National Storage Affiliates Trust - Q4 2025

Transcript

Operator (participant)

Greetings. Welcome to National Storage Affiliates' fourth quarter 2025 conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, George Hoglund, Vice President of Investor Relations for National Storage Affiliates. Thank you, Mr. Hoglund. You may begin.

George Hoglund (VP of Investor Relations)

We'd 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 NSA's President and CEO, David 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. 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. 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 26th, 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. 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.

David Cramer (President and CEO)

Thanks, George, 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 to position NSA for outsized growth.

We produced solid results for the quarter and delivered wins in several areas, including all but one of our 21 reported MSAs, saw an 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. Experienced sequential improvement each month of the quarter. 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 we 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 continued 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. 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've clearly turned the corner.

The 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. Second, there 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. We have the most to gain from a recovery in the level of housing turnover. Our enthusiasm is supported by the fact that we're 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.

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. We continue to improve our portfolio through capital recycling and reinvesting in our properties, while also growing our portfolio through expansions and acquisitions. I'll now turn the call over to Brandon to discuss our financial results.

Brandon Togashi (CFO)

Thank you, Dave. 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 to be reflected in our results, with same-store revenue and NOI coming in for the high end of the full year guidance ranges. For the quarter, same-store revenues declined 70 basis points, driven by lower average occupancy of 120 basis points, partially offset by year-over-year growth in average revenue per square foot of 100 basis points. This is meaningful improvement from the 2.6% revenue decline in the third quarter, with nine of our reported 21 markets delivering positive revenue growth. For the full year, same-store revenues declined 2.3%.

Expenses declined 80 basis points in the fourth quarter, while growing 3.1% for the year, slightly below the low end of our full year guidance range, benefiting from our meaningful expense control efforts. Most notable savings came from payroll costs that were down 4.1% in the quarter and 2.8% for the year, as we continue to find efficiencies with hours of operations and staffing. Marketing was up 37% for the quarter and 31% for the year, as we continue to invest in customer acquisition spend in markets where we clearly see the benefits. Outside of same-store operations, a lighter tropical storm season led to favorable results within our insurance captive, where we retain a portion of the property casualty coverage for our stores.

This resulted in lower expense in the other line item within operating expenses compared to the run rate from the first three quarters. Moving to the transaction environment, we completed the sale of three assets during the quarter for $24 million, subsequent to quarter end, we sold three additional properties for $21 million and acquired one wholly owned property for $10 million.

Our portfolio optimization program will remain active in 2026 as we prioritize scaling in markets while generating proceeds for deleveraging and funding attractive investments through our JV and preferred equity programs. Our on-balance sheet investments will largely be to fulfill 1031 requirements. Now, speaking to the balance sheet, we have ample liquidity and maintain healthy access to various sources of capital.

We have $375 million of maturities this year, consisting of a $275 million term loan that is due in July and $100 million of unsecured notes due in May and October. We have optionality and will most likely address these maturities with a new term loan. Our current revolver balance is approximately $400 million, giving us $550 million of availability. Our leverage continues to come down, with net debt to EBITDA of 6.6x at quarter end, just slightly above our 5.5x-6.5x target range. Moving to 2026 guidance, which we introduced yesterday, and the full details of which are in our earnings release.

The midpoints of key items of our guidance are as follows: same-store revenue growth of 90 basis points, same-store operating expense growth of 3%, flat same-store NOI growth, and Core FFO per share of $2.19. We have also guided the acquisition and disposition ranges of $50 million-$150 million. In both cases, these amounts represent NSA share. With regard to same-store revenue, we foresee the year-over-year growth steadily improving as we progress through these next couple of quarters. As David mentioned, our occupancy is slightly positive year-over-year at the end of January, and that spread has continued into February. At the midpoint of our guidance range, a four penny decline in Core FFO per share is due to growth in G&A of approximately two pennies.

This growth primarily comes from assuming target level cash incentive comp, as the same expense in 2025 for our corporate team was below target levels, given company performance. The remaining $0.02 is attributable to a combination of headwinds from debt refinancings and a tough comp for our insurance captive, based on my earlier comments regarding the favorable results in the fourth quarter of 2025. Thanks again for joining our call today. Let's now turn it back to the operator to take your questions. Operator?

Operator (participant)

Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue, and for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. As a reminder, please ask one question and one follow-up question. Requeue for additional questions. Our first question is from Samir Khanal with Bank of America. Please proceed.

Samir Khanal (Director of U.S. REITs)

Good afternoon, everybody. I guess, Dave, when I look at your guidance, you're calling for a healthy improvement here in revenue growth. You know, you're down about 70 basis points in four Q, getting to about 1% at the midpoint. I think this sort of puts you even above the peers here. Maybe help us kind of walk through kind of how you get there. Talk about the breakdown of let's call it occupancy through the year, rate growth, move-in rate growth, and even ECRIs, how you think about all that. Thanks.

David Cramer (President and CEO)

Yeah, Samir, thanks for joining. Thanks for the question. I'll start off, then I'll have Brandon talk just a little bit of the cadence. I think where I would start is, you know, what's different today versus where we were a year ago when we were given guidance is, you know, our transitioning is done. Our platform is working very, very well. Our synergies and our strategies are working very, very well. All the work we put into our people, process, and platforms is complete, so there's no distraction or no moving pieces right now. As we sit here in 2026 versus where we were a year ago, we just came off a PRO internalization and had a lot of moving pieces.

You know, right now, we're no longer chasing occupancy. Here to say that occupancy in January was 20 basis points up year-over-year, that's something we haven't seen for a couple of years. That gives us high level of confidence that we'll continue to work on that occupancy gains throughout the year. The rate environment is stable. We have seen good contract rate growth through the back half of 2025. We expect to have solid contract rate growth through the year of 2026. That comes from also the strength in the ECRI program. You know, we're now more assertive than we have been historically. That's because we have a high confidence level in our marketing program and our customer acquisitions platforms. We're seeing very, very high levels of rental volume.

You know, we finished on a square footage basis, about 11% up year-over-year in the fourth quarter. Keep in mind, that was muted because we were down about 10% in October because of a hurricane comp, and thus far in January and February, those numbers are even stronger. We're just very, very pleased with the rental output we're getting at the top, you know, through the top of the funnel, all the way through to the rentals themselves. I think for us, looking at all the things we're thinking about, RevPAF is positive, occupancy is positive, contract rate is going in the right direction, and our platforms are really working. I think for us, where we're coming from, where we've been, we just feel very, very confident on how 2026 will play out.I'll let Brandon kind of walk you through the cadence of the year.

Brandon Togashi (CFO)

I think the main thing I would add, Samir, and you touched on it in your question, the -70 basis points that we delivered in the fourth quarter, Dave remarked on in the opening about how that improved. It was more negative to start the fourth quarter, and it got less negatives trending towards flattish as we got to the end of the fourth quarter.

Based on the data points that we've given for end of month, January occupancy, my remarks about how that's continued into February, you know, we just feel comfortable that we're starting the year within the -30% to +210% revenue range, whereas, you know, a year ago, we were delivering a quarter and starting the year that was, you know, frankly, well below the low end.It required a much more of an improvement than what's required now.

Samir Khanal (Director of U.S. REITs)

No, thank you for that. I guess just as a follow-up, maybe as we're talking about the guidance, maybe you can hit on expense growth here, right? I mean, you have about 3%, for this year. Maybe talk kind of the components to kind of get there as we think about 2026. Thanks.

Brandon Togashi (CFO)

Yeah, Samir, I'll go. You know, most significant line item is property taxes, so we'll start there. You know, we're assuming a range of 3%-5%. That's consistent with kind of multiyear averages for our portfolio. Personnel, you saw the good success that we had in that line item, both in the fourth quarter as well as for the full year of 25. We're expecting, you know, similar successes. I expect that line item to be flattish in 2026 over 25. Outside of those two line items, I would say the largest percentage increase is gonna continue to be marketing expense, not to the tune of the 30%-plus that we saw this year, but still probably in the teens on a year-over-year growth rate.

After that, a lot of the other line items fall generally in that low to mid-single digit range that we have for the total OpEx guide. The one exception being insurance. We do believe we're in a better market. Our renewal was in April 1. We are forecasting that line item to be a year-over-year decrease in the cost.

Samir Khanal (Director of U.S. REITs)

Okay, thank you.

Brandon Togashi (CFO)

Thanks, Samir.

Operator (participant)

Our next question is from Michael Goldsmith with UBS. Please proceed.

Michael Goldsmith (U.S. REITs Analyst)

Good afternoon. Thanks a lot for taking my question. First question, Todd. On the January occupancy being up 20 basis points, can you talk a little bit about what's driving that? I think you talked a little bit about strong rental volumes. It seems like marketing spend is up, you know, can you walk through some of the moving pieces? Are you cutting rate to drive that occupancy higher during the slower season? Just trying to understand the moving pieces and context around the occupancy improvement. Thanks.

David Cramer (President and CEO)

Yeah, sure, Michael, thanks for the question. Thanks for being here. I think it's a combination of all those things. You know, clearly, we committed to a higher marketing spend really through the back half of 2025, and that was based upon our conviction that we were seeing the activity at the top of the funnel and our ability to convert those into rentals. We've done a really good job looking at the sales process all the way through the funnel and our conversion rates, and so, that would include how you use discounting, where you're priced in the markets, the amount of marketing spend, and when you're spending that money.

This is where AI and some of the AI technologies and the modeling we have are really starting to pay off, and the fact that the teams are doing a really, really good job as we model our marketing spend and model our dynamic pricing and use of discounts, to really work on that closure within that funnel. We've seen a significant improvement, you know, in our ability to really work the conversion rates through that funnel. So I would tell you from a pricing standpoint, we're keeping the same competitive position we've kept through the back half of the year.

We did a good job holding occupancy and not having the seasonal trough that you normally would have. That's a function of marketing spend, pricing, discounting, and then, you know, use of call center and staffing hours and those things. I think all those things in place. We're not undercutting markets. We're not trying to go out and try to move markets one way or the other. We're just staying within the appropriate competitor set to get the results we want.

Michael Goldsmith (U.S. REITs Analyst)

Thanks for that, Dave. As a follow-up, like, where do you see yourself, to the point of, you know, actually having pricing power, right? Occupancy is... Occupancy,

David Cramer (President and CEO)

having some good success, like, you know, a couple of the ones that jump out, Wichita, Colorado Springs, even Portland. If you look at Portland, where supply and demand are in check, and those markets are responding well to, you know, not only, you know, street rate or market pricing, but the ECR programs and what you're able to drive through the ECR programs are working very effectively. That's really, I think, as you look at our portfolio, we do have a lot of stable markets where they are benefiting very much from all of the changes we've made within the company, and all of the adaptation that we've done within the company is helping those markets.

The other markets, Michael, like Phoenix and Atlanta and Gulf Coast of Florida and stuff, it's really a supply issue, where until you really get that balance and get a better demand profile to get these stores filled up, it's gonna be harder to get pricing power. The one thing I would add into that, too, is we've noticed it, you got to get granular enough down to the unit size. It's one thing to scrape overall properties and look at overall occupancies and overall pricing power, but there are, you know, subsets of unit types that are seeing pricing power within some of our markets because, you know, supply and demand is in check on that particular demand for that unit.

Michael Goldsmith (U.S. REITs Analyst)

Thank you very much. Good luck in 2026.

David Cramer (President and CEO)

Thank you. Appreciate it.

Operator (participant)

Our next question is from Juan Sanabria with BMO Capital Markets. Please proceed.

Juan Sanabria (U.S. Real Estate Analyst)

Good morning. Congrats on the successes on the post PRO internalization. Just hoping out for a little bit more color on kind of the move-in rate trends throughout the fourth quarter and into January, as well as kind of how the quantum and/or cadence of ECRI has changed, maybe year-over-year, or however you could help us contextualize that.

David Cramer (President and CEO)

Sure, I'll start, and if Brandon wants to jump in here. You know, I think what you have seen, and you will see from us, is our move-in rates, as they went through the fourth quarter, narrowed on a year-over-year spread. That's because if you, if you think about a few years ago, in 2024, when we were internalizing the PROs, we reset street rates pretty hard in the back, you know, really the fourth quarter of 2024, and left them elevated, outside of the competition range, probably till April or May of 2025. So our comps on a year-over-year basis are tougher the first five, six months of this year, just on the move-in rents. Now, you know, for us, we're getting the rental volume we want.

We're effectively priced where we want to be priced in the markets, but I think you guys will see us go negative on move-in rates, probably the first four or five months of the year, and then get back to more of a neutral to positive position from June, July on. We are seeing significant rental volume. Again, I'll reiterate, we're not undercutting the market. We just adjusted our competitive position to really work on customer count and doing it as smart as we can to get to a better revenue output. The back half of that question was? I'm sorry, I've drawn a blank now. I've drawn a blank.

Juan Sanabria (U.S. Real Estate Analyst)

ECRI and how that's changed the quantum and/or cadence.

David Cramer (President and CEO)

Yeah, thanks. Thanks, Juan. Sorry about that. You know, the cadence hasn't changed, we're still hitting the ECRI around, you know, the same timing that we have been hitting them. I do know our magnitude of rate increases has increased on a year-over-year basis. All of the testing and the things that we're doing and our confidence in the ability to attract new customers and drive additional rental volumes is allowing us to be more assertive on the rate increases through all of the steps, whether it be first, second, third, fourth, across the board. That's also helpful as we look at our revenue projections this year.

Juan Sanabria (U.S. Real Estate Analyst)

Great. Then I was just hoping you could comment on when you're leasing units, if the size or the number of square feet that is being taken up has changed? I know at one point, I think it was last year, that had gone down for a bit, but curious on kind of the latest thoughts around how many square feet people are actually leasing today and how that's trending?

David Cramer (President and CEO)

Good question, good memory. We certainly, this time last year, were facing probably about a five to six square foot per rental rent, you know, square footage roll down. We've since closed that back up. We're back up to where most of our rentals are either at the same level or a little bit bigger in square footage, that's also very much helping in stabilizing occupancy and making sure we're attracting the customers for the units that we're vacating. Feeling good about that progress we made. That really flipped for us, really, probably, you know, starting September of last year, we've been able to hold it all the way through February, thus far.

Juan Sanabria (U.S. Real Estate Analyst)

Thank you.

David Cramer (President and CEO)

Thank you.

Operator (participant)

Our next question is from Todd Thomas with KeyBanc Capital Markets. Please proceed.

Todd Thomas (Managing Director and Equity Research Analyst)

Yeah. Hi, thanks. Appreciate the detail on January and some February data with regards to occupancy and move-in rents. Seems you've recovered a lot of ground. You described 2025 as sort of a tale of two halves, first half being a little weaker, followed by an improvement in trends in the second half. Is 2026 from, you know, sort of a revenue growth standpoint, also expected to be sort of a tale of two halves, or do you think you can continue to recover in the back half of the year when some of your comps begin to normalize?

Brandon Togashi (CFO)

Todd, this is Brandon. I do think that we'll have the benefit of some easier comps in the first half of the year and partway through the third quarter as well. The fourth quarter will be the tougher comp. We see the year-over-year same store revenue growth steadily increasing as we go throughout the year until maybe we plateau a little bit because of what, you know, you touched on. It does get a little bit tougher of a comp, starting in the back half of the third quarter, and then really for the entirety of the fourth quarter.

Todd Thomas (Managing Director and Equity Research Analyst)

Okay. Then, you know, Brandon, you know, Dave, too, I think you both touched on, you know, reducing leverage as a priority, and I just wanted to ask, you know, whether the guidance includes any sort of deleveraging initiatives, you know, really primarily, I guess, outside of, you know, organic EBITDA growth. Do you have a leverage target for year-end 2026?

David Cramer (President and CEO)

... Yeah, our 5.5x-6.5x range remains kind of the, you know, long-term target for us, just outside the top end of that at the end of 2025. Based on the midpoint of the same store NOI guide, Todd, as you know, flat on that metric, and FFO being, you know, relatively flat, it's really calling for leverage to stay fairly neutral. You know, a little bit of seasonality, depending on which quarter you go through, because the metric is calculated on a annualization of the given quarter, as you know. Outside of that, I would say by the end of 2026, it's gonna be fairly similar to the end of 2025. Capital deployment will affect that.

You saw the guide on acquisitions and dispositions. At the midpoint of each, we're saying that would be neutral. Obviously, changes month by month based on the deals that we're seeing, the success we're having on some of the disposition initiatives, any of the particular deals in front of us that we're underwriting for acquisition, largely through the joint ventures, as we said earlier. The timing and the success on those fronts could drive it and move it a little bit, but generally, at the midpoints, you're seeing it stay pretty constant.

Todd Thomas (Managing Director and Equity Research Analyst)

Okay. Thank you.

David Cramer (President and CEO)

Thanks, Todd.

Operator (participant)

Our next question is from Spenser Allaway with Green Street Advisors. Please proceed.

Spenser Allaway (Senior Analyst)

Hi, good afternoon. Thanks for taking my question. Just a quick one here to start off. Sorry if I missed this before. I know you guys mentioned January and February occupancy. Did you guys provide any color on where move-in rates are thus far into 1Q?

David Cramer (President and CEO)

Yeah. Hey, thanks for joining, Steve. You know, what we talked about is our move-in rates will inflect negative for the first probably four or five months of the year, and it's due to a little tougher comp from 2025. Where we're positioned in our markets to make sure that we're maximizing, you know, flow through the funnel and conversions and customer count, you know, working towards our revenue goal, because that's what we're trying to work towards. I think you will see some negative move-in rates for the next, you know, probably till about June, and then we think they'll inflect back to a more neutral positive for the back half of the year.

Spenser Allaway (Senior Analyst)

Great. Thanks for that insight. You know, given the roughly, I guess, 1% move-in rate growth and overall rental rate growth in the quarter, you know, how are you guys balancing the trade-off between occupancy and rate growth going forward? You know, is one gonna be a bigger priority than the other? You guys kind of mentioned that you guys aren't chasing occupancy. Does that mean that you guys are happy with where occupancy levels are at currently?

David Cramer (President and CEO)

Yeah, I think you're touching on it. It's a, it's a balancing point of marketing spend and the use of price and discount to get better conversion. Really, you know, occupancy can lead to revenue. For us, we think we are at a point where we can use those levers effectively and drive some more customer count, which will increase our occupancy. The fact that we're starting the year, coming out of January, on a positive note on a year-over-year basis, as we look at our year, we think we'll be able to continue to work on the occupancy side of the house effectively, with that, and that's a nice revenue output for us.That is, as you think about our year, we think we'll be more occupied at the end of, you know, 2026 than we were in 2025.

Spenser Allaway (Senior Analyst)

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

David Cramer (President and CEO)

Thank you.

Operator (participant)

Our next question is from Michael Griffin with Evercore ISI. Please proceed.

Michael Griffin (Director and Senior REIT Analyst)

Great, thanks. Dave, I'm curious if you can touch a little bit on sort of, you know, organic customer demand. Obviously, I think it's a positive seeing the same-store revenue growth inflect in the next year, but it feels like that's more, you know, an enhancement of marketing initiatives and capturing more of the top-of-funnel demand as opposed to the pie maybe expanding a bit. Can you talk a little bit about organic customer trends? You know, how are new customers versus renewals? You know, really is the inflection driven by, I guess, capturing more of the pie of customers out there rather than expectations for, you know, more customers to come back to the market?

David Cramer (President and CEO)

Yeah, good question. Thanks, thanks for being here. I would agree with your premise, and I think we're approaching 2026 with a mind frame that the competitive environment will be very similar to what we faced in 2025. You know, nationally, we know that new deliveries are coming down, but, you know, that number takes a while to be absorbed. I think, you know, as you think about our stores that are facing competitors in a three- and five-mile ring, we don't see a material change in the number of stores facing in that competitor set in 2026. You know, we're gonna be very focused on just executing and trying to take more of the pie.

You know, certainly every month you go deeper into absorbing new supply, it helps, but we did not, in our guidance at our midpoint, really model in any catalysts or anything that's really materially different in the way we're thinking about how the competition is gonna look for 2026.

Michael Griffin (Director and Senior REIT Analyst)

That's certainly some helpful context. Maybe just on the external growth opportunities, it seems that particularly the acquisitions, component of that might be more in kind of the JV structures that you've laid out. Can you give us a sense of what kind of, you know, product type you're targeting with those, whether it's, you know, going in cap rates, you know, your yield requirements? Just maybe give us a sense of kind of external growth priorities and the investment pipeline for the year ahead.

David Cramer (President and CEO)

Yeah, really great question. You know, first of all, we're targeting markets where we can densify our portfolio, get better synergies, get better operational efficiencies. That's been part of our portfolio optimization program now for a couple of years. The markets we are targeting are really around where we think we can have good efficiencies and good success in buying properties.

We're probably a little less attracted to the markets that are really struggling right now because we'll want those markets to improve before, you know, we'd want to step into them. We have a number of markets where we have had good success. We've seen the inflection points, we're seeing things go in a positive direction, and we're very actively working in those markets to come up with acquisitions.

The best cost of capital right now for us is our JVs and the new structure, the preferred equity structure. We'll lean into that this year as well. We will buy a balance sheet if needed, primarily used probably to fulfill 1031s, as we come across those through the dispositions. You know, we're willing and able and want to buy, but we're just being very diligent with our money right now because it's, you know, certainly there's, you got to be very smart and you got to be very diligent on how you put your money out and deploy it.

Michael Griffin (Director and Senior REIT Analyst)

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

David Cramer (President and CEO)

Absolutely. Thank you.

Operator (participant)

Our next question is from Ravi Vaidya with Mizuho Securities. Please proceed.

Ravi Vaidya (VP and Equity Research Analyst)

Hi there. Thank you for taking my question. I wanted to ask about the rent per occupied square foot. You've seen strong improvement there on both a year-over-year basis and a quarter-on-quarter basis. How do you see this metric trending in 1Q 2026 and throughout the balance of 2026 as well? Do you think it's going to be stable, accelerating, or decelerating?

David Cramer (President and CEO)

Good question. Thanks for joining. Yeah, we approached 2026 with, you know, continued improvement in the achieved rate. It becomes more challenging when you have bigger rolldowns like we're facing today. Our rent rolldowns are in the low to mid-30s at this point. The strength of our ECRI program and the improvements we've made around, you know, how we implement the ECRI program will help offset that rent rolldown. We, we did, you know, throughout the year, show modest improvement in the, in the achieved rate as we went through the year.

Ravi Vaidya (VP and Equity Research Analyst)

Got it. That's helpful. I want to ask another question about the guide. I know that you mentioned that we don't have any housing-related catalysts or any other demand catalysts for achieving the same-store revenue guide, what are some of the potential levers of maybe upside or elements of conservatism that might be baked in, given that the broader operating environment remains a bit choppy? Thanks.

David Cramer (President and CEO)

Yeah, good question. I'll start, and then, Brandon, if you want to jump in. You know, certainly things that can move the guide around, and one of the primary things is, you know, asking rents. You know, if we see good improvement in asking rents and we see a good spring leasing season, and that's the hard part about sitting here today. It's February, if we were sitting here in May, I think we'd have a lot more light on, you know, how active the spring leasing season was. Did we have good rate? We're able to drive, you know, the street rate, asking rents up, as historically, this industry does.

That's the one thing that we don't know, and that could push the guide up, or it may push it low. If street rates don't cooperate, you get more volatile, competitive environment, as far as the revenue side of the house goes. That would affect, you know, occupancy, and it would affect, obviously, what you're driving home for the achieved rate if you're any movement on that street rate. Anything else?

Brandon Togashi (CFO)

Ravi, I mean, the one thing I might add is just that's outside of our control, obviously, is just the regulatory environment and any, you know, state of emergency declarations due to, you know, severe weather or other events. Our portfolio's not currently in subject to, you know, significant restrictions there, but obviously, that could play a factor. There's always some elements of that, like, throughout in the portfolio as you go throughout the year. In the state of Oklahoma, we had some restrictions in 2025 that impacted our OKC and Tulsa markets. That's just one variable, but we try to, as much as you can, incorporate some element of that as we think about kind of the normal course, revenue management program.

Ravi Vaidya (VP and Equity Research Analyst)

Got it. Thank you.

David Cramer (President and CEO)

Thank you.

Brandon Togashi (CFO)

Thank you.

Operator (participant)

Our next question is from Ron Kamdem with Morgan Stanley. Please proceed.

Ron Kamdem (Head of U.S. REIT and Commercial Real Estate research)

Hey, just two quick ones. Just, can you just contextualize your dividend payout ratio for this year? Sort of I think you talked about sort of inflection. Is it sort of a 27 or 28? Like, when do you sort of anticipate getting that back to sort of even as this inflection sort of plays out? Thanks.

David Cramer (President and CEO)

Hey, Ron, thanks. It's Dave. Thanks for the question. Yeah, certainly, you know, the guidance would imply we're not covering the dividend this year. We will be light on covering the total payout. Certainly, you know, as we think about it, we are in an inflection point. We are seeing fundamentals turn positive. We're seeing our organic growth turn positive, and there are moving pieces that, you know, investment activity and things like that can move, you know, FFO around. We did come off of covering the dividend third quarter and fourth quarter of last year. You know, I think, you know, we have very good discussions with our board. Our board is very in tune to what, you know, the outlook of the company is.

Right now, you know, I think to your point, it's, you know, as we finish the end of the year, we probably back to where we're covering 100% of the dividend, you know, towards the back half, really, the fourth quarter of the year. Into 2027, if the fundamentals keep improving, we'll, you know, we'll certainly be in a much better position. We're certainly aware of where the payout ratio is, and we're, you know, working very hard to accomplish that to be lower.

Ron Kamdem (Head of U.S. REIT and Commercial Real Estate research)

Great, that's helpful. My second question, you know, I think the release sort of noted that all but 1 market saw sort of sequential improvement, which I thought was interesting. I mean, can you just double-click on, you know, whether the heavy supply markets versus maybe the lower supply, how those are sort of performing and what your expectations are in terms of that, the strength of the inflection? Thanks.

David Cramer (President and CEO)

Yeah, good question. I'll start, and if Brandon wants to come in here, but you're touching on it. The markets where we are still facing a tremendous amount of competition that needs to be absorbed are the ones that are really, you know, not inflecting positive, are gonna take time and, you know, and really, it's just time. Some markets, like Phoenix, they need to stop building because they're still building in Phoenix and, you know, so you make two steps forward, and then you have to take three steps back as somebody adds some more product to the market.

The markets that don't have that, and I mentioned a couple of them earlier, you know, Colorado Springs, Wichita, Portland, we're seeing nice, solid, you know, sequential growth in, you know, rate, and occupancies have been steady, and we're seeing some pricing power in those markets, and we're having good success. Fortunately, we do have a diversified portfolio. We have a lot of our markets that are going in the right direction, and so that makes us feel very good as we, you know, we think we've hit that positive inflection point. You know, even a market like Atlanta, which is improving, it's still very much negative, but we are seeing some consistency and some stability in some of these markets, which is encouraging to us.

Ron Kamdem (Head of U.S. REIT and Commercial Real Estate research)

That's it for me. Thank you.

David Cramer (President and CEO)

Yeah, thank you.

Operator (participant)

Our next question is from Eric Wolfe with Citigroup. Please proceed.

Eric Wolfe (Director)

Hey, thanks. You mentioned the positive trends on occupancy year to date. I was just wondering if it was possible for you to update us on where RevPAF has been trending, just to understand how average realized rents have been moving through the early part of the year, especially given your comment around seeing more success on ECIs.

David Cramer (President and CEO)

Yeah, Eric, thanks for joining. Good question. RevPAF is following the similar trends. We are seeing improvement in RevPAF, that would be consistent with, you know, nice, solid ECRI gains, obviously, the improvement in, you know, or stabilization in occupancy and slight improvement in occupancy. The RevPAF is growing, yes.

Eric Wolfe (Director)

Okay. It looks like your other property-related income or revenue was a 40 basis points drag on your same-store revenue growth this quarter. Can you just talk about what's embedded in your guidance for that line item and where you see it trending throughout 2026?

Brandon Togashi (CFO)

Yeah, Eric, it's Brandon. That line item will continue to be a little bit of a drag. You know, that includes our the tenant insurance dollars that are retained at the store. We've always had some amount of tenant insurance dollars, reported within the store level NOI, dating back to the PRO structure. That's just remained. As we talk about all the things that Dave hit on here, you know, the jockeying between street rates, you know, marketing spend, and our discounting and promotion initiatives, the at the time of rental upsell on tenant insurance, you know, we have altered that over the past, you know, couple quarters in order to prioritize getting that rental. That's created a little bit of a drag in that line item.

We expect that to continue in 26, although it does, you know, that comp gets easier as we get to the middle part of the year.

Eric Wolfe (Director)

Got it. That's helpful. Thank you.

Brandon Togashi (CFO)

Yeah. Thanks, Eric.

Operator (participant)

Our next question is from Omotayo Okusanya with Deutsche Bank. Please proceed.

Omotayo Okusanya (Managing Director and Head of US REIT Research)

Yes, good afternoon, everyone. First question I had was, again, while guidance does not really contemplate any real change in the housing market, just curious how you guys are thinking about, again, some of these affordability initiatives that are, you know, that President Trump is trying to make happen. Just kind of take a look at all of that. I mean, do you kind of feel like the housing market could get better, so this could potentially be a positive catalyst? Or do you kind of look at it and kind of it's more, you'll see a whole bunch of refinancing activity because mortgage rates are now down to 6%, but it's still not low enough to really stimulate housing demand?

David Cramer (President and CEO)

Yeah, at this, Dave, thanks for joining the question. That's a hard one. I mean, we are encouraged at the fact that at least everybody's talking about it, and they're trying to find a solution or some solutions to get progress there. We did not look at 2026 of any type of track or, you know, or catalyst in that piece of it. We just approached 2026, that would probably remain the same. Any improvement of that would be much welcome. We would be positioned for outsized impact, should they crack any of that and open up the, you know, resale market or things like that. I think we see the same, you know, data you do. There's a lot of listings.

There's a lot of stuff going on out there, but we've just not seen any significant improvement yet.

Omotayo Okusanya (Managing Director and Head of US REIT Research)

Yes, that's helpful. The second question, the preferred equity platform. Could you just talk a little bit? It's kind of like everything is now kind of in place. Can you just talk a little bit about kind of how deployment is gonna work there and how quickly you think you can kind of put out, put out capital?

David Cramer (President and CEO)

Yeah, sure. You know, it's a two-year program that we'd set up that we wanted to get the capital out in two years. Certainly, we are working very, very hard, and we do have three properties under contract today, totaling a little over $50 million. We're pleased that we've got that stood up, and we've got properties under contract. You know, we'd like to get that out as quick as possible if we can find the right deals. You know, it's hard to handicap those. You know, those transactions are lumpy, and timing is, you know, cannot be, you know, particularly seen, but we are happy that we're off and running. You know, we're certainly looking at a lot of properties, and there are a lot of opportunities.

Omotayo Okusanya (Managing Director and Head of US REIT Research)

Great. Thank you.

David Cramer (President and CEO)

Thank you.

Operator (participant)

Our next question is from Wes Golladay with Baird. Please proceed.

Wes Golladay (Director and Senior Research Analyst)

Hey, good afternoon, everyone. I just have a quick question on the portfolio optimization. When you get through this year's dispositions, will you be largely done with the program?

David Cramer (President and CEO)

Wes Golladay. I think so. We've done the majority of the heavy lifting and the larger work this year. We'll wrap up a lot of that, after that, it'll just be as things you know, materialize and stuff. Most of the heavy lifting is done.

Wes Golladay (Director and Senior Research Analyst)

Okay. Thank you.

David Cramer (President and CEO)

Thank you.

Operator (participant)

Our next question is from Annabelle Ayer with Barclays. Please proceed.

Annabelle Ayer (AVP in Equity Research)

Hi, thank you for taking my question. Can you remind us of your strategy for payroll and how you think about the trade-off between, like, lowering payroll costs versus potentially losing sales?

David Cramer (President and CEO)

Yes, Annabelle, thanks for joining. you know, we've been working for a number of years on how to model payroll, and I can tell you with the data we have today and much better tools that we have today, you know, we certainly wanna meet the customer when they wanna meet us and how they wanna shop with us. There's no singular answer to, you know, perfect staffing levels. We have markets where we have to have more staffing with more hours and markets with less. What I do know is we have a much better line of sight. What we've been working on is hours of operation, you know, and that would be, you know, can we be open later? Can we be closed earlier?

Do we need to be open, you know, 8 hours, 10 hours, 12 hours a day? Do we need to be open 6 hours a day? We've certainly put a lot of emphasis around our customer care center, and our call center teams are doing amazing things. We've implemented AI there, so we have a lot of automation built in there where we do not have to be around. We've, you know, put obviously the barcodes on the window. We have an app stood up. You know, for us, it's pretty fluid in markets and pretty fluid in stores, but we have seen payroll savings, and we do think there are more additional payroll savings for us as we go forward. We will not, you know, try to do that at the expense of the customer.

I do believe, clearly, the customer expectation of when they want us around and how they want us has changed. There's definitely that digital transformation is real, and it allows us to just be a little more flexible when we're at the store.

Annabelle Ayer (AVP in Equity Research)

That's really helpful. Thank you. One more. You guys have invested a lot, in your website and platform over the last year or two. How much more of a benefit do you see coming from improved search rankings and higher conversion rates?

David Cramer (President and CEO)

Another good question. We've certainly put a lot of effort there, and we've seen a lot of success. If you look at our visibility scores and our outranking scores, and it's a true testament to the rental volumes. When we talk about rental volumes being up, you know, 20% and 30%, that's all of these things coming together and working very, very well. So we're extremely happy.

Obviously, you never, you're never done. You're always working and trying to find another, you know, penny here and another rental there. The teams are working very hard with their modeling and how we're evolving our AI modeling. There's a lot of progress around what we're doing with Google and around our...

how we're looking at our search and how we're looking at our paid search and our effectiveness around all of the channels that are available to us. I'm very pleased with the progress, but still more to come there.

Annabelle Ayer (AVP in Equity Research)

Great. Thank you.

David Cramer (President and CEO)

Thank you.

Operator (participant)

Our final question is from Michael Goldsmith with UBS. Please proceed.

Michael Goldsmith (U.S. REITs Analyst)

Hey, guys, back for a couple follow-ups. First, I think you mentioned some restrictions in Oklahoma, like including Tulsa. Can you kind of clarify what you were referring to there?

David Cramer (President and CEO)

Yeah, I'll jump in a little bit, Michael. What we had last year is they had high wind and fire danger restrictions around counties because it was so dry. What we faced for a number of months was a restriction on how much we could increase rates at a certain particular time. We sat a little calmer on Oklahoma through, you know, probably five months or six months of that year, then we had a pretty good lift in January around, you know, working back through the portfolio in Oklahoma and catching folks back up to where we wanted them to be. You know, like Brandon said, a lot of these state of emergencies, they're generally pretty short in nature, and they're not as widespread. I mean, it'll be by county or by city sometimes.

That one just happened to be a wildfire one that hung on because they had such dry conditions for such a long period of time.

Michael Goldsmith (U.S. REITs Analyst)

Got it. Thanks for that. Brandon, a follow-up just on the refinancing. Can you walk through, you know, what's untapped for this year and just how you're thinking about it?

Brandon Togashi (CFO)

Yeah. The, you know, the $375 million that we have coming due this year, concentrated $275 million on that term loan and then $100 million on the private placement notes. As you can see on schedule four in the supplemental blended rate on that $375 million is out of 4.25%. If we, as I said earlier, executed a refinancing of all of that through the term loan market, you know, again, depending on whether we take, you know, some of that floating or fix it all for the tenor, you're probably in the mid-to-high 4s. That's... Let's just say that's half a percent of rate reset on that notional.

You know, it's a partial year impact in 2026, Michael, so that kind of gets to some of that interest expense headwind that I mentioned earlier. You know, that's just kind of the plan A. There's obviously the private placement market or the secured market. We feel comfortable with being able to address the maturities. That'll be the main focus for our finance team. I was also referring to, in my comments earlier, and you see it footnoted in our guidance table, one of our joint ventures has about $360 million of debt that comes due in October, currently the plan there would be to refinance that. That's a 3.5% in-place interest rate.

There would be a rate reset at the JV level, and then we would pick up our 25% share of that. That's all incorporated into the guide.

Michael Goldsmith (U.S. REITs Analyst)

Thanks. I appreciate the extra time.

Brandon Togashi (CFO)

Of course.

David Cramer (President and CEO)

Thank you.

Brandon Togashi (CFO)

Thanks, Michael.

Operator (participant)

There are no further questions at this time. I would like to turn the call back over to Mr. Hoglund for closing comments.

George Hoglund (VP of Investor Relations)

Yeah. Thank you all for joining us today, and we appreciate your continued interest in NSA, and we look forward to seeing many of you investors next week at the conference in Florida. Thank you.

Operator (participant)

Thank you. This will conclude today's conference. You may disconnect at this time, thank you for your participation.