U.S. Markets open in 4 hrs 26 mins

Extra Space Storage Inc (EXR) Q1 2019 Earnings Call Transcript

Motley Fool Transcribers, The Motley Fool
Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Extra Space Storage Inc  (NYSE: EXR)
Q1 2019 Earnings Call
May. 01, 2019, 1:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello and welcome to Q1 2019 Extra Space Storage Inc. Earnings Conference Call. At this time all participants in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at the time. (Operator Instructions) As a reminder, this conference is being recorded. And now I'd like to introduce your host for today's call, Jeff Norman, you may begin.

Jeff Norman -- Vice President, Investor Relations

Thank you, Tuanda. Welcome to Extra Space Storage's first quarter 2019 earnings call. In addition to our press release, we have furnished unaudited supplemental financial information on our website. Please remember that management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the Company's business.

These forward-looking statements are qualified by the cautionary statements contained in the Company's latest filings with the SEC, which we encourage our listeners to review. Forward-looking statements represent management's estimates as of today, May 1, 2019. The Company assumes no obligation to revise or update any forward-looking statement because of changing market conditions or other circumstances after the date of this conference call.

I would now like to turn the call over to Joe Margolis, Chief Executive Officer.

Joseph D. Margolis -- Chief Executive Officer

Hello everyone. Thank you for joining us for our first quarter call and for your interest in Extra Space Storage. We had a good first quarter with positive rate growth and high occupancies, resulting in same-store revenue growth of 4.2% and same-store NOI growth of 4.8%. This contributed to better-than-expected FFO growth, which was $0.02 above the top end of our guidance. Performance continues to be steady despite new supply and we are well positioned heading into the summer leasing season. While we are very pleased with the better-than-expected first quarter results, our views for the balance of 2019 remain generally unchanged.

We still believe 2018 was likely the high watermark for total deliveries and we expect 2019 deliveries to be only modestly lower. Further, we expect the total impact on performance from new supply to be greater in 2019 than it was in 2018 due to the cumulative impact of several years of elevated development. We are seeing this impact in the lease up of our C of O stores. Lease up has slowed from a pace that was well above proformas in 2015 through '17 through trends that today are more in line with historic norms and with our underwriting.

That being said, our people and our systems are working hard to maximize performance in a challenging operating environment.

Our digital marketing platform continues to drive qualified traffic to our stores. We have maintained occupancies above the market averages in MSAs with new supply, but it comes at a cost. Cost per click are elevated due to a competitive bidding environment and we are choosing to pull the advertising lever harder in order to ensure web visibility. In the current environment, large operators like Extra Space are best positioned for success on the web.

In the quarter, we invested $270 million in acquisitions. We continue to have success acquiring properties through off market transactions. For example and as we mentioned last quarter, we bought a joint venture partners interest in 12 properties in Los Angeles and the Bay Area for $192 million. We continue to explore other opportunities to enhance shareholder returns through mutually beneficial partnerships. We also continue to see significant growth in our third-party management platform.

In the quarter we added 46 stores, while only two stores left the platform, both due to a property sale. Additions through our third-party platform continued to be a mix of newly constructed and existing properties, bringing high quality stores into our system as well as additional income. Between our third-party program and our JV stores, we have 805 managed stores with a strong remaining pipeline for the year.

I would now like to turn the time over to Scott.

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Thanks, Joe, and hello everyone. Our core FFO for the quarter was $1.16 per share, exceeding the high end of our guidance by $0.02. The beat was primarily due to stronger-than-expected same-store property performance and lower-than-anticipated G&A and income tax expenses. We continue to see solid performance in the majority of our markets. Revenue growth was primarily driven by a key Street rate growth. Discounts were also down as a percentage of revenue in Q1, providing a modest tailwind that we don't necessarily expect in future quarters.

Our same-store revenue growth includes a change in pool benefit of 30 basis points in the quarter and we anticipate that it will provide a benefit of 15 to 20 basis points for the full year. This quarter we've added an additional disclosure to our financial supplemental showing a third year of same-store pool performance. This disclosure should help further reconcile differences in same-store pool definitions in the industry.

Same-store expenses were a mixed bag with increases in property tax and marketing spend, which were partially offset by savings in payroll and utilities expense. We expect continued pressure on property tax and marketing expense, but we are comfortable with our ability to operate within our guidance. We have not made changes to our annual same-store revenue expense or NOI guidance, which imply moderating revenue growth. As we said in our last call, the moderation will be a result of increased impact of new supply along with the difficult comps in markets that have performed well above the portfolio average for multiple years.

We have increased our full year core FFO guidance to $4.76 to $4.85 per share, which includes the $0.02 beat from the first quarter. We also made minor changes to our G&A, interest expense, income tax and share count guidance. Our FFO guidance includes $0.07 of dilution from value-add acquisitions and an additional $0.16 of dilution from our C of O stores for total dilution of $0.23, which is not changed from our initial guidance. We believe these acquisitions provide significant long-term value for our shareholders and improve the overall quality of our portfolio.

With that, let's turn it over to Tuanda to start our Q&A.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question comes from the line of Shirley Wu with Bank of America. Your line is open. Your line is open.

Our next question comes from the line of Jeremy Metz with BMO Capital. Your line is open.

Jeremy Metz -- BMO Capital -- Analyst

Hey guys, good morning. I was wondering if you could discuss the crossover between discounting and marketing. I recognize this is maybe a little dated, but if I look at your discounting trends from your last slide deck and assume those more or less carry through the first quarter, it looks like there's perhaps maybe call it a 40 basis points give or take benefit to revenue growth from the lower discounting as a percentage of revenues relative to last year on a dollar basis, it's about equivalent to the increase we're seeing in the marketing spend, which is up 24%. So I'm just wondering, it all gets you to the same place in terms of NOI and earnings, but is there any toggling between those two items?

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Jeremy, during the quarter, we didn't have a significant change in our discounting strategy. It was actually impacted a little bit by the lower number of rentals, so if we had fewer rentals, your discounts are down a little bit. And then we gave a slightly fewer number of discounts to rentals coming in the door. So it wasn't a significant change. In terms of marketing, we did choose to pull the marketing lever as to maintain our market share and to continue to move the needle in terms of rentals.

Joseph D. Margolis -- Chief Executive Officer

But they're not -- Jeremy, this is Joe. They're not one-to-one correlated. If discounts go up, marketing goes down and vice versa. They're just two of several factors that all interplay together to achieve our goal of maximizing revenue.

Jeremy Metz -- BMO Capital -- Analyst

All right. And then Scott, obviously the balance sheet is in good shape. Your stock is out there hitting all times high, it's well above at least where consensus (inaudible) that. How do you think about raising equity here whether to get more active on new investments or even just warehouse and capital for the stuff you have in the pipeline?

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Yeah, so we -- obviously it'll depend on where we have -- if we have a use for that money. So, we've always said we want to remain leverage neutral in terms of our balance sheet and if we have a use for the capital, then equity is an option. But how we underwrite a deal doesn't change, how we capitalize a deal could depend on where our stock is trading versus where interest rates are, but it is an option for us.

Jeremy Metz -- BMO Capital -- Analyst

And maybe just sticking with that, Joe, can you just talk about how active the market is for acquisitions right now and anything notable on the pricing front that you're seeing?

Joseph D. Margolis -- Chief Executive Officer

Sure. So, to-date we've invested $270 million, so we feel that's a good number, we're happy -- with that we're happy with the deals that we had. There's not as much activity in the market in the first quarter as there was say in the second half of last year, it's been somewhat quiet. We hope that's seasonal and the market will pick up and there's more opportunities either in a broad brokered market or more importantly through our relationships, which is where we usually have the most success. And I've seen absolutely no changes in pricing. There's still lots and lots of equity of all different flavors, seeking exposure to storage and that is keeping cap rates where they are.

Jeremy Metz -- BMO Capital -- Analyst

Thanks for your time, guys.

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Thanks, Jeremy.

Joseph D. Margolis -- Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Shirley Wu with Bank of America.

Shirley Wu -- Bank of America -- Analyst

Hi guys. Sorry about that before. It wasn't working. So my first question is on Street rate trends in 1Q of '19? You -- I think in your prepared remarks you mentioned that it was up. Could you give a little bit of color on to how much that was?

Joseph D. Margolis -- Chief Executive Officer

Our achieved Street rates in the first quarter were between 2% and 3% on average for the first -- in two new incoming tenants.

Shirley Wu -- Bank of America -- Analyst

And has that changed in April?

Scott Stubbs -- Executive Vice President and Chief Financial Officer

It's closer to 2%, but it's still solid.

Shirley Wu -- Bank of America -- Analyst

Okay. And so on the flip side for discounts, you mentioned that you don't expect the discounts to be coming down as a percentage of revenue to continue. So how do you see concessions kind of trending throughout '19?

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Our guidance and our budgets for the year don't assume any benefit. So, flat year-over-year compared to where they were last year.

Shirley Wu -- Bank of America -- Analyst

Great. Thank you for that color.

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Thanks, Shirley.

Operator

Thank you. Our next question comes from the line of Smedes Rose with Citi. Your line is open.

Smedes Rose -- Citi -- Analyst

Hi thanks. I was just wondering if you could provide a little bit of color on the performance in the couple of your larger markets like LA and New York, which look to put up pretty, I mean, well, more than pretty good, very very good results. And I think if I'm remembering right, it sounds like maybe in markets like LA that we're more mature, you were sort of maybe bumping up against sort of an absolute dollar increase in pricing that you felt you could achieve. So could you just maybe talk about how things are trending there and maybe you were surprised too in the first quarter.

Joseph D. Margolis -- Chief Executive Officer

Yeah, LA continues to perform very well. We are concerned, as you point out that, in these markets where we've had year-after-year of above inflationary -- significantly above inflationary rent increases, that's not sustainable. But we had a great quarter in LA and there's only -- if you look at the L.A MSA, there's only certain kind of sub pockets where supply is an issue, but for the most part supply is not an issue and we're continuing to be able to move rates in a pretty healthy manner.

Smedes Rose -- Citi -- Analyst

Okay. And then same -- I guess sort of same observation in New York?

Joseph D. Margolis -- Chief Executive Officer

So, the New York MSA, I will tell you we were surprised, that it did perform better particularly in northern New Jersey and Long Island than we anticipated and in the face of some new supply, particularly in northern New Jersey. So our systems, our ability to attract customers, part of that a result of increased marketing spend has allowed us to increase revenue at a greater rate than we thought we'd be able to in that market.

Smedes Rose -- Citi -- Analyst

Okay, thanks. And then just a last question. I was going to ask you, are you seeing any change in behavior of new competitors where there is maybe an overabundance of supply at least in the near term, sort of differences between independent operators versus the larger players. Any sort of -- the way that they're driving pricing or occupancy?

Joseph D. Margolis -- Chief Executive Officer

I'm not sure if it's a change. It is competitive out there. I would tell you, I think the large operators are more rational in their pricing movements and sometimes the small operators can do things that we would consider ill-advised. But I don't think there's been any significant change.

Smedes Rose -- Citi -- Analyst

Okay. Thank you.

Joseph D. Margolis -- Chief Executive Officer

Thank you, Smedes.

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Thank you, Smedes.

Operator

Our next question comes from the line of Todd Thomas with KeyBanc Capital. Your line is open.

Todd Thomas -- KeyBanc Capital -- Analyst

Hi, thanks. First question, Joe, know over the last few months it seems like there was an expectation that there would be some opportunity around some distressed development deals, maybe some lease up projects and you commented that the pace of lease up on some C of O in your portfolio is slowing, it's now back to historical norms which is consistent with what you are underwriting. So it doesn't sound so bad. Are you still expecting to see some distress and some opportunity or is that not the case, maybe conditions are improving a little more broadly across the industry relative to your prior expectations?

Joseph D. Margolis -- Chief Executive Officer

Yeah, I hope you didn't take from our comments that conditions are improving across the industry. Obviously, this is a market-by-market business and there are some markets that may be later in the development cycle that are improving, but there's also many markets that the development cycle is hitting full force and will de-accelerate in the future. I'm still hoping for the distress or the disappointment deals, we didn't see them in the first quarter. But I am still hopeful and anticipate in a challenging environment that those acquisition opportunities will appear.

Todd Thomas -- KeyBanc Capital -- Analyst

Okay. And then Scott, I know your guidance implies growth slowing throughout the balance of the year and you commented on that a little bit. I may have missed some of the ins and outs here, but right now growth is heading in the other direction. So maybe you could just provide a little bit of additional color around what you're expecting to change that trajectory and maybe pressure growth a little bit in the portfolio throughout the balance of the year?

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Yeah, our first quarter obviously was a strong quarter. We had it budgeted but our first quarter actually exceeded our budget slightly. Throughout the year, we are assuming that it continues to -- the rate of growth continues to decline throughout the year. That's our assumption in our budget. It's impacted heavily by certain markets that have a lot of new supply. Florida is a tough market. And as we look forward, we think that many of these stores continue to slow in terms of their rate of growth, whether it's the same-store pool or a lease up store. So, overall our guidance and our budgets continue to slow. We'd like to get into the second quarter and see where that goes before we change guidance or do anything.

Todd Thomas -- KeyBanc Capital -- Analyst

Okay. And just lastly, I was just wondering if you could tell us where occupancy was April 30, what that looked like year-over-year?

Scott Stubbs -- Executive Vice President and Chief Financial Officer

At the end of April, our occupancy was up from March by about 40 basis points, but it was slightly -- if you take year-over year comparison, we were down 20 basis points at the end of the March. It was down 40 basis points at the end of April. So, slightly different, but again within our guidance and no big surprises. April is still a solid month.

Todd Thomas -- KeyBanc Capital -- Analyst

Got it. Thank you.

Joseph D. Margolis -- Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of (inaudible) with Goldman Sachs. Your line is open.

Goldman Sachs -- -- Analyst

Good afternoon. I guess a bit of a follow up on the last question here. We noticed in the last couple of years that you had a steep 2Q same-sort slowdown versus the first quarter. I'm just curious what the mechanics were for this to happen and do you think this pattern will repeat for the rest of the year?

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Yes. So Q2 is typically better than Q1. Obviously, it's kind of you're moving into the leasing season. But it's going to be somewhat a comp year-over-year and how we did the prior year. So that could potentially be what you're seeing a little bit there.

Joseph D. Margolis -- Chief Executive Officer

I think in last year it was primarily discounting.

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Correct. And then the other thing is Q1 typically has more benefit from our change in same-store pool. So, Q1 is -- this year we had 30 basis points in the first quarter and we're estimating for the year for that to be 15 to 20, which would assume by Q4 it's very little benefit.

Goldman Sachs -- -- Analyst

Thanks, that's helpful, and you did mention in your guidance that you don't expect any benefit or track from discounts. Do you think you'll need to reintroduce discounts at some point or do you think the environment for pricing has improved as of late?

Scott Stubbs -- Executive Vice President and Chief Financial Officer

No, we continue to use discounts. We -- most new rentals get a discount. Well over 50% of our new rentals coming in the door are going to get some type of discount.

Goldman Sachs -- -- Analyst

Got it. Your peer PSA (ph) has announced a property of tomorrow Initiative which requires a significant investment and will take several years to complete. Just curious how do you think your portfolio compares with newer generation product currently in the market?

Joseph D. Margolis -- Chief Executive Officer

I think we've done a good job of continuing to invest and upgrade our properties to keep them relevant and attractive to customers and we spend money every year doing that and we'll continue to do that.

Goldman Sachs -- -- Analyst

Thank you very much.

Operator

Our next question comes from the line of Todd Stender with Wells Fargo. Your line is open.

Todd Stender -- Wells Fargo -- Analyst

HI, thanks. Just looking at the California properties that you bought from your JV partner, can you characterize the properties, maybe just to look into the submarkets and maybe share any CapEx that's required. I guess just to look inside that portfolio. Thanks.

Joseph D. Margolis -- Chief Executive Officer

So these were all properties that we built, they are in infill areas, 10 in Los Angeles, two in the San Francisco area. They've been -- we've owned them in partnership for many years with our partner. They've been well maintained, capital's been spent every year. They've been part of our seven-year rebranding program that we started three or four years ago, we're about halfway through the portfolio, a little more than that so far. So these are not stores that need a lot of capital. They're great, solid, steady, core acquisitions.

Todd Stender -- Wells Fargo -- Analyst

And even managing them on a third-party basis, is that right?

Joseph D. Margolis -- Chief Executive Officer

No, we were about 95/5 joint venture partner, but we did manage them, not on a third-party basis, on a joint venture basis.

Todd Stender -- Wells Fargo -- Analyst

Okay. Thanks. And then how about pricing on this. How do you look at pricing. You take at your JV partner, they are obviously stabilized, getting market rates, what kind of pricing do you (inaudible)?

Joseph D. Margolis -- Chief Executive Officer

So on the gross value that was negotiated for the portfolio, the purchase price forward 12 month yield after tax reassessment was sub five, which is market for these types of assets in these markets in California. But we had an embedded promote in the venture of $72.8 million that we couldn't realize without a capital transaction. So putting that promote toward the purchase price, the first year yield after tax reassessment was 63 (ph).

Todd Stender -- Wells Fargo -- Analyst

Okay. Thank you, Joe.

Joseph D. Margolis -- Chief Executive Officer

Sure. Thanks, Todd.

Operator

Next question comes from the line of Ronald (ph) Camden with Morgan Stanley.

Ronald Camden -- Morgan Stanley -- Analyst

Hey, just a couple of quick ones from me. Just wondering if you could provide a little bit more color on the marketing spend, meaning, are there any specific markets or regions that really drove the increased spend. And also I think you touched on that pricing are going up every year. Is there a way to quantify that? Is that high single-digits, is that double-digits? How should we think about that?

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Our spend for the year, our original budgets were 15% increase which is what we are thinking we are going to need to spend to kind of keep up with the inflationary pay per click spend. We have spent greater number -- higher than that in the first quarter and we're assuming we'll have to spend at a accelerated level throughout the year. It's across the country, the additional spend but is probably a little more focused on new supply markets or markets where we're struggling.

Ronald Camden -- Morgan Stanley -- Analyst

Great. That's helpful. And then, sort of touching back on some of the bear markets, just looking at Dallas we're still seeing a lot of projects in the pipeline. Just curious if you could remind us how you guys are thinking about that and maybe how are your assets are positioned versus the new supply coming in.

Joseph D. Margolis -- Chief Executive Officer

Yes, Dallas is a market that is challenged and if you look at our supplement and see our revenue growth there, which was less than 1%, it's below portfolio average. Our stores, you know, the North Dallas area is the most challenged and those are our stores that we're focused most on. In South Dallas and other areas, we're doing slightly better.

Ronald Camden -- Morgan Stanley -- Analyst

Great. And then the last question I have was just if you remind us what the spread between the asking rate and the existing tenant rate was maybe during the quarter and how that's trending in April?

Scott Stubbs -- Executive Vice President and Chief Financial Officer

So, the quarter is actually our worst time of year. On average we're mid single-digits in terms of where our ask rates are and are in place rates. The worst time of the year is the winter months, so kind of January-February, the best time of year is the summer months when they're essentially flat, but on average it's mid single-digits. So this is the worst time of year, so higher than that.

Ronald Camden -- Morgan Stanley -- Analyst

Helpful, thanks so much. (inaudible) quarter.

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Thanks.

Operator

For our next question comes from the line of Tayo Okusanya with Jefferies.. Your line is open.

Tayo Okusanya -- Jefferies -- Analyst

Yes. Good afternoon. You guys typically, you know, you're always going to do very interesting things, trying to figure out the best way to maximize profits between pricing and as well as volume. Just kind of curious if you could talk a little bit about maybe some of the assets you may have done this quarter or maybe even the last few quarters on what that might be telling you about just the elasticity of demand from customers?

Joseph D. Margolis -- Chief Executive Officer

So, I'm happy to say that we continue to do tests every quarter, every month. We're a very data-driven shop. We don't make any decisions without having the data analyzed and testing based on that. But I'm not comfortable telling you what are the things we're actually testing.

Tayo Okusanya -- Jefferies -- Analyst

Could you tell us anything about what they may be telling you about customer demand or elasticity of demand?

Joseph D. Margolis -- Chief Executive Officer

So, we don't see any significant difference in customer behavior. Demand is steady to increasing. The fear that folks had that millennials weren't going to rent has proven incorrect. Millennials make up a higher percentage of our renters than they do of the population. We see the stickiness, if you will, of the customers once they get in the face of rate increases to be the same. So we don't see significant changes in customer behavior.

Tayo Okusanya -- Jefferies -- Analyst

Got you. Okay, that's helpful. And then anything incrementally you can talk about also in regards to just business demands for storage?

Joseph D. Margolis -- Chief Executive Officer

So, business demand has been pretty steady for many, many years here and we don't see any significant increase or decrease in business demand.

Tayo Okusanya -- Jefferies -- Analyst

Got you. Thank you. Good quarter.

Joseph D. Margolis -- Chief Executive Officer

Thank you very much.

Operator

Our next question comes from the line of Samir Khanal with Evercore. The line is open.

Samir Khanal -- Evercore -- Analyst

Yeah, good afternoon guys. Joe, thanks for your view on supply. You talked about '18, which is the high watermark on deliveries, but then you continue to see impact from sort of developments, you know, kind of a cumulative impact. So you're kind of taking those two and generally I mean it doesn't have to be for your company but generally as part of the industry, where do you think that the trough and revenue growth will be, I mean, people say it's '20, but do you think it gets further pushed out into even '21 at this point with all the delivery and the impact of what's come on in the last couple of years?

Joseph D. Margolis -- Chief Executive Officer

So we don't have perfect transparency into the future. We don't know if development is going to continue its moderating trend that we see, that's what we would expect given the economics of development, but we don't know. We don't know if people with lower yield requirements or higher risk tolerances are going to keep sticking shovels in the ground. So when the inflection point will occur depends on things that we currently don't know.

Samir Khanal -- Evercore -- Analyst

Okay. And then just switching gears a little bit on the dispositions side, considering where cap rates are and it sounds like cap rates are fairly low and for well stabilized assets do you consider -- that you are considering even maybe selling into this market where pricing is favorable?

Joseph D. Margolis -- Chief Executive Officer

We just closed the disposition of a store in upstate New York this quarter, I guess after the quarter it actually closed. And we -- every year we look at our portfolio and look for assets that would make sense to dispose off either outright or into a joint venture to reduce our exposure to those assets or markets, and we'll continue to do so and execute when it makes sense.

Samir Khanal -- Evercore -- Analyst

Okay. Thank you so much.

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Thanks, Samir.

Joseph D. Margolis -- Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Ryan Lumb with Green Street Advisors. Your line is open.

Ryan Lumb -- Green Street Advisors -- Analyst

Thanks. First appreciate the additional disclosure on your older vintage same-store pools. But just one simple question, can you elaborate on the brief or the small adjustment to the G&A expense guidance? Thanks.

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Yeah. Part of it has to do with just the timing of some hires that we had and we are estimating that the majority of that should flow through and then some consulting expenses that did not come to fruition.

Operator

Thank you. Our next question comes from the line of Jonathan Hughes with Raymond James. Your line is open.

Jonathan Hughes -- Raymond James -- Analyst

Hey, good afternoon. Looking at the broader stabilized stores data, just to get a larger sample size for your performance and LA and San Francisco specifically, it looks like revenue growth was flat sequentially, but the number of facilities in those pools we're down from fourth quarter. Just curious what's going on there. Did you maybe lose some of those third-party managed stores because I think the same-store pool was up a little bit.

Scott Stubbs -- Executive Vice President and Chief Financial Officer

I'd have to go back and look it up because I'm not sure we were down in LA or San Francisco. We could look at that and get back to you.

Jonathan Hughes -- Raymond James -- Analyst

Okay. Fair enough. And then I guess on the other coast in New York and that stabilized pool saw a pretty nice sequential increase in revenue growth. I guess what would the benefit from the new add to that same-store pool, was it similar to the 30 basis point boost to the overall portfolio on same-store revenue growth?

Scott Stubbs -- Executive Vice President and Chief Financial Officer

It's really market-by-market and it'll depend on how many properties we have in it. So I mean a market that only had 10 properties obviously and you add one it's going to get impacted more versus Los Angeles where you have a larger number of properties and you add one it will impact it very little. So, tough to really give you on a market-by-market basis here.

Jonathan Hughes -- Raymond James -- Analyst

Okay, fair enough. I'll follow up offline. Thanks.

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Thanks, Jonathan.

Operator

Our next question comes from the line of Ki Bin Kim with SunTrust. Your line is open.

Ki Bin Kim -- SunTrust -- Analyst

Thanks. Just bigger picture, what do you think -- a couple of things that positively surprised you during this quarter?

Scott Stubbs -- Executive Vice President and Chief Financial Officer

I would tell you discounts being down, I think, were a surprise to us in a positive aspect. I think the fact that some of these markets that have been hit by supply so hard have held on as well as they have. So for instance Dallas and then the last one is I think our payroll was a little lower than we expected and so we've done some things there to try to get some more efficiencies, but we don't expect that to continue through the year, some more of a one-time benefit in Q1 than rather an ongoing thing through the year.

Joseph D. Margolis -- Chief Executive Officer

I think certain markets performed better than we anticipated. Atlanta certainly performed better than we thought. Some of the Florida markets that we thought were going to be impacted either through delays in delivery or otherwise are performing a little better.

Ki Bin Kim -- SunTrust -- Analyst

Okay. And going back to your comments about seeing elevated marketing spend throughout the year and payroll, like you said maybe it was a onetime benefit in the first quarter and that normalizes higher, how does that make you feel about your same-store expense guidance especially at the higher end.

Scott Stubbs -- Executive Vice President and Chief Financial Officer

So we're still comfortable with our guidance. I think that it'll depend a little bit on your marketing spend and where you are in that range.

Ki Bin Kim -- SunTrust -- Analyst

All right. And just last question, you probably kind of knew that MakeSpace is partnering up with Iron Mountain. Does that change your views at all about the long-term efficacy of value storage companies. I know it's probably early, but...

Joseph D. Margolis -- Chief Executive Officer

It doesn't. I mean when we look at current pricing for two of valet customer using valet versus storage, it's kind of played out as we expected. It's hard to -- this seems like they have not been able to pay for those logistical piece of that and still make storage an economical choice, not to say some people aren't going to use it, but it's not competitive with what we have.

That being said, we think there is a segment of customers, elderly or whatever who don't want to move their own boxes. And we would expect, as our business evolves, to be able to offer some type of service to customers who want it.

Ki Bin Kim -- SunTrust -- Analyst

All right. Thank you.

Joseph D. Margolis -- Chief Executive Officer

Thanks, Ki Bin.

Operator

Thank you. I'm showing no further questions at this time. I would like to turn the call back over to Joe Margolis, CEO, for closing remarks.

Joseph D. Margolis -- Chief Executive Officer

Thank you everyone for joining us today. As we discussed, we continued to experience solid property level NOI growth despite new supply. We expect that we're going to have a very solid summer season and another strong year for Extra Space. We're off to a good start on the acquisition front and the external growth front, both through acquisitions and third-party management. And what's most encouraging is that I feel that our teams and our systems are tested mostly during competitive times and they're performing very well and delivering the results for our shareholders. I look forward to seeing many of you at NAREIT. Thank you and have a good day.

Operator

Ladies and gentlemen, that concludes today's conference. Thank you for participating. You may now disconnect. Everyone, have a wonderful day.

Duration: 37 minutes

Call participants:

Jeff Norman -- Vice President, Investor Relations

Joseph D. Margolis -- Chief Executive Officer

Scott Stubbs -- Executive Vice President and Chief Financial Officer

Jeremy Metz -- BMO Capital -- Analyst

Shirley Wu -- Bank of America -- Analyst

Smedes Rose -- Citi -- Analyst

Todd Thomas -- KeyBanc Capital -- Analyst

Goldman Sachs -- -- Analyst

Todd Stender -- Wells Fargo -- Analyst

Ronald Camden -- Morgan Stanley -- Analyst

Tayo Okusanya -- Jefferies -- Analyst

Samir Khanal -- Evercore -- Analyst

Ryan Lumb -- Green Street Advisors -- Analyst

Jonathan Hughes -- Raymond James -- Analyst

Ki Bin Kim -- SunTrust -- Analyst

More EXR analysis

Transcript powered by AlphaStreet

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

More From The Motley Fool

Motley Fool Transcribers has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.