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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-37351
National Storage Affiliates Trust
(Exact name of Registrant as specified in its charter)
 
Maryland 46-5053858
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

8400 East Prentice Avenue, 9th Floor
Greenwood Village, Colorado 80111
(Address of principal executive offices) (Zip code)

(720) 630-2600
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbols Name of each exchange on which registered
Common Shares of Beneficial Interest, $0.01 par value per share NSA New York Stock Exchange
Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share NSA Pr A New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange
Act.
Large Accelerated Filer Accelerated Filer
Non-accelerated Filer Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes   No 
As of May 1, 2023, 88,303,468 common shares of beneficial interest, $0.01 par value per share, were outstanding.



NATIONAL STORAGE AFFILIATES TRUST
TABLE OF CONTENTS
FORM 10-Q
Page
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 (Unaudited)
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022 (Unaudited)
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2023 and 2022 (Unaudited)
Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2023 and 2022 (Unaudited)
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022 (Unaudited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
ITEM 4. Controls and Procedures
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
ITEM 1A. Risk Factors
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
ITEM 3. Defaults Upon Senior Securities
ITEM 4. Mine Safety Disclosures
ITEM 5. Other Information
ITEM 6. Exhibits
Signatures


2


PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements

NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
(Unaudited)
March 31, December 31,
2023 2022
ASSETS
Real estate
Self storage properties $ 6,556,603  $ 6,391,572 
Less accumulated depreciation (824,647) (772,661)
Self storage properties, net
5,731,956  5,618,911 
Cash and cash equivalents 44,330  35,312 
Restricted cash 7,506  6,887 
Debt issuance costs, net 10,247  1,393 
Investment in unconsolidated real estate ventures 223,139  227,441 
Other assets, net 144,666  156,228 
Operating lease right-of-use assets 23,581  23,835 
Total assets $ 6,185,425  $ 6,070,007 
LIABILITIES AND EQUITY
Liabilities
Debt financing $ 3,643,585  $ 3,551,179 
Accounts payable and accrued liabilities 78,603  80,377 
Interest rate swap liabilities 7,983  483 
Operating lease liabilities 25,528  25,741 
Deferred revenue 24,652  23,213 
Total liabilities 3,780,351  3,680,993 
Commitments and contingencies (Note 11)
Equity
Series A Preferred shares of beneficial interest, par value $0.01 per share. 50,000,000 authorized, 9,017,588 and 9,017,588 issued and outstanding at March 31, 2023 and December 31, 2022, respectively, at liquidation preference
225,439  225,439 
Series B Preferred shares of beneficial interest, par value $0.01 per share. 7,000,000 authorized, 5,668,128 issued and outstanding at March 31, 2023 (Note 3)
115,212   
Common shares of beneficial interest, par value $0.01 per share. 250,000,000 authorized, 88,296,142 and 89,842,145 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively
883  898 
Additional paid-in capital 1,689,136  1,777,984 
Distributions in excess of earnings (420,408) (396,650)
Accumulated other comprehensive income 25,153  40,530 
Total shareholders' equity 1,635,415  1,648,201 
Noncontrolling interests 769,659  740,813 
Total equity 2,405,074  2,389,014 
Total liabilities and equity $ 6,185,425  $ 6,070,007 
See notes to condensed consolidated financial statements.

3


NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
2023 2022
REVENUE
Rental revenue $ 194,129  $ 174,469 
Other property-related revenue 6,807  6,166 
Management fees and other revenue 7,057  6,549 
Total revenue 207,993  187,184 
OPERATING EXPENSES
Property operating expenses 56,483  49,358 
General and administrative expenses 14,821  13,966 
Depreciation and amortization 55,458  58,072 
Other 1,173  470 
Total operating expenses 127,935  121,866 
OTHER (EXPENSE) INCOME
Interest expense (37,948) (22,647)
Loss on early extinguishment of debt (758)  
Equity in earnings of unconsolidated real estate ventures
1,678  1,494 
Acquisition costs (844) (553)
Non-operating expense (598) (112)
Gain on sale of self storage properties   2,134 
Other expense (38,470) (19,684)
Income before income taxes 41,588  45,634 
Income tax expense (1,196) (848)
Net income 40,392  44,786 
Net income attributable to noncontrolling interests
(11,433) (19,558)
Net income attributable to National Storage Affiliates Trust
28,959  25,228 
Distributions to preferred shareholders
(3,962) (3,279)
Net income attributable to common shareholders
$ 24,997  $ 21,949 
Earnings (loss) per share - basic $ 0.28  $ 0.24 
Earnings (loss) per share - diluted $ 0.24  $ 0.24 
Weighted average shares outstanding - basic 89,499  91,323 
Weighted average shares outstanding - diluted 148,622  91,323 
Dividends declared per common share $ 0.55  $ 0.50 

See notes to condensed consolidated financial statements.

4


NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
2023 2022
Net income $ 40,392  $ 44,786 
Other comprehensive income (loss)
Unrealized (loss) gain on derivative contracts (12,953) 38,608 
Reclassification of other comprehensive (income) loss to interest expense
(7,761) 4,974 
Other comprehensive (loss) income
(20,714) 43,582 
Comprehensive income 19,678  88,368 
Comprehensive income attributable to noncontrolling interests
(4,881) (32,341)
Comprehensive income attributable to National Storage Affiliates Trust
$ 14,797  $ 56,027 

See notes to condensed consolidated financial statements.

5


NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(dollars in thousands, except number of shares)
(Unaudited)
Accumulated
Additional Distributions Other
Preferred Shares Common Shares Paid-in In Excess Of Comprehensive Noncontrolling Total
Number Amount Number Amount Capital Earnings (Loss) Income Interests Equity
Balances, December 31, 2021 8,736,719  $ 218,418  91,198,929  $ 912  $ 1,866,773  $ (291,263) $ (19,611) $ 707,226  $ 2,482,455 
OP equity issued for property acquisitions:
Internalization of PRO, net of offering costs
—  —  —  —  —  —  —  3,217  3,217 
OP units, subordinated performance units and Series A-1 preferred units, net of offering costs
—  —  —  —  —  —  —  16,576  16,576 
Redemptions of Series A-1 preferred units 8,216  205  —  —  —  —  —  (205)  
Redemptions of OP units —  —  258,477  3  4,601  —  (44) (4,560)  
Effect of changes in ownership for consolidated entities
—  —  —  —  (40,627) —  590  40,037   
Equity-based compensation expense
—  —  —  —  103  —  —  1,441  1,544 
Issuance of restricted common shares
—  —  7,913  —  —  —  —  —   
Vesting and forfeitures of restricted common shares, net
—  —  (3,599) —  (118) —  —  —  (118)
Preferred share dividends —  —  —  —  —  (3,279) —  —  (3,279)
Common share dividends —  —  —  —  —  (45,710) —  —  (45,710)
Distributions to noncontrolling interests
—  —  —  —  —  —  —  (33,009) (33,009)
Other comprehensive income —  —  —  —  —  —  30,799  12,783  43,582 
Net income —  —  —  —  —  25,228  —  19,558  44,786 
Balances, March 31, 2022 8,744,935  $ 218,623  91,461,720  $ 915  $ 1,830,732  $ (315,024) $ 11,734  $ 763,064  $ 2,510,044 
See notes to condensed consolidated financial statements.

6


NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(dollars in thousands, except number of shares)
(Unaudited)
Accumulated
Additional Distributions Other
Preferred Shares Common Shares Paid-in In Excess Of Comprehensive Noncontrolling Total
Number Amount Number Amount Capital Earnings (Loss) Income Interests Equity
Balances, December 31, 2022 9,017,588  $ 225,439  89,842,145  $ 898  $ 1,777,984  $ (396,650) $ 40,530  $ 740,813  $ 2,389,014 
Issuance of preferred shares 5,668,128  115,212  —  —  (1,938) —  —  —  113,274 
OP equity issued:
Acquisition of properties —  —  —  —  —  —  —  37,257  37,257 
Issuance of Series A-1 preferred units —  —  —  —  —  —  —  750  750 
Redemptions of OP Units —  —  67,431  1  1,093  —  30  (1,124)  
Repurchase of common shares —  —  (1,622,874) (16) (69,295) —  —  —  (69,311)
Effect of changes in ownership for consolidated entities —  —  —  —  (18,720) —  (1,245) 19,965   
Equity-based compensation expense —  —  —  —  101  —  —  1,548  1,649 
Issuance of restricted common shares —  —  12,417  —  (89) —  —  —  (89)
Vesting and forfeitures of restricted common shares, net —  —  (2,977) —  —  —  —  —   
Preferred share dividends —  —  —  —  —  (3,962) —  —  (3,962)
Common share dividends —  —  —  —  —  (48,755) —  —  (48,755)
Distributions to noncontrolling interests —  —  —  —  —  —  —  (34,431) (34,431)
Other comprehensive (loss) —  —  —  —  —  —  (14,162) (6,552) (20,714)
Net income —  —  —  —  —  28,959  —  11,433  40,392 
Balances, March 31, 2023 14,685,716  $ 340,651  88,296,142  $ 883  $ 1,689,136  $ (420,408) $ 25,153  $ 769,659  $ 2,405,074 
See notes to condensed consolidated financial statements.

7


NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
2023 2022
OPERATING ACTIVITIES
Net income $ 40,392  $ 44,786 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 55,458  58,072 
Amortization of debt issuance costs 1,600  1,043 
Amortization of debt discount and premium, net (150) (172)
Other 969   
Gain on sale of self storage properties   (2,134)
Equity-based compensation expense 1,649  1,544 
Equity in earnings of unconsolidated real estate ventures
(1,678) (1,494)
Distributions from unconsolidated real estate ventures
5,981  5,135 
Change in assets and liabilities, net of effects of self storage property acquisitions:
Other assets 7,730  (437)
Accounts payable and accrued liabilities (3,043) 2,846 
Deferred revenue 845  877 
Net Cash Provided by Operating Activities 109,753  110,066 
INVESTING ACTIVITIES
Acquisition of self-storage properties (9,920) (75,098)
Capital expenditures (8,450) (8,213)
Deposits and advances for self storage properties and other acquisitions (200) (6,000)
Expenditures for corporate furniture, equipment and other (678) (370)
Acquisition of management company assets and interest in reinsurance company from PRO retirement (16,924)  
Proceeds from sale of self storage properties   6,166 
Net Cash Used In Investing Activities (36,172) (83,515)
FINANCING ACTIVITIES
Borrowings under debt financings 196,000  324,000 
Repurchase of common shares (69,311)  
Principal payments under debt financings (102,644) (265,085)
Payment of dividends to common shareholders (48,755) (45,710)
Payment of dividends to preferred shareholders (3,664) (3,279)
Distributions to noncontrolling interests (34,513) (33,277)
Debt issuance costs (1,057) (1,222)
Equity offering costs   (706)
Net Cash Used In Financing Activities (63,944) (25,279)
Increase in Cash, Cash Equivalents and Restricted Cash 9,637  1,272 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period 42,199  27,875 
End of period $ 51,836  $ 29,147 

See notes to condensed consolidated financial statements.

8


NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)


Supplemental Cash Flow and Noncash Information
Cash paid for interest
$ 29,521  $ 21,140 
Consideration exchanged in investment activity
Issuance of OP Units and subordinated performance units 37,257  19,793 
Issuance of Series B preferred shares 113,274   
Deposits on acquisitions applied to purchase price   700 
Other net liabilities assumed 85  332 

See notes to condensed consolidated financial statements.

9


NATIONAL STORAGE AFFILIATES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)





1. ORGANIZATION AND NATURE OF OPERATIONS
National Storage Affiliates Trust was organized in the state of Maryland on May 16, 2013 and is a fully integrated, self-administered and self-managed real estate investment trust focused on the self storage sector. As used herein, "NSA," the "Company," "we," "our," and "us" refers to National Storage Affiliates Trust and its consolidated subsidiaries, except where the context indicates otherwise. The Company has elected and believes that it has qualified to be taxed as a real estate investment trust for U.S. federal income tax purposes ("REIT") commencing with its taxable year ended December 31, 2015.
Through its controlling interest as the sole general partner of NSA OP, LP (its "operating partnership"), a Delaware limited partnership formed on February 13, 2013, the Company is focused on the ownership, operation, and acquisition of self storage properties predominantly located within the top 100 metropolitan statistical areas throughout the United States. Pursuant to the Agreement of Limited Partnership (as amended, the "LP Agreement") of its operating partnership, the Company's operating partnership is authorized to issue preferred units, Class A Units ("OP units"), different series of Class B Units ("subordinated performance units"), and Long-Term Incentive Plan Units ("LTIP units"). The Company also owns certain of its self storage properties through other consolidated limited partnership subsidiaries of its operating partnership, which the Company refers to as "DownREIT partnerships." The DownREIT partnerships issue equity ownership interests that are intended to be economically equivalent to the Company's OP units ("DownREIT OP units") and subordinated performance units ("DownREIT subordinated performance units").
The Company owned 932 consolidated self storage properties in 39 states and Puerto Rico with approximately 59.3 million rentable square feet in approximately 461,000 storage units as of March 31, 2023. These properties are managed with local operational focus and expertise by the Company and its participating regional operators ("PROs"). As of March 31, 2023, the Company directly managed 619 of these self storage properties through its corporate brands of iStorage, SecurCare, Northwest and Move It, and the PROs managed the remaining 313 self storage properties. These PROs are Optivest Properties LLC and its controlled affiliates ("Optivest"), Guardian Storage Centers LLC and its controlled affiliates ("Guardian"), Arizona Mini Storage Management Company d/b/a Storage Solutions and its controlled affiliates ("Storage Solutions"), Hide-Away Storage Services, Inc. and its controlled affiliates ("Hide-Away"), an affiliate of Shader Brothers Corporation d/b/a Personal Mini Storage ("Personal Mini"), Southern Storage Management Systems, Inc. d/b/a Southern Self Storage ("Southern"), affiliates of Investment Real Estate Management, LLC d/b/a Moove In Self Storage of York, Pennsylvania ("Moove In") and Blue Sky Self Storage, a strategic partnership between Argus Professional Storage Management and GYS Development LLC ("Blue Sky").
Effective January 1, 2023, one of our PROs, Move It Self Storage and its controlled affiliates ("Move It"), retired as one of the Company's PROs. As a result of the retirement, on January 1, 2023, management of our 72 properties in the Move It managed portfolio was transferred to us and the Move It brand name and related intellectual property was internalized by us, and we discontinued payment of any supervisory and administrative fees or reimbursements to Move It. In addition, on January 1, 2023, we issued a notice of non-voluntary conversion to convert all of the subordinated performance units related to Move It's managed portfolio into OP units. As part of the internalization, a majority of Move It's employees were offered and provided employment by us and will continue managing Move It's portfolio of properties as members of our existing property management platform. See Note 3 and Note 6 for additional information related to the Move It retirement and internalization.
As of March 31, 2023, the Company also managed through its property management platform an additional portfolio of 185 properties owned by the Company's unconsolidated real estate ventures. These properties contain approximately 13.5 million rentable square feet, configured in approximately 111,000 storage units and located across 21 states. The Company owns a 25% equity interest in each of its unconsolidated real estate ventures.
As of March 31, 2023, in total, the Company operated and held ownership interests in 1,117 self storage properties located across 42 states and Puerto Rico with approximately 72.8 million rentable square feet in approximately 572,000 storage units.

10


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles ("GAAP") and have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the condensed consolidated financial statements have been included. The Company's results of operations for the quarterly and year to date periods are not necessarily indicative of the results to be expected for the full year or any other future period.
Principles of Consolidation
The Company's financial statements include the accounts of its operating partnership and its controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidation of entities.
When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if the entity is deemed a variable interest entity ("VIE"), and if the Company is deemed to be the primary beneficiary, in accordance with authoritative guidance issued on the consolidation of VIEs. When an entity is not deemed to be a VIE, the Company considers the provisions of additional guidance to determine whether the general partner controls a limited partnership or similar entity when the limited partners have certain rights. The Company consolidates all entities that are VIEs and of which the Company is deemed to be the primary beneficiary. The Company has determined that its operating partnership is a VIE. The sole significant asset of National Storage Affiliates Trust is its investment in its operating partnership, and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of its operating partnership.
As of March 31, 2023, the Company's operating partnership was the primary beneficiary of, and therefore consolidated, 22 partnerships that are considered VIEs, which owned 48 self storage properties. The net book value of the real estate owned by these VIEs was $412.0 million and $412.9 million as of March 31, 2023 and December 31, 2022, respectively. For certain DownREIT partnerships which are subject to fixed rate mortgages payable, the carrying value of such fixed rate mortgages payable held by these VIEs was $188.7 million and $188.7 million as of March 31, 2023 and December 31, 2022, respectively. The creditors of the consolidated VIEs do not have recourse to the Company's general credit.
Revenue Recognition
Rental revenue
Rental revenue consists of space rentals and related fees. Management has determined that all of the Company's leases are operating leases. Substantially all leases may be terminated on a month-to-month basis and rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term.
Other property-related revenue
Other property-related revenue primarily consists of ancillary revenues such as tenant insurance and/or tenant warranty protection-related access fees, sales of storage supplies and truck rentals which are recognized in the period earned.
The Company and certain of the Company’s PROs have tenant insurance and/or tenant warranty protection plan-related arrangements with insurance companies and the Company’s tenants. During the three months ended March 31, 2023 and 2022, the Company recognized $5.5 million and $4.9 million, respectively, of tenant insurance and tenant warranty protection plan revenues.
The Company sells boxes, packing supplies, locks, other retail merchandise and rents moving trucks at its properties. During the three months ended March 31, 2023 and 2022, the Company recognized retail sales of $0.6 million and $0.6 million, respectively.

11


Management fees and other revenue
Management fees and other revenue consist of property management fees, platform fees, call center fees, acquisition fees, amounts related to the facilitation of tenant warranty protection or tenant insurance programs for certain stores in the Company's consolidated portfolio and unconsolidated real estate ventures, access fees associated with tenant insurance-related arrangements, and profit distributions from the Company's interest in a reinsurance company.
With respect to both the 2018 Joint Venture and the 2016 Joint Venture (as each is defined in Note 5), the Company provides supervisory and administrative property management services, centralized call center services, and technology platform and revenue management services to the properties in the unconsolidated real estate ventures. The property management fees are equal to 6% of monthly gross revenues and net sales revenues from the assets of the unconsolidated real estate ventures, and the platform fees are equal to $1,250 per month per unconsolidated real estate venture property. With respect to the 2016 Joint Venture only, the call center fee is equal to 1% of each of monthly gross revenues and net sales revenues from the 2016 Joint Venture properties. During the three months ended March 31, 2023 and 2022, the Company recognized property management fees, call center fees and platform fees of $4.2 million and $3.8 million, respectively.
The Company also earns acquisition fees for properties acquired by the unconsolidated real estate ventures subsequent to the Initial 2016 JV Portfolio and the Initial 2018 JV Portfolio. These fees are based on a percentage of the gross capitalization of the acquired assets determined by the members of the 2016 Joint Venture and the 2018 Joint Venture, and are generally earned when the unconsolidated real estate ventures obtain title and control of an acquired property. During the three months ended March 31, 2023 and 2022, the Company recognized acquisition fees of $0 and $0.2 million, respectively.
The Company provides or makes available tenant insurance or tenant warranty protection programs for tenants at its properties. For certain of the properties in the Company’s consolidated portfolio and unconsolidated real estate ventures, the Company provides such tenant insurance through the Company’s wholly-owned captive insurance company and a separate reinsurance company in which the Company has a partial ownership interest. With respect to properties in both of the Company’s unconsolidated real estate ventures, the Company receives 50% of all proceeds from tenant insurance and tenant warranty protection programs at each unconsolidated real estate venture property in exchange for facilitating the programs at those properties. During the three months ended March 31, 2023 and 2022, the Company recognized $2.8 million and $2.4 million, respectively, of revenue related to these activities.
Gain on sale of self storage properties
The Company recognizes gains from disposition of facilities only upon closing in accordance with the guidance on sales of nonfinancial assets. Profit on real estate sold is recognized upon closing when all, or substantially all, of the promised consideration has been received and is nonrefundable and the Company has transferred control of the facilities to the purchaser.
Investments in Unconsolidated Real Estate Ventures
The Company’s investments in its unconsolidated real estate ventures are recorded under the equity method of accounting in the accompanying condensed consolidated financial statements. Under the equity method, the Company’s investments in unconsolidated real estate ventures are stated at cost and adjusted for the Company’s share of net earnings or losses and reduced by distributions. Equity in earnings (losses) is recognized based on the Company’s ownership interest in the earnings (losses) of the unconsolidated real estate ventures. The Company follows the "nature of the distribution approach" for classification of distributions from its unconsolidated real estate ventures in its condensed consolidated statements of cash flows. Under this approach, distributions are reported on the basis of the nature of the activity or activities that generated the distributions as either a return on investment, which are classified as operating cash flows, or a return of investment (e.g., proceeds from the unconsolidated real estate ventures' sale of assets) which are reported as investing cash flows.

12


Noncontrolling Interests
All of the limited partner equity interests ("OP equity") in the operating partnership not held by the Company are reflected as noncontrolling interests. Noncontrolling interests also include ownership interests in DownREIT partnerships held by entities other than the operating partnership or its subsidiaries. In the condensed consolidated statements of operations, the Company allocates net income (loss) attributable to noncontrolling interests to arrive at net income (loss) attributable to National Storage Affiliates Trust.
For transactions that result in changes to the Company's ownership interest in its operating partnership, the carrying amount of noncontrolling interests is adjusted to reflect such changes. The difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted is reflected as an adjustment to additional paid-in capital on the condensed consolidated balance sheets.
Allocation of Net Income (Loss)
The distribution rights and priorities set forth in the operating partnership's LP Agreement differ from what is reflected by the underlying percentage ownership interests of the unitholders. Accordingly, the Company allocates GAAP 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 its operating partnership at period end after adjusting for any distributions or contributions made during such period. The HLBV method is commonly applied to equity investments where cash distribution percentages vary at different points in time and are not directly linked to an equity holder’s ownership percentage.
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.
Other Comprehensive Income (Loss)
The Company has cash flow hedge derivative instruments that are measured at fair value with unrealized gains or losses recognized in other comprehensive income (loss) with a corresponding adjustment to accumulated other comprehensive income (loss) within equity, as discussed further in Note 12. Under the HLBV method of allocating income (loss) discussed above, a calculation is prepared at each balance sheet date by applying the HLBV method including, and excluding, the assets and liabilities resulting from the Company's cash flow hedge derivative instruments to determine comprehensive income (loss) attributable to National Storage Affiliates Trust. As a result of the distribution rights and priorities set forth in the operating partnership's LP Agreement, in any given period, other comprehensive income (loss) may be allocated disproportionately to unitholders as compared to their respective ownership percentage in the operating partnership and as compared to their respective allocation of net income (loss).
Cash and Cash Equivalents
The Company considers all highly-liquid investments purchased with original maturities of three months or less to be cash equivalents. From time to time, the Company maintains cash balances in financial institutions in excess of federally insured limits. We mitigate credit risk by placing cash and cash equivalents with major financial institutions. The Company has never experienced a loss that resulted from exceeding federally insured limits.


13


Restricted Cash
The Company's restricted cash consists of escrowed funds deposited with financial institutions resulting from property sales for which we elected to purchase replacement property in accordance with Section 1031 of the Code, for real estate taxes, insurance and other reserves for capital improvements in accordance with the Company's loan agreements.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

3. SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS
Shareholders' Equity
At the Market ("ATM") Program
On February 27, 2019, the Company entered into a sales agreement with certain sales agents, pursuant to which the Company may sell from time to time up to an aggregate of $250.0 million of common shares of beneficial interest, $0.01 par value per share of the Company ("common shares") and 6.000% Series A cumulative redeemable Preferred Shares of beneficial interest ("Series A Preferred Shares") in sales deemed to be "at the market" offerings (the "sales agreement"). On May 19, 2021, the Company entered into an amendment to the sales agreement with certain sales agents, whereby the Company increased the aggregate gross sale price under the program to $400.0 million, which included $31.0 million of the remaining available offered shares. The sales agreement contemplates that, in addition to the issuance and sale by the Company of offered shares to or through the sale agents, the Company may enter into separate forward sale agreements with any forward purchaser. Forward sale agreements, if any, will include only the Company's common shares and will not include any Series A Preferred Shares. If the Company enters into a forward sale agreement with any forward purchaser, such forward purchaser will attempt to borrow from third parties and sell, through the related agent, acting as sales agent for such forward purchaser (each, a "forward seller"), offered shares, in an amount equal to the offered shares subject to such forward sale agreement, to hedge such forward purchaser’s exposure under such forward sale agreement. The Company may offer the common shares and Series A Preferred Shares through the agents, as the Company's sales agents, or, as applicable, as forward seller, or directly to the agents or forward sellers, acting as principals, by means of, among others, ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of sale or at negotiated prices.
During the three months ended March 31, 2023, the Company did not sell any common shares through the ATM program. As of March 31, 2023, the Company had $169.1 million of capacity remaining under its ATM Program.
Common Share Repurchase Program
On July 11, 2022, the Company approved a share repurchase program authorizing, but not obligating, the repurchase of up to $400.0 million of the Company's common shares of beneficial interest from time to time. The timing, manner, price and amount of any repurchase transactions will be determined by the Company in its discretion and will be subject to share price, availability, trading volume and general market conditions. During the three months ended March 31, 2023 the Company repurchased 1,622,874 common shares for approximately $69.3 million.







14


Series B Preferred Shares
On March 15, 2023, the Company classified 7,000,000 of the Company's authorized but unissued preferred shares of beneficial interest as 6.000% Series B Cumulative Redeemable Preferred Shares ("Series B Preferred Shares"). The Series B Preferred Shares rank senior to the Company’s common shares of beneficial interest, and on parity with the Company’s 6.000% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest (“Series A Preferred Shares”) and any future equity shares that the Company may later authorize or issue and that by their terms are on parity with the Series B Preferred Shares, and junior to any other class of the Company’s shares expressly designated as ranking senior to the Series B Preferred Shares. The Series B Preferred Shares have a per share liquidation preference of $25.00 per share and receive distributions at an annual rate of 6.000%. These distributions are payable quarterly in arrears on or about the last day of March, June, September and December of each year, beginning on June 30, 2023. The first dividend would be a pro rata dividend from and including March 16, 2023 to and including June 30, 2023. Generally, Series B Preferred Shares are not redeemable prior to September 15, 2043.
On March 16, 2023, the Company issued 5,668,128 Series B Preferred Shares for approximately $139.6 million, to an affiliate of Personal Mini, in connection with the acquisition of a portfolio of 15 properties. As part of the acquisition transaction, the Company recorded a $26.1 million promissory note receivable from an affiliate of Personal Mini. Proceeds from the promissory note were used by the affiliate of Personal Mini to acquire $26.1 million of subordinated performance units. The promissory note bears interest at a rate equivalent to the dividends paid on 1,059,683 of the Series B Preferred Shares. As a result of these agreements, in accordance with GAAP, the $26.1 million promissory note receivable, interest income on the note receivable, $26.1 million of Series B Preferred Shares value, and dividends on such Series B Preferred Shares have been offset in the accompanying consolidated balance sheets, statements of operations, and statements of changes in equity, resulting in a net amount presented as proceeds from the issuance of Series B Preferred Shares of $113.3 million.
Noncontrolling Interests
All of the OP equity in the Company's operating partnership not held by the Company are reflected as noncontrolling interests. Noncontrolling interests also include ownership interests in DownREIT partnerships held by entities other than the Company's operating partnership. NSA is the general partner of its operating partnership and is authorized to cause its operating partnership to issue additional partner interests, including OP units and subordinated performance units, at such prices and on such other terms as it determines in its sole discretion.
As of March 31, 2023 and December 31, 2022, units reflecting noncontrolling interests consisted of the following:
March 31, 2023 December 31, 2022
Series A-1 preferred units 745,649  712,208 
OP units 38,782,420  35,737,281 
Subordinated performance units 7,532,547  8,154,524 
LTIP units 756,898  728,890 
DownREIT units
DownREIT OP units 2,120,491  1,924,918 
DownREIT subordinated performance units 4,133,474  4,337,111 
Total 54,071,479  51,594,932 






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Series A-1 Preferred Units
The 6.000% Series A-1 Cumulative Redeemable Preferred Units ("Series A-1 preferred units") rank senior to OP units and subordinated performance units in the Company's operating partnership with respect to distributions and liquidation. The Series A-1 preferred units have a stated value of $25.00 per unit and receive distributions at an annual rate of 6.000%. These distributions are cumulative. The Series A-1 preferred units are redeemable at the option of the holder after the first anniversary of the date of issuance, which redemption obligations may be satisfied at the Company’s option in cash in an amount equal to the market value of an equivalent number of the Series A Preferred Shares or the issuance of Series A Preferred Shares on a one-for-one basis, subject to adjustments. The Series A Preferred Shares are redeemable by the Company for a cash redemption price of $25.00 per share, plus accrued but unpaid dividends beginning in October 2022. The increase in Series A-1 preferred units outstanding from December 31, 2022 to March 31, 2023 was due to the issuance of 33,441 Series A-1 preferred units in connection with the termination of a lease and the contribution of the development rights for vacant land owned by the Company at one of the Company’s self storage facilities.
OP Units and DownREIT OP units
OP units in the Company's operating partnership are redeemable for cash or, at the Company's option, exchangeable for the Company's common shares on a one-for-one basis, and DownREIT OP units are redeemable for cash or, at the Company's option, exchangeable for OP units in its operating partnership on a one-for-one basis, subject to certain adjustments in each case. The holders of OP units are generally not entitled to elect redemption until one year after the issuance of the OP units. The holders of DownREIT OP units are generally not entitled to elect redemption until five years after the date of the contributor's initial contribution.
The increase in OP units outstanding from December 31, 2022 to March 31, 2023 was due to (i) 2,545,063 OP units issued upon the non-voluntary conversion of 926,623 subordinated performance units (as discussed further below) in connection with Move It's retirement, (ii) 481,811 OP units issued upon the voluntary conversion of 397,000 subordinated performance units, (iii) the conversion of 85,696 LTIP units into an equivalent number of OP units, partially offset by the redemption of 67,431 OP units for an equal number of common shares.
The increase in DownREIT OP units outstanding from December 31, 2022 to March 31, 2023 was due to 195,573 DownREIT OP units issued upon the voluntary conversion of 203,637 DownREIT subordinated performance units.
Subordinated Performance Units and DownREIT Subordinated Performance Units
Subordinated performance units may also, under certain circumstances, be convertible into OP units which are exchangeable for common shares as described above, and DownREIT subordinated performance units may, under certain circumstances, be exchangeable for subordinated performance units on a one-for-one basis. Subordinated performance units are only convertible into OP units after a two year lock-out period and then generally (i) at the holder’s election only upon the achievement of certain performance thresholds relating to the properties to which such subordinated performance units relate or (ii) at the Company's election upon a retirement event of a PRO that holds such subordinated performance units or upon certain qualifying terminations. The holders of DownREIT subordinated performance units are generally not entitled to elect redemption until at least five years after the date of the contributor's initial contribution.
Following such lock-out period, a holder of subordinated performance units in the Company's operating partnership may elect a voluntary conversion one time each year on or prior to December 1st to convert a pre-determined portion of such subordinated performance units into OP units in the Company's operating partnership, with such conversion effective January 1st of the following year, with each subordinated performance unit being converted into the number of OP units determined by dividing the average cash available for distribution, or CAD, per unit on the series of specific subordinated performance units over the one-year period prior to conversion by 110% of the CAD per unit on the OP units determined over the same period. CAD per unit on the series of specific subordinated performance units and OP units is determined by the Company based generally upon the application of the provisions of the LP Agreement applicable to the distributions of operating cash flow and capital transactions proceeds.



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The decrease in subordinated performance units outstanding from December 31, 2022 to March 31, 2023 was due to the conversion of 926,623 subordinated performance units into 2,545,063 OP units in connection with the retirement of Move It, and the voluntary conversion of 397,000 subordinated performance units into 481,811 OP units, partially offset by the issuance of 701,646 subordinated performance units for co-investment by the Company's PROs in connection with the acquisition of self storage properties.
The decrease in DownREIT subordinated performance units outstanding from December 31, 2022 to March 31, 2023 was due to the voluntary conversion of 203,637 DownREIT subordinated performance units into 195,573 DownREIT OP units.
LTIP Units
LTIP units are a special class of partnership interest in the Company's operating partnership that allow the holder to participate in the ordinary and liquidating distributions received by holders of the OP units (subject to the achievement of specified levels of profitability by the Company's operating partnership or the achievement of certain events). LTIP units may also, under certain circumstances, be convertible into OP units on a one-for-one basis, which are then exchangeable for common shares as described above.
The increase in LTIP units outstanding from December 31, 2022 to March 31, 2023 was due to issuance of 113,704 compensatory LTIP units to employees, net of forfeitures, partially offset by the conversion of 85,696 LTIP units into an equivalent number of OP units.
4. SELF STORAGE PROPERTIES
Self storage properties are summarized as follows (dollars in thousands):
March 31, 2023 December 31, 2022
Land $ 1,145,627  $ 1,111,326 
Buildings and improvements 5,399,887  5,269,383 
Furniture and equipment 11,089  10,863 
Total self storage properties 6,556,603  6,391,572 
Less accumulated depreciation (824,647) (772,661)
Self storage properties, net $ 5,731,956  $ 5,618,911 
Depreciation expense related to self storage properties amounted to $52.1 million and $46.7 million during the three months ended March 31, 2023 and 2022, respectively.
5. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES
2018 Joint Venture
As of March 31, 2023, the Company's unconsolidated real estate venture, formed in September 2018 with an affiliate of Heitman America Real Estate REIT LLC (the "2018 Joint Venture"), owned and operated a portfolio of 104 self storage properties containing approximately 7.8 million rentable square feet, configured in approximately 64,000 storage units and located across 17 states.
2016 Joint Venture
As of March 31, 2023, the Company's unconsolidated real estate venture, formed in September 2016 with a state pension fund advised by Heitman Capital Management LLC (the "2016 Joint Venture"), owned and operated a portfolio of 81 properties containing approximately 5.6 million rentable square feet, configured in approximately 47,000 storage units and located across 13 states.




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The following table presents the combined condensed financial position of the Company's unconsolidated real estate ventures as of March 31, 2023 and December 31, 2022 (in thousands):
March 31, 2023 December 31, 2022
ASSETS
Self storage properties, net $ 1,875,028  $ 1,891,203 
Other assets 34,630  36,873 
Total assets $ 1,909,658  $ 1,928,076 
LIABILITIES AND EQUITY
Debt financing $ 1,002,531  $ 1,002,301 
Other liabilities 22,436  23,808 
Equity 884,691  901,967 
Total liabilities and equity $ 1,909,658  $ 1,928,076 
The following tables present the combined condensed operating information of the Company's unconsolidated real estate ventures for the three months ended March 31, 2023 and 2022 (in thousands):
Three Months Ended March 31,
2023 2022
Total revenue $ 53,752  $ 48,998 
Property operating expenses 15,049  13,809 
Net operating income 38,703  35,189 
Supervisory, administrative and other expenses (3,529) (3,202)
Depreciation and amortization (17,883) (15,382)
Interest expense (10,411) (10,410)
Acquisition and other expenses (232) (274)
Net income $ 6,648  $ 5,921 

6. ACQUISITIONS AND DISPOSITIONS
Acquisitions
The Company acquired 16 self storage properties for $160.5 million during the three months ended March 31, 2023, all of which were acquired by the Company from its PROs. The 16 self storage property acquisitions were accounted for as asset acquisitions and accordingly, $1.0 million of transaction costs related to the acquisitions were capitalized as part of the basis of the acquired properties. The Company recognized the estimated fair value of the acquired assets and assumed liabilities on the respective dates of such acquisitions. The Company allocated the total purchase price to the estimated fair value of tangible and intangible assets acquired and liabilities assumed. The Company allocated a portion of the purchase price to identifiable intangible assets consisting of customer in-place leases which were recorded at an estimated value of $3.4 million, resulting in a total value of $157.1 million allocated to real estate.
The following table summarizes the investment in self storage property acquisitions completed by the Company during the three months ended March 31, 2023 (dollars in thousands):
Acquisitions Closed During the Three Months Ended: Number of Properties Summary of Investment
Cash and Acquisition Costs
Value of Equity(1)
Other Liabilities Total
March 31, 2023 16 $ 9,920  $ 150,531  $ 85  $ 160,536 
(1)Value of equity represents the fair value of Series B Preferred Shares and subordinated performance units.

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During the three months ended March 31, 2023, in connection with the retirement of Move It as a PRO as discussed in Note 1 and Note 3, the Company acquired Move It's rights to its asset management agreements, the Move It brand, and intellectual property for $4.7 million.
7. OTHER ASSETS
Other assets consist of the following (dollars in thousands):
March 31, 2023 December 31, 2022
Customer in-place leases, net of accumulated amortization of $5,818 and $5,004, respectively
$ 5,967  $ 5,090 
Receivables:
Trade, net 13,962  13,120 
PROs and other affiliates 2,463  4,175 
Receivables from unconsolidated real estate ventures 4,294  5,375 
Property acquisition and other deposits 200   
Interest rate swaps 38,252  51,466 
Prepaid expenses and other 12,052  26,156 
Corporate furniture, equipment and other, net 2,083  1,534 
Trade names 8,851  7,442 
Management contracts, net of accumulated amortization of $5,736 and $5,398, respectively
15,090  12,113 
Tenant reinsurance intangible, net of accumulated amortization of $2,796 and $2,466, respectively
33,270  21,575 
Goodwill 8,182  8,182 
Total $ 144,666  $ 156,228 
Amortization expense related to customer in-place leases amounted to $2.5 million and $10.7 million for the three months ended March 31, 2023 and 2022, respectively. Amortization expense related to management contracts amounted to $0.3 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively. Amortization expense related to the tenant reinsurance intangible amounted to $0.3 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively.

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8. DEBT FINANCING
The Company's outstanding debt as of March 31, 2023 and December 31, 2022 is summarized as follows (dollars in thousands):
Interest Rate(1)
March 31, 2023 December 31, 2022
Credit Facility:
Revolving line of credit 6.20  % $ 660,500  $ 496,000 
Term loan A   %   125,000 
Term loan B 3.23  % 275,000  250,000 
Term loan C 3.19  % 325,000  225,000 
Term loan D 2.92  % 275,000  175,000 
 Term loan E 4.91  % 130,000  125,000 
2023 Term loan facility   %   175,000 
2028 Term loan facility 4.62  % 75,000  75,000 
April 2029 Term loan facility 4.27  % 100,000  100,000 
June 2029 Term loan facility 5.37  % 285,000  285,000 
2026 Senior Unsecured Notes 2.16  % 35,000  35,000 
2029 Senior Unsecured Notes 3.98  % 100,000  100,000 
August 2030 Senior Unsecured Notes 2.99  % 150,000  150,000 
November 2030 Senior Unsecured Notes 2.72  % 75,000  75,000 
May 2031 Senior Unsecured Notes 3.00  % 90,000  90,000 
August 2031 Senior Unsecured Notes 4.08  % 50,000  50,000 
November 2031 Senior Unsecured Notes 2.81  % 175,000  175,000 
August 2032 Senior Unsecured Notes 3.09  % 100,000  100,000 
November 2032 Senior Unsecured Notes 5.06  % 200,000  200,000 
May 2033 Senior Unsecured Notes 3.10  % 55,000  55,000 
November 2033 Senior Unsecured Notes 2.96  % 125,000  125,000 
2036 Senior Unsecured Notes 3.06  % 75,000  75,000 
Fixed rate mortgages payable 3.85  % 298,428  299,570 
Total principal 3,653,928  3,560,570 
Unamortized debt issuance costs and debt premium, net
(10,343) (9,391)
Total debt $ 3,643,585  $ 3,551,179 
(1)Represents the effective interest rate as of March 31, 2023. Effective interest rate incorporates the stated rate plus the impact of interest rate cash flow hedges and discount and premium amortization, if applicable. For the revolving line of credit, the effective interest rate excludes fees for unused borrowings.

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On January 3, 2023, the Company's operating partnership, as borrower, certain of its subsidiaries, as subsidiary guarantors, and the Company entered into a third amended and restated credit agreement with a syndicated group of lenders which expanded the total borrowing capacity of its credit facility by $405.0 million to $1.955 billion with an expansion feature to expand the total borrowing capacity to $2.5 billion. The maturity date of the revolving line of credit (the "Revolver") is now January 2027, while the total borrowing capacity of the Revolver was increased to $950.0 million from $650.0 million. In connection with the credit facility recast, the $125.0 million tranche A term loan facility (the "Term Loan A") due January 2023 was eliminated by the Company, tranche B term loan facility (the "Term Loan B") increased from $250.0 million to $275.0 million, tranche C term loan facility (the "Term Loan C") increased from $225.0 million to $325.0 million, tranche D term loan facility (the "Term Loan D") increased from $175.0 million to $275.0 million, tranche E term loan facility (the "Term Loan E") increased from $125.0 million to $130.0 million, and the Company eliminated the $175.0 million term loan facility due in June 2023. In connection with the credit facility recast, effective January 3, 2023, all of our LIBOR-based interest rate swaps were converted into SOFR-based interest rate swaps.
As of March 31, 2023, the Company had outstanding letters of credit totaling $6.2 million and would have had the capacity to borrow remaining Revolver commitments of $283.3 million while remaining in compliance with the credit facility's financial covenants. At March 31, 2023, the Company was in compliance with all such covenants.
Future Debt Obligations