Greetings, welcome to the National Storage Affiliates Q1 2023 conference call. At this time, all participants are on 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 Q1 2023 earnings conference call of National Storage Affiliates Trust. On the line with me here today are NSA's Executive Chair, Tamara Fischer, President and CEO, Dave Cramer, and CFO, Brandon Togashi. Following prepared remarks, management will accept questions from registered financial analysts. Please limit your questions to one question and one follow-up and then return to the queue if you have more questions. In addition to the press release distributed yesterday afternoon, we furnished our supplemental package with additional details on our results, which may be found in the investor relations section on our website at nationalstorageaffiliates.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, May 2nd, 2023. 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 Dave. Thanks, George. Thanks everyone for joining our call today. Before we get started, I'd like to acknowledge the recent passing of a valued member of our Board of Trustees, George Chapman. George joined our Board at our IPO in April 2015. His contributions are too many to name. We greatly appreciated his wisdom, guidance, and sense of humor. We will miss him greatly. Many of you know today is my first earnings call as CEO. Tammy is in the room with us today. I'd like to say thank you for all you've done for NSA over the years, and congratulations on your move to the Executive Chair role. I'd also like to acknowledge and thank all of our team members here at NSA and our PROs for their continued dedication and hard work. It's a significant contributions from our team members that drive our continued growth, and we appreciate everyone's efforts. Overall, looking how the year started, there are positive signs that fundamentals are moving in the right direction. Street rates have increased 4% from the beginning of the year through the end of April. Contract rates are also up slightly over that same timeframe. Length to stay continues to increase, with the average length to stay on move-outs now up to 17 months, the highest it's ever been for our portfolio. Also, our rent roll-down has moderated every month this year, starting at 19% in January and is now 13% in April. With things moving in the right direction, I'll remind you that we're coming off the best two- years of rate and occupancy growth in the self-storage sector has ever seen. The comps are challenging as we moderate back to normal levels. Turning to results for the quarter. We began the year with solid operating performance, delivering same store revenue growth of 5.7%, which is still above the long-term historical average for the sector. Occupancy ended the quarter at 89.8% and April finished at 90%. With the headwinds of a slowing economy and a muted housing market, demand levels will continue to feel pressure. As an example, in March, home sales were down 29% year-over-year in both Phoenix and Las Vegas, while occupancy in those markets was down 570 basis points and 790 basis points, respectively. Our teams have done a good job navigating the changing economic environment and remain focused on executing strategies to capture new customers as we progress through the spring leasing season. Keep in mind, it's still very early. The next couple of months will be key to our full year growth. Geographically, our Sun Belt and secondary markets continue to outperform, with MSAs such as McAllen, Oklahoma City, Brownsville, and Wilmington all generating revenue growth north of 10%. This reinforces our strategic market focus and continued emphasis on geographic diversity. Turning to the supply environment, we believe that on a portfolio-wide level, supply will remain relatively muted near to midterm given the many headwinds that developers are facing today. That said, there are a handful of markets where we're feeling pressure from new supply, resulting in below-average growth, including Portland, Phoenix, and Las Vegas. On the acquisitions front, we had a productive quarter, acquiring 16 properties totaling $160 million. 15 of these properties were previously discussed and were part of a portfolio purchased out of the captive pipeline for approximately $145 million. We funded these transactions with $150 million of equity, which Brandon will discuss further in his remarks. These transactions demonstrate one of the benefits of our PRO structure, which is the captive pipeline, which now stands at approximately 100 properties totaling $1.4 billion. The acquisition environment remains competitive with a wide gap between buyer and seller expectations while we remain patient and disciplined, focusing on captive pipeline and off-market transactions. I'll now turn the call over to Brandon to provide more detail on our financial results and balance sheet activity. Thank you, Dave. Yesterday afternoon, we reported Core FFO per share of $0.66 for the Q1 of 2023. Which represents a decrease of 2.9% over the prior year period. The sequential and year-over-year decline in Core FFO per share, despite 4.8% growth in same store NOI, was due primarily to elevated interest expense given the rising rate environment, minimal acquisition volume in the Q4 of 2022 versus the $1.1 billion of acquisitions in the Q4 of 2021, and an overall deceleration in operating fundamentals as we come off historic highs. Operating expense growth in the Q1 was 8.3%, in line with the high single-digit growth we previewed on our last call, as we had a tough comp on property taxes with favorable adjustments in the prior year period. Property taxes grew 11% year-over-year, but excluding the prior year adjustments, the growth was closer to 7%. We also saw an 11% increase in utilities and a 29% increase in marketing expense. Both of these line items had elevated spend beginning in the Q2 of last year, so we will start to lap the tough comps by mid-year. These items were partially balanced by lower growth in other line items, a 1% increase in payroll, and a 4% increase in repairs and maintenance. Turning to the balance sheet. Apart from the January recast of our credit facility we previously announced, we issued $113 million of a new series of preferred stock during the quarter in conjunction with an Orlando portfolio acquisition. The Series B preferred stock has a 6% coupon and was issued at an effective yield of approximately 6.1%. Separately, we also repurchased 1.6 million common shares for $69 million. Subsequent to quarter end, we issued $120 million of five-year unsecured notes in a private placement with a face coupon of 5.61% and an effective rate to us of 5.75%, inclusive of the impact of pre-issue hedges. Additionally, Kroll Bond Rating Agency affirmed NSA's BBB+ credit rating and maintained the outlook at stable. At quarter end, our leverage was 6.3 times net debt to EBITDA, up sequentially from year-end, primarily due to typical Q1 seasonality. We project leverage will decline slightly in the next couple quarters as EBITDA increases from organic growth and the acquisitions we completed in mid-March. Giving effect for our $120 million debt raise, approximately 16% of our debt is subject to variable rate exposure, mostly from the outstanding balance on the revolver. We're committed to maintaining a conservative leverage profile and healthy access to multiple sources of capital. Moving on to 2023 guidance. As Dave mentioned, it's still early, so we will wait until we get further into the peak leasing season before revisiting the outlook for same store revenue growth. On the OpEx front, we completed our annual property insurance renewal effective April 1 and experienced the same as other property owners, a very challenging renewal market with cost increases that were roughly double what we had in the budget. While insurance expense is a relatively small component of our property OpEx, this will still put some pressure on growth, which we'll combat where we can with controllable items. We thus maintain the guidance ranges that we introduced in February, which can be found in the earnings release. Thanks again for joining our call today. Let's now turn it back to the operator to take your questions. Operator? Thank you. At this time, we'll be conducting a question- and- answer session. If you'd 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'd like to remove your question from the queue. As a reminder, we ask that you please limit to one question and one follow-up and return to the queue if necessary. 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 questions. Our first question comes from Michael Goldsmith with UBS. Please proceed with your question. Good afternoon. Thanks a lot for taking my question. Your comments from the earnings release and the call today implies some caution. Can you maybe elaborate a little bit on how you viewed the quarter and then trends in April? Hi, Michael, this is Dave. Thanks for joining our call today. I appreciate you being on, and thanks for the question. Yeah, I think as you listened to what we talked about in our prepared remarks and as we look at the quarter, we certainly have a challenging comp to last year's occupancy, and we've been facing that comp now for two quarters coming off unprecedented times of just great times for the self-storage sector. We really spent a lot of time looking on what is it we wanted to accomplish in the Q1 and what were the business trends we were trying to achieve in the Q1. The Q1, in our opinion, really reacted pretty much as we expected. We saw seasonal changes where you saw the trough in occupancy and you saw the trough in the street rates really come in about mid-quarter in February, which would be expected in a normal seasonal trend. We saw improvement in March, and we saw improvement again in April in occupancy and street rate and contract rate. From that, our seat, that was a positive, you know, reaction in the quarter, a positive trend within the quarter that we're hoping to see. You know, our Sun Belt states continued to perform well throughout the quarter, really outperforming the portfolio in general. Our MSAs above 25 also outperformed our portfolio in general, as you think about how they performed against the total portfolio. You know, top of the funnel, we're made it active. We had to spend more marketing dollars to keep customers coming in that top of the funnel. As we looked at the quarter, though, we thought the rental activity was a little bit less than we wanted. Top of the funnel was active enough Conversion rates were not as strong as we wanted to be within that funnel, and so we thought rental activity was a little bit on the light side. Again, overall, the quarter very much played out like we thought, and we were pretty happy with where we ended, particularly coming out of April. That's helpful, Dave. As my follow-up, I'm just trying to put the start of this year into context. Maybe if we compare, you know, other years where, you know, rent activities may be a little bit light. In the beginning of the year, you know, has there been times when it picks up in May and June, and you're able to meet your expectations or meet the guidance through the year because things pick up? Is it kind of like, you know, when you face pressure earlier in the year, it's just harder to catch up based on maybe a little softness earlier in the year? Good, good question. We do think it's early yet. You know, we're just now entering the spring leasing season. We still have May and June, which are very, very active months, and sometimes July, you know, parts of July are as well. We think it's too early to tell, and that's why we haven't really, you know, looked any more about our guidance. We think there's plenty of opportunity in the next couple of months to drive performance, and we're watching it very closely. Like I said, we did see an improvement, you know, April over March as far as net moves. We were pleased with that. you know, April just a pure rental activity in occupancy gain, March to April was just a little lighter than we thought it might be based on maybe 2018 or 2019 trends, 2018 or 2019 trends. Got it. Thank you very much. Thank you. Appreciate it. Our next question is from Juan Sanabria with BMO Capital Markets. Please proceed with your question. Hi. Thank you. Just wanted to follow up on that last commentary. One of your peers talked about March was softer, but April rebounded, and it's kind of back to normal. Just curious, I guess, what you saw month to month in March and April and maybe May? I guess you can't talk to May. It's the second of May. Just curious on the slope of what you're seeing and if that is not as steep on the upward trajectory as you'd normally would expect? More importantly, I think from an investor perspective, what's assumed in guidance is, if you could just comment on that'd be great? Thank you. Yeah. I'll touch on the, you know, the slope of the activity around the LPs, Brandon can jump in on the other backside of that question. You know, certainly again, we were happy with the improvement. We saw street rate improvement, we saw contract rate improvement through the Q1, and It also improved in April. We're happy with that. The top of the funnel, you know, the marketing spend of the dollars we deployed generated opportunities. I think April. You know, March to April, maybe we would expect maybe a 60-basis point improvement in occupancy, We didn't get the 60. That's where we're looking at the rental activity being a little softer now. It doesn't mean it's not gonna come either. There are days of the week involved at the end of April, where maybe a Saturday last year was the thirtieth, and the thirtieth this year was on a Sunday. There's some movement around days. You know, we're way early in May. I can't really comment on May, but I do think there's an opportunity from a rental aspect to make some of this up in the month of May. Brandon, if you wanna jump in on... Juan, the only thing I would say, kind of in response to what you asked as well as what Michael asked is, you know, we're doing a lot of sanity checks as it relates to what we saw pre-pandemic years. You know, there's other things in play as well. We're still coming off the historic high occupancies that Dave spoke to. Our in-place rate strategies, though, are a lot stronger than they were back in 2018 and 2019. You have that dynamic as well. We can use 2018, 2019 as reference points, but there's also an element of a new normal that we're frankly still finding. On this, just on the existing customer rate increases, how have you been able to push those? What's been the receptivity of the customers? Has there been any increased price sensitivity to where maybe you step back on the pace of the increases you'd expected to push through? Any commentary would be helpful. Good question. Honestly, no. That's been very solid for us. It's been a good strength for us. You know, our cadence remains as active as it has been in, you know, really through the pandemic. The amount of customers and the amount of rate increase they're getting remains very constant and very, you know, right where we want it to be. There's been no change. There's been no commentary back from our consumer. Our length to stay hit 17 months, which is the longest length to stay on move-outs that we've seen in our history. I think there's a lot of strength around that. Right now we're really confident where we're at with our in-place rent changes. Thank you very much. Thank you. Our next question is from Jeff Spector with Bank of America. Please proceed with your question. Great. Thank you. Yeah, just stepping back, I'd say, you know, the comments on the call today are more positive than the quotes I read in the press release. Just trying to figure out again, maybe the weakness or where it was lighter in April. 'cause I think based on the press release and the quotes, there was some concern maybe it was more national. Though, when you say lighter in April, are you specifically talking about the weaker markets you highlighted in the press release and on today's call, like Phoenix and Vegas, where there's more supply? I guess, can you know, maybe, dive into that a little bit? Yeah, great question. Thanks, thanks for being on the call. Those markets certainly put pressure on that activity. Absolutely. You know, you certainly have seen changes around some of these markets because they're coming off from some really hot, you know, housing market, but also they have new supply coming. Phoenix had supply coming, Vegas had supply coming. We're still feeling pressure in Portland, which was one of our largest MSAs. Some of that move volume is clearly around those markets. We also had, you know, our other markets, some in the Sun Belt, you know, Oklahoma City, another one we called out where we had very good activity. I would not say it's a national situation. It's just we do have some markets that are more adversely affected due to changing economic conditions. Okay, thank you. My follow-up would be on the, I guess, the marketing strategy as we're, you know, heading into May here into some of the busy months. Like, what is the marketing strategy at this point, for 2023 peak leasing? Certainly, we wanna make sure that we keep the activity at the top of the funnel. We have certainly increased our marketing spend pretty substantially to make sure that we're keeping that activity. I think the tricky part as the team's experiencing, and it's, you know, we have a lot of markets and all markets are not reacting the same, is really pricing and discounting and really getting that customer to convert as you get them into the funnel. You know, we would like, you know, a little stronger conversion rate into rental from those opportunities. We're generating enough opportunities. We're happy with the opportunities we're generating. We're just we're trying to find the right formula to get a better conversion rate. We think customers are shopping more. They're certainly taking more touch points to rent. It's feeling, you know, it's feeling back like it did in 17 and 18 and 19. We're really trying to figure out what's the best formula in all of our markets, and it varies by market to get the conversion rates we want on rentals. Okay, thank you. Thank you. Our next question is from Samir Khanal with Evercore ISI. Please proceed with your question. Yeah. Can you provide the various components there? I mean, how are they tracking versus your expectations? Any areas where you're seeing more pressure than others? I missed the first part of that, Samir. will you ask the first part of that question? Yeah. No, I was asking about just an update on expenses, the various line items, the components, how are they tracking versus your expectations? Any areas where you're seeing more pressure than others? Yeah. Samir, this is Brandon. The Q1, as I mentioned in the open, was very much in line with our expectations. We knew property tax was gonna be a tough comp. High single-digit growth number over prior year was not, you know, a surprise to us. We were essentially on our budget. As a reminder, the Q1 growth for same store last year in OpEx was 3%, even though for the full year it was closer to five. It's just a tough comp there. Everything, you know, the biggest surprise is the insurance that I mentioned at the open. We have a renewal that starts April 1, so we feel three-fourths of the impact of that 12-month renewal in 2023. We had budgeted something closer to 25% year-over-year increase. Like I said in the earlier remarks, it's going to be closer to a 50% year-over-year increase, April through December, that you see in this year's numbers. That's the biggest downside that's come through since our last call. Property taxes for the full year, even inclusive of the tough Q1 comp, we still expect to be toward the high end of the total OpEx range that we gave. Call it, you know, 5.5%-7%. Personnel, R&M, we expect to be within the total OpEx range, maybe even a touch below in the case of R&M. Marketing will be double-digit year-over-year. The worst of it, I think, is Q1 and Q2 because of the comps. Got it. Okay. Thanks for that. For my next question, just switching subjects a little bit here. You know, we've seen the LSI deal get announced, we've been getting a lot of questions about your portfolio. Just how difficult does the particular PRO structure deal to get approved in the event that there was an interest for your portfolio? Maybe help us think through the process here. Yeah, Samir, I'm sorry. It's really choppy. Can you say it one more time, please? Yeah. Look, I... You know, we've seen the LSI deal get announced, and we've been getting a lot of questions about your portfolio. Maybe just remind us how difficult does the PRO structure make it for a potential deal to get approved in the event that there was an interest for your portfolio? Help us think through the process. Well, you know, Samir, our board is very focused on strategies that will create superior long-term value for our shareholders. That's top priority, and they certainly are very focused on it. The PRO structure itself, you know, if the PRO structure to remain intact, it doesn't really put a lot of obstacles in it at all. I mean, if there's changes to the current structure and there might be modifications to current structure, then the PROs would certainly have a voice in the transaction. If all things remain the same and the PRO structure remained intact, there's a very clear path to it. Okay. Thank you. Thank you. Our next question is from Keegan Carl with Wolfe Research. Please proceed with your question. Yeah, thanks for the time, guys. Dave, I know you mentioned in your opening remarks that street rates are up kind of similar, you know, in the 4% range since the start of the year. I'm just kinda curious, a few questions on that. First, how does that compare to March and then also to this time last year? You know, throughout Q1, if you could just help us kind of understand how street rates flowed, just given the softness that everyone experienced in March. Well, I can tell you street rate rise, we've improved every month since January. We've seen a continual uptick, you know, January to February to March to April. You know, the April was the strongest of that increase. That's where you saw the largest percent increase month-over-month as expected. I mean, as you're going into the spring leasing season, we're starting to see a little more activity. We're certainly trying to push, you know, as hard as we can. You know, it's hard to compare to last year. Last year was such an outsized year. I mean, we had the best pricing power that we've had ever since I've been in this industry. We had, obviously, the strongest occupancy numbers. You know, our street rates are still down about 8% to last year. The pace of growth, April to March last year was better than it was this year. Again, just a really tough comp. I would say, as I look back at maybe in 2018 and 2019, maybe at core portfolio, that April street rate gain is similar to what we just saw in that April, you know, in the 2018 and 2019 cycle. Yeah, no, that's helpful. You know, I guess for a follow-up here, how should we think about your capital allocation going forward? I mean, if your, you know, if your multiple stays where it's currently at, is there an expectation we should be, you know, looking for more buybacks and less transactions from an acquisition side of things going forward? Keegan, this is Brandon. You know, we're gonna be like we have been the past few quarters, since, you know, interest rates really started to increase and cost of capital became a lot higher. We're gonna be very patient. We're gonna be very judicious about the opportunities in front of us. I think we've been quite balanced these last couple quarters. We're doing some in the way of acquisitions. We talked about it in February, some creative deals in the sense that we've issued OP equity at a premium. We did the new series of preferred stock. Those are ways that we're helping to fund the acquisitions without issuing our common at kind of this discounted value and not bearing too much on high-interest rate debt either. Yeah, we certainly had some appetite for share repurchases. I think it's been in moderation. I think going forward, you can expect us to be, you know, selective in the same ways that we have been these past couple quarters. Great. Thanks for the time, guys. Thank you. Thank you. Our next question is from Spenser Allaway with Green Street. Please proceed with your question. Thank you. I know you guys tend to acquire assets via your PRO relationships, and I know you commented on your captive pipeline in your opening remarks. Is there anything you can share just on the broader transaction market in terms of what's come across your screen as it relates to volume of deals being marketed right now, competition for assets and cap rates? Thanks for the question. Thanks for being on the call today. Certainly, you know, the captive pipeline has been a great tool for us in the first half of the year, and it has been over our years. From third-party transactions, we're certainly seeing less volume of transactions cross our desk. There's still opportunities out there. Those opportunities are probably more single to one asset versus portfolios at this point in time. We're not seeing a lot of portfolio opportunities cross our desk. There's still just a wide gap between seller and buyer's expectation, maybe 10%-15% price-wise, if you think about it in those aspects. It varies by market. It varies by asset type, of course. You know, we've been underwriting, we've been active. We will be very patient in making sure we're buying the right opportunity strategically for ourselves in the future. I can tell you, it's just been more challenging just because of the seller and buyer's expectations are different at this point in time. Okay, that's helpful. Then how front-loaded are you guys being on the rate side in markets where you've seen occupancy fall back to pre-COVID levels? Specifically, are you able to comment on how much promotional activities is being given right now relative to, let's say, the pre-COVID era? Pro-promotion and discounting still remains at historical lows. I mean, it's not back to pre-COVID levels yet. I think what the teams are working on and what we're finding is, thus far, rate has been a little bit better trigger than discounting. You know, as we watch rates in different markets and watch our reaction to what the markets are doing, that's been our focus. So it is certainly, you know, tricky. I think what I'd tell you, it's been very dynamic. We've seen a lot of movement around street rates. We've seen, operators chasing occupancy, and maybe that's putting a little more pressure on street rate. Our teams are looking at all the levers and asking ourselves, what is the best formula to try to get the revenue and working on street may we work well in one market and discounting may work well in the other. At this point in time, I would tell you discounting is just not climbing back to the historical averages yet. Okay. Thanks so much for the color. Thank you. Our next question is from Ki Bin Kim with Truist Securities. Please proceed with your question. Hi, good afternoon, everyone. Just a quick one on street rates. You mentioned 8%, down year-over-year. Was that for the Q1 or April? The Q1, Ki Bin, was around 7.5%, and April was 8%. The, the average for the Q1 is 7.5%. How do those rates compare to, let's say, like 2019 levels? Still elevated that, Brandon. Ki Bin, I mean, when we look at a subset of stores that we've had for that entire period of time, you strip out some of the noise of new additions, street rates are up, right around 20% over that four-year period. You know, simple average 5%, a little less when you compound average it. Okay. I realize your PROs are also kind of geographically divided. It might be difficult to answer this next question. You know, under the PRO structure, obviously, the PROs kind of can run their own pricing schemes or marketing platforms. Are you noticing at all differences between how PROs have performed as we are kind of in a somewhat of a soft patch? Good question. You know, I think you touched on it, Ki. It's geography. You know, we've had the Southeast and some of those Florida markets just still performing at very, very strong levels. The PROs have done a great job at the opportunities given unto them. They have strong occupancies. They've been able to have good pricing, They're doing all they can to drive performance out of those markets. We have PROs that are in Las Vegas or Phoenix, for an example, which are facing a different challenge. You know, oversupplied markets, cooling housing market, cooling fundamentals, You're seeing pretty significant swings in, you know, peak occupancy last year to where they're sitting today, and they're having to take a different approach. What I do know is our teams do a great job. We talk weekly about this stuff. The marketing people have roundup calls weekly. The operations group are constantly talking about it, and we're, you know, there's a really good tight connection around strategies and are strategies working or are they not working and what you're seeing on the ground. We get lots of good color, we get lots of good flavor, and we have PROs with a lot of history that can really dial in on, you know, things they've seen in the past. I don't think it inhibits anybody from maximizing their business. They're doing a really good job. Are there any mechanisms built into the contracts where... I mean, I'm gonna assume the answer is no, but where if you deem that operations are a little bit weaker than you would have expected, some type of mechanism where you could put in more of the NSA controls in there? There are certainly things in the agreement should something go south with a PRO, and it's something that, you know, that's, you know, not outside of their control. I mean, we're very realistic about the business and what. If there's something that they are doing that, you know, maybe is getting in the way of their business, we certainly have mechanisms where we can insert somebody from the NSA to help guide their business and try to get it back on track. That's, you know, it's very well defined in the documents and, you know, we've been very, very fortunate over the years. Never even been close to having to do something like that. There are mechanisms in our document that would allow us to do that. A more practical thing, Ki Bin, that we do, though, is just on a week-to-week basis, we share information. I mean, the PROs have access to the same management reporting tools that we do. Just as an example, we have, typically, you know, Tammy, Dave, and I have meetings with our PROs, close to every Monday, every other Monday. Oftentimes, that's to review acquisition deals. In an environment like this where the transaction pace is slower, we use it as an opportunity to talk operations, talk fundamentals, show the visual analytics on the screen and discuss and frankly, the SP distributions that the PROs get is the biggest motivator, on performance. Okay. Thank you. Thank you. Our next question is from Smedes Rose with Citi. Please proceed with your question. Hi, thanks. I was just wondering if you've seen any changes in the amount of late payments or non-payments year-over-year, and maybe how that compares to kind of pre-pandemic levels? A good question. You know, we've actually seen an improvement in bad debt. You know, as we mentioned, the team getting the portfolio ready for the spring leasing season. We worked very hard with delinquencies and working through the delinquency schedule of our tenants. Our bad debt has actually came back and has improved over the last two months. No real change in, you know, how many people are delinquent in any cycle of the delinquency schedule. You know, from days late and amount of payments made is really consistent, and we've been very pleased there, which is, again, strength of our consumer right now, still strong. Okay, thanks. When you lower initial asking rates and, you know, I guess the PROs have a fair amount of autonomy across their own portfolios, but do you find that a customer that comes in with, like, a particularly low rate tends to stay longer relative to a customer who didn't? Is there anything you can speak to there maybe as potential strategies? We haven't noticed a real large difference between the rental rate when they moved in. You know, certainly we're more assertive. If you're getting a better entry rate, you're probably getting a much stronger first in, you know, rate increase on our in-place rent changes right off the bat. We just haven't seen a real, you know, difference. I mean, I look at it, if you're renting, you know, 10 units to 10 different customers, the percentages of people that are staying through the buckets are pretty similar, whether you have to be at a lower street rate to get... Market is driving the street rate, right? We're not... It's not necessarily us changing the street rate. The market's driving the street rate. We're trying to find our rental foothold and our rental activity. The customer bases are seem to be very similar, no matter where the asking rate is right now. Keep in mind, we're not out there trying to destroy a market either, so we're not slashing street rates 50% to grow occupancy. We're just not doing that. Okay. Thank you. Thank you. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment while we poll for questions. Our next question is from Ronald Kamdem with Morgan Stanley. Please proceed with your question. Hey, just a couple quick ones. I saw the preferred issuance in the quarter. Maybe can you talk about just how you're thinking about funding in this environment? You know, where could you issue debt, and how do you make that call between using debt and the preferred, and can we see more of the preferred or preferred issuance? Ronald, that was a really, a really good transaction that we were working on for a long time with our PRO in the Orlando area. We talked about a little bit on the last call, but it was a lot of moving parts, a lot of different family dynamics and ownership pieces that the PRO had to work through on their side of the portfolio, and then just some complexities generally, including getting that new series of preferred equity stood up. Very pleased with the coupon or, you know, the effective yield that I cited of 6.1% in the opening remarks. You know, very pleased with At pricing, given the cost of all alternative sources of capital right now. Certainly we're open to doing more in the way of the preferreds as an alternative to say our common equity. When we first did our inaugural issuance of preferreds back in 2017, that represented roughly 5%, perhaps a little bit more than 5% of our total capital stack, and over time, that's drifted down just because of the way we balanced the, you know, the sources and uses. You know, this will put us back up closer to 3.5%-4% of the capital stack, and I think there's room to add to the extent that that suits what a seller is looking for. Great. Thanks. Then just, can you just touch on the top of the funnel demand heading into the peak leasing season? The question really is if you think about... I see marketing spend is up, and you've talked about sort of street rates down sort of, I think, 8% in April. I would have thought that would start to strengthen by now. The question is that still to come? Have you seen strengthening? Just what sort of trends are you seeing this year as you're coming into the peak leasing season, and maybe how would that have compared to other years? A good question. From a top of the funnel perspective, the spend is certainly creating opportunities. We're pleased with that. The fact that we can go out and target markets and target specific areas and drive top of the funnel activity has been good. As we talked earlier, you know, as we flow them through the funnel, the conversion rate, we'd like to see a little bit better to rental, and that's what we're focused on. That's a function of... could be a function of concession or rate. You know, there's certain things as you work your way through that. Street rates have improved since the beginning of the year. Street rates are up 4% since January. The 8% down is to last year's comp, and last year's comp, it remains very, very challenging for us, you know, through the Q2 and into the Q3 as far as occupancy, and we just had tremendous pricing ability last year. We're pleased that our street rate this year is up 4%. We have seen it, you know, improved to answer your question. Great. The last one is just, I know you guys obviously solve for revenue and not occupancy, but what is the guidance baking in for the occupancy trends, back half of the year? Where are you ending the year? Thanks. It would look very similar to, you know, what you may have seen early in, you know, 2018 and 2019 in our trends. You know, if we're gonna come into the season and trough in February, we might see a 300 basis point peak in July and then trail off, you know, 250 in the back half of the year. You know, towards the end of the year is really how we'd look at the occupancy curve this year. Great. Thanks so much. Thank you. Our next question is from Todd Thomas with KeyBanc. Please proceed with your question. Hi, it's AJ on for Todd Thomas. Dave, I just wanted to follow up some of your comments around supply in your opening remarks. Are you seeing the deliveries delayed, or is it more about starts decreasing? Then, is the outlook of supply does that have more of a impact on 2023, or is that 2024 and on? Really good question. What we're really seeing is, you know, if it was in the cycle and being built, it's being completed, so that hasn't, you know, that piece is continuing. The new starts are really slowing. What you're seeing is, using some of the Yardi data that we look at is if it hasn't been started, it's probably not gonna be started. It's kind of the conclusion we're starting to see. That really helps us really, you know, 2024 and beyond, as you think about it, 'cause the stuff that's has been built or being completed will be cycling here, you know, through the rest of this year. Most of our markets are seeing a decline in, you know, new supply hitting, you know, the market. We're happy about that. I think those headwinds are gonna remain. It's, it's very expensive to develop. It takes a long time. There's some uncertainty around, you know, what kind of rate growth you can drive today versus what they were underwriting when they were trying to get these projects approved two years ago. You know, I can tell you anecdotally, there's a lot of land crossing our desk right now where they have a C/O deal that they're looking to sell. They're not looking to build it, they're looking to sell it. Thanks. That's helpful. If I, if I could just follow up. For the non-stabilized stores, you mentioned in Portland, Phoenix, Las Vegas, that you were seeing pressure from the new supply. Can you just provide a little context around how the operators of the non-stabilized stores in those markets are being? Are they using promotions? Are they cutting rates? Can you just provide a little more color? Really good question. I would say predominantly rate is the driver right now. They're being super assertive on trying to get their fill up. There's some discounting out there. I'm not saying there aren't, but we've certainly seen... I think our team would tell us, you know, it-it's been more about rate, and driving that rental growth through rate. You know, as far as occupancy growth through rate, excuse me. Perfect. Thank you. Thanks. Our next question is from Wes Golladay with Baird. Please proceed with your question. Hey, everyone. Can I just get a follow-up to that supply question? I guess, are we calling for, like, peak delivery this year in 2023 or peak supply pressure when you take into context the time to lease up? I think might say it'd be deliveries. I mean, the deliveries, We've seen the pinnacle, and the deliveries are on their way down. Okay. Okay. Was it like a typical one year to lease up, so maybe a little bit more pressure, at least in the front half of next year, would be a good way to look at it? I think that's probably an appropriate way to look at it. You know, the lease-up curve may be interesting to study on these facilities. You know, certainly things have changed versus in the old days, I'll use that word. I mean, it was. You're talking about 36 months to fill up a property, you know, and then during COVID, it got down to 18 months. You know, I think we're heading more back towards the old days and where fill-up is gonna be a lot longer. Okay. Thanks for that. My, my final question would be, you know, how do you balance buying back the shares? I know it's a pretty steep discount. I understand that part. At the same time, you're taking on a little bit more leverage and variable rate debt at the same time with the macro and even the micro at this point is a little bit more uncertain. Yeah, Wes, it's a good question. It's generated a healthy discussion, I would say, you know, on our side. It's all done with a view of long-term value. We look at the growth prospects of our company and the diversified portfolio that we offer relative to alternative capital deployment options. You know, most recently, especially in light of what Dave spoke to earlier about the bid-ask spread between buyers and sellers on individual assets, that's been an easier investment to make that gives, you know, what we think is pretty quantifiable, easy to quantify, I should say, real value to shareholders long term. To your point, we have to keep in balance with leverage, you know, concerns or evaluations. The increase in our leverage from Q4 to Q1, I spoke to it on the call, but we were at 6.0x at 12/31. That went to 6.3x. I attribute, you know, 0.1 of a turn to the buyback, and we're gonna easily grow into that with organic growth. That's kind of the way we look at that. That solves for itself pretty quickly. The other 0.2 of a turn increase was really the seasonality and the lack of external growth that we've had the last couple quarters. With seasonality changing, you know, that will come down as well. You there, Wes? We might have lost Wes, operator. That's it. Thanks. Thanks, everyone. Oh, okay. Gotcha. Yep. Thank you. Our next question comes from Spenser Allaway with Green Street. Please proceed with your question. Sorry. Thanks. Just one more, and I apologize if I missed this, would you guys be able to provide just a little bit more color on the 16 assets, sorry, that you acquired in the quarter? I know obviously you gave the state breakout, any additional color on what was appealing about these assets? Any commentary on age, you know, were they single story versus multi, any of the units climate controlled, et cetera, that would be really helpful? A really good question. The majority of those, 15 of those were in the Orlando market. The appeal of that is here's a top 25 market where we can add a significant amount of assets to an operator out of their captive pipeline. you know, we bring. It was a tough transition for the PRO because there was. Each one of these were owned individually by a lot of people, and so there was a lot of time putting this portfolio together and then getting it over the finish line. We bought in the top 25 market for, you know, around a six cap, just right around a six cap, and we think that's a pretty good price for a top 25 market. Strategically, we like Orlando, we like the market, we like everything that's going on there. There's, you know, a lot of metrics we like about Orlando, so it made a lot of sense for us. The assets are mostly single story. There is a mixture of climate and non-climate in there. The assets are, you know, I'd say the average age is probably in the 90s. 85 to 90 probably would be the average age on those assets. Well-positioned in a part of Orlando where you wouldn't be building storages right today. I mean, there's a lot of good pluses in this portfolio and where they're positioned in the Orlando MSA. Okay. Very helpful color. Was there much deferred CapEx underwritten with those assets? No. The PRO had done a really good job in the previous ownership, so there wasn't a lot. They've done a really good job maintaining them and keeping them up to standard and just well taken care of assets, well-positioned. Yeah. Okay. That's it. Thank you again. Thank you. We have reached the end of the question- and- answer session. I'd now like to turn the call back over to David Cramer for closing comments. We are pleased with our operating results for the quarter, with trends moving in the right direction. Having been in the industry for 25 years, I'll once again remind you that the self-storage sector, and the NSA in particular, remain well positioned to manage through different economic environments. Thank you all for your continued interest in the NSA. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.