Greetings, and welcome to the National Storage Affiliates third quarter 2022 conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, George Hoglund, Vice President of Investor Relations for National Storage Affiliates. Thank you, Mr. Hoglund. You may begin. We'd like to thank you for joining us today for the third quarter 2022 earnings conference call of National Storage Affiliates Trust. On the line with me here today are NSA's CEO, Tamara Fischer, President and COO, David Cramer, and CFO, Brandon Togashi. Following prepared remarks, management will accept questions from registered financial analysts. Please limit your questions to one question and one follow-up, and then return to the queue if you have more questions. In addition to the press release distributed yesterday afternoon, we furnished our supplemental package with additional detail on our results, which may be found in the investor relations section on our website at nsastorage.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements that are subject to risks and uncertainties and represent management's estimates as of today, November 3, 2022. The company assumes no obligation to revise or update any forward-looking statement because of changing market conditions or other circumstances after the date of this conference call. The company cautions that actual results may differ materially from those projected in any forward-looking statement. For additional detail concerning our forward-looking statements, please refer to our public filings with the SEC. We also encourage listeners to review the definitions and reconciliations of non-GAAP financial measures such as FFO, Core FFO, and net operating income contained in the supplemental information package available in the investor relations section on our website and in our SEC filings. I will now turn the call over to Tammy. Thank you, George, and thanks everyone for joining our call today. I'll start the call by addressing the recent hurricanes, Fiona and Ian, and expressing our compassion for all who were affected by the storms. We're pleased to report that all of our team members were safe and accounted for subsequent to the hurricanes. Although a number of our stores, primarily in Florida, were impacted to a certain degree, all of our stores are currently open and operational. I'd also like to thank our team for their extraordinary response to the storms, both in terms of watching out for each other, taking care of our customers, and so quickly working to assess damages, get the cleanup process underway, and resume normal operations. Now, moving on to results. We delivered another great quarter with growth in Core FFO per share of 26.3% and same-store NOI growth of 12.1%. As expected, our results continue to moderate from record levels as we face tougher year-over-year comps and a return to more normal seasonality. Moderation is also fueled by inflationary pressures on the consumer. As we close out 2022 and enter what may well be an even more challenging macroeconomic environment in 2023, keep in mind that the self-storage asset class has historically proven to be quite recession resilient through various economic cycles. The sector benefits from unique counter-cyclical demand factors, including demand driven by household contraction and necessity-based relocations. Further, the pandemic introduced new customers to self-storage who have realized the convenience and affordability of the product, particularly in a time of increasing cost per square foot for housing. Finally, with the benefits of our differentiated PRO structure and our broad geographic exposure, we remain very confident in NSA's future prospects. Now, turning to investment activity in the third quarter. We acquired 23 wholly owned properties, investing $322 million at an average cap rate of 5.4%. 20 of these stores are in Texas, Florida, Georgia, and South Carolina, a great fit for our existing portfolio in fast-growing Sun Belt markets. While the transaction market has slowed from last year's record pace, we're still seeing opportunities come to market, and we continue to evaluate deals where it makes sense. We're definitely being very selective in the face of today's increased cost of capital. There is still a relatively significant bid-ask gap between buyer and seller expectations, so we expect that Q4 will be relatively quiet on the transaction front. Going forward, we will remain opportunistic with respect to our capital and investment strategy, always with an eye to creating value for our shareholders over the long term. Overall, I'd characterize the third quarter as strong performance with moderating fundamentals and in line with our expectations. The self-storage sector, and NSA specifically, remain well-positioned to navigate the dynamic operating environment as we head into the new year. I'll now turn the call over to Dave to discuss current trends in operations. Dave? Thanks, Tammy. The third quarter benefited from continued strength in self-storage fundamentals. However, we are clearly returning to normal seasonal patterns, which are being highlighted by a challenging year-over-year comp. Third quarter same-store NOI increased 12.1% over last year, driven by a 10.7% increase in revenue, combined with a 6.9% increase in property operating expenses. Our contract rates were up 15% in the third quarter from the prior year, while street rates were up 10% year over year. Consistent with return to normal seasonality, we continue to see moderation in our street rates, which we expect to continue through the end of the year. Our rent roll was flat for the quarter and is now following normal seasonal trends. Discounting and concessions remained below historical averages during the quarter, and we've increased our marketing spend as customer acquisition activity returns to normal. Same-store occupancy averaged 94.1% for the quarter, down 240 basis points compared to last year. We ended the third quarter with the same-store occupancy of 92.6%, down 350 basis points compared to the prior year. Occupancy reflects the return to normal seasonality, and the net change year-over-year is directly related to an abnormal comp last year. Although we're experiencing moderation across the portfolio, I think it's worthwhile to point out that we're on track to stabilize above pre-pandemic levels. To give you a sense of where we were versus three years ago, street rates in Q3 2022 are about 37% higher than Q3 2019, and in-place contract rents are about 24% higher. Occupancy is also about 320 basis points higher. Our average length to stay for tenants that have moved out has increased from 15.5 months to 16.2 months, and the percent of customers that have stayed with us for longer than two years has increased from 45 to 50%. All of these data points support our views that fundamentals remain healthy. Looking at geographic performance, the Sun Belt continues to outperform with states such as North Carolina, Georgia, Texas, and Florida all generating above portfolio average revenue growth. Several of our smaller markets, such as Oklahoma City, New Orleans, Savannah, and Wilmington, are outperforming the portfolio average as well. This reinforces our strategic market focus and continued emphasis on geographic diversity. I'll now turn the call over to Brandon to provide more detail on our financial and balance sheet activity. Thank you, Dave. Yesterday afternoon, we reported Core FFO per share of $0.72 for the third quarter 2022, which represents an increase of 26% over the prior year period. This continued robust year-over-year growth was driven by a combination of double-digit same-store growth and our healthy acquisition volume over the past four quarters. Our third quarter results represented a record seventh consecutive quarter that we achieved double-digit same-store NOI growth. Additionally, approximately 30% of our wholly owned portfolio is in our non-same store pool, and we're very encouraged by the outperformance relative to underwriting for these properties, which were mostly acquired in 2021 and will be eligible for same-store inclusion beginning in 2023. Regarding operating expenses, our third quarter growth of 6.9% reflected inflationary pressures that we're seeing across the economy, as well as property taxes driven by significant increases in self-storage property values. The third quarter increase in same-store OpEx is due primarily to a 6.1% increase in property taxes driven by Texas, Georgia, and Florida, a 12.4% increase in utilities, and a 28.6% increase in marketing spend. Repairs and maintenance grew 4.1%, while personnel costs grew just 2.6%. While the increase in marketing spend was significant, in Q3 of last year, we experienced a decline of over 10%, so the two-year average increase is about 9%. Turning to the balance sheet. During the quarter, we closed on a $200 million 10-year unsecured debt private placement with a fixed rate of 5.06%. At quarter end, our leverage was 6x net debt to EBITDA, right in the middle of our targeted range of 5.5x-6.5x. We are very comfortable with our balance sheet, with no maturities through 2022 and $375 million scheduled to mature in 2023, $300 million of which consists of two-term loans that we will address over the next few months. Approximately 24% of our debt is subject to variable rate exposure, half of which is the revolver, and we had over $210 million of availability on the revolver at quarter end. We're committed to maintaining a conservative leverage profile and healthy access to multiple sources of capital. Now, moving on to guidance. As Tammy and Dave touched on, we have seen a return of normal seasonality and trends in fundamentals throughout the third quarter and continuing into the fourth quarter, which is driving the moderation in same-store NOI as we move gradually back toward long-term historical averages. However, our expense growth is trending a bit higher than we previously expected, as I mentioned before regarding property taxes and inflationary pressures. As a result, for the full year 2022, we estimate same-store revenue growth of 11.5%-12.5%, a tighter range than the previous guidance, while keeping the midpoint of 12%. Expense growth of 5.5%-6.5%, up from the previous range of 5%-6.25%. An NOI growth of 14%-15% with a midpoint of 14.5%, or 50 basis points below the prior midpoint. Additionally, the rapid rise in interest rates is pressuring interest expense, which, combined with an income tax charge during the third quarter, will weigh on core FFO per share by approximately $0.02 for full year 2022. The combination of these factors results in us adjusting the midpoint of our core FFO per share guidance down by $0.015 to $2.81. The updated range is $2.80-$2.82. The midpoint represents an impressive 24% growth above our strong 2021 results and a two-year combined increase of 64% over our FFO per share in 2020. Thanks again for joining our call today. Let's now turn it back to the operator to take your questions. Operator? Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for your questions. Our first question comes from the line of Juan Sanabria with BMO Capital Markets. Please proceed with your questions. Hi, good morning. A Q&A question on ECRIs. It sounded like you gave how much rates have increased both in place and street rates over the last couple of years or since pre-COVID. It seems like maybe there's some room for continued ECRI increases at kind of above pre-COVID levels. Just curious on your view on if in fact that's accurate and kind of how we should think about ECRIs in 2023 versus what you've been able to achieve into 2022 through 2022. Yeah. Dave, thanks, Juan. This is Dave. A good question. You know, it's certainly not gonna really point to 2023 yet. I can tell you know, as we looked at the third quarter, you know, our cadence and our activity and the amount of rate increases remained very stable, which was encouraging. The tenant reaction to those increases remained stable as well. As we look at customer behavior finishing out the year and really look how we model our in-place rent changes, as we move forward, you know, we're still pretty confident in the program and the way we're running it. We're still confident in our cadence. We'll just have to monitor what happens as we look, you know, as occupancy numbers and street rates move around a little bit. We'll have to look at, you know, what customer behaviors do if they change at all over the upcoming leases or the upcoming period, excuse me. You know, it's just one part of the puzzle. I mean, we're looking at occupancy, we're looking at street, we're looking at concessions. You know, we're looking at, you know, the in-place rent changes to find the revenue goal that is satisfying to us. You know, we've had a lot of kind of discussion about this, and, you know, I've been at this for a few years now, and, you know, I was with SecurCare back when we were private in 2008. I can tell you, even in the toughest times of that great financial crisis, through that period, we were still able to do in-place rent changes. You know, maybe the amounts may not have been as much, and maybe the tenants may not have been as many, but the financial pressures we may be facing, you know, the economy may be facing right now didn't really deter us back then from really, you know, continuing on some form of IPRC program. Just as a second question, curious if you guys looked at Storage Express, either the assets or the software, and as a result of the transaction there, do you think you're gonna see or are seeing more competition for assets in your secondary or tertiary markets? Or kind of a sub question, do you think that there is the opportunity to continue to use technology to improve efficiencies and maybe go more remote in store management? Yeah. Another good question. You know, we've known Jefferson for a long time. We've been around his product for a long time and watched him, you know, develop a very good model that worked extremely well. So we're, you know, familiar from a lot of different points of view on what he was able to accomplish. You know, we are running stores remotely now. We're running stores either as an annex or even just purely remotely. We have technology in place that aids us to do that. We have room to improve, and we are working on improvements to that technology piece. We certainly think as we look at our future, that's a way from a payroll savings perspective as you look at store hours and maybe overall head count. It also allows you the ability to buy smaller properties within our markets that fit very nicely and run them as maybe a hub and spoke type concept where you have, you know, some floating personnel where you can take care of two, three stores with less head count. We've done that over the years and demonstrated that that is effective for us in certain markets. You know, to the last part of your question, could this introduce more competition for people buying properties in our markets? It could. You know, there are other operators that have been running this for quite a while now, and we've been around those operators for a number of years. I don't know if it significantly changes the landscape at this point. Just maybe if I could sneak in a quick third one. Could you give us any sense of the third quarter trends or the October trends in occupancy and street rates that to compare versus the third quarter levels? We did experience street rate growth year-over-year in October. It is obviously coming off of, you know, continuing to reduce as you think about where, you know, the end of the third quarter, where September was to October, but we did. You know, it's still year-over-year an increase, which is a positive sign for us. Occupancy continued to come down off its levels. I mean, occupancy levels came down in the month of October to the number I can give you is 91.4%. So it dropped, you know, from the quarter end average down to 91, and we finished the end of the third quarter at 92.6. So we did have a continued reduction in occupancy levels in October. Thank you very much. Mm-hmm. Thank you. Thank you. Our next question comes from the line of Neil Malkin with Capital One Securities. Please proceed with your questions. Hi. Thanks, everyone. Just sticking on that last question. You know, that occupancy, you know, versus the September occupancy versus the average for third quarter, that slowed, I think, the most versus peers. Then, again, you saw a pretty significant slowdown in October. It looks like it's gonna be well short of the sort of from peak deterioration that you outlined previously that you expect for Q4. Maybe can you help us understand what is leading to that? You know, it seems like a more significant fall in occupancy versus kind of what we expected the sort of new post-COVID model to look like. Is it small versus large markets? Is it too much pushing on IPRC and not enough concessions? Like any comments on occupancy and you know how you see that continuing to play out and your comfort level at the current levels. Yeah, you know, good question. There's a lot of pieces to this. I mean, we certainly have had markets that have come off on occupancy. They're still posting very large revenue gains. I mean, if you looked at Atlanta or Riverside or Sarasota, Florida, where they've had 5% occupancy loss, but still posting 15%, 17% revenue gains. You know, we look at it as it's one of the pieces of the puzzle. You know, if you look at our portfolio historically, we've always ran a little lighter than our peers. We're comfortable with that. It fits in our markets, it fits in our revenue models, and it fits in our business plan. As we're looking at this really challenging occupancy comp versus last year, you know, we're trying to navigate the waters of where we wanna land, where it fits in with our revenue modeling, and really where that, you know, that occupancy discount, street rate, in-place rate all fit together. It's a big puzzle. To your point, I do acknowledge I think the occupancy fall was a little quicker and a little steeper than we thought, and we're making adjustments to our marketing strategies. We're making adjustments to discounting and really street rate, you know, where we're gonna be positioned in markets within the street rates. I think, you know, we're aware of it. We're you know in certain markets, we're adjusting to it, in certain markets, we're just fine. There's a lot of pieces of that puzzle that we look at. Just a little quicker than the occupancy drop that we had probably had forecast in the second quarter. Yeah. Okay. I guess just, you know, going a little further on the comment you just made, you know, is it fair to expect, you know, higher marketing, more, you know, discounting or I guess, you know, more pressure on net pricing or net rates, at least maybe until you feel comfortable that occupancy continues or, you know, kind of stops eroding at a faster rate than you would have thought? Yeah, I think that's fair. We're doing all of those things. You know, you gotta look at it market by market too. It's, you know, that affects the overall portfolio. Keep in mind we also have a little bit of drag in Portland, and Portland's a different, you know, market we'll talk about here shortly. To your point, we're looking at all those levers. You know, marketing spend was up for the quarter, so you saw the third quarter, we did have a pretty significant jump in marketing. Now the tier average was not as high, but, you know, 28% year-over-year. Clearly last year we had easy sailing and marketing expense, and this year we had to certainly lean on that a lot more. We'll lean on the marketing piece as we go into the fourth quarter. We'll start to look more around street rate and where we're positioned in market. You know, the third quarter discounts were very, very low, 2.2% of revenue. You know, we still have some opportunity around discounts, and we wanna use that lever to continue to find what the right math problem is to revenue. You know, we acknowledge that occupancy is a big piece of that, but also these other factors come into play. Overall, you know, think about it, we're very happy with our contract rate growth, which was 15% for the quarter as well. It was a nice balancing offset to the occupancy piece. Yeah. Hey, Neil, this is Brandon. Just a little color too on that. Like my opening remarks on the marketing spend, I mentioned last year, Q3, we were, you know, negative growth on the marketing 10%. Similarly, in the fourth quarter, we were negative 12% year-over-year. As we have increased our spend this year, and that's gonna continue into Q4, and then it's also gonna compare against a really challenging comp. That's absolutely gonna be elevated on a year-over-year basis. Okay. Yeah, that's helpful. Other one for me is you know, you're traditionally not a seller. But if you just look at the performance of your stock, you know, have you thought about or you know, closer to potentially looking at you know, leverage neutral buybacks or you know, how do you think about you know, capital allocation and also balancing sort of macro uncertainty in general? Good question, Neil. I think that, you know, looking at our use of capital and sources of capital, it's really on us in any case to make sure that we're evaluating our portfolio and selectively disposing of assets. As you said, we're not really, we haven't been a big seller. We're not. I don't think we'll be a big seller, but we see that as an alternative in terms of sourcing capital. So, I think the answer to your question is yes. I don't think you'll see us sell off, you know, a 100-property portfolio or anything like that, but I think selectively, we will look to prune the portfolio a bit and raise some capital that way in this environment where the cap rates are frankly still better than, you know, what we can, what we could do otherwise. Certainly, taking that capital and redeploying it in the repurchase of our own shares makes all the sense in the world. Okay. Thank you. Thank you. Our next question comes from the line of Elizabeth Doykan with Bank of America. Please proceed with your questions. Great. Thank you. I just wanted to follow up on the prior point made about, you know, adjusting in certain markets and adjusting down in others. Can you kinda comment on which markets haven't really taken those level of street rate increases, as well as others, and where maybe you're still seeing some drag. I know you had mentioned seeing a little bit of drag in Portland, so if you could just give an update on your markets. Yeah. Yeah, absolutely. We're still very strong in the Sun Belt in the Southeast. You know, you look around Atlanta and the Carolinas and through Georgia and through Texas, we're still having, you know, very good success down in those pieces, both on street and you know, contract rate. You know, now keep in mind, we're coming off extreme highs. I mean, some of those markets were 98% full last year, and now they're running 93% and 92%. That occupancy headwind, while on paper may look very, very daunting, you know, for us, those portfolios and those more stores in those markets are settling right in where we want them to be, and we're very comfortable. We're certainly facing some pressure in Portland. Portland has a number of things going on there. We've talked about in previous calls and through the past, there was you know pre-pandemic there was a bunch of new supply brought on, and that supply is still there. The pandemic may have masked the impacts of that supply. Now that the pandemic you know has kind of you know come and gone and things are returning back to normal, Portland's really starting to see some of those pressures of that new supply. Plus, there are some economic and social things going on in Portland that just makes that MSA right now challenging for us. We'll continue to look at how we operate there. We're you know not gonna go in and try to you know start some kind of rate war, do something like that. We'll be smart. I mean, you got to realize that the Portland market's gonna operate where it operates at, and we're gonna try to maximize what that level is. Phoenix, we're feeling a little bit pressure. Phoenix also had a bunch of new supply come on through the pandemic, and some of that, now that some of the housing market is slowing down and migration is slowing down a little bit, Phoenix is starting to show a little bit of pressure. How we manage Phoenix from a street rate perspective, discount perspective, occupancy level is gonna be challenging for us as we go, you know, into 2023. Really, you know, the rest of the markets, there's not a lot to really call out. We have some stable markets in the Heartland, like Oklahoma City and Tulsa, that are just, they're doing very well. You know, from a historical perspective, they're doing above average, but they're certainly not doing at what the portfolio level is. We're very comfortable in how they're operating and how they perform. You know, we kind of call them the steady Eddies, but they just perform well over and over and over again, and just didn't have the highs and the lows of the pandemic piece of it. Okay. Thank you. For my second question, I'm curious to hear more about the volume of move-ins and how that trended versus your expectations, and maybe how that compares to the movement from pre-COVID. You know, has that rate kind of slowed down, or did you see any signs of this being below your expectations? If you could comment on move-outs as well. Yeah, good question. Certainly the last year, move-ins were less and move-outs were more. That's comparing to last year. That's to be expected. As we look back to 2019, which is really probably the most stable year we could look to before the pandemic, both move in and move out activity are very similar to the patterns we would expect. We think it's returning to historical averages based on, you know, occupancy portfolio, how many tenants you have in the portfolio, and what's our expectations around the move metrics of that tenant base. You know, that's where I would point you there. What I would also add to that is the consumer shopping patterns are changing. It's taking more touch points, and it's taking more of a lift to get people to convert today. You know, one of the things we're very much focused on is marketing spend and really what we're doing with conversion rates. The team is very dialed into how do we, you know, boost that conversion rate and make sure we're using that dollar effectively. That will bring into play the other levers. Where are we positioned with street rate? What are we doing with discounting? How well are we closing? I think that as I looked at the quarter and really look ahead is, you know, that's back to really normal times of 2019 as well, and we need to continue to make sure that we're driving efficiencies through our conversion rates. Great. If I could follow up on how do you see move-ins? What is the move in, move out activity like into October? October, we, you know, we saw the occupancy come off of where it was in September. We were happy with where, you know, again, back looking at historical to 2019, very comfortable. It's a tough comp. I mean, really in the fourth quarter, we actually grew occupancy into the fourth quarter last year at a slight pace. That's one of the things we were looking at is, you know, it's a tough comp year-over-year, but it was very much in line of what we thought 2019 looked like. All right. Thank you. Thank you. Thank you. Our next question has come from the line of Smedes Rose with Citi. Please proceed with your questions. Hi. Thanks. Just kind of sticking with the occupancy declines, which do seem a little more pronounced maybe relative to your expectations and certainly to our expectations. I was just kind of wondering, you know, where do you think you might exit the year now on the occupancy front? I think internally our expectations, we'd like to flatten it out. I don't you know, we're not looking to lose a lot more occupancy. You know, obviously there's conditions going on out there with consumers and economic tightening and stuff that we have to navigate. I thought we did a good job holding our street and contract rate growth in the third quarter. I think you'll see a little more pressure on street in the fourth quarter and a little more pressure on discounting, which will allow us to flatten that occupancy piece. That's the math problem we're working on. The teams are working, you know, on every market and every store to really find where that balance is, but. I think, Dave, you've called this out in your remarks and in some of the questions here earlier today, but we really don't manage to occupancy. Smedes, I think I know you know that, we've talked about it a lot. Our objective here is to optimize revenue growth. That's been our strategy for a long time, and we'll continue to do that. I think our view is that occupancy settles out at 200 basis points higher than pre-pandemic levels for us, but probably still a gap between us and our peers. Yet, you know, we've set out to deliver, you know, outstanding growth and same-store revenue. Yeah. No, I appreciate that you're not running it for occupancy. I mean, I guess there is. I mean, there's got to be some point where, you know, you and other operators would pivot to protect occupancy rate. I mean, you can't raise rates- Sure. -on empty boxes, as they like to say. You know, I just wanted to ask you. I mean, do you feel like it's fair? I mean, it's just like, you know, commentary that we've heard from others and just something like your view on it. I mean, in some of the more secondary and tertiary markets, I mean, do you think you're just inherently more exposed to maybe a more demographically sensitive customer around rates and to what's going on with economy, the economy? Or do you think that's not that doesn't hold water? I don't think that's an issue at all. I do think one thing that is happening, though, is we didn't have some of the tailwinds of Miami and New York and L.A. and some of these other markets because of our exposure there. We were out. You know, we didn't have the rate restrictions that maybe some of our peers had for a couple of years. I think that weighs on us a little bit as you think about year-over-year results. I also think last year we did an excellent job driving this portfolio. In my words, I use overheating our portfolio. We drove it to an occupancy level through the back half of the year and a revenue result level that was abnormal for our markets. You know, we're settling back into what we think is normal for our markets. To Tammy's point, we think it's gonna be above pre-pandemic levels, which was an objective for us. you know, I think all things considered, I don't think it's a, you know, tertiary, secondary market question. We're just settling back into what we feel are very comfortable normals. Okay. Could I just follow up? I wanted to come back to the share repurchase. I mean, you, I think you did $50 million, you know, and you bought back at considerably higher prices. Presumably, I mean, would you be interested in maybe getting more aggressive on that front as we head through the year and given the decline in the stock price here? Or how are you? Maybe just kind of go back to how you're thinking about that program. Well, I think as we think about capital deployment, it's all about where we can achieve the best returns. I will also say that we are probably, along with others, being very, very selective, and we will deploy capital opportunistically. In this current environment where cost of capital is high and access is not as free as it was a year or so ago, maybe even six months ago, I think I don't have a yes or no black and white answer for you, Smedes. It is an alternative that we will consider as we are thinking about strategic capital deployment. When it's all said and done, it's all about the long term for us and building and delivering long-term shareholder value. You can imagine if we thought it was a great investment at $52, we certainly think it's an even better investment where we are today. I just don't think there's a black and white answer to your question. Smedes, this is Brandon. Okay. Thank you. The other thing I would add in. Yeah. Go ahead. The other thing I would add in is just that we, through today, we've issued almost 600,000 common OP units to contributors of properties. They've taken that equity at a price that's about $54 and change. You saw the activity we did on the repurchases was at $52 and change. There was, you know, part of our guiding thought on some of this was, hey, we were able to neutralize some of the dilution impact of equity that we had issued earlier in the year. That was also a point of reference for us in thinking through the execution. Right. Yeah. No, thanks for that. Okay. Thank you. Appreciate it. Thank you. Thank you. Our next questions come from the line of Michael Goldsmith with UBS. Please proceed with your questions. Good afternoon, good morning. Thanks a lot for taking my questions. I'm gonna try to tie together a couple different topics that have already been discussed. Tammy, you started the call off talking about the inflationary pressures on the consumer. Then later in the call, we touched on, you know, maybe there's been a little bit more difficulty converting customers who have entered the channel and in converting them to tenants. I guess just, you know, how do you think about the inflationary pressure on the consumer? How is it impacting kind of your trends? Like, are customers responding more negatively to rate increases? Are they being more price sensitive when moving in? Or are they just vacating at a more frequent rate just because they're spending more money on food and other things? Good questions. I'll try to cover as you went through. To your last question, we don't see any change in move out patterns that have to do with economic conditions. It's still around need based. As you think about, you know, when the time is up, the time is up for them. If you rented a storage unit because you're remodeling your house and your house is done, you're moving out. We haven't, you know, and this is through surveying and through things that we do, we have not seen a significant, you know, change in the customer pattern of why they're moving or why they're moving out. From an economic perspective, there's a lot of things that have changed. The housing market has cooled off significantly. You know, would we love to have a hotter housing market? Yes. In a down housing market, we will still do well. The sector does well. You know, we've proven that we're recession resilient, but we don't think there's anything around what's happening in economic conditions right now that's changing what's going on with our length of stay or our tenant base. As far as the conversion piece, you know, this is where we have to, you know, monitor all of our levers and figure out what's the best trigger point to get people to convert at the rate we want them to convert at. That's really more of a use around, I think right now, at this period of time, of what's happening with discounting, what's happening with street rates. There is a lot of the sector that is cutting street rates pretty dramatically right now. We have not done that. We've always talked about it's a balance between the revenue goal, and the revenue goal is rate, occupancy, concession, all those things in a mix. We've chosen the path that we've held a little firmer on street rate, held a little firmer on less discounting, and we're still generating the numbers that we aim to hit. I think that will change a little bit from the conversion pattern, and we may have to be a little more assertive on street rate and a little more assertive on discounting. That's helpful, Dave. My second question is on just kind of the cadence of the same-store revenue growth. You reported 10.7% in the quarter, so that was down sequentially by about 400 basis points. You know, your guidance at the midpoint implies about a 6% same-store revenue growth in the fourth quarter, which suggests kind of a step up in the slowdown. I'm just trying to better understand kind of the cadence of the moderation and how we should think about it going forward. And just like, I guess, you know, you talked about altering some of the approaches, like how much can that... Like how much can you expect to slow the moderation based on kind of this current rate of about 400 basis points sequential deceleration? Hey, Michael, it's Brandon. Let me try to hit a couple things you hit on there. Look, I think what's really important to remember is that the fourth quarter last year was very abnormal for a comp purpose, okay? Pre-pandemic, it would not be uncommon for same-store revenue from Q3 to Q4, just absolute dollars, to decline 0.5% to 1.5%. The midpoint of our guide for the full year 2022, it implies a fourth quarter it's closer to, like, a 7% growth rate. It has us declining from Q3 right around that level. Last year, the increase from Q3 to Q4 was about 2.5%. That speaks to how challenging that comp is. We're not really trying to manage to the comp or the cadence. It's more about just executing on strategy, which Dave spoke to, and the comp is what it is. I think, you know, another thing that people have done across the sector and for us is just to look at that two-year stack, and that moderation is a lot more ratable. It's not as dramatic, if that makes sense. No, that does. If I can squeeze one more in. On the topic of property taxes, you've been feeling the pressure from Texas this year. Do we have any visibility into how property tax may play out in the coming years? coming years is tough, Michael. I mean, we'll guide in February. I'll tell you, we start every year with, like, a 5%-7% growth rate assumption. Coming into 2022, we had an average three-year increase of 2% on total OpEx and an average annual increase on property tax of 2.4. We've dodged it the last few years, and so we came into this year with that higher assumption and we're experiencing it. You see our numbers for the full year, nine months, and I think Q4 will be something similar. The comp for property taxes is a little more challenging, so maybe it comes in for fourth quarter year-over-year closer to 8%, but it puts the full year number at something closer to 7. The high end of where we would have entered this year with the expectation. We'll update in February about what we're assuming for the full year 2023, but you know, best guess right now is it would be kind of in that 5%-7% range. Got it. Thank you very much. Good luck in the fourth quarter. Thanks, Michael. Thank you. Our next questions come from the line of Wes Golladay with Baird. Please proceed with your questions. Hey, everyone. Can you give us your view on supply this year versus next year, when you look at it from a weighted average of the impact of your operations? Sure, I can start. Dave and Brandon can jump in. I think our view of supply this year is that it has been, and it will remain, somewhat muted. I think that for projects that are under construction, they'll go forward, they'll be delivered. What we're seeing and hearing from our PROs and from our friends at Yardi is that projects that are not yet approved and certainly projects that have not yet secured financing very good chance that they will fall out at least for the time being. Our view on supply is that it will remain muted, probably through 2023, and when we'll start looking at potential impact probably, I don't know, early to mid-2024, but we'll keep you updated on that. We track that pretty closely, not only with Yardi, but with our PROs who are operating in the markets where, you know, where we're seeing the potential threat. Got it. Then, you had the comment earlier, it's an all cycle business, and it has proven that to be over the last, you know, 10, 20 years. If you can maybe comment on some of the cyclical demand that may be abating, and then are you seeing the counter cyclical demand pick up at the moment? Yeah, I think, you know, as we talk about maybe that now that the housing market's cooled off, you know, will there be other factors that pick up on that? We are. I mean, I think the hard part for us is we're coming off something that was historic, and you look at, you're coming off a pandemic which we navigated very nicely through. We obviously had a lot of success, you know, as the pandemic matured and went through its cycle. We just, you know, the self-storage sector and ourselves had unbelievable highs. Now we're heading into this uncharted waters of tough economic conditions and certainly maybe looking down the barrel of a recession. I think all things will continue to play out. If the housing market cools off, then the renter market maybe stays longer. People can't afford as much of a house as they could. You know, what happens with business owners and how much. You know, we're a pretty nice option versus warehouse space for business owners and how they look at us. I just think all the things that we've seen through our history will prove out again that this sector and our business and our portfolio will do well and be recession resilient through what's coming forward for us. Yeah, I think that's right, Dave. I mean, what we've talked about over the years is that change drives demand. When one source of demand dries up, another one seems to flourish and replace it. That is our, you know, view of, I don't know, probably through the next 18-24 months. Mm-hmm. Got it. Housing. Yeah. No, sorry about that. Yeah. That's okay. Well, if I get one last one in, you know, variable debt increased this quarter, and you did have a $200 million loan at a pretty attractive price. What is the appetite for more variable rate debt? Is it something you wanna get down over time through free cash flow, maybe some dispositions? Rates did move up almost parabolically, so it may have caught some people off guard, myself included. Just maybe how you're gonna navigate the variable rate challenge. Yeah. Wes, this is Brandon. I mean, we're at a level that we're comfortable with right now. I don't think you should expect us to go dramatically higher. I also don't think that exposure is gonna get cut to zero either. In my opening remarks, you heard me mention half of that. 24% of our total debt is variable rate, and half of that is revolver. When you exclude that, because over time, we're gonna replenish that revolver balance with permanent capital, long-term capital, fixed rate, you know, debt. When you think about it with and without, and when you exclude it, you've got 12% of the rest of our debt, a couple of bank term loans that we've kept variable. You're right, I mean, rates move sharply, so that will be a short-term headwind. When, you know, things calm down, there will be opportunity for us to opportunistically, you know, raise capital like you mentioned we did during the quarter with the 5% coupon debt that we placed. Great. Thanks, everyone. Thanks. Yeah. Thank you. Thank you. Our next question has come from the line of Ronald Kamdem with Morgan Stanley. Please proceed with your questions. Hey, just a couple quick ones. Just going back to the occupancy, but actually mixing in a little bit of the ECRI. When you think about, can you just give us a sense of the ECRI intensity, you know, over the past couple quarters as you're sort of watching this occupancy drop? Because I think your point is that there's a trade-off, and I think what we're trying to figure out is where was sort of the peak ECRI intensity and, you know, how much does it come off potentially as you've sort of seen occupancy go down, if that makes sense. Yeah, it makes sense. Thanks. You know, typically peak, you know, historic seasonal trends, the peak ECRI activity is really in the summer months. You know, there was a couple of months in the summer, I think we mentioned last quarter, May was our most active month, where we had the largest percent increase and the largest percentage of tenants hit. If you looked at the third quarter, we kept a very normal cadence. The percent of rate changes, the percentage of rent change to the customer as far as the dollar amount was very much in line with what we've been seeing over the last 12-14 months. The percentage of our tenants that we hit in the third quarter was very similar. It is a balancing act. The team is studying right now, you know, what's the percentage of loss that we can attribute to rate increase versus what customer sentiment is to what customer appetite is. You know, we're, we've already gone back and instilled some caps. We were looking at, you know, percentage of rate, you know, how many number of rate increases we've given tenants. So we're going back to some of the older practices that allow us to really dial in our risk score on do we give a tenant an rate increase or not. But the third quarter remained very steady. We were fairly steady in October. What's to come, you know, we have to monitor what the consumer is telling us. At this point in time, there are nothing that they've told us yet that, you know, is causing us to shift dramatically. Again, you know, this is stuff we monitor and it's a big puzzle and, you know, there's a lot to it. I hope that answers your question. Yeah, that was super helpful. Just moving on to the next one. It's just on the expense, same-store NOI expense guidance or the same-store expense guidance, excuse me. I think you mentioned it was higher both 'cause of, you know, some property taxes and some inflationary pressures. Any chance we could just dig into that and a little bit more color? Like, is it half of it is taxes, half of it is the other? Like, how does it break out? Just any more color on what came in higher than you expected? Thanks. Yeah, Ronald, I mean, taxes is a big piece just given it's you know one of the two largest OpEx line items in addition to personnel. It's coming in closer to 7% for the full year growth. But we've managed the personnel costs really well, right? A little under 3% growth for the quarter, call it flat for the 9 months year-over-year. Those making up almost 60% of our OpEx, they blend out to kind of like a 4% growth combined for those two line items. Then really what you have is those other contributors that I mentioned in my opening remarks. We were seeing the utilities costs go up in second quarter, so there were some elements of that already baked into our expectations when we talked to you in early August. I would say it came in and those costs and the increases in rates came in a little bit higher than we expected three months ago. That was a contributor to upping the OpEx guide a little bit. Then on marketing costs, again, we fully expected to increase that spend. I mentioned that at the open. I also think in one of the questions earlier spoke to the fact that that's gonna be elevated again in the fourth quarter. You know, we pulled on that lever a little bit more than we might have thought in early August. Those were a couple of the key items. Credit card processing fees is another one that came in on the margin a little bit higher. Great. Then my last one was just, so when I look at the same-store revenue guidance, it sort of implies, you know, sort of a mid-sixes growth rate coming in 4Q, if I'm doing that math correctly. But, you know, I think we're just trying to square the same-store revenue for 4Q versus the peer set. You know, how do you guys sort of think about where your portfolio is different from everybody else, right? Is it maybe because, you know, others have L.A. exposures, you guys don't? Do you think about sort of rent-to-income ratios at all? Like, just how do you square sort of what you're seeing in your markets versus the peers? Thanks. Yeah. Ronald, I mean, it's hard to speak to the peers 'cause everybody's portfolio has different dynamics. I know that we were the second highest in revenue growth in Q4 last year, right? That's gonna play into the two-year stack when you do that math on the comp. The other thing I would just point to is what I remarked to Michael earlier about, you know, the comparable and kind of the abnormality of what we had last year as well as 2020, where sequentially same-store revenue grew Q3 to Q4, and that was in part because we were either gaining occupancy or you know, not trading off that much on occupancy. That's very unusual. If you look at any pre-pandemic year with occupancy declining Q3 to Q4, as it seasonally does, it would not be uncommon to have absolute dollar revenue growth decline Q3 to Q4. We didn't have that last year, but we're absolutely expecting it this year, or at least that's what's implied by the midpoint of the guide. I think, you know, another way of saying what some of this is, you know, as I hear you and others remark on what the growth implies, that, you know, you're all coming up with like a 6.3%, a 6.5%. It's actually a 6.9% at our midpoint. It's the difference between doing kind of the simple quarterly average math and looking at the raw dollars because of this really challenging comp. With the... You know, if we look at the strict, specific dollar math, the low point of our revenue guide implies Q4 growth of 5%, the midpoint is 6.9, and the high end is, when we look at it's 8.8. That just speaks to the challenging comp that we have or the unusual comp that we have in the fourth quarter of last year. Great. Super helpful. Thank you. Thanks, Ronald. Yeah. Thank you. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question is coming from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your questions. All right. Hi. Thanks. Dave or Brandon, maybe, you know, you both pointed out a number of times, you know, that occupancy grew last year from 3Q to 4Q and talked about that tough comp and some of the abnormal seasonality last year. You know, with regards to that 91.4% occupancy data point at the end of October, I'm curious what the year-over-year spread looks like in occupancy. Also, is the change in discounting and promotions and I guess, you know, the change in street rates that you're now implementing having the intended result, or are you starting to, you know, see demand stimulated a little bit more and the expected response? Yeah, Todd, I'll take the first part, and I'll let Dave speak to the discounting and promotions and success rate on that. It's about 400-450 basis points year-over-year negative on that end of occupancy number that Dave spoke to. I think, you know, just to bridge some of the commentary that you heard from Tammy and Dave, our low point going into COVID, so late 2019 on same-store occupancy was right around 87%-88%. For a long while now, we've been saying, look, we are gonna revert back to a more normal level. As Dave said at the open, we think it's gonna stabilize above somewhere above, maybe 200 basis points. That could put you at 90%. You know, I don't wanna mischaracterize what we've said here. I think even though what Dave said is true, maybe it's gone a little quicker. It's not that much quicker. I mean, our revenue guide at the midpoint stayed the same. We're not necessarily that surprised by what's happening in occupancy. We're certainly reacting on a daily basis, but I don't wanna mischaracterize some of the comments earlier as if it was a you know, big surprise to us. Dave, you wanna hit the discounts? Yeah. You know, kind of trying to work our way through discounts. We talked about, you know, third quarter was historic, you know, it's low, 2.2%. You know, at this time of year, you might be running closer to 4.5%-5%. I think as we look at, as how we navigate, you know, this conversion rate that we're after, I think, you know, that this kind of piece is gonna step into this place, and then where we balance, you know, ourselves in the market as far as street rates. I think all those things contribute. We, you know, purposely held through the third quarter. We, you know, contract rate growth was solid. Street rate decline was minimal, and that was on purpose. This is how our markets react. Again, I think this occupancy headwind, you know, compared to last year is a tough drag to get over, but that's not what we're worried about. We're worried about where we're going with our portfolio and where our portfolio lands. We're looking at this, not just this quarter or the next quarter, but long term. Long experience in our markets, long history with our customers, finding the right balance of all these things to find the revenue number that fits for the markets we operate in. The occupancy headwind, Todd, it's gonna be there. I mean, just, you know, this should be on everyone's screen. It's gonna be, you know, a negative comp challenge for certainly the fourth quarter of this year as well as Q1 of next year. Just until we lap that, this kind of abnormal comp, we really don't lap it until Q2 of next year. Okay. Got it. That's helpful. In terms of, you know, kind of looking ahead, it's, you know, there's clearly a little bit of uncertainty around the macro and, you know, conditions are, you know, sort of evolving, you know, with regards to the consumer, with small business, and so forth. I'm just curious, as you know, you kind of think about budgeting for next year, you know, are the PROs in the portfolio communicating with you any differently today? You know, are they coming to you looking for a little bit more guidance or vice versa? Maybe Tammy, you know, can you discuss, you know, how you work with your PROs to set budgets and forecasts and, you know, sort of re-forecast, you know, I guess for the year ahead and really throughout the year a little bit? We're well into the budgeting process for 2023, Todd. The process, you know, starts toward the middle to the end of the third quarter. We have regular conversations with our PROs, and this is on a handful of different fronts. We have a VP of financial planning and analysis who kind of runs the process, and he stays very close to our PROs and their chief financial person, whoever that ends up being. I would say that what we're hearing from our PROs so far this year is pretty consistent with what we're seeing across our corporate portfolio. I think the communications are. Everybody is cautiously optimistic. You know, our PROs have been in the business for, you know, 20-plus years and operating in their respective markets, so they understand this as well or better than frankly anybody as far as I'm concerned. I think that the moderation that we're seeing is not unique to corporate managed stores. It's really across the country. Some markets being affected maybe a little more than others. You know, what we've talked about over the years, Todd, is that because of our broad geographic diversification, for us, what we see is that when one, two, or three markets go down, there are another three, four, or five that are countercyclical and are going up. I think that will continue to be true for us. The communication just generally speaking, communications with our PROs happens at a lot of different levels. In terms of the principals, we have a Monday afternoon, you know, touch point meeting that we've had, I don't know, every Monday, barring travel and other things going on, like we might be releasing earnings or something. We have a Monday call with the PROs. Then once a quarter at least, we do a deep dive with each PRO. That's not a big group call, but rather a deep dive on the PROs' performance, what they're seeing in the market, what they're seeing with new supply, you know, what their expectations are, both short term and a little bit longer term. Well, yeah, Dave just mentioned to me, and then we also have a biweekly operations meeting. The operations leads are staying in touch on what they're seeing in their markets and best operating practices. And then we have an annual meeting where we bring everybody together, and you probably didn't even want to know that much. I think. No, it's all. We can- Yeah. Sorry. Go ahead. Okay. Oh, no. I was really just wrapping up. I was just saying, I think that communication is frequent and thorough and continues to be, I think, very productive and collaborative. Okay. I guess I'm also wondering, you know, how much input do you have on the budgets that they're setting for the year? Or, you know, alternatively, do you know, take their budgets and, you know, as you kind of wrap them up or roll them up to sort of, you know, the corporate or, you know, to the REIT's forecast for the year, you know, how much work do you do on their budgets? It's a good question. The answer to that is, you know, we have a software that, you know, we set up all the parameters, and we set up all the historicals on, and we actually, it has, you know, the ability to, you know, make changes through line items. We let them take a first stab at it. We come back in, you know, so it's a bottom-up approach. We listen and solicit feedback, and then we get heavily involved in it. We look at what, you know, markets that we have overlap, you know, expectations. You know, we certainly have a goal in our mind of where we would like to land next year, and that plays into that budgeting process as well. It's collaborative, yes, but there are some pushing and talking and, you know, negotiations that go along in that process. Lots of experience, lots of great minds working on it, but definitely, you know, we are involved in the budget process. You know, from my experience, the way we run it is not very different from other companies that I've been involved with in terms of, you know, where it starts and how it builds up. Then, you know, eventually, we know who the sandbaggers are, and we know the guys who are, you know, being out there, you know, putting their maybe strongest foot forward. So we push and we pull. You calling me a sandbagger? Uh, I would- Okay. The one sandbagger in charge. Okay. All right. No, that's helpful. Just one last one real quick on the transaction environment. I realize that you're, you know, you're expecting, you know, activity to be slow here near term, and that makes sense. There's, you know, some volatility around asset pricing and in the capital markets. You know, I just wanted to ask about the captive pipeline, which I think stood at around $1.5 billion, maybe slightly higher. You know, what's the status of that pipeline today, and how should we think about investments from the captive pipeline and just, you know, what the PROs will look to do, you know, given the current lending environment when you sort of put it all together? Because I believe a lot of those acquisitions from the captive pipeline were, you know, sort of expected to take place at, you know, alongside debt maturities and other capital markets related activity or recaps. Just curious, you know, what we should be thinking about there, just given where interest rates are and the lending environment and so forth. I don't think we'll see too much of a change in cadence because of the capital markets. You know, the assets that have financing on them, it's already there. There may be a little bit of an acceleration with a handful of our PROs who are developing assets and as those assets approach stabilization, and they're looking for, you know, whether they get contributed or permanent financing until they reach full stabilization. I don't know the answer to that yet. You know, our cost of capital has gone up too, so that resets pricing and expectations on that side. I think it will remain a solid opportunity for us to maintain an acquisition pace of off-market acquisitions at good prices with our PROs and assets that are high quality in markets where we're currently operating. It may accelerate a bit. I don't have line of sight on that yet, but I think it's a good bet that we'll see some assets ahead of where we might have otherwise in 2023. Okay. All right, great. Thank you. Mm-hmm. Thank you. Our next question has come from the line of Steve Sakwa with Evercore ISI. Please proceed with your questions. Hey, team, this is Laura with Steve from Evercore. I just have a quick follow-up question. Geographically and demographically, your customers are relatively more sensitive to inflation and national pressures. Pertaining to this factor, I guess, how's the bad debt trending so far, and what's your expectations of the bad debt levels through year-end and towards 2023? Thanks. Yeah. Yeah, thanks for the question. Good question. You know, bad debt has certainly returned to pre-pandemic levels, and returned, you know, really in the third, you know, it started in the second quarter, really returned into the third quarter. The teams are having to work, you know, really hard on collections as far as back to what normal, you know, normal cadence would be. We're seeing more units at auction. You know, the processes of those things are back to what we would see, you know, levels of 2019. Is it concerning us? No, not at this point. These are levels that we're used to operating under. And that's not everywhere. We have markets that are a little, you know, could be a little higher than that, and markets a little bit lower than that. As a whole, it's returned to average. Again, no concern at this point. Okay. Is there any certain level of bad debt that makes you start to be cautious on rate growth and maybe try to start to manage the occupancy? Yeah, I think we've tried to talk through it. You know, certainly occupancy is a piece of this, and we are looking at how and where we wanna land throughout all of our markets. We certainly, in the third quarter, looked at marketing spend, and the only reason you'd look at marketing spend is you wanted to drive more move-in activity. We're gonna look at, you know, where we're positioned with street rates and discounting. Yes, that is a part of the piece of the puzzle. There will be some markets that we will certainly react a little bit harder if we wanna drive some more occupancy, and we think that's the right revenue math problem. You know, that's what we would work on. We also have markets that are performing very well that we're going back into and say, "Can we drive a couple more points of occupancy in markets that are performing very well?" It's not always a negative thing that we're trying to balance all these pieces, where we spend our money, how we use rates, how we use discounting. Certainly on our mind about where we balance and where we finish. Okay, thanks. I appreciate the call. Yeah, thanks. Thanks for the questions. Thank you. There are no further questions at this time. I'd now like to hand the call back over to Tamara Fischer for any closing comments. Thanks everyone for your time today and for your interest in and support of NSA. Even with moderating fundamentals and tough comps, we had a great third quarter, and we're very optimistic about the rest of the year and into 2023. As I mentioned earlier, self-storage has demonstrated its resilience in challenging economic times and is one of the best, perhaps the best performing property type over the past 25 years. We look forward to seeing many of you in San Francisco in a couple of weeks. Thanks, and have a great day. Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.