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Greetings, and welcome to 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 [Operator Instructions]. 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 questions. In addition to the press release distributed yesterday, we furnished our supplemental package with additional detail on our results, which may be found in the investor relations section on our Web site 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 and represent management's estimates as of today, February 22, 2022. The Company assumes no obligation to revise or update any forward-looking statements because of changing market conditions or other circumstances after the date of this conference call. 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 Web site 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 strengths 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 a billion dollars and growth in core FFO per share of 39%, the highest quarterly earnings growth in our history as a public company. Those strong results solidify 2021 as a banner year across the board for NSA, including record same store revenue and an 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 32%, also the highest in our history. To cap the year off, in December, our portfolio surpassed the 1,000 properties milestone, and NSA delivered total shareholder return of 98% in 2021, including raising our dividends up by 29% throughout the year. Our results are driven by the powerful combination of our differentiated PRO structure, our concentration in Sunbelt, 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 we'll 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 success. On the external growth front, we topped off the year and 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 average 5.1% but generally range from the high 3s to the high 6s 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. So about $350 million or 16% of the properties we acquired in 2021 were non-stabilized. We believe this provide 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. So 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 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 down 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 NSAs 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. So that's certainly how the fourth quarter laid out and that statement still holds true today. We did experience some normal seasonality at the end of the year, but occupancy levels remain 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. [Indiscernible] 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, is still well above normal at a time when we usually experiencing rent roll downs. Rent roll up trend remains positive in 2022. Our contract rates improved every month in 2021 and were up about 12% for the fourth quarter. Keep in mind that we started the years since we were 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 to 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 your perspective is that coming off a record 2021 moderation in growth is expected. Nonetheless, our same-store guidance implies revenue and NOI growth that are double the sectors long-term historical averages, not too shabby. Turning to new supply. We're starting to see a handful of projects get started in mostly the top 20 MSAs. However, we continue to take the impacts new supply will likely remain muted through 2022 and into 2023. Currently the unprecedented consumer demand there is certainly no shortage of developers who want to build a self Storage, and we do just expect a development activity to pick up with construction and land costs remain high and the entitled 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 with 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 the three or five mile radius are in line with last quarter and flat to slightly down from year end 2020. I'll 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, a strong acceleration from the $0.57 we reported in Q3. The 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. In 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, 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 outside 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 corporate FFO per share growth in 2020, add in the momentum that we're currently experiencing with operating fundamentals, and we expect a very strong 2022, the 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 to $2.74 or 20% growth over prior year at the midpoint; a same store pool 631 properties with revenue growth of 8% to 9.5%, OpEx growth of 5.25% to 6.5% and NOI growth of 9% to 11%; we expect acquisitions of $400 million to $600 million during the year and we also expect the retirement of Northwest to be accreted by 2 pennies 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, 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, but 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 earnings. 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 use to pay down amounts outstanding on our revolver. And with that in mind today our revolver balance stands at about $370 million. At year-end, our reported leverage was 6.1 times net debt to EBITDA in the middle of our targeted range of 5.5 to 6.5 times. 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 leveraged would fall to about 5.7 times 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?
And at this time, we'll be conducting our question-and-answer session [Operator Instructions]. Our first question comes from Elvis Rodriguez with Bank of America Securities.
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?
So couple things just to clarify for you and others, because we've only had the one other PRO retirement prior to the Northwest back in 2020 SecurCare. So of course, we own all of the assets already. So 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 happened on January 1, the specific unit counts, they are in the supplemental, they're a little 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 unites converting into 3.9 million OP units. So that's one thing, and then the SP distributions that were going to the Northwest PRO will no longer happen. And so that's a benefit to the FFO number and then our FFO denominator obviously goes up for that OP unit count. And then 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've hired for the vast majority of those Northwest employees. So that comes into our normal corporate G&A load. But there isn't that benefit there and that's part of the calculus to get to that 2 pennies of accretion. So I guess I'll offer that as just a breakdown of the key elements of the PRO retirement. But let me see if you have follow-up if there's anything I didn’t hit.
No, that's very helpful. Perhaps moving on to the performance year-to-date on the portfolio? Can you share an update of where the portfolio is today street rates versus in place, as well as any occupancy gains that you can share?
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 to 30 basis points of occupancy through January, and in 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. And then we still have a spread of about a little over close, probably pretty close to about 2% street rate over contract grant at this point in time. So everything fundamentally is great. As we look to the spring season, rental velocities have remained well, remain good and move out velocity is still a little bit muted for us. So all things positive.
[Operator Instructions] Our next question comes from Neil Malkin with Capital One.
First question for me. Dave, maybe you can elaborate. But given the large amounts of acquisitions you guys made in '21 and the relative, significant portion of lease-up opportunity and not to mention just the overall benefit from being on the MSA sort of corporate revenue management platform. Can you maybe give us an idea or order of magnitude and what that non same portfolio NOI would kind of do or should grow relative to the same-store this year?
We might need just a little more color on the question. So you're asking on the non same-store pool, how to think about the performance of that relative same-store subset?
Yes. I mean, you acquired a lot. So I'm just trying to kind of gauge what kind of upside from being on your platform from third parties all that kind of how you think about that in terms of, again, just increasing from not only the acquisitions 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 maybe how you think that should perform relative to your same-store. Is it 500 basis points of alpha just again, given the lease up, any way to think about that because obviously those two portfolios aren't going to grow the same rate. So just any kind of color or view would be great.
So certainly we acquired a significant amount of properties, and so we had a bucket of those properties that were certainly more mature. And as we look at those properties and look at how we are able to perform, as you think about really growing rates and growing around some of the occupancy metrics where maybe they were very strong, physically occupied, but there was an economic spread of 15, 20 points on physical and economic occupancy that mature portfolio certainly, the benefit we will have bringing on our portfolios will tighten up that economic occupancy and really close that 15 to 20 point spread very quickly as we work through our revenue management system, as we work through our contract rates and our in place rent changes. And so you look at the opportunity within that portfolio versus our stable portfolio, you certainly have -- that occupancy spread is where I would probably tell you where most of that gain is going to come as we close up that economic to physical occupancy. And so 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 going to be, but we certainly do expect it to outperform the stable portfolio. And then we had another bucket that that Tammy mentioned in her opening comments about this non-season group. And that non-season group probably has a physical occupancy of around 70% and maybe an economic occupancy of another 15 point points below that. And so, those will take a little bit longer to season. You may look at our window of maybe 18 to 24 months to season those properties to maybe a little more stable look, and certainly you season those properties out 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.
The other one for me is, in terms of acquisitions. I mean, I'm sure people are going to ask a lot of, different ways. But I think Tammy you said you have $200 million to $300 million under contract or LOI. I understand that competition continues to increase, but does that what 400 to 600 seem a little, I guess, conservative. I mean, I feel like last time you talked, 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. So can you just maybe kind of speak on what you're seeing and how you expect the year to shape up just given all the things I mentioned, plus the fact that, you still have very attractive cost of capital?
So we're still seeing a significant amount of activity in the funnel. So a lot of transactions coming to market, and we continue to look at every deal that kind of crosses our desk. The issue is that cap rates remain compressed. And while the cost of capital is, it's good, it's not as good as it was. And we, frankly, are not. We don't like what we're seeing as much as what we were looking at last year. And 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. And we acquired $2 billion of assets last year. And that's going to 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. So I think we're comfortable with the guidance that we're providing now. Something might change. We're seeing a handful of small and midsized portfolios that might prove interesting. But at least for now, I think our view is to be -- we're cautiously optimistic about 2022, let me put it that way.
Our next question comes from Todd Thomas with KeyBanc Capital Markets.
Just first question, I guess following up on that last line of questioning. Dave, I'm curious, 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 a year, maybe 250 basis points, what's the right way to think about that throughout the year?
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. And the cap rate on those assets was in the low to mid-3% range. The stabilized cap rate so call it two to three years out would be about 6%.
And then 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 embedding in the guidance, occupancy gains to flatten out or turn negative during the year?
So certainly, we're starting at an elevated level. So we certainly think we're returning to some normal seasonal trends. We started the back half of 2021, really the back quarter 2021, we saw some seasonal transit, occupancy pull off just a little bit. And so we're starting at a higher level 2022, we certainly expect to see the seasonality in the summer months, albeit, we're a little slower now. So we may not see the significant change in occupancy, as you said into June and July but we certainly are going to see improvement in June and July, and we expect it to pale off in the back half of the year. Really starting around August, around more seasonal normal historical trends and normal, so that’s usually around 300 to 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. And so we may be thinking if normal history was 300 to 350, we're probably thinking 250 to 300 is what we're thinking about by the end of the year as far as occupancy landing point.
And can you can you share where current occupancy is today and what that spread looks like year-over-year?
So Todd, end of the year we were 94.8 and Dave, I think mentioned it earlier, we're about 30 basis points out, which is kind of normal from that December to mid-February, so call it 94.5, and that's still a healthy [Multiple Speakers] prior year.
Our next question comes from Smedes Rose with Citi.
Tammy, I just want 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 said cap rates remain compressed? And I'm just wondering, are you seeing the same amount of sort of product from the market? It seemed like there was kind of this rush to sell last year and is that kind of down a little bit?
I would say that the volume is still high, the volume of potential transactions. And I think what gives us pause is a combination of quality and cap rate. So where you were paying compressed cap rates on markets where we're building scale and want to operate long-term in 2021, the markets are not maybe not quite as desirable and the assets frankly, maybe not quite as desirable in terms of improving the long-term quality of our portfolio.
And then I want to ask you, when the PROs retire now that you've had two, 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. But there's, obviously, probably obviously they’re the PRO more accretions to NSA. But if you think about it, there's the penalty on the conversion from the SP units to the OP units, which is one component of the accretions. And then the second component is management savings taking the assets off the PRO management fee and the PRO management platform onto NSA’s corporate platforms. And in that regard, we'll save some money on the management fee, but we also expect to get some benefits from the full use of the corporate platform.
Our next question comes from Kevin Stein with Stifel.
I was just wondering if you've seen any changes in the top of your funnel in terms of demand, maybe any color there would be helpful?
The overall activity at top of the funnel still remains very robust and we haven't seen a significant change as far as the amount of activity we are 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 have very favorable marketing costs, very favorable demands, which created cheaper rentals, if you want to think about it that way from and marketing expense, and 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 remains very robust.
Our next question comes from Samir Khanal with Evercore.
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?
So personnel cost, I would tell you, we are estimating kind right in line with that total OpEx guide at 5.25% to 6.50%. Property taxes baked into the ranges, a number of 5% to 7% growth. And then outside of that, I would highlight marketing and insurance as two line items that would be above the total OpEx range, call it, double-digits 10% to 15% growth. And R&M is one where it would be below the 5.25% to 6.5% range.
And I guess, as a follow, just sticking to expenses. Your G&A is I think when you do the maths are up about 15% year-over-year and 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.
I mean the pro retirement will actually be a little bit of a benefit to my earlier remarks. But you are right, Samir. I mean, the G&A growth this past year '21 over '20 was 17%, if you look at the guidance that we gave at the midpoint, it's implied to be a 15% growth. But you are also talking about top-line revenue in '21 grew 36% this past year. And our projection for 2022 is a top-line revenue growth of 32%. So we are certainly still taking advantage of the scale of efficiencies, growing top-line at a faster pace than our G&A load. And one of the metrics that we look at internally is G&A as a percentage of revenue. And so that number, if you look at 2020 was 10%, it's up 9 in '21 and I expect at least of 8 in 2022. So those are all good indicators for us and results in EBITDA and margin expansion.
Our next question comes from Ki Bin Kim with Truist.
So I'm not sure if I missed because, 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 in mid-February and what is implicit in your guidance and how you are thinking about that, how that progresses through the year?
Certainly Ki, I'll start off and Brandon can finish here. We certainly seen, year-over-year the percentages of street rate increases are still in the low 20s. So things are very positive starting out the year as far as street rates year-over-year. We are starting to see street rates, you're not seeing the rapid, rapid rise that we saw certainly for parts of 2021, but we are still able to improve in most of our markets. And so we are happy with that and the positive rent roll up, as we talked about earlier, we're still positive in our rent roll up, which allows us to still strong street rates strong occupancy, we're still being very assertive in the IPRC. But thus far street rates are still doing very well.
And Ki Bin, the 12% you heard was a contract rate for the fourth quarter year-over-year.
And so second part of that question was, what do you expect for rest of the year? Is it still at 20% range?
No, you can’t be able to hold that level. I mean, certainly we had tremendous growth in 2021. And so as you look at the back half of the year comps said that that spread of growth year-over-year will not be in the 20s. As we bring it down towards the end of the year, certainly see that coming into probably more normal historical ranges, as you think of the back half year as far as street rate grow.
And in terms of PRO internalization this quarter. Was that PRO fully on the NSA platform or were they operating under their own umbrella or was there something in between? And if it's the case that it comes onto NSA platform are there additional synergies that you think you might be able to extract from that?
They were probably more on their own platforms than they were on NSA platforms. And so what I mean by that is they ran their own Web site, they had their own web team, they use the NSA's revenue management platform, they had their own decision making process within their company around that piece of it. So we do think there's efficiencies we had, we do think there's upside there, we've already transformed them to all the NSA platform. So they're on currently on this CMS and they're currently on their full revenue management platform and all the platforms across. So we do think there's upside there. The team did a wonderful job. They were very good at what they do. So it's a big challenge for us. But we do think there's upside here.
And if I can squeeze in a third one. You mentioned that you're going to keep the same flag that is currently exists. But if I think about what storage companies have done over the past decade has been able to, it's been the drive to increase scale, not just in a physical means but from a digital perspective, getting the benefit scale on Google search and whatnot. So why keep it under it's own flag or is that interim decision?
No, it's not an interim decision. With the Northwest brand is very dominant in those markets, our ability to bring it on our platform and put all the tools in place will certainly make it be better. But Northwest brand itself has been there for a long time, it’s been well represented and well positioned, they've done a good job building that brand out. And as we evaluate the cost of rebrand the restores and the disruption when you rebrand every restore, we just don't think it's worthy. We think we can be very good run in Northwest brand up there. And the digital benefits with the platforms we have the tools we have, we can implement everything we do with the Northwest brands. There's no hiccup there at all, it actually gets better. So as we think about it, we just think it's the right decision to keep the brand.
And I think the other thing I would add Ki Bin is we talked about this over the years is that this is a very local trade area business. So what 80%, 90% of our customers come from within a three mile, maybe now it's expanding a little bit up to a 5 mile trade area. But the benefit that we would lose by the branding -- we do not believe that it could be offset. 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. And we just wouldn’t pick up those benefits of digital marketing.
Our next question comes from Ronald Kamdem with Morgan Stanley.
Just two quick ones for me. One just on the rent increases, both in terms of the frequency and the magnitude. 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.
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 notice, as we talked earlier, our increases are actually in the low to mid teens, where a year ago they may have been low single -- or high single digits to low teens. So we've certainly been able to be more assertive, and we're going to keep that program running at this point. We're just not seeing significant push back or changes in the environment. As we model occupancy through the year, we just believe that we've got stuff dialed in and there will be a significant change.
And then just another one on the PROs, obviously, second one internalize. I remember in previous calls, you talked about conversation 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?
We continue to have conversations with high quality private operators who might be a good fit for the NSA differentiated structure. But 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. And so it 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 and we're not contemplating any changes to the structure for new or existing PROs right now.
[Operator Instructions] Our next question comes from Wes Golladay with Baird.
I just have a quick question on the balance sheet, 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 are the long-term plans for the year on the line of credit?
We did bring that down post year-end with the last tranche that we had yet to fund on the private placements. So it's closer to just over $350 million. We also up to capacity on our line at the end of December. So we have a total capacity of 4650 million . So we still got a lot of room in terms of capacity. So nothing urgent, not feeling under the gun to necessarily address anything, I mentioned those 2022 maturities and Tammy’s comments about the deal flow. So we're comfortable with where we're at. We always strive to have optionality and flexibility. And so we're very pleased with the private placement transaction we have late last year, that's certainly an option on that side. We also did some things with a bank group last year and did very well, we’ll do so again this year. So anyway, lot of opportunities, lot of options, still plenty of capacity on our ATM as well.
And then one quick one. You mentioned that a normalized debt-to-EBITDA due to timing of the fourth quarter after the acquisitions. Could you provide us with the EBIDA that was not captured in 4Q in the run rate?
The math, Wes, to get from that 6.1 to 5.7, it's really adding about $35 million of EBITDA to the annualized number. I mean, that's the number that gets you to that specific math. And then just another point of color of the one point, a little over $1.1 billion of deals that we did in Q4, about half for that was in the month of December. And the majority of that December volume was really in the last two weeks of December, from December 15 through the end of the year, if it helps with the modeling.
Our next question comes from Neil Malkin with Capital One.
Can you talk about, just given historically kind of low turnover and you are getting aggressive or you continue to be aggressive on the IPRC. What percentage of the portfolio is eligible or receiving renewal notices versus like 2019 or pre-COVID? How much more, how much of the portfolio is eligible and getting that bump? Obviously, that's pretty much your largest driver of growth every year. So, can you maybe just quantify that?
I think, as I look at it, I'd say probably an average of 2% to 3% more of our tenants per month are eligible and receiving rate increases versus what maybe 2019 would look like. So that's a pretty significant number given the tenant base that we have. And, again, with the amount of rate increase we are doing and the way we remove some caps and really just increase not only frequency of the amount, it's adding up a pretty good number for us, but I would say 2% to 3% more on average is what's coming across.
Neil, and also pre-COVID, we were open about the annual number being maybe 75% of the customer base. So if you do the map on what Dave just gave you that's you're talking about, hitting each of the customers so hitting 100% of the [Multiple Speakers] over the course of the year.
And obviously you're turning customers over every month and new customers are being replaced. So that factors into that as well.
The other one is, in terms of some markets had the eviction moratorium, I believe expire in some form or another end of the last year, January 1st of this year, some coastal markets. Have you seen any increase in demand in markets that, where you've had either long-winded or protections moratoriums? And are you seeing influx of demand from this location or nothing really discernible?
Nothing discernible. Anecdotally, we have certainly heard the stories and we have seen folks who have been gone through the process of being evicted and had to relocate. And so 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 are in a very tough rental market, as you know transitioning the time of year to find a new rental home has been tough. So we're hearing stories about it. I can't give you a real number on what it's doing as far as overall impact.
Our next question comes from Elvis Rodriguez with Bank of America Securities.
Just a quick follow-up on supply. I think you mentioned that you're starting to see a little bit of uptake 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 portfolios performed any new developers and entering your market? Any information you can share would be helpful.
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 MSAs 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, 18 months, some of those are retooling and they're building in some of these top 20 markets. But overall, we just haven't seen a significant change due to the things we mentioned, timing, supply chain problems, ability to find contractors, ability to get them zoned, we think is as we listened 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.
And then just a follow-up on the internalization of the PRO, I think you mentioned opportunities for synergy. But as you bring the portfolio onto your platform, call it, it's been a couple, maybe six, eight weeks now. Can you mention sort of performance of the portfolio on your platform versus when it was externally managed by the PRO?
We really can't comment at this point in time. As we get in further end of the year, I'm going to 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.
And 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.
So I'll close 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 supportive 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 may disconnect. Have a great day.