jump in. Certainly, things that can move the guide around. And one of the primary things is asking rents. If we see good improvement in asking rents, and we see a good spring leasing season. And that's the hard part about sitting here today, it's February. And if we were sitting here in May, I think we'd have a lot more light on how active the spring leasing season was. If we have good rate, we're able to drive the street rate asking rents up as historically this industry does. And so that's the one thing that we don't know, and that could push the guide up or it may push you to the low end if street rates don't cooperate and you get more volatile competitive environment as far as the revenue side of the house goes. And that would affect occupancy and it would affect, obviously, what you're driving home for the achieved rate if you're any movement on that street rate. Anything else?

Brandon Togashi, CFO

Ravi, I mean, one thing I might add is just that's outside of our control, obviously, is just the regulatory environment and any state of emergency declarations due to severe weather or other events, our portfolio is not currently subject to significant restrictions there. But obviously, that could play a factor. There's always some elements of that in the portfolio as you go throughout the year. In the state of Oklahoma, we had some restrictions in 2025 that impacted our OKC and fulsome markets. So that's just one variable. But we try to, as much as you can, incorporate some element of that as we think about kind of the normal course revenue management program.

Operator, Operator

Our next question is from Ronald Kamdem with Morgan Stanley.

Ronald Kamdem, Analyst

Can you provide some context on your dividend payout ratio for this year? Also, when do you anticipate it will return to even, around 2027 or 2028, as this inflection plays out?

David Cramer, CEO

Thanks for the question. Yes, the guidance indicates that we won't be able to cover the dividend this year, and we'll be short on the total payout. We are at a turning point where fundamentals are improving, and our organic growth is becoming positive. There are various factors, including investment activities, that can affect our funds from operations. We stopped covering the dividend in the third and fourth quarters of last year. We have constructive discussions with our Board, which is very attuned to the company's outlook. As we approach the end of the year, we likely will cover 100% of the dividend in the latter half, particularly the fourth quarter, and if fundamentals continue to improve, we'll be in a stronger position going into 2027. We are mindful of the payout ratio and are committed to reducing it.

Ronald Kamdem, Analyst

Great. That's helpful. My second question is regarding the release that mentioned all but one market experienced sequential improvement, which I found interesting. Could you elaborate on the performance of heavy supply markets compared to lower supply markets and what your expectations are regarding the strength of this inflection?

David Cramer, CEO

Yes. Good question. I'll start and if Brandon wants to come in here. But you're touching on it. The markets where we are still facing a tremendous amount of competition that needs to be absorbed are the ones that are really not inflecting positive are going to take time. And really, it's just time. And in some markets like Phoenix, they need to stop building because they're still building in Phoenix. And so you make 2 steps forward and then you have to take 3 steps back as somebody adds some more product to the market. The markets that don't have that, and I mentioned a couple of them earlier, Colorado Springs, Wichita, Portland, we're seeing nice solid sequential growth in rate and occupancies have been steady, and we're seeing some pricing power in those markets, and we're having good success. And so fortunately, we do have a diversified portfolio. We have a lot of our markets that are going in the right direction. And so that makes us feel very good as we think we've hit that positive inflection point. And even a market like Atlanta, which is improving, it's still very much negative, but we are seeing some consistency and some stability in some of these markets, which is encouraging to us.

Operator, Operator

Our next question is from Eric Wolfe with Citigroup.

Eric Wolfe, Analyst

You mentioned the positive trends on occupancy year-to-date. I was just wondering if it was possible for you to update us on where RevPath has been trending. Just to understand how average realized rents have been moving through the early part of the year, especially given your comment around seeing more success on ECRIs.

David Cramer, CEO

Thanks for joining and that's a good question. RevPath is following similar trends. We are seeing improvement in RevPath that aligns with solid ECRI gains and the recent stabilization and slight improvement in occupancy. Yes, RevPath is growing.

Eric Wolfe, Analyst

And it looks like your other property-related income or revenue was a 40 bps drag on your same-store revenue growth this quarter. Can you just talk about what's embedded in your guidance for that line item and where you see it trending throughout 2026?

Brandon Togashi, CFO

Yes, Eric, it's Brandon. That line item will continue to be a bit of a burden. It includes the tenant insurance dollars that are retained at the store. We've consistently reported some amount of tenant insurance dollars within the store level NOI since the PRO structure, so that has remained unchanged. As we discuss the various topics that Dave has mentioned, at the time of rental upsell and tenant insurance, we have made adjustments over the past couple of quarters to prioritize securing that rental. This change has created some drag on that line item. We expect that to continue in 2026, although it should become easier to manage as we reach the middle of the year.

Operator, Operator

Our next question is from Omotayo Okusanya with Deutsche Bank.

Omotayo Okusanya, Analyst

First question I had was, again, while guidance does not really contemplate any real change in the housing market. Just curious how you guys are thinking about, again, some of these affordability initiatives that President Trump is trying to make happen. I mean just kind of take a look at all of that. I mean, do you kind of feel like the housing market could get better, so this could potentially be a positive catalyst? Or do you kind of look at it and kind of say it's more you'll see a whole bunch of refinancing activity because mortgage rates are now down at 6%, but it's still not low enough to really stimulate housing demand?

David Cramer, CEO

Yes, this is Dave. Thank you for the question. It's a tough one. We are encouraged that people are discussing it and trying to find solutions for progress. We didn't consider 2026 in relation to any cracker catalyst in that aspect. Our outlook for '26 would likely stay the same. Any improvement would be greatly appreciated. We would be positioned for a significant impact if they manage to crack any of that and open up the resale market. However, we are observing the same data as you. There are many listings and activity happening, but we have not seen any notable improvements yet. Yes, it's a 2-year program that we set up to deploy capital within that timeframe. We are working diligently and currently have 3 properties under contract worth just over $50 million. We're pleased to have those properties secured and are eager to finalize additional deals as quickly as possible if the right opportunities arise. However, it’s challenging to predict the timing of these transactions as they can be unpredictable. Nonetheless, we are excited to be making progress and are actively exploring many properties with numerous opportunities available.

Operator, Operator

Our next question is from Wes Golladay with Baird.

Wesley Golladay, Analyst

I just have a quick question on the portfolio optimization. When you get through this year's dispositions, will you be largely done with the program?

David Cramer, CEO

Wes, it's Dave. Yes, I think so. We've done the majority of the heavy lifting and the larger work. This year, we'll wrap up a lot of that. And then after that, it will just be as things materialize and stuff. But yes, most of the heavy lifting is done.

Operator, Operator

Our next question is from Annabelle Ayer with Barclays.

Annabelle Ayer, Analyst

Can you remind us of your strategy for payroll and how you think about the trade-off between like lowering payroll costs versus potentially losing sales?

David Cramer, CEO

Yes. Annabelle, thanks for joining. We've been working for a number of years on how to model payroll. And I can tell you with the data we have today and much better tools that we have today, we certainly want to meet the customer when they want to meet us and how they want to shop with us. And so there's no singular answer to perfect staffing levels. We have markets where we have to have more staffing with more hours and markets where it's less. But what I do know is we have a much better line of sight. What we've been working on is hours of operation. And that would be, can we be open later? Can we be closed earlier? Do we need to be open 8 hours, 10 hours, 12 hours a day? Do we need to be open 6 hours a day? We've certainly put a lot of emphasis around our customer care center and our call center teams are doing amazing things, plus we've implemented AI there. So we have a lot of automation built in there where we do not have to be around. We've put obviously the bar codes on the window. We have an app stood up. But for us, it's pretty fluid in markets and pretty fluid in stores, but we have seen payroll savings. And we do think there are more additional payroll savings for us as we go forward. But we will not try to do that at the expense of the customer. But I do believe, clearly, the customer expectation and when they want us around and how they want us has changed. There's definitely that digital transformation is real, and it allows us to just be a little more flexible when we're at the store.

Annabelle Ayer, Analyst

And then one more. You guys have invested a lot in your website and platform over the last year or two. How much more of a benefit do you see coming from improved search rankings and higher conversion rates?

David Cramer, CEO

Another good question. We've certainly put a lot of effort into this area and have seen significant success. Our visibility and outranking scores reflect the increase in rental volumes. When we mention rental volumes rising by 20% to 30%, it indicates that all of these elements are coming together effectively. We are extremely satisfied with the results. However, there is always room for improvement, and we continuously seek out new opportunities. Our teams are diligently working on modeling and evolving our AI strategies. Additionally, we are making substantial progress in our collaboration with Google and in refining our search approach, as well as enhancing our paid search and overall effectiveness across all available channels. I am very pleased with our advancements, but there is still more to be done.

Operator, Operator

Our final question is from Michael Goldsmith with UBS.

Michael Goldsmith, Analyst

Back for a couple of follow-ups. First, I think you mentioned some restrictions in Oklahoma, like including Tulsa. Can you kind of clarify what you're referring to there?

David Cramer, CEO

Yes. I'll jump in a little bit, Michael. What we had last year is they had high wind and fire, major restrictions around counties because it was so dry. And so what we faced for a number of months was a restriction on how much we could increase rates at a certain particular time. And so we set a little calmer on Oklahoma through probably 5 or 6 months of that year. And then we had a pretty good lift in January around working back through the portfolio in Oklahoma and catching folks back up to where we wanted them to be. Like Brandon said, a lot of these state of emergencies, they're generally pretty short in nature, and they're not as widespread. I mean it will be by county or by city sometimes. And that one just happened to be a wildfire one that hung on because they had such dry conditions for such a long period of time.

Brandon Togashi, CFO

The $375 million due this year consists of $275 million from the term loan and $100 million from the private placement notes. The blended rate on this amount is approximately 4.25%. If we pursue a refinancing of the entire sum through the term loan market, depending on whether we opt for some floating rates or fix all of it for the term, we would likely see rates in the mid to high 4s. This would create a partial year impact in 2026, contributing to the interest expense headwind I mentioned earlier. This is our primary plan. We also have the option of the private placement market or the secured market, and we are confident in our ability to manage these maturities, which will be our finance team’s main focus. Additionally, one of our joint ventures has around $360 million of debt maturing in October. The current plan is to refinance that, and it carries an in-place interest rate of 3.5%. There will be a rate reset at the joint venture level, and we will receive our 25% share of that. This is all factored into our guidance.

Operator, Operator

There are no further questions at this time. I would like to turn the call back over to Mr. Hoglund for closing comments.

George Hoglund, Vice President of Investor Relations

Thank you all for joining us today, and we appreciate your continued interest in NSA. And we look forward to seeing many of you investors next week at the conference in Florida. Thank you.

Operator, Operator

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.