Form: 8-K

Current report filing

October 30, 2019

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Table of Contents
Page
 
 
 
Earnings Release
 
 
Consolidated Statements of Operations
 
 
Consolidated Balance Sheets
 
 
Schedule 1 - Funds From Operations and Core Funds From Operations
 
 
Schedule 2 - Other Non-GAAP Financial Measurements
 
 
Schedule 3 - Portfolio Summary
 
 
Schedule 4 - Debt and Equity Capitalization
 
 
Schedule 5 - Summarized Information for Unconsolidated Real Estate Ventures
 
 
Schedule 6 - Same Store Performance Summary By State
 
 
Schedule 7 - Same Store Performance Summary By MSA
 
 
Schedule 8 - Same Store Operating Data - Trailing Five Quarters
 
 
Schedule 9 - Reconciliation of Same Store Data and Net Operating Income to Net Income
 
 
Schedule 10 - Selected Financial Information
 
 
Glossary
 
 
 
 
 
 
 
 



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October 30, 2019
National Storage Affiliates Trust Reports Third Quarter 2019 Results
GREENWOOD VILLAGE, Colo. - (BUSINESS WIRE) - National Storage Affiliates Trust (“NSA” or the "Company") (NYSE: NSA) today reported the Company’s third quarter 2019 results.
Third Quarter 2019 Highlights
Reported net income of $16.5 million for the third quarter of 2019, a decrease of 1.9% compared to the third quarter of 2018. Reported loss per share of $0.20 for the third quarter of 2019, primarily relating to the HLBV method for allocating net income among the various classes of equity.
Reported core funds from operations ("Core FFO") of $36.7 million, or $0.40 per share for the third quarter of 2019, an increase of 11.1% per share compared to the third quarter of 2018.
Achieved same store net operating income ("NOI") growth of 4.2% for the third quarter of 2019 compared to the same period in 2018, driven by a 3.7% increase in same store total revenues and a 2.7% increase in same store property operating expenses.
Acquired six wholly-owned self storage properties for $35.8 million during the third quarter of 2019. Consideration for these acquisitions included the issuance of approximately $1.0 million of OP equity.
Issued $100.0 million of 3.98% senior unsecured notes due August 30, 2029 and $50.0 million of 4.08% senior unsecured notes due August 30, 2031 in the Company's inaugural debt private placement.
Executed an agreement with lenders to extend maturities and increase the total borrowing capacity under the Company's credit facility by $255.0 million for a total credit facility of $1.275 billion.
Arlen Nordhagen, Chairman and Chief Executive Officer, commented, "Once again, our quarterly results were slightly ahead of expectations and included strong 4.2% same store NOI growth driven by a 3.7% increase in same store total revenues. These operating results combined with the acquisition of 62 self storage properties during the first three quarters of 2019 generated an excellent 11.1% increase in third quarter 2019 Core FFO per share."
Tamara Fischer, President and Chief Financial Officer, added, "With the amendment of our credit facility and the closing of a debt private placement during the third quarter, our balance sheet is well positioned to fund our long-term growth plans. We ended the third quarter with a weighted average cost of debt of 3.5%, a weighted average maturity of 6.2 years and the full borrowing capacity available under our $500.0 million revolving line of credit."
Ms. Fischer continued, "Given third quarter results were slightly ahead of expectations, and we expect fourth quarter operating expenses to be lower than prior forecasts, we are again increasing guidance for Core FFO per share and same store NOI growth assumptions for full-year 2019."


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Financial Results
($ in thousands, except per share and unit data)
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
Growth
 
2019
 
2018
 
Growth
Net income
$
16,514

 
$
16,829

 
(1.9
)%
 
$
47,187

 
$
41,843

 
12.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
Funds From Operations ("FFO")(1)
$
36,375

 
$
31,083

 
17.0
 %
 
$
102,933

 
$
84,177

 
22.3
 %
Add back acquisition costs
321

 
141

 
127.7
 %
 
783

 
471

 
66.2
 %
Core FFO(1)
$
36,696

 
$
31,224

 
17.5
 %
 
$
103,716

 
$
84,648

 
22.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per share - basic and diluted
$
(0.20
)
 
$
0.03

 
(766.7
)%
 
$
(0.32
)
 
$
0.25

 
(228.0
)%
 
 
 
 
 
 
 
 
 
 
 
 
FFO per share and unit(1)
$
0.39

 
$
0.36

 
8.3
 %
 
$
1.14

 
$
1.01

 
12.9
 %
Core FFO per share and unit(1)
$
0.40

 
$
0.36

 
11.1
 %
 
$
1.15

 
$
1.01

 
13.9
 %
(1) Non-GAAP financial measures, including FFO, Core FFO and NOI, are defined in the Glossary in the supplemental financial information and, where appropriate, reconciliations of these measures and other non-GAAP financial measures to their most directly comparable GAAP measures are included in the Schedules to this press release and in the supplemental financial information. 
Net income decreased $0.3 million for the third quarter of 2019 and increased $5.3 million for the nine months ended September 30, 2019 ("year-to-date") as compared to the same periods in 2018. The decrease for the third quarter of 2019 resulted from increases in depreciation and amortization, interest expense, general and administrative expenses and GAAP losses from the Company's unconsolidated real estate ventures substantially offset by additional NOI generated primarily from 69 wholly-owned self storage properties acquired between October 1, 2018 and September 30, 2019 and same store NOI growth. The year-to-date increase was the result of additional NOI generated primarily from 69 wholly-owned self storage properties acquired between October 1, 2018 and September 30, 2019, same store NOI growth and gain on sale of self storage properties, partially offset by increases in interest expense, depreciation and amortization, general and administrative expenses and GAAP losses from the Company's unconsolidated real estate ventures.
The increases in FFO and Core FFO for the third quarter of 2019 and year-to-date were primarily the result of incremental NOI from properties acquired between October 1, 2018 and September 30, 2019, same store NOI growth, and incremental FFO from the Company's unconsolidated real estate ventures, partially offset by higher interest expense, general and administrative expenses and increases in distributions to subordinated performance unitholders.
Same Store Operating Results (439 Stores)
($ in thousands, except per square foot data)
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
Growth
 
2019
 
2018
 
Growth
Total revenues
$
76,015

 
$
73,300

 
3.7
%
 
$
222,385

 
$
213,045

 
4.4
%
Property operating expenses
22,595

 
22,010

 
2.7
%
 
66,931

 
65,557

 
2.1
%
Net Operating Income (NOI)
$
53,420

 
$
51,290

 
4.2
%
 
$
155,454

 
$
147,488

 
5.4
%
NOI Margin
70.3
%
 
70.0
%
 
0.3
%
 
69.9
%
 
69.2
%
 
0.7
%
 
 
 
 
 
 
 
 
 
 
 
 
Average Occupancy
90.2
%
 
89.9
%
 
0.3
%
 
89.0
%
 
88.7
%
 
0.3
%
Average Annualized Rental Revenue Per Occupied Square Foot
$
12.06

 
$
11.68

 
3.3
%
 
$
11.91

 
$
11.49

 
3.7
%
Year-over-year same store total revenues increased 3.7% for the third quarter of 2019 and 4.4% year-to-date as compared to the same periods in 2018. The increases were driven primarily by a 3.3% increase in average annualized rental revenue per occupied square foot for the third quarter of 2019 and a 3.7% increase in average annualized rental revenue per occupied square foot year-to-date combined with a 30 basis point increase in average occupancy in both periods. Markets that generated above portfolio average same store total revenue growth include: Riverside-San

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Bernardino, Atlanta, and Las Vegas. Markets that generated below portfolio average same store total revenue growth include: Portland, Dallas and Tulsa.
Year-over-year same store property operating expenses increased 2.7% for the third quarter of 2019 and 2.1% year-to-date as compared to the same periods in 2018. These increases primarily resulted from increases in property taxes, personnel costs and repairs and maintenance expenses partially offset by decreases in insurance costs.
Investment Activity
NSA acquired six wholly-owned self storage properties located across four states consisting of approximately 0.3 million rentable square feet configured in approximately 3,200 storage units during the third quarter of 2019. Total consideration for these acquisitions of $35.8 million included approximately $34.6 million of net cash, the issuance of approximately $1.0 million of subordinated performance units and the assumption of approximately $0.2 million of other working capital liabilities.
Balance Sheet
On July 29, 2019, NSA executed an agreement with a syndicated group of lenders to amend its credit facility, increasing the total capacity by $255.0 million for a total credit facility of $1.275 billion (the "amended credit facility"), which included an additional $100 million of revolving line of credit capacity and $155.0 million of additional term loan borrowings. The agreement also reduced the spread for the revolving line of credit by 10 basis points and the weighted average interest rate of the credit facility's term loan borrowings by 7 basis points, after taking into account the effect of interest rate swaps.
The Company's amended credit facility consists of the following components: (i) a revolving line of credit that matures in January 2024 which provides for a total borrowing commitment up to $500.0 million, (ii) a $125.0 million Term Loan A that matures in January 2023, (iii) a $250.0 million Term Loan B that matures in July 2024, (iv) a $225.0 million Term Loan C that matures in January 2025, and (v) a $175.0 million Term Loan D that matures in July 2026. The Company has an expansion option under the credit facility, which if fully exercised, would provide for a total borrowing capacity under the credit facility of $1.750 billion.
On August 30, 2019, the Company's operating partnership issued $100.0 million of 3.98% senior unsecured notes due August 30, 2029 and $50.0 million of 4.08% senior unsecured notes due August 30, 2031 (the "Senior Unsecured Notes") in a private placement to certain institutional accredited investors.
Common Share Dividends
On August 22, 2019, NSA's Board of Trustees declared a quarterly cash dividend of $0.32 per common share, which was paid on September 30, 2019 to shareholders of record as of September 13, 2019.

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2019 Guidance
The following table outlines NSA's updated and prior FFO guidance estimates and related assumptions for the year ended December 31, 2019:
 
Current Ranges for
Full Year 2019
 
Prior Ranges for
Full Year 2019
 
Low
 
High
 
Low
 
High
Core FFO per share(1)
$1.52
 
$1.54
 
$1.51
 
$1.54
 
 
 
 
 
 
 
 
Same store operations (439 stores)
 
 
 
 
 
 
 
Total revenue growth
3.5%
 
4.0%
 
3.5%
 
4.0%
Property operating expenses growth
2.25%
 
2.75%
 
2.75%
 
3.25%
NOI growth
4.25%
 
4.75%
 
3.5%
 
4.5%
 
 
 
 
 
 
 
 
General and administrative expenses (as a percent of revenue)
11.0%
 
12.0%
 
11.0%
 
12.0%
General and administrative expenses (excluding equity-based compensation)
10.0%
 
10.5%
 
10.0%
 
10.5%
Equity-based compensation
1.0%
 
1.5%
 
1.0%
 
1.5%
 
 
 
 
 
 
 
 
Management fees and other revenue, in millions
$20.0
 
$21.0
 
$20.0
 
$21.0
Core FFO from unconsolidated real estate ventures, in millions
$15.0
 
$16.0
 
$15.0
 
$16.0
 
 
 
 
 
 
 
 
Subordinated performance unit distributions, in millions
$33.0
 
$35.0
 
$33.0
 
$35.0
 
 
 
 
 
 
 
 
Wholly-owned acquisitions, in millions
$425.0
 
$475.0
 
$400.0
 
$500.0
Joint venture acquisitions, in millions
$—
 
$25.0
 
$20.0
 
$100.0
(1) The following table provides a reconciliation of the range of estimated earnings (loss) per share - diluted to estimated Core FFO per share and unit:
 
Current Ranges for
Full Year 2019
 
Prior Ranges for
Full Year 2019
 
Low
 
High
 
Low
 
High
Earnings (loss) per share - diluted
$(0.40)
 
$(0.30)
 
$(0.20)
 
$(0.10)
Impact of the difference in weighted average number of shares and GAAP accounting for noncontrolling interests, two-class method and treasury stock method
0.94
 
0.85
 
0.79
 
0.70
Add real estate depreciation and amortization, including NSA's share of unconsolidated venture real estate depreciation and amortization
1.36
 
1.39
 
1.30
 
1.34
Subtract gain on sale of self storage properties
(0.03)
 
(0.03)
 
(0.03)
 
(0.03)
FFO attributable to subordinated unitholders
(0.36)
 
(0.38)
 
(0.36)
 
(0.38)
Add acquisition costs and NSA's share of unconsolidated real estate venture acquisition costs
0.01
 
0.01
 
0.01
 
0.01
Core FFO per share and unit
$1.52
 
$1.54
 
$1.51
 
$1.54
Supplemental Financial Information
The full text of this earnings release and supplemental financial information, including certain financial information referenced in this release, are available on NSA's website at http://ir.nationalstorageaffiliates.com/quarterly-reporting and as exhibit 99.1 to the Company's Form 8-K furnished to the SEC on October 30, 2019.

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Non-GAAP Financial Measures & Glossary
This press release contains certain non-GAAP financial measures. These non-GAAP measures are presented because NSA's management believes these measures help investors understand NSA's business, performance and ability to earn and distribute cash to its shareholders by providing perspectives not immediately apparent from net income (loss). These measures are also frequently used by securities analysts, investors and other interested parties. The presentations of FFO, Core FFO and NOI in this press release are not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, NSA's method of calculating these measures may be different from methods used by other companies, and, accordingly, may not be comparable to similar measures as calculated by other companies that do not use the same methodology as NSA. These measures, and other words and phrases used herein, are defined in the Glossary in the supplemental financial information and, where appropriate, reconciliations of these measures and other non-GAAP financial measures to their most directly comparable GAAP measures are included in the Schedules to this press release and in the supplemental financial information.
Quarterly Teleconference and Webcast
The Company will host a conference call at 1:00pm Eastern Time on Thursday, October 31, 2019 to discuss its financial results. At the conclusion of the call, management will accept questions from certified financial analysts. All other participants are encouraged to listen to a webcast of the call by accessing the link found on the Company's website at www.nationalstorageaffiliates.com.
Conference Call and Webcast:
Date/Time: Thursday, October 31, 2019, 1:00pm ET
Webcast available at: www.nationalstorageaffiliates.com
Domestic (Toll Free US & Canada): 877.407.9711
International: 412.902.1014
Replay:
Domestic (Toll Free US & Canada): 877.660.6853
International: 201.612.7415
Conference ID: 13692161
A replay of the call will be available for one week through Thursday, November 7, 2019. A replay of the webcast will be available for 30 days on NSA's website at www.nationalstorageaffiliates.com.
Upcoming Industry Conferences
NSA management is scheduled to participate in the Nareit REITworld 2019 Annual Conference on November 12-14, 2019 in Los Angeles, California.
About National Storage Affiliates Trust
National Storage Affiliates Trust is a Maryland real estate investment trust focused on the ownership, operation and acquisition of self storage properties located within the top 100 metropolitan statistical areas throughout the United States. As of September 30, 2019, the Company held ownership interests in and operated 735 self storage properties located in 35 states and Puerto Rico with approximately 46.8 million rentable square feet. NSA is one of the largest owners and operators of self storage properties among public and private companies in the United States. For more information, please visit the Company’s website at www.nationalstorageaffiliates.com. NSA is included in the MSCI US REIT Index (RMS/RMZ), the Russell 2000 Index of Companies and the S&P SmallCap 600 Index.

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NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements contained in this press release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company's control. These forward-looking statements include information about possible or assumed future results of the Company's business, financial condition, liquidity, results of operations, plans and objectives. Changes in any circumstances may cause the Company's actual results to differ significantly from those expressed in any forward-looking statement. When used in this release, the words "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "may" or similar expressions are intended to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: market trends in the Company's industry, interest rates, the debt and lending markets or the general economy; the Company's business and investment strategy; the acquisition of properties, including those under contract, our ability to execute on our acquisition pipeline; the timing of acquisitions under contract; and the Company's guidance estimates for the year ended December 31, 2019. For a further list and description of such risks and uncertainties, see the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, and the other documents filed by the Company with the Securities and Exchange Commission. The forward-looking statements, and other risks, uncertainties and factors are based on the Company's beliefs, assumptions and expectations of its future performance, taking into account all information currently available to the Company. Forward-looking statements are not predictions of future events. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Contact:
National Storage Affiliates Trust
Investor/Media Relations
George Hoglund, CFA
Vice President - Investor Relations
720.630.2160
ghoglund@nsareit.net

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National Storage Affiliates Trust
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
REVENUE
 
 
 
 
 
 
 
Rental revenue
$
92,746

 
$
79,547

 
$
262,776

 
$
226,577

Other property-related revenue
3,217

 
2,687

 
9,169

 
7,557

Management fees and other revenue
5,374

 
3,148

 
15,383

 
7,464

Total revenue
101,337

 
85,382

 
287,328

 
241,598

OPERATING EXPENSES
 
 
 
 
 
 
 
Property operating expenses
28,988

 
26,552

 
82,635

 
76,962

General and administrative expenses
12,039

 
8,848

 
33,975

 
25,614

Depreciation and amortization
27,598

 
22,469

 
77,776

 
66,226

Total operating expenses
68,625

 
57,869

 
194,386

 
168,802

OTHER (EXPENSE) INCOME

 

 

 

Interest expense
(14,432
)
 
(10,656
)
 
(41,590
)
 
(30,763
)
Equity in (losses) earnings of unconsolidated real estate ventures
(1,214
)
 
242

 
(4,962
)
 
290

Acquisition costs
(321
)
 
(141
)
 
(783
)
 
(471
)
Non-operating (expense) income
(8
)
 
153

 
(275
)
 
69

Gain on sale of self storage properties

 

 
2,814

 
391

Other expense
(15,975
)
 
(10,402
)
 
(44,796
)
 
(30,484
)
Income before income taxes
16,737

 
17,111

 
48,146

 
42,312

Income tax expense
(223
)
 
(282
)
 
(959
)
 
(469
)
Net income
16,514

 
16,829

 
47,187

 
41,843

Net income attributable to noncontrolling interests
(25,374
)
 
(12,435
)
 
(56,292
)
 
(21,098
)
Net (loss) income attributable to National Storage Affiliates Trust
(8,860
)
 
4,394

 
(9,105
)
 
20,745

Distributions to preferred shareholders
(3,272
)
 
(2,588
)
 
(9,117
)
 
(7,763
)
Net (loss) income attributable to common shareholders
$
(12,132
)
 
$
1,806

 
$
(18,222
)
 
$
12,982

 
 
 
 
 
 
 
 
Earnings (loss) per share - basic and diluted
$
(0.20
)
 
$
0.03

 
$
(0.32
)
 
$
0.25

 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic and diluted
59,278

 
55,722

 
57,835

 
52,189


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National Storage Affiliates Trust
Consolidated Balance Sheets
(dollars in thousands, except per share amounts)
(unaudited)
 
September 30,
 
December 31,
 
2019
 
2018
ASSETS
 
 
 
Real estate
 
 
 
Self storage properties
$
3,055,597

 
$
2,637,723

Less accumulated depreciation
(313,694
)
 
(246,261
)
Self storage properties, net
2,741,903

 
2,391,462

Cash and cash equivalents
44,749

 
13,181

Restricted cash
5,457

 
3,182

Debt issuance costs, net
3,464

 
1,260

Investment in unconsolidated real estate ventures
228,446

 
245,125

Other assets, net
63,271

 
75,053

Operating lease right-of-use assets
23,507

 

Total assets
$
3,110,797

 
$
2,729,263

LIABILITIES AND EQUITY
 
 
 
Liabilities
 
 
 
Debt financing
$
1,533,936

 
$
1,278,102

Accounts payable and accrued liabilities
78,849

 
33,130

Operating lease liabilities
24,777

 

Deferred revenue
16,029

 
15,732

Total liabilities
1,653,591

 
1,326,964

Equity
 
 
 
Preferred shares of beneficial interest, par value $0.01 per share. 50,000,000 authorized, 8,727,119 and 6,900,000 issued and outstanding at September 30, 2019 and December 31, 2018, respectively, at liquidation preference
218,178

 
172,500

Common shares of beneficial interest, par value $0.01 per share. 250,000,000 shares authorized, 59,328,388 and 56,654,009 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
593

 
567

Additional paid-in capital
901,530

 
844,276

Distributions in excess of earnings
(187,305
)
 
(114,122
)
Accumulated other comprehensive (loss) income
(17,294
)
 
13,618

Total shareholders' equity
915,702

 
916,839

Noncontrolling interests
541,504

 
485,460

Total equity
1,457,206

 
1,402,299

Total liabilities and equity
$
3,110,797

 
$
2,729,263



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Supplemental Schedule 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funds From Operations and Core Funds From Operations
(in thousands, except per share and unit amounts) (unaudited)
 
 
 
 
 
 
 
 
Reconciliation of Net Income to FFO and Core FFO
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
16,514

 
$
16,829

 
$
47,187

 
$
41,843

Add (subtract):
 
 
 
 
 
 
 
Real estate depreciation and amortization
27,279

 
22,164

 
76,816

 
65,332

Company's share of unconsolidated real estate venture real estate depreciation and amortization
5,197

 
1,954

 
16,126

 
4,709

Gain on sale of self storage properties

 

 
(2,814
)
 
(391
)
Company's share of unconsolidated real estate venture loss on sale of properties

 
205

 
202

 
205

Distributions to preferred shareholders and unitholders
(3,515
)
 
(2,711
)
 
(9,729
)
 
(8,106
)
FFO attributable to subordinated performance unitholders(1)
(9,100
)
 
(7,358
)
 
(24,855
)
 
(19,415
)
FFO attributable to common shareholders, OP unitholders, and LTIP unitholders
36,375

 
31,083

 
102,933

 
84,177

Add:
 
 
 
 
 
 
 
Acquisition costs
321

 
141

 
783

 
471

Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders
$
36,696

 
$
31,224

 
$
103,716

 
$
84,648

 
 
 
 
 
 
 
 
Weighted average shares and units outstanding - FFO and Core FFO:(2)
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
59,278

 
55,722

 
57,835

 
52,189

Weighted average restricted common shares outstanding
27

 
29

 
29

 
30

Weighted average OP units outstanding
30,483

 
28,910

 
30,217

 
29,009

Weighted average DownREIT OP unit equivalents outstanding
1,848

 
1,835

 
1,848

 
1,835

Weighted average LTIP units outstanding
535

 
715

 
605

 
689

Total weighted average shares and units outstanding - FFO and Core FFO
92,171

 
87,211

 
90,534

 
83,752

 
 
 
 
 
 
 
 
FFO per share and unit
$
0.39

 
$
0.36

 
$
1.14

 
$
1.01

Core FFO per share and unit
$
0.40

 
$
0.36

 
$
1.15

 
$
1.01

 
 
 
 
 
 
 
 
(1) Amounts represent distributions declared for subordinated performance unitholders and DownREIT subordinated performance unitholders for the periods presented.
(2) NSA combines OP units and DownREIT OP units with common shares because, after the applicable lock-out periods, OP units in the Company's operating partnership are redeemable for cash or, at NSA's option, exchangeable for common shares on a one-for-one basis and DownREIT OP units are also redeemable for cash or, at NSA's option, exchangeable for OP units in the Company's operating partnership on a one-for-one basis, subject to certain adjustments in each case. Subordinated performance units, DownREIT subordinated performance units and LTIP units may also, under certain circumstances, be convertible into or exchangeable for common shares (or other units that are convertible into or exchangeable for common shares). See footnote(3) for additional discussion of subordinated performance units, DownREIT subordinated performance units, and LTIP units in the calculation of FFO and Core FFO per share and unit.

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Supplemental Schedule 1 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funds From Operations and Core Funds From Operations
(in thousands, except per share and unit amounts) (unaudited)
 
 
 
 
 
 
 
 
Reconciliation of Earnings (Loss) Per Share - Diluted to FFO and Core FFO Per Share and Unit
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Earnings (loss) per share - diluted
$
(0.20
)
 
$
0.03

 
$
(0.32
)
 
$
0.25

Impact of the difference in weighted average number of shares(3)
0.07

 

 
0.11

 
(0.10
)
Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method(4)
0.26

 
0.14

 
0.62

 
0.25

Add real estate depreciation and amortization
0.30

 
0.25

 
0.85

 
0.78

Add Company's share of unconsolidated real estate venture real estate depreciation and amortization
0.06

 
0.02

 
0.18

 
0.06

Subtract gain on sale of self storage properties

 

 
(0.03
)
 

FFO attributable to subordinated performance unitholders
(0.10
)
 
(0.08
)
 
(0.27
)
 
(0.23
)
FFO per share and unit
0.39

 
0.36

 
1.14

 
1.01

Add acquisition costs
0.01

 

 
0.01

 

Core FFO per share and unit
$
0.40

 
$
0.36

 
$
1.15

 
$
1.01

 
 
 
 
 
 
 
 
(3) Adjustment accounts for the difference between the weighted average number of shares used to calculate diluted earnings per share and the weighted average number of shares used to calculate FFO and Core FFO per share and unit. Diluted earnings per share is calculated using the two-class method for the company's restricted common shares and the treasury stock method for certain unvested LTIP units, and assumes the conversion of vested LTIP units into OP units on a one-for-one basis and the hypothetical conversion of subordinated performance units, and DownREIT subordinated performance units into OP units, even though such units may only be convertible into OP units (i) after a lock-out period and (ii) upon certain events or conditions. For additional information about the conversion of subordinated performance units and DownREIT subordinated performance units into OP units, see Note 10 to the Company's most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission. The computation of weighted average shares and units for FFO and Core FFO per share and unit includes all restricted common shares and LTIP units that participate in distributions and excludes all subordinated performance units and DownREIT subordinated performance units because their effect has been accounted for through the allocation of FFO to the related unitholders based on distributions declared.
(4) Represents the effect of adjusting the numerator to consolidated net income (loss) prior to GAAP allocations for noncontrolling interests, after deducting preferred share and unit distributions, and before the application of the two-class method and treasury stock method, as described in footnote(3).

10

image0a93.jpg

Supplemental Schedule 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Non-GAAP Financial Measurements
 
 
 
 
 
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Operating Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
16,514

 
$
16,829

 
$
47,187

 
$
41,843

(Subtract) add:
 
 
 
 
 
 
 
Management fees and other revenue
(5,374
)
 
(3,148
)
 
(15,383
)
 
(7,464
)
General and administrative expenses
12,039

 
8,848

 
33,975

 
25,614

Depreciation and amortization
27,598

 
22,469

 
77,776

 
66,226

Interest expense
14,432

 
10,656

 
41,590

 
30,763

Equity in losses (earnings) of unconsolidated real estate ventures
1,214

 
(242
)
 
4,962

 
(290
)
Acquisition costs
321

 
141

 
783

 
471

Income tax expense
223

 
282

 
959

 
469

Gain on sale of self storage properties

 

 
(2,814
)
 
(391
)
Non-operating expense (income)
8

 
(153
)
 
275

 
(69
)
Net Operating Income
$
66,975

 
$
55,682

 
$
189,310

 
$
157,172

 
 
 
 
 
 
 
 
EBITDA and Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
16,514

 
$
16,829

 
$
47,187

 
$
41,843

Add:
 
 
 
 
 
 
 
Depreciation and amortization
27,598

 
22,469

 
77,776

 
66,226

Company's share of unconsolidated real estate venture depreciation and amortization
5,197

 
1,954

 
16,126

 
4,709

Interest expense
14,432

 
10,656

 
41,590

 
30,763

Income tax expense
223

 
282

 
959

 
469

EBITDA
63,964

 
52,190

 
183,638

 
144,010

Add (subtract):
 
 
 
 
 
 
 
Acquisition costs
321

 
141

 
783

 
471

Gain on sale of self storage properties

 

 
(2,814
)
 
(391
)
Company's share of unconsolidated real estate venture loss on sale of properties

 
205

 
202

 
205

Equity-based compensation expense
1,153

 
1,022

 
3,373

 
2,808

Adjusted EBITDA
$
65,438

 
$
53,558

 
$
185,182

 
$
147,103


11

image0a93.jpg

Supplemental Schedule 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Summary
As of September 30, 2019
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholly-Owned Store Data by State (Consolidated)
 
Total Operated Store Data by State (Consolidated & Unconsolidated)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State/Territories
 
Stores
 
Units
 
Rentable Square Feet
 
Occupancy at Period End
 
State/Territories
 
Stores
 
Units
 
Rentable Square Feet
 
Occupancy at Period End
California
 
83

 
49,607

 
6,227,213

 
89.9
%
 
California
 
93

 
55,804

 
6,981,567

 
89.6
%
Texas
 
70

 
29,006

 
4,159,442

 
88.1
%
 
Texas
 
74

 
31,341

 
4,436,231

 
87.6
%
Oregon
 
61

 
24,498

 
3,105,159

 
84.5
%
 
Florida
 
69

 
43,175

 
4,566,339

 
86.0
%
Georgia
 
43

 
18,480

 
2,459,489

 
90.9
%
 
Oregon
 
61

 
24,498

 
3,105,159

 
84.5
%
Florida
 
42

 
27,798

 
2,844,274

 
87.8
%
 
Georgia
 
54

 
24,621

 
3,331,797

 
90.2
%
North Carolina
 
33

 
15,379

 
1,885,479

 
94.2
%
 
Oklahoma
 
36

 
16,093

 
2,196,964

 
89.4
%
Arizona
 
31

 
16,896

 
1,927,092

 
89.0
%
 
Arizona
 
33

 
17,905

 
2,036,922

 
88.8
%
Oklahoma
 
30

 
13,849

 
1,903,042

 
88.9
%
 
North Carolina
 
33

 
15,379

 
1,885,479

 
94.2
%
Louisiana
 
26

 
12,348

 
1,539,774

 
85.6
%
 
Louisiana
 
26

 
12,348

 
1,539,774

 
85.6
%
Indiana
 
16

 
8,783

 
1,134,830

 
91.9
%
 
Michigan
 
24

 
15,622

 
1,977,623

 
88.4
%
Kansas
 
16

 
5,716

 
763,249

 
88.8
%
 
Ohio
 
22

 
12,424

 
1,526,139

 
88.5
%
Washington
 
14

 
4,497

 
578,723

 
82.5
%
 
New Jersey
 
18

 
11,962

 
1,417,062

 
89.4
%
Nevada
 
13

 
6,677

 
844,761

 
90.6
%
 
Nevada
 
17

 
8,295

 
1,096,918

 
89.7
%
Colorado
 
11

 
5,050

 
615,468

 
89.8
%
 
Indiana
 
16

 
8,783

 
1,134,830

 
91.9
%
New Hampshire
 
11

 
4,667

 
571,045

 
90.6
%
 
Kansas
 
16

 
5,716

 
763,249

 
88.8
%
Ohio
 
8

 
3,640

 
461,393

 
90.3
%
 
Alabama
 
15

 
6,297

 
937,091

 
87.6
%
Other(1)
 
52

 
25,654

 
3,128,429

 
88.5
%
 
Washington
 
14

 
4,497

 
578,723

 
82.5
%
Total
 
560

 
272,545

 
34,148,862

 
88.8
%
 
Massachusetts
 
11

 
7,800

 
836,596

 
88.7
%
 
 
 
 
 
 
 
 
 
 
Colorado
 
11

 
5,050

 
615,468

 
89.8
%
 
 

 

 

 
 
 
New Hampshire
 
11

 
4,667

 
571,045

 
90.6
%
 
 
 
 
 
 
 
 
 
 
Other(2)
 
81

 
43,387

 
5,228,815

 
86.3
%
 
 

 

 

 
 
 
Total
 
735

 
375,664

 
46,763,791

 
88.2
%





(1) Other states and territories in NSA's owned portfolio as of September 30, 2019 include Alabama, Idaho, Illinois, Kentucky, Maryland, Massachusetts, Mississippi, Missouri, New Jersey, New Mexico, Pennsylvania, South Carolina, Virginia and Puerto Rico.
(2) Other states and territories in NSA's operated portfolio as of September 30, 2019 include Delaware, Idaho, Illinois, Kentucky, Maryland, Minnesota, Mississippi, Missouri, New Mexico, New York, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia and Puerto Rico.

12

image0a93.jpg

Supplemental Schedule 3 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Summary
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 Acquisition Activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Self Storage Properties Acquired
During the Quarter Ended:
 
 
 
 
 
 
 
Summary of Investment
 
Stores
 
Units
 
Rentable Square Feet
 
Cash and Acquisition Costs
 
Value of OP Equity
 
Other Liabilities
 
Total
 
 
 
 
 
March 31, 2019
 
32
 
14,952
 
1,745,495

 
$
160,531

 
$
33,356

 
$
674

 
$
194,561

June 30, 2019
 
24
 
12,327
 
1,762,895

 
168,442

 
15,515

 
1,378

 
185,335

September 30, 2019
 
6
 
3,193
 
329,002

 
34,624

 
950

 
197

 
35,771

Total Acquisitions(3)
 
62
 
30,472
 
3,837,392

 
$
363,597

 
$
49,821

 
$
2,249

 
$
415,667

 
2019 Disposition & Divestiture Activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dispositions Closed During the Quarter Ended:
 
Stores
 
Units
 
Rentable Square Feet
 
Gross Proceeds
 
 
June 30, 2019(4)
 
1
 
453
 
45,273

 
$
6,500

 
Unconsolidated Real Estate Ventures (at 100%)(5)
 
 
 
 
 
 
 
 
 
March 31, 2019(6)
 
1
 
318
 
40,930

 
4,075

 
Total 2019 Divestitures(5)
 
2
 
771
 
86,203

 
$
10,575















(3) NSA acquired self storage properties located in Arizona (2), Florida (8), Georgia (9), Idaho (3), Louisiana (12), Maryland (1), Massachusetts (2), New Hampshire (1), New Jersey (3), New Mexico (4), Oregon (1), Pennsylvania (6) and Texas (10).
(4) NSA disposed of a self storage property located in Washington during 2019.
(5) Values represent entire unconsolidated real estate ventures at 100%, not NSA's proportionate share. NSA's ownership in each of the unconsolidated real estate ventures is 25%.
(6) The divestiture completed during the quarter ended March 31, 2019 was a sale from one of NSA's unconsolidated real estate ventures into the consolidated portfolio of NSA.

13

image0a93.jpg

Supplemental Schedule 4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt and Equity Capitalization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Summary (dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Interest Rate(1)
 
Basis of Rate
 
Maturity Date
 
2019
 
2020
 
2021
 
2022
 
2023
 
2024
 
2025
 
Thereafter
 
Total
Credit Facility:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving line of credit
3.32%
 
Variable(2)
 
January 2024
 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
$

Term loan - Tranche A
3.74%
 
Swapped To Fixed
 
January 2023
 

 

 

 

 
125,000

 

 

 

 
125,000

Term loan - Tranche B
2.91%
 
Swapped To Fixed
 
July 2024
 

 

 

 

 

 
250,000

 

 

 
250,000

Term loan - Tranche C
2.80%
 
Swapped To Fixed
 
January 2025
 

 

 

 

 

 

 
225,000

 

 
225,000

Term loan - Tranche D
3.57%
 
Swapped To Fixed
 
July 2026
 

 

 

 

 

 

 

 
175,000

 
175,000

Term loan facility - 2023
2.83%
 
Swapped To Fixed
 
June 2023
 

 

 

 

 
175,000

 

 

 

 
175,000

Term loan facility - 2028
4.62%
 
Swapped To Fixed
 
December 2028
 

 

 

 

 

 

 

 
75,000

 
75,000

Term loan facility - 2029
4.27%
 
Swapped To Fixed
 
April 2029
 

 

 

 

 

 

 

 
100,000

 
100,000

2029 Senior Unsecured Notes
3.98%
 
Fixed
 
August 2029
 

 

 

 

 

 

 

 
100,000

 
100,000

2031 Senior Unsecured Notes
4.08%
 
Fixed
 
August 2031
 

 

 

 

 

 

 

 
50,000

 
50,000

Fixed rate mortgages payable
4.18%
 
Fixed
 
October 2020 - October 2031
 

 
35,669

 
3,683

 

 
82,349

 
20,311

 

 
122,311

 
264,323

Total Principal/Weighted Average
3.53%
 
 
 
6.17 years
 
$

 
$
35,669

 
$
3,683

 
$

 
$
382,349

 
$
270,311

 
$
225,000

 
$
622,311

 
$
1,539,323

Unamortized debt issuance costs and debt premium, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(5,387
)
Total Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
$
1,533,936

Debt Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Covenant
 
Amount
Net Debt to Annualized Current Quarter Adjusted EBITDA
 
n/a
 
5.7x
Trailing Twelve Month Fixed Charge Coverage Ratio
 
> 1.5x
 
3.1x
Total Leverage Ratio
 
 
< 60.0%
 
41.6%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Effective interest rate incorporates the stated rate plus the impact of interest rate cash flow hedges and discount and premium amortization, if applicable.
(2) For the $500 million revolving line of credit, the effective interest rate is calculated based on one month LIBOR plus an applicable margin of 1.30% and excludes fees which range from 0.15% to 0.20% for unused borrowings.

14

image0a93.jpg

Supplemental Schedule 4 (continued)
 
 
 
 
Debt and Equity Capitalization
 
 
 
 
As of September 30, 2019
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
Preferred Shares and Units
 
 
 
 
 
 
 
Outstanding
 
 
6.000% Series A cumulative redeemable preferred shares of beneficial interest
8,727,119

 
 
6.000% Series A-1 cumulative redeemable preferred units
642,982

 
 
 
 
 
 
Common Shares and Units
 
 
 
 
 
 
 
Outstanding
 
If Converted
Common shares of beneficial interest
59,302,037

 
59,302,037

Restricted common shares
26,351

 
26,351

Total shares outstanding
59,328,388

 
59,328,388

Operating partnership units
30,458,558

 
30,458,558

DownREIT operating partnership unit equivalents
1,848,261

 
1,848,261

Total operating partnership units
32,306,819

 
32,306,819

Long-term incentive plan units(3)
536,173

 
536,173

Total shares and Class A equivalents outstanding
92,171,380

 
92,171,380

Subordinated performance units(4)
10,961,146

 
15,893,662

DownREIT subordinated performance unit equivalents(4)
4,371,622

 
6,338,852

Total subordinated partnership units
15,332,768

 
22,232,514

Total common shares and units outstanding
107,504,148

 
114,403,894










(3) Balances exclude 224,000 long-term incentive plan ("LTIP") units which only vest and participate in dividend distributions upon the future contribution of properties from the PROs.
(4) If converted balance assumes that each subordinated performance unit (including each DownREIT subordinated performance unit) is convertible into OP units, notwithstanding the two-year lock-out period on conversions for certain series of subordinated performance units, and that each subordinated performance unit would on average convert on a hypothetical basis into an estimated 1.45 OP units based on historical financial information for the trailing twelve months ended September 30, 2019. The hypothetical conversions are calculated by dividing the average cash available for distribution, or CAD, per subordinated performance unit by 110% of the CAD per OP unit over the same period. The Company anticipates that as CAD grows over time, the conversion ratio will also grow, including to levels that may exceed these amounts.

15

image0a93.jpg

Supplemental Schedule 5
 
 
 
 
 
Summarized Information for Unconsolidated Real Estate Ventures
(dollars in thousands) (unaudited)
 
 
Combined Balance Sheet Information
 
 
 
 
 
 Total Ventures at 100%(1)
 
September 30, 2019
 
December 31, 2018
ASSETS
 
 
 
 
Self storage properties, net
 
$
1,849,177

 
$
1,894,412

Other assets
 
27,632

 
50,915

Total assets
 
$
1,876,809

 
$
1,945,327

LIABILITIES AND EQUITY
 
 
 
 
Debt financing
 
$
947,678

 
$
956,357

Other liabilities
 
23,559

 
16,516

Equity
 
905,572

 
972,454

Total liabilities and equity
 
$
1,876,809

 
$
1,945,327

 
 
 
 
 
Combined Operating Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2019
 
Nine Months Ended September 30, 2019
 
 
 Total Ventures at 100%(1)
 
NSA Proportionate Share (Ventures at 25%)(2)
 
 Total Ventures at 100%(1)
 
NSA Proportionate Share (Ventures at 25%)(2)
Total revenue
 
$
41,600

 
$
10,400

 
$
122,253

 
$
30,563

Property operating expenses
 
12,727

 
3,182

 
37,815

 
9,454

Net operating income
 
28,873

 
7,218

 
84,438

 
21,109

Supervisory, administrative and other expenses
 
(2,750
)
 
(688
)
 
(8,109
)
 
(2,027
)
Depreciation and amortization
 
(20,788
)
 
(5,197
)
 
(64,502
)
 
(16,126
)
Interest expense
 
(9,934
)
 
(2,484
)
 
(29,895
)
 
(7,474
)
Loss on sale of self storage properties
 

 

 
(806
)
 
(202
)
Acquisition and other expenses
 
(314
)
 
(79
)
 
(1,141
)
 
(285
)
Net loss
 
$
(4,913
)
 
$
(1,230
)
 
$
(20,015
)
 
$
(5,005
)
Add (subtract):
 
 
 
 
 
 
 
 
Equity in earnings adjustments related to amortization of basis differences
 
 
 
16

 
 
 
43

Company's share of unconsolidated real estate venture real estate depreciation and amortization
 
 
 
5,197

 
 
 
16,126

Company's share of unconsolidated real estate venture loss on sale of properties
 
 
 

 
 
 
202

Company's share of FFO and Core FFO from unconsolidated real estate ventures
 
 
 
$
3,983

 
 
 
$
11,366


(1) Values represent entire unconsolidated real estate ventures at 100%, not NSA's proportionate share. NSA's ownership in each of the unconsolidated real estate ventures is 25%.
(2) NSA's proportionate share of its unconsolidated real estate ventures is derived by applying NSA's 25% ownership interest to each line item in the GAAP financial statements of the unconsolidated real estate ventures to calculate NSA's share of that line item. NSA believes this information offers insights into the financial performance of the Company, although the presentation of such information, and its combination with NSA's consolidated results, may not accurately depict the legal and economic implications of holding a noncontrolling interest in the unconsolidated real estate ventures. The operating agreements of the unconsolidated real estate ventures provide for the distribution of net cash flow to the unconsolidated real estate ventures' investors no less than monthly, generally in proportion to the investors’ respective ownership interests, subject to a promoted distribution to NSA upon the achievement of certain performance benchmarks by the non-NSA investor.

16

image0a93.jpg

Supplemental Schedule 6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By State
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2019 compared to Three Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
Property Operating Expenses
 
Net Operating Income
 
Net Operating Income Margin
State
Stores
3Q 2019
 
3Q 2018
 
Growth
 
3Q 2019
 
3Q 2018
 
Growth
 
3Q 2019
 
3Q 2018
 
Growth
 
3Q 2019
 
3Q 2018
 
Growth
California
80

 
$
19,584

 
$
18,787

 
4.2
 %
 
$
5,222

 
$
5,180

 
0.8
 %
 
$
14,362

 
$
13,607

 
5.5
 %
 
73.3
%
 
72.4
%
 
0.9
 %
Oregon
58

 
9,897

 
9,844

 
0.5
 %
 
2,500

 
2,409

 
3.8
 %
 
7,397

 
7,435

 
(0.5
)%
 
74.7
%
 
75.5
%
 
(0.8
)%
Texas
58

 
7,635

 
7,361

 
3.7
 %
 
2,812

 
2,704

 
4.0
 %
 
4,823

 
4,657

 
3.6
 %
 
63.2
%
 
63.3
%
 
(0.1
)%
Georgia
33

 
4,394

 
4,106

 
7.0
 %
 
1,323

 
1,297

 
2.0
 %
 
3,071

 
2,809

 
9.3
 %
 
69.9
%
 
68.4
%
 
1.5
 %
Oklahoma
30

 
3,735

 
3,632

 
2.8
 %
 
1,195

 
1,149

 
4.0
 %
 
2,540

 
2,483

 
2.3
 %
 
68.0
%
 
68.4
%
 
(0.4
)%
North Carolina
29

 
4,336

 
4,116

 
5.3
 %
 
1,259

 
1,231

 
2.3
 %
 
3,077

 
2,885

 
6.7
 %
 
71.0
%
 
70.1
%
 
0.9
 %
Florida
28

 
6,756

 
6,584

 
2.6
 %
 
2,056

 
2,052

 
0.2
 %
 
4,700

 
4,532

 
3.7
 %
 
69.6
%
 
68.8
%
 
0.8
 %
Arizona
16

 
3,318

 
3,169

 
4.7
 %
 
957

 
878

 
9.0
 %
 
2,361

 
2,291

 
3.1
 %
 
71.2
%
 
72.3
%
 
(1.1
)%
Indiana
16

 
2,588

 
2,530

 
2.3
 %
 
825

 
833

 
(1.0
)%
 
1,763

 
1,697

 
3.9
 %
 
68.1
%
 
67.1
%
 
1.0
 %
Louisiana
14

 
1,932

 
1,865

 
3.6
 %
 
687

 
675

 
1.8
 %
 
1,245

 
1,190

 
4.6
 %
 
64.4
%
 
63.8
%
 
0.6
 %
Washington
13

 
1,788

 
1,816

 
(1.5
)%
 
474

 
472

 
0.4
 %
 
1,314

 
1,344

 
(2.2
)%
 
73.5
%
 
74.0
%
 
(0.5
)%
Nevada
11

 
2,042

 
1,867

 
9.4
 %
 
569

 
554

 
2.7
 %
 
1,473

 
1,313

 
12.2
 %
 
72.1
%
 
70.3
%
 
1.8
 %
Colorado
11

 
1,810

 
1,820

 
(0.5
)%
 
619

 
558

 
10.9
 %
 
1,191

 
1,262

 
(5.6
)%
 
65.8
%
 
69.3
%
 
(3.5
)%
New Hampshire
10

 
1,625

 
1,543

 
5.3
 %
 
505

 
454

 
11.2
 %
 
1,120

 
1,089

 
2.8
 %
 
68.9
%
 
70.6
%
 
(1.7
)%
Other(1)
32

 
4,575

 
4,260

 
7.4
 %
 
1,592

 
1,564

 
1.8
 %
 
2,983

 
2,696

 
10.6
 %
 
65.2
%
 
63.3
%
 
1.9
 %
Total/Weighted Average
439

 
$
76,015

 
$
73,300

 
3.7
 %
 
$
22,595

 
$
22,010

 
2.7
 %
 
$
53,420

 
$
51,290

 
4.2
 %
 
70.3
%
 
70.0
%
 
0.3
 %













(1) Other states in NSA's same store portfolio include Alabama, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, South Carolina and Virginia.

17

image0a93.jpg

Supplemental Schedule 6 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By State
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2019 compared to Three Months Ended September 30, 2018
 
 
Rentable Square Feet
 
Occupancy at Period End
 
Average Occupancy
 
Average Annualized Rental Revenue per Occupied Square Foot
State
Units
 
3Q 2019
 
3Q 2018
 
Growth
 
3Q 2019
 
3Q 2018
 
Growth
 
3Q 2019
 
3Q 2018
 
Growth
California
48,068

6,074,740

 
90.3
%
 
90.7
%
 
(0.4
)%
 
91.0
%
 
91.8
%
 
(0.8
)%
 
$
13.56

 
$
12.90

 
5.1
 %
Oregon
23,660

2,989,234

 
84.5
%
 
85.8
%
 
(1.3
)%
 
85.9
%
 
87.3
%
 
(1.4
)%
 
15.08

 
14.75

 
2.2
 %
Texas
23,230

3,296,551

 
90.0
%
 
89.6
%
 
0.4
 %
 
91.0
%
 
90.6
%
 
0.4
 %
 
9.90

 
9.62

 
2.9
 %
Georgia
13,619

1,847,885

 
91.8
%
 
88.7
%
 
3.1
 %
 
91.8
%
 
88.8
%
 
3.0
 %
 
10.04

 
9.68

 
3.7
 %
Oklahoma
13,849

1,903,042

 
88.9
%
 
86.2
%
 
2.7
 %
 
89.3
%
 
86.4
%
 
2.9
 %
 
8.53

 
8.58

 
(0.6
)%
North Carolina
13,083

1,599,504

 
94.4
%
 
93.3
%
 
1.1
 %
 
95.2
%
 
92.7
%
 
2.5
 %
 
10.93

 
10.65

 
2.6
 %
Florida
18,864

2,001,580

 
88.3
%
 
88.6
%
 
(0.3
)%
 
88.5
%
 
88.6
%
 
(0.1
)%
 
14.67

 
14.44

 
1.6
 %
Arizona
9,135

1,067,881

 
89.3
%
 
87.7
%
 
1.6
 %
 
89.5
%
 
89.2
%
 
0.3
 %
 
13.43

 
12.90

 
4.1
 %
Indiana
8,783

1,134,830

 
91.9
%
 
91.4
%
 
0.5
 %
 
92.1
%
 
91.8
%
 
0.3
 %
 
9.64

 
9.42

 
2.3
 %
Louisiana
6,325

858,719

 
87.0
%
 
83.5
%
 
3.5
 %
 
87.2
%
 
84.6
%
 
2.6
 %
 
10.10

 
10.06

 
0.4
 %
Washington
4,285

554,988

 
82.4
%
 
87.9
%
 
(5.5
)%
 
84.7
%
 
88.2
%
 
(3.5
)%
 
14.93

 
14.56

 
2.5
 %
Nevada
5,826

736,215

 
90.5
%
 
94.3
%
 
(3.8
)%
 
90.8
%
 
94.0
%
 
(3.2
)%
 
11.68

 
10.44

 
11.9
 %
Colorado
5,050

615,468

 
89.8
%
 
90.6
%
 
(0.8
)%
 
91.6
%
 
92.3
%
 
(0.7
)%
 
12.55

 
12.51

 
0.3
 %
New Hampshire
4,188

509,770

 
90.2
%
 
91.3
%
 
(1.1
)%
 
91.6
%
 
91.8
%
 
(0.2
)%
 
13.48

 
12.81

 
5.2
 %
Other(1)
13,414

1,822,137

 
89.8
%
 
90.4
%
 
(0.6
)%
 
90.8
%
 
90.0
%
 
0.8
 %
 
10.62

 
9.99

 
6.3
 %
Total/Weighted Average
211,379

27,012,544

 
89.4
%
 
89.3
%
 
0.1
 %
 
90.2
%
 
89.9
%
 
0.3
 %
 
$
12.06

 
$
11.68

 
3.3
 %














(1) Other states in NSA's same store portfolio include Alabama, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, South Carolina and Virginia.

18

image0a93.jpg

Supplemental Schedule 6 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By State
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2019 compared to Nine Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
Property Operating Expenses
 
Net Operating Income
 
Net Operating Income Margin
State
Stores
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
California
80

 
$
57,394

 
$
54,971

 
4.4
%
 
$
15,481

 
$
15,366

 
0.7
 %
 
$
41,913

 
$
39,605

 
5.8
%
 
73.0
%
 
72.0
%
 
1.0
 %
Oregon
58

 
28,856

 
28,533

 
1.1
%
 
7,486

 
7,373

 
1.5
 %
 
21,370

 
21,160

 
1.0
%
 
74.1
%
 
74.2
%
 
(0.1
)%
Texas
58

 
22,280

 
21,387

 
4.2
%
 
8,328

 
8,131

 
2.4
 %
 
13,952

 
13,256

 
5.3
%
 
62.6
%
 
62.0
%
 
0.6
 %
Georgia
33

 
12,756

 
11,665

 
9.4
%
 
4,147

 
3,809

 
8.9
 %
 
8,609

 
7,856

 
9.6
%
 
67.5
%
 
67.3
%
 
0.2
 %
Oklahoma
30

 
11,025

 
10,718

 
2.9
%
 
3,512

 
3,395

 
3.4
 %
 
7,513

 
7,323

 
2.6
%
 
68.1
%
 
68.3
%
 
(0.2
)%
North Carolina
29

 
12,600

 
11,944

 
5.5
%
 
3,827

 
3,564

 
7.4
 %
 
8,773

 
8,380

 
4.7
%
 
69.6
%
 
70.2
%
 
(0.6
)%
Florida
28

 
19,885

 
19,280

 
3.1
%
 
6,021

 
6,053

 
(0.5
)%
 
13,864

 
13,227

 
4.8
%
 
69.7
%
 
68.6
%
 
1.1
 %
Arizona
16

 
9,681

 
9,293

 
4.2
%
 
2,759

 
2,647

 
4.2
 %
 
6,922

 
6,646

 
4.2
%
 
71.5
%
 
71.5
%
 

Indiana
16

 
7,625

 
7,200

 
5.9
%
 
2,279

 
2,314

 
(1.5
)%
 
5,346

 
4,886

 
9.4
%
 
70.1
%
 
67.9
%
 
2.2
 %
Louisiana
14

 
5,629

 
5,490

 
2.5
%
 
2,010

 
1,955

 
2.8
 %
 
3,619

 
3,535

 
2.4
%
 
64.3
%
 
64.4
%
 
(0.1
)%
Washington
13

 
5,337

 
5,310

 
0.5
%
 
1,427

 
1,467

 
(2.7
)%
 
3,910

 
3,843

 
1.7
%
 
73.3
%
 
72.4
%
 
0.9
 %
Nevada
11

 
5,919

 
5,359

 
10.4
%
 
1,646

 
1,700

 
(3.2
)%
 
4,273

 
3,659

 
16.8
%
 
72.2
%
 
68.3
%
 
3.9
 %
Colorado
11

 
5,297

 
5,185

 
2.2
%
 
1,782

 
1,682

 
5.9
 %
 
3,515

 
3,503

 
0.3
%
 
66.4
%
 
67.6
%
 
(1.2
)%
New Hampshire
10

 
4,778

 
4,452

 
7.3
%
 
1,564

 
1,459

 
7.2
 %
 
3,214

 
2,993

 
7.4
%
 
67.3
%
 
67.2
%
 
0.1
 %
Other(1)
32

 
13,323

 
12,258

 
8.7
%
 
4,662

 
4,642

 
0.4
 %
 
8,661

 
7,616

 
13.7
%
 
65.0
%
 
62.1
%
 
2.9
 %
Total/Weighted Average
439

 
$
222,385

 
$
213,045

 
4.4
%
 
$
66,931

 
$
65,557

 
2.1
 %
 
$
155,454

 
$
147,488

 
5.4
%
 
69.9
%
 
69.2
%
 
0.7
 %













(1) Other states in NSA's same store portfolio include Alabama, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, South Carolina and Virginia.

19

image0a93.jpg

Supplemental Schedule 6 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By State
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2019 compared to Nine Months Ended September 30, 2018
 
 
Rentable Square Feet
 
Occupancy at Period End
 
Average Occupancy
 
Average Annualized Rental Revenue per Occupied Square Foot
State
Units
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
California
48,068

6,074,740

 
90.3
%
 
90.7
%
 
(0.4
)%
 
90.7
%
 
91.6
%
 
(0.9
)%
 
$
13.28

 
$
12.60

 
5.4
 %
Oregon
23,660

2,989,234

 
84.5
%
 
85.8
%
 
(1.3
)%
 
84.5
%
 
86.3
%
 
(1.8
)%
 
14.90

 
14.46

 
3.0
 %
Texas
23,230

3,296,551

 
90.0
%
 
89.6
%
 
0.4
 %
 
89.5
%
 
89.0
%
 
0.5
 %
 
9.79

 
9.46

 
3.5
 %
Georgia
13,619

1,847,885

 
91.8
%
 
88.7
%
 
3.1
 %
 
90.0
%
 
87.3
%
 
2.7
 %
 
9.89

 
9.36

 
5.7
 %
Oklahoma
13,849

1,903,042

 
88.9
%
 
86.2
%
 
2.7
 %
 
87.4
%
 
84.9
%
 
2.5
 %
 
8.58

 
8.59

 
(0.1
)%
North Carolina
13,083

1,599,504

 
94.4
%
 
93.3
%
 
1.1
 %
 
93.0
%
 
90.8
%
 
2.2
 %
 
10.82

 
10.51

 
2.9
 %
Florida
18,864

2,001,580

 
88.3
%
 
88.6
%
 
(0.3
)%
 
87.9
%
 
87.9
%
 

 
14.57

 
14.35

 
1.5
 %
Arizona
9,135

1,067,881

 
89.3
%
 
87.7
%
 
1.6
 %
 
88.2
%
 
88.3
%
 
(0.1
)%
 
13.26

 
12.73

 
4.2
 %
Indiana
8,783

1,134,830

 
91.9
%
 
91.4
%
 
0.5
 %
 
90.4
%
 
87.7
%
 
2.7
 %
 
9.63

 
9.36

 
2.9
 %
Louisiana
6,325

858,719

 
87.0
%
 
83.5
%
 
3.5
 %
 
85.2
%
 
83.9
%
 
1.3
 %
 
10.06

 
9.95

 
1.1
 %
Washington
4,285

554,988

 
82.4
%
 
87.9
%
 
(5.5
)%
 
84.3
%
 
88.1
%
 
(3.8
)%
 
14.91

 
14.23

 
4.8
 %
Nevada
5,826

736,215

 
90.5
%
 
94.3
%
 
(3.8
)%
 
91.2
%
 
93.4
%
 
(2.2
)%
 
11.26

 
10.08

 
11.7
 %
Colorado
5,050

615,468

 
89.8
%
 
90.6
%
 
(0.8
)%
 
89.7
%
 
90.6
%
 
(0.9
)%
 
12.50

 
12.09

 
3.4
 %
New Hampshire
4,188

509,770

 
90.2
%
 
91.3
%
 
(1.1
)%
 
91.8
%
 
90.4
%
 
1.4
 %
 
13.23

 
12.56

 
5.3
 %
Other(1)
13,414

1,822,137

 
89.8
%
 
90.4
%
 
(0.6
)%
 
89.5
%
 
87.0
%
 
2.5
 %
 
10.45

 
9.90

 
5.6
 %
Total/Weighted Average
211,379

27,012,544

 
89.4
%
 
89.3
%
 
0.1
 %
 
89.0
%
 
88.7
%
 
0.3
 %
 
$
11.91

 
$
11.49

 
3.7
 %














(1) Other states in NSA's same store portfolio include Alabama, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, South Carolina and Virginia.

20

image0a93.jpg

Supplemental Schedule 7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By MSA(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2019 compared to Three Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
Property Operating Expenses
 
Net Operating Income
 
Net Operating Income Margin
MSA(1)
Stores
3Q 2019
 
3Q 2018
 
Growth
 
3Q 2019
 
3Q 2018
 
Growth
 
3Q 2019
 
3Q 2018
 
Growth
 
3Q 2019
 
3Q 2018
 
Growth
Riverside-San Bernardino-Ontario, CA
46

 
$
9,751

 
$
9,319

 
4.6
%
 
$
2,437

 
$
2,435

 
0.1
 %
 
$
7,314

 
$
6,884

 
6.2
%
 
75.0
%
 
73.9
%
 
1.1
 %
Portland-Vancouver-Hillsboro, OR-WA
45

 
7,790

 
7,738

 
0.7
%
 
1,955

 
1,906

 
2.6
 %
 
5,835

 
5,832

 
0.1
%
 
74.9
%
 
75.4
%
 
(0.5
)%
Atlanta-Sandy Springs-Roswell, GA
25

 
3,812

 
3,541

 
7.7
%
 
1,094

 
1,081

 
1.2
 %
 
2,718

 
2,460

 
10.5
%
 
71.3
%
 
69.5
%
 
1.8
 %
Dallas-Fort Worth-Arlington, TX
17

 
2,295

 
2,233

 
2.8
%
 
908

 
854

 
6.3
 %
 
1,387

 
1,379

 
0.6
%
 
60.4
%
 
61.8
%
 
(1.4
)%
Oklahoma City, OK
17

 
2,074

 
2,007

 
3.3
%
 
692

 
657

 
5.3
 %
 
1,382

 
1,350

 
2.4
%
 
66.6
%
 
67.3
%
 
(0.7
)%
Indianapolis-Carmel-Anderson, IN
16

 
2,588

 
2,530

 
2.3
%
 
825

 
833

 
(1.0
)%
 
1,763

 
1,697

 
3.9
%
 
68.1
%
 
67.1
%
 
1.0
 %
Los Angeles-Long Beach-Anaheim, CA
14

 
5,022

 
4,902

 
2.4
%
 
1,375

 
1,312

 
4.8
 %
 
3,647

 
3,590

 
1.6
%
 
72.6
%
 
73.2
%
 
(0.6
)%
Tulsa, OK
13

 
1,660

 
1,625

 
2.2
%
 
502

 
493

 
1.8
 %
 
1,158

 
1,132

 
2.3
%
 
69.8
%
 
69.7
%
 
0.1
 %
North Port-Sarasota-Bradenton, FL
12

 
2,741

 
2,625

 
4.4
%
 
853

 
879

 
(3.0
)%
 
1,888

 
1,746

 
8.1
%
 
68.9
%
 
66.5
%
 
2.4
 %
Phoenix-Mesa-Scottsdale, AZ
12

 
2,630

 
2,542

 
3.5
%
 
781

 
702

 
11.3
 %
 
1,849

 
1,840

 
0.5
%
 
70.3
%
 
72.4
%
 
(2.1
)%
Las Vegas-Henderson-Paradise, NV
11

 
2,042

 
1,867

 
9.4
%
 
569

 
554

 
2.7
 %
 
1,473

 
1,313

 
12.2
%
 
72.1
%
 
70.3
%
 
1.8
 %
Other MSAs
211

 
33,610

 
32,371

 
3.8
%
 
10,604

 
10,304

 
2.9
 %
 
23,006

 
22,067

 
4.3
%
 
68.4
%
 
68.2
%
 
0.2
 %
Total/Weighted Average
439

 
$
76,015

 
$
73,300

 
3.7
%
 
$
22,595

 
$
22,010

 
2.7
 %
 
$
53,420

 
$
51,290

 
4.2
%
 
70.3
%
 
70.0
%
 
0.3
 %

















(1) MSA (Metropolitan Statistical Area) as defined by the United States Census Bureau.

21

image0a93.jpg

Supplemental Schedule 7 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By MSA(1)
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2019 compared to Three Months Ended September 30, 2018
 
 
Rentable Square Feet
 
Occupancy at Period End
 
Average Occupancy
 
Average Annualized Rental Revenue per Occupied Square Foot
MSA(1)
Units
 
3Q 2019
 
3Q 2018
 
Growth
 
3Q 2019
 
3Q 2018
 
Growth
 
3Q 2019
 
3Q 2018
 
Growth
Riverside-San Bernardino-Ontario, CA
24,871

3,343,166

 
90.3
%
 
90.8
%
 
(0.5
)%
 
91.0
%
 
92.2
%
 
(1.2
)%
 
$
12.20

 
$
11.51

 
6.0
 %
Portland-Vancouver-Hillsboro, OR-WA
17,618

2,152,323

 
84.3
%
 
85.9
%
 
(1.6
)%
 
85.7
%
 
86.6
%
 
(0.9
)%
 
16.57

 
16.28

 
1.8
 %
Atlanta-Sandy Springs-Roswell, GA
11,493

1,578,405

 
92.2
%
 
88.4
%
 
3.8
 %
 
92.2
%
 
88.1
%
 
4.1
 %
 
10.16

 
9.85

 
3.1
 %
Dallas-Fort Worth-Arlington, TX
6,427

858,372

 
88.2
%
 
88.5
%
 
(0.3
)%
 
88.6
%
 
89.3
%
 
(0.7
)%
 
11.69

 
11.38

 
2.7
 %
Oklahoma City, OK
7,724

1,088,227

 
89.2
%
 
84.9
%
 
4.3
 %
 
89.6
%
 
85.5
%
 
4.1
 %
 
8.27

 
8.40

 
(1.5
)%
Indianapolis-Carmel-Anderson, IN
8,783

1,134,830

 
91.9
%
 
91.4
%
 
0.5
 %
 
92.1
%
 
91.8
%
 
0.3
 %
 
9.64

 
9.42

 
2.3
 %
Los Angeles-Long Beach-Anaheim, CA
9,738

1,062,914

 
86.8
%
 
89.2
%
 
(2.4
)%
 
88.2
%
 
90.6
%
 
(2.4
)%
 
20.54

 
19.50

 
5.3
 %
Tulsa, OK
6,125

814,815

 
88.5
%
 
87.9
%
 
0.6
 %
 
89.0
%
 
87.7
%
 
1.3
 %
 
8.89

 
8.82

 
0.8
 %
North Port-Sarasota-Bradenton, FL
7,778

756,133

 
85.4
%
 
85.0
%
 
0.4
 %
 
85.8
%
 
85.6
%
 
0.2
 %
 
16.23

 
15.76

 
3.0
 %
Phoenix-Mesa-Scottsdale, AZ
7,404

833,439

 
87.7
%
 
86.2
%
 
1.5
 %
 
87.8
%
 
87.7
%
 
0.1
 %
 
13.85

 
13.45

 
3.0
 %
Las Vegas-Henderson-Paradise, NV
5,826

736,215

 
90.5
%
 
94.3
%
 
(3.8
)%
 
90.8
%
 
94.0
%
 
(3.2
)%
 
11.68

 
10.44

 
11.9
 %
Other MSAs
97,592

12,653,705

 
90.2
%
 
90.0
%
 
0.2
 %
 
91.1
%
 
90.6
%
 
0.5
 %
 
11.29

 
10.95

 
3.1
 %
Total/Weighted Average
211,379

27,012,544

 
89.4
%
 
89.3
%
 
0.1
 %
 
90.2
%
 
89.9
%
 
0.3
 %
 
$
12.06

 
$
11.68

 
3.3
 %
















(1) MSA (Metropolitan Statistical Area) as defined by the United States Census Bureau.

22

image0a93.jpg

Supplemental Schedule 7 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By MSA(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2019 compared to Nine Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
Property Operating Expenses
 
Net Operating Income
 
Net Operating Income Margin
MSA(1)
Stores
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
Riverside-San Bernardino-Ontario, CA
46

 
$
28,496

 
$
27,236

 
4.6
%
 
$
7,213

 
$
7,143

 
1.0
 %
 
$
21,283

 
$
20,093

 
5.9
%
 
74.7
%
 
73.8
%
 
0.9
 %
Portland-Vancouver-Hillsboro, OR-WA
45

 
22,901

 
22,628

 
1.2
%
 
5,845

 
5,820

 
0.4
 %
 
17,056

 
16,808

 
1.5
%
 
74.5
%
 
74.3
%
 
0.2
 %
Atlanta-Sandy Springs-Roswell, GA
25

 
11,038

 
9,997

 
10.4
%
 
3,389

 
3,146

 
7.7
 %
 
7,649

 
6,851

 
11.6
%
 
69.3
%
 
68.5
%
 
0.8
 %
Dallas-Fort Worth-Arlington, TX
17

 
6,787

 
6,606

 
2.7
%
 
2,675

 
2,616

 
2.3
 %
 
4,112

 
3,990

 
3.1
%
 
60.6
%
 
60.4
%
 
0.2
 %
Oklahoma City, OK
17

 
6,098

 
5,910

 
3.2
%
 
2,028

 
1,941

 
4.5
 %
 
4,070

 
3,969

 
2.5
%
 
66.7
%
 
67.2
%
 
(0.5
)%
Indianapolis-Carmel-Anderson, IN
16

 
7,625

 
7,200

 
5.9
%
 
2,279

 
2,314

 
(1.5
)%
 
5,346

 
4,886

 
9.4
%
 
70.1
%
 
67.9
%
 
2.2
 %
Los Angeles-Long Beach-Anaheim, CA
14

 
14,859

 
14,411

 
3.1
%
 
3,993

 
3,903

 
2.3
 %
 
10,866

 
10,508

 
3.4
%
 
73.1
%
 
72.9
%
 
0.2
 %
Tulsa, OK
13

 
4,926

 
4,808

 
2.5
%
 
1,484

 
1,454

 
2.1
 %
 
3,442

 
3,354

 
2.6
%
 
69.9
%
 
69.8
%
 
0.1
 %
North Port-Sarasota-Bradenton, FL
12

 
8,022

 
7,690

 
4.3
%
 
2,539

 
2,596

 
(2.2
)%
 
5,483

 
5,094

 
7.6
%
 
68.3
%
 
66.2
%
 
2.1
 %
Phoenix-Mesa-Scottsdale, AZ
12

 
7,713

 
7,509

 
2.7
%
 
2,220

 
2,100

 
5.7
 %
 
5,493

 
5,409

 
1.6
%
 
71.2
%
 
72.0
%
 
(0.8
)%
Las Vegas-Henderson-Paradise, NV
11

 
5,919

 
5,359

 
10.4
%
 
1,646

 
1,699

 
(3.1
)%
 
4,273

 
3,660

 
16.7
%
 
72.2
%
 
68.3
%
 
3.9
 %
Other MSAs
211

 
98,001

 
93,691

 
4.6
%
 
31,620

 
30,825

 
2.6
 %
 
66,381

 
62,866

 
5.6
%
 
67.7
%
 
67.1
%
 
0.6
 %
Total/Weighted Average
439

 
$
222,385

 
$
213,045

 
4.4
%
 
$
66,931

 
$
65,557

 
2.1
 %
 
$
155,454

 
$
147,488

 
5.4
%
 
69.9
%
 
69.2
%
 
0.7
 %

















(1) MSA (Metropolitan Statistical Area) as defined by the United States Census Bureau.

23

image0a93.jpg

Supplemental Schedule 7 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By MSA(1)
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2019 compared to Nine Months Ended September 30, 2018
 
 
Rentable Square Feet
 
Occupancy at Period End
 
Average Occupancy
 
Average Annualized Rental Revenue per Occupied Square Foot
MSA(1)
Units
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
Riverside-San Bernardino-Ontario, CA
24,871

3,343,166

 
90.3
%
 
90.8
%
 
(0.5
)%
 
90.7
%
 
92.2
%
 
(1.5
)%
 
$
11.91

 
$
11.21

 
6.2
 %
Portland-Vancouver-Hillsboro, OR-WA
17,618

2,152,323

 
84.3
%
 
85.9
%
 
(1.6
)%
 
84.8
%
 
85.6
%
 
(0.8
)%
 
16.42

 
16.08

 
2.1
 %
Atlanta-Sandy Springs-Roswell, GA
11,493

1,578,405

 
92.2
%
 
88.4
%
 
3.8
 %
 
90.1
%
 
86.6
%
 
3.5
 %
 
10.02

 
9.50

 
5.5
 %
Dallas-Fort Worth-Arlington, TX
6,427

858,372

 
88.2
%
 
88.5
%
 
(0.3
)%
 
87.9
%
 
88.5
%
 
(0.6
)%
 
11.63

 
11.31

 
2.8
 %
Oklahoma City, OK
7,724

1,088,227

 
89.2
%
 
84.9
%
 
4.3
 %
 
87.0
%
 
83.9
%
 
3.1
 %
 
8.34

 
8.40

 
(0.7
)%
Indianapolis-Carmel-Anderson, IN
8,783

1,134,830

 
91.9
%
 
91.4
%
 
0.5
 %
 
90.4
%
 
87.7
%
 
2.7
 %
 
9.63

 
9.36

 
2.9
 %
Los Angeles-Long Beach-Anaheim, CA
9,738

1,062,914

 
86.8
%
 
89.2
%
 
(2.4
)%
 
88.9
%
 
90.9
%
 
(2.0
)%
 
20.11

 
19.06

 
5.5
 %
Tulsa, OK
6,125

814,815

 
88.5
%
 
87.9
%
 
0.6
 %
 
87.9
%
 
86.2
%
 
1.7
 %
 
8.89

 
8.83

 
0.7
 %
North Port-Sarasota-Bradenton, FL
7,778

756,133

 
85.4
%
 
85.0
%
 
0.4
 %
 
85.0
%
 
85.8
%
 
(0.8
)%
 
16.06

 
15.76

 
1.9
 %
Phoenix-Mesa-Scottsdale, AZ
7,404

833,439

 
87.7
%
 
86.2
%
 
1.5
 %
 
86.6
%
 
87.0
%
 
(0.4
)%
 
13.73

 
13.34

 
2.9
 %
Las Vegas-Henderson-Paradise, NV
5,826

736,215

 
90.5
%
 
94.3
%
 
(3.8
)%
 
91.2
%
 
93.4
%
 
(2.2
)%
 
11.26

 
10.08

 
11.7
 %
Other MSAs
97,592

12,653,705

 
90.2
%
 
90.0
%
 
0.2
 %
 
89.7
%
 
89.1
%
 
0.6
 %
 
11.15

 
10.75

 
3.7
 %
Total/Weighted Average
211,379

27,012,544

 
89.4
%
 
89.3
%
 
0.1
 %
 
89.0
%
 
88.7
%
 
0.3
 %
 
$
11.91

 
$
11.49

 
3.7
 %
















(1) MSA (Metropolitan Statistical Area) as defined by the United States Census Bureau.

24

image0a93.jpg

Supplemental Schedule 8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Operating Data (439 Stores) - Trailing Five Quarters
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3Q 2019
 
2Q 2019
 
1Q 2019
 
4Q 2018
 
3Q 2018
 
YTD 2019
 
YTD 2018
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental revenue
$
73,444

 
$
71,481

 
$
69,935

 
$
70,430

 
$
70,873

 
$
214,860

 
$
205,947

Other property-related revenue
2,571

 
2,580

 
2,374

 
2,345

 
2,427

 
7,525

 
7,098

Total revenue
76,015

 
74,061

 
72,309

 
72,775

 
73,300

 
222,385

 
213,045

Property operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Store payroll and related costs
6,845

 
6,848

 
6,911

 
6,742

 
6,637

 
20,604

 
20,210

Property tax expense
6,169

 
5,929

 
6,206

 
6,006

 
5,963

 
18,304

 
17,662

Other property operating expenses
9,581

 
9,276

 
9,166

 
8,957

 
9,410

 
28,023

 
27,685

Total property operating expenses
22,595

 
22,053

 
22,283

 
21,705

 
22,010

 
66,931

 
65,557

Net operating income
$
53,420

 
$
52,008

 
$
50,026

 
$
51,070

 
$
51,290

 
$
155,454

 
$
147,488

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income margin
70.3
%
 
70.2
%
 
69.2
%
 
70.2
%
 
70.0
%
 
69.9
%
 
69.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Occupancy at period end
89.4
%
 
90.9
%
 
88.6
%
 
87.4
%
 
89.3
%
 
89.4
%
 
89.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average occupancy
90.2
%
 
89.6
%
 
87.7
%
 
88.2
%
 
89.9
%
 
89.0
%
 
88.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average annualized rental revenue per occupied square foot
$
12.06

 
$
11.81

 
$
11.82

 
$
11.83

 
$
11.68

 
$
11.91

 
$
11.49

 
 
 
 
 
 
 
 
 
 
 
 
 
 

25

image0a93.jpg

Supplemental Schedule 9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Same Store Data and Net Operating Income to Net Income
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3Q 2019
 
2Q 2019
 
1Q 2019
 
4Q 2018
 
3Q 2018
 
YTD 2019
 
YTD 2018
Rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Same store portfolio
$
73,444

 
$
71,481

 
$
69,935

 
$
70,430

 
$
70,873

 
$
214,860

 
$
205,947

Non-same store portfolio
19,302

 
15,694

 
12,920

 
9,071

 
6,372

 
47,916

 
14,391

Effect of bad debt expense classification resulting from adoption of leasing standard(1)

 

 

 
2,325

 
2,302

 

 
6,239

Total rental revenue (as reported)
92,746

 
87,175

 
82,855

 
81,826

 
79,547

 
262,776

 
226,577

Other property-related revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Same store portfolio
2,571

 
2,580

 
2,374

 
2,345

 
2,427

 
7,525

 
7,098

Non-same store portfolio
646

 
548

 
450

 
281

 
260

 
1,644

 
459

Total other property-related revenue
3,217

 
3,128

 
2,824

 
2,626

 
2,687

 
9,169

 
7,557

Property operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Same store portfolio
22,595

 
22,053

 
22,283

 
21,705

 
22,010

 
66,931

 
65,557

Non-same store portfolio
6,393

 
5,137

 
4,174

 
2,883

 
2,240

 
15,704

 
5,166

Effect of bad debt expense classification resulting from adoption of leasing standard(1)

 

 

 
2,325

 
2,302

 

 
6,239

Total property operating expenses (as reported)
28,988

 
27,190

 
26,457

 
26,913

 
26,552

 
82,635

 
76,962

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income
66,975

 
63,113

 
59,222

 
57,539

 
55,682

 
189,310

 
157,172

Management fees and other revenue
5,374

 
5,116

 
4,893

 
4,846

 
3,148

 
15,383

 
7,464

General and administrative expenses
(12,039
)
 
(11,170
)
 
(10,766
)
 
(10,606
)
 
(8,848
)
 
(33,975
)
 
(25,614
)
Depreciation and amortization
(27,598
)
 
(25,829
)
 
(24,349
)
 
(22,921
)
 
(22,469
)
 
(77,776
)
 
(66,226
)
Interest expense
(14,432
)
 
(13,947
)
 
(13,211
)
 
(11,961
)
 
(10,656
)
 
(41,590
)
 
(30,763
)
Equity in (losses) earnings of unconsolidated real estate ventures
(1,214
)
 
(1,646
)
 
(2,102
)
 
(1,713
)
 
242

 
(4,962
)
 
290

Acquisition costs
(321
)
 
(305
)
 
(157
)
 
(192
)
 
(141
)
 
(783
)
 
(471
)
Non-operating (expense) income
(8
)
 
(169
)
 
(98
)
 
(160
)
 
153

 
(275
)
 
69

Gain on sale of self storage properties

 
2,814

 

 

 

 
2,814

 
391

Income tax expense
(223
)
 
(244
)
 
(492
)
 
(349
)
 
(282
)
 
(959
)
 
(469
)
Net Income
$
16,514

 
$
17,733

 
$
12,940

 
$
14,483

 
$
16,829

 
$
47,187

 
$
41,843




(1) As a result of the new leasing standard adoption, beginning on January 1, 2019, activity related to uncollectible accounts is presented within revenue. For periods prior to 2019, such amounts were previously included in operating expenses, and as such, for comparability, NSA has presented activity related to uncollectible accounts as a reduction to same store and non-same store revenue and operating expenses.

26

image0a93.jpg

Supplemental Schedule 10
 
 
 
Selected Financial Information
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Average Annualized Rental Revenue Per Occupied Square Foot
 
 
 
 
 
 
 
 
Same store
$
12.06

 
$
11.68

 
$
11.91

 
$
11.49

Total consolidated portfolio
12.20

 
11.76

 
12.06

 
11.54

 
 
 
 
 
 
 
 
Average Occupancy
 
 
 
 
 
 
 
 
Same store
90.2
%
 
89.9
%
 
89.0
%
 
88.7
%
Total consolidated portfolio
89.6
%
 
89.7
%
 
88.6
%
 
88.5
%
 
 
 
 
 
 
 
 
Total Consolidated Portfolio Capital Expenditures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recurring capital expenditures
$
2,016

 
$
1,595

 
$
6,773

 
$
4,030

Value enhancing capital expenditures
1,234

 
474

 
3,386

 
3,149

Acquisitions capital expenditures
2,219

 
2,762

 
6,547

 
7,511

Total consolidated portfolio capital expenditures
$
5,469

 
$
4,831

 
$
16,706

 
$
14,690

 
 
 
 
 
 
 
 
Property Operating Expenses Detail
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Store payroll and related costs
$
8,705

 
$
7,347

 
$
25,362

 
$
21,873

Property tax expense
7,730

 
6,532

 
22,149

 
18,943

Other property operating expenses
12,553

 
10,371

 
35,124

 
29,907

Bad debt expense

 
2,302

 

 
6,239

Property operating expenses on the Company's statements of operations
$
28,988

 
$
26,552

 
$
82,635

 
$
76,962

 
 
 
 
 
 
 
 
General and Administrative Expenses Detail
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supervisory and administrative expenses
$
5,219

 
$
4,335

 
$
14,825

 
$
12,577

Equity-based compensation expense
1,153

 
1,022

 
3,373

 
2,808

Other general and administrative expenses
5,667

 
3,491

 
15,777

 
10,229

General and administrative expenses on the Company's statements of operations
$
12,039

 
$
8,848

 
$
33,975

 
$
25,614

 
 
 
 
 
 
 
 




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Glossary
 
 
 
 
 
This Earnings Release and Supplemental Financial Information includes certain financial and operating measures used by NSA management that are not calculated in accordance with accounting principles generally accepted in the United States, or GAAP. NSA's definitions and calculations of these non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other real estate companies and, accordingly, may not be comparable. These non-GAAP financial and operating measures should not be considered an alternative to GAAP net income or any other GAAP measurement of performance and should not be considered an alternative measure of liquidity.
 
 
 
 
 
2016 JOINT VENTURE: NSA's 2016 Joint Venture was formed in 2016 with a major state pension fund advised by Heitman Capital Management LLC. NSA's ownership in the 2016 Joint Venture is 25% and NSA earns customary fees for managing and operating the 2016 Joint Venture properties. In connection with the 2016 Joint Venture’s acquisition of an initial portfolio of self storage properties, NSA separately acquired the property management platform related to the initial portfolio, including a property management company, a captive insurance company, and related intellectual property, including the iStorage brand, under which NSA's management platform operates the 2016 Joint Venture.
2018 JOINT VENTURE: NSA's 2018 Joint Venture was formed in 2018 with an affiliate of Heitman America Real Estate REIT LLC to acquire a portfolio of over 100 self storage properties. NSA's ownership in the 2018 Joint Venture is 25% and NSA earns customary fees for managing and operating the 2018 Joint Venture properties. Substantially all of the 2018 Joint Venture properties are operated by NSA's management platform under NSA's iStorage brand.
AVERAGE ANNUALIZED RENTAL REVENUE PER OCCUPIED SQUARE FOOT: Average annualized rental revenue per occupied square foot is computed by dividing annualized rental revenue (including fees and net of any discounts and uncollectible customer amounts) by average occupied square feet.
AVERAGE OCCUPANCY: Average occupancy is calculated based on the average of the month-end occupancy immediately preceding the period presented and the month-end occupancies included in the respective period presented.
CAPITAL EXPENDITURES DEFINITIONS
ACQUISITIONS CAPITAL EXPENDITURES: Acquisitions capital expenditures represents the portion of capital expenditures capitalized during the current period that were identified and underwritten prior to a property's acquisition.
RECURRING CAPITAL EXPENDITURES: Recurring capital expenditures represents the portion of capital expenditures that are deemed to replace the consumed portion of acquired capital assets and extend their useful lives.
VALUE ENHANCING CAPITAL EXPENDITURES: Value enhancing capital expenditures represents the portion of capital expenditures that are made to enhance the revenue and value of an asset from its original purchase condition.
EBITDA: NSA defines EBITDA as net income (loss), as determined under GAAP, plus interest expense, loss on early extinguishment of debt, income taxes, depreciation and amortization expense and the Company's share of unconsolidated real estate venture depreciation and amortization. NSA defines ADJUSTED EBITDA as EBITDA plus acquisition costs, organizational and offering expenses, equity-based compensation expense, losses on sale of properties and impairment of long-lived assets, minus gains on sale of properties and debt forgiveness, and after adjustments for unconsolidated partnerships and joint ventures. These further adjustments eliminate the impact of items that the Company does not consider indicative of its core operating performance. In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in this presentation. NSA's presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items.
NSA presents EBITDA and Adjusted EBITDA because the Company believes they assist investors and analysts in comparing the Company's performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. EBITDA and Adjusted EBITDA have limitations as an analytical tool. Some of these limitations are:

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EBITDA and Adjusted EBITDA do not reflect the Company's cash expenditures, or future requirements, for capital expenditures, contractual commitments or working capital needs;
EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debts;
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;
Adjusted EBITDA excludes equity-based compensation expense, which is and will remain a key element of the Company's overall long-term incentive compensation package, although the Company excludes it as an expense when evaluating its ongoing operating performance for a particular period;
EBITDA and Adjusted EBITDA do not reflect the impact of certain cash charges resulting from matters the Company considers not to be indicative of its ongoing operations; and
other companies in NSA's industry may calculate EBITDA and Adjusted EBITDA differently than NSA does, limiting their usefulness as comparative measures.
NSA compensates for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with the Company's analysis of net income (loss). EBITDA and Adjusted EBITDA should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues and net income (loss).
FUNDS FROM OPERATIONS: Funds from operations, or FFO, is a widely used performance measure for real estate companies and is provided here as a supplemental measure of the Company's operating performance. The December 2018 Nareit Funds From Operations White Paper - 2018 Restatement, which the Company refers to as the White Paper, defines FFO as net income (as determined under GAAP), excluding: real estate depreciation and amortization, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment write-downs of certain real estate assets and impairment of investments in entities when it is directly attributable to decreases in the value of depreciable real estate held by the entity and after items to record unconsolidated partnerships and joint ventures on the same basis. Distributions declared on subordinated performance units and DownREIT subordinated performance units represent NSA's allocation of FFO to noncontrolling interests held by subordinated performance unitholders and DownREIT subordinated performance unitholders. For purposes of calculating FFO attributable to common shareholders, OP unitholders, and LTIP unitholders, NSA excludes distributions declared on subordinated performance units, DownREIT subordinated performance units, preferred shares and preferred units. NSA defines CORE FFO as FFO, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of its core operating performance. These further adjustments consist of acquisition costs, organizational and offering costs, gains on debt forgiveness, gains (losses) on early extinguishment of debt, and after adjustments for unconsolidated partnerships and joint ventures.
Management uses FFO and Core FFO as key performance indicators in evaluating the operations of NSA's properties. Given the nature of NSA's business as a real estate owner and operator, the Company considers FFO and Core FFO as key supplemental measures of its operating performance that are not specifically defined by GAAP. NSA believes that FFO and Core FFO are useful to management and investors as a starting point in measuring the Company's operational performance because FFO and Core FFO exclude various items included in net income (loss) that do not relate to or are not indicative of the Company's operating performance such as gains (or losses) from sales of self storage properties and depreciation, which can make periodic and peer analyses of operating performance more difficult. NSA's computation of FFO and Core FFO may not be comparable to FFO reported by other REITs or real estate companies.
FFO and Core FFO should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, operating income and net income (loss). FFO and Core FFO do not represent cash generated from operating activities determined in accordance with GAAP and are not a measure of liquidity or an indicator of NSA's ability to make cash distributions. NSA believes that to further understand the Company's performance, FFO and Core FFO should be compared with the Company's reported net income (loss) and considered in addition to cash flows computed in accordance with GAAP, as presented in the Company's consolidated financial statements.
HYPOTHETICAL LIQUIDATION AT BOOK VALUE METHOD: In accordance with GAAP, the Company allocates income (loss) utilizing the hypothetical liquidation at book value ("HLBV") method, in which the Company allocates income or loss based on the change in each unitholders’ claim on the net assets of the Company's operating partnership

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at period end after adjusting for any distributions or contributions made during such period. The Company uses this method because of the difference between the distribution rights and priorities set forth in the operating partnership's Agreement of Limited Partnership and what is reflected by the underlying percentage ownership interests of the unitholders.
The HLBV method is a balance sheet-focused approach to income (loss) allocation. A calculation is prepared at each balance sheet date to determine the amount that unitholders would receive if the operating partnership were to liquidate all of its assets (at GAAP net book value) and distribute the resulting proceeds to its creditors and unitholders based on the contractually defined liquidation priorities. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is used to derive each unitholder's share of the income (loss) for the period. Due to the stated liquidation priorities and because the HLBV method incorporates non-cash items such as depreciation expense, in any given period, income or loss may be allocated disproportionately to unitholders as compared to their respective ownership percentage in the operating partnership, and net income (loss) attributable to National Storage Affiliates Trust could be more or less net income than actual cash distributions received and more or less income or loss than what may be received in the event of an actual liquidation. Additionally, the HLBV method could result in net income (or net loss) attributable to National Storage Affiliates Trust during a period when the Company reports consolidated net loss (or net income), or net income (or net loss) attributable to National Storage Affiliates Trust in excess of the Company's consolidated net income (or net loss). The computations of basic and diluted earnings (loss) per share may be materially affected by these disproportionate income (loss) allocations, resulting in volatile fluctuations of basic and diluted earnings (loss) per share. Readers and investors are cautioned not to place undue reliance on NSA's income (loss) allocations or earnings (loss) per share without considering the effects described above, including the effect that depreciation and amortization have on income (loss), net book value and the application of the HLBV method.
LONG-TERM INCENTIVE PLAN UNITS: Long-term incentive plan units, or LTIP units, are a special class of partnership interest in NSA's operating partnership that allow the holder to participate in the ordinary and liquidating distributions received by holders of the operating partnership units (subject to the achievement of specified levels of profitability by our operating partnership or the achievement of certain events). Upon vesting, and after achieving parity with operating partnership units, vested LTIP units may be converted into an equal number of operating partnership units, and thereafter have all the rights of operating partnership units, including redemption rights.
NET DEBT TO ANNUALIZED CURRENT QUARTER ADJUSTED EBITDA: NSA calculates net debt to Adjusted EBITDA as total debt (inclusive of $7.0 million of fair value of debt adjustments and $12.4 million of debt issuance costs) less cash and cash equivalents, divided by annualized current quarter Adjusted EBITDA.
NET OPERATING INCOME:  NSA defines net operating income, or NOI, as net income (loss), as determined under GAAP, plus general and administrative expenses, depreciation and amortization, interest expense, loss on early extinguishment of debt, equity in earnings (losses) of unconsolidated real estate ventures, acquisition costs, organizational and offering expenses, income tax expense, impairment of long-lived assets, losses on the sale of properties and non-operating expense and by subtracting management fees and other revenue, gains on sale of properties, debt forgiveness, and non-operating income. NOI is not a measure of performance calculated in accordance with GAAP.
NSA believes NOI is useful to investors in evaluating the Company's operating performance because:
NOI is one of the primary measures used by NSA's management and the Company's PROs to evaluate the economic productivity of the Company's properties, including the Company's ability to lease its properties, increase pricing and occupancy and control the Company's property operating expenses;
NOI is widely used in the real estate industry and the self storage industry to measure the performance and value of real estate assets without regard to various items included in net income that do not relate to or are not indicative of operating performance, such as depreciation and amortization, which can vary depending upon accounting methods, the book value of assets, and the impact of NSA's capital structure; and
NSA believes NOI helps the Company's investors to meaningfully compare the results of its operating performance from period to period by removing the impact of the Company's capital structure (primarily interest expense on the Company's outstanding indebtedness) and depreciation of the cost basis of NSA's assets from its operating results.
There are material limitations to using a non-GAAP measure such as NOI, including the difficulty associated with comparing results among more than one company and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect the Company's net income (loss). NSA compensates for these

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limitations by considering the economic effect of the excluded expense items independently as well as in connection with the Company's analysis of net income (loss). NOI should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues and net loss.
NET OPERATING INCOME MARGIN: The ratio of NOI divided by total rental and other property-related revenue.
NON-SAME STORE PORTFOLIO: Non-same store portfolio comprises those properties that do not meet the Same Store portfolio property definition. 
OCCUPANCY AT PERIOD END:  Represents total occupied rentable square feet divided by total rentable square feet at period end.
OPERATING PARTNERSHIP UNITS:  Operating partnership units, or OP Units, are Class A common units of limited partner interest in the Company's operating partnership which are economically equivalent to NSA's common shares. NSA also owns certain of the Company's self storage properties through other consolidated limited partnership subsidiaries of the Company's operating partnership, which the Company refers to as "DownREIT partnerships." The DownREIT partnerships issue certain units of limited partner or limited liability company interest that are intended to be economically equivalent to the Company's OP units, which the Company defines as DOWNREIT OPERATING PARTNERSHIP UNIT EQUIVALENTS, or DownREIT OP units.
PROs: Participating regional operators, or "PROs", are NSA's experienced regional self storage operators with local operational focus and expertise. As of September 30, 2019, the Company had ten PROs, SecurCare Self Storage, Northwest Self Storage, Optivest Properties, Guardian Storage Centers, Move It Self Storage, Storage Solutions, Hide-Away, Personal Mini, Southern Self Storage and Moove In Self Storage.
RENTABLE SQUARE FEET: Rentable square feet includes all enclosed self storage units but excludes commercial, residential, and covered parking space.
RESTRICTED COMMON SHARES: Restricted common shares are common shares that are subject to restrictions on transferability subject to vesting and such other restrictions. Generally, a participant granted restricted common shares has all of the rights of a shareholder, including, without limitation, the right to vote and the right to receive dividends on the restricted common shares. Holders of restricted common shares are prohibited from selling such shares until they vest.
SAME STORE PORTFOLIO: NSA's same store portfolio is defined as those properties owned and operated since the first day of the earliest year presented, excluding any properties sold, expected to be sold or subject to significant changes such as expansions or casualty events which cause the portfolio's year-over-year operating results to no longer be comparable.
SUBORDINATED PERFORMANCE UNITS:  Subordinated performance units, or SP Units, are Class B common units of limited partner interest in the Company's operating partnership. SP units, which are linked to the performance of specific contributed portfolios, are intended to incentivize the Company's PROs to drive operating performance and support the sustainability of the operating cash flow generated by the contributed self storage properties that the PROs continue to manage on NSA's behalf. Because subordinated performance unit holders receive distributions only after portfolio-specific minimum performance thresholds are satisfied, the Company believes SP units play a key role in aligning the interests of the Company's PROs with NSA and the Company's shareholders. The DownREIT partnerships also issue units of limited partner interest that are intended to be economically equivalent to the Company's SP units, which the Company defines as DOWNREIT SUBORDINATED PERFORMANCE UNIT EQUIVALENTS, or DownREIT SP units.

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Equity Research Coverage
 
 
 
 
 
 
 
 
 
 
Baird Equity Research
 
BMO Capital Markets
 
Citi Investment Research
RJ Milligan
 
R. Jeremy Metz
 
Michael Bilerman / Smedes Rose
813.273.8252
 
212.885.4053
 
212.816.1383 / 212.816.6243
 
 
 
 
 
Jefferies LLC
 
KeyBanc Capital Markets
 
Morgan Stanley
Jonathan Petersen / Reuben Treatman
 
Todd Thomas / Jordan Sadler
 
Ronald Kamdem
212.284.1705 / 212.323.3307
 
917.368.2286 / 917.368.2280
 
212.296.8319
 
 
 
 
 
Stifel
 
SunTrust Robinson Humphrey
 
Wells Fargo Securities, LLC
Stephen Manaker / Kevin Stein
 
Ki Bin Kim / Ian Gaule
 
Todd Stender / Philip Defelice
212.271.3716 / 212.271.3718
 
212.303.4124 / 212.590.0948
 
562.637.1371 / 443.263.6442
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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