Good day, and thank you for standing by. Welcome to the Q1 2024 Extra Space Storage Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jared Connelly, Vice President of Investor Relations. Please go ahead. Thank you, Michelle. Welcome to Extra Space Storage's Q1 2024 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, May 1, 2024. 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, Jared, and thank you everyone for joining today's call. As many of you know, Jeff Norman has transitioned into another role within the organization as the Head of Treasury and Capital Markets. Many of you on this call have worked with Jeff and experienced his professionalism, responsiveness, vast knowledge, and good nature. I recognize and appreciate his efforts to make Extra Space a leader in the industry and look forward to his continued contribution to the company. I would also like to introduce Jared Connelly, our new Vice President of Investor Relations. Jared has been with Extra Space since 2002 and has worked in various roles, most recently as our Head of Financial Planning and Analysis. We look forward to introducing him in person next month at Nareit. Turning to this quarter's performance, we have seen sequential improvement in occupancy and rate since our Q4 earnings call in late February. Operationally, occupancy at the Extra Space same-store pool grew every month during a period normally recognized for seasonal declines, ending the quarter at 93.2%, a 50 basis point increase year-over-year. Our revenue strategy has allowed us to both improve occupancy and average move-in rate in the quarter, with the latter growing sequentially by approximately 8% from a seasonal low in January. The combination of improving move-in rate, higher occupancy, and steady existing customer rate increases have provided a 1% lift in Extra Space same-store revenue performance, which is in line with our internal projections. Also, as expected, Extra Space same-store expense growth increased by 5.5% year-over-year. The legacy Life Storage same-store pool performance continues to improve, outpacing the Extra Space same-store properties. Revenue gained 1.7% year-over-year, which was in line with internal projections and against the backdrop of a difficult comp, where prior management pushed hard on rates in 2023 at the expense of occupancy. Occupancy at our Life Stores improved to 92%, a 220 basis point improvement over last year, narrowing the gap between pools to 120 basis points at quarter end. At the end of April, this gap, which was over 400 basis points at closing, has further narrowed to 90 basis points on our platform. To do so, we have maintained lower rates through the quarter, with the strategy of higher occupancy leading to stronger new and existing customer rates through the remainder of the year. We believe improved rate performance will continue to lift these properties and ultimately bring them to parity with legacy Extra Space store rate and occupancy levels. Life Storage same-store expenses increased 6.7% year-over-year, also due to an exceptionally hard 2023 comparable, but below internal projections. Expenses increased, particularly in the areas of payroll and repairs and maintenance, as we address areas that were underinvested at this time last year. On the external growth front, the transaction market continues to be muted. However, we expanded our capital light external growth activities, adding $164 million in new bridge loans, meaningfully ahead of our projections. In addition, we added 97 third-party managed stores gross and 72 stores net. We continue to have the fastest-growing third-party management platform in the industry. Overall, the year is unfolding as expected, with wins in capital light growth and G&A and expense savings. We are working hard, and I am confident of our teams and infrastructure are well prepared to optimize performance during the important upcoming leasing season. I'll now turn the time over to Scott. Thanks, Joe, and hello, everyone. As Joe mentioned, we had another good quarter, driven by steady revenue, G&A savings, and better-than-expected property operating expenses, specifically property taxes. The G&A savings have been from a broad range of categories as we continue to seek efficiencies and capitalize on our greater scale. As mentioned in our prior call, we closed a $600 million bond offering in the quarter at a time when interest rates were more favorable than the current environment. Proceeds were used to repay the bridge loan that we used to acquire Life Storage, and the offering helps reduce our exposure to variable interest rate debt. Our balance sheet is in great shape, and we have plenty of dry powder to capitalize on an improving transactions market. Due to the inline nature of same-store performance, we are not making any revisions related to property operations. We will update our property guidance after the Q2, once we see how the leasing season progresses and how much pricing power we gain. We do expect to see continued savings in G&A and have adjusted our annual assumptions accordingly. We have also adjusted our annual average SOFR assumption, increasing interest expense, which is partially offset by increases in interest income from our bridge loan program. We are encouraged by the outsized rental volume year to date and the high occupancy at our stores, and we should be in a great position to maximize the performance at our properties as we move into the rental season. And with that, Michelle, let's open it up for questions. Thank you. If you'd like to ask a question, please press star one, one. If your question has been answered and you'd like to remove yourself from the queue, please press star one one again. Our first question comes from Michael Goldsmith with UBS. Your line is open. Good morning. Thanks a lot for taking my question. Can you talk a little bit about what the trend was in April and how that kind of compares from, you know, the last couple of months at the end of the end of the Q1? Yeah, Michael. So we ended the month of April at 93.7% occupied, which is still a 50 basis point delta over last year, and our rates improved sequentially, month-over-month from the month of January. So what's happened in the quarter is we averaged about 14% negative achieved rates in the quarter, and in the month of April, that has moved to about negative 9% year-over-year. That 92.7 is the Extra Space same-store pool. We're at 92.8 for the Life Storage same-store pool. Got it. And then my thanks for that, guys. And my follow-up question is, you know, to reach the midpoint of the guidance, you know, it seems like you've started to, you've kind of hit your occupancy or have started to make some momentum there. I suspect that's going to translate to starting to push street rates. Like, to meet the midpoint of your guidance, how much do street rates need to increase from here in order to achieve that midpoint level? Thanks. Yeah. So street rates is only one component, right? And we don't – we're kind of agnostic as to whether we can maximize our revenue through street rates, through occupancy, through discounts, through marketing spend, through ECRI. So there's no one number we're targeting for any one of those metrics. We're trying to mix and match them to maximize revenue. Maybe if I ask that a slightly different way, if ECRIs kind of remain steady and you get kind of the normal seasonality within, you know, occupancy, then, you know, how much street rate gains do you need in order to kind of meet your kind of internal expectations on? Michael, we actually have not broken out Street Rates. If you remember, on the last call, we actually didn't break them out. We said when we did our budgets, when we did our estimates and forecasts, we did it based on revenue growth. And so, you know, Street Rate is a component of that, as is Occupancy. And obviously, the better the Street Rates are, the better the Occupancy, the higher we are going to be in that range. Got it. Thank you very much. Good luck in the Q2. Thanks, Michael. Thank you. Our next question comes from Jeff Spector with Bank of America. Your line is open. Great. Thank you. I just want to confirm, you know, thinking about your comments and where we stand here, May first versus, let's say, the last couple of years where there was a bit less visibility and there was, you know, seasonality was a bit distorted, or I guess, you know, can you just put the context of how you feel today versus the prior two years? Because it sounds like you're more comfortable, confident, maybe with, you know, that seasonality, normal seasonality trends are kicking in, and we should expect that to continue for, the remainder of the year. So, I think comfort is always greater as you get into and have some feeling as to how the leasing season's gonna go. So at this time of year, before we're into the leasing season,... in a period where we have reduced housing activity, where we have signs of consumer weakness, you know, we have not—I'll say this, we have not enough comfort that we're gonna change our guidance. I understand that, Joe. I guess I'm just asking, though, again, part of the issue the last couple of years was pinning down seasonality trends, right? And so are you, you know, and I feel like it's important to have a grasp on that, you know, seasonality trends are back normal, so your operations and systems are running smoothly, and you're confident in those systems. Is that not a fair way to think about it? Yeah. So I think if you look at, say, occupancy seasonality, and you look at the annual occupancy curve, pre-COVID, to what we've experienced last year and what we expect to experience this year, our system has taken a great deal of the seasonality in occupancy out of our performance. You know, we will keep our stores at higher occupancy levels at all times of the year. And I think you see that in the Q1 this year, right? The bigger question is: how much rate power do we have, and can we push rates at those occupancy levels? Do you think we'll have a better feel when we see you at NAREIT, or again, could it be later in the summer, like last year? You know, I think we get data every day, and we'll have more data and a better feel at NAREIT, and we'll have even more and a better feel at our next conference call. We'll certainly, you know, keep all of our shareholders and interested parties up to date with what we know. Thank you. Thank you. Thank you. Our next question comes from Eric Wolfe with Citi. Your line is open. Hey, thanks for taking questions. If I look at the 165 stores added to the same store pool this year, it looks like they're growing around 7%. And then if you include the 2023 same store pool, it looks like the 216 stores combined are growing around 5%. So I was just wondering if the deceleration that you're predicting in your same store revenue guidance is coming mainly from those stores, just as occupancy comps get tougher through the year, or is there something else that would be driving the deceleration? Or maybe you're just being conservative because it's early, but just trying to understand what's—what would drive the deceleration, from, call it, 1% same store revenue to get you down to your midpoint. Yeah, Eric. So the main driver of that is not the 165 stores. I mean, those stores actually increased our performance in the quarter. I think they added about 40 basis points to our revenue growth in the quarter. Our revenue growth throughout the summer is impacted somewhat by our performance last year, obviously, where you're coming off higher numbers. Comps do get easier as you move throughout the year, but we are not seeing. You know, our current expectations, similar to what we said at the, when we gave our annual guidance, is we're not expecting a major recovery from the housing market today. We're expecting things to kind of perform as they are today and not seeing a major rebound. And I think that's maybe one difference from what some other people have projected or thought. Okay. That's helpful. And then, I guess, just conversely, on your LSI guidance, you're expecting looks like around 3.25 same-store revenue growth for the rest of the year. Can you just talk about the timing of that acceleration from your 1Q numbers? Obviously, your occupancy did, you know, increase, like, I think, 200 basis points at quarter end, so that should drive over, you know, 200 basis points same-store revenue growth. But just curious, what gets you the rest of the way there to that 3.75, and, you know, when would you expect to see that? Yeah. So obviously, it's a range that we provided, so it'll depend a little bit on where you are in that range. But the way we're viewing this is as occupancy moves up to parity with the Extra Space stores, those rates will move up. So today, our Life Storage stores have rates that are 5%-10% below our Extra Space stores, as they are growing faster. We saw very good rentals in the Q1. We've continued to close that occupancy gap. We would expect that occupancy gap to be closed at some point during this rental season, and then see the growth in the back half of the year. Okay. All right, thank you. Thanks for the detail. Thanks, Eric. Thank you. Our next question comes from Nick Yulico with Scotiabank. Your line is open. Thanks. Hi. First question is just, can you give us a feel for how, you know, ECRI is trending, you know, year to date versus, let's say, the back half of last year, on percentage basis? So I would say very similarly. I mean, we're, I mean, we're constantly testing and trying new things, but overall, the program is very similar to the back half of the last year. Customers are accepting ECRI at the same rates, and it's an effective tool for us to maximize revenue. Okay. Then in terms of, you know, maybe could you just elaborate a little bit further on, you know, on that pricing strategy right now, where, you know, it feels like it's been, you know, a discounted, heavily discounted, you know, promotional move-in, web rate in some cases, and then you're trying to get that customer back up to a more normalized rate in a pretty quick timeframe. You know, what were you - Are you getting pushback from, you know, customers? I mean, what's sort of the feeling for that? And I guess I'm wondering, you know, at some point, do you, you know, do you need to - do you move away from that strategy as you get more comfortable, you know, with occupancy, and then, you know, that'll help show improvement in move-in rates? How should we think about that? Yeah. So, I mean, the strategy, you described it pretty well, right? On the web, for the web customer, they get a discounted rate, but no promotion, right? Which is different than our peers, who offer many times promotions on the web. So a discounted rate, we do that because the data tells us these are the, longer term and better customers, and that is the pricing package they react best to. We use ECRI to get them to street rate within a reasonable period of time. We have a different structure for the customer who walks in the store. And our data tells us, and our testing tells us this is a very effective strategy. And when the data tells us and the testing tells us, we should evolve it to something else, then we will. But, you know, it's not in place for a fixed period of time or until we see something. We're constantly, one of the advantages of our scale is we can constantly have a few hundred stores here and there are running different tests, and when we see something that tells us we need to evolve our strategy, we will. Okay. Thanks for that, Joe. Sure. Thank you. Our next question comes from Juan Sanabria with BMO Capital Markets. Your line is open. Hi, good morning. Just hoping you could talk a little bit about the transactions market. You guys have done some deals in the Q1 and then expected to close over the balance of the year. So maybe you could give us a little flavor for what they're going in and stabilized yields that you're underwriting to? Sure. So, the transaction market is pretty muted. There's still a significant bid-ask spread. There's not a lot of distress in storage, so sellers don't need to sell in general. We see a lot of transactions get put on the market and get pulled, particularly larger transactions. It seems there's less capital for big portfolios than there are for one-offs. So the transaction market is pretty quiet. We did close 7 deals in the Q1, but one of those was a joint venture development, and one was a C of O deal, so those were agreed to some time ago. We only approved... You know, I think that a better sense of the market is what's approved in a quarter, because the ones that closed might have been baked, you know, many, many, many months before. We only approved three transactions in the Q1. One was a remotely managed store, and the cap rate was in, you know, initial cap was in the mid-6s, and then two developments where the development yield at a property level was in the high eights and about 100 basis points higher to us because of the joint venture structure. So, I mean, good deals, we'll do good deals like that when we see them, but there's not a lot of them in the market right now. Great. And, and then just, a bigger picture question, maybe a little bit to Jeff's question earlier, that, you know, you guys sound fairly optimistic, but the guidance doesn't necessarily call for any necessary re-acceleration in the H2. But I guess, are you seeing signs at the different markets that individual markets are starting to re-accelerate at all? An advantage of our scale is how diversified we are and the exposure we have to many, many, many markets. And that's a purposeful portfolio construction because, you know, all of our data tells us that markets act differently. You know, not all markets move in the same direction. Even if you start to categorize markets by primary, secondary, tertiary, you know, coastal or whatever, they, they don't act with any correlation. And the reasons markets act differently is because of new supply situations, because of job growth and population, and because sometimes if a market does really well for a couple of years, you know, has revenue growth over 20%, like we experienced in Atlanta, then the next year it's not going to be so good. So because we have this wide exposure, we absolutely have markets that are re-accelerating, and we have markets that are flat, and we have markets that are not doing as well. And I think we'll always be in that position. But this broad diversification, you know, provides, you know, smooths our volatility, if you will, and we are big believers in having exposure to, you know, as many good growth markets as we possibly can. Thanks, Joe. Sure. Thank you. Our next question comes from Samir Khanal with Evercore ISI. Your line is open. Hey, Joe. Maybe sticking to the last question here on markets. You know, one market that sort of is lagging here is Florida. You know, look at Tampa, you look at Orlando. And I know that, you know, looking at the integration with LSI, LSI had a big exposure to Florida. So, I mean, that occupancy gap is still about, I think, 180-200 basis points. How do you think about your ability to sort of close that gap, given some of the dynamics in sort of Florida? Yeah, so great question. So yeah, Florida, some of the markets in Florida are some of our weaker markets today. That's a good observation. That's partially because they did so well during COVID, and that's partially because of supply issues in some of those markets. But, you know, we're in this, and we did this merger for the long term. And over the long term, the Sun Belt markets, the Florida markets, and the population growth and the, the businesses that are moving there, we believe those are really good long-term markets. So yes, this quarter, some of those markets, and maybe this year, some of those markets might be on the weaker side, but long term, we're really happy to have exposure down there. You know, a market like Houston and Chicago, which we also increased our exposure to through the Life transaction, those markets are doing really well. They're kind of on the top of the heap now. So again, it's great to have exposure to lots of different markets because they'll always be moving in different directions. I guess my second question is around ECRIs. You know, that's still holding up clearly. I guess, what does it take for the consumer behavior to sort of shift? Is it job growth at this point? I mean, job growth with non-farm payroll is still pretty strong, you know, month to month. I mean, is that - is it really job growth that'll sort of crack that? I mean, just kind of, you know, what are your thoughts there? So, you know, when we talk about the consumer, I think we have to separate the existing tenant consumer and the new tenant consumer. The existing tenant consumer is really strong and really price insensitive. They're not moving out in the face of ECRI. Bad debt is very low. Lengths of stay are incrementally improving. You know, the storage customer, once they become a storage customer, is, is really a strong, sticky customer. We see more weakness in the new customer, the customer looking for storage, and that's where we see more price sensitivity. There's enough demand out there for us to capture more than our share and keep our stores at optimal occupancy, but it's the pricing strength that is at issue now. I think we're at a period of time where we've had, you know, several quarters where inflation outpaced wage growth, and the extra money that was pumped into the economy isn't there anymore, savings rates are down. You have some weakness in the consumer, and that's what we're experiencing. Okay, thank you. Sure. Thank you. Our next question comes from Todd Thomas with KeyBanc Capital Markets. Your line is open. Hi, this is AJ on for Todd. Appreciate you guys taking the question, but first, just to piggyback off that last question. So, vacates were down and, but one of your peers noted that they saw a slight uptick in vacate activity and noted that there might be a normalization in the length of stay. You just noted that length of stay is incrementally improving. I'm curious, though, if you expect that to continue, or do you see potential for vacate activity and the length of stay trends to normalize a bit moving forward? Yeah, so I probably explained that incorrectly. Length of stay is incrementally better than pre-COVID. It's worse than during COVID, right? We had that period where people just weren't leaving the stores. So, overall, I'm looking at a longer period of time where saying length of stay is incrementally improving, but it is clearly normalizing from COVID levels. Sorry if I wasn't clear enough on that. Oh, yeah, yeah, that clarification is helpful. And then just transitioning just over to the structured finance book as that kind of continues to grow. So it seems like the demand for that product definitely seems strong today. How big are you comfortable with growing that to? And are you starting to see competition from others, creating a more competitive environment for the bridge loan and mezz financing? So we do see other people getting into the business. Some of our public peers have announced they wanna get into this business. On the ground, we don't see competition yet. We're not losing loans. We're not, you know, we don't hear people saying they're taking this to someone else to bid. But there's other lenders, there's competition for this business, just like there's competition for the management business or any other business we're in. And our job is to compete well, and that's what we're trying to do. How big this can get? You know, we have the ability to sell off the A notes in this structure, and that's a really good tool for us to be able to control how much of the balance sheet, how many of these loans we keep on the balance sheet. So we've ticked up our guidance a little bit as for this year as to what we expect to keep on the balance sheet, but, you know, we certainly have flexibility to move that number one way or another. Perfect. I appreciate the time. Thanks. Sure. Thank you. Thank you. Our next question comes from Keegan Carl with Wolfe Research. Your line is open. Yeah, thanks for the time, guys. Maybe first, just on LSI, I'd love to hear how the performance of the portfolio is trending relative to your expectations at the start of the year. Do you think you've fully realized your revenue synergies in this yet? So I think LSI performance in the Q1 was as expected, on target, so we were happy with that. And, you know, we still have, as of today, a 90 basis point occupancy gap, and depending on what metric you look at, what pool of stores you look at, anywhere from an 8%-12% rate gap. So we still, still have wood to chop. I think the good news is the tools we need, the infrastructure we need in place to close those gaps is largely there, right? So the LSI store manager is now performing close to or at the level of an Extra Space store manager in terms of conversion rates and all the metrics we use, right? And that took some time to, to get there. You know, we've largely caught up on R&M and capital, and the stores look like an Extra Space store now in terms of, you know, cleanliness and repair, things like that. The LSI website is actually now faster than the Extra Space website. It was much slower when we bought it. So a lot of the customer acquisition metrics are improving. I'd say they're not all the way there yet for LSI, but improving. So we've made a lot of progress. We still have some wood to chop, and we still have some opportunity to capture. Got it. That's really helpful. Thanks for the color, Joe. And then I guess, just shifting gears here a little bit. I know you guys don't necessarily break it out, but it would be helpful to maybe just understand, you know, how you expect your year-over-year occupancy delta to trend throughout the rest of this year, and if anything might have changed from a few months ago? Yeah. So we don't expect a significant occupancy delta for the entire year. You know, we obviously, it's a component of your revenue, but we would expect it to be flat for most of the year, although we have been ahead some in the Q1. Great. Thanks, guys. Really appreciate it. Sure. Thank you. Thank you. Our next question comes from Spencer Holloway with Green Street. Your line is open. Thank you. You guys have been successful with your revenue management strategy, but just thinking about how you've had to cut move-in rents fairly aggressively like peers, I'm just curious if you have a sense of how long, on average, based on the current cadence and magnitude of ECRIs, it would take you to get your new customer rents up to market-level rents? Yeah, so I, I think there's a little bit of a misunderstanding baked into that question that we've cut rents more aggressively than our peers. And I think that comes from the web scraping data that, that is published and people see. When you look at that data, that's not adjusted for promotions. And our, We offer promotions, it's under 10% of our web customers get a first month free or a promotion like that, where at our peers, it's the vast majority of their customers. So to compare our web rates to our peers' web rates, you have to adjust for promotions. And I think once you do that, you'll see we have not cut rates significantly more than our competitors. It's just not, it's just not true. You know, our goal is once someone comes in at a discounted rate to, you know, to get them to street rate, you know, within a reasonable period of time, and that may vary based on different factors, but, you know, within a reasonable period of time, they need to get to street rate. Okay. And then you've spoken about the progress you've made in, in closing the occupancy gap on the legacy LSI assets, but based on your growing knowledge of the LSI markets, I'm just curious what you think is a sustainable long-term occupancy level for that portion of the portfolio? So we had an 80% market overlap with LSI and Extra Space stores. So for 80% of the portfolio, it's, it's the same. And we don't, we don't really target an occupancy level. Again, as we said earlier, it's, it's just one factor that goes into, the algorithm that is trying to maximize revenue, and it may be different in different types, different types of markets based on customer behavior. Okay. Thank you. Thank you, Spencer. Thank you. Our next question comes from Caitlin Burrows with Goldman Sachs. Your line is open. Hi, everyone. I don't think this has been talked about yet. I just wanted to touch on the marketing spend. So can you talk about how you measure maybe the return on marketing spend and how long you expect this kind of level to sustain for going forward? Yeah, the first thing to look at here is really marketing spend as a percentage of your revenues. If you look at our marketing spend as a percentage of revenues, we're still about 2%, which is still a very small component. On a year-over-year perspective, we get it that 23% looks like a big number, but there's still a very positive yield. We look at the return on that spend in several different ways. It depends on where you're spending money, whether it's pay per click, whether it's search engine optimization or other areas. But we continue to have a very high, you know, return on that marketing spend, and it's, you know, a very small component of our expenses. ... Got it. Okay, and then maybe just thinking, I know you guys maximize revenue through both rate and occupancy, but as you think about maybe absolute rental rates, how much they've grown over the past few years, I guess, what kind of gives you confidence, that there does continue to be upside to, that rent per square foot number? So I think that, you know, what gives you confidence? You know, I think the question was asked earlier, your guide versus your tone and where you are. I think we've seen positive things early in this year in terms of month-over-month rate increases. Now, that's a positive. The negative is we're still negative to last year, so we are moving in the right direction. I think the leasing season will kind of be the real catalyst to say it was a great year or, you know, a good year, or, hey, maybe it's still a little bit slow. So I think that it's really that June, July timeframe when we're gonna get a feel for that. But so far, occupancy's held up. Sequentially, rate has improved, but it's still probably too early to really say, yes, it, it's been a good year so far. Got it. Okay, thanks. Thanks, Caitlin. Thank you. Our next question comes from Ronald Kamdem with Morgan Stanley. Your line is open. Hey, just the first one is just on housing. Can you sort of remind us what percent of your customers are coming in because of sort of home sales or the home activity, and how you're thinking of demand is changing as rates have moved up? Sure. So, right now, about half of our customers, a little more, 51% of our customers tell us that they're moving. That doesn't mean they're buying a home, right? 45% of those 51% are moving from apartment to apartment. That was... The peak of that was 61% in the Q3 of 2021. So we don't have enough data, right? We can only ask so many questions and have the tenants answer the surveys. My gut tells me fewer people are moving because they're buying a house, but more people are moving 'cause they're renting a house or 'cause they're moving apartment to apartment or for other home transition reasons. So down somewhat from a peak, but still a meaningful portion of our customers. Great. And then my second question was just on the guidance. There was a lot of moving pieces from sort of the Q1, the initial guidance and the guidance that you gave today. I know you reiterated, but interest costs are higher, you know, interest income is also higher, and so forth. And then if I think about where you are on Q1 on the same-store NOI, whether it's a legacy EXR or LSI, it seems like the EXR portfolio needs to decelerate to get to the middle of the NOI guidance while the LSI will accelerate. I just-- I guess when I... The question's really: Was the lack of the raise, yeah, there's a peak leasing season aspect of it, too, but is it just there's so many pieces that are changing right now that it's hard to like, the range of outcome is still so wide that it's hard to have conviction in raising? Thanks. So we have not seen anything that is significantly different than what we saw 60 days ago. So that's really the catalyst for us not changing the guidance. In terms of the items that we did change, they were interest rate based, which we changed our SOFR assumption from 4.75 to 5.2. That's based on the forward curve, and when you, you know, obviously lock into that or, or update your guidance. And then we updated it for volume of bridge loans and a small change in our management fees. All of those netted to a very small delta, which caused your FFO to stay the same. But, you know, we really don't have the information yet to be able to give strong conviction that things are better or worse than, you know, what we originally estimated for our properties. Thanks so much. Thanks, Ron. Thank you, Ron. Thank you. Our next question comes from Eric Luebchow with Wells Fargo. Your line is open. Great. Thanks for the, thanks for the question. I know you talked about the current gap between LSI and EXR for, for new customers, but, any color you could provide on the gap between the in-place customer, at those two, how far apart they are, and, you know, how long you think it will take to get to kind of the target, to, to hit your revenue synergies? You're talking the gap on the, specifically the Life Storage tenants, the negative roll down, or which gap are you talking about? I was talking about, like, the in-place rental, rental gate, rental rate per square foot gap. So, when we underwrote this deal, we looked at this in a number of different ways, and I think the most meaningful way is we found 109 Life Storage stores that had an Extra Space competitor of like type, right? You know, multi-story, climate control or single, you know, whatever it was, similar type within the trade area, and we compared rates of those stores. And right now that gap's about 8% between those stores. We also looked at it at a portfolio level and at a market level and different, but I think that kind of like for like store is the best, best comparison. Okay, great. That's helpful. I know we touched on this in a few different questions, but as you look generally at the supply picture across many of your markets, do you think based on construction starts, things will improve even more into 2025? And are there any markets you'd highlight that are still—you think will continue to deal with elevated levels of supply, whether that's like a Phoenix, Atlanta, you know, a few markets in Florida you touched on as well? That'd be helpful. Thanks. Sure. So, you know, we look at supply by looking at our same-store pool and how many stores within our same-store pool will have new supply delivered. In the Q1, 3% of our same-store pool stores had new supply delivered in their trade area, and that's kind of right on our estimate of 11%-13% for the year. That's down, you know, 30% from 2023 deliveries. I think the headwinds to development, you know, equity dollars, debt dollars, debt costs, construction costs, entitlement periods, all the things that are making the ability to put together a pro forma with rent growth in it, I think all of those items are gonna continue to provide a headwind to self-storage development. There certainly are markets, Northern New Jersey, some of the Florida markets, that, you know, do have new supply issues, and we'll have to work through those. Okay, great. Thanks for the questions. Thank you. Our next question comes from Michael Mueller with J.P. Morgan. Your line is open. Yeah, hi. I have a follow-up question on LSI, and kind of a sequencing. You talked about potentially closing the occupancy gap this summer and then, kind of moving, closing the rate gap maybe in the H2 of the year. And I guess the question is, when you're talking about closing the rate gap, are you talking about resetting pricing and then starting the process of letting it flow through the system? Or say by year-end, you could be at parity, you know, in-place portfolio to in-place portfolio. Mike, it's really a combination of both. The first thing you're going to move is the street rates or your achieved rate coming in, so it's at parity with the Extra Space. So the new customer would then be paying the same amount. Then the other differential in the achieved rate. Or I mean, in your rent per square foot that's at the store, that'll come over time as we do existing customer rate increases. Got it. Okay, I understand. Thank you. Thank you. Our next question comes from Omotayo Okusanya with Deutsche Bank. Your line is open. Hi, yes, good, good afternoon. First question is just around ECRI. I'm taking a look at your revenues per occupied square foot, kind of in the 20s. Again, so that means a typical 10 by 10 unit, someone's paying, like, $220 a month, which isn't an insignificant bill. I mean, probably outside of, you know, your mortgage and your car payments, it's probably one of the higher bills one would be paying. So when I look at that, I just kind of ask, then, what is that ability to keep pushing ECRIs at kind of, you know, 10%, 12%, 15% without that becoming such a huge piece of someone's monthly payment that they start to, you know, push back? Yeah, I'm not sure I agree with your thesis, right? It's it may be $200 for that unit, but what is your alternative? If it's buy, you know, move from a two-bedroom to a three-bedroom apartment, that delta is probably greater than what you're paying for the unit. I also think it's important to realize that our tenants consistently underestimate how long they're gonna stay for. So it may be $200 a month, but you're only staying six or seven months. It's not a permanent drag on your monthly budget, and then they end up staying much longer, but that's a different thing. So I don't think we're... You know, this is a flexible, convenient, important, and relatively affordable option for people, and I don't think we're to that point yet where we're capped out on rate. Fair enough. That's helpful. And then my second question, if you would allow me, again, the past 10 years, technology has been such a big game changer in the industry. Could you help us think about the next 10 years, whether it's AI or, or kind of what do you see technology-wise that helps lower customer acquisition costs, that helps lower cost of operation? And, and how quickly can we kind of start to see some of that stuff get implemented and kind of hit your overall numbers? Yeah. So I mean, I think we're seeing it now, and we'll continue to see it because your thesis is right. Like, technology and AI are gonna change things drastically. We used and tested AI in several parts of our business. Sometimes it worked well, sometimes it didn't. It will continue to help us at the call center, on the web, in all sorts of data analytics. And, you know, we are striving to find the right combination of, you know, people and technology to run our stores, and we think over time, that will help us optimize that expense. So, you're right, the last 10 years have shown a lot of change and a lot of efficiencies through technology, and I expect the next 10 years to be the same. Thank you. Sure. Thank you. Thank you. Our next question comes from Ki Bin Kim with Truist. Your line is open. Thank you. Good morning. Just want to go back to your bridge loan program. You obviously announced a pretty major increase in the pipeline. Just curious if you can provide more color on, you know, where this demand is coming from, and just high level, I mean, the rates are a bit higher, you know, 9%. So, what is the kind of profile of the customer that would come to you guys for this type of loans? So I think it's customers that have expensive equity, partners that want to get cashed out, folks that don't think this is the greatest sales market, where there's been or where there's been value created. You know, we talk about the benefits of the Life Storage transaction. One benefit we don't really talk about is we were introduced to a whole new group of partners we didn't have relationships with. So we've, we've closed or have under term sheet, $239 million worth of bridge loans with LSI partners we had no relationship with before closing. And we've, we've got... I'm off topic now, but we have signed 30 management contracts, new management contracts, with LSI partners we have relationships with. So, you know, part of the increase in our bridge loan volume is we have all these new relationships now. We got through the merger, and we're doing a lot of business with them. That was actually part of my second question. Do vast majority of these come with management contracts? And management contracts can obviously be terminated, but is there a sense that the management contracts' lifetime can exceed the, you know, bridge loan maturity? So 100% of our bridge loans, we manage the property. We will not make a loan on a property we don't manage for risk control and economic reasons. So yes, they all come with management contracts. And the management contracts can be canceled. That hardly ever happens. It hardly ever happens that someone cancels a public or a Cube contract and comes to us. People don't move like that. We expect, you know, if we're a good manager and we produce good results, then we're going to have these relationships and manage these properties, you know, after the bridge loan is gone, unless we end up buying the property, which is also an option. Second question on CapEx. Can you just provide some color? I know you don't really disclose it, on the maintenance CapEx you spent in 2023, and what we should expect in 2024, obviously excluding development or whatever solar projects you might have. Kevin, our maintenance CapEx has typically been about $0.65 per sq ft, and we would expect it to be pretty similar in 2024. Okay. Thank you, guys. You're welcome. Thank you. There are no further questions. I'd like to turn the call back over to Joe Margolis for closing remarks. Great. Thank you. Thanks, everyone, for your time and your interest in Extra Space. I hope you can tell we're off to a good start. We're really excited about the rest of the year. We can't control all the variables. We don't know. You know, we can't control the housing market and the customer, but what we can control, we do very well. We have the platform and the people to take advantage and optimize whatever the external situation is. So I hope everyone has a great day, and thank you for your time. Thank you for your participation. This does conclude the program. You may now disconnect. Have a great day.