Greetings, and welcome to the National Storage Affiliates fourth quarter 2021 conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, George Hoglund, Vice President of Investor Relations for National Storage Affiliates. Thank you, Mr. Hoglund. You may begin.
We'd like to thank you for joining us today for the fourth quarter 2021 earnings conference call of National Storage Affiliates Trust. On the line with me here today are NSA's CEO, Tamara Fischer, COO, Dave Cramer, and CFO, Brandon Togashi. Following prepared remarks, management will accept questions from registered financial analysts. Please limit your questions to one question and one follow-up, and then return to the queue if you have more questions. In addition to the press release distributed this morning, 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 answers to your questions may contain forward-looking statements that are subject to risks and uncertainties that represent management's estimates as of today, February 22nd, 2022.
The company assumes no obligation to revise or update any forward-looking statement because of the 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 in the Investor Relations section on our website and in our SEC filings. I will now turn the call over to Tammy.
Thanks, George, and thanks everyone for joining our call today. Before we discuss the strength of our industry and NSA's banner year and outlook for 2022, I'd like to first acknowledge and thank our team for their extraordinary dedication and hard work, which allowed us to accomplish all that we did in 2021. As industry fundamentals remain strong, we finished the year on a high note, achieving some of the strongest operating results in the history of the self-storage industry. In the fourth quarter alone, we delivered record results with same-store NOI growth over 20%, acquisition volume over $1 billion, and growth in Core FFO per share of 39%, the highest quarterly earnings growth in our history as a public company.
Those strong results solidified 2021 as a banner year across the board for NSA, including record same-store revenue and NOI growth of 15.1% and 19.8% respectively, the highest reported full-year results in the history of self-storage. Acquisition volume of $2.2 billion, the highest year in our history, and core FFO per share growth of 32%, also the highest in our history. To cap the year off, in December, our portfolio surpassed the 1,000 property milestone, and NSA delivered total shareholder return of 98% in 2021, including raising our dividends by 29% throughout the year. Our results are driven by the powerful combination of our differentiated PRO structure, our concentration in Sun Belt, suburban, and secondary markets, and the remarkable strength and resilience of the self-storage sector.
Building off a record 2021, we begin 2022 with another accretive event, the retirement of Northwest Self Storage, one of our founding PROs. As a reminder, we've discussed and anticipated PRO retirements over time, and we expected at the time of our IPO that as many as half of our six PROs at the time would choose to retire within 10 years or less. Northwest will now be the second of our PRO retirements, and we expect that this internalization will be even smoother as we implement based on lessons learned from our experience with SecurCare. In terms of the transition, all of our Northwest stores have been migrated onto NSA corporate platforms. Almost all of the Northwest team came on board with us and will continue to operate the stores under the Northwest flag.
The internalization of Northwest increases the number of stores managed within our corporate portfolio to 685 stores or 65% of our total 1,050 stores at the end of the year. We estimate this retirement will be approximately $0.02 per share accretive to Core FFO in 2022. I'd like to thank the Northwest team for their partnership over the years. They've been a key contributor to NSA's success. On the external growth front, we topped off the year in the fourth quarter with the investment of over $1 billion in 110 properties, bringing our total acquisition volume for the year to 229 properties valued at $2.2 billion. This significantly surpassed our expectations and exceeded the top end of our guidance range.
Cap rates on fourth quarter deals averaged 5.1%, but generally range from the high 3s% to the high 6% based on level of lease up, location, source of the deal, that is, whether it was marketed, off market, or from our captive pipeline, and whether there was a portfolio premium involved. As we talked about over the course of the year, we were more active in 2021 in the acquisition of non-stabilized properties. About $350 million or 16% of the properties we acquired in 2021 were non-stabilized. We believe this provides significant growth opportunities for 2022 and beyond. The weighted average cap rate on all of our transactions in 2021 was approximately 5.3%.
It's also worth noting that over 60% of the deals we closed in 2021 were off-market or from our captive pipeline, where we tend to buy at cap rates slightly above market. The strength and resilience of our industry continues to draw attention and increased interest in investing in self-storage. It's not surprising that we continue to see significant competition for transactions despite the upward movement in the 10-year treasury and the overall increase in the cost of capital. As a result, we expect a lower volume of acquisitions this year as we remain disciplined in our underwriting and focused on assets that add to the long-term value of our portfolio and are accretive to our shareholders.
Year to date, we've closed on properties valued at about $20 million, and we have additional deals valued at between $200 million and $300 million under contract or letter of intent. Complementing external growth this year, we have significant opportunity to drive growth and scale efficiencies from the integration of the record number of assets that we acquired in 2021, as well as through the integration of the Northwest stores onto NSA's management platform. Our exceptional fourth quarter results, elevated acquisition volume, and continued tailwinds in the sector give us confidence for 2022. Our guidance once again implies double-digit same-store NOI growth and 20% growth in core FFO per share, which is an impressive encore to 2021. Brandon will provide further details on our guidance in his comments.
I'll now turn the call over to Dave to provide color on what we're seeing on the ground and with new supply. Dave?
Thanks, Tammy. On our third quarter earnings call, we said that overall storage fundamentals remain strong. We also noted that we didn't see any near-term signs of changes to the current favorable environment. Well, that's certainly how the fourth quarter played out, and that statement still holds true today. We did experience some normal seasonality at the end of the year, but occupancy levels remained high. As a result, our street rates averaged 25% higher this fourth quarter compared to a year earlier. We're also able to hold discounting concessions well below historical averages at 2% of revenue. Continue to be assertive on rent increases to in-place tenants, with the increases averaging in the low to mid-teens. Our rent roll-up in the fourth quarter was a positive 3.5%.
This is down from the 7% we realized in the third quarter, but still well above normal at a time when we're usually experiencing rent roll downs. The rent roll-up trend remains positive in 2022. Our contract rates improved every month in 2021, and we're up about 12% for the fourth quarter. Keep in mind that we started the year essentially flat year over year, so we are pleased with the momentum of our contract rents. We ended the fourth quarter with occupancy of 94.8%. This is up 310 basis points over the prior year. Occupancy declined just 190 basis points from June and 210 basis points from the peak occupancy at the end of July, both of which were below historical norms but in line with our expectations.
Continue the return to our normal seasonal trends. We will be entering the spring leasing season well-positioned on both occupancy and rate. Having this momentum in these areas helps us with our ultimate goal, which is revenue growth. One thing I'd like to put into perspective is that coming off a record 2021, some moderation in growth is expected. Nonetheless, our same-store guidance implies revenue and NOI growth that are double the sector's long-term historical averages. Not too shabby. Turning to new supply, we're starting to see a handful of projects get started in most of the top 20 NSAs. However, we continue to think the impacts of new supply will likely remain muted through 2022 and into 2023. Currently, the unprecedented consumer demand has reduced the competitive impact of the few new facilities that are coming online.
There's certainly no shortage of developers who want to build a self-storage, and we do expect development activity to pick up, but construction and land costs remain high, and the entitle and permitting process still remain very slow and cumbersome. Overall, we expect to continue to face competition from new supply in Portland, Phoenix, certain submarkets in Dallas, Atlanta, and West Florida, but the strong fundamentals in these markets are offsetting much of the impact. We have not seen a significant change in new competitive landscape within our portfolio. The percentage of stores having a new competitor in a 3 mi or 5 mi radius are in line with last quarter and flat to slightly down from year-end 2020. I will now turn the call over to Brandon to discuss financial results and balance sheet activity.
Thank you, Dave. This morning, we reported Core FFO per share of $0.64 for the fourth quarter of 2021, which represents an increase of 39% over the prior year period and a strong acceleration from the $0.57 we reported in Q3. This sequential increase was due to a combination of factors, including the fact that our Q3 acquisition volume was weighted toward the end of the quarter, we had some dilution in Q3 from our July equity raise, and we had record acquisition volume during the fourth quarter. Same-store NOI increased by 21.7% in the fourth quarter over prior year period, driven by a 17.4% revenue increase, combined with a 6.5% increase in property operating expenses. Same-store occupancy averaged 95.5% during the quarter, an increase of 360 basis points compared to Q4 2020.
For the full year, Core FFO per share was $2.26, a 32% increase over 2020, driven by robust same-store growth and healthy acquisition volume in the back half of 2020 and throughout 2021. Full year same-store NOI grew 19.8%, a record in the history of the self-storage industry, driven by 15.1% revenue growth and 4% growth in OpEx. Same-store NOI growth was near the high end of our guidance range, while Core FFO per share results beat the top end, largely due to outsized acquisition volume and better than expected results from our non-same-store pool. Regarding OpEx, same-store growth ticked up in the fourth quarter to 6.5% due to the challenging year-over-year comp and upward pressure on personnel expenses. Specifically, personnel costs increased 8%, with R&M and utilities up by a similar percentage.
This expense growth was partially offset by marketing costs that were down 11.8% and property taxes that grew just 1.5%. For the full year, we were pleased that on a combined basis, our two largest OpEx line items, personnel and property tax, only grew 3.2% year over year. Now, moving on to guidance. We expect the elevated acquisition volume in 2021, which was largely back-half weighted, will have a meaningful impact on core FFO per share growth in 2022. Add in the momentum that we're currently experiencing with operating fundamentals, and we expect a very strong 2022, with higher growth levels in the first half of the year as comps become more challenging in the second half.
Taking all of this into consideration, we introduce full year 2022 guidance as follows: Core FFO per share of $2.68-$2.74, or 20% growth over prior year at the midpoint. A same-store pool of 631 properties with revenue growth of 8%-9.5%, OpEx growth of 5.25%-6.5%, and NOI growth of 9%-11%. We expect acquisitions of $400 million-$600 million during the year, and we also expect the retirement of Northwest to be accreted by $0.02 per share in 2022. Regarding Northwest, I'll offer a reminder on the mechanics of a PRO retirement.
The SP units associated with the Northwest PRO were converted to OP units on January 1st at a conversion ratio of 1.88%, and therefore distributions to SP units will be reduced accordingly. NSA will no longer pay a management fee to a PRO for the Northwest branded properties, so there will be a reduction in supervisory and administrative expenses within G&A, which will be partially offset by an increase in other G&A, as the properties will now be managed by NSA's corporate property management platform. All of these items are factored into our additional guidance assumptions that are detailed in the earnings release. Turning to the balance sheet. We were active in the fourth quarter on the capital front in order to fund our acquisition volume.
On the equity side, we issued $138 million of common equity through our ATM program and $120 million of OP equity for acquisitions. On the debt side, we upsized our revolver by $150 million to give us $650 million of capacity, and we priced $450 million of senior unsecured private placement notes, which we discussed on our last call. $325 million of those notes were funded in December, and the remaining $125 million was funded at the end of January, which we used to pay down amounts outstanding on our revolver. With that in mind, today our revolver balance stands at about $370 million.
At year-end, our reported leverage was 6.1x net debt to EBITDA in the middle of our targeted range of 5.5x-6.5x . However, this number is skewed higher by the fact that our significant Q4 acquisition volume was weighted toward the end of the quarter. Adjusting for a full period effect of the EBITDA from those acquisitions, our leverage would fall to about 5.7x or toward the low end of our targeted range. Taking all of that into account, we're very comfortable with how our balance sheet is positioned, with no maturities through 2022 and $280 million of remaining availability on the revolver. We're committed to maintaining a conservative leverage profile and healthy 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?
Thank you. At this time, we'll be conducting our question-and-answer session. Please note. Please ask only one question per each time that you queue. You may queue up again for any follow-up questions. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press the star key followed by the number two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, to ask a question, please press star one and please ask only one question per each time that you queue. Thank you. Our first question comes from Elvis Rodriguez with Bank of America Securities. Please state your question.
Good morning out there. Congrats on the quarter and year. Just a quick question on the internalization of Northwest Self Storage. Anything you can share on the dollar amount, the yield that you're bringing in the portfolio in today relative to when you first created the relationship?
Hey, Elvis, this is Brandon. Thanks for the question. A couple of things just to clarify for you and others because we've only had the one other PRO retirement prior to Northwest. Back in 2020, SecurCare. Yeah, of course, we own all of the assets already. This transaction is purely related to a couple things. One, the PRO has subordinated performance or SP equity that gets converted into OP equity. That's what I mentioned in my remarks that happened on January 1. The specific unit counts are in the supplemental. They're a little, it's fine print, but it's the second page of Supplemental Schedule Four, where we talk about 2.1 million OP units converting into 3.9 million OP units. 2.1 million SP units converting into 3.9 million OP units. That's one thing.
The SP distributions that were going to the Northwest PRO will no longer happen, and so that's a benefit to the, you know, the FFO number. Our FFO denominator obviously goes up by that OP unit count. The second critical thing is that management fee that we pay to a PRO, that's a percentage of revenue number, that goes away. I mentioned that in my opening remarks. We will have some incremental G&A that we absorb. Tammy mentioned we hired the vast majority of those Northwest employees, so that comes into our normal corporate G&A load. There is a net benefit there, and that's part of the calculus to get to that $0.02 of accretion. That's. I guess I'll offer that up as just a breakdown of the key elements of the PRO retirement. Well, let me see if you have follow-up, if there's anything I didn't hit.
No, that's very helpful. Thank you. Perhaps moving on to the performance year-to-date on the portfolio, can you share an update of where, you know, the portfolio is today, street rates versus in place as well as, you know, any occupancy gains that you can share?
Elvis, thanks. This is Dave Good question. You know, we're very pleased with where the portfolio started out in 2020, obviously finishing as strong as we did in 2021. We've only lost about 20-30 basis points of occupancy through January and into February, so we're pleased with that. We've been able to maintain street rate levels. We're still in a positive rent roll-up situation as far as move-out and move-in tenants. We still have, you know, a spread of about a little over, probably pretty close to about 2%, street rate over contract rent at this point in time. Everything fundamentally is great as we look to the spring season. Rental velocities remain good and, you know, move-out velocities are still a bit, a little bit muted for us. All things positive.
Thank you.
Thank you. Just to clarify, it's one question and one follow-up per each time in queue. Thank you. Our next question comes from Neil Malkin with Capital One. Please state your question.
Hey, good morning, everyone. Great quarter, great year. Congrats on everything. You know, first question for me, you know, Dave, maybe you can elaborate. You know, given the large amount of acquisitions you guys made in 2021 and, you know, the relative, you know, significant portion of lease-up opportunity and not to mention just the overall benefit from being on the NSA sort of corporate or revenue management platform, can you maybe give us an idea or order of magnitude on what that non-same portfolio NOI would kinda do or should grow, you know, relative to the same store this year?
Neil, this is Brandon. We might need just a little more color on the question. You're asking on the non-same store pool, how to think about the performance of that relative to the same store subset?
Yeah. I mean, you acquired a lot, right? I'm just trying to, you know, kind of gauge, you know, what kind of upside synergy, you know, from being on your platform, you know, from third parties, you know, all that, you know, kinda, you know, how you think about that in terms of, again, just accretion from not only the acquisitions, you know, from relative to your cost of capital, but just being in the NSA platform in terms of revenue and expense management, and then also the accretion from lease-up. Just trying to see, you know, maybe how you think that should perform, you know, relative, you know, to your same store. Like, is it 500 basis points, you know, of alpha just, again, given the lease-up?
You know, any way to think about that? Because obviously those two portfolios aren't gonna grow the same rate. Just any kind of color or view would be great.
Yeah. I think approach it in a couple manners. Certainly we acquired a significant amount of properties, and so we had a bucket of those properties that were certainly more mature. As we look at those properties and look at how we're able to perform, you know, as you think about, you know, really growing rates and growing around, you know, some of the occupancy metrics where maybe they were very, you know, strong physically occupied, but there was an economic spread of 15-20 points on physical and economic occupancy.
That mature portfolio, certainly we, you know, the benefit we'll have bringing them on our portfolios will tighten up that economic occupancy, you know, and really close that 15-20-points spread very quickly as we work through our revenue management system, as we work through our, you know, contract rates and our in-place rent changes. You know, you look at that, you know, the opportunity within that portfolio versus our stable portfolio, you certainly have, you know, that occupancy spread is where I would probably tell you is where most of that gain's gonna come as we close up that economic to physical occupancy. We certainly expect that portfolio to outperform our stable portfolio as you think about how we season that up.
I'm not sure I'm prepared to give you probably a hard number on what that spread of points is gonna be, but we certainly do expect it to outperform the stable portfolio. We had another bucket that Tammy mentioned in her opening comments about this non-seasoned group. You know, that non-seasoned group probably has a physical occupancy of around 70%, and maybe an economic occupancy of another 15-20 points below that. Those will take a little bit longer to season. You know, you may look at our window of maybe 18 to 24 months to season those properties to maybe a little more stable look. Certainly, as you season those properties out and stabilize the occupancy and stabilize the revenue and drive some of the rental rates forward, those will certainly perform at a much higher level than what our stable portfolio will perform at.
Yeah. That's great. Thank you for that. The other one, you know, for me is just in terms of acquisitions, I mean, I'm sure people are gonna ask a lot of, you know, different ways, but, you know, I think, Tammy, you said you have $200 million-$300 million, you know, under contract or LOI. I understand that competition continues to increase, but, you know, does that $400 million-$600 million seem a little, you know, I guess, conservative? I mean, I feel like last time we talked, you know, it sounded like if 2021 didn't exist, 2022 theoretically would be like a record year, as well, just given the amount of transaction activity.
You know, can you just maybe kind of speak on you know what you're seeing and you know how you expect the year to shape up just given you know all the things I mentioned plus the fact that you know you're still a very attractive cost of capital. Thanks.
Sure. Sure, Neil. Thanks. So we're still seeing a significant amount of activity in the funnel, so a lot of transactions coming to market. We continue to look at every deal that kind of crosses our desk. The issue is that cap rates remain compressed. While the cost of capital is good, it's not as good as it was. We don't like what we're seeing as much as what we were looking at last year. When you think about that and think about the fact that we've always said we'll be very disciplined in our underwriting, we're buying for the long term, we're improving the quality of our portfolio and very focused on acquiring assets that are accretive to our shareholders.
It's just causing us to pause a little bit now. We acquired $2 billion of assets last year, and that's gonna take some time and effort and energy to integrate into our portfolio. We have a lot of upside in those assets that we acquired in the fourth quarter. I think we're comfortable with the guidance that we're providing now. You know, something might change. We're seeing a handful of small to mid-sized portfolios that might prove interesting. At least for now, I think our view is we're cautiously optimistic about 2022. Let me put it that way.
Okay, appreciate it. Thank you, guys. Great quarter.
Thank you.
Thank you. Our next question comes from Todd Thomas with KeyBanc Capital Markets. Please state your question.
Hi. Thanks. Just first question, I guess following up on that last line of questioning. Dave, I'm curious, you know, how much of the 2021 investment volumes, almost $2.2 billion, how much of that was non-stabilized or non-seasoned where there is outsized growth? And how much yield upside should we assume, 150 basis points during the year, maybe 250 basis points? What's the right way to think about that throughout the year?
Hey, Todd, this is Tammy. Thanks for the question. Good question. The way we're looking at that $2.2 billion, about $350 million of it is what we consider non-stabilized in some phase of stabilization. The cap rate on those assets was in the low to mid-3% range. The stabilized cap rate, so call it, you know, two to three years out, would be about a 6%.
Okay, great. That's helpful. Regarding the guidance, can you talk about what's embedded in the guidance for occupancy throughout the year, whether we should expect NSA to maintain a positive year-over-year occupancy spread throughout the year? Are you anticipating an embedding in the guidance, occupancy gains to flatten out or turn negative during the year?
Yeah, it's a good question. Certainly we're starting at an elevated level. You know, we certainly think we're returning to some normal seasonal trends. We saw it at the back half of 2021. Really the back quarter of 2021, we saw some you know, seasonal trends that you know, saw occupancy pull off just a little bit. We're starting at a higher level of 2022. We certainly expect to see the seasonality in the summer months, albeit we're a little fuller now, so we may not see the you know, significant change in occupancy as you head into June and July, but we certainly are gonna see improvement in June and July, and we expect it to trail off in the back half of the year, you know, really starting around August, around more seasonal normal historical trends.
Normally that's usually around 300-350 basis points from the peak to the end of the year. We've modeled that maybe just a little more conservative this year because we are starting at a higher level, and we may not have as many seasonal tenants. You know, we may be thinking, you know, if normal history was 300-350, we're probably thinking 250-300 is what we're thinking about by the end of the year as far as an occupancy landing point.
Great. Can you share where current occupancy is today and what that spread looks like year over year?
Todd, end of the year, we were 94.8%, and Dave, I think, mentioned it earlier. You know, we're about 30 basis points off, which is kind of normal from that December to mid-February. Call it 94.5%.
Yeah.
That's still, you know, a healthy, you know.
200 basis points, yeah.
Above prior year.
Okay, great. Thank you.
Yep.
Our next question comes from Smedes Rose with Citi. Please state your question.
Hi. Thank you. Tammy, I just wanted to ask you, when you say that you don't really like what you're seeing in the market now on the acquisition side, is it a function of quality? Or, you know, you said cap rates remain compressed, and I'm just wondering, are you seeing it's the same amount of sort of product on the market? It seemed like there was kind of this rush to sell last year, and has that kind of died down a little bit?
I would say that the volume is still high, the volume of potential transactions. I think what gives us pause is a combination of quality and cap rate. Where you were paying compressed cap rates on markets where we're building scale and wanna operate long term in 2021, the markets are maybe not quite as desirable. The assets frankly may be not quite as desirable in terms of improving the long-term quality of our portfolio.
Okay. I wanted to ask you, when the PROs retire, now that you've had two, I mean, is it always the case that their retirement is accretive to NSA or are there times where it may not be, where it might be neutral or even dilutive?
It will always be modestly accretive. Obviously, the bigger the PRO, the more accretion to NSA. If you think about it, there's the penalty on the conversion from the SP units to the OP units and which is one component of the accretions. The second component is management savings, taking the assets off the PRO management fee and the PRO management platform onto NSA's corporate platforms. In that regard, we'll, you know, save some money on the management fee, but we also expect to get some benefits from the full use of the corporate platforms.
Okay. Thank you. Appreciate it.
Sure.
Our next question comes from Kevin Stein with Stifel. Please state your question.
Good morning, everyone. I was just wondering if you've seen any changes in the top of your funnel in terms of demand, maybe searches or, any color there would be helpful.
Yeah, great question. You know, the overall activity at the top of the funnel still remains very robust, and we haven't seen a significant change as far as the amount of activity we're able to drive. What you're starting to see is a return to normal pricing around cost per acquisition. If you think of 2021, particularly the spring of 2021, we had very favorable marketing costs, very favorable demands, which created, you know, cheaper rentals if you wanna think about it that way from a marketing expense. The teams have done a good job returning to very disciplined practices. But the marketing costs are returning to a more normal cost and a more normal pace, but the top of the funnel remains very robust.
Okay, thanks.
Mm-hmm.
Thank you. Our next question comes from Samir Khanal with Evercore. Please state your question.
Hey, Brandon. I guess just on guidance, can you maybe break down the OpEx line items? Just trying to see where personnel, property taxes, what your views are on kind of the various line items for this year.
Yeah, sure, Samir. You know, personnel costs, we're estimating kind of right in line with that total OpEx guide of 5.25%-6.5%. Property taxes baked into the range is a number of 5%-7% growth. Then outside of that, I would highlight marketing and insurance as two line items that would be above the total OpEx range, call it, you know, double digits, 10%-15% growth. R&M is one where it would be below the 5.25%-6.5% range.
Got it. I guess as a follow-up, just sticking to expenses, your G&A is, I think when you do the math, you're up about 15% year-over-year. You know, I know costs are up across the board, but wondering what else is driving that. I know you. Maybe the PRO retirement acquisitions or is there something else that's driving that number?
Yeah. I mean, the PRO retirement will actually be a little bit of a benefit to my earlier remarks. You are right, Samir. I mean, the G&A growth this past year of 2021 over 2020 was 17%. If you look at the guidance that we gave at the midpoint, it's implied to be a 15% growth. You're also talking about top line revenue in 2021 grew 36% this past year, and our projection for 2022 is a top line revenue growth of 32%. You know, we're certainly still taking advantage of the scale efficiencies, growing top line at a faster pace than our G&A load. One of the metrics that we look at internally is G&A as a percentage of revenue. That number, if you look at 2020, was 10%.
It's sub-9% in 2021, and I expect that'll be sub-8% in 2022. Those are all good indicators for us and results in EBITDA margin expansion.
Got it. Thanks so much.
Yep.
Thank you. Our next question comes from Ki Bin Kim with Truist. Please state your question.
Good afternoon, everyone. So I'm not sure if I missed this, but can you talk about the street rate trends that you are seeing? I think you said 12% up in 4Q. What does that look like mid-February, and what is implicit in your guidance? How you're thinking about that as that progresses through the year.
Yeah, certainly, Ki Bin. I'll start off and Brandon can finish here. We're certainly seeing, you know, year-over-year, the percentages of street rate increases are still in the low- 20%. So things are very positive starting out the year as far as street rates year-over-year. We're starting to see street rates. You know, you're not seeing the rapid rise that we saw certainly for parts of 2021, but we're still able to improve, you know, in most of our markets, and so we're happy with that. You know, and being in a positive rent roll-up, as we talked about earlier, we're still positive in our rent roll-up, which allows us to still, you know, strong street rates, strong occupancy. We're still being very assertive in the IPRC. Thus far, our street rates are still doing very well.
Ki Bin, the 12% you heard was a contract rate for the fourth quarter year-over-year.
Okay. You know, the second part of that question was, what do you expect for rest of the year? Is it still that 20% range?
No, it can't. It won't hold at that level. I mean, certainly we, you know, had tremendous growth in 2021. As you look at the back half of the year comps, that spread of growth year-over-year will not be in the 20%. As we bring it down towards the end of the year, we certainly see that coming into probably more normal historical ranges as you think of the back half of the year as far as street rate growth.
Okay. In terms of the PRO internalization this quarter, was that PRO fully on the NSA platform, or were they operating kind under their own umbrella, or was it something in between? You know, if it's the case that it comes onto the NSA platform, are there additional synergies that you think you might be able to extract from that?
Yeah, good question. They were probably more on their own platforms than they were on NSA platforms, you know? What I mean by that is they ran their own website. They had their own web team. They used the NSA's revenue management platform, but they had their own decision-making process, you know, within their company around that piece of it. We do think there's efficiencies to be had. We do think there's upside there. We've already transformed them to all the NSA platforms, so they're on, you know, currently on the CMS, and they're currently on their full revenue management platform and all the platforms across. We do think there's upside there. The team did a wonderful job. They were very good at what they do. It's a big challenge for us, but we do think there's upside here.
If I could squeeze in a third one. You mentioned that you're going to keep the same flag that currently exists. You know, but if I think about, you know, what storage companies have done over the past decade, it's been a drive to increase scale, not just in a physical, you know, means, but from a digital perspective, getting the benefit of scale on Google Search and whatnot. Why keep it under its own flag? Or is that just-
Well, Northwest
...an interim decision?
No, it's not an interim decision. Yeah. It's a good question, Ki Bin. The Northwest brand is very dominant in those markets. Our ability to bring it onto our platform and put all the tools in place will certainly make it be better. The Northwest brand itself has been there for a long time, has been well represented, well positioned. They've done a good job building that brand out. As we evaluate the cost to rebrand every store and the disruption when you rebrand every store, you know, we just don't think it's worth it. We think we can be very good running the Northwest brand up there. You know, the digital benefits with the platforms we have and the tools we have, we can implement everything we do with the Northwest brand.
There's no hiccup there at all. It actually gets better. As we think about it, we just think it's the right decision to keep the brand.
I think the other thing I would add, Ki Bin , is and we've talked about this over the years, is that this is a very local trade area business. So, you know, what 80%-90% of our customers come from within a 3 mi to 5 mi trade area. Maybe now it's expanding a little bit up to a 5 mi trade area. But the benefit that we would lose by the rebranding. We do not believe that it could be offset by the. I don't know if I'm saying this the right way. The benefit of the local presence would be lost in a rebranding effort, and we don't believe it would be worth the cost of rebranding. We just wouldn't pick up those benefits, digital marketing.
Got it. Thank you.
Mm-hmm.
Our next question comes from Ronald Kamdem with Morgan Stanley. Please state your question.
Hey, congrats on a great quarter. Just two quick ones from me. One, just on the rent increases, both in terms of the frequency and the magnitude, you know, as you're doing sort of your guidance for 2022, is there any sort of thoughts or changes maybe this year versus last year? How should we think about that? What's the strategy for this year? Thanks.
Yeah, great question. Certainly, we've been able to be more assertive, and then we really have been through 2021, really the back half of 2021. The strategy going into 2022 is very much the same. We're not coming off of our assumptions. We're leaving most, all of the frequencies in place. If you noticed, as we talked earlier, you know, our increases are actually in the low- to mid-teens% now, where a year ago they might have been low- single or high- single- digits to low- teens. We've certainly, you know, been able to be more assertive, and we're gonna keep that program running at this point. We're just not seeing significant pushback or changes in the environment. As we've modeled occupancy through the year, we just believe that we've got stuff dialed in and it won't be a significant change.
Got it. That's helpful. Just another one on the PRO. Obviously, second one internalized. I remember in previous calls you talked about conversations with new PROs coming on. Maybe can you just remind us how those conversations are going, and does the math change at all, for a PRO coming in today versus, I don't know, 12 to 24 months ago?
Sure. Good question. We continue to have conversations with high quality private operators who might be a good fit for the NSA differentiated structure. As we've talked about before, it's a long and difficult process. It's a big decision for an operator to join NSA. It's a very big decision for us to decide to affiliate with an operator. So it just takes time, and it's unpredictable in terms of the timing. But in terms of the math, no real change to the structure. Our structure has remained consistent since, basically, since formation in 2013. We're not contemplating any changes to the structure for new or existing PROs right now.
Great. Thank you.
Thank you.
Thank you. Just a reminder to ask a question, press star one on your telephone keypad. To remove yourself from the queue, press star two on your telephone keypad. Our next question comes from Wes Golladay with Baird. Please state your question.
Hi, everyone. I just have a quick question on the balance sheet. It looks like the line balance was up a little to finish the year. I think you mentioned you cleared the line a little bit, but what is the long-term plans for the year on the line of credit?
Yeah, Wes, thanks for the question. This is Brandon. You're right. We did, you know, bring that down post year-end with the last tranche that we had yet to fund on the private placement. It's, you know, closer to just over $350 million. We also upped the capacity on our line at the end of December, so we have a total capacity of $650 million. We still got a lot of room in terms of capacity. You know, nothing urgent, not feeling under the gun to necessarily address anything. I mentioned no 2022 maturities, and you heard Tammy's comments about the deal flow. You know, we're comfortable with where we're at. We always strive to have optionality and flexibility.
You know, we're very pleased with the private placement transaction we had late last year. That's certainly an option on the debt side. We also did some things with the bank group last year and could very well do so again this year. Anyway, a lot of opportunities, a lot of options, still plenty of capacity on our ATM as well.
Okay. One quick one. You mentioned the normalized debt to EBITDA due to the timing of the fourth quarter acquisitions. Could you provide us with the EBITDA that was not captured in 4Q in the run rate?
Yeah, the math, Wes, to get, you know, from that 6.1% to the 5.7%, it's really adding about $35 million of EBITDA to the annualized number. I mean, that's the number that, you know, gets you to that specific math. Then just another point of color, you know, a little over $1.1 billion of deals that we did in Q4, about half of that was in the month of December. The majority of that December volume was really in the last two weeks of December, from December 15th through the end of the year. If it helps with the modeling.
Yeah, thank you very much for that.
Yep.
Our next question comes from Neil Malkin with Capital One. Please go ahead.
Thanks, guys, for letting me take another crack at it. Can you talk about just given, you know, historically kinda low turnover and, you know, you're getting aggressive or you continue to be aggressive on the IPRC, what percentage of the portfolio is eligible or receiving, you know, renewal notices versus like, you know, 2019 or pre-COVID? How much more of the portfolio, you know, is eligible and getting that bump? Obviously that's pretty much your largest driver of growth every year. Can you maybe just quantify that?
I think, you know, as I look at it, I would say probably an average of 2%-3% more of our tenants per month are eligible and receiving rate increases versus what maybe 2019 would look like. That's a pretty significant number given the tenant base that we have. And, you know, again, with the amount of rate increase we're doing and, you know, the way we've removed some caps and really just increased, you know, not only frequency but the amount, it's adding up to a pretty good number for us. I would say 2%-3% more on average is what's coming across.
Yeah, Neil, also pre-COVID, you know, we were open about the annual number being maybe 75% of the customer base. If you do the math on what Dave just gave you, that's you're talking about, you know, hitting each of the customers or hitting 100% of the base-
Pretty close, yeah.
Over the course of a year.
Obviously, you're turning customers over every month, and new customers are being replaced, so that factors into that as well, so.
Right.
Great. Thanks. The other one is in terms of some markets had the eviction moratoriums, I believe, expire in some form or another, end of last year, January 1st of this year, you know, some coastal markets. Have you seen any increase in demand in markets where you've had either longer or strict protections, moratoriums end? Are you seeing an influx of demand from dislocation or nothing really discernible?
Anecdotally, we've certainly heard the stories, and we've seen folks who have gone through the process of being, you know, evicted and had to relocate. Nothing I can really put a hard number to, but yes, as those moratoriums burned off, it has created some more transition in some of our markets, and those folks have used storage, and, you know, are in a very tough rental market. You know, as you know, trying hard, you know, transitioning this time of year to find a new rental home has been tough. We're hearing stories about it. I can't give you a real number on what it's doing as far as overall impact.
All right, thanks again.
Mm-hmm.
Thank you. Our next question comes from Oliver Rodriguez with Bank of America Securities. Please go ahead.
Just a quick follow-up on supply. I think you mentioned that you're starting to see a little bit of uptick in supply but won't really impact you until 2023. Can you talk about that in more depth? I know your secondary markets traditionally see less supply, so anything that you see is changing given how well your portfolio's performed, any new developers entering your markets, any information you can share would be helpful. Thank you.
Yeah, great question. You know, as we commented earlier, we just have not seen in most of our markets a lot of new supply coming. We mentioned the top 20 NSAs is where we felt probably the most pressure of new developers coming. If you think about a lot of the older developers were bought out of their properties probably in the last 12 to 18 months. Some of those are retooling, and they're building in some of these top 20 markets. Overall, we just haven't seen a significant change due to the things we mentioned. You know, timing, supply chain problems, ability to find contractors, ability to get them zoned. We think, you know, we listen to outsiders talk a little bit about what we've been studying.
It's just the process still remains very slow, very cumbersome, and we just haven't seen a real ramp up in development activity yet.
Great. Just to follow up on the internalization of the PRO, I think you mentioned opportunities for synergy, but as you bring the portfolio onto your platform, you know, call it's been a couple, maybe six to eight weeks now. Can you mention sort of performance of the portfolio on your platform versus when it was externally managed by the PRO?
Yeah, great question. We really can't comment at this point in time. We'll, you know, as we get in further into the year and get into obviously calls later after future quarters, we'll probably be able to speak a little bit more about it, but there's just nothing to report at this time.
Great. Thank you.
Mm-hmm.
Thank you. Ladies and gentlemen, that's all the questions we have for today. I'll now turn the call back to Tamara Fischer for closing remarks. Thank you.
Thank you. I'll close the call today by again thanking our team for their commitment and efforts through an incredibly busy quarter and year of 2021. We're very optimistic about our prospects for 2022 as we continue to deliver outstanding results by executing on our differentiated strategy, including our PRO structure, our geographic diversity, and our presence in Sunbelt and secondary markets. Thanks again for joining our call and for your interest and support of NSA. We've said it before, and I'm sure we'll say it again, it's a great time to be in self-storage. Thank you.
Thank you. This concludes today's conference. All parties, you may disconnect. Have a great day.