Earnings call transcript: National Storage Affiliates Q3 2025 earnings beat expectations

National Storage Affiliates Trust reported its third-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $0.17, compared to the forecasted $0.15, marking a 13.33% surprise. Despite this, the company fell short of revenue forecasts, posting $170.25 million against an expected $188.95 million, resulting in a negative surprise of 9.9%. The stock experienced a modest increase of 0.89% to close at $29.11 following the announcement.

Key Takeaways

• National Storage Affiliates exceeded EPS expectations by 13.33%.
• Revenue came in below forecasts, missing by 9.9%.
• Stock price increased by 0.89% post-earnings announcement.
• The company maintained its 2025 guidance ranges.
• Positive outlook for the self-storage sector in 2026.

Company Performance

National Storage Affiliates Trust (NSA) demonstrated resilience in its Q3 2025 earnings, despite challenges in revenue. The company reported a Core Funds From Operations (FFO) per share of $0.57, reflecting an 8% decline from the previous year. Same-store revenues and rental revenue saw declines of 2.6% and 2.2% respectively, while expenses grew by 4.9%. The company’s strategic initiatives, including brand consolidation and innovation in marketing, have shown signs of positive impact, with web shopping sessions increasing by 23% in October.

Financial Highlights

• Revenue: $170.25 million (down from forecasted $188.95 million)
• Earnings per share: $0.17 (exceeding forecast of $0.15)
• Core FFO per share: $0.57 (8% decline YoY)
• Expense growth: 4.9%
• Net debt to EBITDA: 6.7x (improved from 6.8x in Q2)

Earnings vs. Forecast

National Storage Affiliates reported an EPS of $0.17, surpassing the forecasted $0.15, resulting in a 13.33% positive surprise. However, the company’s revenue of $170.25 million fell short of the expected $188.95 million, indicating a 9.9% negative surprise. This mixed performance highlights the company’s ability to control costs and maintain profitability despite revenue challenges.

Market Reaction

Following the earnings announcement, NSA’s stock price increased by 0.89%, closing at $29.11. This movement positions the stock closer to its 52-week low of $28.02, suggesting a cautious yet optimistic investor sentiment. The modest price increase reflects the market’s reaction to the positive EPS surprise, tempered by the revenue shortfall.

Outlook & Guidance

The company maintained its 2025 guidance ranges, expecting improvements in same-store revenue growth and occupancy stabilization in 2026. NSA anticipates a positive outlook for the self-storage sector, with new supply levels expected to remain below long-term historical averages. The company is also exploring additional joint venture opportunities and expects potential improvements in its dividend payout ratio.

Executive Commentary

CEO Dave Cramer expressed confidence in the company’s strategic direction, stating, "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." CFO Brandon Togashi highlighted the company’s measured approach, emphasizing, "Everything we’re doing today is relatively modest and measured for long-term benefits."

Risks and Challenges

• Continued revenue decline could pressure future earnings.
• Expense growth may impact profitability if not controlled.
• Market saturation in certain regions could limit expansion.
• Macroeconomic factors, such as interest rates, might affect consumer demand.
• Potential delays in housing market recovery could slow storage demand.

Q&A

During the earnings call, analysts inquired about the company’s new joint venture with a preferred equity structure and its impact on future growth. Management also addressed questions regarding marketing spend and strategy, detailing efforts to enhance revenue paths and occupancy trends. The potential impact of the housing market on storage demand was another focal point of discussion.

Full transcript - National Storage Affiliates Trust (NSA) Q3 2025:

Conference Operator: Greetings. Welcome to the National Storage Affiliates Third Quarter 2025 conference call. At 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, this 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, Mr. Hoagland. You may now begin.

George Hoagland, Vice President of Investor Relations, National Storage Affiliates: 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 NSA’s 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’ve furnished our supplemental package with additional detail on our results, which may be found in the Investor Relations section on our website at nsastorage.com. On today’s call, management’s prepared remarks and answers to your questions may contain forward-looking statements that are subject to risks and uncertainties and represent management’s estimates as of today, November 4th, 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, a consolidated platform, and an enhanced team is starting to take hold and has continued into the fourth quarter. Contract 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. Two, assuming Fed interest rate cuts push down mortgage rates, this would likely result in increased storage demand that would accelerate the current inflection in fundamentals. Three, in addition, lower interest rates will benefit our borrowing costs and overall cost to 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. Two, 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. Three, 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 has 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.

Brandon Togashi, CFO, National Storage Affiliates: 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 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 the first 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 PSA 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 at 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 comp 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 the leverage. 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 PSAs, 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 points 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 NOI guide implies 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. Operator.

Conference Operator: 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. You will hear a confirmation tone to indicate your line is in the question queue. You may press star two if you’d 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 proceed with your questions.

Samir Khanal, Analyst, Bank of America: Good afternoon, everybody. Hey, Dave, when I listen to your opening remarks, 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 heard from the peers. Maybe help us understand what makes you so confident sort of on a relative basis. Thanks.

Dave Cramer, President and CEO, National Storage Affiliates: Yeah, Samir, thanks for joining. And a good question. I think from my seat and from our seat, we spent the last couple of years in a very challenging environment working on our company and working on the way our company was structured, working on initiatives that would allow us to become better and position ourselves to have better performance in the future. You think we collapsed the pro structure, we consolidated brands, we consolidated operating platforms, we hung everything on nsastorage.com, a 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 and 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 are 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 of 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 heard in our opening remarks, we’ve been able to hold occupancy relatively flat.

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 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.

Samir Khanal, Analyst, Bank of America: 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 it, that sort of. Disposition, capital recycling over the next 12 months. Thanks.

Dave Cramer, President and CEO, National Storage Affiliates: 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 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.

Samir Khanal, Analyst, Bank of America: Thank you.

Dave Cramer, President and CEO, National Storage Affiliates: Thank you.

Conference Operator: Our next questions are from the line of Michael Goldsmith with UBS. Please proceed with your questions.

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

Dave Cramer, President and CEO, National Storage Affiliates: 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 we 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 strategy and our ability to continue to maximize how we implement in-place rate changes to our customers. And so that’s probably a long-winded answer to, I think we have three things we’re working on. They’re 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 draw 2026’s rental volume levels and how we execute on the ECRI program.

Brandon Togashi, CFO, National Storage Affiliates: 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 realize that benefit? Thanks.

Dave Cramer, President and CEO, National Storage Affiliates: Yeah, good question. We definitely in the third quarter saw some momentum. Around, I’ll give you this stat, around move-in sq ft for Q3. And if you think about the overall move-in sq ft 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 in the net rental sq ft that we were able to achieve. Of that, 3% of that 5.8% came out of the core portfolio, the corporate stores that we had managed before. The pro stores saw a 10.1% improvement in that rental sq ft 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.

Brandon Togashi, CFO, National Storage Affiliates: Thank you very much. Good luck in the fourth quarter.

Dave Cramer, President and CEO, National Storage Affiliates: Thank you.

Conference Operator: The next question is from the line of Spencer Glimsher with Green Street. Please proceed with your questions.

Spencer Glimsher, Analyst, Green Street: Yeah, thank you. Just given your former JVs 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?

Dave Cramer, President and CEO, National Storage Affiliates: Thanks, Spencer. Yeah, thanks for joining. I certainly think it’s an opportunity. 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’re very pleased to announce the one that we have just announced. It puts us 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 markets where I think they’re going to have very good success buying properties and have 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.

Spencer Glimsher, Analyst, Green Street: Okay, great. And then I know you mentioned in your prepared remarks that the capital recycling provides proceeds, obviously, to delever, 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?

Brandon Togashi, CFO, National Storage Affiliates: Yeah, Spencer, this is Brandon. 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 talked about closing the majority of that portfolio in late second quarter. So that was just finalizing that deal. Our JV23 acquired two stores. 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 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 for long-term benefits.

Spencer Glimsher, Analyst, Green Street: Okay. Yep, that makes a lot of sense. Thanks.

Brandon Togashi, CFO, National Storage Affiliates: Thank you.

Conference Operator: The next questions are from the line of Eric Wolff with Citi. Please proceed with your questions.

Eric Wolff, Analyst, Citi: Hey, thanks for taking my questions. I think on your last earnings call and in your recent presentations, you provided the rent path growth. I was just hoping you could provide that for October specifically and then talk about how you expect the trend through the quarter to hit that midpoint of your guidance?

Brandon Togashi, CFO, National Storage Affiliates: Yeah, Eric, this is Brandon. I’ll take that first, and then Dave can chime in. That metric, we started to introduce into our investor deck back at June May read, and that followed our first quarter supplemental. 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, RevPath is essentially a combination of that in-place customer rate metric with the occupancy. And so to your question about October, Dave, in his opening remarks, mentioned our occupancy down 170 basis points at the end of October. We were down 140 at the end of the third quarter.

So on average, you’re in that down 150 to 160 territory. But he also commented that contract rates were up 160 basis points. So those two things are essentially flat, meaning that that RevPath metric for October is essentially flat as well. 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 to prior years. 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 RevPath 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-handle instead of a two-handle. And that is where we need to be, obviously, to get to that midpoint of the guide.

Eric Wolff, Analyst, Citi: 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, say, October or 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 zero?

Dave Cramer, President and CEO, National Storage Affiliates: I think what Dave meant, well, he can answer for himself, Eric, but I’ll also be really clear about what’s in our guidance. I mean. I’ve said at recent conferences, 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 2024 and 2025, 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.

Eric Wolff, Analyst, Citi: Thank you.

Brandon Togashi, CFO, National Storage Affiliates: Yep. Thank you, Eric.

Conference Operator: The next questions are from the line of Michael Griffin with Evercore ISI. Please proceed with your questions.

Michael Griffin/Todd Thomas, Analyst, Evercore ISI/KeyBanc Capital Markets: 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 2026 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?

Dave Cramer, President and CEO, National Storage Affiliates: Yeah, 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 I think from an occupancy level, contract rate, where we’re going to be with RevPath.

I’m 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.

Michael Griffin/Todd Thomas, Analyst, Evercore ISI/KeyBanc Capital Markets: 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 revenue or NOI growth or exit cap as it relates to achieving that IRR?

Brandon Togashi, CFO, National Storage Affiliates: 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 properties, if we’re acquiring them off-market, the JV is acquiring them off-market. They’ve maybe been undermanaged 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. Our cash flow is priority to our partners.

And so all of the operating cash flow after that service will come to us up until that 10% preference return is filled. 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.

Dave Cramer, President and CEO, National Storage Affiliates: Yeah. I think I’d just add to that, to Brandon’s point. I mean, I don’t think we’re being overly assertive on exit cap rates, and I don’t think we’re being overly assertive as we think about revenue growth. I think. The partner we’ve chosen has a good handle on their markets, and we oversee 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.

Michael Griffin/Todd Thomas, Analyst, Evercore ISI/KeyBanc Capital Markets: Great. That’s it for me. Thanks for the time.

Brandon Togashi, CFO, National Storage Affiliates: Thank you. Thanks, Griff.

Conference Operator: The next questions are from the line of Juan Sanabria with BMO Capital Markets. Please proceed with your questions.

Juan Sanabria, Analyst, BMO Capital Markets: Hi. 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.

Dave Cramer, President and CEO, National Storage Affiliates: Yeah. Thanks, Juan, for joining. Good question. We’ve really spent a lot of time around looking at all facets of our business. Early on, we had to obviously strengthen our financial team as we brought all the accounting and all this stuff through the pro structure, 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 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 in leadership position around the marketing, peer 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. And so I think we’ve just really strengthened there. And then this 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 that 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 off, and we just are really starting to hit our stride.

Juan Sanabria, Analyst, BMO Capital Markets: Great. Thanks. And then just on the revenue side, hoping you could talk a little bit about ECRIs and kind of the quantum or the cadence and how that’s changed. And then 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.

Dave Cramer, President and CEO, National Storage Affiliates: Sure. I’ll start, and then Brandon can finish up on the rate question. 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 it it can evolve.

Having the additional talent, the additional strength, and the additional wisdom there is paying off on our ECRI strategy.

Brandon Togashi, CFO, National Storage Affiliates: And then, Juan, on your discounts question. Related to the move-in rate metric that we report back in schedule seven for the same-store pool, Dave mentioned it earlier. For the third quarter, we were up 4.9% on the move-in rates. If you adjust that for discounts, 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-threes. And for second quarter, we reported that move-in rate was up 130 basis points, and it was probably closer to flat.

Juan Sanabria, Analyst, BMO Capital Markets: Do you have the corresponding October?

Brandon Togashi, CFO, National Storage Affiliates: October year-over-year, Juan, is high just because that’s a consequence of last year 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 and a half off that for the discounts. But 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.

Juan Sanabria, Analyst, BMO Capital Markets: Thank you.

Dave Cramer, President and CEO, National Storage Affiliates: Thank you.

Brandon Togashi, CFO, National Storage Affiliates: Thanks, Juan.

Conference Operator: The next questions are from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your questions.

Michael Griffin/Todd Thomas, Analyst, Evercore ISI/KeyBanc Capital Markets: 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 as each investment’s completed? Is that how that’ll work? And then Brandon, you noted that the properties will not hit the 10% pref 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?

Brandon Togashi, CFO, National Storage Affiliates: 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. We’ve been working on the specifics of the agreement with our former partner for multiple months and very pleased to be able to announce it now. We’ve also, over these past few months, been concurrently underwriting a couple of deals that haven’t materialized, but jointly underwriting some opportunities. So we are excited about what we’re seeing in the market and looking to deploy those first dollars in the venture. On the second question. 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 I’ll just tell you because I referenced that we’ve underwritten a couple of opportunities recently. You’re hitting that in a few deals that we’ve looked at most recently. Year three, on average, I would say.

Michael Griffin/Todd Thomas, Analyst, Evercore ISI/KeyBanc Capital Markets: Okay. And then. 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?

Dave Cramer, President and CEO, National Storage Affiliates: Sure. I’ll take this. This is Dave, Todd. Thanks for the questions. I think there is interest from other former pros around this program. And like I say, we don’t—like 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 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-focused areas where this fits their capital need and our capital want. And so, yeah, I think we could see some more activity here in the future. 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 collapsed the OpCo 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.

Michael Griffin/Todd Thomas, Analyst, Evercore ISI/KeyBanc Capital Markets: Okay. So there won’t be any additional fees or 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?

Dave Cramer, President and CEO, National Storage Affiliates: Yeah. I mean, certainly, there’s the initial 10%, and then 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 of where we want to be potentially. But right now, it’s a preferred 10 with an upside.

Michael Griffin/Todd Thomas, Analyst, Evercore ISI/KeyBanc Capital Markets: Okay. Right. But no revenue management platform that’s being shared, no technology, no overlap around any impact around tenant insurance or anything of that nature?

Dave Cramer, President and CEO, National Storage Affiliates: 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 fees being paid to us. But the tenant insurance is an upside. That’s correct.

Brandon Togashi, CFO, National Storage Affiliates: I think, Todd, though, to your tying your questions together, though, this initial deal with our former pro made a lot of sense given that particular pro had invested a lot in building out a property operations group, and our comfort with them being managers of the 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 could roll out to other operators or other owners, the answer is yes, and I think in some of those situations, we would potentially be the property manager, in which case some of those scale and platform benefits would start to come into play.

Michael Griffin/Todd Thomas, Analyst, Evercore ISI/KeyBanc Capital Markets: Okay. Thank you.

Conference Operator: Next questions come from the line of John Peterson with Jefferies. Please proceed with your questions.

John Peterson, Analyst, Jefferies: 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?

Dave Cramer, President and CEO, National Storage Affiliates: Yeah. Thanks for joining. Good question. Yes. So we’ve had good success with the NSA storage consolidation and consolidation of brands. 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 of websites and trying to track the numbers as you think about everybody else having their own little systems and those pieces. But just a couple of 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. It shows good solid progress on the fact that we’re actually driving the marketing spend and the visibility we’re putting in place and where we’re putting our analytics was working. And so we were very happy with that. And then conversion rate 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.

John Peterson, Analyst, Jefferies: 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?

Dave Cramer, President and CEO, National Storage Affiliates: Yeah. I think the run rate will be pretty consistent as we go through the fourth quarter of what we saw around the third quarter. As far as dollars deployed towards really the primary driver, this is around the paid marketing platform. 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 and the amount of 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 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.

John Peterson, Analyst, Jefferies: All right. That’s helpful. Thank you. That’s all for me.

Dave Cramer, President and CEO, National Storage Affiliates: Appreciate it.

Conference Operator: The next question is from the line of Ravi Vaidya with Mizuho Securities. Please proceed with your questions.

Spencer Glimsher, Analyst, Green Street: 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 fives and low sixes? And within your portfolio, which markets do you think have the most immediate upside in the event of a housing market recovery? Thanks.

Dave Cramer, President and CEO, National Storage Affiliates: 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 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 of positioning 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 to apartment or some other place, and they’re still renters. But 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, Sunbelt, obviously, for us, we’ve got a lot of exposure throughout the south. If you think about down through Florida, 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. And 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.

Spencer Glimsher, Analyst, Green Street: Got it. That’s super helpful. And maybe just one more here. It seems like 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 same-store? Thanks.

Brandon Togashi, CFO, National Storage Affiliates: 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 across the board. Obviously, our commentary here and we’ve got a couple of conferences coming up, which I’m sure will be helpful for folks. It allows people to kind of understand our any type of bias or narrowing that others 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.

Spencer Glimsher, Analyst, Green Street: Got it. Thank you. Appreciate it.

Dave Cramer, President and CEO, National Storage Affiliates: Thank you.

Conference Operator: The next question is from the line of Brendan Lynch with Barclays. Please proceed with your questions.

Spencer Glimsher, Analyst, Green Street: Great. Thanks for taking my question. The prior 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 it just helps us think about how we should think about the benefits of this ongoing change to your structure.

Dave Cramer, President and CEO, National Storage Affiliates: I’ll start, Brandon. You can jump in. 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. We did rebrand our stores to NSA Storage, 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. They’re a good, strong operator, and we know they understand the markets and where they’re at. And from our seat, 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.

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.

Spencer Glimsher, Analyst, Green Street: 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 have to kind of outsource that again?

Dave Cramer, President and CEO, National Storage Affiliates: No, I think we’re open to doing both. I think 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 at the time of who this person, 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.

Spencer Glimsher, Analyst, Green Street: Okay. Thank you.

Dave Cramer, President and CEO, National Storage Affiliates: Thank you.

Conference Operator: Our next question is from the line of Ronald Kamdem with Morgan Stanley. Please proceed with your question.

Michael Griffin/Todd Thomas, Analyst, Evercore ISI/KeyBanc Capital Markets: Hey, I just have two quick ones. Just on the same store revenue, I know the guidance implies you’re sort of down 1.3% in 4Q. But the commentary suggests that 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.

Brandon Togashi, CFO, National Storage Affiliates: Yeah, Ronald. So I’ll just restate some of the same things we said earlier, but that’s more just to reemphasize and try to answer your question at the 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 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, the 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 higher discounts year-over-year. I mentioned tenant insurance year-over-year being a little bit of a drag. Those are the things that put you into the red.

Negative year-over-year or 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 2026. 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 a shorter window than that.

Michael Griffin/Todd Thomas, Analyst, Evercore ISI/KeyBanc Capital Markets: Yeah. Super, super helpful. I guess my follow-up, just on the dividend, I think the payout ratio had been over 100%. Now that we’re at this inflection, just how does your thinking change about when you can get back to below that 100-level mark? Thanks.

Dave Cramer, President and CEO, National Storage Affiliates: Yeah. I think you’re touching on something. 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 the pace of that will be determined on how 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 business, to Brandon’s point, is you can move pretty quickly in this industry about rates and about occupancy. And really adjust to the factors that are going on pretty quickly in 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.

Michael Griffin/Todd Thomas, Analyst, Evercore ISI/KeyBanc Capital Markets: Great. Thanks so much. That’s it for me.

Brandon Togashi, CFO, National Storage Affiliates: Thanks, Ronald.

Conference Operator: Thank you. Our final question is from the line of Omotayo Okusanya with Deutsche Bank. Please proceed with your questions.

Samir Khanal, Analyst, Bank of America: Hi, yes. Good afternoon. Just wanted to go back to the JV again. Brandon, with your comments about three years to get to the 10% preferred return, just kind of give us a little bit more information around what kind of NOI growth you are basically underwriting to underneath that and kind of what kind of debt or cost of debt this JV entity will have when it does ultimately fund the debt part of the equation.

Brandon Togashi, CFO, National Storage Affiliates: Yeah, Tyo, 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 speak to it in generalities. 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 an important part of our story for 2026. But I think maybe getting into some of the particulars that you’re asking about will be easier once we’ve identified and funded the first couple of deals, and then we’ll have real numbers to speak to. Illustratively, what I would tell you is if you think about a six-cap property and if 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 layer 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?

Samir Khanal, Analyst, Bank of America: Gotcha. Okay. Why would your pool partner also be willing to take on a 10% preferred equity hurdle? What’s in it 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?

Dave Cramer, President and CEO, National Storage Affiliates: I think, Tyo, from their seat, looking at the properties they’re going to buy and looking at it 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 just being around 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 makes this very attractive for them.

Samir Khanal, Analyst, Bank of America: Thank you.

Dave Cramer, President and CEO, National Storage Affiliates: Yeah, thank you.

Conference Operator: 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.

Dave Cramer, President and CEO, National Storage Affiliates: 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.

Conference Operator: 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.

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