Joe Margolis: I’m not sure there is a base case. I mean we’re going to handle every loan as it comes up, and I think some will extend, some will get paid off and some will buy the collateral. And grow, I think the attractiveness of the product will remain, and we should continue to be able to make new loans to backfill ones that are maturing in some way or another.
Ki Bin Kim: Okay. Thank you guys.
Joe Margolis: Sure.
Scott Stubbs: Thanks Ki Bin.
Operator: Our next question will come from the line of Caitlin Burrows with Goldman Sachs.
Caitlin Burrows: Hi, everyone. Maybe could you give us some more color on new supply expectations for deliveries this year, but also what are you seeing on starts, timing of construction and how that impacts your longer-term view?
Joe Margolis: So our data which we look at for our properties, not for the overall development landscape is pretty encouraging. We see about a 30% drop in Extra Space same-store pools that will be affected by new development in 2024. And when you look at all our wholly owned stores, it’s even a larger drop, almost 40%. So new development isn’t going away, we still have to – the market still has to lease up the ones that were delivered in prior years, but the environment is certainly getting better.
Caitlin Burrows: Got it. Okay. And then maybe just one more to follow up on move-in rate topics, which has been talked about a lot. I’m wondering if you could just comment on how you expect either EXR and/or the industry to regain pricing power with new customers? Is it housing market related and you need that to pick up? I know you mentioned marketing spend will be up, but what makes this new customer pricing power improve? And is there anything you can do to help it.
Joe Margolis: So the housing market certainly will help, but it’s not the sole driver of demand for self-storage. I think just people moving more, whether right now, almost half of the people who tell us their storing because they’re moving or moving apartment to apartment. So more transition is just good. The single-family home rental business, the more that grows, I think that’s great. That helps people move in and out of homes without having to buy them without having to worry about a mortgage. So a strong economy is always better than a weak economy and all indications are now that we’re going to have more of a soft landing than a recession. So I think all of those things can help improve customer demand.
Caitlin Burrows: Got it. Thank you.
Scott Stubbs: Thanks, Caitlin
Operator: Our next question will come from the line of Juan Sanabria with BMO Capital Markets.
Unidentified Analyst: This is Robin Haneland [ph], filling in for Juan. I just wanted to follow up on how you expect move-out and move-in spreads to trend throughout the year? And what is the spread for Life Storage? And how do you expect that spread to trend?
Scott Stubbs: Yes. So we focus as much on occupancy as we do move ins and move outs, and I’ll give you an example. I mean, Life Storage in the quarter and the fourth quarter elevated move-outs due to the auctions, but they also had elevated move-ins. So we’re managing probably more to occupancy than we are moving ins to move-outs, and we are assuming that occupancy is fairly flat throughout this year. On the Extra Space same-store pool, the Life Storage pool, we would expect to close that gap. So we would expect move-ins to be higher than move-outs.
Unidentified Analyst: And do you feel like you’re ready to reengage in sort of larger external growth at this point? Or are you still focused internally on executing Life Storage?
Joe Margolis: So we’re absolutely focused on achieving our goals with the Life Storage portfolio. We are also very focused on the testing and efforts we’re making with respect to remote management. I think that will be another big point. We will grow our management business significantly this year. We added not including the LSI assets, we added 225 new managed stores last year. That’s the most we’ve ever added in a year and we have a very significant and robust pipeline there. We’ve talked about the bridge loan program. We’ll continue to grow that. And I think our joint venture partners were somewhat quiet in 2023, but there’s indications that, that will turn around, and that’s great capital-light accretive growth for us. And we’ll certainly get back into that business. So we’re in a position to take advantage of whatever growth that is both strategic and accretive and we’re not afraid to do so.
Unidentified Analyst: Thank you.
Scott Stubbs: Thanks, Robin.
Operator: That concludes today’s question-and-answer session. I’d like to turn the call back to Joe Margolis for closing remarks.
Joe Margolis: Great. Thank you. Lots of questions about the overall environment and what our assumptions were for them. And I can’t tell you whether our assumptions are right or wrong. But I do have an extraordinary amount of confidence that no matter what the market conditions our platform and our people are in a position to maximize our performance and take advantage of whatever occurs in the market. So thank you all for your time today, and thank you for your interest in Extra Space.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
