Extra Space Storage Inc (EXR) — Q1 2026 Earnings Call Transcript

Thanks, Karen. Welcome to Extra Space Storage's First Quarter 2026 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, April 29, 2026. 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 like to now turn the time over to Joe Margolis, Chief Executive Officer.

Thanks, Jared, and thank you, everyone, for joining today's call. We are pleased to report first quarter core FFO of $2.04 per share, up 2% year-over-year. Our solid performance demonstrates the strength and resilience of our diversified portfolio and best-in-class platform as we navigate an improving operating environment. Operationally, we delivered positive same-store revenue growth of 1.7%, which exceeded our internal projections. We ended the quarter with same-store occupancy at 93% compared to 93.2% in the prior year, with the year-over-year occupancy delta improving 50 basis points since year-end. We did this while continuing to achieve positive rate growth to new customers during the quarter, and our systems continue to optimize for total revenue with no preference for move-in rate or occupancy. We are seeing encouraging broad-based revenue improvement across our markets, driven primarily by declining new supply. The sequential new customer rate gains we have been achieving over recent quarters are now translating into revenue growth. These positive operating trends position us well as we enter the leasing season. Our diversified external growth platform continues to be effective across multiple channels. We continue to review a high volume of acquisition opportunities while maintaining a disciplined approach given current asset pricing relative to our cost of capital. We are projecting $200 million in total acquisitions for 2026, under the assumption that we will close materially more in total transactions, primarily in asset-light joint venture structures. Our bridge loan program continues to perform well, maintaining an average balance of approximately $1.5 billion in Q1 2026. This program not only generates attractive interest income, but also serves to expand our management business and provides an opportunity for future acquisitions. Our third-party management platform added 84 stores in the quarter with net growth of 60 stores, bringing our total managed portfolio to 1,916 stores. The consistent demand for our management services demonstrates the value we deliver through superior property performance, operational expertise and our data and technology platforms. Overall, we are encouraged by our first quarter performance. The sequential improvement across our portfolio gives us confidence in our ability to capitalize on continued supply moderation and strengthening fundamentals as we progress through 2026. I will now turn the time over to our CFO, Jeff Norman.

Thanks, Joe, and hello, everyone. As Joe mentioned, we are off to a good start in 2026, and we are especially pleased with our store-level operating performance. Same-store revenue accelerated 130 basis points from 0.4% in the fourth quarter of 2025 to 1.7% in the first quarter of 2026, and same-store NOI growth improved 110 basis points from 0.1% to 1.2%. We are seeing the benefit of multiple quarters of positive new customer rate growth begin to flow through to revenue growth, and our pricing models continue to utilize rate, occupancy and marketing spend to drive total revenue. We also had solid expense control, with all categories in line with our estimates, outside of utilities and repairs and maintenance, which ran higher than expected primarily due to snow removal and other weather-related items. Excluding the above budgeted portion of weather-related expenditures, total year-over-year expense growth would have been 1.5%. Our ancillary businesses also delivered strong performance during the quarter. Management fee and other income grew over 9% year-over-year, reflecting our expanding third-party management platform. Net tenant insurance growth was over 5%, and our bridge loan program produced steady fee and interest income. All components of our diversified revenue model are performing well and contributing to our overall results. Our balance sheet remains in excellent shape, with 83% of our total debt at fixed interest rates, a figure that increases to 93% on an effective basis when accounting for our variable rate loan receivables. Our weighted average interest rate stands at 4.3%, and we currently have approximately $2 billion in capacity on our revolving lines of credit, providing us with strong liquidity and plenty of growth capital. We are maintaining our full year 2026 core FFO guidance range of $8.05 to $8.35 per share, as well as our same-store performance outlook. While our Q1 performance exceeded internal expectations and we're encouraged by the sequential improvements we're observing, we believe maintaining our current guidance range appropriately balances the positive momentum we're experiencing with the uncertainties that remain in the broader macroeconomic environment. We will revisit our annual guidance with our second quarter earnings after the leasing season has played out. In summary, we're encouraged by the acceleration in same-store NOI and the strong performance across all parts of our business, driving positive core FFO growth. The combination of our operational strength, talented team and diversified growth platform gives us confidence in our ability to continue delivering long-term shareholder value through 2026 and beyond. With that, operator, let's go ahead and open it up for questions.

First question, positive move-in rates over the past year seemed to carry the same-store revenue growth to a much higher level in the first quarter with the same-store revenue growth of 1.7%. Now that move-in rates are moderating, should that weigh on same-store revenue growth for the balance of the year? And is that reflected in your same-store revenue growth guidance that implies moderation from here? Just trying to understand the impact of street rates flowing through the algorithm. And does that imply a deceleration later in the year?

Yes. Thanks for the question, Michael. No, not necessarily. So while new customer rates are an important part to driving same-store revenue growth, obviously, all the other revenue levers are also important. So we did see new customer rate growth moderate from 5% to 6% in January and February to, call it, a little over 1% in March. And then that averages for the quarter at about 2.5% because of the higher volume that you see from a rental standpoint in March. But over that same period of time, particularly in March, we actually picked up occupancy. And as we've always said, we're much more focused on just driving revenue and not focusing on any particular lever. While we're on the topic, I should probably also mention, you probably noticed we converted that metric from reporting new customer rates on a per unit basis to a per square foot basis. While similar, they aren't exactly apples-to-apples, and that reduces the number by about 100 basis points. So on a like-for-like basis, move-in rates would have averaged about 3.5% for the quarter. On a per square foot basis, it was closer to 2.5%.

Got it. And while we're on this topic, Jeff, do you mind providing an update on what you've seen? We're almost done with April now, but what have you seen so far in April from a street rate occupancy perspective?

Yes, continuation of what we saw in March largely where we continue to see improvement in occupancy from both a sequential standpoint and a year-over-year standpoint where that continues to tighten. And then a new customer base from a new customer rate standpoint, modestly positive.

And continuing to be ahead of budget.

Yes. Yes.

I guess, Joe, maybe to start off, how would you characterize sort of top of funnel demand today? Maybe compare that to last year. And as we start the leasing season, curious on your thoughts.

I think demand is steady, if I had to characterize it. I don't think we've seen any material improvement or any material degradation in demand. Our systems, our platform, our customer acquisition abilities allow us to capture more than our share of demand that's in the market. So we continue to be the highest occupied of any of our peers at the highest rates. And that's a good spot for us to be in.

And maybe as a follow-up on the other side of it, I mean, it certainly feels like commentary is more of optimism. Is that primarily from sort of the lower supply you're seeing? Maybe expand on that, please?

Yes. That's a good follow-up. So yes, the demand being steady, the correlated to that is we are seeing improvement in the supply situation. And many of the markets that were particularly impacted by supply in the Sunbelt, we are starting to see improvement in those markets. So that's very encouraging for us, particularly because we have disproportionate exposure to the Sunbelt, which we believe long term is a positive. That's where the growth is going to be in our country. But in the recent past has been a headwind for us.

Maybe you could give us some high-level thoughts on the competitive impact to the market from PSA and NSA being combined?

Well, I mean, we compete with all of those stores now. So we'll continue to compete with them in the future. I think PSA is a very good operator, and I'm confident those stores will do better under one unified platform than the system NSA was pursuing. So we'll continue to compete with them. They've been a good competitor in the past. They'll be a good competitor to us in the future. And it's one reason we never stop trying to get better, never stop trying to sharpen our tools because we know we have good competitors who are doing the same.

And then maybe just on the volume of transactions and your expectations for an improvement there or growth there. Can you talk about how seller expectations have changed, if at all, or if there's something else that's driving the increase in volume that you anticipate going forward?

That's a great question. There is activity in the market and assets are being sold. The last two material transactions we saw, on our numbers, priced at sub-5% initial cap rates without enough growth to make them attractive going forward. That's pretty aggressive, and capital buyers appear to be underwriting the fact that we are at the beginning of a recovery cycle. As a result, we have fairly modest acquisition guidance for this year on a net, EXR-dollar basis. As I mentioned, I expect we'll close a lot of deals, but many will be in joint venture structures to keep them accretive to our shareholders. We've also had years where we published an acquisition target and then found interesting off-market opportunities. We're very active, have many relationships, and can be creative and innovative, and the team is eager to do that again this year.

I wanted to dig a little bit more at the same-store revenue range. You had a strong first quarter, exceeding the top end of the range. Can you walk us with the upside and downside scenario for the full year? And maybe some color on how you expect the cadence of this will continue throughout '26?

So, first of all, I appreciate the question, Ravi. It makes sense given where we ended the first quarter relative to our stated same-store revenue range. The point I want to make clear is that our decision not to adjust guidance does not reflect a view on expected performance for Q2 through Q4. We view it more from the standpoint that it's early in the year and we haven't completed our busy leasing season. Combined with some macro factors in the background, it makes sense to wait one more quarter, see how the leasing season plays out, and make any adjustments then. All of that said, from a guidance cadence standpoint, so far this year we've continued to see revenue outperform our internal expectations, and that outperformance has accelerated. But we do know we have tougher comps as we move deeper into the year. Combining all of those factors, we are very optimistic about where we stand today relative to our stated range, and we'll look to update it after the second quarter.

I'd just like to add that Jeff appropriately points to the risks associated with macro factors, higher gas prices, inflation, consumer confidence. We haven't seen any of that flow through to our business yet. Customer behavior is unchanged. Customers are still accepting ECRI at the same level they have in the past. Bad debt is down actually to 1.5%. Vacates remain muted compared to historical numbers. And we see this across all different demographic markets. So that's very positive for us. So our caution isn't because of anything that we've actually seen. It's more of an unknown, and we just feel it's prudent to wait for the leasing season in another quarter before we revisit guidance.

Can you just talk about the reason for the change in the definition of move-in rate growth? And what explains the delta between the two approaches, the 2.4% you reported and the mid-3s on the other definition?

Yes, you're exactly right. Thanks, Eric. The reason for the change was really just market feedback. We had heard that from both buy-side and sell-side analysts, I think, for consistency with disclosures from other peers and wanted to accommodate that request. And in terms of why the delta between the two approaches, what it comes down to is volumes, rental activity between larger and smaller units and pricing power within those units. So on the margin, saw stronger pricing power in some of the larger units within the quarter, creating the delta.

Got it. And you mentioned that I think across both definitions, the rent growth came down a bit in March and April. Can you talk about whether that was just from sort of tougher comps or something changed in the environment? I know you're always trying to optimize for the best revenue growth. So I guess I'm asking why the system determined that sort of lower asking rent growth was the best revenue maximizing decision at that time.

Yes, I think it's possible that it's a few of the factors you mentioned combined. So certainly are lapping harder comps, so those continue to become more difficult throughout the year. And I think the model is always evaluating price elasticity and seeing where is the optimal balance for total revenue. So in March, we did see it lean a little more into occupancy and take more occupancy, closing that gap on a year-over-year basis. And as we've always said, we're happy with either as long as we feel like we're getting the right revenue outcome. And based on the results, we're really pleased with how it's gone through the first quarter.

This is Viktor Fediv on with Nick. I have a question on your bridge loan book. So you originated only $5.5 million this quarter. Last year, it was more than $50 million in Q1. So what was the driver behind that slowdown on a year-over-year basis? Was it just the slower activity or interest rates not attractive for you?

I don't think this program, like our acquisition program, will produce steady volume quarter after quarter. Some quarters will have higher volume and some will have lower volume. We did have a quiet quarter for originations, although we had a good quarter in terms of approvals for future loans. Overall, the business is a little slower because of lower transaction activity and less development. A portion of our loans are for newly delivered properties, so when the number of those declines, lending opportunities decline as well. There are also more competitive lenders who have followed us into this business. But overall, we're comfortable and happy with our volume and our ability to make loans and continue with this program.

Got it. And then as a follow-up. So given that your loan book serves as a potential acquisition pipeline, so out of your $200 million kind of guidance for this year, how much do you expect to get through this funnel? And how does the pricing differ from what's kind of available on the market otherwise?

So we don't assume we'll buy anything out of the loan program. That would be additional volume that we could get. And our pricing discipline is the same regardless of how the acquisition comes to us from the management business, from a joint venture, from the bridge loan program or on the market, we still want to make accretive transactions given our cost of capital or structure the acquisition such that we can make it accretive.

And while we don't specifically model or guide towards a specific volume of acquisitions through the bridge loan program, our experience has been that those opportunities end up coming to fruition. Historically, we've purchased about 25% of the underlying collateral of loans that we've originated. And I don't see any reason that we wouldn't continue to see quite a few acquisition opportunities from that program. So we don't model it, but to Joe's point, I think we'll see our fair share.

Just hoping, Joe or Jeff, if you could talk a little bit about the length of stay and how that's trending, typically talk about over 12 and 24 months? And if you've seen any change in vacates or churn? And if ECRI has played any part in that?

So we'll answer it in reverse order. So as you know, we do monitor really carefully our ECRI-induced churn, and we haven't seen any change in that level of churn. So that program still seems to be working as designed, and customer behavior has not changed with respect to that. With respect to length of stay, current tenants over 12 months is about 64% of our tenants. And that's a 167 basis point improvement from prior year, year ago March. Current tenants over 24 months is about 46%, and that's a 190 basis point improvement from a year ago. So tenants are staying longer. Our systems continue to do a better and better job targeting and attracting tenants who are more likely to stay longer. And it's a great benefit to the business, particularly where we have steady and price-sensitive demand.

And Juan, I would add, you mentioned churn. Churn was really flat for the quarter. So rental and vacate volume on a year-over-year basis Q1 '25 compared to Q1 '26 is basically flat. And that's comping almost all-time lows. So churn is still relatively muted compared to average historical number.

Thanks for that context. And just on the third-party management, maybe just following up on the bridge loan question. Have you seen any impacts from new entrants, either REITs or some of the larger privates looking at managing assets themselves either on their own behalf or for third parties in terms of squeezing fees or margins or anything of that for that third-party management business?

We really haven't. I mean, one, we're not changing our pricing at all. We are the highest priced option in the market because we produce the best results and have the best platform and provide the best service. So our growth in this, another 60 net in this quarter is much faster than any of our competitors. And to us, it's the market speaking. The market is choosing the best platform even if they have to pay more for us. So we have not seen any impact on our business from new entrants.

Maybe circling back on your points earlier, Joe, around revenue optimization, and I realize you're not going to give us the secret sauce. But as you think about the interplay between rate and occupancy, I mean, what are the signals that you're looking at, that the team is looking at to say, 'Hey, now is a good time to push rate over occupancy?' You've highlighted a number of times about how highly occupied the portfolio is. If you have a market to say hits 95% occupancy as an example, are you really going to try to push there? Or how should we think about the puts and takes between the interplay of those two?

So the way you asked the question makes it seem like Jeff and I and a bunch of the other folks on the team sit around the table and say, "Let's get 50 basis points more occupancy." It really doesn't work that way. We have several proprietary algorithms built with our extensive data set that price every unit type in every building every night. We look at the 5x5s on Main Street in Philadelphia, examine historical vacates and many dozens of factors, and decide for that unit price and unit type to drop the price because that's how it can get the right number of rentals to maximize occupancy. That happens for 2.8 million units every night. That rolls up into something where we say the system is leaning a little bit more toward occupancy. But that doesn't mean that's the case with every unit type, every building, or every market. While that's going on, we do have data scientists looking at it and checking to make sure there's nothing new in the environment the algorithm doesn't know about that we need to take a second look at or test. But that's the level of human involvement, not making individual decisions about rate or occupancy.

And Griff, maybe I would just tack on to that. And with our scale and as the tools continue to get better, you can see that data in much shorter time periods to make those decisions, and the system can recalibrate faster than it ever has before as the data and tools improve, which is a significant advantage for the large operators.

I certainly appreciate the helpful context there. Maybe next, just on the same-store expense growth and the cadence. It seemed like the quarter was pretty down the fairway relative to the guide. But Jeff, as I'm thinking about it, I know there were probably some more elevated operating expenses in the middle part of last year, call it 2Q, 3Q. So can you maybe walk us through or if you can give us some color on expectations of cadence? Is it easier comps in the second and third quarter? Just how should we think about sort of same-store expenses on a quarterly basis for the balance of the year?

Yes. I think it's more of a first half, second half comp differential. So first half, you had easier comps with property taxes in particular being the real standout. And we'll lap that in the back half of the year and have more difficult comps, but still anticipate similar performance. As you mentioned, relative to the guide, we're well within it. Outside a couple of those weather-related exceptions that I mentioned, all of our expenses came in really right in line with what we expected. Maybe one specific call out, Griff, that would be helpful just because it's a little larger in magnitude and timing based is our insurance expense, which in Q1 was over 10%. We renew our insurance policies in the end of May. And all of the feedback we're getting so far, we're actively negotiating that renewal right now is that it's a favorable environment for insureds. And we expect that to come in relatively flat, if not better. So we were optimistic that we also have some opportunity with insurance, which was already factored into our guidance. We figured that would be the case.

Great. Just two quick ones. Staying with expenses. I know philosophically, you guys have had a little bit of a different view in terms of the service associates that are in the stores and the ability to sort of optimize the revenue with that person there. But I guess my question is just as you're thinking about the next couple of years, is there more opportunity to take expenses out of the structure? Or is it pretty much as optimized as you can get?

I think there's always opportunities to take expenses out of the structure. And I think there's several factors that will lead us to that. One is growth in densification. As we get more stores in a market, it becomes more efficient, and we can run those stores with fewer people and supervisory people, right? If a district manager has to fly to three different markets, he can cover fewer stores than if all of these markets are in one area and he or she can drive to them. So that growth is one. Second is AI. And certainly, we're looking at lots and lots of opportunities for reporting and analysis and audit and all sorts of different things that we can get more efficient through using AI tools. And then third is customer preference. Right now, we like to have managers in the stores more than our competitors because the customers want that. Thirty-nine percent of our customers end up signing a lease by choice, sitting across the table from a store manager. Twenty-eight to thirty percent of those have never interacted with us on the web or on the phone. And they all have phones, they all have computers. They could call the call center. They can do a transaction totally online. They're choosing to come to the store for a reason. They want to see the 5x5. They want to see how clean it is. They don't understand how to get into the gate, etc. So as long as the customers want that, we'll provide it. But we also know that when you look at the demographics, the younger customers want that much less than the older customers. So as our customer base ages, we imagine that demand by customers will get fewer and fewer. And at that point, we will need fewer and fewer people on site. So yes, sorry for the long answer. But yes, there's always opportunities to continue to gain expense efficiencies. But at a high-margin business, we will always keep an eye on the revenue line item and make sure that nothing we're doing on the expense line item is going to damage the revenue line item because that is of much more importance.

Great. That's really helpful. Then my second question, if I may, is on the revenue line item: you mentioned the algorithm that's pricing 2.8 million units every night. With AI coming in, the amount of customer data will increase exponentially. How do you integrate that new wave of customer data, and how does it feed into the algorithm to make it more efficient?

So our algorithms have had what we used to call machine learning in them for a long time. So I guess that's a form of artificial intelligence. And I wish I knew the answer to your question. I think there's lots and lots of opportunities. And the biggest challenge with implementing AI is triaging the opportunities, understanding them and then implementing them in an effective and safe manner. And luckily, we have a lot of smart people here who are focused on that. I don't have to be the expert on that because there's not one clear road map. And I think we and other large companies have the ability, technology, resources to focus on that and effectively implement AI in our pricing models and in lots of other areas of our business. And I think it's just going to increase the kind of gap between the large and small companies and how they can operate their businesses.

In terms of the first quarter outperformance relative to your budget, which you mentioned has carried into April, the same-store revenue growth and the improvement you saw was relatively broad-based across the portfolio. Where did you see the wins or the outperformance? Is there anything specific that you can point to that resulted in the better results in the quarter?

Yes. So some of your stronger markets, Todd, you can see in the results include Chicago, Washington, D.C., a lot of the Midwest and coastal markets. And as we've talked about for a long time, the strongest correlation seems to be new supply. Places where there was less pressure from supply earlier are the areas where we got pricing power earliest, which is now flowing through to revenue. And then you've seen some of that pricing benefits starting to roll through to other stores. So I think Joe mentioned earlier in the call that in some of our Sunbelt markets where we had experienced a lot of headwinds from a new customer rate standpoint in '24 or '25, where we're starting to get a little more traction as well. So no specific tailwind that I'd say is driving outside of improvement in fundamentals driven by supply.

Okay. And then, yes, I guess following up a little bit. My second question was about the Sunbelt. I'm just curious, do you think the Sunbelt is sort of out of the woods here? There were some of the largest sequential moves in the quarter were in some of the Texas markets, Atlanta, Phoenix. I mean, do you see those trends continuing in the near term? And then I know that you've integrated the Life Storage portfolio now for a couple of years, but are you seeing any greater momentum in that portfolio now that the conditions are starting to recover?

So the Sunbelt doesn't operate as one market. It's hard for us to say the Sunbelt is doing this, the Sunbelt is doing that. And we are big believers in diversification, and the markets act differently, and we want to have exposure to lots and lots of good growth markets. There are some Sunbelt markets that performance has significantly improved. Atlanta, Austin, Dallas, Miami, Phoenix are some examples of those. Southwest Florida, Tampa, still facing some headwinds and some difficulties. Houston is another one I'd put. So we are seeing recovery in many markets, but not in all markets. The LSI stores, to the extent that they were disproportionately in the Sunbelt are having that experience. But overall, their performance is akin to Extra Space stores now.

And Todd, you asked, are those markets out of the woods, so to speak. I think we continue to still see a relatively price-sensitive new customers. So it's not like we are able to push double-digit new customer rate growth across the board. And as Joe mentioned earlier, you see that down to the property type, unit type where different products moving better and then that rolls up into markets and eventually the whole portfolio. So it's pretty granular. I think we'll need to keep working through supply in some of those markets. But directionally, it's certainly improving.

I'd just like to touch quickly back on move-in rates here. But you've been able to achieve a positive move-in rate growth for consecutive quarters now, which is great. But I guess the question I have here is, how sustainable or how far can we expect this positive pricing momentum to continue without the lack of the housing market recovery? Is the positive momentum that we're seeing for the last two quarters more of a function of easier comps?

I think easier comps are a factor. But I also think with steady demand and reduced supply is another factor, right? So it's kind of two sides of the coin, right, if demand stays the same, but if supply reduces, that's positive for us.

And Salil, I would add that in our original guide we did not factor in an improvement in the broader housing market to reach our range. Our assumption was a relatively flat housing market compared with year‑ago levels. If the housing market were to accelerate, that would be a tailwind for us and could speed the recovery. Absent that, we'll still see a recovery; it will probably be a slightly flatter slope.

Great. And just another follow-up here on the housing market. Nationwide, the country is definitely still struggling, but are you guys perhaps looking at any market specifically that are, for us, recovering better than average or could be better positioned when home sales eventually or hopefully rebound?

Yes, it's a difficult analysis. And when you say looking, I assume you mean from an acquisition standpoint. We found it's really hard to target acquisitions to say we would love to be in Seattle, right? So we think we're underexposed in Seattle. But we find when we go and identify stores in Seattle and cold call the owners, they put prices on the table that are pretty aggressive. So we need to be a little more reactive to what's on the market as opposed to targeting markets. We've tried that in the past and have not had a lot of success.

We've talked a lot about the impact that supply can have, and it seems like it's coming down. So that's good. I guess, can you give any insight on what you're seeing across the industry on new starts and the current expectation of how kind of supply will compare in '26 for '25, but then maybe visibility on those starts and what it could mean for '27?

Yes, sure. I think we have really good visibility, maybe better than anyone else, primarily through our third-party management business because we get an extraordinary number of inquiries from people saying, 'We want you to manage this development, would you take a look at it for us?' And many, many of those end up not happening, but we do get a sense for the volume of that and whether it's increasing or decreasing, it is decreasing, and what the deals look like. We also look at Yardi data, I think, which produces good data. Their data says that national starts are going to reduce from 2.8% to 2.3% of total stock between '25 and '26. Another data point we use is number of our same-store square footage that is having a new competitor delivered in its trade area. And that, in '21, '22, '23, it was in the high 20s, 84% over those 3 years. It went down to 13% in '24, 8% in '25, and we think it will be 6% in '26. So clearly, new supply is not going to zero, but it's clearly moving in the right direction, and we're feeling the effects of that.

And pointing out the obvious, but with the lease-up time since we can't pre-lease these properties, this is generally on a rolling three- or four-year basis. And so every year that you tack on, another one of these single-digit delivery years using the numbers that Joe provided versus 2023, that was well into 20s, there's a material benefit from that.

Got it. And then I think on the previous question, you were just talking about the acquisition environment and that if you seek somebody out, maybe then the pricing is too high. So I guess could you talk a little bit about what you're seeing come to market? Is there anything on the portfolio side? And I know you said that you might do more on JVs versus 100% ownership. But yes, what kind of opportunities you're seeing?

There are opportunities on the market. I think I referenced earlier in the call, the last two sizable opportunities I referenced were priced at initial yields of sub-5 and didn't have sufficient growth in them to get to numbers we would consider accretive in a reasonable period of time. Most deals we're seeing in the 5s somewhere on initial yield. And I know initial yield is not really the most important factor, but it's a good comparative we can all talk to. So again, I'm sorry to repeat myself. We're really allergic to growing for growth's sake. When we invest our shareholders' dollars, we want that to be an accretive strategic transaction. And if we can't do that, we are willing to be patient.

Just one on capital allocation. So Joe, you're just talking about how acquisition cap rates are still pretty aggressive from what you've seen. So does it change at all, your strategy to consider maybe more potential asset sales or potentially buying back even more stock as opposed to going after deals?

Yes. Asset sales for us are mainly about improving the portfolio by selling assets where we want to reduce market exposure, where growth rates are unattractive, or that require significant capital we don't expect to get a return on. We typically sell those at cap rates appropriate for the lower-performing properties in our portfolio. Such sales are typically short-term dilutive, depending on how we deploy the proceeds; for example, if we put the money into bridge loans or value-add projects, they are not dilutive. We would not accelerate asset sales as a primary source of capital. Stock repurchases are not something we're opposed to. We bought about $140 million of our shares in the fourth quarter at a little below $130. We continued into early January and bought roughly $1 million to $1.5 million of stock this quarter. The stock price then became volatile: it went up, so we stopped buying, and later it returned to levels where we had been buying. At that time, we believed we had material nonpublic information, so we did not think it appropriate or fair to buy shares in the market while in possession of such information, and we did not continue the program. That said, in the future if the stock reaches a level we consider an attractive and good use of capital, we will absolutely use that tool.

Okay. Great. And just a quick question on L.A. I think you were targeting a 40 basis point headwind from the rent restrictions. Just wanted to confirm that's still what you're expecting that's in line with your initial guide? And when that restriction is ultimately lifted, I think how quickly do you think you can get rates back to market?

Yes, we do expect a 40 basis point headwind assuming that the state of emergency is in play for the entire year. Unfortunately, since COVID we've had lots of experience with states of emergency being lifted and determining the appropriate strategy afterward. When that happens, we'll get the right people around the table, look at the facts and the situation as they are then, and make a decision on the appropriate strategy.

Just one question here. There's been a lot of volatility over the past five to seven years. So I'm curious, what do you think is a normal level of same-store revenue growth in a normal environment?

Yes, it's a great question, Mike. It certainly has been an unusual handful of years with the highest of highs, and then some periods that were relatively flat same-store revenue growth. If you look long term, it would be in the 4s range. That includes a few periods post the financial crisis where development was very suppressed for a long time and we were taking a lot of rate and occupancy in times. So maybe that's a little higher than the sustainable long-term average, but we certainly would target it being something above inflationary over time. And it's been relatively steady throughout that 20-plus year look as we've been a publicly traded company. Outside of the COVID years, there's not been a huge amount of volatility.

Thanks for taking the follow-up, and sorry if I missed it. But on L.A., I know you said a moment ago that you still expect a 40 basis point dilution, if you will. But I guess if you look at the fourth quarter, you're like negative 1-ish, now you're positive 1. I guess, what caused the sort of jump between the fourth quarter and the first quarter? And I guess, given your comments, like, I guess you would expect it to come back down for the rest of the year, like what would cause that?

So the 40 basis points is a reference to the state of emergency in L.A. County. And our reported results have to do with the L.A. MSA. We have 122 stores in L.A. MSA, and 73 of those are in L.A. County. So our performance is driven largely by the stores outside of L.A. County, where we're restricted with what we can do with rates.

And that kind of speaks to the acceleration that you're mentioning, Eric, being driven by those non-L.A. County properties. One observation that maybe is interesting is while we haven't seen rate growth at the same level in those L.A. County stores given the restrictions, we have seen occupancy build in L.A. County. It's approximately 96% already, and we haven't even started the leasing season. So I think it shows the impact of those artificially suppressed market rates, which has also reduced churn in those properties since they're priced well below market. So that headwind from the L.A. County properties will continue and increase throughout the year and the longer this remains in place. But fortunately, the properties throughout the rest of the MSA, as Joe mentioned, are performing really well and ahead of expectations, frankly.

Great. Thank you. Thank you, everyone, for your time and your interest in Extra Space. Great questions, good conversation. As we said, we're very encouraged as the first four months of this year, we're running at a schedule, and the systems are working, and we're optimizing our performance. So we look forward to speaking with you after the second quarter. Thank you very much.