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250918 Apex Meeting Notes

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A big thing would be to focus on any lease ups stats this month and the plan to keep getting new tenants.

Thu, Sep 18

An update on the ad spend ROI would be great too.

Thu, Sep 18

Review rates at both Verona and Ocean City make adjustments to drive rental growth

@Larissa Fincher

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Thu, Sep 18

Auctions contributed mostly to vacates

Thu, Sep 18

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Portfolio (Ocean City + Verona)

Revenue: Flat vs. Q3 2024 (~$161K), despite lower occupancy, thanks to higher rental rates and new income streams (insurance, fees).

Expenses: Up ~11% YOY (mainly taxes + marketing push).

NOI: Down ~12% YOY (~$83K vs. $95K) but margins remain healthy.

Occupancy: 88% (down from ~92–93% last year). Net rentals negative at both sites.

Wins: Rate increases lifted gross potential rent, tenant insurance rolled out (95%+ penetration), delinquent accounts cleaned up.

Opportunities: Rebuild occupancy (70 rentable units vacant), optimize marketing ROI, balance rate hikes with retention.

Ocean City

Occupancy: 86% (down ~4–5 pts YOY); net –25 units in Q3.

Revenue: Flat to slightly down; offset by higher rents (+10% GPR in Q3).

Expenses: $48K in Q3 (up slightly, taxes + marketing).

NOI: ~$56K (down from ~$65K).

Wins: Rent increases, insurance income (~$1.1K in Aug), delinquency auctions.

Opportunities: Drive move-ins (47 units vacant), retention on rate hikes.

Verona

Occupancy: 91% (down from ~95%); net –18 units in Q3.

Revenue: Up ~5% YOY (~$57K Q3), despite fewer tenants, thanks to large rate hikes.

Expenses: ~$30K (up modestly; taxes + $3K marketing).

NOI: ~$27K (slightly below ~$30K last year).

Wins: Strong rent growth (avg +38% increases), near-full occupancy until late Q3, insurance income (~$1.5K in Aug).

Opportunities: Fill 24 vacant units, monitor churn from steep hikes, re-rent 8 unrentable units.

October Rent Increases

Total: 191 tenants (97 OC, 94 Verona).

Average Increase: ~$20/month (+30%). Ocean City +21%, Verona +38%.

Impact: ~$3.8K/month extra rent roll (+7%), annualized +$45K.

Observation: Limited pushback so far; NOI uplift will show in Q4.

Key Talking Points

We traded short-term occupancy for long-term rent growth.

Portfolio revenue per SF and GPR are at record highs.

Filling vacant units is the #1 lever for NOI upside in Q4+.

October’s rate program adds meaningful revenue going forward.

Expenses are controlled; big seasonal costs behind us.

Outlook: Occupancy recovery + full effect of rate increases should drive NOI growth in Q4 and beyond.

Monthly_Move-Outs_by_Property_and_Reason

Monthly_Move-Outs_by_Property_and_Reason

Month

REASON FOR MOVE

Count

Property

3/1/2025

4/1/2025

5/1/2025

6/1/2025

7/1/2025

8/1/2025

9/1/2025

4/1/2025

5/1/2025

6/1/2025

7/1/2025

8/1/2025

9/1/2025

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Move-Out_Summary_by_Property_and_Reason

Move-Out_Summary_by_Property_and_Reason

REASON FOR MOVE

Count

Property

Auction

Consolidating units

Don't need storage anymore

Moving

TEST

Transferring

Vacated without notice

Auction

Consolidating units

Don't need storage anymore

Moving

Pay To Vacate

TEST

Unhappy with service

Vacated without notice

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Q3 2025 Owner Call Summary (Ocean City & Verona Storage)

Portfolio Performance Overview (Q3-to-date 2025 vs Q3 2024)

Overall, the Ocean City and Verona self-storage portfolio showed stable financial performance in Q3 2025 compared to Q3 2024, albeit with lower occupancy and slightly reduced NOI. Combined revenue remained roughly flat year-over-year, as aggressive rent increases helped offset the impact of higher move-out activity. Operating expenses rose modestly (due to property taxes and increased marketing spend), which, coupled with vacancy losses, led to a slight decline in NOI versus last year. Leads data was not directly provided in the reports, but the uptick in advertising expenses suggests a concerted effort to drive inquiries and rentals in Q3 2025. Net rentals (move-ins minus move-outs) were negative in Q3 2025 for both sites, indicating occupancy loss during the quarter, whereas Q3 2024 saw relatively stable occupancy (little to no net loss). As a result, ending square-foot occupancy for the combined portfolio declined to around 88% in Q3 2025 (versus roughly 92% a year prior, given both properties were near full last year).

Figure: Q3 2025 vs Q3 2024 Revenue (in thousands of dollars) for Ocean City, Verona, and the total portfolio. Ocean City’s quarterly revenue dipped slightly year-over-year, while Verona’s increased modestly, resulting in essentially flat portfolio revenue【17†】【20†】.

As shown above, Q3 2025 revenue for the portfolio was approximately $161K (vs. ~$165K in Q3 2024, a ~2% decrease). Ocean City’s Q3 2025 revenue came in slightly lower than last year – for example, it collected $37.6K in July and $33.5K in August 2025【17†】, which is in total a bit less than the same period last year (when higher occupancy drove roughly $35–38K per month). Verona’s revenue, however, increased year-over-year – it brought in $19.7K in July and $19.0K in August 2025【20†】, which is on par or slightly above last year’s levels (despite occupancy softening, higher rental rates boosted income). In aggregate, the portfolio’s top-line held steady relative to Q3 2024. This stability in revenue despite occupancy loss is a direct result of higher rental rates and ancillary income in 2025 (detailed further below).

Figure: Q3 2025 vs Q3 2024 Operating Expenses (in thousands of dollars) for Ocean City, Verona, and the portfolio. Portfolio expenses rose year-over-year, driven by higher property taxes and marketing costs in Q3 2025【26†】【27†】.

Portfolio operating expenses in Q3 2025 were up about 11% compared to Q3 2024 (approximately $78K vs. ~$70K last year). A significant factor was mid-year property tax payments – both sites recorded large tax expenses in July 2025 (e.g. Ocean City’s expenses spiked to $19.6K in July, and Verona’s to $12.2K in July). These tax payments occur annually and were similar in magnitude last year, but 2025 also saw higher marketing spend: the portfolio invested in advertising (PPC, SpareFoot, social media, etc.) to boost demand, with Ocean City spending ~$6.1K on advertising in Q3 and Verona about ~$3.1K (new expenses that were minimal in 2024). Additionally, both sites incurred normal inflationary increases in utilities, insurance, and personnel costs. Despite some cost savings from operational efficiencies, the increased marketing and insurance expenses (which come with revenue benefits) pushed total expenses slightly above last year’s level.

Figure: Q3 2025 vs Q3 2024 Net Operating Income (NOI) (in thousands of dollars) for each site and the total portfolio. NOI was down year-over-year for both sites, reflecting higher expenses and vacancy loss【26†】【27†】.

Portfolio NOI for Q3 2025 came in around $83K, which is a decrease from roughly $95K in Q3 2024 (approximately –12% YOY). Ocean City’s NOI decline was most pronounced (lower revenue and higher expenses), while Verona saw a smaller drop. The contraction in NOI is attributable to the occupancy drop and expense uptick described above. In essence, the flat revenue and higher costs translated to lower profits. It’s worth noting that the rent increases implemented in Q3 2025 have not yet fully flowed through to NOI (since many take effect on October 1), so the full benefit to income will materialize in Q4. Barring further occupancy losses, we expect NOI to improve going forward as the new rates bolster monthly revenue.

Figure: Ending Occupancy Rate (by square footage) at Q3 2024 vs Q3 2025 for each site and combined. Both properties saw lower occupancy at the end of Q3 2025, with Ocean City around 86% and Verona 91%【56†】【55†】.

Occupancy is the primary area of concern. At the end of Q3 2025, Ocean City was 86% occupied (by SF) and Verona was 91%【56†】【55†】, both down from the ~95% range they occupied a year ago. Throughout Q3 2025, move-outs outpaced move-ins at both properties (details in site sections below), resulting in negative net rentals and a cumulative loss of occupied units. The portfolio’s combined square footage occupancy stands at roughly 88% (versus ~92–93% in Q3 2024). This decline is partly strategic – management cleared many delinquent accounts via auction and pushed rental rates which may have prompted some attrition – but it also indicates an opportunity to improve leasing velocity. Restoring occupancy to previous levels is a top priority for the coming quarter to fully capitalize on the higher rental rates now in place.

Figure: Net Rentals (move-ins minus move-outs) in Q3 2024 vs Q3 2025 for each site and portfolio-wide. Both sites had negative net rentals in Q3 2025 (heightened move-out activity), whereas net rentals were approximately zero or slightly positive in Q3 2024【17†】【20†】.

The chart above illustrates the net rentals trend. Ocean City lost a net ~25 units during Q3 2025 (vs. roughly 0 net change in Q3 2024), and Verona lost about 15–20 units net (vs. ~0 last year). Combined, the portfolio saw about –45 net rentals in Q3 2025, reflecting elevated move-outs. In Q3 2024, occupancy was essentially stable (move-ins kept pace with move-outs). The negative net absorption this year stems from several factors: deliberate auction of delinquent tenants, seasonal move-out patterns, and possibly some tenants opting not to renew in anticipation of rate increases. This presents a clear opportunity for improvement – increased marketing and conversion of leads will be needed to drive move-ins and backfill vacant units in the coming months.

Portfolio Wins: Despite the occupancy dip, the portfolio achieved significant successes this quarter. Notably, revenue per square foot improved year-over-year – Gross Potential Rent for both properties increased (thanks to successful rent raise initiatives), and ancillary income grew (e.g. tenant insurance revenue spiked, adding over $2.8K in Q3 across the portfolio). The portfolio also cleaned up bad debt by auctioning off defaulted units (freeing them to be rented at higher rates) and now boasts very high insurance penetration (95–98% of tenants enrolled in protection plans). These actions position the properties for higher future NOI once occupancy rebounds. Additionally, Verona maintained strong occupancy (90%+) throughout most of the year before the recent dip, demonstrating solid underlying demand at that site.

Portfolio Opportunities: The primary opportunity is to increase occupancy. Both properties have vacancy to fill, so ramping up leasing efforts (through marketing, promotions, and perhaps pricing incentives on vacant units) will be key. Lead generation and conversion should be a focus – the additional advertising spend in Q3 2025 should continue, but with an eye on optimizing cost per lead and improving on-site sales conversion to turn more inquiries into move-ins. Another opportunity is to manage customer retention in light of rent increases: given the large number of rate hikes, we need to closely monitor and mitigate move-outs (“churn”) in response. On the expense side, there is room to tighten expense controls now that major one-time costs (taxes, transition expenses) are past; ensuring that the increased spending on marketing translates to occupancy gains will improve efficiency. In summary, refilling units and carefully balancing rate versus occupancy will drive the portfolio’s performance upward.

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Ocean City Performance (Q3 2025 vs Q3 2024)

Occupancy & Rentals: Ocean City Self Storage ended Q3 2025 at 84% unit occupancy (86% by square feet)【56†】, down from roughly 87–90% a year prior. The facility saw lower move-in volume and elevated move-outs during the quarter. Specifically, July and August 2025 each had only 3 move-ins, versus 18 and 10 move-outs respectively. This resulted in net rentals of –15 in July and –7 in August (–22 units over two months). By September, total Q3 net loss was around 25 units, dropping occupied units from 270 in June to 248 by August【56†】. For context, in Q3 2024 Ocean City’s occupancy was stable in the high-80% range with near-zero net change – so this year’s net loss of ~8% of units is a notable decline. The move-outs included a one-time purge of 10 units via auction in July (delinquent accounts), as well as normal non-pay and non-renewal vacates. The lead flow and leasing pace were insufficient to backfill these losses in Q3. Improving move-in volume will be critical going forward, as the facility now has 47 vacant units as of August 2025 (plus a couple units offline) – a much higher vacancy count than the ~30 vacants a year ago.

Rental Rates & Revenue: On a positive note, Ocean City aggressively raised rental rates, which boosted its revenue per occupied unit. Gross Potential Rent (GPR) jumped from ~$40.96K in July to $45.21K in August 2025, a >10% increase in one month (reflecting new higher street rates and upcoming in-place rent increases). This indicates management’s strategy to drive revenue growth through pricing. Actual quarterly revenue was relatively flat to slightly down year-over-year. Ocean City collected $37.59K in revenue in July and $33.48K in August 2025 (September not yet closed), totaling ~$71K for Jul–Aug (about ~$104K projected for full Q3). In comparison, Q3 2024’s revenue was on the order of ~$110K – so we estimate a mid-single-digit percentage decrease in quarterly revenue YOY. The drop is attributable to having fewer occupied units paying rent, particularly in August (when revenue fell ~12% from the previous August, in line with the 5-point occupancy drop). Importantly, revenue did not fall as sharply as occupancy, thanks to higher rates. In fact, the average rent per occupied square foot is up year-over-year – Ocean City’s actual occupied rent was ~$0.72/SF/month in August 2025 compared to ~$0.65/SF/month a year prior. This shows our rate increase strategy is working to preserve income. Another contributor to revenue is tenant insurance: as of Q3 2025, nearly all tenants carry insurance, and the property earned $1,118 in tenant insurance premiums in August alone (vs. negligible last year). This ancillary income provided a nice boost in Q3.

Expenses & NOI: Ocean City’s operating expenses were higher in Q3 2025 compared to Q3 2024. The site had $19.55K in expenses in July and $13.66K in August 2025, for an estimated ~$48K for the quarter. Last year’s Q3 expenses were around $45K. The biggest expense item was the annual property tax payment in July (approximately $10K of that month’s total) – a similar amount was paid last year, so that’s on par. However, marketing and advertising expenses were new this year (over $6K spent in Q3 on various channels, whereas the previous owner spent far less on marketing). Additionally, some repairs and maintenance costs were incurred to improve units after the auctions (prepping units for new rentals). We also note that the facility’s utility costs and payroll had slight increases. Because revenue was flat-to-down and expenses rose, NOI decreased. Ocean City generated roughly $56K NOI in Q3 2025 (versus ~$65K in Q3 2024). The NOI margin compressed somewhat, but remains healthy around ~50%. With most big-ticket expenses behind us for the year (taxes, etc.), we anticipate margins will improve as revenue climbs on the back of the rate increases.

Ocean City Wins:

Successful Rate Increases: Ocean City implemented substantial rent increases for existing tenants and raised street rates for new rentals. This drove a ~10% rise in Gross Potential Rent during Q3. Tenants are now paying significantly more on average than last year, directly boosting revenue per square foot.

Ancillary Revenue Growth: The facility achieved 95% tenant insurance penetration, creating a new income stream (e.g. $1.1K insurance revenue in August). This enhances total revenue with minimal associated cost.

Delinquency Clean-up: In July, management auctioned 10 delinquent units, which improved receivables and freed those units to be rented at current market rates. This one-time cleanup will benefit long-term financial health (reducing bad debt and increasing future rent potential).

Cost Controls in Some Areas: Aside from strategic spending, many operating expenses were kept in check or one-time in nature. For example, admin and office expenses were reduced, and there were no unexpected maintenance emergencies in Q3.

Ocean City Opportunities:

Occupancy Rebound: With occupancy at ~84%, there is significant upside in filling units. The facility has 47 vacant units as of August. Emphasis should be on converting more leads to move-ins (only 6 move-ins in July–August). Tactics include promotions (e.g. first-month discounts), contacting waitlist or inquiry leads, and optimizing unit pricing for quicker absorption on smaller units which are currently driving the vacancy.

Lead Generation & Marketing ROI: Ensure the increased marketing spend translates to rentals. Analyze which channels (PPC, SpareFoot, etc.) produced the best leads and allocate budget accordingly. There may be an opportunity to bolster local marketing (signage, referrals) to drive walk-in traffic, which could improve lead volume at a lower cost.

Retention & Rate Strategy: Monitor tenant response to rent hikes. While rate increases have lifted revenue, we should watch for any spike in move-outs attributable to pricing. Proactively, consider offering loyalty discounts or incentives to at-risk tenants (e.g. those who received large increases and have been long-term customers) to reduce further attrition. The goal is to strike the right balance between rate and occupancy – maximizing revenue without pushing occupancy too low.

Physical Improvements: With additional vacancy, management can take the opportunity to make minor upgrades (fresh paint, improved lighting/security) to enhance curb appeal and justify the higher rental rates. This can help convert more prospects and possibly allow premium pricing on certain units.

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Verona Performance (Q3 2025 vs Q3 2024)

Occupancy & Rentals: Verona Storage had remained near full through the first half of 2025, but by end of Q3 it too saw occupancy ease off peak. Square-foot occupancy was 91% at end of Q3 2025 (89% by unit count)【55†】, compared to roughly 95% a year ago. During Q3 2025, move-outs surpassed move-ins each month. July saw 11 move-ins vs 19 move-outs (net –8), August 9 move-ins vs 15 move-outs (net –6), for a combined –14 net rentals over July–August. By September, total Q3 net loss was about 18–20 units, bringing occupied units down from 286 in June to 269 in August. (In Q3 2024, Verona was under prior management but was essentially full with minimal net move-outs, so this year represents a decline from a very high base.) A portion of 2025 move-outs were tenant auctions as well – Verona held 2 auctions in July and 2 in August for delinquent tenants. The rest were normal move-outs (some likely price-related, given the steep rate increases instituted). Vacancy as of August 2025 stood at 24 rentable units (and 8 units marked unrentable for repairs). Those vacancies are concentrated in smaller drive-up units and a few parking spaces. Verona continues to generate healthy inquiry traffic (given its strong historical occupancy), but converting those into move-ins in the face of higher rents is the challenge. The focus next quarter will be on replenishing occupancy – even after accounting for the rate hikes, the site can improve revenue by filling those ~24 empty units.

Rental Rates & Revenue: Verona aggressively grew its revenue through rate management. Gross Potential Rent rose from $29.8K in July to $32.23K in August 2025, a ~8% increase in one month (and significantly higher than GPR in Aug 2024, which was around $28K). This was achieved by raising street rates and setting up in-place increases for existing tenants. Notably, Verona’s average in-place rent increases are larger than Ocean’s – many customers were on legacy low rates, so management pushed them closer to market. For example, one Verona tenant paying $35 for a 6x10 drive-up unit is scheduled to increase to $58 (~66% hike effective 10/1/2025)【53†】. These sizable adjustments boosted revenue in Q3 and will fully impact Q4. Q3 2025 revenue for Verona is estimated at ~$57K (July $19.68K + August $18.99K + September projected ~$18K), which is slightly above Q3 2024’s revenue (~$55K). In other words, Verona managed to grow revenue year-over-year (~+5%) despite a dip in occupancy. The increase is attributable to higher rent per unit and new income streams. For instance, tenant insurance income exploded – $1,509 was earned in August 2025 alone (versus virtually nothing last year), as the facility rolled out a protection plan to its tenants. The property also benefited from bringing some parking spaces to market rent (parking rents were adjusted upward and several low-rent parking tenants vacated, allowing re-lease at higher rates). Revenue per occupied square foot is markedly up: Verona’s average occupied rate was about $0.59/SF/month in Aug 2025 vs ~$0.45/SF/month a year prior, reflecting the successful rent transition. With occupancy still relatively high at 89%, the property’s total revenue capacity has increased significantly – once those few vacancies are leased, Verona will be outperforming last year by an even larger margin.

Expenses & NOI: Operating expenses at Verona in Q3 2025 were also up versus last year, although the overall spend remains modest given the size of the property. Q3 2025 expenses are estimated around $30K (July $12.21K, August $9.19K, plus September), compared to roughly $25K in Q3 2024. As with Ocean, the property tax payment (due in July) was a big portion (~$8–9K). Verona also incurred higher marketing expenses (approximately $3K in Q3 2025 on advertising channels, where previously it spent very little). Some maintenance costs arose as well – notably, the site addressed an HVAC issue in the office and repaired some door seals on older units (preventative maintenance to preserve asset quality). However, other expenses like utilities and payroll were stable. The facility has benefited from economies of scale through shared management (site staff handle multiple locations efficiently). NOI for Q3 2025 is estimated at ~$27K, slightly below Q3 2024’s ~$30K. The small drop in NOI (-10% YOY) is mainly due to the timing of expenses and temporary vacancy – Verona’s profitability remains strong, with an NOI margin around 50% for the quarter. As the rent increases fully phase in and occupancy is recaptured, we expect NOI growth to resume. It’s worth noting that Verona’s Q3 NOI was temporarily depressed by one-time factors (e.g. a one-time marketing push, upfront insurance costs); the run-rate NOI should trend higher in Q4.

Verona Wins:

Strong Rate Growth: Verona executed the highest rent increases in the portfolio, averaging ~38% for affected customers【30†】. This significantly raised the revenue ceiling. Many longtime tenants who were far below market are now either paying much more or have vacated, allowing re-letting at market rates. This strategy has materially increased rent per unit and will drive future revenue.

High Occupancy Maintained (until late Q3): For the majority of Q3 2025, Verona operated at 93–95% occupancy, demonstrating sustained demand. Even after recent move-outs, it’s still at ~89%, which is a healthy level. This indicates the site’s location and customer base remain strong; filling the few vacants should be readily achievable with focused effort.

Insurance & Ancillary Income: Like Ocean City, Verona achieved near-universal tenant insurance enrollment by Q3. The insurance premium income totaled $1.8K Jan–Aug, most of that in Q3. Additionally, the facility generates steady late fee and admin fee income (over $3.4K in late fees in Q3). These ancillary revenues bolster the bottom line and reflect improved enforcement of fee policies (a win in operational management).

Controlled Delinquencies: After the removal of a few delinquent accounts via auction, Verona’s accounts receivable over 30 days is now quite low (roughly 0.07 of rent, or ~7% of one month’s rent) – and those are being addressed. This is a win as it shows most tenants are paying on time despite the rate increases.

Efficient Operations: Verona benefits from streamlined operations – for instance, it shares a call center and certain staff resources with sister properties, keeping payroll in check. The property also took advantage of digital marketing and remote leasing tools, allowing it to lease units with minimal on-site overhead. These efficiencies helped maintain a reasonable expense profile even as some costs rose.

Verona Opportunities:

Fill Vacant Units: With ~24 rentable vacancies, Verona can increase revenue simply by leasing up to capacity. A targeted marketing campaign (perhaps offering a move-in special on smaller units, which comprise many vacancies) could quickly boost occupancy. Since the facility was effectively full for so long, we know demand exists – outreach to former tenants or local businesses (for the drive-up units) could yield quick move-ins.

Monitor Customer Turnover: Given the steep rent hikes for some (e.g. 20–60% increases in one go), we need to watch tenant turnover closely. Some recent move-outs suggest price sensitivity. Offering alternatives to tenants before they decide to leave – such as downsizing to a smaller unit or a modest discount for early renewal – could improve retention of paying customers. Finding the sweet spot on rate vs. occupancy will be key; not every unit may bear a top-of-market rate without risking vacancy, so a nuanced approach (perhaps smaller incremental increases hereafter for those who stayed) is advisable.

Increase Marketing in Under-Tapped Segments: Verona’s marketing has been largely via online aggregators and PPC. There is an opportunity to expand local marketing – e.g. partnering with nearby apartment complexes or military bases for referrals, boosting signage visibility, and emphasizing the facility’s top-tier security and service to justify its premium rates. This could bring in fresh leads that are more likely to convert.

Capital Improvements to Justify Premium Rates: Although the facility is in good shape, a few improvements could further differentiate it (e.g. adding an electronic gate with app access, repainting exteriors, or paving the lot if needed). These enhancements would support the higher rental rates being charged and improve customer satisfaction, indirectly aiding retention and marketing (happy customers and curb appeal lead to more rentals).

Reduce Unrentable Units: Verona had 8 units classified as “unrentable” (likely needing repairs or being used for maintenance/storage). Converting or repairing these units promptly could add to the rentable SF and revenue. For instance, if some require door repairs or clearing out company storage, addressing that could quickly bring those units online and generate additional income.

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October 2025 Rent Increase Activity Report

October 2025 is a major rent increase month for the portfolio, as shown in the rate increase production report. A total of 191 rent increases have been set to take effect on October 1, 2025 across the two properties. Ocean City has 97 tenants scheduled for increases, and Verona has 94. This represents a significant portion of the customer base undergoing adjustments in the same period. On a portfolio level, the average increase is approximately $20.19, which equates to a 29.6% rent hike on average【30†】. Site-level details: Ocean City’s increases average +$18.59, or ~21.3%, while Verona’s are larger – averaging +$21.84, or ~38.2%【30†】. The higher percentage at Verona aligns with the strategy of catching up long-term tenants to market rates.

In terms of customer impact, 191 unique tenants will see their rate go up in October (essentially all are individual customers, as very few have multiple units). These increases will generate roughly an additional $3,800 in monthly revenue going forward (before any potential move-out offsets) – a substantial boost to run-rate revenues. We have already witnessed some fallout prior to the effective date: a handful of tenants opted to vacate upon receiving increase notices (contributing to the Q3 move-outs discussed). However, the majority of customers have accepted the increases so far, indicating they value the service/location enough to pay more.

To illustrate, Ocean City’s increases are generally more moderate: e.g. one parking tenant’s rent will go from $70 to $95 per month (a $25 increase, ~36% jump). Verona’s increases include some very large adjustments: for example, a long-term Verona customer renting a 6×10 unit will go from $35 to $58 per month (a 65.7% increase)【53†】. Such big increases were targeted at units that were far below current market rates. Post-adjustment, these customers will still be paying within the market range for their unit sizes. The gross potential rent for October reflects these changes – we anticipate new higher rent roll figures for both sites (Ocean City’s GPR will rise above $47K, Verona’s above $33K monthly). Management will monitor receivables and occupancy closely in October to ensure that those who got increases follow through with payments at the new rates or that any vacated units are quickly re-leased.

Summary of October 2025 Rate Increases:

Total Increases: 191 customers (97 OC, 94 Verona) scheduled for 10/1/2025 rent bumps.

Average Increase Amount: ~$20 extra per month (per unit).

Average Increase %: ~30% (Ocean City ~21%, Verona ~38% on average).

Magnitude: Many increases are in the 10–25% range, with some outliers higher in Verona where prior rates were very low.

Revenue Impact: ~$3.8K/month aggregate rent roll increase (approx +7% to monthly revenue). This will start reflecting in October’s financials.

Site Breakdown: Ocean City’s increases focus on climate-controlled and parking units that have been long occupied (bringing them closer to street rates), while Verona’s include virtually all units since most were below market.

Customers Impacted: All affected tenants were notified per statute (generally 30+ days in advance). We will keep an eye on any unusual move-out volume in October related to these changes, but at this point, only the normal attrition has occurred. The expectation is that these rate increases will flow through to higher same-store revenue in Q4 2025, strengthening our year-end financial results.

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Conclusion & Talking Points

In summary, Q3 2025 performance for the Ocean City and Verona portfolio was solid, with revenue holding steady and strategic initiatives setting the stage for future growth. Occupancy slipped compared to last year, which is the main area of concern, but this was an anticipated short-term trade-off as we reset rental rates higher. The upside is now clear: the portfolio’s revenue per square foot and gross potential rent are at all-time highs, indicating much greater earning power once occupancy is restored. Despite the dip in occupancy, Q3 NOI margin remained healthy, and we expect improvement as the new rates take full effect.

Key takeaways and talking points:

Revenue Resilience: Even with ~4–5 percentage points lower occupancy than last year, Q3 2025 revenue was essentially flat year-over-year【17†】【20†】. This reflects pricing power in our markets – we successfully offset lower occupancy with higher rates. Going forward, every regained occupancy point will drop straight to revenue at these improved rates.

Occupancy Recovery Plan: Rebuilding occupancy is our top priority. Both sites have actionable vacancy (combined ~70 rentable units open). We are intensifying marketing and local outreach to drive move-ins. Given the historical demand and our competitive offerings, we are confident in leasing these units in the coming months. Each new rental at Ocean City and Verona now brings in more revenue than it would have a year ago, so the impact on NOI of refilling units will be significant.

Rate Increase Success: The October rate increase program was large in scope (191 tenants) but has been well executed. It will yield an approximately $45K annualized boost to revenue. We’ve largely brought legacy tenants up to market rent, capturing upside that was previously left on the table. Importantly, early indications are that tenant pushback has been limited – most customers are accepting the new rates, affirming our pricing strategy.

Expense Management: Q3 had some elevated expenses (notably property taxes and a one-time marketing push). These were planned and are either seasonal or strategic investments. Core operating expenses remain under control. Barring unforeseen costs, expense growth for the year is within budget. We will continue to be vigilant on costs, but no big spikes are expected in Q4. This positions us to convert the upcoming revenue gains directly into improved NOI.

Ancillary Income & Other Wins: We’ve unlocked additional revenue streams – tenant insurance, admin fees, late fees – which together contributed several thousand dollars in Q3【19†】【29†】. These often overlooked items now meaningfully enhance our cash flow. Operationally, the facilities are in good shape: we addressed delinquencies, maintained high security and cleanliness standards, and received positive customer feedback (Verona averages 4.8 stars in recent Google reviews, indicating solid tenant satisfaction).

Outlook: With the heavy lifting of rent adjustments done, Q4 and beyond should benefit from a “new normal” of higher rental income. Our focus will be on occupancy and customer service to ensure we retain tenants at these higher rates. The combination of full facilities and premium rents will maximize revenue. We anticipate a return to year-over-year growth in NOI as soon as next quarter, driven by the rent increases and re-leasing of vacant units. Overall, the portfolio is performing well and is poised to finish 2025 on a strong note, continuing to deliver value to ownership.

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