Greetings. Welcome to the National Storage Affiliates' Third Quarter 2025 Conference Call. [Operator Instructions] 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 now begin.

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. [Operator Instructions] 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, November 4, 2025. The company assumes no obligation to revise or update any forward-looking statements 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 the 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're 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 of capital, which will aid us in our future acquisition activity. Additionally, we are encouraged by our relative position in the industry as we have 2 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 have 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 asserted 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.

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 a 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 PRO 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…

[Operator Instructions] And our first question comes from the line of Samir Khanal with Bank of America.

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.

Yes. Samir, thanks for joining. 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 our -- the way our company was structured, working on initiatives that allowed 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, 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 than 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 3 or 4 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 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 coming -- we improved in the third quarter, held it flat in October. We're in a position now where contract rates is still remaining positive on a year-over-year basis. There's just a lot of things that 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.

Got it. And then I guess switching subjects here on -- maybe on the disposition side. Maybe talk around kind of capital recycling, how you're thinking about that sort of disposition capital recycling over the next 12 months?

Yes, 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 is built around becoming operationally efficient and really trying to find the future that this serves us the best and creates the most return for our shareholders. And so 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 will -- 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.

Our next questions are from the line of Michael Goldsmith with UBS.

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 impact -- positively impact same-store revenue growth. How long do you think that takes? And what's the opportunity there?

Yes. Good point, Michael. I think from our seat, we're doing 3 things right now. We're closing the year-over-year occupancy gap and as we look out 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 will 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 ended answer to, I think we have 3 things that we're working on that are 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 drove 2026 as rental volume levels and how we execute on the ECRI program.

Got it. 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.

Yes. Good question. We definitely in the third quarter saw some momentum around, I'll give you this data, around move-in square footage for Q3. And if you think about the overall move-in square footage 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 square foot that we were able to achieve. Of that, 3% of that $5.8 million came out of the core portfolio, the corporate stores that we have managed before. The PRO store saw a 10.1% improvement in that net rental square foot on a year-over-year basis for Q3. So we certainly are starting to see momentum around all of the rebranding and all 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. Definitely we're happy with what the momentum we saw in the third quarter.

The next question is from the line of Spenser Glimcher with Green Street.

Just given your former PROs 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?

Spenser, yes, thanks for joining. I certainly think it's an opportunity. We -- one of the strong points of the -- there was a lot of strong points to the PRO structure, but that was one of them with their access to these local markets and ability to get off-market transactions done with buyers and sellers and us being the buyer and then finding sellers. And so I do think it's an opportunity. We are very pleased to announce the one that we have just announced. We put this 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.

Okay. Great. And then I know you mentioned in your prepared remarks that the capital recycling provides 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?

Yes, Spenser, 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 2 assets that was part of the 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 JV '23 acquired 2 stores. Our capital outlay was $8 million. Certainly, this preferred investment that we're talking about is a larger capital outlay and upwards of $100 million plus, but that will 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.

The next question is from the line of Eric Wolfe with Citibank.

I think on your last earnings call in your recent presentations, you provided the [ RevPAF ] growth. I was just hoping you could provide that for October specifically and then talk about how you expect to trend through the quarter to hit that midpoint of your guidance.

Yes, 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 NAREIT, 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 -- [ RevPAF ] 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 you also commented the contract rates were up 160 basis points. So those 2 things are essentially flat, meaning that [ RevPAF ] metric for October is essentially flat as well. All of 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 in the prior year. 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 [ RevPAF ] 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 [ RevPAF ] to something that's negative, but frankly, starting with a 1 handle instead of a 2 handle, and that is where we need to be, obviously, to get to that midpoint of the guide.

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 like, say, October, 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 0.

I think what Dave meant well, he can answer for himself there, but I'll also be really clear about what's in our guidance. I mean we -- 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 and 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 '24 and '25, which I think was the essence of Dave's remark. So not entirely 0 year-over-year, flat year-over-year, but modestly negative and improving.

Our next question is coming from the line of Michael Griffin with Evercore ISI.

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 '26 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?

Yes. 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 in 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 2, 3 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 [ RevPAF ], 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.

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 -- NOI growth or exit cap as it relates to achieving that IRR.

Yes, 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 Spenser'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 stabilize, 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 [ debt ] service will come to us up until that 10% pref return is filled. And so that -- 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.

Yes. 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 overlook 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.

The next question is from the line of Juan Sanabria with BMO Capital Markets.

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.

Yes. 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 the 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 the 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 strengthened leadership position around the marketing -- pure marketing team and the customer acquisitions team. And so I think adding this experience, these 3 people we added had years of experience in their field. They've had years of experience, 2 of them had years of experience around self-storage. And so I think we've just really strengthened there. And then that just 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 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 the transitions 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.

Great. 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 the kind of the advertised rate, if you will.

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 still a little bit stronger than it was last year, and will continue to evolve as data points tell us it can evolve. And so having the additional talent, additional strength and additional wisdom there is paying off on our ECRI strategy.

And then, Juan, on your discounts question, related to the move-in rate metric that we report back in Schedule 7 for the same-store pool. As Dave mentioned it earlier, for the third quarter, we were up 4.9% from the move-in rates. If you adjust that for discounts. It's -- for both third quarter and the second quarter, it was about 100 to 150 basis point impact because concessions were higher. So that 4.9% would otherwise be kind of mid-3s. And for second quarter, we reported that move-in rate was up 130 basis points, and it was probably closer to flat.

Do you have the corresponding October?

October year-over-year, Juan, is very -- is high just because -- and that's a consequence of last year, September and October comp was as 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 the PRO internalization. So our move-in rates achieved for October were up 14% and I would also guide you to take 1 point, 1.5 points 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 will be year-over-year relatively flat.

The next questions are from the line of Todd Thomas with KeyBanc Capital Markets.

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 is each investment completed? Is that how that will 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 time line might be for that 10% hurdle to be achieved?

Yes, Todd. So on the first question, it will be deployed on an investment-by-investment basis or asset by asset. So it will occur over time. And we've been working on the specifics of the agreement with our former PRO for multiple months and very pleased to be able to announce it now. We've also, over this 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 will 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 3 on average, I would say.

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-in banner moving forward from an operational standpoint?

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 focus areas where this fits their capital need and our capital want. And so yes, I think we could see some more activity here in the future. I don't -- 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 PRO 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 brands. 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 to have success at a level where we think it's appropriate.

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?

Yes. I mean certainly, there's an 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.

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?

Yes. yes, 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.

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. So -- and our comfort with them being managers of assets stems from obviously our history with [indiscernible] PRO. To your earlier question about do we see this more as a programmatic thing that we can 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.

Next questions come from the line of Jon Petersen with Jefferies.

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?

Yes. Thanks for joining. Good question. Yes. So the -- 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 [ major ] 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 to come in October. I mean web shopping sessions were up 23% year-over-year in October, which we thought was a good metric, shows good solid progress on the fact that we're actually, the marketing spend and the visibility we're putting at our place and where we're putting our underwriting shares was working, and so we're very happy with that. And the conversion rate was up 7.1%. So we're pretty happy with both the shopping session and the conversion rate. So again, momentum, things that made us happy and pleased with the progress.

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?

Yes. 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 of 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 our 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.

Next question is from the line of Ravi Vaidya with Mizuho Securities.

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 5s and low 6s? And within your portfolio, which markets do you think have the most immediate upside in the event of a housing market recovery?

Yes. 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 does not have -- 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 [indiscernible] 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 in, transition is encouraging as far as just people moving around the country. The second part of that, Sun Belt obviously, for us. We've got a lot of exposure throughout the South. If you think about down through Florida, down through parts of Phoenix and 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 market 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.

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? Like what are some of the bear and bull assumptions regarding the implied 4Q core FFO and same-store?

Yes, 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 midyear in August, and things haven't materially changed and we feel comfortable with the ranges generally, we just leave them untouched down 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.

The next question is from the line of Brendan Lynch with Barclays.

The PRO 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 your partner is going to manage the assets and the JV itself has a bit of complexity. So maybe just help us think about how we should think about the benefits of this ongoing change to your structure?

I'll start and 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 iStorage, but the markets that this particular person is 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. It's -- they're 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're able to grow their portfolio in a manner that we would approve and have success with.

Okay. 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 kind of outsource that again?

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 -- 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.

Our next question is from the line of Ronald Kamdem with Morgan Stanley.

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.

Yes, Ronald. So I'll just -- I might restate some of the same things we said earlier, and 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 the 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 2 things, the in-place contract rate for all same-store customers as well as the average occupancy stat that gives you this flat [ RevPAF ] 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 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 '26. 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.

Yes. 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 does your -- how does your thinking change about when you can get back to below that 100% level mark?

Yes. 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 then 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 way than we were looking at this year. So I think that helps from the dividend payout percentages.

Our final question is from the line of Omotayo Okusanya with Deutsche Bank.

Just wanted to go back to the JV, again, Brandon, with your comments about 3 years to get to the 10% prerequisite return. Can you 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?

Yes, Tayo, 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 6-cap property and 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, we're 75% of that equity capital and we're getting all of the cash flow, 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 your end of year 2, middle of year 3 and year 4 scenarios, right?

Got you. Okay. And then why would your PRO partner also be willing to take on a 10% preferred equity hurdle? Like what's kind of in this for them? The first few years kind of sound like it basically is working for you before they kind of start to make any money. So why is the 10% preferred equity the most attractive cost of equity to them?

I think, Tayo, 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 I -- just being around that -- 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 us very attractive for them.

At this time, this concludes our question-and-answer session. I'll turn the call back over to George Hoglund for closing comments.

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.

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.