Good morning everyone, and welcome to the Life Storage First Quarter Earnings Release. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your phone keypad. Please note this call is being recorded. I will now turn the conference over to your host, Mr. Brent Maedl. Brent, you may begin. Good morning, and thank you for joining us today for the First Quarter, 2023 Earnings Conference Call of Life Storage. Leading today's discussion will be Joe Saffire, Chief Executive Officer of Life Storage, and Alex Gress, Chief Financial Officer. Following prepared remarks, management will accept questions from registered financial analysts regarding Life Storage's operational and financial results. As a reminder, the following discussion and answers to your questions contain forward-looking statements that are subject to risks and uncertainties and represent management estimates as of today, May 3, 2023. The company assumes no obligation to revise or update any forward-looking statement because of the changing market conditions or other circumstances after the date of this conference call. Additional information regarding these factors can be found in the company's public SEC filings. In addition to the press release distributed yesterday, we furnished our supplemental package with additional detail on our financial results, which may be found on the investor relations section on our website at lifestorage.com. As a reminder, during today's question and answer session, we ask that you please limit yourself to 2 questions to allow time for everyone who wishes to participate. Please re-queue with any follow-up questions thereafter. At this time, I'll turn the call over to Joe. Thanks, Brent, and good morning, everyone. I am pleased to report we delivered another strong quarterly performance across all segments of our business. While we continue to see the operating environment normalize as compared to the height of the pandemic, occupancy and asking rates remain above pre-pandemic levels. I'd like to highlight a few notable results and trends. We achieved same-store revenue and net operating income growth of 10.5% and 12.8% respectively, despite challenging year-over-year comparison. This marks the 8th straight quarter of double-digit same-store revenue and net operating income growth. As the environment normalizes, our solid performance has remained broad-based, with 25 of our top 20-40 markets achieving 9% or greater revenue growth. These results highlight the value of our portfolio strategy over the past few years, which has allowed us to capitalize on strong regional trends. Move-ins for the quarter finished up 1.1%, with April accelerating nearly 3% over March. Our customer base continues to show resilience, with 49% of our customers having stayed with us 2 years or more. That is up 210 basis points from this time last year. Recent trends and a resilient customer base keep us cautiously optimistic as we head into the peak leasing season. For the quarter, we completed 1 joint venture acquisition in New Jersey in which we invested $4.1 million. Subsequent to the quarter end, we invested $15.1 million in 4 additional stores in the New York City area with a joint venture partner. These acquisitions are highly complementary with our current portfolio and our future upside with moderate capital investment. Before I hand the call over to Alex, I want to provide a brief perspective on the merger with Extra Space Storage, which was announced on April third, and which we expect to close in the second half of the year. First, I would like to express my gratitude and appreciation to the entire Life Storage team. I am very proud of what we have all achieved together and am incredibly excited about the opportunities ahead. We are focused on working with Extra Space team to complete the merger and capitalize on the significant potential of our combined platform. With that, I will hand the call over to Alex, who will provide additional color on our performance for the quarter. Thanks, Joe. Last night, we reported quarterly adjusted funds from operations of $1.63 per share for the first quarter, an increase of 13.2% over the same quarter last year and above the high end of our guidance. The strong adjusted FFO performance was a result of robust same-store results and acquisition performance. First quarter same-store revenue increased 10.5% over the first quarter of 2022, primarily driven by 13.6% growth in achieved rates over last year. As no surprise, the operating environment continues to normalize and level off from its highs, with same-store occupancy averaging 90.7% during the quarter, but remaining 80 basis points above pre-pandemic levels. We remain cautiously optimistic as we enter peak leasing season with asking rates and move-ins heading in the right direction. Our same-store operating expenses grew only 5.2% for the quarter versus the prior year, primarily driven by real estate taxes, credit card fees, and payroll and benefits. The net effect of that same-store revenue and expense performance was 140 basis point expansion in quarterly same-store net operating income margin to 71.5%, resulting in year-over-year growth in same-store NOI of 12.8% for the first quarter. As Joe noted, this marks our eighth consecutive quarter of double-digit same-store NOI growth. Turning to the balance sheet, our net debt to recurring EBITDA ratio is a comfortable 4.9 times at quarter end, which is up very slightly from 4.8 times at the previous quarter end. Our debt service coverage is at a very healthy 5.2 times as of March 31st. We continue to have no significant debt maturities until April 2024, when $175 million becomes due with our average debt maturity of 5.3 years and our weighted average rate is 3.7% at quarter end. In addition, as of March 31st, 82% of our debt was fixed rate. Details of our 2023 earnings guidance and related assumptions were included in our release last night. Our forward guidance for the year remains consistent with the guidance we provided late February. Before we turn to the Q&A portion of the call, I'd ask that you please keep your questions focused on our first quarter results as we will not be providing additional commentary regarding the pending transaction with Extra Space. With that, operator, please open the call for questions. Thank you very much. At this time, the floor is open for questions. If you would like to ask a question, please press star one on your phone keypad. Confirmation tone will indicate your line is in the queue. You may press star two if you would like to remove your question from the queue. For anyone using speaker equipment, it may be necessary to pick up your handset before you press the keys. Please pause a moment whilst we poll for any questions. Thank you. Your first question is coming from Spenser Allaway of Green Street. Spencer, your line is live. Thank you. As noted in your opening remarks, you had really impressive rental rate growth in the quarter. Can you just help us understand how move-in rates and ECRIs trended in 1Q to arrive at that 13.6%? Any color you can provide on how those two metrics trended through April would be helpful. Thank you. Sure. Hi, Spencer. Good morning. It's Alex. You know, consistent with Joe's opening comments, you know, just to give a macro view on the quarter, you know, it's kind of what we said, you know, the operating environment, you know, continued to normalize. As we get into, you know, March, April, we're definitely seeing early indications of increasing and stronger seasonal trends. To talk about some specifics, you know, Q1 from the move-in side was certainly an interesting quarter. Overall, you know, we were up on record move-ins 1.1% for the quarter, it was almost a tale of two worlds. I mean, very strong January, consistent with what you heard from the other REITs, you know, it's certainly move-in volume, you know, slowed down in February and March. Now we still had a record quarter, but we saw that slowdown in February, March. Now that's shifted and changed and move-ins as expected, you know, certainly began to accelerate and we saw that in April, and that trend, you know, continues into. It's only a couple of days into May, but, you know, that what I said, that early strength of seasonal trends continues. Move-ins, you know, accelerating from March to April accelerated up, you know, 3%. That's the trend there. You know, move-outs overall for the first quarter, pretty much what we expected. I mean, they were up in totality for the quarter, about 7%. A little higher. Yeah, it's very similar theme, a little higher in January and February. March for everybody just seemed to be very quiet, you know, the backdrop being, you know, theoretical crisis in the banking world and March just being a challenging month from an economic perspective. March just seemed flat. As we look at, you know, move-outs going from March to April and what we saw in April, move-outs are actually going down. They're down 4.5%, month-over-month comparing March to April. That's exactly what we expected. Early signs are strong. Yeah. Spenser Allaway, it's Joe Saffire. I would just add, you asked about ECRI as well, and we obviously were, you know, pretty much on target with what we expected to do for the year. We typically try to get most of them done in, you know, the first half of the year, and we're on track with that. Feel good about the results, and obviously the move-outs we're pleasantly surprised and pleased with what we're seeing so far despite the ECRI program. Okay. That's very helpful. Thank you guys. Sure. Thank you very much. Your next question is coming from Ki Bin Kim from Truist Securities. Ki, your line is live. Thanks. Good morning. Joe, I just want to clarify the comments you made about achieved rates. Were you saying that move-in rates were up 13%+ year-over-year in the first quarter? No. No. Ki Bin, let me clarify. What was up 13.6% in the first quarter of this year of 2023 were our achieved rates. That's what, you know, our customers are paying. That was up 13.6%. What drives that? Obviously that's a lot of the rate growth from our ECRI program. Yeah. The actual asking rate, street rates, Ki Bin, were down for the quarter about 14%. How did that trend into April, please? April, actually slightly up 2% from March. Year-over-year still down about 14%-15% range. I'll just add to that. You know, we expect that, right? Think about the path of street rates for all of us last year. That's a really tough comparison on a year-over-year basis. While we're down in that mid-teens on an asking rate or street rate perspective even in April, what Joe commented on to add on is we're seeing that what we expect. Street rates are increasing, you know, as we get into peak leasing season. Yeah. We're seeing some nice indications. You know, it's early in May, but we're seeing some nice month-to-month continued growth in the street rates. I think up another 2% or so. You know, that's what we expect, you know, for the peak leasing season. Okay. That makes a lot more sense. Thanks for clarifying. My second question, you guys have obviously, you know, seems to be bucking the trend here, compared to some of your peers that showed more deceleration. I was just curious high level, any kind of incremental changes you guys made to your pricing philosophies, or do you see a bigger contribution from ECRI in this quarter than previous quarters? I'm just trying to get a sense of like what contributes to your differences. No, I think, to be honest, since last year, we decided to maximize revenue and not necessarily occupancy, and pretty much the same strategy, you know, for the first start of this year as well. No real changes. Similar levels of ECRIs as last year, similar percentages, and pretty much as we had planned. Okay. Thank you. Thanks, Ki Bin. Thank you very much. Your next question is coming from Michael Goldsmith of UBS. Michael, your line is live. Good morning. Thanks a lot for taking my questions. Guys, did you see any price sensitivity of the customer during the quarter? Clearly, right, there was a bit of a slowdown in March. Do you think that was a result of price sensitivity? And did you adjust your prices, kind of your street rates through the quarter? Then similarly on the ECRI side, you know, you clearly do some testing so, you know, In trying to get a sense of, is the self-storage customer more price sensitive now than they have been in the past? Hey. Hi, Michael. you know, obviously we do a lot of testing, especially with ECRIs. We've, you know, continually looked to improve that strategy. As I said in my opening, maybe the first question, you know, pleasantly surprised with move-outs being down year-over-year in April, which is, you know, a nice thing to see. It shows our customers are sticky. They can take the rate increases and, you know, I think again, we're just kind of getting back to some normalization and seasonality. Obviously for, you know, the demand looks like it's holding up pretty well, like what we see coming into May. Obviously we adjust our street rates accordingly, promotions and so forth. Nothing unusual right now. We're pretty pleased with what we're seeing. Yeah. I'll just really briefly add to Joe's comments, Michael. Yeah, I mean, for us Our customer retention continues to be really positive, so we're currently, you know, at 39.7 months for customer retention, and that's certainly higher than what we saw in 2019 or earlier levels where it was, you know, about 37 and a half months. You know, as we've talked about in the past and we certainly did not see an impact in the quarter to add more data to your question. You know, 64% of our customers stay one year or more, and that's up from, you know, the past and 49% are staying two years or more. you know, we think those are really good indications of the resilience and stickiness of the self-storage customer for us and likely the entire space. That's helpful. My second question has to do with the slowdown in February and March. You know, what do you think caused that? You know, did you take any actions as a result of that or adjust your strategy in order to kind of invigorate demand back in April? Did you cut street rate? Did you hold back on ECRIs at all just given that the demand wasn't there? Just trying to get a sense of, you know, your thought process around it, around what happened, and then also, what actions you took, which may have rectified kind of the slower demand. Yeah, I mean, obviously, you know, January, February, March, slow part of the year. No knee-jerk reactions. Obviously we're, you know, we gotta stay competitive with pricing, follow street rates, look at competition. We do a lot of scraping. You know, obviously, no, we didn't go crazy on promotions. Again, kind of gearing up for the peak leasing season, which I think is upon us. Nothing unusual, Michael. I think we're kind of pleased what we're seeing so far and, kind of expected given what's going on in the economy and housing that may be up and down a little bit, but nothing that's worrying us right now. Yeah. No, as we, as we kind of said earlier, Michael, I mean, we know March was kind of a challenging month for the environment, given the backdrop of what was happening outside the storage space. You know, I think a lot of people saw just general slowness in March. To be specific, we stuck to our ECRI program. You know, we continued on that program, and you certainly saw that in our same-store rev growth that we put up for the first quarter. We expected as, you know, move-outs to accelerate in Q1 as we pushed on rates, and we did. It was interesting to see that it was flat in March, and I just think that shows that everything kind of slowed down a little bit in March on move-ins and move-outs. Thanks for all the color, guys. Thank you very much. Your next question is coming from Juan Sanabria from BMO Capital Markets. Juan, your line is live. Good morning. Robyn Hahn here sitting in for Juan. Hi. On geography, are you seeing any softness across any markets that had, previously hot housing markets and, that are now cooling a bit? Well, you know, actually, you know, we've been pretty bullish on the Sunbelt markets. I think we're seeing some separation from those markets compared to some of the other markets such as the Northeast. You know, the Phoenix, the Floridas, West Coast, again, doing very, very well for us, kind of separating themselves a bit from some of the other markets such as the Northeast. Nothing too significant. Got it. Thank you. Yep. Also as a follow-up, Extra Space tends to run occupancy about 300 basis points higher, with higher rates. Has this influenced your operating strategy any, and what's the path to bridge the gap? You know, again, we focus on maximizing revenue, and it's been our strategy for a while. We don't focus on, you know, purely occupancy. We don't expect that to change. Okay. Thank you, guys. Thank you. Thank you very much. Just as a reminder, if anyone does have any questions or comments, please press star one on your phone keypad now. Your next question is coming from Samir Khanal from Evercore ISI. Samir, your line is live. Thank you. Joe or Alex, just curious, when I look at some of your markets, right, Atlanta, Vegas, Phoenix, I mean, occupancy drops were, I think it was like 400 bips or so year-over-year. Is there a common theme you're seeing across these markets? I know things are normalizing, I get that, but is it housing? Is it supply? I just wanna see if there's anything that we can pick up from those sort of occupancy drops. Hey, Samir, it's Alex. You know, obviously, we really like the Sunbelt market. You know, it's obviously where we've invested and I think there. We continue to expect relative outperformance there. You know, a little softening in the quarter in Vegas and Phoenix to call them out. You know, obviously, we know some parts of the Northeast weather that expects to happen. You know, we did see maybe just a touch more as expected, saw some supply, maybe specifically coming into Vegas and Phoenix that may be part of that there, but nothing unusual, and we like that market. Got it. Anything on, I guess as a follow-up, anything on the expense side that's there to call out that's maybe, are there any line items or components that are maybe coming in a little bit higher than you sort of budgeted for the year as we think about balance of the year? Any pressures to the upside you're seeing? No. I mean, first of all, you could see that all our expenses came in very much in line, you know, with our guidance, so absolutely nothing unusual. You know, obviously, we're facing transaction-related expenses that are not impacting our core FFO, which are taken below the line as everyone would expect us to. Outside of that, no, very much in line with our guidance that we set out in February and reaffirmed last night. Got it. Thanks, guys. Thanks, Samir. Thank you very much. Your next question is coming from Todd Thomas of KeyBanc Capital Markets. Todd, your line is live. Hi. Thanks. I guess, two questions. First, I just wanted to see if you could comment on occupancy. Sorry if I missed this. Quarter end was down about 30 basis points from the quarter average. I was just curious if, you know, that was anticipated and if you could comment on April and how occupancy's trended a little bit more recently through the early part of the peak rental season. Hey, Todd. Yeah, it's Alex. I mean, very much, yeah, we expect through the course of Q1 that occupancy, you know, was going to come down a little bit just as we pushed on rates and, you know, expected those move-outs, and then March happened to be flat. You know, not a surprise there in Joe's comments earlier. That's really not our prime focus as we think about more optimizing revenue. As we get into April and the environment continues to normalize, and more specifically, we see that strengthening seasonal trends start to pick up, and we know that May and June will be strong months, we expect, you know, there'll be a continued, you know, upward slope in occupancies that will go up through Q2. That's kind of consistent with where we've set our guidance and. We'll see. We'll see how May and June kind of play out. Okay. I wanted to ask about guidance. I realize you're, you know, under a merger agreement with Extra Space that's pending here. I don't know if that had an impact. You guided originally for the first quarter to $1.55-$1.59. You came in, you know, a few pennies, $0.04 above the high end of that range, despite sort of the slowdown in February and March that you discussed. I was just curious if you could comment about the quarter itself relative to budget and sort of, you know, provide a little bit of additional commentary around the balance of the full year as it pertains to, you know, your outlook or original guidance. Yeah. Yeah. Thanks, Todd. Obviously, we're very pleased with the quarter results, pleased with what we're seeing in early, I would say the last week or so in terms of rate and move-in volume activity. You know, obviously, we wanna see what's going on with the peaks, you know, leasing season over the next few months, and then make a judgment with regard to guidance after that. Right now, I think we feel comfortable sticking with what we have out there. Feel good about what we have, and feel we should be able to achieve that. Obviously, we'd make some adjustments as the year progresses into the summer. Okay. Relative to the first quarter guidance, you know, whether same-store or otherwise, you know, I guess what were, you know, sort of the main, you know, positive variances that drove you know, $0.05, $0.06 above the midpoint of the range that you guided to? Yeah. I'll get a little more specific relative to budget in Q1. You know, obviously it's clearly a beat in Q1 and, you know, but not... Again, a couple of pennies, so not far outside of our guidance. I think on the expense side, as I said earlier, very much in line with budget. I think we were very pleased, even though March was flat, we said move-ins and move-outs. Going back to the comments we said a few minutes ago, you know, the self-storage consumer remains very resilient and sticky, and the ability to absorb ECRI, you know, those rate increases very much remains. A little bit higher than what we had certainly thought, but in a good way was that 13.6, you know, year-over-year growth in achieved rates, which gave us a little bit more of a beat to the upside coming out of, you know, our same-store pool. I would say secondly, you know, the, the acquisitions that are not in our same-store pool continue to perform consistent with, if not slightly above, you know, our underwriting assumptions. A combination of those factors, probably gave us a little bit more of a beat relative to the Q1 budget. All right, great. All right, thank you. Thanks, Todd. Thank you very much. Your next question is coming from Keegan Carl of Wolfe Research. Keegan, your line is live. Hey, guys. Thanks for the time. Apologies if I missed this, but, I mean, how should we be thinking about your marketing spend going forward, just kind of given what you're seeing in your demand funnel? Yeah. Maybe I'll go first and Joe can comment. You know, obviously, you know, for us, when you look at our marketing spend on our same-store pool, you know, it came in on the advertising very much, you know, in line with what we expect, you know, just north of that 4%. And I think we're continuing to see you know, pretty good, you know, website traffic growth. And the challenge continues to remain for us and everybody, the conversion of that traffic growth into true reservations. You know, if I look at just doing simple math, which is kind of the way, one of the ways we look at it, you know, the cost per move-in for us was only up year over year, 1.7% to sub 2% for every move-in that we achieved in the first quarter. I like that. We like that trade because we've commented earlier on the stickiness, the resilience of our customer base. I think that's the path, and we expect that to continue to be on those levels as we think about the rest of the year. Okay. I guess from a transaction side of things, I guess first, what are you sort of seeing volume-wise in the market? You know, where are you seeing cap rates at? On the JV, you know, the JV acquisitions you did in the quarter and those going to quarter end, what are your expected stabilized yields on those? Yeah, Keegan. You know, obviously the market's a bit of a pencils down right now. The bid-ask spread is pretty wide. Till we see some more stability in the debt markets and specifically the 10-year, I think you're not gonna see so many transactions. Our guidance kind of anticipated, you know, the bulk of any deals would be in the second half of the year. We still feel that's the case. The JVs, you know, the New York City portfolio, you know, those are mature assets with some, you know, I think some decent upside in terms of management, probably about a 6-6.5% stabilized yield. Great. Thanks for the time, guys. Thanks, Keegan. Thank you very much. At this time, there are no more questions. I'm now gonna turn it over to Joe for any closing remarks. Thanks, everybody, for joining today's call. Hope you have a good day, and we'll talk soon. Thank you. Thank you, everybody. This does conclude today's conference call. You may disconnect your lines at this time, and have a wonderful day. Thank you for your participation.