National Storage reveals core FFO growth and improved occupancy trends, positioning for a strong 2026 amid favorable market conditions.

Greetings, welcome to the National Storage affiliate's third quarter 2025 conference call. @ this time, all participants will be in listen only mode. A brief question and answer session will follow the formal presentation. If anybody today should require operator assistance, please press star zero from your telephone keypad. As a reminder, the conference is being recorded. It is now my pleasure to introduce your host, George Hoagland, Vice President of Investor Relations for National Storage affiliates. Thank you George Hoagland. You may now begin.

We'd like to thank you for joining us Today for the third quarter 2025 earnings conference call of National Storage Affiliates Trust. On the line with me here today are National Storage Affiliates' President and CEO Dave Kramer and CFO Brandon Tagashi. Following prepared remarks, management will accept questions from registered financial analysts. Please limit your questions to one question and one follow up and 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@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. The November 4, 2025 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 details 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'll now turn the call over to Dave. Thanks George and thanks everyone for joining our call today. We delivered solid results in the third quarter reflecting sequential improvement in the level of year over year. Same store revenue growth in 16 of our 21 reported MSAs. Additionally, our Core FFO per share result beat consensus estimates. Our focus on driving performance with our upgraded tools, consolidated platform and an enhanced team is starting to take hold and has continued into the fourth quarter. Contact rates in October were better than last year by 160 basis points versus a 20 basis point increase for the third quarter. Occupancy ended the month at 84.3% versus 84.5% at the end of September, we were pleased that we were able to hold occupancy relatively flat in October. On a year over year basis. Occupancy was down 170 basis points. I'll remind you that occupancy in October of last year had 20 basis points of hurricane demand. Looking at the sector more broadly, we are positive about the outlook for self storage in 2026 and beyond given that one new supply over the next few years is expected to come down to levels well below long term historical averages, supporting a notable shift in the supply demand balance for the sector. 2. Assuming Fed interest rate cuts push down mortgage rates, this would likely result in increase storage demand and that would accelerate the current inflection in fundamentals. 3. In addition, lower interest rates will benefit our borrowing costs and overall cost of capital which will aid us in our future acquisition activity. Additionally, we are encouraged by our relative position in the industry as we have two levers to pull rate and occupancy which provide us with a growth potential advantage going forward. Our positive momentum is supported by one. The pace of our same store revenue growth is improving quickly, suggesting the worst is behind us and a solid inflection off of the bottom. 2. Our continued focus on the execution of our strategy including enhanced marketing and revenue management, optimized staffing levels, property improvements and expense controls are all starting to show results. We continue to add earnings growth drivers as evidenced by the launch of our Preferred Investment program. Adding strategies like this will help return NSA to being a growth company. In aggregate, these factors provide the best setup for the self storage sector and our portfolio have seen in several years. We are confident that our revenue growth will continue to improve even without a housing market recovery. Although the pace of the recovery is uncertain, we are encouraged that we have reached an inflection point. We will continue to focus on improving our occupancy level and revenue growth with increased marketing spend, competitive position in terms of rate and promotion, solid execution of the sales process and remaining assertive with our ECRI strategy. We are also focused on improving our portfolio through continued capital recycling and reinvesting in our properties. I'll now turn the call over to Brandon to discuss our financial results.

Thank you Dave. Yesterday afternoon we reported Core FFO per share of $0.57 for the third quarter in line with our expectations. The 8% decline from the prior year period was due primarily to a decrease in same store Net Operating Income (NOI) and an increase in interest expense for the quarter. Same store revenues declined 2.6% driven by lower average occupancy of 150 basis points and a year over year decline in average revenue per square foot of 40 basis points. This is meaningful improvement from the first half of the year due to us finding stability operationally and also as we encounter the easier comps to last year. To emphasize this, I'd refer you to Schedule 7 in our supplement where we break out same store total revenue between rental revenue which represents over 95% of the total, and other property related revenue which primarily consists of tenant insurance dollars retained by the stores. Our rental revenue line Item was down 2.2% year over year in the third quarter compared to negative 3.2% year over year in 1st half of 2025, a 100 basis point improvement. The other property related revenue line item on the other hand, had a difficult comp as last year's third quarter was outsized partly due to us commonizing all of the legacy PRO properties onto our corporate tenant insurance program. Understanding these different components is critical to evaluating the same store portfolio performance in the third quarter and the implied fourth quarter growth. @ the midpoint of our guidance, expense growth was 4.9% in the third quarter. The main drivers of growth were property taxes, marketing and utilities, partially offset by a decrease in insurance costs. Property taxes were elevated mainly due to a tough computer given successful appeals in the prior year period, marketing was up 29% versus the prior year. As we continue to invest in customer acquisition spend in markets where we clearly see the benefits, we expect some of these expense pressures to ease a bit in the fourth quarter as implied by our guidance range. Moving to the transaction environment, our 2023 JV acquired two properties, one in California and one in Tennessee for a total of $32 million. We also completed the sale of two assets which were discussed on last quarter's call. Our continued commitment to our capital recycling program provides several benefits. First, we're becoming more operationally efficient. Second, it generates proceeds to deleverage and third, it funds attractive investments through JV and preferred equity structures. We're particularly excited about the preferred equity program that we just announced because this opportunity allows us to accretively invest in self storage deals that provide us with a larger initial yield than wholly owned acquisitions. It also allows us to continue partnerships with our former pros using a structure that solves for our partners capital raising needs and NSA's risk adjusted return requirements for capital deployment. It also provides a captive acquisition pipeline for us as we have a right of first offer on the properties acquired by the joint venture we announced with the Investment Real Estate Group. Now speaking to the balance sheet. We have ample liquidity and maintain healthy access to various sources of capital. Subsequent to quarter end, we amended our credit facility agreement to remove the 10 basis point SOFR index adjustment on our Revolver Tranche D Term Loan and Tranche E Term Loan. This amounts to nearly $1 million of annual interest savings on the debt associated with these facilities. We have no maturities of consequence until the second half of 2026 and our current revolver balance is approximately $400 million, giving us $550 million of availability. Our leverage has been slowly coming down with net debt to EBITDA of 6.7 times at quarter end, down slightly from 6.8 times in Q2. Turning to guidance Given that results were in line with expectations, we maintained our guidance ranges for 2025 for same store growth and core FFO per share, which are detailed in the release. I'll highlight that the midpoint of the same store revenue and Net Operating Income (NOI) guide imply continued improvement in the pace of growth for the fourth quarter, building off of the inflection in the third quarter, which gives us further confidence of positive momentum into 2026. Thanks again for joining our call today. Let's now turn it back to the operator to take your questions oper.

Thank you. We'll now be conducting a question and answer session. We ask you to please limit yourself to one question and one follow up. If you'd like to ask a question, please press star one on your telephone keypad. The 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. Thank you. And our first question comes from the line of Samir Khanal with Bank of America. Please receive your questions.

Good afternoon everybody. Hello Dave,, When I listen to your opening remarks, you know, your comments in the earnings release, your prepared remarks, certainly you have a very positive tone here, which is a bit different versus what we've. We've heard from the peers. Maybe help us understand what makes you so confident sort of on a relative basis. Thanks.

Yes, Samir, thanks for joining. Good question. You know, I think from my seat and from our seat, , we spent the last couple years in a very challenging environment working on our company and working on our the way our company was structured, working on initiatives that allowed us to become better and position ourselves to have better performance in the future. You know, you think we collapsed the pro structure. We consolidated brands, we consolidated operating platforms, we hung Everything on NSA storage.com, centralized marketing platform have centralized revenue management now centralized pricing, centralized marketing. And so we've worked really, really hard to put ourselves in a position now where we're looking forward saying that we think we've inflected, , from this point forward, as we go forward, as we look out to 2026, we think we're in probably the best position we've been in several years to perform in today's environment than any other environment that's in front of us. And so as we look out and we look at the progress we've made over the last three or four months around some of the efficiencies that we're tracking like occupancy level, contract rate and where we're heading coming out of this year and looking into 2026, it just feels like from our seat, , we feel very, very good about how we're executing, how the team is executing all of the work and the changes we've done is coming together and we just feel very confident as we head out that we're in a position today that we haven't seen in several years from easing supply pressures from the sector. But really from our seat, looking at what we have in front of us, we have a couple levers to pull that make us a little bit different than our competitors. We have occupancy left and we have rate left and we're going to work on our marketing spend and we're going to work on our execution and really focus on driving our portfolio forward and having success around, , in today's environment. And really it sets us up in a position for 2026 going forward. You know, you heard in our opening remarks, we've been able to hold occupancy relatively flat coming. You know, we improved in the third quarter, held it flat in October. We're in a position now where contract rate is still remaining positive on a year over year basis. There's just a lot of things we feel that we've worked on that are, that are really starting to have, , fruit right now. And it feels like, , as we go into 2026, it sets us up to have a good year. Got it.

And then I guess just switching subjects. Here on maybe on the disposition side, maybe talk around kind of capital recycling, how you're thinking about that sort of. Disposition, capital recycling over the next 12 months. Thanks.

Yeah, I think we'll stay at our thought process around recycling our capital. We still have some markets and some stores that we're in the market with right now. And so we have stuff that we have not closed on, but we're marketing today as part of that initial push. As we look through our portfolio, everything's built around becoming operationally efficient and really trying to find the future that this serves us the best and creates the most return for our shareholders. And so as we look at recycling capital, we've had good success selling properties. We've had good success with the buyers wanting our properties. And we've been able to turn around and reinvest that money from the recycling program in very efficient ways. Brandon has spoken in his opening remarks about this new opportunity we just created, which allows us to take some of this recycled capital and put it to very good use and a very good preferred investment. And we just think we'll be smart about it. We think that probably the big chunks of our recycling program are over, but we will continually work on the portfolio to make sure we're in the best position to perform.

Thank you. Thank you. Our next questions are from the line of Michael Goldsmith with ubs. Please proceed with your questions.

Good afternoon. Thanks a lot for taking my question, Dave. The move in rate was up 4.9%, which is really encouraging, but since the revenue growth was down 2.6%. So from your perspective, how do you think about these improved street rates flowing through the algorithm and you know, and its ability to impact, positively impact same store revenue growth, how long do you think that takes and what's the opportunity there?

Yeah, good point, Michael. I think from our seat, we're doing three things right now. We're closing the year over year occupancy gap. And as we look off into 2026, we're going to work very hard around having a pretty level basis on year over year occupancy and look next year to grow that occupancy on a year over year basis. So that'll help on the overall revenue output of the portfolio. Along with that, , obviously we'll position ourselves in the market from a street rate and promotion positioning to make sure that we're competitive and get the amount of conversions we want for the marketing effort and for the positioning that we're doing around attracting new customers. And so that creates still a rent roll down, which I think we're all dealing with. But what I do have more confidence in as we get better and better with our platforms is around the ECRI (Existing Customer Rate Increase) strategy and our ability to continue to maximize how we implement, , in place rate changes to our customers. And so, , that's A long, probably a long winded answer to. I think we have three things we're working on that are going to help us drive additional customers into the platform and actually be able to maximize the revenue. And so as we look at 2026, we're going to start the year in a position we haven't been in several years. And the fact that we're going to be pretty flat on a year over year basis on occupancy, we're going to have good positioning on contract rate. And from that point forward, it's just a matter of how we drove. You know, 2026 is, , rental volume levels and how we execute on the ECRI (Existing Customer Rate Increase) program.

Got it. Thanks for that, David. And as a follow up, just along the same lines, to what extent are the former pros impacting same store revenue growth? Is that a positive now or is. That still a little bit of a drag? How have you been able to operate those stores better and when do you think you can kind of harness maybe some of the upside from your operations out of those stores and. You know. And realize that benefit? Thanks.

Yeah, good question. You know, we definitely in the third quarter saw some momentum around. I'll give you this stat around move in square footage for Q3. And if you think about the overall move in square footage for Q3 was 5.8% higher than it was a year ago. So as we look at our platforms and our marketing and all the things we're working on, we certainly saw an imPROvement, imPROvement in the net rental square foot that we were able to achieve. Of that, 3% of that imPROvement, 5.8 came out of the core portfolio. The corporate stores, that we had managed before the Pro store saw 10.1% imPROvement in that rental square foot on a year over year basis for Q3. So we certainly are starting to see momentum around all of the rebranding and all of the efforts around centralized platforms starting to flow through on a rental basis, which will lead to revenue and revenue outperformance from the expense side of the house. We've seen some savings around payroll, but we're also spending more on the marketing dollars to generate the rental volume that you're seeing here. So we just think, as we talked about last quarter, we were a little bit behind where we thought we would be. We definitely were happy with what the momentum we saw in the third quarter.

Thank you very much. Good luck in the fourth quarter.

Thank you.

The next question is from the line of Spencer Glimsher with Green Street. Lucas, please proceed with your questions.

Thank you. Just given Your former pros were obviously a strong piece of your historical external growth. Should we expect to see more of These growth focused JVs form in the near to midterm?

Thanks, Spencer. Yeah, thanks for joining. You know, I certainly think it's an opportunity. We, you know, one of the strong points of the. There was a lot of strong points of the PRO structure, but that was one of them was their access to these local markets and ability to get off market transactions done with buyers and sellers and us being the buyer and them finding sellers. And so I do think it's an opportunity. We are very pleased to announce the one that we have just announced. It put this in the mid Atlantic kind of northeast section of the country where this former PRO has a very, very strong operating presence and they have very, very strong tentacles into these, these markets where I think they're going to have very good success buying PROperties and having good success in this PROgram. So I think it could lead to more. We don't have a line of sight right now on more, but it's certainly something we think could be attractive.

Okay, great. And then I know you mentioned in. Your prepared remarks that the capital recycling. Provides proceeds obviously to de-lever and that has been coming down slowly. But can you just talk about the. Larger capital allocation decision here to grow. At all when you're 45% levered and trading at a material discount to NAV. That doesn't allow you to delever outside. Of those disposition proceeds?

Yes. Spencer, this is Brandon. You know, I would say everything that we're doing today is pretty modest and with a very disciplined and prudent eye. I mean if you just look to the activity that we reported for the third quarter. Right. I mean we completed the sale of two assets that was part of a 10 pack that we had. We had talked about closing the majority of that portfolio in late second quarter. So that was just finalizing that deal. Our JV23 acquired two stores. You know, our capital outlay was $8 million. Certainly this preferred investment that we're talking about is a larger capital outlay upwards of 100 million plus. But that'll take time to deploy all that. And, and then at the same time we have a clear initiative to improve the portfolio over time through some targeted select dispositions. And so I hear the spirit of your question, but I would just say that everything we're doing is relatively modest and measured, with a focus on long-term benefits for long term benefits.

Okay. Yeah, that makes a lot of sense. Thanks.

Thank you. The next questions are from the line of Eric Wolf with Citibank Please proceed with your questions.

Hey, thanks for taking my questions. I think on your last earnings call and in your recent presentations, you provided Revpath growth. I was just hoping you could provide that for October specifically and then talk about how you expect to trend through. The quarter to hit that midpoint of your guidance.

Yeah, Eric, this is Brandon. I'll take that first and then Dave can chime in. You know that that metric we started to introduce into our investor deck back at June Nareit and that followed our first quarter supplemental, you know, in late April, early May, which is typically when we introduce any type of new disclosures. Right. And so in that first quarter supplemental, that's when we first started introducing the in place customer rate for our same store portfolio as well as the rates at which customers were moving in and out. And so because we were providing that in place customer rate, it's essentially, you know, that RevPAR (Revenue Per Available Room) is essentially a combination of that in place customer rate metric with the occupancy. And so to your question about October, you know, Dave, in his opening remarks, mentioned Our occupancy down 170, 170 basis points at the end of October. We were down 1, 140 at the end of the third quarter. So on average you're in that, you know, down 150 to 160 territory. But he also commented the contract rates were up 160 basis points. So those two things are essentially flat. Meaning that that rev path metric for October is essentially flat as well. However, you know, all that having been said, you do have things like the impact of discounts and concessions which we've talked on these calls more recently about those discounts being elevated the prior year. So that eats into the revenue growth a little bit. And then you also heard in my opening remarks about that other property related revenue line item being a little bit of a drag. And so those are really the things that are dragging you from that rev path metric for the third quarter to get to that negative 2.6 that we reported. And that's also what would take you in October from being flat on revpath to something that's negative. But frankly starting with a one-point decrease instead of a two-point decrease and that that is where we need to be obviously to get to that midpoint of the guide. That's helpful. And then I think you mentioned a comment about occupancy being flat to start 2026. Did you mean that on a sequential basis or on a year over year.

Basis, meaning you're comparing it versus you. Know, like say October the third quarter on average. Are you saying that by the time you start 2026 that on a year over year basis that 170 basis points. Of occupancy gap that you have today. In October will go to will go to zero? I think what Dave meant, well, he can answer for himself there. But I'll also be really clear about.

What's in our guidance. I mean we, I've said at recent conferences, you know, we expected to have something in that 150 basis point year over year delta for the back half of the year. Now a range of scenarios feeds a guidance range obviously, but I still expect we would be negative year over year to some degree, but certainly not to the magnitude that we were to start 24 and 25, which I think was the essence of Dave's remark. So not entirely zero year over year, flat year over year, but modestly negative and improving. Thank you. Yep. Thank you, Eric.

Our next questions are from the line of Michael Griffin with Evercore isi. Please proceed with your questions.

Great. Thanks. Dave, I want to go back to. Your comments just on inflection as maybe. You look to the year ahead and. I realize you're not giving 26 guidance at this point, but can you give us a sense of maybe the trajectory or expectation of same store revenue growth? Was that more a comment of a. Year over year improvement or could we. See that maybe in the first half. And then building throughout the year? Yes.

Thanks for joining. It's a good question. I think everything we see today and what Brandon was just commenting earlier is our momentum sequentially month over month and our traction that we're gaining on a year over year basis. We're closing the gap on several fronts and that's around some of the occupancy delta that we faced the last couple of years certainly on a contract rate basis as we go forward. And so we look at 2026 where we're starting in a much better position earlier in the year than we've started the last two, three years in several quarters. And so we look at 2026 probably with a little bit more rosy lens in our opinion right now just from our starting position. And so you know, I think from an oxy level contract rate where we're going to be with RevPAR (Revenue Per Available Room), you know, not giving any guidance for 2026, but we do think we're going to be in the best position we've been in several years and have some success. There's.

Great, appreciate the color there. And then maybe Dave or Will, can you walk through maybe Some of the assumptions or give us a little more color on the recently announced joint venture in terms of what kind of properties you're targeting in terms of acquisition cap rates and then maybe an IRR you're underwriting to and assumptions maybe around NOI. Growth or exit cap as it relates.

To achieving that irr. Yeah, Griff, this is Brandon. I'll take it. And then Dave can supplement certainly value add deals is the flavor of what we're looking for in the structure. I think to Spencer's earlier question, a lot of the PROperties fit the PROfile that very well may have suited our former PRO. Under our PRO structure, meaning the initial yield may look stabilized, but there could be an opportunity for further upside just because the, the PROperties, if we're acquiring them off market, the JV is acquiring them off market, they've maybe been under managed by a less sophisticated operator. Also some assets that maybe have expansion opportunity where our former PRO and partner have a specialty in being able to deliver on those types of additive additions and expansions to sites. And so that's the PROfile. I would tell you the yield that we're targeting. You know, our cash flow is priority to our partners. And so all of the operating cash flow after debt service will come to us up until that 10% prep return is filled. And so that, and that just corresponds to the level at which we're invested in the capital stack. And so we expect that initial cash flow to be less than the 10% and the Delta, the unpaid piece of the 10% will accrue and then be paid over time as cash flows increase.

Yeah, I think I just added that to Brandon's point. I mean, I don't think we're being overly assertive on exit cap rates, you know, and I don't think we're being overly assertive as we think about revenue growth. I think, you know, the partner we've chosen has a good handle on their markets and we overlook all the underwriting as well on the properties they're buying. And I think we'll certainly be very smart about putting capital out and how we underwrite the performance of the properties.

Great. That's it for me. Thanks for the time.

Thank you.

Thanks, Griff.

The next questions are from the line of Juan Sanavria with PMO Capital Markets. Please proceed with your questions.

Hi, good afternoon. Good morning. Just in the opening remarks, Dave, you mentioned the enhanced team. So I was just hoping you could spend a little time on the additions you have made and maybe future opportunities to kind of bolster the senior leadership of the company.

Yeah. Thanks, Juan, for joining. Good question. You know, we've really spent a lot of time around looking at all facets of our business. You know, early on we had to obviously strengthen our financial team as we brought all the accounting and all this stuff through the prostructure and, and the team has done a good job there. Our recent additions have really been around more revenue management performance driving leadership roles. And so we brought in a seasoned person to help us with our revenue management. She takes care of ECRI pricing and upfront pricing for customers and promotions. And she really leads the data science team and the revenue management team on the efforts towards, you know, improving and remodeling and tweaking and continually to test and do all the things we're trying to do around driving the maximum dollar through our portfolio. We've also added strength in the IT department that allows us with these consolidated systems to have the most efficient technology platforms we have and continue to develop. And we added another strength and leadership position around the pure marketing team and the customer acquisitions team. And so I think adding this experience, these three people we added had years of experience in their fields. They've had years of experience. Two of them had years of experience around self storage storage. And so I think we've just really strengthened there. And then that just ripples through the team as they come in. They bring in additional talent, whether it be at a manager level or whether it be at a systems operations level. And so they've just done a really, really good job strengthening that side of the house. On the operations front, obviously now the transition's over, the operations team has spent a tremendous amount of time around staffing levels, hours of operation. I think I said in my last call, it's nice to be focused on the business instead of transition. And I think all the benefits of focusing on the business are starting to pay it off and we just are really starting to hit our stride. Great, thanks.

And then just on the revenue side, hoping you could talk a little bit about ECRI and kind of the quantum or the cadence and how that's changed. And then if on the move in side, could you give the numbers net of discounts? I think that's a more useful figure than kind of the advertised rate, if you will. Thanks. Sure.

I'll start and then Brandon can finish up on the rate question. You know, from the ECRI strategy program. I would tell you how we look at the cadence of the ECRIs. We haven't changed. We've been testing some different thought process around it, but we haven't changed and we haven't seen anything that's going to make us really change our cadence. I think on the magnitude side, all of the testing we're doing is helping us improve our magnitude on the rate increases. And that's all the way through from the first time rate increase all the way through the existing customer base. And so I think on a year over year basis from our seat, we feel like the ECRI program is a little bit stronger than it was last year and will continue to evolve as data points tell us it can evolve. And so having the additional talents, additional strength and the additional wisdom there is paying off on our ECR strategy.

And then Juan, on your discounts question related to the move in rate metric that we report back in Schedule 7 for the same store pool, Dave mentioned it earlier. For the third quarter we were up 4.9% from the move in rates. If you adjust that for discounts, it's for both third quarter and the second quarter it was about a 100 to 150 basis point impact because concessions were higher. So that 4.9% would otherwise be kind of mid 3s. And for second quarter we reported that move in rate was up 130 basis points and it was probably closer to flat. Do you have the corresponding October? October year over year one is very is high just because and that's a consequence of last year. You know, the September and October comp was much easier just given where we had moved rates, given what was going on in the market as well as what we were dealing with with the pro internalization. So our move in rates achieved for October were up 14%. And I would also guide you to take a point, a point and a half off that for the discounts. But that's, that's going to flip in November and December we're likely going to be down. So on average for the fourth quarter I think it'll be year over year relatively flat.

Thank you. Thank you.

Thanks Juan.

Our next questions are from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your questions.

Hi. Thanks. A couple of questions or follow ups perhaps on the new growth vehicle that you announced Yesterday. I guess first, will the $105 million pref. Will that be funded on a property by property basis or is each investment's completed? Is that how that will work? And then Brandon, you noted that the properties will not hit the 10% prep early on the balance will accrue. But based on today's cost of debt and the return profile and assets that you're looking to acquire any sense what the timeline might be for that 10% hurdle to be achieved? Yeah, Todd.

So on the first question, it will be deployed on an investment by investment basis or asset by asset. So it'll occur over time. And you know, we've been working on this specifics of the agreement with our former pro for multiple months and very pleased to be able to announce it now. We've also over the past few months been concurrently underwriting a couple deals that haven't materialized, but jointly underwriting some opportunities. So we are excited what we're seeing in the market and looking to deploy those first dollars in the venture. On the second question, you know, it's going to be deal dependent. I mean, I think the initial cash yield to us will rival the type of cash yields that we're generating in our other JV structures. But then obviously that growth is going to inure to our benefit disproportionately. And so then that's where it has an opportunity to get up into that 10%. So it'll vary. But you know, I'll just tell you because I referenced that we've underwritten a couple opportunities recently. You know, you're hitting that in the few deals that we've looked at most recently. You know, year three on average, I would say.

Okay. And then, you know, it sounded, I mean, you characterized it like a program and I think you referenced this or maybe mentioned it in a prior question. It sounds like you don't have line of sight into additional ventures, but is there interest from former pros to replicate this? Is this something that you think we should assume with sort of a geographic market focus or some exclusivity regionally around the country that you might roll out? And then with regard to Move in specifically, you just rebranded and announced that you rebranded those stores. How many Move in stores are there left operating today? Because my understanding is that the acquisitions made by that venture will be branded Move In. And how comfortable are you with that brand and banner moving forward from an operational standpoint?

Sure. I'll take these. This is Dave. Todd, thanks for the questions. You know, I think there is interest from other former pros around this program. And like I say, we don't. Like I said, I said we didn't have a direct line of sight, but we've certainly had conversations. And so if we think it's appropriate and we think it's the right, you know, time to move forward, you could see us roll this out a little bit more to, as you said, it really around geographic focused, opportunistic focus areas where this fits their capital need and our capital wants. And so, yeah, I think we could see some more activity here in the future. I don't, again, no direct line of sight, no timing on that, but it's certainly something that could materialize. As far as the move in brand, they still operate, I think, over, I don't know, 35, 40 stores. They've got probably in that range around those store count. They are a regional brand that is strong. When we collapse the Pro structure, it was a brand they wanted to keep. So they paid to have our istorage stores branded from their move in stores and they wanted to keep their regional brand. So there's a lot of strength in their local markets with this brand. And so we're pretty comfortable in their ability to manage the stores in this venture for us and have success at a level where we think it's appropriate.

Okay, so there won't be any additional fees or, you know, any sort of efficiencies or scale benefits from this growth vehicle. It's purely just limited to the preferred equity investment. And that's it.

Yeah, I mean, certainly there's an initial 10% and then, you know, upon exit of a particular part of this venture, there's a chance for us to earn up to about a 14% total return somewhere in that neighborhood, you know, of where we want to be, you know, potentially. But right now it's a, It's a preferred 10 with an upside.

Okay, right. But, but no, no revenue management platform that that's being shared. No technology, no, you know, overlap around any, any impact around tenant insurance or anything of that nature.

Yeah, yeah, there is ti, Todd. That's something we could mention. They're using our TI program and so we'll have some benefit from the TI use program. We get some, obviously some revenue off of that TI program. Other than that, no revenue management, no marketing, no other, you know, fees being paid to us. But the tenant insurance is an upside.

That's correct, I think, Todd, though, to your, to your tying your questions together though, this, this initial deal with our former Pro made a lot of sense given that that particular pro had invested a lot in building out a property operations group. You know, so that, and our comfort with them being managers of assets stems from obviously our history with them as a pro. To your earlier question about do we see this more as a programmatic thing that we can roll out to other operators or other owners, the answer is yes. And I think in some of those situations, you Know, we would, we would potentially be the property manager, in which case some of those scale and platform benefits would start to come into play.

Okay, thank you.

Next questions come from the line of John Peterson with Jefferies. Please proceed with your questions. Great, thank you. Can you update us on how the.

Consolidation of brands on a single website is going and if you've got search engine optimization back to the levels where it was before the integration? Yeah, thanks for joining. Good question. Yes. So we've had good success, you know, with the nsa, storage consolidation and consolidation of brands. You know, from a high level. October was really the first month where we had really year over year statistics because there was a lot of noise on different websites and different measurements or websites and you know, trying to track the numbers as you think about everybody else having their own little systems and those piece. But you know, just a couple high level stats that caught my eye in October. I mean, web shopping sessions were up 23% year over year in October, which we thought was a good metric, shows good solid progress on the fact that we're actually, you know, the marketing spend and the visibility we're putting in our place and where we're putting our shares was working. And so we were very happy with that. And then, you know, conversion rate, you know, was up 7.1%. So we were pretty happy with both the shopping session and the conversion rate. So again, momentum, things that made us happy, pleased with the progress. Okay, all right, that's helpful. And then maybe related to that, Dave, I think in your prepared remarks you mentioned that you want to spend more on marketing. Can you talk about what that might look like, like what channels and maybe dollar amounts that you guys are targeting on marketing? Yeah, you know, I think the run rate will be pretty consistent as we go through the fourth quarter of what we saw around the third quarter. You know, as far as dollars deployed towards, you know, really the primary driver of this is around the paid marketing platform. You know, you do, you know, you do some paid search in social, you do some paid search in other platforms. But we're really working hard on positioning ourselves in the market where we have the right efficiency to get the right amount of sessions. We want in the minority reservations which obviously lead to rentals. And so the team has done a good job with the new modeling around our paid search model. And that's been our priority, primary effort and primary lift. And we're very happy with the progress we're making there. So I think from our view, we use the marketing dollars as a tool and if the tool is working. We'll continue to put dollars into the tool as long as we get the results out of it. All right, that's helpful. Thank you. That's all for me. Appreciate it.

The next question is from the line of Ravi Vadia with Mizuho Securities. Please proceed with your questions. Hi there.

Thanks for taking my question. Can you discuss some of the demand drivers within the quarter and for October here? Are you seeing any more housing related demand given that mortgage rates are in the high 5s and low 6s and within your portfolio, which markets do you think have the most immediate upside in the event of a housing market recovery? Thanks. Yeah, thanks for joining. Good questions. Certainly we have not seen a major shift in the amount of people because of the housing market. Obviously you're pleased to see rates come off a little bit, but it does not have, hasn't had a material impact in our opinion on the amount of resale of homes or turnover around homes. I would note that moving is activating about where it would be in our thought process, a position of why people are using storage. So we're seeing moving as a top reason people use storage, which is good, but that doesn't mean they're buying a house. It could just mean they're moving from apartment, apartment or you know, some other place and they're still renters. But you know, the fact that we have seen more around moving and transition is encouraging. As far as just people moving around the country, the second part of that, some belt obviously for us we've got a lot of exposure throughout the south. If you think about down through Florida, down through parts of Phoenix and in Vegas and you go all the way through really the southern parts of the country would be the biggest benefit we think from a housing turnover for our portfolio. We have a lot of exposure down there. We like the markets long term. We think they're a great place to own storage. But we think they've been the most adversely affected during this lockup of the housing market. Got it. That's super helpful. And maybe just one more here. It seems like, you know, fundamentals are inflecting and there's a lot of positive momentum. Maybe why not narrow the guide at this point sitting in November? What are some of the bear and bull assumptions regarding the implied 4q core FFO and same story. Thanks.

Yeah. Ravi, this is Brandon. Your question touches on probably more of just an approach that we've always taken where especially if we've revisited the guidance mid year in August and things haven't materially changed and we feel comfortable with the ranges. Generally we just leave them untouched down the board. Obviously our commentary here and we've got a couple conferences coming up which I'm sure will be helpful for folks. It allows people to kind of understand, you know, any type of bias or narrowing that others want to want to take from our results and commentary and apply. So that's really the reason it's just kind of been our historical approach of leaving everything unchanged and then supplementing it with our remarks on these calls. Got it.

Thank you. Appreciate it.

Thank you.

The next question is from the line of Brendan lynch with Barclays. Please proceed with your questions.

Great. Thanks for taking my question. The pro internalization was kind of the. Reason you guys gave at the time was about managing your assets in house. And simplifying your story. But with the new JV structure, it seems that your partner is going to manage the assets and the JV itself adds a bit of complexity. So just help us think about how we should think about the benefits of this ongoing change to your structure. I'll start.

Brandon, you can jump in. You know, I think in this particular opportunity, we like the priority position we have in the investment. We understand the operator, we understand the markets that they'll be looking in. We don't have a significant presence in those markets from an operating standpoint. You know, we did rebrand our stores to iStorage, but the markets that this particular person's in is not necessarily on top of those stores. So I don't know that we look at it as it's overly complicated from our point of view. It's, you know, they're good, strong operator and we know they understand the markets and where they're at. And from our seat, you know, that's part of the reason we chose them. We were very, very comfortable. We didn't think it was going to be a high risk and a high attention need from us. You know, we understand their abilities and what they're able to do and we felt very comfortable that they were able to grow their portfolio in a manner that we would approve and have success with.

Okay, thanks. If you do, it sounds like you're considering doing more of these going forward. Would you expect to manage the assets in any other JVs that come down the line or would you kind of outsource that again?

No, I think we're open to doing both. I think, you know, depending on the situation of the investment and the situation of the operator, I think we could see this where you may find folks who want to do this. And have us manage the stores. And so I think the opportunity would sit on both sides. Again, I think we evaluate, you know, at the time of who this person, you know, who the people are and how strong they are and what their desires are and what our desires are. And it could lead us to both paths.

Okay, thank you. Thank you. Our next question is from the line of Ronald Camden with Morgan Stanley. Please proceed with your question.

Hey, just have two quick ones just. On the same store, same store revenue. I know the guidance implies you're sort of down 1.3 and 4Q but the commentary suggests that you know the inflection point. So maybe you're doing better than that. So I guess I was just wanting to tie those together. And is the thinking here if things continue to improve that presumably same store revenue should flatten out at some point in the next 12 to 18. Just high level without sort of thinking through guidance here. Thanks.

Yeah Ronald, so I'll just might restate some of the same things we said earlier. But that's more just to reemphasize and try to answer your question at time the same. Same time. So one of the stats that Dave gave earlier about October was our contract rates being up 160 basis points. That's for the all customers in place for the same store pool and then the same store average occupancy for October being down 170 in the month. And I supplemented that and said on average it was in the 150 to 160 range. So those two things that in place contract rate for all same store customers as well as the average occupancy stat that gives you this flat rev path and then you have, you know, higher discounts year over year. I mentioned tenant insurance year over year being a little bit of a drag. You know, those are the things that put you into the red negative year over year still on revenue. But to Dave's opening remarks, the pace of that year over year growth is changing quickly. And so we like the trajectory, we like the trajectory that we have exiting the year entering 26. And so I think being flat on revenue growth is certainly achievable sooner than a 12 month time frame or 18 month time frame. I think you're talking, you know, a shorter window than that.

Yeah, super, super helpful. I guess my follow up just on. The dividend, you know, I think the payout ratio had been over 100%. You know, now that we're at this inflection just does your, how does your thinking change about when you can get back to you know, below that 100 level mark. Thanks.

Yeah, I think you're, you're touching on something. You know, we're, we're confident in our trajectories. We're really confident in how we're starting to execute. That certainly puts us in a position to start growing FFO again and, you know, and the pace of that will be determined on how, you know, a lot of factors that we've talked about on the call here today. I think from our board seat, they're very thoughtful. They always think about all of the things that are going on with our business and what the future looks like. But the one thing that is very prevalent in our businesses, to Brandon's point, is you can move pretty quickly in this industry about rate and about occupancy and really adjust to the factors that are going on pretty quickly in this, this industry. So I think as we go forward, we're looking to 2026 in a little more positive light than we were looking at this year. So I think that helps from the dividend payout percentages. Great.

Thanks so much. That's it for me.

Thanks, Ronald.

Thank you.

Our final question is from the line of Omotayo Okonsanya with Deutsche Bank. Please proceed with your questions.

Hi. Yes, good afternoon. Just wanted to go Back to the JV again, Brandon, with your comments about, you know, three years to get to the 10% prerequisite return. Just kind of give us a little bit more information around what kind of noi group you are basically underwriting to underneath that and kind of what kind of debt or cost of debt this, this JV entity will have when it does ultimately fund the debt part of the equation. Yeah, Tyo, you know, it really is going to vary based on the specific deal and the opportunity that that deal provides. And so I think it's tough to, you know, speak to it in generalities. You know, we wanted to announce the program because it's been something we've been working on for a period of time now, and we do think that it's going to be important part of our story for 2026. But, but I think maybe getting into some of the particulars that you're asking about will be easier once we've identified and funded, you know, the first couple deals and then we'll have real numbers to speak to illustratively. You know, what I would tell you is if you, if you think about a six cap property and the debt cost is very similar to that cap rate, so you're kind of neutral there and Then if you had 6% equity yield, but we're 75% of that equity capital and we're getting all of the cash flows, you run that math and you're at an 8 yield, right? I mean, that's super high level, super simplistic. And then you, and then you lay your growth on top of that. And so you can kind of, if you use that super high level illustrative example, you could impute that growth that would be required to get you to a 10% return to end of year two, middle of year three and year four scenarios. Right, gotcha. Okay. Why would your pro partner also be willing to take on a 10% preferred equity hurdle? What's kind of in this for them? The first few years kind of sound. Like they're basically just working for you. Before they kind of start to make any money. So. Why is a 10% preferred equity. The most attractive cost of equity to them?

I think tyo from their seat, looking at the properties they're going to buy and looking at from their lens, as we talk about our underwriting, we talk about how we think the properties are going to perform and the overall performance of the deals they're making. I think they have had history and have proven that they're going to outperform. And from their lens, this is an appropriate level of cost of capital for what they're going to get out of it. And so I just being around that, you know these operators a long time, I was one of these operators. I think they will find some home run deals that work out very, very well for them and it makes this very attractive for them.

Thank you.

Yeah, thank you. Thank you at this time. This concludes our question and answer session. I'll turn the call back over to George Hoagland for closing comments.

Yes, thank you all for joining our call today and we look forward to seeing many of you at the upcoming conferences this month and next. Have a good day.

Ladies and gentlemen, this will conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.