National Storage Affiliates Trust (NSA) Q2 2021 Earnings Call Transcript

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National Storage Affiliates Trust (NSA 0.65%)
Q2 2021 Earnings Call
Aug 4, 2021, 1:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the National Storage Affiliates Second Quarter 2021 Conference Call. [Operator Instructions]

It is now my pleasure to introduce your host, George Hoglund, Vice President of Investor Relations for National Storage Affiliates. Thank you, Mr. Hoglund. You may begin.

George Hoglund -- Vice President, Investor Relations

We'd like to thank you for joining us today for the second quarter 2021 earnings conference call of National Storage Affiliates Trust. On the line with me here today are NSA's Chief Executive Officer, Tamara Fischer; Chief Operating Officer Dave Cramer; and Chief Financial Officer, Brandon Togashi. Following prepared remarks, management will accept questions from registered financial analysts. In addition to the press release distributed yesterday, we furnished our supplemental package with additional detail on our results, which may be found in the Investor Relations section on our website at nationalstorageaffiliates.com. On today's call, management's prepared remarks and the answers to your questions may contain forward-looking statements that are subject to risks and uncertainties and represent management's estimates as of today, August 4, 2021.

The Company assumes no obligation to revise or update any forward-looking statement because of changing market conditions or other circumstances after the date of this conference call. The company cautions that actual results may differ materially from those projected in any forward-looking statement. For additional detail concerning our forward-looking statements, please refer to our public filings with the SEC. We also encourage listeners to review the definitions and reconciliations of non-GAAP financial measures, such as FFO, core FFO and net operating income contained in the supplemental information package available on the Investor Relations section on our website and in our SEC filings.

I will now turn the call over to Tammy.

Tamara Fischer -- President and Chief Executive Officer

Thanks, George, and thanks, everyone, for joining our call today. Before diving into our Q2 results and our revised full year 2021 guidance, I'd like to acknowledge and thank the entire NSA team, including our PROs and their teams for their dedication and efforts that allowed us to deliver such exceptional second quarter results. I'd also like to thank our shareholders for their ongoing support, which allowed us to complete a very successful upsized equity raise a few weeks ago. The results we announced yesterday, including growth in same-store NOI of 21.5% and growth in core FFO per share of just over 34% were consistent with flash numbers we provided in conjunction with our recent equity offering. The healthy fundamentals and active transactional environment, which led to a strong first quarter, really kicked into high gear during the second quarter, and these positive trends continue into the third quarter, were at record high levels of occupancy, Street rate growth is dynamic and to top it off, we're seeing unprecedented volume of assets come to market. On the acquisition front, we've been very busy this year, and we expect the pace of deals coming to market to remain elevated in the second half.

During the second quarter, we invested $270 million in 20 properties, bringing first half volume to 43 properties valued at $435 million. And year-to-date, we've closed or have under contract 100 plus properties valued at nearly $900 million. Cap rates on these deals range from about 5% to 7% and vary based on location, source of the deal, whether it was marketed, off-market or from our captive pipeline. And if there's a portfolio premium or some element of lease-up involved. But the weighted average cap rate on all of our transactions, closed and under contract, is in the mid-to-high 5s cap range. We continue to see meaningful competition for transactions and the amount of capital seeking to establish or expand the position in self-storage continues to drive cap rate compression, especially on larger portfolios.

Fortunately, though, about 2/3 of our deals closed and under contract this year have been off-market or from our captive pipeline, where we tend to buy at cap rates slightly above market. Our exceptional second quarter results and our outlook for the remainder of the year give us confidence to increase guidance on key metrics, including year-over-year growth in same-store NOI of 16%, growth in core FFO per share of 24% and increased expectations for acquisition volume to over $1 billion. Brandon will provide more color on our revised guidance in his comments. In summary, and it probably goes without saying, it's a great time to be in self-storage. We continue to benefit from our commitment to secondary and tertiary markets as well as our differentiated pro structure, which we're able to leverage to drive results and take advantage of the robust transaction volume that we're seeing this year.

I'll now turn over the call to Dave to provide color on what we're seeing on the ground. Dave?

David Cramer -- Executive Vice President And Chief Operating Officer

Thanks, Tammy. Since the start of the year, we've seen improvement in almost all key metrics. In my 20 plus years in the self-storage business, I've never seen fundamentals quite this strong. Occupancy levels continue to reach new highs, which has allowed us to implement significant increases in our Street rates, which ended in July about 28% over the previous year. We continue to be very assertive about rent increases to in-place tenants, which are averaging high single to low double digits. Now we all know that 2021 comparisons to 2020 are distorted, so I want to provide some additional color. Last year, our Street rates at the lowest point, only declined about 6%. For the current year increase of 28% at the end of July would imply about 20% Street rate growth since 2019.

We ended the second quarter with record occupancy of 96.7%, which further increased to 96.9% at the end of July. Based on the current strength we are seeing, it appears the occupancy will remain elevated relative to last year, but the next few months will give us a clearer picture. Our guidance assumes a seasonal decline of 200 to 250 basis points in the back half of the year. We do want to reiterate that we do manage to optimize total revenues and not occupancy. We remain impressed by the strength and sustainability of consumer demand. And as we've discussed in our past couple of calls, consumer demand for storage is driven by change. In this current environment that includes job transition, a very strong housing transition, lifestyle changes, adding a home gym, adding a home office, all of these, which we believe will continue.

Turning to new supply, we've yet to see a meaningful shift in development activity in any of our markets. However, we are hearing of more developers looking for projects, given how strong fundamentals are. We do expect development activity to pick up, but construction and land costs have risen meaningfully and the entitlement and permitting process will remain slow and very cumbersome. We expect to continue to face headwinds from new supply in Portland, Phoenix and in certain submarkets of Dallas, Atlanta and West Florida. Currently, approximately 29% of our portfolio has a new competitor in the three mile radius and approximately 48% within the five mile radius. These figures are flat to slightly down from year-end 2020 and currently robust demand is mitigating the negative impact from supply in these markets.

I'll now turn the call over to Brandon to discuss financial results and balance sheet activity. Brandon?

Brandon Togashi -- Executive Vice President And Chief Financial Officer

Thank you, Dave. Yesterday afternoon, we reported core FFO per share of $0.55 for the second quarter of 2021, which represents an increase of 34% over the prior year period. Second quarter same-store NOI increased by 21.5% over prior year, driven by a 16.3% revenue increase, combined with a 4.3% increase in property operating expenses. Same-store occupancy averaged 95.4% during the quarter, an increase of 760 basis points compared to 2020. While this is the highest growth for same-store revenue and NOI as well as core FFO per share that we've ever reported during our six-year history as a public company, I think it's appropriate to look at average growth across the last two years, thus removing the noise from the impact of pandemics. For 2Q, the two-year average same-store revenue and NOI growth is 7.6% and 10.2%, respectively, and core FFO per share growth over those same two periods is 21%, all very impressive levels.

Dave hit the highlights on operating trends, but I wanted to point out a few additional details regarding top line revenue. Bad-debt remains below historical averages, and fee income has recovered from last year, but still remains below historical norms. Regarding opex, same-store growth accelerated in the second quarter to 4.3% due to the challenging year-over-year comp, partially offset by an ongoing focus on cost control. Specifically, personnel costs increased 5.6% year-over-year, in part due to more normal store hours and staffing levels this past quarter versus the reduced levels we experienced last year. Additionally, repairs and maintenance grew 9.8% in the second quarter. Largely due to the challenging comp as we had pulled back on all but absolutely necessary expenses in the second quarter last year. Property taxes also increased 1.4%. These increases were partially offset by utilities that declined 3.6% and marketing costs that were down 6.4%. Clearly, with the elevated occupancy and strong demand that we're experiencing, there is a reduced need for marketing spend. Now, moving on to guidance.

As Tammy touched on earlier, the strong fundamentals and acquisition activity during the second quarter, combined with everything we're seeing so far in the third quarter, give us confidence that this positive momentum will carry throughout the second half of the year. What we previously highlighted as challenging second half comps now don't appear as challenging, given the strength we're seeing in occupancy and REIT growth. We are thus increasing full-year 2021 guidance as follows: core FFO per share increases to a range of $2.11 to $2.14 or 24% growth over prior year at the midpoint and an 11% increase from the prior guidance midpoint. For same-store, revenue growth of 11.75% to 12.75%, with the midpoint implying that the second half of the year should be just as strong as the first half. opex of 2.5% to 3.5% and NOI growth of 15% to 17%. Expected acquisition volume goes to a new range of $1.1 billion to $1.3 billion. Additional assumptions regarding guidance are outlined in the earnings release. Now, turning to the balance sheet.

We were active in the second quarter and subsequent to quarter end on the capital front, utilizing our ATM to raise over $140 million of equity. We also accessed the private placement market to issue $180 million of notes. And of course, most recently, we completed a very successful follow-on equity offering of 10.1 million shares at $51.25 per share or net proceeds of approximately $500 million. We were very pleased with the execution as the transaction was upsized and the greenshoe was exercised in full. All of the proceeds from these capital raises were used to repay borrowings on our revolver and will fund our acquisition activity. Our balance sheet is well-positioned with no maturities through 2022, a fully available $500 million revolver, and approximately $450 million of cash on hand at the end of July. Our leverage profile with a net debt-to-EBITDA ratio of 5.4 times at the end of the second quarter, and these recent transactions clearly demonstrates our commitment to maintaining a strong balance sheet with access to multiple sources of capital. Thanks again for joining our call today.

Let's now turn it back to the operator to take your questions. Operator?

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Neil Malkin with Capital One Securities.

Neil Malkin -- Capital One Securities -- Analyst

Hi, everyone. Fantastic quarter. Brandon, congratulations, I believe you recently had the birth of your daughter. So that's great and congrats.

Brandon Togashi -- Executive Vice President And Chief Financial Officer

Thanks, Neil. Appreciate it on both fronts.

Neil Malkin -- Capital One Securities -- Analyst

Sure. So, yes, first question. Can you just talk about what your roll-up spreads were or the gap between move-ins and people who moved out in the quarter? And then kind of what trends are you seeing into July and in the third quarter or what do you expect for Street rates and similarly, that roll-up spread?

Brandon Togashi -- Executive Vice President And Chief Financial Officer

Yes, Neil, this is Brandon. Thanks again for the first comments. And by the way, we just wanted to say, I know some people had trouble getting into the call, maybe starting as early as 30 minutes ahead of time, so if you ran into that or anyone else, apologies there. There were some technical difficulties. On your question, we talked on our last call about the spread between move-in rates for new customers relative to move-out rates decreasing such that it was near flat by the end of Q1 and actually flipping positive or second quarter, that spread was about a 6% roll-up. And here, through the early part of third quarter, that has only increased when you look at year-over-year. A very strong momentum for quarter.

Neil Malkin -- Capital One Securities -- Analyst

Yes. Fantastic. Maybe just on acquisition market. You talked about more things coming to market as the months progress, higher and higher deal activity. Can you just talk about maybe some of the larger assets or portfolios? We've heard from a couple of brokers that there are, I think, a couple billion dollar portfolios or very large portfolios out there. Can you just comment on that if those portfolios could be potentially split up or what the process looks like for you guys, just given your very, very low cost of capital?

Tamara Fischer -- President and Chief Executive Officer

Sure. I'll start, and Dave can jump in. Neil, thanks for the question. We -- I think it's probably safe to say that we see every -- portfolio of any size that comes to market. And we've heard the same as you, that there are a number in that billion-plus, up to $2 billion value range coming. We -- I can't really comment on it right now. I guess the one thing I could say is that to the extent these portfolios are in markets that we like that are a good geographic fit for us, we'd be keenly interested. And in terms of how we might think about putting it together, we could probably do it on balance sheet, if it's up to $1 billion; anything over that, we might look for a joint venture partner to work with. But I think probably the safe thing to say here is that when a portfolio like that hits the market, we'll take a good hard look.

Neil Malkin -- Capital One Securities -- Analyst

Ok, Great. Thanks. That's all for me. Thank you.

Brandon Togashi -- Executive Vice President And Chief Financial Officer

Thanks, Neil.

Operator

Thank you,Our next question comes from Juan Sanabria with BMO Capital Markets. Please proceed with your question.

Juan Sanabria -- BMO Capital Markets -- Analyst

Hi, Good morning.Just hoping you could talk a little bit more about the cap rate environment. I think you talked about mid-to-high 5s for the transactions or the acquisitions to date. But just curious if that is a going-in yield or stabilized yield? And if it's a stabilized yield, what the going-in number is and kind of the path to get there?

Brandon Togashi -- Executive Vice President And Chief Financial Officer

Yes. Juan, this is Brandon. So the 5%, 8% that Tammy referred to, that's a year one going-in. So for us, that's NOI before the -- with our structure, there's a management fee, percent of revenue management fee that is paid to the PRO. So that's before that, the cost. But it's that NOI year one over the total investment. And so there is -- for us, historically, we're acquiring stabilized assets. What we have talked recently in the past few quarters about having some appetite should those deals arise. And so there is some assets here and there that we would consider non-stabilized, they're going to be in that number -- in that year one going in 5%, 8%.

Juan Sanabria -- BMO Capital Markets -- Analyst

Very impressive. Okay. And just on the cost side, just hoping to talk to a couple of line items. One being marketing, you guys were up year-over-year despite kind of the record occupancy. So just curious on how we should think about that going forward? And second would be on personnel. We've seen some large declines from some of your peers, able to leverage the kind of rent now or e-rental programs or however you want to name them or call them. Just curious on how you guys are seeing that line amid all the wage pressure and difficulty in finding labor.

Brandon Togashi -- Executive Vice President And Chief Financial Officer

Yes. Sure, Juan, it's Brandon again. So on marketing costs, they were down. Same-store costs were down year-over-year for the second quarter, just over 6%. And then -- and also in the first quarter, I believe that number was down year-over-year, about 4%. So year-to-date, six months same-store marketing costs are down. And so I think that's more in line with maybe what you'd expect given the strong occupancy, the strong customer demand. I think last call, I made the comment, if we don't need to spend the money, we're certainly not going to spend the money, and that's been the case with the marketing costs.

On personnel, I think we're experiencing a lot of the same things as our peers. We cut hours and cut staffing quite a bit last year. So there's a comp that I would point out for us, our actual dollar spend in the second quarter for same-store was actually down from Q1 sequentially, but that increase year-over-year of 5.6%. That's really up against a tough comp from Q2 of last year. So when you're serving across the other companies, I just think you have to consider anything they might have done with regard to hazard pay or when they really slash their hours and how they manage their staffing. So just -- that's one heads-up. And then -- but then going forward, I would just say we're certainly seeking a lot of the same efficiencies, and we have been over the last year. I think there's been a lot of lessons learned, we've proven we can run stores at lower hours than we realized we could through pandemic. And I should probably, pause here, let Dave chime in on some of the other potential efficiencies we're exploring.

David Cramer -- Executive Vice President And Chief Operating Officer

Sure. Sure. I think what I would add, Juan, as you look at going forward with payroll stuff, the great numbers we're putting up as well our employees have an incentive program. And so when you have revenue numbers that are off the charts like we have, some of those personnel costs you're seeing, the comp is one piece of it, but we're also having a bonus program backing that up. And so we're proud of the results, and we're proud to obviously pay the incentive programs. As we look forward going forward, it's very competitive for personnel. It's a very tough environment to hire and so we're looking at always online rental, online payment systems, ways that we can run our stores more efficiently and really look at our store hours overall and our headcount overall. I think the unique part about our business positions as well as we can run a little leaner or maybe a little short staffed in this very tough hiring environment, it doesn't impact our business.

So we're flexing team members around. We're probably using a little bit more overtime than we're historically used to using, but we're making do in the environment we're at. And so our online leasing program is about mid-to-high-20s on leasing. 26%, 27% on online rentals across the portfolio came through our online platform. We continue to work on that customer journey and improving that platform and like to see those numbers increase, which obviously leads to efficiencies around the call center, efficiencies around our store personnel and to Brandon's point, a lot of lessons learned and there's a lot of more runway for us here I think to improve.

Brandon Togashi -- Executive Vice President And Chief Financial Officer

And then one last thing. Brandon, again. So for the six months same-store payroll and related costs were up 2% and so we do expect that to be a little higher of a growth rate in the back half. For the full year growth rate, I would put it probably close to the high end of that total opex growth range that we gave of 2.5% to 3.5%.

Juan Sanabria -- BMO Capital Markets -- Analyst

Thanks very much. [Speech Overlap]

Operator

Thank you, Our next question comes from Wes Golladay with Baird. Please proceed with your question.

Wes Golladay -- Baird -- Analyst

Hi, everyone. When we look to the back half of the year, what do you think is the biggest moving part for occupancy? Is it purely the decision to push rate with the items such as maybe students going back-to-school, taking their stuff out of storage or other items like that?

David Cramer -- Executive Vice President And Chief Operating Officer

That's a great question. I think, first of all, we thought we did have a little college student activity in April. We had a pretty significant gain in occupancy. We saw some good rental velocities, and so as we look at the back half of the year, we guided toward 200 -- 250 basis point decline in occupancy by the end of the year. Some of that's around that seasonal -- what we felt was a little more seasonal pattern, college students, a little bit of summer transition. And so we think we'll see some of that toward August, September. As you mentioned, when you start pushing rates and you start really applying some various sort of increases, that could cause some movement. I think the positive is right now the rental velocities are super strong, and so as we're moving folks out, they're moving right back in. And we're sitting here still at 97% -- almost 97% occupancy at that point in time. This should be the peak of the season. It should start to deteriorate a little bit from here, but it's not going anywhere quickly. We're very pleased with the fundamentals. We don't see anything in the future or the back half of the year that's going to really knock those fundamentals off, one big wall if you want to call it, coming. There's just a lot of strength because of a lot of reasons.

Wes Golladay -- Baird -- Analyst

Great. And then I think you mentioned you had about 48% of your portfolio has supply within five miles. Do you think this number will move I guess lower as we go out in the next 12 months?

David Cramer -- Executive Vice President And Chief Operating Officer

I certainly think it could. The new deliveries are slowing, and we've been talking about that over the past few calls. Deliveries are declining since 2019. And with the 2020 pressures of the pandemic, it slowed the 2020s into 2021 and so those are delivering now. There's a lot of -- certainly a lot of interest in our product and a lot of people liking our product, but it's hard to buy metal right now, it's hard to buy wood right now, it's hard to get planning done right now. So I think you might see that number decline a little bit in the next 12 months.

Tamara Fischer -- President and Chief Executive Officer

Yes. I think the only thing I'd add to that, Dave, is that the secondary and tertiary markets where we're focused are less attractive to new developers. Now that may not always be true, but the returns just historically haven't been there. The rents aren't as high and the risk isn't that much different. So at least historically, we've been somewhat protected from the new supply cycle.

Wes Golladay -- Baird -- Analyst

Got it. And I think in the prepared remarks you mentioned you had unprecedented -- seen unprecedented amounts of assets coming to market. Can you maybe talk about how your conversations with potential PROs is going on right now? Are they eager to sell or transact ahead of potential tax changes?

Tamara Fischer -- President and Chief Executive Officer

I think for our PRO -- with our potential PROs, we continue to have conversations with private operators who would be good adds to our group of participating regional operators. But it is -- I will say this is a case where -- potential changes in tax law don't seem to be moving the process along that much faster. I think that it's a big decision, and I think operators are making a decision to sell or sustain the business and continue to grow. But basically selling all of your assets into NSA and becoming part of a team is a very big decision. So I'd just say it's not really changing the cadence of our discussions.

Wes Golladay -- Baird -- Analyst

Great, Thank you.

Operator

Thank you. Our next question comes from Todd Thomas with KeyBanc Capital Markets. Please proceed with your question.

Ravi Vaidya -- KeyBanc Capital Markets -- Analyst

Hi there, This is Ravi Vaidya on the line for Todd Thomas. Can you talk a little bit about the self-storage market in Puerto Rico? Can you comment on how the pricing and demand for self-storage is different between Puerto Rico and state side? And do you have a long-term target about how much exposure you would want to Puerto Rico?

Tamara Fischer -- President and Chief Executive Officer

Well, thanks for the question. I appreciate it, and I'll start by saying that Puerto Rico has been a fantastic market for us. We really like the supply demand dynamics and I -- and frankly, pricing is a strength down there. In the case of the portfolio that we just acquired in the second quarter, that portfolio was sourced off-market by our PRO who's built strong relationships down there. And what we liked about adding to our portfolio there was the ability to build scale. And so on the whole, we like Puerto Rico, and we see it as a good long-term play.

Ravi Vaidya -- KeyBanc Capital Markets -- Analyst

Perfect, That's all for me.

Operator

Thank you. Our next question comes from Steve Sakwa with Evercore ISI. Please procceed with your question.

Steve Sakwa -- Evercore ISI -- Analyst

Great. Thanks. Most of my questions have been asked and answered, but I'm just curious as you're thinking about ECRI given that you're sitting at almost 97% occupancy, are you sort of changing the pricing strategy going into the back half of the year? How are you sort of managing the business a bit differently?

David Cramer -- Executive Vice President And Chief Operating Officer

Great question, Steve. With the strength of what we're seeing and the continued strength of rental velocity and our ability with the rent roll up and all the things that are going right now for us, we've been a little bit more aggressive I think particularly going through July and August as we look out and even into September. And so I would say we're very much on the assertive end. We're looking at a broader base of tenants. We're looking at maybe where our potential caps or where we may have capped out and not done looking back at that. Our revenue management platform, which is fully implemented about 12 months ago is really starting to pay dividends. We've got some really good logic built in behind it, and it's really challenging us to really think about how we maximize the situation we're in. So at this point in time, I would say we're probably being a little bit more assertive in amount and how quick we're implementing the rate changes.

Steve Sakwa -- Evercore ISI -- Analyst

And is there anything you can tell on customer behavior about rent increases? Is there sort of a threshold at which you see maybe higher move out rates or any kind of change in behavior that would kind of limit how far you can push rent increases?

David Cramer -- Executive Vice President And Chief Operating Officer

We haven't come across anything yet. Like I say, we're looking at some of those upper boundaries. And what I mean by that is maybe the total dollar amount. We may have a cap set on a dollar amount that we may feel would be uncomfortable to the tenant. So we're pushing some of those boundaries today, but we haven't come across anything anywhere across the country. Mind you, in all of our municipalities and all of our communities, we've been testing a lot of different projects and nothing standing out that what we're doing has caused any type of change in behavior at this point.

Steve Sakwa -- Evercore ISI -- Analyst

Great, Thanks. That's all for me.

Operator

Thank you. Our next question comes from Smedes Rose with Citigroup. Please proceed with your question.

Smedes Rose -- Citigroup -- Analyst

Hi, Thanks.I just wanted to follow-up on that a little bit. You mentioned the revenue management platform that was rolled out about 12 months ago. So I mean, you're on target I guess to have over 1,000 properties now between wholly owned and unconsolidated, what -- are they all on that platform now? Or as I recall, the PROs have the option to be on the platform or not? I was just wondering kind of is there an opportunity there to add more to the platform and kind of where do you stand on that?

David Cramer -- Executive Vice President And Chief Operating Officer

That's a great question. And one of the things we've been very pleased with, through our best practices and through our -- really a lot of our conversations over the last 12 to 18 months is the acceptance level of some of these platforms. And our PROs are doing a wonderful job, and they have built some really great teams, but they have -- we figure right now, a little over 80% of our stores are on the platform and taking advantage of it in the frozen. Really built some great talent inside of that, too. So the PROs are getting much better data than they've had, and they're getting much better results. And so we're very pleased there.

Smedes Rose -- Citigroup -- Analyst

So you would expect kind of incremental take up, I guess, for that 80%?

David Cramer -- Executive Vice President And Chief Operating Officer

I would think so, yes.

Brandon Togashi -- Executive Vice President And Chief Financial Officer

Yes. And Smedes, this is Brandon. The one thing I would say is that the PROs that maybe haven't onboarded on to our specific in-house built platform, I mean, they're still running certainly revenue management strategies, similar things that they've maybe done as private operators. And so they're still pushing rent increases to customers. And so there's still -- but I do believe there is opportunity. I just wanted to make that clear.

Smedes Rose -- Citigroup -- Analyst

Ok, Thank you.

Brandon Togashi -- Executive Vice President And Chief Financial Officer

Thanks, Smeedes.

Operator

Thank you.[Operator Instructions] Our next question comes from Ronald Kamdem with Morgan Stanley. Please proceed with your question.

Ronald Kamdem -- Morgan Stanley -- Analyst

Hey, Congrats on the quarter, and Brandon congrats on the newborn. Just on the -- thinking about -- historically, there were a couple of markets that have been oversupplied, Portland, for example, comes to mind. Can you just help us contextualize just the amount of demand that we've seen in the last 18 months and so forth? You're looking at same-store numbers that are double digits. How many years did we gain sort of during that period before we get to equilibrium? Just how should we think about what these last 18 months has done for those markets?

David Cramer -- Executive Vice President And Chief Operating Officer

It's a great question. And I'm not sure we have a clear line of sight to how many maybe years of supply we've shaved off. With the economic -- all the drivers that are going on right now, Portland and Oregon and a couple of these other markets, Phoenix being one of them, I've just seen tremendous results. You look at results around Oregon, they're just at the top of the list. And so we look at it this way, is there's still -- certainly still pressure there. If you look at Portland's overall occupancy, it's still about three points less than the overall portfolio, which is kind of the presence that there is some competition there. But the team has done a wonderful job really maximizing where they want to be positioned, how they -- how many rentals they want to get, how many consumers they want to get and they've done a great job driving occupancy and revenue and all the other things that come with that. So I don't know that I could really answer how many years do we think we've shaved off, but there's currently -- certainly, the demand factors are mitigating some of that competitive pressure. And so for Oregon and a few of these other places, our numbers are solid.

Brandon Togashi -- Executive Vice President And Chief Financial Officer

And it plays -- Ronald, it plays into the answer to Juan's earlier question as well about that 48% we talked about in the five mile. I mean that's the one thing we didn't tell in our response is the fact that some of what's happened in the past year has certainly accelerated the absorption. So you're hitting on the right thing, it's just -- it's tough to put a number to it, as Dave said.

Ronald Kamdem -- Morgan Stanley -- Analyst

Got it. And then not to beat sort of the acquisition question to death, but you doubled the guidance, right? And I think, you talked a little bit more -- just there's just more activity going on. Is that like -- is that really the biggest change and the biggest drivers from three to six months ago? Just you're getting a look at a lot more deals than you thought, you're closing maybe a lot more than you thought? Or is your -- is this a view of just being more aggressive into an accelerating market or maybe a little bit of both? Just some color there would be helpful.

Tamara Fischer -- President and Chief Executive Officer

I think it's a couple of things, Ron. And it's a good question. But what we saw in the first quarter, frankly, just continued to accelerate into the second quarter and what we're seeing right now. And as I mentioned in my earlier comments, we've also been able to source a number of portfolios, either off-market or you might call it pocket-marketed. And I think that's given us a benefit. We've been able to leverage our PROs' relationships and our Captive pipeline. So it's -- I guess I'll say it's a little bit of all of the above. I would add that I think we're being extremely disciplined in our underwriting. We like what we're seeing. It just so happens. I don't know if we'll see another year like this, but it clearly is unprecedented potential volume.

Ronald Kamdem -- Morgan Stanley -- Analyst

Thanks again.

Operator

Thank you, Our next question comes from Joab Dempsey, Truist. Please proceed with your question.

Joab Dempsey -- Truist -- Analyst

Good afternoon, everyone. Thanks for taking my question. First of all, I just wanted to circle back on the acquisition topic again. Can you talk a little bit more about in-depth about the type of assets you're targeting, the quality? I know you spoke a little bit about yield. I guess, ultimately, how do you sort of balance more activities in the markets and more assets for sales versus the higher prices that you're seeing now?

Tamara Fischer -- President and Chief Executive Officer

So I guess, I'll start, and Dave can jump in here. But I would say that our approach to underwriting in terms of geographic location, quality of the asset -- and as you know, we're perfectly happy with single-story assets, multi-building in secondary and tertiary markets. I think that gives us a slight advantage. It fits well with our geography. And for that reason, the cap rates might be a little higher than what others are seeing. But I'll tell you that in addition to that, we are also looking at newer assets that are in stabilization. They're not quite stabilized yet. If we see assets like that, that are well-priced and fit well with our geography in a place where we want to be long term, we'll go for it. And so I don't know if that answers your question or if there's any other color I can provide. I don't think it's changed too much. Our focus on secondary and tertiary markets remains the same. But -- and I guess the one thing I would add is that we've talked historically about being focused on stabilized assets, but to -- now, to the extent we're seeing non-stabilized, we are open to underwriting and acquiring those assets.

Brandon Togashi -- Executive Vice President And Chief Financial Officer

One thing to -- it's Brandon. The one thing I would add is geographically, everything that we have -- that we spoke about that's ahead of us to close is very nicely complemented with the existing portfolio. That's right.

Joab Dempsey -- Truist -- Analyst

Okay. Great. Great. And then secondly, you mentioned some of the demand in your prepared remarks, it's coming from transition-related housing-related demand. Traditionally, are users that stem from that kind of demand segment, do they have like longer length of stay, shorter, or is that pretty consistent with the traditional customer base?

David Cramer -- Executive Vice President And Chief Operating Officer

I'd say, it's -- it could be a variety of answers, but I'd say, overall, fairly consistent. What we're seeing now, though, with that tight housing market is how long they're out of house. So you sold and you can't get to your new house in maybe the time you were thinking about, we're seeing something around housing pressure as far as pricing. So maybe I wasn't able to afford the type of house I was thinking or the size of the house I was thinking about, so maybe I'm buying a little bit less square footage of house, which may lead to longer storage needs. And if you look at our product, we think that's very encouraging because it's very affordable, and it's a great use of space. And so as this housing market and this red hot rental market play out, we think, for us, we're in a very good position to have some good success around this really tight housing transition that's going on.

Joab Dempsey -- Truist -- Analyst

Okay. Perfect. And then just lastly for me. I figured I had asked, with the Delta variant cases beginning to rise across the country, any noticeable difference in consumer behavior over the past few weeks?

David Cramer -- Executive Vice President And Chief Operating Officer

Nothing to speak of. I know we've gone back and we've kept all of our protocols in place. So we have a lot -- that piece going on. We're seeing a little bit more noise around some of our communities about masking mandates, but nothing that we can really definitely say is going to push economy one way or the other. Keep in mind, we were able to navigate the pandemic last year very successfully. And so I don't know even if the Delta variant really flares or puts pressure on communities, it's going to have a significant impact on us. We were deemed in the sense of business last year, and I think that will continue, should this thing really flare.

Joab Dempsey -- Truist -- Analyst

Thank you.

David Cramer -- Executive Vice President And Chief Operating Officer

Thank you.

Operator

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Tamara Fischer for closing remarks.

Tamara Fischer -- President and Chief Executive Officer

Thanks. And to wrap up, I'd like to thank you again for joining our call and for your interest in and support of NSA. I'll also reiterate our thanks to our team members and our PROs, whose efforts are key to NSA once again delivering sector-leading results. We remain optimistic about 2021, and we're looking forward to meeting with many of you either virtually later this quarter or hopefully in person at Nareit in November. Thanks, again.

Operator

[Operator Closing Remarks]

Duration: 40 minutes

Call participants:

George Hoglund -- Vice President, Investor Relations

Tamara Fischer -- President and Chief Executive Officer

David Cramer -- Executive Vice President And Chief Operating Officer

Brandon Togashi -- Executive Vice President And Chief Financial Officer

Neil Malkin -- Capital One Securities -- Analyst

Juan Sanabria -- BMO Capital Markets -- Analyst

Wes Golladay -- Baird -- Analyst

Ravi Vaidya -- KeyBanc Capital Markets -- Analyst

Steve Sakwa -- Evercore ISI -- Analyst

Smedes Rose -- Citigroup -- Analyst

Ronald Kamdem -- Morgan Stanley -- Analyst

Joab Dempsey -- Truist -- Analyst

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