Good morning everyone, welcome to the CubeSmart Third Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Charles Place, Director of Investor Relations. Please go ahead, sir.
Thank you, Chad. Hello, everyone. Good morning from sunny Malvern, Pennsylvania. Welcome to CubeSmart's Third Quarter 2019 earnings call. Participants on today's call include Chris Marr, President and Chief Executive Officer, and Tim Martin, Chief Financial Officer. Our prepared remarks will be followed by a Q&A session. In addition to our earnings release, which was issued yesterday evening, supplemental operating and financial data is available under the investor relations section of the company's website at www.cubesmart.com. The company's remarks will include certain forward-looking statements regarding earnings and strategy that involve risks, uncertainties, and other factors that may cause the actual results to differ materially from those forward-looking statements.
The risks and factors that could cause our actual results to differ materially from forward-looking statements are provided in documents the company furnishes to or files with the Securities and Exchange Commission, specifically the Form 8-K filed this morning together with our earnings release, filed with the Form 8-K, and the Risk Factors section of the company's annual report on Form 10-K. In addition, the company's remarks include reference to non-GAAP measures. A reconciliation between GAAP and non-GAAP measures can be found in the third quarter financial supplement posted on the company's website at www.cubesmart.com. I will now turn the call over to Chris.
Thank you, Charlie. A solid quarter, given the challenges we knew we were facing in the quarter from difficult expense comps and the impact of new supply on our top-line growth. Our thesis on supply remains unchanged. We continue to expect new store openings in our top 12 markets to peak in 2019 and decline in 2020. Based on our internal analysis, we currently see a slowdown in deliveries in each of our top 12 markets, with the most significant declines in Chicago, Miami, Dallas, and Houston. Markets experienced the impact of new supply early in this cycle. While we expect a reduction in 2020 deliveries, given the fact that the average length of a customer stay is about 13 months, we expect the impact of supply and its related pricing pressure will continue to weigh on top-line growth into 2020, albeit at a gradually reduced rate of deceleration.
We remain encouraged by the resilience of our portfolio in the face of new supply. Sequential improvements in the same-store revenue growth in Dallas, Houston, and Miami, we believe are indicative of the performance of high-quality real estate when operated by a focused team. After several quarters of cautioning about the impending impact of new supply in Brooklyn, we finally began feeling its effect during the quarter. The good news is that after spending a day driving the market, touring the new comps, and speaking to operators, demand is solid, as evidenced by our portfolio having 120 basis points higher year-over-year occupancy, and the newly opened competitor stores appear to be leasing up nicely.
The reality is we have outstanding real estate relative to the overall competitive set, and therefore, we expect Brooklyn to absorb the supply, much like our experience with the earlier wave of new construction in the Bronx. We continue to have success in growing our funds from operations per share. Recent transactions have reduced our weighted average cost of capital while continuing to strengthen our very conservative balance sheet. We remain disciplined in deploying capital, continuing to utilize joint ventures as an additional means of external growth. Our third-party platform continues to be both a source of services revenue as well as a platform for acquisition. Our consumer remains healthy. We currently operate 230 stores that are in various stages of lease-up, and demand remains very solid.
Significant near-term pressure on price is largely confined to supply-impacted markets, and we believe in long-term value creation our high-quality platform and portfolio will produce. Thank you for listening to my comments, and I'm now pleased to turn the call over to our Chief Financial Officer, Tim Martin, who will expand on various successes of the quarter. Tim?
Thanks, Chris, and thanks to everyone joining us on the call for your continued interest and support. Another solid quarter report. We reported third quarter 2019 results last evening, including a headline result of $0.44 per share of FFO as adjusted, which was at the high end of our guidance range. 1.5% growth in same-store revenue and 5.3% growth in same-store expenses yielded same-store NOI growth of 0.1% during the quarter. As Chris mentioned, the impact of new supply on operating fundamentals continues into the back half of 2019, consistent with our expectations. We continue to see pressure on rental rates while continuing to maintain solid occupancy levels. Same-store occupancy ended the quarter at 92.5%, and we averaged 93.1% during the quarter.
Expense growth of 5.3% was driven by continued pressure on real estate taxes, timing of repair and maintenance costs compared to last year, as well as the impact of a fairly significant increase in the cost of our property and casualty insurance compared to last year.
Following our big transaction last quarter, external growth was more modest in the third quarter. On a wholly owned basis, we acquired 2 stores during the quarter for just under $18 million, one in Atlanta and one in Charleston, South Carolina. Year to date, we've invested $189 million into wholly owned store acquisitions and have another $88 million under contract. We continue to find good opportunities to grow and expand in our target markets. Our HVP IV venture that is focused on lease-up acquisitions added 2 more stores during the quarter for $46 million, and we expect to add another 2 stores during the fourth quarter to that venture for around $34 million. During the quarter, we opened one of our development projects in the Boston MSA.
We also added a new development to our pipeline in King of Prussia, Pennsylvania, as detailed on page 23 of our supplemental information package. We currently have five projects in our development queue, with deliveries expected through 2021. Our third-party management platform continued adding stores in a meaningful way as we added 48 stores in the third quarter, bringing our third-party platform to 652 stores under management. Likely will provide some attractive acquisition opportunities in the future. On the balance sheet front, we've been active in raising both debt and equity capital. During the quarter, we issued 1.8 million shares under our after-market equity program, raising $61.2 million at an average price of $34.93 per share. In subsequent quarter end, we accessed the public bond market for the second time this year.
In early October, we issued $350 million in senior unsecured notes that bear interest at 3% and mature in 2030. Proceeds from the offering were used to repay amounts drawn on our revolving credit facility, as well as to fund acquisition and development activity. Combining all of this activity, along with our new $750 million revolver we discussed on last quarter's call, we're well positioned from a balance sheet perspective and have capacity to execute our external growth strategy and to fund that growth in a manner that's consistent with our investment-grade credit ratings. Our revised earnings guidance and underlying assumptions are detailed in our release from last evening. Highlights include a narrowed full-year range of FFO per share as adjusted of $1.67-$1.69, which is a half penny raise at the midpoint, as well as narrowed ranges for our outlook for same-store revenue, expenses, and NOI.
We introduced fourth quarter FFO per share, as adjusted guidance of $0.41-$0.42. Thanks again for joining us on the call this morning. At this point, Chad, why don't we open up the floor for some questions?
Certainly. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll just pause momentarily to assemble that roster. The first question comes from Smedes Rose with Citi. Please go ahead.
Hi, good morning. I wanted to just ask a little bit about the change in the guidance, particularly at the top end. I noticed your prior guidance had indicated some deceleration through the back half of the year. It seems like, I think, relative to a lot of forecasts, it was a little steeper than expected in the third quarter. Was that mostly due to what you saw in Brooklyn? You kind of called that out. Is there something else going on that changed, I guess, from your prior outlook?
Yeah. Smedes, this is Chris. The results in N.Y. have actually been better than we would have anticipated throughout 2019 based on what we saw at the end of last year and our expected timing of deliveries. Again, we're just providing a range of outlook. We create that range in the fall of the year before, we're still operating within that range. It just became obvious that everything breaking in our way in all the markets across the country to hit the high end was going to be mathematically challenging based on where we are through the nine months, we adjusted that top end accordingly.
Yeah. Mathematically, Smedes, our previous high ends, given our third quarter print, would have mathematically suggested a re-acceleration in the fourth quarter, which we do not anticipate, which is why we took away the high end of that range.
Okay. You had mentioned that in some of the markets that saw development early on in the cycle, you sound like maybe a little more optimistic on, but which ones sort of specifically, maybe as you look into 2020, maybe perhaps would see some sort of re-acceleration in?
Yeah, I think, again, it's those ones I rattled off in the prepared remarks that saw the impact of supply earlier in the process. When you look at what right now is on our radar for deliveries in 2020, you see the sharpest declines in Dallas, in Chicago, and in Houston, and to some degree, in Miami, although still more anticipated in 2020 in Miami than in Chicago or Dallas or Houston. I think, again, Austin would also be in that category. Those are the markets where you're starting to see some green shoots. We saw some good outcome in Q3 from that perspective. Our occupancies are there. We're just starting to see rental rate climb back from its lows, and gives us some optimism as we go into 2020 that those markets will continue to show improvement.
Okay. Thank you.
The next question will be from Jeremy Metz with BMO Capital Markets. Please go ahead.
Hey, good morning, guys. Just sticking with supply, Chris, you had mentioned you're continuing to hold your expectation that supply peaks here in 2019 and starts to decline in 2020. I guess as we step back and think more broadly about just the lingering impact here, you mentioned it weighing in on 2020, but what is the typical lag as you think about it between peak supply and peak supply impacts?
Yeah, I think you're in that, academically, kind of that 9 to 13 month range as that sort of the churn in the customer base, and that's, again, as it relates to a decline in price based on that supply. I think the rate at which that impacts you slows. I think the impact as we get here later in this impact of supply cycle will be less pronounced than the rate of its impact as we experienced it earlier this year through the third quarter. If that's helpful to sort of answer it in two ways there.
Yeah, no, that's fair. Just switching gears to the expenses, if I look at the advertising spend, it's up. Clearly it was 4%, but nothing crazy, at least relative to what we're seeing from some of your peers. Are you just not seeing as much incremental demand with additional spend, such that you're not ramping that even harder? Is it just better faith in the systems to be selective on bidding and no need to really crank up that spend just from a diminishing returns on additional cost? Just trying to think about how you're valuing the increased ad spend from here.
Yeah. The focus is on achieving our objectives while paying very close attention to the cost of that incremental customer relative to the lifetime value of that incremental customer. In Q3, we certainly actively looked at spend. We're willing to spend, but we were able to achieve our objectives in the quarter continuing to be, again, with that eye on that incremental customer and their value relative to the spend. As we look forward, the landscape hasn't changed. It is incredibly competitive, not only from the larger competitors and their spend, but also from the regional and non-traditional storage folks who are also ramping up paid. You have to focus in on the fact that paid search, in and of itself, produces the least amount of customers for us. That's only one component of the overall.
I think to be fair, as we look at the landscape and we look out into Q4 and into 2020, our expectation would be that we will continue to find ways to use other channels and to be able to generate that incremental customer at a reasonable cost that will cause us to spend at a rate in excess of inflation. How high does that go? Stay tuned and we'll articulate that when we provide guidance for operating expenses for next year. I continue to anticipate that our spend will continue to grow at a rate more rapidly than what it has in the past, and certainly more rapidly than the rate of inflation.
Got it. Thanks, Chris.
Thanks.
The next question will be from Todd Thomas with KeyBanc Capital Markets. Please go ahead.
Hi, good morning. Just sticking with expenses, can you comment on the increase in property taxes, almost 8% in the quarter? Is that level of growth in property taxes expected to persist for a period of time, or was this quarter a bit more elevated than you would expect going forward?
Hey, Todd. There's a couple things going on there. It is a little bit of a difficult comp because we had some good news in last year's number. We had the benefit of a handful of assessment challenges that came back in our favor last year to create a little bit more difficult comp. That said, though, boy, it's hard to get too excited about seeing meaningful decreases in that level of growth in property taxes. It feels like a broken record. We've been talking about this for what, three, four years now. For us in the quarter, we saw significant pressure on growth in taxes in Chicago, Houston, San Antonio, Cleveland, Nashville, to name a few that were the bigger impact MSAs.
We're in the midst of preparing all of our outlook for 2020, and as Chris mentioned, obviously, we're not sharing that on this call, but we continue to expect pressure in the real estate tax range. We've experienced, as you know, over the past couple of years, anywhere from 4%-8%. Of course, quarters can go up and down, but I would certainly anticipate that at least into 2020 and possibly a year beyond that the continued pressure on real estate taxes is not going away anytime soon.
Okay, you mentioned San Antonio and we saw 168% increase in operating expenses there. I realize it's just four stores, was that predominantly due to property taxes and do you expect to see any other sort of big pops in other markets like that?
Yeah, that particular market was significantly impacted by a successful refund last year. There was an increase in the general real estate tax bill in San Antonio in the 2019 period, but the 2018 period was helped meaningfully by a tax refund. It's a really difficult comp, so I wouldn't read too much into that one.
Okay. Just shifting over, the Labor Day sales that many operators held during August into September, did that have an impact on traffic and activity across your portfolio? Was that expected, or was that new this year, or at least more impactful than in prior years?
Hey, it's Chris. It was not new this year. Certainly for a few of our larger competitors, it's a recurring theme. I think what was new this year is duration. You saw some variation of a sale, regardless of what it was branded, that lasted longer into September. Certainly from one of our competitors, it lasted significantly longer in September. That's new. I think anytime you have something like that, it puts some pressure on the rentals. It certainly works from an occupancy perspective. It puts additional pressure on price because you're giving away an additional concession there. Some of that is offset by changes in base rate that you make in advance of the sale. I would say, I would not read into that it was anything different than the norm.
As I said, the only thing I would say is different is the duration was a little bit longer in terms of keeping that in place than what we would have seen in the last couple of years.
Okay. All right. Thank you.
The next question will be from Jonathan Hughes with Raymond James. Please go ahead.
Hey, good morning. Kind of a related question. Were you guys running any revenue management experiments with rates or discounting during the quarter? If so, I realize this might be tough, but do you have a sense of what revenue growth would've been had you not made a potential change?
Yeah. Great question. We are running experiments and tests constantly. We are playing around with a bunch of different things all year. Some of which, again, quarter to quarter can have an impact. It can swing, obviously, both ways. I think some of the things we were doing leading into the third quarter put some pressure on quarterly revenue growth, but I would not say it was overly meaningful. Certainly put a little bit of pressure on. Obviously, with a belief that the long-term revenue growth from those customers is going to be better and to our advantage.
Right. Maybe trading, discounting for a higher rate?
Various other tools, but yes, directionally, yes.
Okay. I think you mentioned it earlier, but I just want to confirm, you're not seeing any change in existing tenant behavior, despite any of the broader macroeconomic choppiness?
No. Our self-storage customer, as I said, continues to remain very healthy. Demand is healthy. Again, my point, the stores that are new, and again, we own or manage over 200 stores that are in some degree of lease-up. The physical occupancy is fine. Most of the stores are leasing up quite nicely. It's just in those markets with heavy impact of supply, you're seeing an awful lot of pressure on price. Again, to go back to the and not to be the broken record, the stable stores only need to backfill the 5%-6% of the customers who vacate every month. You're not chasing that customer down to the bottom. We have stores in market, where you've got competitors that are face rate 25%-50% below what I would say are market rents.
We don't have to chase them to that point, we continually see call it somewhere between 2.5% and 3.5% down in effective rents relative to where we were last year, and last year was down relative to the year before. It's pressure in the markets with supply. I'm confident that this too shall pass.
Okay. That's helpful. Then just one last one for me. You ended the last call by hinting at priming the balance sheet ahead of an interesting time period for the sector, and you executed on that with the debt and equity raises since then. Are you finally starting to see more properties come to market as maybe some owners and other operators find out this business is tough and are performing below expectations and may look to monetize before things could get even tougher?
Hey, it's Tim. We always see opportunities. There's always a market for folks that are looking to dispose of their self-storage holdings. I don't know that I would go so far as to characterize it the way that you laid it out, that folks are trying to call a shift in the market. We continue to work hard to focus on deals that come to market. We continue to focus on existing relationships, largely through our third-party management platform, but not exclusively. We've underwritten a tremendous amount of opportunity this year, much of which there's just a disconnect between buyer and seller expectations. Obviously, as we have increased our activity and our guidance on external growth, modestly, we're finding opportunities. We continue to be optimistic that opportunities will come.
I wouldn't characterize it though as some type of market shift that somebody's trying to call the top, and they're trying to sell in advance of that. That said, a lot of folks, as we've talked about for several calls, a lot of folks who built their stores and built them based on a pro forma that they established many years ago, that didn't anticipate another store being built or two more stores being built in that market. Many of those stores are not performing to their underwritten pro formas. Many of those builders or investors were short-term focused anyway. There's certainly going to be some activity that we're going to see that's a result of that type of activity. Again, back to our comments for the past couple of quarters, we don't think that folks are in distress.
I think folks are going to be modestly disappointed compared to where they thought they were going to be, and I think that probably provides some opportunity for us or for someone, to make a good investment here in the coming 12 or 24 months.
Okay. Thanks for the time.
Thanks.
The next question will be from Shirley Wu of Bank of America. Please go ahead.
Hey, guys. Thanks for taking the question. I think a follow-up on New York, as you're seeing more of an impact of supply in the back half of 2019, could you talk to the cadence of that supply over the next few quarters and what you anticipate getting delivered, and also on top of that, some of the street rates that you're seeing in the boroughs in Q2?
Sure. I think as you look at new development impacting each of the boroughs, start with the Bronx. As we think about the Bronx, there's one, two, three deliveries left for 2019. Right now, what we're looking at for 2020 is one store that's on the docket to open in 2020. I think, again, you're starting to see the opportunities for supply there dropping off pretty significantly. In Brooklyn, again, I think you've got a similar construct. Most of the deliveries are scheduled, either already have happened. Brooklyn, just like every other borough in New York, you can build the stores where the zoning is. We have four stores out of our same store pool in Brooklyn who are currently experiencing eight brand new comps impacting them.
If you take away those four stores out of our overall Brooklyn same store pool, the other stores in Brooklyn are actually performing pretty nicely and have same store revenue growth that's quite healthy. It's a concentrated impact, which is just the reality of life in the boroughs. I think the significant impact in terms of deliveries in Brooklyn largely are coming now. We either saw them in the third quarter or we'll see them in the fourth. Queens, just not much happening. There's a delivery here or there. Again, it's a different cat. Those deliveries tend not to have as much of an impact as they do in Brooklyn and in Bronx. We have the one property in Manhattan. It's unaffected. We're starting to see supply in Long Island, in North Jersey, in Westchester.
Again, I think the Bronx opportunity set is dissipating quickly, and so folks who want to continue to find opportunities in the New York MSA are moving out into the suburbs. Our Staten Island store, which is just a spectacular site, continues to chug along just very nicely. Does that help, Shirley?
Yes. That was helpful. Can you also talk to what you were seeing in terms of net effective rate trends in Q3, starting from, let's say, the end of Q2 and moving into the back half, and then what you're seeing going into October as well?
Yeah. No sharp changes. Again, we continue to be in, as I said to a previous question, we're in that somewhere between down one, down five, in net effective rents. I know that's a pretty big gap, again, it's a story of the supply and no supply markets. The markets, Las Vegas is a great example, that aren't seeing the impact of new supply. We've got very solid asking rent or net effective rent growth. Similar in many of the California markets. While it's slowing relative to what we had seen in the heyday, it's still nice growth. Those markets, and we know where they are, that are seeing supply. They're down to some degree. Worst in our portfolio is Houston. Florida, all of Florida is seeing some pressure from supply.
It's now not only Miami, it's the West Coast of Florida up into Orlando and then even Jacksonville to some degree. The song remains the same, and will be until we get into next year and start to, I think, see a diminishing impact from the supply.
Great. The range is a little bit wider than expected. If you were to do a back of an envelope and weighted by your exposure to those different markets, would your net effective rates be closer to the high end or low end of that range?
Right in the middle, Shirley. Thank you.
Our next question comes from Ki Bin Kim with SunTrust. Please go ahead.
Thanks. Hi out there. Can you go back to that supply topic? You said you're seeing supply peaking next year, just trying to get a sense of what that really means. If there were 2,000 properties being delivered and next year it will be down to 1,900, it probably doesn't mean much. If it goes to 1,000, obviously more meaningful. Just trying to get a better picture.
Yeah. These numbers are a range, Ki Bin, because, again, some of these deliveries that we would anticipate coming in to 2019 will obviously not get completed and will open in January, February 2020. Equal number by probability will not open in 2020 and will move into 2021. In order of magnitude for us, and again, this is just our top 12 markets, which is about 70% of our revenue. You're going from a range in 2019 of expected deliveries in those top 12 markets of somewhere between 300 and 360, going to a range of somewhere between 110 and 150.
Well, that's a pretty big drop-off. When you look at maybe permitting data, is that a similar tone, or is that a little bit different?
Yeah, I think all of it sort of holds together. We've got our own proprietary work that we do internally. We utilize the various entities that are out there doing a similar amount of work. We look at, again, this is in the top 12, I just think you're running out of opportunity that makes sense economically. The rental rates that you would need to have a new development make sense, certainly in the top-tier markets, are well in excess of what today's rental rates are. I think given the experience that people are having who did open in the last 18 to 24 months, you're just not seeing as much activity. It's moving to the second-tier markets. I think there still is opportunity. It's going to largely be away from those markets where our portfolio is heavily concentrated.
Okay, earlier you said there were no changes to customer behavior when they get a rent increase. How about for new customers? Any kind of incremental changes in shopping patterns or how sensitive they are to prices? Maybe that's highlighted by the average time visitors spend on your website, if that's changed at all, things like that?
No, I just think there are more options, right. No change. I just think, again, given the amount of new supply, the customer is finding more options, therefore, we need to be more efficient on getting those customers we need to meet our objectives at the stable stores.
Okay. Thank you.
Thanks.
Next question is from Eric Frankel with Green Street Advisors. Please go ahead.
Thank you. I just want to touch on the third-party management business. Obviously, you added a fair amount of stores this quarter, but I think the net new addition was only about four. Maybe you could just comment on the stores that came off your platform.
Sure, happy to. You'll recall that last quarter, we talked about our HVP III transaction, where we acquired 18 stores and sold 50 stores. As part of that transaction, the new owner of those stores was looking for a transition period for us to continue to manage for a short period of time while they staffed up their operations. Ultimately, their intent is to self-manage those stores. During the quarter, the majority of the stores that came off the platform were stores that we transitioned off of our platform to the new owner. The balance of the stores that left the platform were various little chunks of stores that were sold.
Yeah, the biggest chunk was a sale to another, not a CubeSmart.
Correct.
Got you. Okay. The other question is related to New York again. One of your, I guess you could call it one of your competitors pushed a pretty sizable portfolio in the market there at what seems like a pretty aggressive price. Maybe you could just touch upon whether the valuations in New York have changed at all, as fundamentals maybe have softened a little bit?
Sure. I think I will start by, I'm not sure they're a self-storage competitor, but time will tell. The values in New York, yeah, clearly continue to grind a little bit tighter. It's just a very, very attractive market long-term for storage. We're proud to have identified that eight years ago and be the market leader there. When you're looking at valuations across the country, I think historically, for the last 25 years, you always looked at California and everywhere else. I think that's shifting a bit to some of the East Coast markets being perceived on an equal footing.
Okay. Thanks for the update, and queue.
Thanks.
The next question comes from Todd Stender of Wells Fargo. Please go ahead.
Hi. Thanks. Just to stay with New York, looking at your Brooklyn development project, the opening date slipped into Q4, and there's a lot to get that investment total up to the final estimate. I wonder if you could just speak to this specific project, just because of its size, and maybe you still have a good nut to get that up to that $43 million. Thanks.
The difference between where we are and where we ultimately will be is that development deal was structured similar to many of our deals, where our development partner has the right to put their position to us in the future. We put in our total investment number there, what we ultimately expect, including their put. That will come in one big chunk.
Todd, I was just there again, as I said, I spent the day in New York touring. That site is an extremely challenging site. We are under the elevated train line or next to it. Interestingly enough, I think we've talked about this site, we're about 14 inches from a competitor store that they've just finished and are leasing up right now, and actually are leasing up really nicely. Two basements. It's a complicated construction. The delays are days and weeks, not months. We try to predict as best we can when the stores will open, but that store should open here before the end of the year, and we're super excited about it. It's a really underserved market, and we look forward to being a very good competitor to our peer.
In something like that, is the lease-up period expectation still three leasing seasons, or are you really like it and it's like two? How do you think about that?
Yeah. For a size of that store, I think the underwriting would be more like four. I will say based on where the market is today, we're pretty pleased with being able to get that store delivered. Yeah, it's going to be more like four.
Got it. Okay. Then just switching to disposition guidance, just at the high end of the range, that came way down. Was there a group of assets or a market that you might've been looking to exit? Or just the fact that you tapped the bond market already here in Q4 and you're plenty liquid, so you don't need any proceeds right now. How do you think about that?
I wish there were some great answer to that. We started the year with a $0-$50 million range because we were exploring a couple of opportunities. As we sit here today, we know what the answer is. We sold the one store in Texas here subsequent to quarter end. That's likely to be the disposition activity for the year.
Was that a very small asset? For $4 million, it sounds on the tiny side.
It was $4.1 million worth of asset.
Okay. Thank you.
You're welcome.
Ladies and gentlemen, this concludes our question and answer session. I'd like to return the conference back to Chris Marr for any closing remarks.
All right. Well, thank you everybody for listening in. Trust me, we're going to navigate through this impact of supply just fine. The customer remains very resilient. Our business continues to be extremely solid. It's a challenge here going forward, I think, for a few quarters as we go quarter to quarter. For those of you with a longer term outlook on our industry and our company, I feel extremely confident we're moving in a good direction. As the new supply impact begins to wane, we'll come out the other side stronger for it. Thank you all for listening. Look forward to seeing many of you in sunny Los Angeles, California. We'll look forward to speaking to everybody on our year-end call. Have a great weekend. Thanks.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.