Extra Space Storage Inc (EXR) — Q1 2020 Earnings Call Transcript

Thank you, Daniel. Welcome to Extra Space Storage’s first quarter 2020 earnings call. In addition to our press release, we have furnished unaudited supplemental financial information on our website. Please remember that management’s prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company’s business. These forward-looking statements are qualified by the cautionary statements contained in the company’s latest filings with the SEC, which we encourage our listeners to review. Forward-looking statements represent management’s estimates as of today, May 7, 2020. 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. I would now like to turn the call over to Joe Margolis, Chief Executive Officer.

Thank you, Jeff. Good morning and good afternoon to everyone, and thank you for your interest in Extra Space. Before I discuss the first quarter and the balance of 2020, I would like to make a couple of introductory remarks. First, I understand that every one of us has had our daily routines interrupted, stress put on our lives, and may have dealt with the illness of family and friends. I sympathize with the difficulties everyone has endured and greatly appreciate the professionalism, positive attitudes, and support shown by everyone on this call. At times of crisis reveal our true nature, and our industry can be very proud of itself. I hope you and your loved ones are well, healthy, and managing through this. Secondly, I'm frequently asked what makes Extra Space different or special. In response, I describe our portfolio, our operating and technology platforms, and most importantly our people. While all of these have performed well during this crisis, it is our people, particularly our store managers, who have really stepped up and delivered in an extraordinary manner. All of our employees, regardless of role or region of the country have adapted quickly to changing operating procedures and requirements and have gone to great efforts to keep our stores open and our customers safe, and all of this was done while they were under the same personal stress and worry that we all are feeling. I could not be prouder of the people who make up Extra Space and feel extremely lucky to be part of such a great team. I know that whatever challenges lie ahead, this team will strive to optimize performance while upholding Extra Space's values. With respect to performance, Q1 was a strong quarter. Even with the impact of COVID-19 in the latter part of March, property revenue for the quarter was in line with expectations and same-store revenue growth was 1.9%. Core FFO per share growth was 6.9%, $0.04 higher than the top end of our guidance. We continue to see strong external growth through third-party management with 48 stores added to the platform and in bridge loan activity. External growth through acquisitions is currently muted as we patiently wait for opportunities that present attractive risk-reward metrics. Our balance sheet is in great shape. We have been in contact with all of our lenders and partners, and we are very comfortable that we have sufficient capital options to satisfy upcoming maturities as well as having additional capacity to be opportunistic if attractive investments become available in this unusual environment. We are proud of our strong start to the year and while we are fortunate that we have been able to keep our stores open, execute new leases, and continue to provide our customers access to their belongings, we certainly have not been immune to the impacts of COVID-19. The financial impact of the changes to our operations caused by the pandemic, such as the decision to pause auctions, temporarily suspend existing customer rent increases and a reduction in rental activity due to stay-at-home orders create a wide range of possible FFO outcomes, some of which fall outside of our initial guidance. While we considered simply revising our annual guidance range, we recognized that in order to provide accurate guidance, one key driver impacting all primary revenue assumptions is the timing of lifting stay-at-home orders across the country and subsequent customer behavior. We are encouraged by the activity we see in markets like Detroit, Salt Lake City, and most impactful to our portfolio, multiple California markets where rental activity is improving, but the uncertainty of when other major markets like New York City will reopen and how customers will respond in such dense urban markets reduces our performance visibility for the balance of the year. Therefore, since these key factors remain unclear and will vary from market to market, we do not believe it would be prudent to provide guidance that would reasonably capture the full span of possibilities. It would also encourage us to produce guidance that may be overly cautious in order to include even remote possibilities. However, we believe it is important to be transparent with the information that we have to help our investors understand our company and the sector so they can make informed decisions. As we provide point-in-time metrics we urge you not to lose sight of the big picture. It is still a very good time to be invested in storage. Demand for our need-based product, while temporarily slowed, will continue. The life transitions that have made demand so durable in the past will continue. The advantages over smaller operators with our diversified portfolio, sophisticated platform, and top-notch team are still in place. Our balance sheet quality is better than ever and external growth opportunities will likely increase going forward. I would now like to turn the time over to Scott to walk through some of those metrics in more detail.

Thank you, Joe, and hello everyone. To understand our current operating trends, it is helpful to have some context as to what has taken place over the last few months. From January of this year until early March, we further expanded our positive year-over-year occupancy delta to 90 basis points while also increasing achieved rate. By early March, our achieve rate for flat is slightly positive on a year-over-year basis. Beginning in mid-March, stay-at-home orders caused a gradual reduction in rental activity. This was partially offset by increased college student rentals. However, as more orders were issued across the country, the reduction in rentals and vacates increased significantly. Rentals were down 35% to 40% for the 30 days from mid-March to mid-April, partially offset by vacates which were down approximately 25% during the same period. Over the last 15 days of April, rental velocity improved with 25 of our top 30 markets experiencing an increase in rental velocity compared to the previous 30 days. While rental volume has been down, it is primarily due to lower walk-in traffic which is expected. Web traffic remains steady, indicating that people are still looking for storage. Occupancy as of April 30th was 91.1%, which is 60 basis points lower than this time last year, but still very healthy. To give you some context, occupancy at the end of the first quarter in 2008 was 84.1%. Our ability to acquire customers is significantly better today than leading up to the financial crisis, and we believe we'll be able to continue to drive traffic to our properties and to maximize revenue. In April, achieved rate for new rentals were down approximately 10% year-over-year. In March, we postponed sending existing customer rate increases, which is having an adverse impact on our revenue growth. As municipalities lift stay-at-home orders, we are resuming rate increases market by market. We collected 93% of rent in April, and this is down approximately 5% on a year-over-year basis for the same store pool due to increased accounts receivable and causing auctions. It is important to note that these levels were attained without making collection calls for aggressive following up with past new accounts from mid-March until the end of April. We have resumed these practices in May and we expect accounts receivable balances to decline. As Joe mentioned, while we haven't been immune to the impact of COVID-19, our company is well positioned to navigate the current landscape. Our team has a track record of consistent high-level execution and we will continue to find ways to provide value to our shareholders regardless of the economic climate. With that, let's turn it over to Daniel to start our Q&A.

Hi everyone, this is actually Alua Askarbek for Jeff today. Thank you for taking my questions. So just wondering if you could give any expectations or color on the third-party management platform in the near term? Are you expecting to see that continue to grow, or have you seen some declines in interest in the past few weeks? Anything on that would be great.

Sure. Thank you for the question. So we had a great first quarter for our third-party management platform. We added 48 stores. We saw 18 stores leave the platform, so a net increase of 30. We added 12 in April. We had scheduled to add 19 but we're seeing some delays, and one trend that we are seeing is that we're noting less interest from new development as new development waned but more interest from owners of existing leased stores. So we expect to continue to grow that platform and have a very positive year.

Okay. Great. Thank you. And then just one quick question, just your commentary on the share repurchase program. Are you guys planning to continue that right now or do you think that's going to be paused for a little bit?

We are proud that we are good allocators of capital and I think you can see that historically if you look at the timing of when we were heavy in the acquisition market, when we participated in new development through certificate of occupancies and when we pull back and when we issued equity. Buying back shares is another allocation of capital decision, and we will continually consider it in comparison to our other investment options.

Okay. Great. Thank you.

Thank you.

Hey, it's Michael Bilerman here. I wanted to ask you some on the occupancy side. The 911 at the end of April, does that include the tenants that are in there but on delinquent status, or I guess there's an economic occupancy or not?

Yes. The occupancy as of the end of April does include all tenants that are in our properties, and it includes about 20 basis points of occupancy for the month and a half of paused auctions.

And then from a collectability standpoint, can you share anything I guess, so far in May? I don't know how much you have on autopay versus actual physical checks?

Yes. So our autopay is about 65% of our tenants, so almost two-thirds of our tenants are on autopay. So those continue to pay automatically. It's that other about 90% of our customers who pay with a credit card and that other 25% are the ones that typically call in each month with a credit card or we reach out to them. So the month of May as well as question for the month of April will start reaching out to those tenants if they have not paid. So we're expecting to collect a large portion of those accounts receivable that are current, 30 days.

Okay. All right. Thank you.

Thank you, Michael.

Thanks. Hello out there. You talked about reinstating the existing customer rate increase program. Can you give us a kind of broader scope of how much is coming back online and how much you expect to have come back online by the end of the year?

So we will resume in and are resuming our existing customer rate increase program market by market as they open up subject to governmental restrictions on that. So whether we can have it fully resumed by the end of the year is totally a function of when markets open up and government activity and frankly it's one reason we don't have enough transparency to give guidance.

Okay. And do you think as you open up certain markets, do you think the demand from people who couldn't use it will come back out and start using storage will be greater than perhaps the people who were waiting to pull out their belongings from those storage units? Which one do you think will kind of win out when the market starts to open up?

So we don't have a ton of data and I don't want to give you what I think. So what I can tell you is based on the last two weeks of April. In 25 of our 30 markets, we saw improvement in rental activity while vacates stayed flat. Now that's two weeks. We are encouraged by that but we're being patient to see how the situation plays out over time.

Okay. Thank you.

Thank you, Kim.

Hey guys, hey Joe just for clarity the move out activity you were saying was flat on a year-over-year basis here. So no additional churn from that kind of activity. But just to clarify.

There was no change in vacate activity from mid-March to early April compared to the last two weeks of April, where there was significant improvement. It's not a year-over-year comparison; rather, it's about how things are evolving as we progress through this situation.

Got it. Okay. So there may still be some pent up move outs in that. All right. So I was just wondering if you could talk the expense side a little bit? Any opportunity to mitigate some costs we should be thinking about and I guess on the other side I guess there isn’t probably on taxes at this point and in terms what's the latest on marketing? I'm guessing that's still the main tool you're going to be using to help drive demand here. So should we expect an elevated level or even perhaps increase here in the second quarter?

Yes. if you look at the first quarter and look at which expensive line items were elevated the ones that pop out to your payroll, marketing and then property taxes. I think property taxes are pretty close to what we are expecting and we expect them to be somewhat elevated, but as if revenues fall then you potentially get some reprieve but that typically lags by as much as a year or two. In terms of payroll part of the reason it is elevated in Q1 this year is it's a tough comp. Q1 last year we actually had negative 4% payroll growth and so very difficult comp. We would expect payroll to continue to be elevated more at inflationary call at 3% to 4% but not necessarily at that 7% range. We did not see a benefit from lower staffing or anything of the sort in the first quarter as we continued to pay our employees as our stores were open. The last one is really marketing. Our marketing expense in the first quarter is elevated partly due to a tough comp from last year. So we started increasing our marketing spend in the second quarter of last year and it was elevated throughout the year and we continued spending at that elevated level into the Q1 of this year. So Q1 of this year had a very tough comp from last year, and we expect to continue to use marketing this year but I don't think you'll see the elevated spend quarter over quarter for the remainder of the year that you saw in Q1 of this year.

Okay. And then last one Joe, you guys have always been pretty acquisitive and on your opening remarks you mentioned being positioned to be opportunistic. I guess opportunities arise, I guess when we look at supply that's in the markets already being weighing on fundamentals before they should look at the potential drag here from the pandemic into the busy season. I guess how big is your actual appetite to take on additional lease-up in the form of potential distress opportunities?

So we are lucky in that we are not constrained by capital. So between internal capital sources and partners' capital we can take advantage of any opportunity that makes sense. So the limiting factor in my mind is going to be are there good deals that we can appropriately understand the risks and get rewarded for it. If we can identify those deals, we have various sources of capital to execute on them and are not limited by some target number. Thank you, Jeremy.

Thank you. First question, just following up on the comments made around rentals in the 25 markets where you're seeing improvements. I think your comment was that move-ins in the final two weeks of April were higher compared to the prior 30 days, so the mid-March to mid-April period. Can you comment on rentals during the last two weeks or 15 days in April and what that was on a year-over-year basis?

I am sorry. I am not sure I followed the question.

I think your comments around rentals improving in 25 of 30 markets you commented that you're seeing improvements. I think that was relative to the prior 30-day period, and I'm just curious if you can help us understand how move-ins, rentals trended on a year-over-year basis just against the down 35% move-in activity that you spoke about just so we can understand sort of the trajectory and kind of the trend and magnitude of rental activity?

Okay. So I apologize for making you repeat that. So I'll give you a couple of examples and maybe that will help you. And if I'm not answering your question let me know. So take San Diego, for example. From mid-March to early April in San Diego, we were down 31% in rentals. In the last two weeks of April, we were down 1%. So that's significant improvement. We saw similar improvement in Los Angeles, Sacramento, Dallas, and that's encouraging to us. The flip side of that is if you look at Washington DC and that kind of Washington to Baltimore Corridor, we saw no improvement. We had the same experience kind of early in the crisis as we did in the last two weeks of April.

Okay. That's helpful. So in some of the markets those 25 markets or so where you're seeing improvements, are in San Diego on a year-over-year basis rentals are almost flat?

San Diego, yes.

Okay. Got it. And then look, I understand the environment is unpredictable today, but normally you'd be gaining occupancy at this point in the peak leasing season and it's falling backwards understandably in March and then at the end of April. Do you think it's possible that you might not see sequential occupancy improvements at all from April levels in May, June, or July during this peak leasing season or would you expect to see some occupancy improvements over the course of the next couple of months?

So I think it's important to remember that occupancy is not our goal. Our goal is revenue and occupancy is one tool along with rate, advertising spend, and discount. If we can maximize revenue by driving occupancies up, then the system can do that. If we can maximize revenue by losing a little occupancy or staying where we are, then this system can do that.

Okay. And just one last one for Scott. Following up on the existing customer rate increase program, if we think back to the original guidance, how much of the 0.75% to 1.75% same-store revenue growth that you forecasted was attributable to rate increases and I guess some of that growth is really earned in for the year. So customers that received increases in '19 and also early this year that do not leave. So how much this year's revenue growth was from the ECRI program, and how much of that do you think could be impacted in 2020?

Yes. so I think that's really the difficult question and one of the reasons we pulled guidance is one is the occupancy in the summer as well as how long we are on pause in terms of our existing customer rate increases. In terms of historically how has it added it actually has added between 10 and 30 basis points to our annual growth rate. It's not a significant driver because we do it on a year-over-year basis. Now where it could hurt you this year, for instance, is if we have to pause these for months on end. Now if this pause happens for a month or two, it's obviously impacts us but it's much less than if we pause them for five or six months, and so that's obviously one of the big reasons why we elected not to update our guidance and pull our guidance.

Okay. All right. Thank you.

Thanks. I wanted to just ask a couple of quick questions. Scott, I wanted to clarify I think you said that in April rates on new rentals were down 10%. Is that correct?

That is correct.

Could you provide a comparison of the rates from the first quarter and your thoughts on how they may trend going forward? Have achieved rates declined further, potentially widening the gap moving forward, or have street rates remained stable?

Yes. At the start of the year, we were slightly negative on our achieved rates. By the 1st of March, we were slightly positive. So they were trending in the right way before the stay-at-home orders and before the outbreak of the COVID-19. In April, we were negative 10%. I think that we will continue to adjust rates and marketing spend as we look to maximize revenue. So rate is obviously always a factor. We will continue to test to try to figure out the best rate, but if rentals stay down, if occupancy stays down, and our model shows that rate is the best thing to adjust, we will adjust rate.

Okay. And then maybe a question for you or Joe, just on your kind of lending program, I'm just sort of curious the activity level and opportunity that you see, and I guess any distress kind of brewing on kind of lease-ups and when might those manifest themselves in opportunities?

With respect to the lending program, we see an increase in opportunities as, I guess, other lenders have gone to the sidelines, and more owners are seeking a bridge to better times. So last year we did nine loans for a $104 million gross. This year we closed three and approved ten for $133 million – $134 million, and we have a very strong pipeline. So we see the loan program as a good growth opportunity for us.

And then just anything on the distressed side in terms of kind of certificate of occupancy deals or lease-ups kind of not performing well, and do you think that some of those might manifest themselves as acquisition opportunities this year? Do you think it kind of holds off into ‘21?

I think we will see those opportunities this year. It's a little early to say that there's been a flood of those, but I think there is stress in the market and we are going to see a good number of those opportunities, and we'll look at each of them individually and see if we think it makes sense for us.

Great. Thanks. That's it for me.

Thank you.

Hi thanks. Are you able to share what the paid search trends have been like so far in the second quarter, all of this sort of assuming that online traffic has fallen in recent weeks?

So I would not assume online traffic has fallen in recent weeks. It's actually been pretty steady throughout this and costs have been fairly flat.

Sure. So that to assume that conversion rates have fallen a bit?

Correct.

Interesting. Okay. And then last question, have there any changes been made to compensation for store-level employees in light of recent events?

So we have a great team out there, and we pay our managers above minimum wage and give them incentives to sign leases, and when the crisis hit, we first took all necessary steps to keep them safe. We originally closed our stores and we're doing no contact leases. We're in the process of going to kind of phase two of that with Plexiglass protection and being able to open our offices, but we provided paid time for people whose stores were closed by government mandate. We provided some relief pay for employees who were ill or had to take care of loved ones. So we feel we did the right things by our employees. We did not need to pay them more or issue hazard pay or something like that to keep them engaged in working, and we've recently done a survey and continued to have over 80% positive engagement from our workforce. So I think they've done a great job through this, and it's been beneficial to us to develop such a great workforce and have such great relationships with them and that's benefited us through this crisis.

Okay. Great. Thanks.

Thank you.

So thanks guys. Hope you're all well. Can you talk about your collection strategy right now? Just under normal conditions, I think the threat of having the tenants' property auctioned off pretty quickly keeps tenants in check but without that, or if you, I guess if you soften that stance right now, how do you balance that gathering versus showing some degree of flexibility?

Yes. so we obviously are going to try to focus on our customer first and so our decision to do this was very customer-focused and recognizing that they're feeling some strain as they're staying at home, as you've had people stick around them, a lot of fear and so our decision was to move away from auctions to pause those and then also to move away from collection calls. We did do some reminder calls letting people know, but starting the first part of May as things open up we are moving back to auctions. So as states open up following the state mandates we will open up auctions if it's allowed. We will try to work first to pay to vacate a unit. So you'll try to work with a customer to get whatever we can to have them vacate versus moving to auction. It's a better experience and we will now begin more of a collection call versus a collection reminder or a payment reminder where you are calling now and instead of saying your rent is due, we're saying your rent is due and do you have a credit card. So just a little bit more proactive in that manner.

Alright. That's helpful. And you're still acquiring Certificate of Occupancy deals, some wholly owned, some in joint ventures. You probably were using your underwriting methodology as of a couple months ago. So has anything changed? Would you be expecting a longer duration to get to a stabilized occupancy at this point? Any changes on maybe the underwriting?

We have eight Certificates of Occupancy planned to close in 2020 and 2021. Five of these will be in joint ventures, which reduces our risk and enhances our returns through management fees and tenant insurance. Our approach to underwriting has evolved as the development cycle progressed and we encountered more competition in these markets. We haven't approved a new deal since COVID-19, and if we were to see a new opportunity now, it would be quite challenging for us to approve it, and our underwriting would likely need to change as well.

Thank you.

Thank you.

Thank you, Todd.

Yes. Hi. Coming back to the April rents being down 10% year-over-year, I just want to clarify that you did say before that at the beginning of the year, they were modestly positive. Is that the right comparison? So before this they were mostly positive and now about down 10% in April? Was that correct?

Correct. They were slightly negative at the start of the year. By the 1st of March, they were slightly positive and then down about 10% in April.

Okay. And how did the actual move-in rate to dollar amount compare to the dollar amount moving out?

So if you look at our current in-place rent versus the rents that are moving in, there is a negative that always depends on the time of year and in the summer months that negative amount is different than in January, February. Now the other thing I would caution you on when you compare those is that assumes that everyone moves out on average whereas we see more churn in our short-term customers. Our median length of stay is about six months versus an average length of stay of everyone that's moved in and moved out of about 16 months. And so if you look at someone who moved in five months ago and they are the ones that move out, it is much different than someone that moved in and moved out two years ago or three years ago.

Got it. Okay. And I guess on the bridge loans can you just talk about the pricing what sort of rates are you achieving on that?

So our whole loans are currently priced LIBOR plus 400 to LIBOR plus 500 with the LIBOR floor. I think this smallest floor was 50 to 150 basis points, and then the return to Extra Space is based on as we sell or place a piece, or the first piece return starts our LIBOR plus 900 plus in addition to that we manage the properties and get tenant insurance.

Got it. Okay. Thank you.

Thank you.

Hey, just two quick questions for me. One was on sort of the opening comments about sort of the college students in 1Q just curious what percent of the portfolio is exposed sort of those college students then? Is there a way to sort of quantify what that benefit could be in 1Q or even in other markets? They're clearly may be more exposed than others. Any color there would be appreciated.

Yes. So our portfolio has low teens in terms of exposure to college students. So it's 12% to 15%. In terms of the benefit from those students, the effective we got an extra month or two from them, and you're talking 1/12th or 1/10th of 12%. So it's really not impactful; not a big benefit.

That's helpful, and then the second question was just sort of a similar but moving on sort of the small business and the business customer. Just how are they faring? What are you hearing from them? How is this environment sort of impacting them? Thanks so much.

Sure. Thank you. We really don't have a lot of data to show any difference in behavior in our business tenant. So I think it's just a little too early to tell, but so far they seem to be behaving just like our retail tenants.

Okay. That's it from me.

Thank you. It's Michael Bilerman again. I guess just taking out in the last comment, I'm surprised that there isn't a bigger difference between the business and just the straight customer individual because I would have thought a lot of businesses and people may be storing things. There's no events going on, so they may be the reason but I would have thought there would have been a higher level of delinquency, perhaps on your business side versus your individual side?

Yes. Michael, I can't tell you what we're going to see, but we're pretty early in this. We are one or two months in and can the business pay 150 bucks for a month to see if they can hang on or do whatever. So far we haven't seen it. I don't know if we will see it in the future. I don't know if government checks are helping, but we just don't see that yet.

They often will be on auto pay, also, Michael, and so it could be later that you see something like that. So we just have not seen it at this level yet. A lot of them are sole proprietors too.

Okay. Has there been any difference in what you're seeing in the first five days of May compared to April?

Yes. Ours is a little different, Michael, in that we're anniversary dates. So we've really only seen five days or a small portion of the month, whereas many operators are first of the month. So they get a better idea of collections early on. So ours is a very small sample size.

Right. Is there a way to analyze the 500 basis points of people who didn't pay? Can you provide a breakdown by region and type of unit, specifically how much of it was due to the inability to conduct an auction? I’m looking for a more detailed understanding of the people who didn't pay their rent.

Yes. We categorize it into three groups: 0 to 30 days, 30 to 60 days, and 60 days or more. We tend to focus more on those who are 30 days or more past due. Most of the accounts in the 0 to 30 days are typically paying, and we have been somewhat flexible with them.

Can you provide more detail on the delinquency rates? Did it vary by region or between larger and smaller units? I'm looking for insight into your national portfolio, especially in areas like California where moratoriums and eviction restrictions are in place. How are these consumer trends affecting payment behavior?

The biggest trend I would tell you would be more cash payments versus credit card payments, meaning a store that is 95% credit card, obviously, is going to have less delinquencies than somewhere that is 60% cash payments, and those typically are, we have obviously fewer of those stores, but that's probably the biggest trend I'd point to.

And then just thinking about the cadence of same-store NOI in terms of its components of revenue and expenses. And I totally understand of why you'd want to pull guidance given you're in a short lease duration sector and there's a lot of uncertainty and you don't want to be too aggressive, nor do you want to be too conservative, but the industry just from an occupancy perspective is at a very different level because the industry has moved their occupancy levels up higher than they've ever been before, right? And even you go back to the GFC, you guys are running in the mid-80s, low to mid-80s. PSA obviously pursuing a hierarchy strategy was in the low 90s; all industries now in that low 90s. And I know part of that's just an operating side of things and all of it was a greater adoption too, but there is an element from same-store NOI perspectives, just trying to frame how negative it can be. And so we've been through two recessions in the last 20 years, you were sort of high single-digit declines in the early 2000s. It was called mid-single-digit declines year-over-year on a quarterly basis, coming out of the GFC. Is there any goalposts that you can share with us especially given the fact that when you came into this you're only thinking same-store NOI was going to be 1% this year or I'm sorry 25 basis points this year and I recognize you did better in the first quarter but are there sort of things you can at least give us some goalposts on how we should be thinking about this?

We can point to the last downturn where we saw 2.9% decrease in same-store revenue growth. Our occupancy went down about 270 basis points. There were similarities in that downturn going in; we were coming on a supply run. Last time we're on, we've had a lot of supply recently. There's also differences. I mean this one going in is much more severe; we stopped I think everybody stopped rate increases very quickly, whereas during the last downturn we continued to do rate increases throughout. So there's similarities and differences, and it's very difficult to frame, and that's why we pulled the guidance.

Okay. Thank you.

Thanks, Michael.

Thanks. This one isn't that question but I know Joe you guys have prided ourselves on your culture and your employee engagement. So it's actually good to see that actually translated into something quantifiable which is typically never quantifiable. And my follow-up question, you guys have typically talked about tenant turnover being about 6% to 7% per month but a lot of times it's the same space turning over. So you can't just take that number times the Street rate. But when you take a step back and you account for the same space turning all the time, what is the effective turnover rate in a quarter and what is the kind of effective turnover rate in a year that we could apply the change in Street rates too?

I don't know that we've ever done that effective math on an entire portfolio and it's going to be very different for a stable property versus a new property. I mean, a new property doesn't have any long-term tenants versus a property that's 20 years old. It could have some tenants that have been in there since day one. So an older property has much lower turnover than new property.

Okay. I see. And can you just talk about the New York City market? How much different was New York City compared to your portfolio average that you saw in April in terms of operating metrics?

So New York City, New York MSA, New York City had negative 1% revenue growth compared to the portfolio of 1.9%. So it has been for several quarters and continues to lag behind the portfolio.

The other thing I would add, Ki Bin, is they were more severely impacted by the rentals, the decline in rentals as their stay-at-home orders were more strict than some of the more suburban markets that we've seen.

Okay. Thank you.

Thank you. Thank you for your comment, Kim Bin. I appreciate it.

Thank you all for your interest in Extra Space Storage. I wish everyone and their families well and healthy through this difficult time and I'm sure we'll all talk soon. Thank you again.