Greetings, and welcome to the National Storage Affiliates First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Martie Dowling, Director of Investor Relations for National Storage Affiliates.
Thank you. Mrs. Dowling, you may begin.
Hello, everyone. We would like to thank you for joining us today for the Q1 2019 earnings conference call of National Storage Affiliates Trust. In addition to the press release distributed yesterday, we have filed an 8 ks with the SEC containing our supplemental package with additional details 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. The company cautions that actual results may differ materially from those projected in any forward looking statements.
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. Today's conference call is hosted by National Storage Affiliates' Chairman and Chief Executive Officer, Arlen Nordhagen President and Chief Financial Officer, Tamara Fischer Chief Operating Officer, Steve Treadwell and Vice President of Investor Relations, George Hoglund. Following prepared remarks, management will accept questions from registered financial analysts. I will now turn the call over to Arlen.
Thanks, Marty, and good morning, everyone. Before I discuss our quarterly results, I'd first like to point out that we recently celebrated the 4 year anniversary of our IPO. And as such, I think it would be helpful context to highlight some of our accomplishments over that time. Since our IPO, we've acquired nearly $4,000,000,000 of properties, grown same store NOI by a quarterly average of 8.3% year over year and grown core FFO per share by a quarterly average of almost 15% year over year. We've also added 4 new PROs plus our internal management PRO and implemented an aggressive joint venture investment strategy.
Lastly, and perhaps most importantly for our investors, since IPO, we've delivered total shareholder returns of over 160%, which leads to the self storage sector. We're very proud of our accomplishments to date, and we look forward to continuing this success in 2019 and beyond. Now turning to the current environment. We see that the broader economy is providing a favorable backdrop for self storage. The economy grew at 3.2% in the 1st quarter, the highest rate of 1st quarter growth in 4 years, And demand for self storage units remained solid.
Regarding new supply, we're encouraged by our recent market data that suggests that the pipeline of projects under construction has peaked, and we continue to see projects in the planning phases being canceled. We also continue to believe that 2018 represented the peak in new supply deliveries in our markets, although 2019 will be another significant year. Against this backdrop, we're pleased to report another excellent quarter. Once again, our strong first quarter results of 4.8% same store revenue growth and 6.7% same store NOI growth benefited from our differentiated Pro platform as we continued to hone our operational strategies while executing on our external growth strategy. We were able to deliver these results in the face of continued pressure from new supply and stiff competition on the acquisition front as there remains a significant amount of capital chasing desirable self storage assets.
Our strong start to the year positions us well to deliver outsized growth in core FFO per share in 2019. In addition to healthy operations during the quarter, acquisition volume was significant. We brought on 2 new PROs, Southern and Move In, and acquired a total of 32 properties for approximately $195,000,000 Average cap rates remained in the lowtomid6 percent range with market pricing relatively unchanged from recent quarters. To date, we haven't seen much improvement in cap rates and haven't spotted many distressed sales, except for a few non stabilized properties in a couple of severely overbuilt markets. Competition for acquisitions remains high, but we continue to benefit from our PRO structure through their established local market relationships and knowledge.
Our first quarter core FFO per share of $0.37 grew by 15.6 percent over the prior year period, fueled by a combination of strong same store NOI growth, robust acquisition volume and growing fees from our JV platform. These results are a reflection of the outstanding execution of our business plan by the entire NSA team. From a supply perspective, we believe new supply in our markets will remain at elevated levels in 2019, and we expect the impact on fundamentals to increase over the course of the year. That said, given our higher level of secondary market exposure relative to our peers, we expect our portfolio will experience less pressure from new supply given that excess supply this cycle has been disproportionately weighted to the primary markets. We estimate 35% of our stores are affected by new supply in the Five Mile trade area.
But as I've mentioned before, we have and will continue to benefit from the significant geographic diversity of our portfolio, with the majority of our markets seeing a balanced or even favorable supplydemand picture. Although new supply is weighing on street rates in several markets and drives the need for increased marketing efforts and discounting, we remain confident in our ability to continue to push mid to high single digit rent increases to in place customers,
which is a key
driver of our revenue growth. We're further encouraged by our 40 basis point average occupancy gain in the Q1, following a 20 basis point decline in occupancy for the full year 2018. We believe the strength of our Pro platform and the fact that we're in the early stages of the life cycle of honing our revenue management and Internet marketing platforms will provide additional operational upside going forward. We complement our internal growth with external levers inherent in our differentiated platform, including a deep pipeline of acquisitions, which we source through our PROs and their network of industry relationships as well as an active joint venture strategy. Having 10 PROs essentially means having 10 acquisition teams in the field in addition to our corporate acquisition team.
As such, with approximately $210,000,000 in acquisitions completed year to date, we're well on our way to meeting our full year 2019 acquisition guidance of $300,000,000 to $500,000,000 In addition, the captive acquisition pipeline managed by our PROs, but not yet owned by NSA, is currently over 100 properties valued at approximately $1,000,000,000 This powerful external growth engine, combined with our sector leading same store NOI growth, gives us confidence that we will again achieve core FFO per share growth that leads our sector. With that, I'll now turn the call over to Tammy.
Thanks, Arlen. As mentioned on our last call, our 2019 same store pool increased by 63 stores, and our 4 39 property same store pool represents nearly 85% of our wholly owned stores. For the Q1, same store NOI increased by 6.7%, driven by growth in same store revenues of 4.8% and relatively flat same store property operating expenses. We continued to push rate increases on existing tenants, which drove a 4% increase in average annualized rent per square foot, and we were pleased with the 40 basis point increase in our average occupancy during the quarter. Our revenue growth was better than expected this quarter, partially due to a healthy contribution from the 63 stores added to the same store pool this year.
In addition, we're seeing solid execution by our pros who continue to benefit from our evolving revenue management and Internet marketing platform. Same store expense growth for the quarter was relatively flat at just under 1%, benefiting from operating efficiencies, moderate increases in property taxes of just under 4% and a milder winter in many of our markets. While we're pleased with this result, we do expect expense growth to be at more normal level throughout the remainder of the year. Notably, property taxes are very much a wildcard, and we won't have a good sense of the full year impact until the back half of the year. Turning to geographic performance.
Our best performing MSAs include Riverside, Atlanta, Indianapolis, Los Angeles and Las Vegas, where demand growth
has been stronger than supply growth.
Markets that underperformed included Portland, Dallas, Oklahoma City, Tulsa and Phoenix, most of which were impacted by elevated new supply. With respect to our balance sheet, we remain committed to our conservative strategy, providing the flexibility we need to continue to fund our aggressive growth. During the Q1, we issued over $33,000,000 of OP equity in connection with the acquisitions we completed. In addition, we just refreshed our ATM program in March. While we didn't utilize our ATM during the quarter, it remains an attractive tool as we think about sources of capital.
Subsequent to quarter end, we received a BBB rating with a stable outlook from Kroll. This is a key step in the evolution of our capital strategy and will facilitate access to additional sources of capital. We also recently closed on a $100,000,000 10 year term loan with a fixed interest rate of 4.27%. We used the proceeds to reduce borrowings on our revolver. Our weighted average cost of debt at quarter end was 3.6% and 75% of our debt was fixed rate.
After the recently completed term loan, approximately 82% of our debt is now fixed rate and our weighted average maturity increases to 4.5 years. Given the proceeds of the $100,000,000 term loan completed last week, we had approximately $220,000,000 of additional availability on our $400,000,000 revolver. At the end of the first quarter, our net debt to EBITDA ratio was 6x, the middle of our target range of 5.5x to 6.5x. We have no debt maturities in 2019. Now let me address our guidance for 2019.
Although our Q1 results were strong as our trends subsequent to quarter end, it's been our practice to wait until we get further along the peak spring and summer leasing season before we revise our full year guidance expectation. So we're reaffirming our guidance and leaving it unchanged at this time. We would remind you that we continue to expect the pace of same store revenue and NOI growth to moderate somewhat as the year progresses due to increasing pressure from new supply and more challenging year over year comps on the back half of the year. However, we'll revisit our guidance numbers at the time of our Q2 earnings release. Before we move on to the Q and A portion of the call, I'd like to highlight an upcoming event that we're hosting for institutional investors and analysts on Tuesday, June 25.
We'll be hosting a Meet the Pros and Portland property tour in Portland, Oregon. Given the heightened interest in that market, which is our 2nd largest MSA and requests for more exposure to our pros, we decided this would be an efficient way for analysts and investors to interact with our PRO and take a deep dive into the Portland market. More details will be provided shortly, and we hope you'll be able to join us for this event. Thanks again for joining our call this morning. We'll now turn it back to the operator to take your questions.
Our first question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your question.
Hi, thanks. Good afternoon. Tammy, just first question, I was wondering if you could discuss the changes to the same store pool and what the impact was on the same store metrics in the quarter?
Sure. As I mentioned, we added 63 stores to the same store quarter this year, Todd. And 13 of them were in the Atlanta market, 6 in St. Louis, 5 in Portland actually, 5 in Las Vegas, 4 in Portland and 4 in Shreveport. And overall, that the new stores performed better than the old same store pool.
The same store revenue growth on the 2018 same store pool would have been 4%. That's on the 3 76 stores that were in our pool last year. And same store NOI growth was in 5.5%. So the new stores performed, frankly, ahead of our expectations this quarter.
Quarter. Okay. That's helpful. And then in terms of the guidance, I understand the policy about waiting a little further into the year to revisit the guidance if necessary, just given the seasonality of the business. But can you give us a sense of how much ahead revenue and NOI was in the quarter versus your expectations in the quarter?
So I'd say it was probably 100 basis points maybe ahead of where we thought it was going to come out. We got the benefit from the new stores to the same store pool, and we think that will diminish over the balance of the year. We also, as you know, we have tough comps in the back half of the year. And so in the face of new supply and we have 35% of our stores are facing challenges from new supply, we just thought it would be prudent to hold off, see how this spring and summer leasing season goes and revisit it in August when we release earnings.
Okay. Got it. And then just last question on in terms of the rent increase program to existing customers, I was wondering if you could talk about the sort of legacy policies of some of the PROs, whether the PROs have been pushing rates to existing customers all along historically? Or has that changed at all more recently either in the last few years or as some of the pros have joined the platform a little bit more? I'm just trying to get a sense for how that program may have changed or may be changing in sort of recent years or recent quarters?
Todd, it's Steve. Honestly, we've been quite consistent on our rent increase policy and programs for the last, I'd say, 3 years really since we started in earnest with revenue management. The PROs do have sort of differences in practice times. But in terms of looking at the time line, everybody's been generally pretty consistent through time. So you aren't seeing anything in this quarter that is different than what we've been doing for the last couple of years.
And to just summarize, we're still getting sort of high single digit increases on average every quarter, and we still expect to raise rents on, let's say, 3 quarters of our customers across the course of the year.
And what about for the pros that have joined NSA since the initial formation of the company? Have you seen or do you sense that they do get either more aggressive or have increased confidence sort of after joining the platform and either working with some of the company's best practices and technology and systems? Or is that also just not necessarily consistent with what's happening?
No, I think that's a fair point. Certainly, the newer PROs, as we bring them under the NSA umbrella and get them plugged into our platforms, They definitely adjust their behavior and certainly learn from their peers. And so they sort of join the fray, if you will, when it comes to rent increases. But I would say that happens early on when a new firm comes online. And everybody's been pretty consistent since they've been with NSA.
Our next question comes from the line of Ki Bin Kim with SunTrust. Please proceed with your question.
Thank you. Can you talk about the same store pool definition?
Same store pool definition, the way we define the same store, Ki Bin, is those are all stores that we own for the entirety of both periods being reported upon. And so all of the stores that were owned by NSA, Oneoneeighteen would be in our 20 onetwenty 19 in our 2019 same store pool. And we at least historically, we do not adjust the same store pool the course of the year.
Also, Ki Bin, this is Arlen. Remember, we only buy stabilized assets. So we don't have any fill up assets in our in any of our portfolio. So basically, these are all stabilized assets. The thing that changes though during the year is early on in the year, for example, if we bought a property, let's say, in November of 2017, it would now be in our same store pool.
But we buy most all of these properties from 3rd party operators. And so by the Q1 of 'eighteen, we may not have had all of our improvements to the property in terms of the physical CapEx that we spend on the properties. We certainly wouldn't have had all of our programs implemented fully. So that's really the source of the pickup is the fact that our performance is so much better than the prior performance under the 3rd party sellers once we implement our programs and platforms. And so the Q1 is always going to be the highest in terms of the new contribution from the new stores to the same store pool.
And then we'll expect to see a trail off of that.
Yes. And then it won't be nearly as much later because we will have already been running that for 9 months or whatever.
And for this pool, actually, it's interesting. A large number of the stores that are coming into the same store pool in 2019 were part of a portfolio acquisition that we completed in November of 2017. And so the Q1 of 2018, we really only owned those stores for, call it, 60 days by the time the New Year started.
Occupancy minimum to be considered a stabilized property that you would put in the same store pool? Because I realize you're not buying a ton of development, but maybe kind of recently developed projects might still not be fully stabilized.
No. We don't. And we really we have a practice of not acquiring nonstabilized properties.
So the definition we use is that they have to be at least above the market average occupancy in the market that it's at. So basically, the bottom line of that is that we don't have any properties in the same store pool that are typically below 85% occupancy. But if they're if the market average occupancy was 75%, theoretically, a 75% store could go into the same store pool if that's the stabilized occupancy for that market.
Okay. And you mentioned the uplift that you're getting in same store revenue once you add a property to your platform. I know it probably depends on which property you're adding and what assets and what markets. But any sense of directionally like how much uplift you are actually able to get?
Well, yes, in general, what we see is that the performance of new stores when they come in, it varies a lot by who the prior operator was. But on average, they typically, for the 1st year or so, will run double what our average same store performance is on our portfolio that we've had for a long time.
Okay. And just some last question. I remember last conference call, you guys mentioned that street rates were down low to mid single digits. So when we see this type of same store revenue reacceleration, it is a quite a bit of surprise. Can you talk about what you're seeing with fruit rates today for the current pool?
Yes. Ki Bin, it's quite similar. It may have slipped a little bit, that was true through the bulk of Q1 as well. So Street rates are still a headwind for us. Obviously, we make up for it with rent increases to existing customers.
And as we mentioned for this quarter, for Q1, we made up for it with some occupancy pick up. So it is still a tough fight out there with the new supply, and we're working it out store by store and unit type by unit type.
And so am I correct to assume that if street rates are still negative, low to mid single digits, and your average occupancy, the way you show it is up only 60 basis points year over year. It basically just implies that you're getting a huge uplift from the ECRI program, especially as it pertains to newly added stores. Is that the right way to think about it?
No, that's absolutely correct. And we've been saying that for several quarters now that really the lever that we're pulling when we grow revenue is the rent increases to existing customers. There is a roll down effect with street rates being lower than last year, and we offset that and go beyond through the rent increases. And that's how we achieved the rental rate growth that we're putting out there at 4% for Q1.
But we did get a good in occupancy from the new stores added to that.
Absolutely. So that's when you think about the 40 bps that we saw in Q1, that is largely coming from the new stores and same store pool. But when you look at the rental rate increase of 4%, that is a combination of a headwind from street rates being down and new supply at a tailwind or the thrust of the existing customer rate increases or IPRC, whichever term you prefer. Our
next question comes from the line of Ronald Kamdem with Morgan Stanley. Please proceed with your question.
Hey, this is Ron. Just a couple of quick ones for me. 1, can you just touch on of the discounting trends that happened in the quarter and how you're looking at that for the rest of the year? And then the follow-up to that would be in terms of online advertising, is that how are you guys thinking about that channel? And is that something where we could see spending increasing?
Yes. So discounting year over year, while it's been flat for a number of quarters, I would say that for Q1, it was probably up about 2% year over year. And once again, all the same factors apply here. We were fighting new supply in many of our markets with many of our stores, so discounting makes a difference. And as we've said many times, discounting is preferred to a lower street rate.
So we would rather use discounting than a lower rate where we can. And we've definitely been pulling on that lever. When you think about advertising spend, I know some of our peers have expressed that they're up. We actually have seen flat year over year advertising spend, and that's really been driven by improvements in our advertising platform. Our whole marketing platform, marketing team, if you will, is doing a much better job year over year.
And so we're seeing the cost per reservation, the cost per lead actually edged downwards for us. So advertising expense has been very constant or flat so far. I would expect that as you said, the yield wears on. We may choose to invest more in advertising costs to generate more rental. So I don't expect it to stay flat necessarily, but that's what we saw for Q1.
So sort of tying it all together, I would say discounting is up, advertising is flat, maybe a bias to the downside in Q1. And so customer acquisition cost in Q1 was really very stable. And it's really a reflection, Ron, of the fact that as we keep improving our platform tools and refining them, we get a lot more effective with our marketing dollars. It's not that we do everyone knows that the cost per click and all those with Google are going up. But when we can be more effective with how those are spent, we just get the benefit of that.
And some of our peers have been doing it longer than we have, obviously, since we're a new company. So they've got those things already milked out in their system, and we're just continuing to refine that as we go forward.
Great. That's helpful. And then if I could just kind of follow-up on the previous line of questioning in terms of acquiring stabilized asset and then sort of putting it through your program to get that uplift. Can you just talk about what are you guys doing to the properties? Is it just cosmetics in terms of the facade?
Is it structural? And then in terms of the operationally, maybe what are the like 2 or 3 low hanging fruit things that are really driving those kind of uplifts?
Yes. I'd say it's going to vary certainly by store, by portfolio. It depends on the managed store previously. There are certainly cases where we find a store is undermanaged. There are cases where we find the store has been poorly marketed, then we can improve that.
There are cases where we find that customers have not been getting rent increases, and we find that as a lever that we can pull. It is not consistent across every store, but we always look for catalysts like those that will allow us to drive value. It just happens to be different across a broad swath of the portfolio. So we use every advantage we can get, and it's a combination of all those things. We certainly do, as you say, improve the curb appeal where it makes sense and invest in that as well.
So I apologize I can't give you a more focused answer, but it's all the things that you talked about.
Now I
would say, Ron, one thing we don't we rarely see would be like structural problems. If we do have that, that would be negotiated as part of the contract where the seller is effectively paying for those repairs. So that's almost never it's almost always geared towards things that make the property more attractive, more marketable. And frankly, it's a big part of our acquisition total budget. We spend a lot of money on almost every property we buy on the front end.
Got it. No, that answers perfectly. That's really helpful. I guess the last question was just, I appreciate the same store disclosure by MSA, which I found to be helpful. But just from your standpoint, can you just provide us I think we've talked about this theme of supply potentially moving to some of the secondary markets.
What are you hearing on that front? And what are your thoughts going forward on that?
Yes. In general, we're very pleased with the fact that the secondary markets, while they certainly have new supply, for the most part, the supply has been much more balanced with the demand growth. Now there are exceptions to that. And what you consider, for example, Portland is sort of a secondary market. Austin is a secondary market from the standpoint it's not the 15, neither of those are top 15.
And both of those are severely overbuilt markets because they're highly attractive markets. Love them because they're growing so much. But in general, for the most of our secondary markets, what we love about them is we see new supply, but it's coming in very commonly at the rate of growth of new demand. And that's really helpful.
Our next question comes from the line of Smedes Rose with Citi. Please proceed with your question.
Hi, thanks. Also just wanted to add, we do appreciate the incremental disclosure that you started to provide. That's helpful. A lot of our questions have been asked and answered, but I just wanted to make sure I understand. So the deceleration that you're anticipating through the balance of the year in same store NOI, it sounds like that's primarily driven on the expense side versus a downtick in the revenues or both?
I think we'll see a combination. We do not expect to see this level of revenue growth as the year wears on. It's partially the impact of the newly acquired stores that have entered the same store pool. Those will mature as the We do not expect to hit 1% for the year, so you're exactly right. That will tick up.
But I think NOI, in general, is going to be a combination, both increasing expenses and deceleration on revenue growth. I think one thing we're seeing, Smedes, is that on the old same store pool, that's pretty much it will continue pretty common, pretty much where it has been. But the new part to the same store pool is going to slow down because the comps from last year keep getting tougher as we have had those programs our platform programs implemented longer last year. So that's really where we see the revenue impact slowing down the most.
And I guess the only other thing I would add is Q1 property taxes came in at 3.7 percent on the same store pool. And as you know or you might remember, we've talked about 5% to 6% being built into our guidance. And while we were pleased with the Q1 results, we're still waiting to see what happens when we start getting the notices for final notices for 2019 in Q3. So we'll have more
And then Arlen, on the last your last quarterly call, you talked about seeing acquisition cap rates at 6% to 6.5%. Have you seen any changes in the last 60 days or however?
No, we really haven't. I would say the good news is they haven't gone down. Cap rates haven't gotten worse, but they really haven't improved either. So we're still running right in that range. Typically, we'll average for the year in the 6.25% type number with the markets that we go in for primarily.
And that if you go into the really larger primary markets, it will be in the 5.5% to 6% range. And then smaller market, it will be 6.5%, and it kind of blends out with our mix right around 6.25%.
And are you seeing any sort of I mean, it looks like, obviously, you're getting acquisitions done. But are you seeing any, I guess, change in the sort of the volume of properties coming to market or kind of the quality of properties coming to market? Anything there that's maybe different over the last since last we talked?
No, not really anything different, I would say. The Q1 might be a little slower than in terms of the new stuff coming to market, which, of course, wouldn't close until Q2 or Q3. That's maybe a little slower than it was in Q4. But we're still seeing a very good volume of opportunities to look at. Quality is comparable.
I would say one difference is that who we are seeing in the market is consistently different in that used to be we were really always bidding against the other REITs. And nowadays, there's a lot of private equity backed buyers that are we're bidding against. That's I would say in a typical deal, there might be 10 bids and 8 of them will be from private equity backed guys.
Interesting. Okay. Thank you.
Thank you.
Our next question comes from the line of Todd Stender with Wells Fargo. Please proceed with your question.
Hi, thanks. Did you guys go through the yields for the acquisitions in the quarter? I know it's a pretty diverse group. You've got the bulk, I guess, is in Louisiana and then you've got some New Jersey tucked in there as well as Georgia. Can we just hear some of those cap rates?
I guess that would be helpful.
So on average, Todd, we are looking at, call it, 6 in the quarter across the portfolio. But you're right, they're geographically diverse. The assets that came in with Southern were primarily in the Florida Panhandle. We closed on the New Orleans portfolio at the same time. The stores that came in with move in are mostly secondary markets in Pennsylvania and Mid Atlantic.
So on average, I'd say 6.4 percent is a good average cap rate to use.
Okay. And were all 32 facilities acquired through the 2 new PROs?
No. There were a handful of other portfolios and one off transactions that we closed in the quarter. Those are the 2 biggest, obviously.
Okay. And for the remainder that were not from the new PROs, how many properties were spread across how many existing PROs?
Let's see. I know that right off the top of my head. I would say about half the stores were not with the 2 new PROs, and they were spread among probably 4 or 5 different PROs.
Yes. I mean only about half, a little just a little over half the stores came with the new PROs. And so almost half of them were from our existing PROs. And we continue to see that as we look into the second quarter. All the PROs are active.
We're going to be seeing acquisitions with almost all of our PROs this Q2.
Okay. That's helpful. And then for the new PROs, were they using revenue management systems? And how sophisticated would you say where those properties run, I guess, institutionally run? And just to maybe get a glimpse of the upside potential.
So definitely, both of our controls are institutional operators. In terms of specific revenue management policies and other pro, but sort of a split from that other PRO, but sort of a split house allowance. And certainly, both of the new PROs will benefit from some of the scale benefits that we get through our platform tools, and that would be benefit that they get, which our other PROs have always received.
Okay. And just last question. When you go to, I guess, the funding sources, you guys have had great access to capital. Funding sources have been pretty diverse, particularly in this quarter. Can you just go through some of the costs or coupons?
You have the Series A1 preferreds. You've assumed some liabilities, not much. But just maybe go through some of the costs associated with your capital.
So most of the capital that we issued was FP and OP equity and that's issued at market. The preferred equity was a very small piece of that. And I think we issued that just under par. So something slightly over 6%, if you will. And I guess beyond that's really it.
I mean, the OP and SPF, the debt we did after the end of the quarter, and I think we locked that in at 4.27% fixed. We swapped it to fixed, I should say.
Okay. Sorry, I guess maybe I do have one last question. With the Kroll rating, what's that for the benefit of? Does that help with your term loan pricing? Is this just a stepping stone maybe before you start to seek ratings from S P and Moody's?
Where does that kind of fit in?
I think we think of it more as a stepping stone, and I think it will give us an opportunity to gain easier access to perhaps the debt private placement market. But as you say, I would think of it more as a stepping stone.
Okay. Thank you.
Thanks, Todd.
Ladies and gentlemen, we have reached the end of question and answer session. And I would like to turn the call back to George Hoglund, Vice President of Investor Relations, for closing comments.
Thanks everyone for joining NSA's Q1 2019 earnings call. We appreciate your continued interest in and support of National Storage Affiliates. We look forward to seeing many of you at the upcoming REIT conference in June and later that month at our Meet the Pros and Portland Property Tour event.
Have a nice weekend.
This concludes today's conference. You may disconnect your lines at this time. Thank you for