Good afternoon, ladies and gentlemen, and welcome to Extra Space Storage third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touch tone telephone. As a reminder, this conference call may be recorded. I would now like to turn the conference over to your host, Mr. Jeff Norman, Senior Vice President of Capital Markets. Sir, the floor is yours. Thank you, Joanna. Welcome to Extra Space Storage's third quarter 2021 earnings call. In addition to our press release, we have furnished unaudited supplemental financial information on our website. Please remember that management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in the company's latest filings with the SEC, which we encourage our listeners to review. Forward-looking statements represent management's estimates as of today, October 28th, 2021. The company assumes no obligation to revise or update any forward-looking statements because of changing market conditions or other circumstances after the date of this conference call. I would now like to turn the call over to Joe Margolis, Chief Executive Officer. Thanks, Jeff, and thank you, everyone, for joining today's call. Well, we had an exciting quarter. I'm not sure how else to describe it. Among other accomplishments, we celebrated the addition of store number 2,000 to our portfolio. We were recognized by Inside Self-Storage as the best third-party management company in the industry, and we achieved some of the strongest operating results in our company's history. Same-store occupancy once again reached a new all-time high during the quarter at over 97%, with vacates continuing at lower than historic levels. Our strong occupancy resulted in exceptional pricing power. Achieved rates to new customers in the quarter were 43% higher than 2020 levels and 41% greater than 2019 levels. In addition to the benefit from new customer rates, we have continued to bring existing customers closer to current street rates as state of emergency rate restrictions continue to be lifted throughout the country. Other income improved significantly year-over-year, primarily due to increased late fees, contributing 30 basis points to revenue growth in the quarter. We had modestly higher discounts due to higher street rates, but their impact was offset by lower bad debt. These drivers produced same-store revenue growth of 18.4%, a 480 basis point acceleration from Q2, and same-store NOI growth of 27.8%, an acceleration of 760 basis points. In addition, our external growth initiatives produced steady returns outside of the same-store pool, resulting in FFO growth of 41.2%. Turning to external growth. The acquisition market remains very active but expensive in our view. Our investment team has never been busier, and we have found the most success acquiring lease-up properties and/or acquiring stores with a joint venture partner. While most of our transactions have been in relatively small bites, the total is adding up, allowing us to increase our investment guidance to $700 million for the year. Also, our approach has resulted in better-than-market average yields. We are much more focused on FFO per share accretion than total acquisition volume, and we plan to continue to be selective in the current environment. We continue to look at all material transactions in the market, and we have plenty of capital to invest when we find opportunities that create long-term value for our shareholders. We had an incredibly strong quarter on the third-party management front, adding 96 stores. Our growth was partially offset by dispositions where owners sold their properties. It is worth mentioning that oftentimes we are the buyer of these properties, and they are simply moving from one ownership category to another. In the quarter, we purchased 11 of our managed stores in the REIT or in a joint venture for a total of 30 stores purchased from our third-party platform through September. Fundamentals have remained even stronger than our already positive outlook, allowing us to raise our annual FFO guidance by $0.28 at the midpoint. While we still assume a seasonal occupancy moderation, it has been less than our initial estimate of 300 basis points from this summer's peak. Our revised guidance now assumes a 200 basis points moderation, which would result in 2021 year-end occupancy generally similar to that of 2020. We expect continued strong growth in the fourth quarter to cap off what has been an incredible year for Extra Space Storage. I would now like to turn the time over to Scott. Thanks, Joe, and hello, everyone. As Joe mentioned, we had an excellent quarter with accelerating same-store revenue growth, driven by all-time high occupancy and strong rental rate growth to new and existing customers. Core FFO for the quarter was $1.85 per share, a year-over-year increase of 41.2%. Property performance was the primary driver of the beat, with additional contribution from growth in tenant insurance income and management fees. As a result of our strong FFO growth, our board of directors raised our third quarter dividend an additional 25% after already raising it 11% earlier this year, a total increase of 38.9% over the third quarter 2020 dividend. We delivered a reduction in same-store expenses in the quarter, including a 3% savings in payroll, 42% savings in marketing, and a 4% decrease in property taxes due to some successful appeals. Despite the payroll savings we've enjoyed this year, like most companies, we have felt material wage pressure across all markets, including our corporate office. Some of the payroll reduction has been the result of higher turnover and longer time required to fill vacant positions. We will experience continued payroll pressure in 2022, as we have raised wages to retain and recruit the best team in the storage industry. This will also impact our G&A expense. In the second quarter, we completed our inaugural investment-grade public bond offering, and we completed a successful second offering in the third quarter, issuing another $600 million 10-year bond at a rate of 2.35%. We also refiled our ATM in the quarter, and we have $800 million in availability. Our access to capital has never been stronger, and between net operating income and disposition proceeds, our leverage continues to be reduced. Our quarter-end net debt to EBITDA was 4.5 times, giving us significant dry powder for investment opportunities while maintaining our credit ratings. Last night, we revised our 2021 guidance and annual assumptions. We raised our same-store revenue range to 12.5%-13.5%. Same-store expense growth was reduced to -1% to 0%, resulting in same-store NOI growth range of 18%-19.5%. These improvements in our same-store expectations are due to better than expected rates, higher occupancy, and lower payroll and marketing expense. We raised our full-year core FFO range to $6.75-$6.85 per share. Due to stronger lease-up performance, we dropped our anticipated dilution from value add acquisitions and C of O stores from $0.12 to $0.11, even after adding a number of additional lease-up properties to our acquisition pipeline. We're excited by our strong performance year-to-date and the success of our team driving our growth strategies across our highly diversified portfolio. As we often say, it's a great time to be in storage. With that, let's turn it over to Joanna to start our Q&A. Thank you. Ladies and gentlemen, once again, if you would like to ask a question, you may press star then the number one on your touch tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Your first question is from Juan Sanabria of BMO Capital Markets. Your line is open. Hi, good morning. Given the strength that you've had year to date and exceeding expectations, just curious if you could speak to the earnings as we start to think about 2022, if you assume kinda occupancy holds steady versus what you've achieved year to date, or and/or how you guys think about that. It's always important to remember, and, you know, we've talked about this before, that occupancy is just one metric. If occupancy does better than what we've assumed for our guidance, I assume we'd also have good rate pressure or rate power, and we would be set up to have a strong 2022. Is there any way to estimate, given the results you've had to date and how much of the portfolio has had the rate increases and given average length of stay, what's kinda locked in to start the year next year, given the results to date? I mean, we'll certainly make all of those estimates and come up with guidance for 2022 and talk about that early in the first quarter next year. Okay. Just a more strategic big picture question. You guys talked about the acquisitions environment being very heady at this point and prefer to do kind of singles and doubles and working with joint venture partners. Given the scale, you're now 2,000 stores, any interest in pursuing development on balance sheet and building out the capabilities in-house? So yes to the first part of that question. We're not adverse to pursuing development on balance sheet. We have a very small number of developments underway or that we're committed to. We believe for us. I know other companies execute it a different way, which, you know, makes sense for them. The best way for us to do development is with joint venture partners, where we can be, the partner with the best local or regional developer who brings their particular local skills and something that we don't have across the country. The other advantage that gives us is through structure, we can allocate the specific risks of development, entitlement risk, cost risk, delay risk, completion risk, you know, fairly between the development partner and ours, so we don't take all of those risks when those are frankly more in the development partner's control. We believe development's a great way to make money in any real estate business. We believe if it's structured right, you can control the risk, and we believe it's very important to make sure you're in the right time in the market cycle to be heavy in the development business. Thanks, Joe. Thank you. Your next question is from Michael Goldsmith of UBS. Your line is open. Michael, if you are on mute, please unmute. Your line is open. Good morning. Good afternoon. Thanks a lot for taking my question. Same-store revenue growth for the year is now expected to be 12.5%-13.5%. That implies something in the fourth quarter that's above what you saw in the first half of the year, but maybe slower than the third quarter. The comparison from last year in the fourth quarter is maybe 400 basis points more difficult. How much of the implied slowdown in same-store revenue growth is a reflection of starting to lap more difficult comparisons compared to, you know, underlying trends? How much of an impact should this, you know, more difficult comparison have going forward? Yeah. You hit it right on the head in that the fourth quarter is a much more difficult comp. If you look at where we were looking back to 2020, I mean, second quarter, we had negative rates. Third quarter, we moved to low to mid-single digit, you know, achieved rate growth. In the third quarter, we had close to double-digit rate growth. In the fourth quarter, we really started moving rates significantly. Much more difficult comp in the fourth quarter. In addition, some of the occupancy goes away. The occupancy benefit, we're expecting occupancy at the end of the year to be flat, but to still have a positive occupancy benefit, but not as strong as what we had in the second and third quarter. Most of it is from rate and the comp. Got it. How much of your portfolio now is up near these kind of new market rates? Said another way, like, how much upside is left from passing along ECRIs when marking your existing customer portfolio up to these market rates? Okay. I think we've made up most of the room. There's still, you know, some states where we're limited, and as rates go up, you know, the gap continues. I would say most of it's in the rearview mirror. Got it. If we could just touch on costs for a second. The costs were well contained in the quarter. Same-store expenses were down 4%, though the decline was driven primarily by lower marketing. Like, as we look forward, you know, are there any expense items that could pressure the business? You mentioned payroll. Insurance was up big. Can you kinda walk through kind of where you see expense pressure and kind of to the extent that you can talk about the magnitude of that would be extremely helpful. Let me maybe start with property taxes. I mean, we had a negative quarterly comp, and that's not gonna continue. Property taxes we would expect to grow in the 5%-6% range as we continue to see pressure. I think that's partly with lower cap rates, higher valuations. We would expect municipalities to continue to assess. We would expect that to continue into next year. We obviously are not ready to give guidance on property taxes, but that will continue. The second one I would point to is marketing. You know, we wouldn't expect it to be down 40% again this year. You know, we would expect next year to maybe be a little bit more normal, and it's a lever we will use as we see opportunities to grow our revenues by using marketing. The third one I would point to, just because of the size of the expense, is payroll. This year we've had a negative payroll comp, and it's been, you know, by us being proactive partly. We've done things to decrease hours to optimize our payroll. We've also had some, what I would call a negative benefit. What I mean by that is we've seen our payroll go down because we've had higher turnover, and we've had longer time to fill. Not necessarily a good thing. We've had lower payroll as a result of that. We continue to see pressure on wages, so that's at the stores, that's in our corporate office, and we would expect that to be. We would expect that to continue into next year. I think every company in America is experiencing that. The other thing I would point to on the expense side is, it's a good thing to be in storage. What I mean by that is we're in a high-margin business. Payroll, for instance, even if we see significant payroll pressure, you're still sub 6% as a percentage of revenues. If you're in an inflationary market, we do have the ability to push our rates as they're month-to-month leases. Very helpful. Thank you very much. Thanks, Michael. Your next question is from Todd Thomas of KeyBanc Capital. Your line is open. Hi, thanks. Just first question, following up on rates, you know, in place versus street. Joe, you said your efforts in the quarter on rate increases helped bring in place customer rents closer to street. What's the spread look like today? And can you remind us what that spread between in place and street rates looked like, you know, sort of back in 2019, maybe before the pandemic or maybe on average over, you know, sort of the ten-year period, perhaps heading into the pandemic? Sure. It's seasonal, as you know, and our spread is the highest in the summer. I think it was in the high teens when we had our last call. It's closer to flat to slightly + 1% now. If you looked historically, we would be negative now. Okay. Right. You've historically increased in-place customer rents above street rates. Where did that sort of peak in the prior cycle? Todd, would you just repeat that please? You're saying historically. You've increased in-place customer rent above street historically, right? Which resulted in the negative spread that you've historically had. What was that spread like in, you know, where did that spread peak in the prior cycle? I guess I'm trying to understand, you know, how much room you might have on the in-place customer rent increase program to take contractual rents higher, even if asking rents are sort of flattish from here on a seasonally adjusted basis. Yeah. I think the other factor you may not be thinking of is street rates can go down. It's not only increasing existing customers that causes the gap. It's, you know, street rates are the highest in the summer, and they have a seasonal decline, and that causes some of the gap. Scott, do you know off the top of your head the percentage that he's looking for in prior years? I don't know that it's a number we've ever given, Todd. You know, we've always referred to in place versus street. We've talked about how they're, you know, they go in a cycle where you peak in the summer in terms of that gap. It's typically high single digits in the summer, that gap, and then it goes maybe high single digits in the winter. You peak in July, you bottom out in February. This year, we peaked 19%. As Joe mentioned, we're typically starting to go negative now. Our street rates are as strong as they've ever been. Just with regards to the in-place customer rent increases that you're passing through, can you talk about the magnitude or rate growth that you're pushing through to customers and whether you've changed the frequency of those rent increases that eligible customers are receiving? You know, I think it historically has been sort of month five and then maybe every nine months thereafter or something to that extent. Is that still the schedule or has that changed at all? Yeah. We're in very unusual times, right? We had significantly discounted rates, you know, during the height of COVID and brought in people at some really low rates. We had government restrictions that prevented us from moving those folks to where we thought they should be. The third factor is we had, you know, really impressive street rate growth. That caused us to have some customers that had very, very large gaps between where they were and what street rate was. We've been trying to move those customers more towards street rate. As I said in the earlier question, we've done a lot of that. Most of that is in the rearview mirror. That's kind of led us to have, you know, experience and numbers that are very different than our historical practice because we're not in normal times. Okay. All right. Thank you. Thanks, Todd. Good talking to you, Todd. Thank you. Your next question is from Caitlin Burrows of Goldman Sachs. Your line is open. Hi. Good morning, team. I guess first with rent per square foot continuing to rise, how price sensitive are you finding customers? And do you have an idea what portion of move-outs today are due to price and how that compares versus history? Just wondering if it's gone up at all as rates have also increased. Yeah. Very modestly. We track move-outs of customers who did and did not receive rate increase notices. As you could tell by our occupancy, the customers are not very price sensitive, and those who are, we're able to backfill very quickly. Got it. Okay. On the cash flow growth side, it's obviously been very strong, which has reduced your leverage. You guys mentioned earlier that it's now 4.5x. What's your view on being able to kind of redeploy capital in an attractive way, of course, to get leverage above 5x? Is that something that you want to do? Yeah, I would love to be able to invest more and increase our leverage back towards our targeted rate or targeted range, but not at the expense of doing deals that we don't think are good long-term deals for our investors. We're gonna remain disciplined. We look at everything out there. Our investment teams, as I said, are really busy. We have a lot of exciting things we're playing with. We're not gonna invest just to get our leverage up. We're only gonna invest when we think the risk reward is attractive to us. Okay. I guess that's a good position to be in. Thanks. Thank you. Your next question is from Smedes Rose of Citi. Your line is open. Hi. Thanks. I just wanted to ask you a little bit about the acquisition volumes, and obviously they've come up a lot from what your expectations were coming into the year, and we've seen that across the industry in general. I mean, besides favorable pricing for sellers, you know, what do you think are a few things that are kind of driving more folks to come to market? Is there any sort of theme that you're seeing when you talk to the sellers? Well, clearly, the first and most important is what you mentioned is very favorable pricing, very low cap rates. That brings people out of the woodwork who want to sell. I think there's also some concern that the tax regime is gonna change, and that, you know, maybe it's better to pay your taxes now than in the future. Okay. Just those, I mean. Okay, nothing else in particular. I was just wondering if you felt like independents are losing their, you know, the competitive advantages of these larger portfolios as they get bigger and bigger is maybe impacting them. You think it's probably more sort of tax and pricing that's driving that. I do, Smedes. Okay. I wanted to ask you as well, just in terms of, you know, given that fundamentals are so strong, you know, has it changed at all the sort of level of inbound inquiries into bringing you on as a third-party manager? I mean, are other folks that are not part of these larger systems doing sort of similarly as well and are maybe not as inclined to come to you for management? Or, you know, is there any changes there, I guess? Yeah. I mean, Smedes, you hit it right on the head. You know, if you look at the consolidation in the industry, you know, four or five years ago versus now, it's up almost 50% maybe from the low 20s% to the low 30s% of stores in the country are owned or managed by the big public companies. We've seen that significantly. I mean, we brought on, you know, 96 stores in our third-party management platform in the third quarter, 196 through the year. There's been a lot of sales, of which we bought a bunch, but we're still over 100 net growth in our third-party management platform. That's a mix of, you know, the single one-off owner who wants professional management or our more, you know, quasi-institutional partners who, you know, we have good relations with and keep growing their portfolio. It's the growth in that business across all types of owners has been really, really strong, and I expect it to continue to be so. Okay. Just final question from us. You mentioned your guidance underwrites about 200 basis points of occupancy declines through the fall, I think, or the winter. Have you started to see that moderation in October so far to date? Today we're sitting at 96.7% occupancy. We've had pretty modest vacates or decline in occupancy since June 30th, but or September 30th. That's where we are today. Okay. Thank you, guys. Your next question is from Samir Khanal of Evercore. Your line is open. Hi. Good afternoon. When I look at your occupancy for some of the major gateway markets, it has not been impacted at the end of September with sort of the return to work factor in place. I'm just wondering how you're thinking about that dynamic of return to office and the impact it can have in your portfolio in some of the major markets, whether it's New York or Boston or even kind of the L.A. area, maybe in 4Q and into next year. I think it's a little early to really call that. I mean, the first thing I think it's important for everyone to remember is all our markets are doing phenomenally well. If you look at our bottom five markets for revenue growth, they're all above 13%. There's no market that's really struggling. Our bottom markets do include New York and Boston and L.A. and San Francisco. There's a lot of variables, I think, between the stronger markets and the weaker markets. A couple things that we think are consistent is, you know, markets that had state of emergencies in place longer and are just coming out are performing less well than other markets. Okay. Then I guess my second question is, I guess, Joe, you know, given where you are from an occupancy standpoint, I mean, you know, at sort of that 96%-97%, how are you thinking about your strategy in terms of pricing, let's say, going into the next six months, right? Or how are you managing the business differently given the level of occupancy today versus sort of, you know, pre-COVID here? Yeah. We don't really look six months out. Our models are pricing, you know, units in stores every day, and we'll react on a daily basis to not only what's going on, but what is projected to go on. Clearly, in an environment where we're 96.7%, we're gonna reduce marketing expenses. We're going to keep the gas pressed on rates. Okay, thanks. Sure. Your next question is from Ki Bin Kim of Truist. Your line is open. Thanks. Congrats on a great quarter. When you look at where your rates are versus your micro sub-markets versus your competitors, where are you today versus your competitors? Has that changed a whole lot over the past year or so? I think everybody has higher rates today. You know, we're on the higher end. When we look at them compared to 2019, as Joe mentioned, you know, our rates are, you know, up 40%. Our achieved rates in the third quarter were 40% above where they were in 2019. You know, I think everybody's pushing rates. You know, we are pushing rates as our occupancy stays strong and as demand stays strong. Got it. Going back to the topic about sub-market performance. I know you mentioned, you know, some locations that had the kind of governmental orders that restrict the rent growth, having a different impact on these markets. How much of the performance difference between sub-markets is being driven by simply kind of population migration? Do those markets that saw an influx in population, do they just have a longer tail than the New Yorks or San Franciscos? Yeah, it's really hard for us to divide performance to disaggregate performance between population movement and stay-at-home orders and effective new supply. It's really hard to figure out how much each of those variables and many other variables contribute to the performance of different markets. Okay, got it. If I could squeeze in a quick third one. What you're talking about the payroll increases that we should expect, going forward. Like, what kind of magnitude were you thinking? I would say greater than inflation. Okay, thank you. I don't wanna give you a specific number 'cause that's the raise Scott will then ask for. I would ask less then. Thanks, Ki Bin. Your next question is from Elvis Rodriguez of Bank of America. Your line is open. Hi, and thank you for taking the questions. Congratulations on the quarter. What's your update on the supply outlook in your markets, through 2022 now that we're an extra quarter from your last update? Our projections for 2021 from our last update is actually slightly higher. I think the last quarter we said three-year rolling 2019-2021 was about 70% of our same-store pool is gonna be affected or our stores. That's up to about 73%, so a little bit of an increase. 2022, we see a larger decline. Three-year roll in 2021 and 2022, we think about 64.5% of our stores are gonna be affected. We'll continue to gather that data and get better, but we do see moderation in 2022. My concern is given the great performance of the sector, the amount of capital flow that wants exposure to storage, low interest rates, that we are gonna get ourselves back into a development cycle and the line will start to go in the other direction in maybe in 2023 and beyond. Now, that's not all bad, right? Development creates bridge loan and management and acquisition and development participation opportunities for us, but it's also a challenge for the stores that have new supply coming in their trade area, and we'll manage through that just like we managed through the last cycle. Great. Then just a follow-up question on the bond deal. You got better pricing and longer term this time around but your leverage is also lower quarter-over-quarter. How are you thinking about funding your business going forward? You didn't issue any equity in the quarter, so just curious on how you think about using those levers specifically since you started using the bond market this year. Thanks. Yeah. We're kind of in a unique market where we have a lot of good options. You know, you have cheap debt, you have a stock price that's, you know, holding up. You know, we've always said we'd use equity if we have a place to put it in the near term. So far this year, we haven't had a great place to put equity, and we've been delevering as our NOI has grown, as we've had some sales into joint ventures or outright sales. I think, you know, equity is always an option, but I think we'll look to the debt markets first. Thank you. Thanks, Elvis. Your next question is from Spenser Allaway of Green Street. Your line is open. Thank you. In terms of the occupancy losses that you're assuming for the full year, can you just talk about which consumer segments you expect could drive this? For instance, I know that college students have recently contributed to occupancy moves. I'm just curious if you have a view on, you know, what might cause some of the deterioration moving forward. You know, clearly, as was mentioned earlier, if return to work picks up, people come back to the major cities, that could cause some loss in occupancy. I don't think that everyone who established a home office or an extra room is gonna automatically reverse that, so I think it will be gradual. Other than that, I think it's kind of the normal churn of storage, right? Most of our customers are somewhere in the moving process, and when at some point after they're done moving, they don't need storage anymore, they eventually get around to emptying their stuff out. Other than that kind of return to office or return to the big city, I don't think there'll be anything unusual. Spenser, the other thing I would maybe add is, you know, we have a 200 basis points assumption in there. You know, that's based somewhat off historical trend, trends. We're kind of in an odd year this year. It seems like everything that's happened in the past hasn't necessarily happened this year. It's a number. It's our assumption. You know, I think that we'll see how it plays out. Okay. Thank you. Just given residential space is the closest substitute to storage, from a consumer standpoint, do you think that rising residential prices have contributed to your pricing power? Just curious if this is something that you guys pay attention to or have observed over the years. I think the theory is sound, right? If it gets more expensive to rent a larger apartment, people may rent a smaller apartment and use storage. It makes sense, and we see anecdotal evidence of it. We don't have a whole lot of data where we can correlate, you know, rising real estate pricing and demand for storage. I think we need more time and more data before we can be really specific about that. Okay. Thank you. Sure. Your next question is from Mike Mueller of JP Morgan. Your line is open. Yeah. Hi, thanks. Curious, what's the pace of lease-up that you're seeing in your C of O properties? When you're underwriting new transactions today, for those types of deals, what sort of yields are you underwriting to? The pace of lease-up is faster. I mean, one of the things we pointed to in my comments was that we have less dilution this year than we originally forecasted. That's largely to do with the pace of lease-up. It also has to do with rates being higher. We continue to look at C of Os. I think that those vary wildly by market and by how far out they are. You know, some of the recent things that we've approved this year have been 7.5 range, but, you know, I think that we are also looking at where we are in a cycle and, you know, trying to make sure that we risk adjust for that too. Got it. Back to the pace. If we're thinking about underwriting to a stabilization, is it around a four-year timeframe you're thinking about and you're seeing? We haven't changed our assumptions in terms of lease-up, so even though we've benefited from shorter lease-up, you know, we recognize that that can change. It can also change depending on new supply in the market. We try to look at what's coming in the specific market we're looking at. You know, the markets are dynamic and so we assume historical norms in terms of lease-up of those properties. Got it. Okay. That was it. Thank you. Thank you. Your next question is from Rob Simone of Hedgeye Risk Management. Your line is open. Hey, guys. Thanks for taking the question. Hope all is well. Had a question about the management platform to the degree you're able to answer it. You guys are over 800 stores, I guess it's like close to 830 strictly third-party managed stores now and close to 1,100 in total. I guess what is the long-term target, if there is one? What's kind of the path to get there? The reason why I ask that, if I look at your property management fees as a percentage of your G&A, it's starting to trend back up over a longer timeframe towards like the 70% range, meaning you're getting closer to effectively paying for your corporate layer with fees. I guess, you know, from like a structural premium standpoint, even though you guys have already had one, I'm curious like how you guys think about like getting to that number or eclipsing it. I think it's like $63 million or a $100 million now, and kind of how could that gap narrow over time? Yeah. Good question. Thank you. We don't target a number of stores. We're not trying to get to a 1,000 or 2,000 or whatever number you wanna think of. What's important for us is we maintain our profitability, right? We can get a lot more stores if we reduced our fees, but we wanna maintain our profitability, and we also wanna have the right stores, right? A store with an owner that plans to hold for 10 years is of much more value to us than a store where it's a developer and they're gonna build it and flip it. You know, a store in a $40 market is much more valuable to us than a store in a $9 market. We're really focused on the economics and the relationships that this business brings to us as opposed to the outright number of stores. If keeping within that discipline of maintaining our margins, we can grow the management fee revenue that it covers our G&A or more than covers our G&A, we're gonna grow it as big as we can. Yep. It's kind of like a lifetime value of the customer concept as opposed to just straight growing the top line. I think that's what you're saying. That's a good analogy. Got it. Okay. Yeah, it makes sense. I don't know, is there time to ask one more? I don't wanna take too much of your guys' time. Sure. Okay. Sure. Yeah. I guess, as it relates to an earlier question, with I mean, you know, your rental rates are flying off the page here, right? It's obvious to everybody. I guess, how do you guys internally think about your customers, quote unquote, like propensity or wherewithal to pay? I mean, I know it's spread over thousands of leases or, you know, tens of thousands of leases even, but do you guys look at like, you know, how rent-to-income ratios change or I'm just curious how you guys think about that, like in terms of what's like the upside and longer customers' wherewithal to like continue paying higher rates? A couple things. One is we have over 1.2 million customers, so we're highly granular on this topic. Secondly, when storage gets more expensive and our tenants complain they can't afford, our store managers are really good about talking to them about, "Do you really need a 10 by 10 or can we get you into a 10 by 5 or maybe a unit that's upstairs and further away?" We can have other tools to solve their problems. Third is, if it does get more expensive and they move out, that's not a problem for us today. We have plenty of demand to backfill their space. Lastly, most of our customers don't think they're staying very long. Now they end up staying about 50% longer than they think they're staying, but most of them, the added cost they believe is temporary and they can swallow hard. It's only those real long-term tenants that you have that more of that problem. Got it. Okay. Thanks, Joe. Appreciate it. Thanks for taking the questions. Sure. Thanks, Rob. Your next question is from Kevin Stein of Stifel. Your line is open. Hey, good morning, guys. Revenue accelerated in the same-store quite a bit since 2Q, and I was just wondering if there's any, maybe like new demand drivers or if it's just, you know, the existing demand drivers that are increasing or if it's just more of your confidence in being able to increase rental rates more? Thanks. I would tell you it's steady demand combined with low vacates. People are staying longer today. The people that have rented with us have been sticky. I think we did see an increase in demand last year. You know, ask our customers why, they said they were out of space. If you ask them today, that's moved back more towards, "I'm moving." You know, those are kind of the reasons they give for moving or for storing with us. Vacates throughout this entire period have been very, very low. We have less units that need to be rented each month because people are staying longer and vacating less today. Okay. Do you have a sense of? I guess like, I'm not sure what your average length of stay, but for the industry is maybe like, you know, 15, 16 months. I guess that'd imply like roughly 7% of customers will be moving out on average. Do you know like, how many or do you give a number on how many, what percentage of your portfolio turns over in a month? We haven't, and that's gonna vary by property type. So what I mean by that is a new property is gonna have a much shorter length of stay than a property that's 30 years old. You have more and more long-term customers at that, a much lower churn. What we have seen is churn has gone down through COVID, so that, you know, if you're referring to 7%, you know, it's lower than that and it continues to go lower as the vacates are lower. Okay. Thanks. Thanks, Kevin. Your next question is from Ronald Kamdem of Morgan Stanley. Your line is open. Hey, just a quick question on just e-rentals. Can you just remind us what percentage is coming through that channel? Maybe have you seen anything different from that customer relative to the rest of the portfolio? Thanks. We're at about 25% today. We were, I think, 20% or 21% at our last call. We've seen a slight increase in customers' use of that channel. Customers report very high satisfaction rates with it, so that's good for us. There's really not a very meaningful difference in the customer that I could describe to you. Great. That's all my questions. Thank you. Thanks. Thanks, Ronald. Your next question is from Michael Goldsmith of UBS. Your line is open. Hey, one more from me. You're gonna get $100 million back of your preferred investment from JCAP maybe as early as next week. How do you go about replacing the investment's 12% return, and what do you plan on doing with these funds? We are going to continue doing what we've been doing, which we'll continue to look for our bridge loan opportunities. We'll continue to invest both on a wholly owned and a joint venture basis. When unique opportunities come up like that, preferred investment, we'll consider those as well. Great. Thanks for your time. Sure. Speakers, I am showing no further questions at this time. I'd like to turn the call back to Mr. Joe Margolis, Chief Executive Officer. Great. Thank you everyone for participating today. We appreciate your interest in Extra Space Storage. We're really happy to report the results that we've been able to report this quarter, and the only reason we can do it is because of the hard work of all the folks at Extra Space, starting with the folks in the store who deal with the customers every day, but also all the people in the call center and here in the corporate office. I'm extraordinarily proud of them and their dedication and hard work. Thank you. I hope you and all your families are well. Take care. Thank you, speakers. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.