Revenue Guidance and Housing Market
Q: What are your assumptions for new move-in rates and guidance?
A: Management assumes sequential rate growth month-over-month into the leasing season but does not expect a strong rebound in the housing market. They see continued price sensitivity from new customers and do not anticipate interest rates declining enough to impact leasing. Therefore, they have given prudent guidance without assuming a housing market rebound.

Life Storage Synergies and Market Conditions
Q: Is slower demand and rate pressure affecting Life Storage synergies?
A: Yes, market headwinds like slower demand and rate pressure are slowing the achievement of full property synergies from the Life Storage acquisition. While G&A and tenant insurance savings are exceeding expectations, property-level synergies may take longer, potentially not occurring until after this year. At the high end of guidance, they might get close; at the low end, they may fall short.

Same-Store Revenue Growth Differences
Q: What's driving differences in same-store revenue growth between EXR and LSI?
A: The primary driver is the occupancy delta between the portfolios. The gap has decreased from 400 basis points last summer to about 200 basis points in February. Life Storage properties are accepting ECRIs well, moving out at slightly lower rates than EXR customers. However, current market conditions are a headwind, slowing the achievement of full synergies.

Early Year Occupancy and Rate Trends
Q: Can you update us on January and February occupancy and move-in rates?
A: Occupancy is at 93.1%, with a positive 40 basis point delta compared to the end of the year. Strong rentals in January are boosting occupancy, but this is coming at the expense of new customer rates. Rates were down 17% in January and February, reflecting price sensitivity among new customers.

Expense Outlook
Q: Can you comment on expenses and line items in the $475 million midpoint?
A: The $475 million expense midpoint includes a 3% increase in payroll, upper teens percentage increase in marketing expenses, property taxes rising between 2% and 3%, and property and casualty insurance growing close to 20%. Marketing spend is viewed as an investment with an expected ROI.

Transaction Market and Cap Rates
Q: What are you seeing in the transaction market and cap rates today?
A: Most acquisition guidance is already identified and under contract, with $50 million yet to be identified. Transaction volume is very low, and recent deals often have unique circumstances. As such, it's difficult to define a market cap rate, and management wouldn't want to put a specific number on it.

ECRI Strategy and Customer Reception
Q: Has the strategy of using ECRI to drive rent growth been effective?
A: Management believes the strategy is valid and working. Leaning into occupancy and acquiring web customers at lower rates, then relying on ECRI, maximizes long-term revenue. Customers' acceptance of ECRI has not changed, with no increase in vacates due to ECRI notices.

Marketing Spend Importance
Q: How important is aggressive marketing given current demand?
A: Despite price sensitivity, there isn't minimal new customer demand; units are still renting every month. Marketing spend, about 2% of revenue, is considered an investment with ROI metrics in place to ensure effectiveness. Costs are slightly higher, partly due to increased use of SpareFoot, which carries higher costs.

New York Market Performance
Q: What's impacting performance in the New York/New Jersey market?
A: Northern New Jersey is negatively impacting the MSA performance. While New York boroughs are outperforming and have rotated to strong performance, Northern New Jersey is dragging down overall results in the region.

Street Rate Expectations
Q: What's implied for street rates in 2024 guidance?
A: Management does not expect significant growth in street rates this year. At the guidance midpoint, they expect occupancy to remain relatively flat and do not foresee considerable street rate power in 2024.