NSA
#Yes, <UNK>, pretty much the high end of the SP guidance corresponds with the high end of the rest of the guidance.
So if we hit the high end of our NOI growth and we hit the high end of our acquisitions growth, that would also tie in with the high end of our SP guidance.
And likewise the low end; if we hit the low end of our NOI growth, the low end of our acquisitions growth, that's going to tie in with the low end of the SP guidance, as well.
The SP guidance in total dollars is up a fair amount from 2016, primarily obviously because of the large number of acquisitions that we did in 2016 and especially a lot of those coming in later in the year.
And so the SP equity cash flow related to those was only effective for last year for a very small part of the year.
So by having those all through the entire year, that's the main reason why the absolute dollar amount goes up quite a bit.
But where we are within the guidance range is totally dependent on how we perform on those other metrics.
Well, if you take a look at our map, sort of our map of the United States, we've always said that our goal is to be in as many of the top 100 MSAs as we can be in an accretive way for our investors.
So we're not going to go into an MSA just because we want to be there if it is going to hurt our investors.
But you look at the white space on our map, and we say, well, we'd like to be in those white space areas, or the lighter blues on our map ---+ we have different colors and the lighter blue means we're not as dense there.
So we'd like to strengthen the lighter blue and add into the white spaces.
But only to the extent that number one, there's a really good operator or PRO in that area and number two, that we can do it in a way that's accretive for our investors.
Within that, that's kind of how we're having discussions about the ten or so different PROs that we're talking to.
Hey <UNK>, this is <UNK>.
Definitely the iSource portfolio is looking to grow in 2017 and beyond.
We're have capital commitments both from NSA and from our partner.
So we're actively out there bidding on properties and underwriting.
And some of that is built into our guidance.
It's just really a minor portion at our 25% share of the JV.
So we will continue to grow that portfolio.
And I would add to that, <UNK>, that the $200 million commitment that we have made for acquisitions with our partner is intended to occur as good accretive acquisitions come up.
So I think in our overall thought process we thought that that might take four years, but if we could find $100 million of acquisitions this year in those iStorage territories, we would certainly do $100 million rather than $50 million.
But we've forecasted it to be at a fairly slow pace.
<UNK> <UNK>, our same-store pool this year represents about 70% of our total square footage.
So there's a little over 30% that's in the non same-store pool, and that's of the wholly owned, so that does not include the joint venture.
And historically, our non same-store performance has been better than our same-store performance.
As we have implemented the programs with the platform tools, et cetera, the NOI growth in our non-same-store has typically been better by anywhere from 1% to 2% higher NOI growth, up to as much as double same-store NOI growth, depending on how well the store was doing before we bought it.
So we definitely would say that the non same-store pool will do better, than the ---+ but the amount better depends quite a bit on how well it did before we bought it.
Yes what we do is we use our underwritten budget for the forecast for our guidance.
And if you recall, we have talked about how our budget and underwriting has actual performance versus underwriting.
And so far historically our actual performance has exceeded our underwriting in a pretty meaningful way.
But we use our underwritten estimates for our guidance.
That's right.
So that's a little bit of a different scenario because we had already gone in to acquire some recent properties in the Orlando market, but we did not after PRO there, and we've had ongoing discussions with Marc Smith there for quite a number of months.
And so it made a lot of sense, and he was agreeable to join NSA and he'll take over management of four of those recent acquisitions immediately, and they will be bringing in another acquisition in the short term here.
And then additional future acquisitions that might come through the Personal Mini will depend both on what Marc can generate in terms of third-party acquisitions in his market, because he's very well-known in the Orlando area, and also the ability of potential properties from within his portfolio to be contributed.
We have not forecast really any of those additional contribution properties for this year.
We would hope that we might be able to start seeing some of those next year and beyond based upon both being comfortable with how all of the NSA programs work and also debt maturities, et cetera.
But I do expect we will have some third-party acquisitions in the Orlando area this year, but we have not forecast very much in our guidance.
That's certainly one element of it, timing of debt maturity.
And a second part of it relates to the issue of the control of the properties and looking at ---+ because they manage about 36 additional properties on top of the ones that he will be managing for NSA.
And obviously in any discussion where there's another party that's involved in the decision making on contribution of properties being managed, those have to be discussed with those decision makers.
So it's a combination of debt timing plus discussions with decisions makers to make it make sense for them and the timing of would they're trying to do.
Yes.
Obviously it is a range, but we are seeing ---+ generally cap rates have at least stopped declining.
And so we are seeing deals we're underwriting right now and looking at basically right around the 6% cap rate.
There's a few of them that are a little below 6%, a few of them that are a little above 6%, but I would say if you're trying to think about an average, somewhere around a 6% is going to be pretty accurate.
That would be on a forward basis.
Thank you.
Yes, <UNK>, we essentially see that with every large really good operator PRO that we talk with, that they all have lots of options.
And really when a PRO gets into and understands the details of the benefits that they get through the NSA, which is a combination of the platform tools and the participation in the best practices operations, plus the access to capital for growth and the ability to really drive accretive growth for their portfolio.
And then the analysis of how that translates into value for the PROs, if they want to stay in the business for a relatively long period, and by that I mean at least five years, and they want to continue to operate for at least five years, we are absolutely certain that the NSA PRO program is the best option for an operator to go under.
Now if they want to cash out and get the money and run and get out quickly, there's lots of other options for them, and then NSA is not the best.
But for PROs who rally like the business, want to grow the business, want to keep in the business for at least five more years, I'm confident that the NSA program is the best option.
So for the initial portfolio, where they're managing these properties that we already owned, they've co invested several million dollars for the SP co-investment related to that.
And then as any properties that they would contribute in the future come in, then part of their equity would come in in terms of SP equity, and part of their equity would come in in terms of OP equity.
Just like we've done year after year with all of our existing PROs.
Thank you, <UNK>.
Thank you.
This is <UNK>.
We're very focused on raising rates for in place customers.
We gauge the risk of customer flight based on market and market conditions.
So every store and every market is a little bit different, and we use the revenue management algorithms to guide us in that decision make process.
In some markets we're pretty aggressive, and we will send through an increase as early as six months after a customer moves in, and then hit them every nine months thereafter.
And others places we're a little bit less aggressive.
We might wait up to a year before we send out that first letter and we might have interim increases after that spaced at about nine months to a year.
So it's market dependent.
It's been very successful for us.
We've found at least in 2016 that we were able to raise rates at the high single digits type of range, and no customer is safe.
We consider them all with they're ready.
There are some that we go for and some that we don't.
So it's not a monolithic approach across the entire portfolio.
It's more market dependent than PRO dependent, but every PRO has their own style and approach.
But it really gets to the strength of the market or the strength of the store.
Our approach is to provide a common set of tools and techniques to our PROs so that they can leverage the scale that we have as a grander portfolio But our PROs are the operators, they're the boots on the ground as <UNK> said earlier.
And we trust them with their price decisions more than we trust any system.
So we provide the system, we provide the techniques, we provide best practices, and we want to guide us all to the right decisions.
But it's a PRO-level decision when it comes to pricing and price increases.
Yes so one thing to add to that, <UNK> <UNK>, is that the system and the guidance is common.
Everyone is on the same system.
And then it gives guidance to the PRO, but the PRO makes the final decision.
The guidance that they get, it gives them both a conservative approach, a middle approach, and an aggressive approach to pricing.
And they make the call on what they do with that pricing.
But the guidance on the system is common across all our PROs.
It was probably around two-thirds of our customers received a promotion of some sort in 2016 Q4, which was marginally up from 2015.
We are actively using discounts, promotions to help drive or preserve occupancy, and we recognize that we've got to be competitive.
So it's once again store dependent and market dependent.
All in all, we think our discounting growth is well under control.
What we're seeing in Q1 right now is basically flat with what we did in Q4 of last year from a same-store perspective.
So we think it's under control but it's probably elevated relative to last year.
Thanks <UNK> <UNK>.
Thank you, operator and thanks again everyone for joining us for today's year-end earnings call.
2016 was an exceptional year for NSA, and we appear a appreciate your continued support of National Storage Affiliates trust as we move forward into 2017 and look forward to another great year ahead.
Thank you.
