National Storage ( NSA ) Q4 2025 Earnings Transcript

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<h2>DATE</h2>
<p>Thursday, February 26, 2026 at 1 p.m. ET</p>
<h2>CALL PARTICIPANTS</h2>
<ul>
<li>President and Chief Executive Officer — David G. Cramer</li>
<li>Chief Financial Officer — Brandon S. Togashi</li>
<li>Vice President of Investor Relations — George Hoglund</li>
</ul>
<h2>TAKEAWAYS</h2>
<ul>
<li>Core FFO Per Share -- $0.57 for the quarter and $2.23 for the year, at the high end of guidance and “beating consensus.”</li>
<li>Same-Store Revenue -- Declined 70 basis points, a sequential improvement from a 260-basis-point decline in the prior quarter, with nine out of 21 reported markets delivering positive growth.</li>
<li>Occupancy -- Down 70 basis points year over year at year-end, compared to down 140 basis points at the end of the previous quarter; January occupancy up 20 basis points year over year, and the positive trend continued into February.</li>
<li>Same-Store Operating Expenses -- Decreased 80 basis points for the quarter; for the full year, grew 3.1%, which was slightly below the low end of full-year guidance.</li>
<li>Payroll Costs -- Reduced by 4.1% for the quarter and 2.8% for the year, attributed to ongoing operational efficiencies.</li>
<li>Marketing Expense -- Increased by 37% for the quarter and 31% for the year as management invested in customer acquisition, with leadership highlighting resulting gains in rental volume and platform performance.</li>
<li>Preferred Equity Investments Platform -- Introduced during the year, with over $50 million already under contract for deployment across three properties.</li>
<li>Acquisition and Disposition Activity -- Sold 15 properties totaling $97 million and acquired 10 properties totaling $75 million for the year; completed an additional $24 million in property sales during the quarter and $21 million in sales plus $10 million in acquisitions subsequent to quarter end.</li>
<li>Leverage -- Net debt to EBITDA at quarter end was 6.6x, just above the targeted 5.5x-6.5x range, with $375 million in maturities in 2026 primarily expected to be refinanced with a new term loan.</li>
<li>2026 Guidance Highlights -- Same-store revenue growth projected at 90 basis points, operating expense growth at 3%, flat same-store NOI growth, and core FFO per share at $2.19; guidance includes $50 million–$150 million in acquisitions and dispositions each.</li>
<li>Move-In Rental Volume -- Rental volume finished about 11% higher year over year for the fourth quarter, despite a roughly 10% decline in October due to a hurricane comp; January and February volumes tracked even higher.</li>
<li>RevPAR and Achieved Rate Trends -- “Modest improvement” in achieved rate was sustained throughout the year, supported by ongoing enhancements to ECRI (existing customer rate increase) initiatives, even as roll-downs remained in the low to mid-30% range.</li>
<li>Portfolio Optimization -- Five states exited and the number of brands consolidated to six; majority of portfolio repositioning work expected to be completed in 2026, transitioning to ongoing maintenance thereafter.</li>
<li>Dividend Coverage -- Management stated, “the guidance would imply we are not covering the dividend this year,” with expectations of returning to full coverage by the fourth quarter and stronger positioning if fundamentals continue to improve into 2027.</li>
</ul>
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<h2>RISKS</h2>
<ul>
<li>President and Chief Executive Officer Cramer said, "the guidance would imply we are not covering the dividend this year," and that coverage is not expected until the back half of the year or 2027 contingent on fundamental improvement.</li>
<li>Chief Financial Officer Togashi cited "$375 million of maturities this year" with expected partial-year interest rate headwind from anticipated refinancing costs rising above the 4.5% blended in-place rate.</li>
<li>Other property-related income, including tenant insurance, is expected to be a “drag” on same-store revenue growth again in 2026, though the comparison becomes easier mid-year.</li>
<li>In certain markets such as Phoenix and Atlanta, oversupply continues to weigh on sequential revenue improvement, limiting the pace of positive inflection until new development slows materially.</li>
</ul>
<h2>SUMMARY</h2>
<p>Management confirmed that operational transformation and platform integration initiatives are complete, enabling consistent execution and eliminating sources of distraction cited in prior periods. Strategic emphasis on marketing and dynamic pricing drove a double-digit year-over-year lift in rental volumes, underpinning stabilization in occupancy and a pronounced sequential improvement in same-store revenue decline. The company introduced and began deploying a preferred equity investment platform, actively managing capital by cycling out non-core assets and concentrating investment in targeted markets for densification and joint venture growth. January and February data showed continued positive momentum in occupancy and rental flows, reinforcing management’s guidance for gradual sequential improvement in same-store revenue through 2026 and an expected return to full dividend coverage by year-end or into 2027. Guidance for 2026 is built on existing market dynamics rather than speculative catalysts, with no material tailwinds from a housing recovery assumed, and leverage is forecast to remain at the upper end of the target range as refinancing activity and continued portfolio optimization proceed.</p>
<ul>
<li>President and Chief Executive Officer Cramer said, “All the work we put into our people, process, and platforms is complete, and so there is no distraction or no moving pieces right now.”</li>
<li>Marketing investments and digital tools, including AI, have measurably increased rental conversion rates and customer acquisition efficiency, with visibility and outranking improvements translating to “rental volumes being up 20%–30%.”</li>
<li>Same-store move-in rates are expected to be negative for the first four to five months due to difficult comps, then inflect to neutral or positive in the latter half, with ECRI magnitude of increases higher year over year and cadence unchanged.</li>
<li>Portfolio disposition program will conclude most major divestitures in 2026, after which sales will occur only on an opportunistic basis as conditions warrant.</li>
<li>Markets with supply-demand equilibrium, such as Colorado Springs and Wichita, are producing sequential rate and occupancy gains, while others with continued oversupply will require further supply absorption before pricing power returns.</li>
<li>New supply is anticipated to fall below historical levels beginning in 2027, but guidance for the current year does not embed any impact from a recovery in housing transactions or related catalysts.</li>
<li>The company’s preferred equity investments platform aims to deploy capital on a two-year timetable, with three properties under contract and pacing committed to “get that out as quick as possible.”</li>
<li>Expense growth for 2026 will be led by property taxes (3%-5%), with payroll expected to remain flat and marketing expense growing in the “teens” percentage range; insurance expense is forecast to decline on renewal.</li>
<li>In response to regulatory volatility, Chief Financial Officer Togashi noted, "There is always some element" of weather- or emergency-induced rent restrictions across parts of the portfolio, but these events are generally localized and short in impact.</li>
</ul>
<h2>INDUSTRY GLOSSARY</h2>
<ul>
<li>ECRI (Existing Customer Rate Increase): Strategic program of periodic rental rate increases applied to existing tenants as part of yield management for self-storage REITs.</li>
<li>PRO Internalization: The conversion process through which participating regional operators (PROs) in a self-storage REIT’s network are fully integrated into the company’s centralized operations and management structure.</li>
<li>Achieved Rate: Blended average rate realized across all occupied units, factoring in both new and renewal leases, as well as promotional adjustments.</li>
<li>Roll-Down: The reduction in average realized rent when new tenants lease units at lower rates than outgoing tenants, measured as a percentage.</li>
<li>Preferred Equity Investments Platform: A vehicle for providing equity capital on preferential terms, typically offering a priority return, used to finance the acquisition or development of real estate assets.</li>
</ul>
<h2>Full Conference Call Transcript</h2>
<p>Operator: Greetings. Welcome to National Storage Affiliates Trust Fourth Quarter 2025 Conference Call. At this time, participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. It is now my pleasure to introduce your host, George Hoglund, Vice President of Investor Relations for National Storage Affiliates Trust. Thank you, Mr. Hoglund. You may begin.</p>
<p>George Hoglund: We would like to thank you for joining us today for the fourth quarter 2025 earnings conference call of National Storage Affiliates Trust. On the line with me here today are National Storage Affiliates Trust's President and CEO, David G. Cramer, and CFO, Brandon S. Togashi. Following prepared remarks, management will accept questions from registered financial analysts. Please limit your questions to one question and one follow-up, and then return to the queue if you have more questions. In addition to the press release distributed yesterday afternoon, we furnished our supplemental package with additional detail on our results, which may be found in the Investor Relations section on our website at nsastorage.com.</p>
<p>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, February 26, 2026. 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.</p>
<p>We also encourage listeners to review the definitions and reconciliations of non-GAAP financial measures such as FFO, core FFO, and net operating income contained in the supplemental information package available in the Investor Relations section on our website and in our SEC filings. I will now turn the call over to David.</p>
<p>David G. Cramer: Thanks, George, and thanks, everyone, for joining our call today. The fourth quarter provided further confirmation that our portfolio performance has inflected in a positive direction. We are benefiting from the significant operational efforts executed by our team over the past few years, positioning National Storage Affiliates Trust for outsized growth. We produced solid results for the quarter and delivered wins in several areas, including although one of our 21 reported MSAs saw improvement in same-store revenue growth versus what we reported in Q3. Same-store revenue growth was down 70 basis points in the fourth quarter compared to down 260 basis points in the third quarter, a substantial improvement. We experienced sequential improvement each month of the quarter.</p>
<p>Year-over-year occupancy also continued to improve, finishing the year down 70 basis points. Remember, we were down 140 basis points at the end of the third quarter. Our core FFO per share results came in at the top end of our guidance range, beating consensus. Looking at the full year, we delivered a handful of notable accomplishments, including consolidated another brand, reducing the number of remaining brands to six, and an additional growth driver with the formation of our preferred equity investments platform. We continue to execute on our portfolio optimization program by exiting five states and selling 15 properties totaling $97 million. We also acquired 10 properties totaling $75 million across our joint ventures and on balance sheet.</p>
<p>Most importantly, we exited the year on solid footing with positive momentum that has carried into 2026, as January end-of-month occupancy was up 20 basis points year over year. We have clearly turned the corner. Tremendous efforts undertaken by our team to internalize the PRO structure, dispose of non-core assets, upgrade and centralize our marketing, revenue management, and operations platforms, along with the consolidation of brands and the move to one web domain are paying off. Looking at 2026 and beyond, the backdrop for self storage is improving. First, new supply is currently stable and is projected to decline over the next few years to levels well below long-term historical averages, with the impact becoming more meaningful in 2027.</p>
<p>Second is momentum in the current administration to address home affordability, which could provide a boost to the housing transaction market and self storage demand. Lastly, increased stability in self storage pricing practices could lead to rising street rates, providing a near-term lift to revenue growth. Now, let me comment on our relative position within the sector. Our portfolio fundamentals have inflected positively, and we have the most to gain from a recovery in the level of housing turnover. Our enthusiasm is supported by the fact that we are starting the year with strong rental volume, inflection from negative to positive year-over-year occupancy, and an encouraging trajectory of same-store revenue growth, while we remain focused on disciplined expense controls.</p>
<p>As we enter the spring leasing season, we will continue to focus on driving internal growth with increased marketing spend, competitive position in terms of rate and promotion, solid execution from the sales process, and remaining assertive with our ECRI strategies. Meanwhile, we continue to improve our portfolio through capital recycling, reinvesting in our properties, while also growing our portfolio through expansions and acquisitions. I will now turn the call over to Brandon to discuss our financial results.</p>
<p>Brandon S. Togashi: Thank you, David. Yesterday afternoon, we reported core FFO per share of $0.57 for the fourth quarter and $2.23 for the full year, at the high end of our guidance range, as our focus on operational improvements is starting t