EX-99.1
Published on August 5, 2024
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 MSA | |||||
Schedule 7 - Same Store Operating Data - Trailing Five Quarters | |||||
Schedule 8 - Reconciliation of Same Store Data and Net Operating Income to Net Income | |||||
Schedule 9 - Selected Financial Information | |||||
Glossary | |||||
August 5, 2024
National Storage Affiliates Trust Reports Second Quarter 2024 Results
GREENWOOD VILLAGE, Colo. - (BUSINESS WIRE) - National Storage Affiliates Trust ("NSA" or the "Company") (NYSE: NSA) today reported the Company’s second quarter 2024 results.
Second Quarter 2024 Highlights
•Reported net income of $32.3 million for the second quarter of 2024, a decrease of 29.0% compared to the second quarter of 2023. Reported diluted earnings per share of $0.16 for the second quarter of 2024 compared to $0.28 for the second quarter of 2023.
•Reported core funds from operations ("Core FFO") of $71.2 million, or $0.62 per share for the second quarter of 2024, a decrease of 8.8% per share compared to the second quarter of 2023.
•Reported a decrease in same store net operating income ("NOI") of 5.6% for the second quarter of 2024 compared to the same period in 2023, driven by a 2.8% decrease in same store total revenues and an increase of 4.8% in same store property operating expenses.
•Reported same store period-end occupancy of 87.0% as of June 30, 2024, a decrease of 280 basis points compared to June 30, 2023.
•Acquired three wholly-owned self storage properties for approximately $25.2 million during the second quarter of 2024.
•Repurchased 1,908,397 of the Company's common shares for approximately $71.6 million under the Company's previously announced share repurchase program.
Highlights Subsequent to Quarter-End
•Effective July 1, 2024 (the "Closing Date"), the Company completed the internalization of its participating regional operator ("PRO") structure. As a result, the Company purchased the PROs' management contracts, and in some cases, their brand names, related intellectual property and certain rights to the PROs' tenant insurance programs. As of the Closing Date, the Company will no longer pay supervisory and administrative fees or reimbursements under the previous agreements with the PROs. The Company plans to transition the majority of operations in a phased approach, which is expected to occur over the 12 month period following the Closing Date, and the Company has executed new asset management and property management agreements with a number of the PROs for all or a part of this transitionary period at newly negotiated management fees. In connection with the internalization, on July 1, 2024, 11,906,167 subordinated performance units and DownREIT subordinated performance units converted into 17,984,787 OP units and DownREIT OP units.
•On July 29, 2024, the Company repaid in full the remaining $145.0 million of Term Loan Tranche B using the revolving line of credit.
•On July 30, 2024, a joint venture between a subsidiary of NSA and a state pension fund advised by Heitman Capital Management, LLC (the "2023 Joint Venture") acquired a portfolio of five self storage properties for approximately $71.9 million. The venture financed the acquisition with capital contributions from the venture members, of which the Company contributed approximately $18.0 million.
David Cramer, President and Chief Executive Officer, commented, “We are focused on the internalization of the PRO structure that we announced in early June and closed on July 1st. We’ve made significant progress on our strategic initiatives over the past few quarters, including the sale of non-core assets, repayment of floating rate debt, formation of two new joint ventures, repurchase of common shares, and now the internalization of the PRO structure, all of which position NSA for growth going forward. I'd like to acknowledge and thank our PROs and the NSA team members for the significant time and effort that they have devoted to these initiatives as well as our People, Process and Platform projects, which we expect will significantly benefit our results going forward.”
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Mr. Cramer further commented, “We continue to feel pressure on operating results in this very competitive environment due to factors including less demand as a result of a muted housing market and the absorption of new supply, which is felt most prominently in the Sunbelt markets. We believe that these pressures will remain throughout the back half of the year. We also acknowledge that the transition of the PRO-managed stores creates an additional lift for our team in the near-term. We are acutely focused on navigating today’s challenges and remain well-positioned to benefit when sector headwinds subside.”
Financial Results
($ in thousands, except per share and unit data) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||
2024 | 2023 | Growth | 2024 | 2023 | Growth | ||||||||||||||||||||||||||||||
Net income | $ | 32,280 | $ | 45,476 | (29.0) | % | $ | 127,368 | $ | 85,868 | 48.3 | % | |||||||||||||||||||||||
Funds From Operations ("FFO")(1)
|
$ | 70,118 | $ | 88,478 | (20.8) | % | $ | 142,012 | $ | 172,744 | (17.8) | % | |||||||||||||||||||||||
Add back acquisition costs |
480 | 239 | 100.8 | % | 987 | 1,083 | (8.9) | % | |||||||||||||||||||||||||||
Add integration and executive severance costs(2)
|
626 | — | — | % | 626 | — | — | % | |||||||||||||||||||||||||||
Subtract casualty-related recoveries(3)
|
— | (522) | — | % | — | (522) | — | % | |||||||||||||||||||||||||||
Add loss on early extinguishment of debt |
— | — | — | % | — | 758 | — | % | |||||||||||||||||||||||||||
Core FFO(1)
|
$ | 71,224 | $ | 88,195 | (19.2) | % | $ | 143,625 | $ | 174,063 | (17.5) | % | |||||||||||||||||||||||
Earnings per share - basic and diluted | $ | 0.16 | $ | 0.28 | (42.9) | % | $ | 0.85 | $ | 0.56 | 51.8 | % | |||||||||||||||||||||||
FFO per share and unit(1)
|
$ | 0.61 | $ | 0.68 | (10.3) | % | $ | 1.20 | $ | 1.32 | (9.1) | % | |||||||||||||||||||||||
Core FFO per share and unit(1)
|
$ | 0.62 | $ | 0.68 | (8.8) | % | $ | 1.22 | $ | 1.34 | (9.0) | % |
(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. |
|||||||||||||
(2) | Integration and executive severance costs are recorded within the line items "General and administrative expenses" and "Non-operating income (expense)" in our condensed consolidated statements of operations. Integration costs relate to expenses incurred as a part of the internalization of the PRO structure. | |||||||||||||
(3) | Casualty-related recoveries relate to casualty-related expenses incurred during 2022 and are recorded in the line item "Other" within operating expenses in our consolidated statements of operations. |
Net income decreased $13.2 million for the second quarter of 2024 and increased $41.5 million for the six months ended June 30, 2024 ("year-to-date") as compared to the same periods in 2023. The decrease in net income in the second quarter of 2024 was primarily due to a decrease in NOI, primarily driven by (i) the sale of 32 self storage properties to a third party in December 2023, (ii) the contribution of 56 self storage properties to a joint venture between a subsidiary of NSA and a subsidiary of Heitman Capital Management, LLC (the "2024 Joint Venture"), in the first quarter of 2024, and (iii) the sale of 40 self storage properties to third parties in the six months ended June 30, 2024, partially offset by decreases in depreciation expense of $10.0 million and interest expense of $2.5 million. The year-to-date increase in net income resulted primarily from the gain on the sale of 40 self storage properties to third parties and 56 self storage properties contributed to the 2024 Joint Venture during the six months ended June 30, 2024.
The decreases in FFO and Core FFO for the second quarter of 2024 and year-to-date were the result of a decrease in NOI of 14.1% and 11.3%, respectively, which were partially offset by a decrease in interest expense of 6.2% and 3.0%, respectively, as compared to the same periods in 2023. The decrease in FFO and Core FFO per share and unit for the second quarter of 2024 and year-to-date was largely driven by a decrease in same store NOI and an increase in general and administrative expenses.
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Same Store Operating Results (776 Stores)
($ in thousands, except per square foot data) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||
2024 | 2023 | Growth | 2024 | 2023 | Growth | ||||||||||||||||||||||||||||||
Total revenues |
$ | 174,182 | $ | 179,243 | (2.8) | % | $ | 348,053 | $ | 355,771 | (2.2) | % | |||||||||||||||||||||||
Property operating expenses |
49,840 | 47,576 | 4.8 | % | 99,495 | 95,108 | 4.6 | % | |||||||||||||||||||||||||||
Net Operating Income (NOI) |
$ | 124,342 | $ | 131,667 | (5.6) | % | $ | 248,558 | $ | 260,663 | (4.6) | % | |||||||||||||||||||||||
NOI Margin | 71.4 | % | 73.5 | % | (2.1) | % | 71.4 | % | 73.3 | % | (1.9) | % | |||||||||||||||||||||||
Average Occupancy |
86.4 | % | 89.6 | % | (3.2) | % | 86.0 | % | 89.5 | % | (3.5) | % | |||||||||||||||||||||||
Average Annualized Rental Revenue Per Occupied Square Foot |
$ | 15.66 | $ | 15.57 | 0.6 | % | $ | 15.73 | $ | 15.50 | 1.5 | % | |||||||||||||||||||||||
Year-over-year same store total revenues decreased 2.8% for the second quarter of 2024 and 2.2% year-to-date as compared to the same period in 2023. The decrease for the second quarter was driven primarily by a 320 basis point decrease in average occupancy, partially offset by a 0.6% increase in average annualized rental revenue per occupied square foot. The year-to-date same store total revenue decrease was driven primarily by a 350 basis point decrease in average occupancy, partially offset by a 1.5% increase in average annualized rental revenue per occupied square foot. Markets which generated above portfolio average same store total revenue growth for the second quarter of 2024 include: San Juan, Wichita and New Orleans. Markets which generated below portfolio average same store total revenue growth for the second quarter of 2024 include: Atlanta, Phoenix and Sarasota-Bradenton.
Year-over-year same store property operating expenses increased 4.8% for the second quarter of 2024 and 4.6% year-to-date as compared to the same periods in 2023. The increases primarily resulted from increases in marketing and insurance expense.
Disposition and Investment Activity
During the second quarter, NSA invested $25.2 million in the acquisition of three self storage properties completed under a 1031 exchange, consisting of approximately 200,000 rentable square feet configured in approximately 1,300 storage units. Total consideration for these acquisitions included approximately $25.1 million of net cash and the assumption of approximately $0.1 million of other liabilities.
During the second quarter, NSA sold one self storage property, consisting of approximately 155,000 rentable square feet configured in approximately 1,000 storage units for approximately $8.0 million.
On July 1, 2024, as part of the internalization of the PRO structure, the Company paid consideration in cash and equity for the purchase of the PRO management contracts and, in some cases, their brand names and related intellectual property at a value of approximately $34.6 million and to acquire certain rights with respect to each PROs' tenant insurance programs at a value of approximately $60.3 million. The total cash and equity consideration for these transactions consisted of approximately $32.6 million in cash and the issuance of 1,548,866 OP units. On June 28, 2024, NSA repurchased 194,888 subordinated performance units for approximately $8.5 million in cash in connection with the PRO structure internalization.
Balance Sheet
During the second quarter, NSA repurchased 1,908,397 of the Company's common shares for approximately $71.6 million under the previously approved share repurchase program.
Common Share Dividends
On May 16, 2024, NSA's Board of Trustees declared a quarterly cash dividend of $0.56 per common share. The second quarter 2024 dividend was paid on June 28, 2024 to shareholders of record as of June 14, 2024.
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2024 Guidance
The following table outlines NSA's updated and prior Core FFO guidance estimates and related assumptions for the year ended December 31, 2024. The Company's revisions to Core FFO guidance estimates are primarily driven by lower same store growth assumptions. Certain line items in the table below have been adjusted for the impact of the internalization of the PRO structure, such as general and administrative expenses, management fees and other revenue, and subordinated performance unit distributions. Additionally, the Core FFO per share guidance incorporates an estimated weighted average share count of approximately 135.0 million beginning July 1, 2024, or approximately 126.6 million for the full year 2024.
Current Ranges for Full Year 2024 |
Prior Ranges for Full Year 2024 |
Actual Results for Full Year 2023 | |||||||||||||||||||||||||||
Low | High | Low | High | ||||||||||||||||||||||||||
Core FFO per share(1)
|
$2.36 | $2.44 | $2.40 | $2.56 | $2.69 | ||||||||||||||||||||||||
Same store operations(2)
|
|||||||||||||||||||||||||||||
Total revenue growth |
(3.75)% | (2.25)% | (4.0)% | 0.0% | 2.4% | ||||||||||||||||||||||||
Property operating expenses growth |
3.5% | 5.0% | 3.0% | 5.0% | 4.7% | ||||||||||||||||||||||||
NOI growth |
(6.5)% | (4.5)% | (6.0)% | (2.0)% | 1.6% | ||||||||||||||||||||||||
General and administrative expenses |
|||||||||||||||||||||||||||||
General and administrative expenses (excluding equity-based compensation), in millions |
$50.0 | $52.0 | $54.5 | $56.5 | $52.6 | ||||||||||||||||||||||||
Equity-based compensation, in millions | $7.75 | $8.25 | $7.25 | $7.75 | $6.7 | ||||||||||||||||||||||||
Management fees and other revenue, in millions |
$39.5 | $41.5 | $32.0 | $34.0 | $34.4 | ||||||||||||||||||||||||
Core FFO from unconsolidated real estate ventures, in millions |
$22.0 | $24.0 | $23.5 | $25.5 | $24.6 | ||||||||||||||||||||||||
Subordinated performance unit distributions, in millions |
$21.6 | $21.6 | $40.0 | $44.0 | $49.0 | ||||||||||||||||||||||||
Acquisitions of self storage properties, in millions | $100.0 | $300.0 | $100.0 | $300.0 | $229.5 | ||||||||||||||||||||||||
Current Ranges for Full Year 2024 |
Prior Ranges for Full Year 2024 |
||||||||||||||||||||||
Low | High | Low | High | ||||||||||||||||||||
Earnings per share - diluted | $1.10 | $1.17 | $1.31 | $1.48 | |||||||||||||||||||
Impact of the difference in weighted average number of shares and GAAP accounting for noncontrolling interests, two-class method and treasury stock method |
0.18 | 0.11 | 0.05 | (0.01) | |||||||||||||||||||
Add real estate depreciation and amortization |
1.45 | 1.49 | 1.57 | 1.66 | |||||||||||||||||||
Add (subtract) equity in losses (earnings) of unconsolidated real estate ventures | 0.11 | 0.13 | 0.11 | 0.09 | |||||||||||||||||||
Add NSA's share of FFO of unconsolidated real estate ventures | 0.17 | 0.19 | 0.20 | 0.22 | |||||||||||||||||||
FFO attributable to subordinated unitholders |
(0.17) | (0.17) | (0.34) | (0.38) | |||||||||||||||||||
Less gain on sale of self storage properties |
(0.50) | (0.50) | (0.51) | (0.51) | |||||||||||||||||||
Add integration and executive severance costs | 0.01 | 0.01 | — | — | |||||||||||||||||||
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 |
$2.36 | $2.44 | $2.40 | $2.56 | |||||||||||||||||||
(1) The table above provides a reconciliation of the range of estimated earnings per share - diluted to estimated Core FFO per share and unit. | |||||||||||||||||||||||
(2) 2024 guidance reflects NSA's 2024 same store pool comprising 776 stores. 2023 actual results reflect NSA's 2023 same store pool comprising 724 stores. |
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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 August 5, 2024.
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 1:00 pm Eastern Daylight Time on Tuesday, August 6, 2024 to discuss its second quarter 2024 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: Tuesday, August 6, 2024, 1:00 pm EDT
Webcast available at: www.nationalstorageaffiliates.com
Domestic (Toll Free US & Canada): 877.407.9711
International: 412.902.1014
A replay of the webcast will be available for 30 days on NSA's website at www.nationalstorageaffiliates.com.
Upcoming Industry Conference
NSA management is scheduled to participate in the upcoming 2024 BofA Securities Global Real Estate Conference on September 10-11, 2024, in New York City, New York.
About National Storage Affiliates Trust
National Storage Affiliates Trust is a real estate investment trust headquartered in Greenwood Village, Colorado, focused on the ownership, operation and acquisition of self storage properties predominantly located within the top 100 metropolitan statistical areas throughout the United States. As of June 30, 2024, the Company held ownership interests in and operated 1,052 self storage properties located in 42 states and Puerto Rico with approximately 68.8 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 1000 Index of Companies and the S&P MidCap 400 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, inflation, the debt and lending markets or the general economy; the Company's business and investment strategy; the acquisition of properties, including those under contract and the Company's ability to execute on its acquisition pipeline; the timing of acquisitions under contract; and the Company's guidance estimates for the year ended December 31, 2024. For a further list and description of such risks and uncertainties, see the Company's most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-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
6
National Storage Affiliates Trust
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
REVENUE | |||||||||||||||||||||||
Rental revenue | $ | 174,369 | $ | 199,311 | $ | 354,751 | $ | 393,440 | |||||||||||||||
Other property-related revenue | 6,557 | 7,613 | 13,249 | 14,420 | |||||||||||||||||||
Management fees and other revenue | 9,522 | 8,587 | 18,596 | 15,644 | |||||||||||||||||||
Total revenue | 190,448 | 215,511 | 386,596 | 423,504 | |||||||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||||||
Property operating expenses | 52,201 | 57,094 | 106,895 | 113,577 | |||||||||||||||||||
General and administrative expenses | 16,189 | 14,404 | 31,863 | 29,225 | |||||||||||||||||||
Depreciation and amortization | 46,710 | 56,705 | 94,041 | 112,163 | |||||||||||||||||||
Other | 3,375 | 3,220 | 6,867 | 4,393 | |||||||||||||||||||
Total operating expenses | 118,475 | 131,423 | 239,666 | 259,358 | |||||||||||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||||||||||
Interest expense | (37,228) | (39,693) | (75,345) | (77,641) | |||||||||||||||||||
Loss on early extinguishment of debt | — | — | — | (758) | |||||||||||||||||||
Equity in (losses) earnings of unconsolidated real estate ventures |
(4,449) | 1,861 | (6,079) | 3,539 | |||||||||||||||||||
Acquisition costs | (480) | (239) | (987) | (1,083) | |||||||||||||||||||
Non-operating income (expense) | 337 | 196 | 435 | (402) | |||||||||||||||||||
Gain on sale of self storage properties | 2,668 | — | 63,841 | — | |||||||||||||||||||
Other expense, net | (39,152) | (37,875) | (18,135) | (76,345) | |||||||||||||||||||
Income before income taxes | 32,821 | 46,213 | 128,795 | 87,801 | |||||||||||||||||||
Income tax expense | (541) | (737) | (1,427) | (1,933) | |||||||||||||||||||
Net income | 32,280 | 45,476 | 127,368 | 85,868 | |||||||||||||||||||
Net income attributable to noncontrolling interests |
(15,218) | (16,028) | (51,279) | (27,461) | |||||||||||||||||||
Net income attributable to National Storage Affiliates Trust | 17,062 | 29,448 | 76,089 | 58,407 | |||||||||||||||||||
Distributions to preferred shareholders |
(5,110) | (5,119) | (10,220) | (8,799) | |||||||||||||||||||
Net income attributable to common shareholders |
$ | 11,952 | $ | 24,329 | $ | 65,869 | $ | 49,608 | |||||||||||||||
Earnings per share - basic and diluted | $ | 0.16 | $ | 0.28 | $ | 0.85 | $ | 0.56 | |||||||||||||||
Weighted average shares outstanding - basic and diluted |
75,160 | 88,312 | 77,698 | 88,902 | |||||||||||||||||||
7
National Storage Affiliates Trust
Consolidated Balance Sheets
(dollars in thousands, except per share amounts)
(unaudited)
June 30, | December 31, | ||||||||||
2024 | 2023 | ||||||||||
ASSETS | |||||||||||
Real estate | |||||||||||
Self storage properties | $ | 5,818,388 | $ | 5,792,174 | |||||||
Less accumulated depreciation | (961,977) | (874,359) | |||||||||
Self storage properties, net | 4,856,411 | 4,917,815 | |||||||||
Cash and cash equivalents | 58,975 | 64,980 | |||||||||
Restricted cash | 8,064 | 22,713 | |||||||||
Debt issuance costs, net | 7,055 | 8,442 | |||||||||
Investment in unconsolidated real estate ventures | 230,295 | 211,361 | |||||||||
Other assets, net | 138,522 | 134,002 | |||||||||
Assets held for sale, net | — | 550,199 | |||||||||
Operating lease right-of-use assets | 21,779 | 22,299 | |||||||||
Total assets | $ | 5,321,101 | $ | 5,931,811 | |||||||
LIABILITIES AND EQUITY | |||||||||||
Liabilities | |||||||||||
Debt financing | $ | 3,365,836 | $ | 3,658,205 | |||||||
Accounts payable and accrued liabilities | 93,042 | 92,766 | |||||||||
Interest rate swap liabilities | — | 3,450 | |||||||||
Operating lease liabilities | 23,731 | 24,195 | |||||||||
Deferred revenue | 21,427 | 27,354 | |||||||||
Total liabilities | 3,504,036 | 3,805,970 | |||||||||
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 June 30, 2024 and December 31, 2023, 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 and 5,668,128 issued and outstanding at June 30, 2024 and December 31, 2023, respectively, at liquidation preference |
115,212 | 115,212 | |||||||||
Common shares of beneficial interest, par value $0.01 per share. 250,000,000 shares authorized, 75,169,162 and 82,285,995 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively |
752 | 823 | |||||||||
Additional paid-in capital | 1,293,694 | 1,509,563 | |||||||||
Distributions in excess of earnings | (469,768) | (449,907) | |||||||||
Accumulated other comprehensive income | 25,881 | 21,058 | |||||||||
Total shareholders' equity | 1,191,210 | 1,422,188 | |||||||||
Noncontrolling interests | 625,855 | 703,653 | |||||||||
Total equity | 1,817,065 | 2,125,841 | |||||||||
Total liabilities and equity | $ | 5,321,101 | $ | 5,931,811 |
8
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Net income | $ | 32,280 | $ | 45,476 | $ | 127,368 | $ | 85,868 | |||||||||||||||
Add (subtract): | |||||||||||||||||||||||
Real estate depreciation and amortization | 46,339 | 56,398 | 93,302 | 111,551 | |||||||||||||||||||
Equity in losses (earnings) of unconsolidated real estate ventures | 4,449 | (1,861) | 6,079 | (3,539) | |||||||||||||||||||
Company's share of FFO in unconsolidated real estate ventures | 6,177 | 6,176 | 11,862 | 12,325 | |||||||||||||||||||
Gain on sale of self storage properties | (2,668) | — | (63,841) | — | |||||||||||||||||||
Distributions to preferred shareholders and unitholders | (5,568) | (5,402) | (11,136) | (9,365) | |||||||||||||||||||
FFO attributable to subordinated performance units(1)
|
(10,891) | (12,309) | (21,622) | (24,096) | |||||||||||||||||||
FFO attributable to common shareholders, OP unitholders, and LTIP unitholders |
70,118 | 88,478 | 142,012 | 172,744 | |||||||||||||||||||
Add (subtract): | |||||||||||||||||||||||
Acquisition costs | 480 | 239 | 987 | 1,083 | |||||||||||||||||||
Integration and executive severance costs(2)
|
626 | — | 626 | — | |||||||||||||||||||
Casualty-related recoveries(3)
|
— | (522) | — | (522) | |||||||||||||||||||
Loss on early extinguishment of debt | — | — | — | 758 | |||||||||||||||||||
Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders |
$ | 71,224 | $ | 88,195 | $ | 143,625 | $ | 174,063 | |||||||||||||||
Weighted average shares and units outstanding - FFO and Core FFO:(4)
|
|||||||||||||||||||||||
Weighted average shares outstanding - basic | 75,160 | 88,312 | 77,698 | 88,902 | |||||||||||||||||||
Weighted average restricted common shares outstanding | 21 | 28 | 22 | 26 | |||||||||||||||||||
Weighted average OP units outstanding |
37,644 | 38,755 | 37,638 | 38,746 | |||||||||||||||||||
Weighted average DownREIT OP unit equivalents outstanding |
2,120 | 2,120 | 2,120 | 2,120 | |||||||||||||||||||
Weighted average LTIP units outstanding |
673 | 523 | 683 | 537 | |||||||||||||||||||
Total weighted average shares and units outstanding - FFO and Core FFO |
115,618 | 129,738 | 118,161 | 130,331 | |||||||||||||||||||
FFO per share and unit | $ | 0.61 | $ | 0.68 | $ | 1.20 | $ | 1.32 | |||||||||||||||
Core FFO per share and unit | $ | 0.62 | $ | 0.68 | $ | 1.22 | $ | 1.34 |
(1) | Amounts represent distributions declared for subordinated performance unitholders and DownREIT subordinated performance unitholders for the periods presented. | |||||||||||||
(2) | Integration and executive severance costs are recorded within the line items "General and administrative expenses" and "Non-operating income (expense)" in our condensed consolidated statements of operations. Integration costs relate to expenses incurred as a part of the internalization of the PRO structure. | |||||||||||||
(3) | Casualty-related recoveries relate to casualty-related expenses incurred during 2022 and are recorded in the line item "Other" within operating expenses in our consolidated statements of operations. | |||||||||||||
(4) |
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(5) 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.
|
9
Supplemental Schedule 1 (continued) | |||||||||||||||||||||||
Funds From Operations and Core Funds From Operations | |||||||||||||||||||||||
(in thousands, except per share and unit amounts) (unaudited) | |||||||||||||||||||||||
Reconciliation of Earnings Per Share - Diluted to FFO and Core FFO Per Share and Unit | |||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Earnings per share - diluted | $ | 0.16 | $ | 0.28 | $ | 0.85 | $ | 0.56 | |||||||||||||||
Impact of the difference in weighted average number of shares(5)
|
(0.06) | (0.09) | (0.29) | (0.18) | |||||||||||||||||||
Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method(6)
|
0.13 | 0.12 | 0.42 | 0.21 | |||||||||||||||||||
Add real estate depreciation and amortization | 0.40 | 0.43 | 0.79 | 0.85 | |||||||||||||||||||
Add (subtract) equity in losses (earnings) of unconsolidated real estate ventures | 0.04 | (0.02) | 0.05 | (0.03) | |||||||||||||||||||
Add Company's share of FFO in unconsolidated real estate ventures | 0.05 | 0.05 | 0.10 | 0.09 | |||||||||||||||||||
Subtract gain on sale of self storage properties | (0.02) | — | (0.54) | — | |||||||||||||||||||
FFO attributable to subordinated performance unitholders | (0.09) | (0.09) | (0.18) | (0.18) | |||||||||||||||||||
FFO per share and unit |
0.61 | 0.68 | 1.20 | 1.32 | |||||||||||||||||||
Add acquisition costs | — | — | 0.01 | 0.01 | |||||||||||||||||||
Add integration and executive severance costs | 0.01 | — | 0.01 | — | |||||||||||||||||||
Add loss on early extinguishment of debt | — | — | — | 0.01 | |||||||||||||||||||
Core FFO per share and unit |
$ | 0.62 | $ | 0.68 | $ | 1.22 | $ | 1.34 |
(5) | 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. |
|||||||||||||
(6) |
Represents the effect of adjusting the numerator to consolidated net income 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(5).
|
10
Supplemental Schedule 2 | |||||||||||||||||||||||
Other Non-GAAP Financial Measurements | |||||||||||||||||||||||
(dollars in thousands) (unaudited) | |||||||||||||||||||||||
Net Operating Income | |||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Net income | $ | 32,280 | $ | 45,476 | $ | 127,368 | $ | 85,868 | |||||||||||||||
(Subtract) add: | |||||||||||||||||||||||
Management fees and other revenue | (9,522) | (8,587) | (18,596) | (15,644) | |||||||||||||||||||
General and administrative expenses | 16,189 | 14,404 | 31,863 | 29,225 | |||||||||||||||||||
Other | 3,375 | 3,220 | 6,867 | 4,393 | |||||||||||||||||||
Depreciation and amortization | 46,710 | 56,705 | 94,041 | 112,163 | |||||||||||||||||||
Interest expense | 37,228 | 39,693 | 75,345 | 77,641 | |||||||||||||||||||
Equity in losses (earnings) of unconsolidated real estate ventures | 4,449 | (1,861) | 6,079 | (3,539) | |||||||||||||||||||
Loss on early extinguishment of debt | — | — | — | 758 | |||||||||||||||||||
Acquisition costs | 480 | 239 | 987 | 1,083 | |||||||||||||||||||
Income tax expense | 541 | 737 | 1,427 | 1,933 | |||||||||||||||||||
Gain on sale of self storage properties | (2,668) | — | (63,841) | — | |||||||||||||||||||
Non-operating (income) expense | (337) | (196) | (435) | 402 | |||||||||||||||||||
Net Operating Income |
$ | 128,725 | $ | 149,830 | $ | 261,105 | $ | 294,283 |
EBITDA and Adjusted EBITDA | |||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Net income | $ | 32,280 | $ | 45,476 | $ | 127,368 | $ | 85,868 | |||||||||||||||
Add: | |||||||||||||||||||||||
Depreciation and amortization | 46,710 | 56,705 | 94,041 | 112,163 | |||||||||||||||||||
Company's share of unconsolidated real estate ventures depreciation and amortization | 5,141 | 4,315 | 9,693 | 8,786 | |||||||||||||||||||
Interest expense | 37,228 | 39,693 | 75,345 | 77,641 | |||||||||||||||||||
Income tax expense | 541 | 737 | 1,427 | 1,933 | |||||||||||||||||||
Loss on early extinguishment of debt | — | — | — | 758 | |||||||||||||||||||
EBITDA |
121,900 | 146,926 | 307,874 | 287,149 | |||||||||||||||||||
Add (subtract): | |||||||||||||||||||||||
Acquisition costs | 480 | 239 | 987 | 1,083 | |||||||||||||||||||
Effect of hypothetical liquidation at book value (HLBV) accounting for unconsolidated 2024 Joint Venture(1)
|
5,485 | — | 8,249 | — | |||||||||||||||||||
Gain on sale of self storage properties | (2,668) | — | (63,841) | — | |||||||||||||||||||
Integration and executive severance costs, excluding equity-based compensation(2)
|
223 | — | 223 | — | |||||||||||||||||||
Casualty-related recoveries(3)
|
— | (522) | — | (522) | |||||||||||||||||||
Equity-based compensation expense | 2,331 | 1,677 | 4,186 | 3,326 | |||||||||||||||||||
Adjusted EBITDA |
$ | 127,751 | $ | 148,320 | $ | 257,678 | $ | 291,036 |
(1) | Reflects the non-cash impact of applying HLBV to the 2024 Joint Venture, which allocates GAAP income (loss) on a hypothetical liquidation of the underlying joint venture at book value as of the reporting date. |
|||||||||||||
(2) | Integration and executive severance costs are recorded within the line items "General and administrative expenses" and "Non-operating income (expense)" in our condensed consolidated statements of operations. Integration costs relate to expenses incurred as a part of the internalization of the PRO structure. | |||||||||||||
(3) | Casualty-related recoveries relate to casualty-related expenses incurred during 2022 and are recorded in the line item "Other" within operating expenses in our consolidated statements of operations |
11
Supplemental Schedule 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio Summary | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of June 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(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 | |||||||||||||||||||||||||||||||||||||||||||||||
Texas | 175 | 80,652 | 11,271,809 | 87.7 | % | Texas | 197 | 94,846 | 12,970,392 | 88.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
California | 86 | 51,371 | 6,473,778 | 86.7 | % | Florida | 103 | 58,867 | 6,685,063 | 86.7 | % | |||||||||||||||||||||||||||||||||||||||||||||
Florida | 76 | 43,833 | 4,969,210 | 86.5 | % | California | 98 | 58,020 | 7,253,240 | 86.7 | % | |||||||||||||||||||||||||||||||||||||||||||||
Oregon | 70 | 29,264 | 3,661,064 | 90.3 | % | Georgia | 72 | 33,626 | 4,611,479 | 84.5 | % | |||||||||||||||||||||||||||||||||||||||||||||
Georgia | 50 | 22,019 | 3,024,142 | 83.8 | % | Oregon | 70 | 29,264 | 3,661,064 | 90.3 | % | |||||||||||||||||||||||||||||||||||||||||||||
Arizona | 34 | 18,894 | 2,183,631 | 83.4 | % | Oklahoma | 39 | 17,616 | 2,443,101 | 88.2 | % | |||||||||||||||||||||||||||||||||||||||||||||
North Carolina | 34 | 16,760 | 2,096,937 | 89.4 | % | Arizona | 36 | 19,901 | 2,293,736 | 82.9 | % | |||||||||||||||||||||||||||||||||||||||||||||
Oklahoma | 33 | 15,297 | 2,136,981 | 87.9 | % | North Carolina | 34 | 16,760 | 2,096,937 | 89.4 | % | |||||||||||||||||||||||||||||||||||||||||||||
Louisiana | 25 | 11,452 | 1,389,381 | 83.0 | % | Ohio | 27 | 14,878 | 1,853,164 | 88.0 | % | |||||||||||||||||||||||||||||||||||||||||||||
Pennsylvania | 22 | 10,440 | 1,296,020 | 83.4 | % | Louisiana | 25 | 11,452 | 1,389,381 | 83.0 | % | |||||||||||||||||||||||||||||||||||||||||||||
Colorado | 22 | 9,480 | 1,195,684 | 91.1 | % | Alabama | 25 | 11,638 | 1,773,110 | 82.8 | % | |||||||||||||||||||||||||||||||||||||||||||||
Washington | 19 | 6,638 | 872,069 | 87.8 | % | Michigan | 25 | 15,933 | 2,018,423 | 89.8 | % | |||||||||||||||||||||||||||||||||||||||||||||
Puerto Rico | 15 | 12,868 | 1,393,475 | 91.7 | % | Pennsylvania | 25 | 12,074 | 1,456,490 | 84.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
Nevada | 15 | 7,570 | 964,890 | 87.2 | % | Colorado | 22 | 9,480 | 1,195,684 | 91.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
New Hampshire | 15 | 7,159 | 893,985 | 86.0 | % | Kansas | 21 | 7,774 | 1,068,725 | 89.8 | % | |||||||||||||||||||||||||||||||||||||||||||||
Kansas | 14 | 4,925 | 669,676 | 88.7 | % | New Jersey | 20 | 13,495 | 1,602,176 | 85.9 | % | |||||||||||||||||||||||||||||||||||||||||||||
Indiana | 12 | 6,531 | 827,524 | 84.4 | % | Tennessee | 20 | 10,250 | 1,311,484 | 89.9 | % | |||||||||||||||||||||||||||||||||||||||||||||
Alabama | 11 | 6,120 | 947,722 | 79.1 | % | Washington | 19 | 6,638 | 872,069 | 87.8 | % | |||||||||||||||||||||||||||||||||||||||||||||
New Mexico | 10 | 5,515 | 719,177 | 86.6 | % | Nevada | 19 | 9,188 | 1,217,383 | 87.4 | % | |||||||||||||||||||||||||||||||||||||||||||||
Other(1)
|
73 | 40,299 | 5,076,970 | 84.6 | % | Indiana | 19 | 9,822 | 1,286,329 | 85.7 | % | |||||||||||||||||||||||||||||||||||||||||||||
Total |
811 | 407,087 | 52,064,125 | 86.7 | % | Puerto Rico | 15 | 12,868 | 1,393,475 | 91.7 | % | |||||||||||||||||||||||||||||||||||||||||||||
Massachusetts | 15 | 11,059 | 1,210,376 | 86.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
New Hampshire | 15 | 7,159 | 893,985 | 86.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Minnesota | 12 | 5,728 | 732,545 | 87.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Illinois | 10 | 6,766 | 728,608 | 87.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
New Mexico | 10 | 5,515 | 719,177 | 86.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other(2)
|
59 | 31,610 | 4,042,730 | 85.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 1,052 | 542,227 | 68,780,326 | 87.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
(1) | Other states in NSA's owned portfolio as of June 30, 2024 include Arkansas, Connecticut, Idaho, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, Missouri, Montana, New Jersey, New York, Ohio, South Carolina, Tennessee, Utah, Virginia, Wisconsin and Wyoming. |
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(2) | Other states in NSA's operated portfolio as of June 30, 2024 include Arkansas, Connecticut, Delaware, Idaho, Iowa, Kentucky, Maryland, Mississippi, Missouri, Montana, New York, Rhode Island, South Carolina, Utah, Virginia, Wisconsin and Wyoming. |
12
Supplemental Schedule 3 (continued) | ||||||||||||||||||||||||||||||||||||||||||||
Portfolio Summary | ||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) (unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
2024 Acquisition Activity |
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Self Storage Properties Acquired During the Quarter Ended: |
Summary of Investment | |||||||||||||||||||||||||||||||||||||||||||
Stores | Units | Rentable Square Feet | Cash and Acquisition Costs | Value of Equity | Other Liabilities | Total | ||||||||||||||||||||||||||||||||||||||
June 30, 2024 | 3 | 1,291 | 200,313 | $ | 25,063 | $ | — | $ | 174 | $ | 25,237 | |||||||||||||||||||||||||||||||||
Unconsolidated Real Estate Ventures (at 100%)(3)
|
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March 31, 2024 | 56 | 24,015 | 3,227,743 | 346,194 | — | 2,237 | 348,431 | |||||||||||||||||||||||||||||||||||||
Total Investments(4)
|
59 | 25,306 | 3,428,056 | $ | 371,257 | $ | — | $ | 2,411 | $ | 373,668 |
2024 Disposition & Divestiture Activity |
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Dispositions Closed During the Quarter Ended: | Stores | Units | Rentable Square Feet | Net Proceeds | ||||||||||||||||||||||
Self Storage Properties sold to 3rd Parties | ||||||||||||||||||||||||||
March 31, 2024 | 39 | 17,610 | 2,417,135 | $ | 265,063 | |||||||||||||||||||||
June 30, 2024 | 1 | 1,066 | 155,113 | 8,035 | ||||||||||||||||||||||
Self Storage Properties contributed to Joint Venture | ||||||||||||||||||||||||||
March 31, 2024 | 56 | 24,015 | 3,227,743 | 343,714 | ||||||||||||||||||||||
Total Dispositions and Divestitures(5)
|
96 | 42,691 | 5,799,991 | $ | 616,812 |
(3) | 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%. |
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(4) | NSA through its unconsolidated real estate ventures and wholly-owned portfolio acquired self storage properties located in Georgia (11), Indiana (7), Kansas (7), Missouri (2), Ohio (12), Tennessee (6) and Texas (14). |
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(5) | NSA disposed of self storage properties are located in California (1), Georgia (11), Illinois (4), Indiana (9), Kansas (9), Louisiana (6), Missouri (9), Mississippi (3), Ohio (12), South Carolina (1), Tennessee (6) and Texas (25). |
13
Supplemental Schedule 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Equity Capitalization | BBB+ Rated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of June 30, 2024 | (with Negative Outlook) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | by Kroll Bond Rating Agency | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Summary (dollars in thousands)
|
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Effective Interest Rate(1)
|
Basis of Rate | Maturity Date | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Facility: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revolving line of credit(2)
|
6.71% |
Variable(3)
|
January 2027 | $ | — | $ | — | $ | — | $ | 222,000 | $ | — | $ | — | $ | — | $ | — | $ | 222,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Term loan - Tranche B(4)
|
2.95% |
Swapped To Fixed(5)
|
July 2024 | 145,000 | — | — | — | — | — | — | — | 145,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term loan - Tranche C |
2.93% |
Swapped To Fixed(5)
|
January 2025 | — | 325,000 | — | — | — | — | — | — | 325,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term loan - Tranche D |
3.96% | Swapped To Fixed | July 2026 | — | — | 275,000 | — | — | — | — | — | 275,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term loan - Tranche E |
4.79% |
Swapped To Fixed(5)
|
March 2027 | — | — | — | 130,000 | — | — | — | — | 130,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term loan facility - 2028 | 4.62% | Swapped To Fixed | December 2028 | — | — | — | — | 75,000 | — | — | — | 75,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term loan facility - April 2029 | 4.27% | Swapped To Fixed | April 2029 | — | — | — | — | — | 100,000 | — | — | 100,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term loan facility - June 2029 | 5.37% | Swapped To Fixed | June 2029 | — | — | — | — | — | 285,000 | — | — | 285,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
May 2026 Senior Unsecured Notes | 2.16% | Fixed | May 2026 | — | — | 35,000 | — | — | — | — | — | 35,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
October 2026 Senior Unsecured Notes | 6.46% | Fixed | October 2026 | — | — | 65,000 | — | — | — | — | — | 65,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
July 2028 Senior Unsecured Notes | 5.75% | Fixed | July 2028 | — | — | — | — | 120,000 | — | — | — | 120,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
October 2028 Senior Unsecured Notes | 6.55% | Fixed | October 2028 | — | — | — | — | 100,000 | — | — | — | 100,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2029 Senior Unsecured Notes | 3.98% | Fixed | August 2029 | — | — | — | — | — | 100,000 | — | — | 100,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
August 2030 Senior Unsecured Notes | 2.99% | Fixed | August 2030 | — | — | — | — | — | — | 150,000 | — | 150,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
October 2030 Senior Unsecured Notes | 6.66% | Fixed | October 2030 | — | — | — | — | — | — | 35,000 | — | 35,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
November 2030 Senior Unsecured Notes | 2.72% | Fixed | November 2030 | — | — | — | — | — | — | 75,000 | — | 75,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
May 2031 Senior Unsecured Notes | 3.00% | Fixed | May 2031 | — | — | — | — | — | — | — | 90,000 | 90,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
August 2031 Senior Unsecured Notes | 4.08% | Fixed | August 2031 | — | — | — | — | — | — | — | 50,000 | 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
November 2031 Senior Unsecured Notes | 2.81% | Fixed | November 2031 | — | — | — | — | — | — | — | 175,000 | 175,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
August 2032 Senior Unsecured Notes | 3.09% | Fixed | August 2032 | — | — | — | — | — | — | — | 100,000 | 100,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
November 2032 Senior Unsecured Notes | 5.06% | Fixed | November 2032 | — | — | — | — | — | — | — | 200,000 | 200,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
May 2033 Senior Unsecured Notes | 3.10% | Fixed | May 2033 | — | — | — | — | — | — | — | 55,000 | 55,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
October 2033 Senior Unsecured Notes | 6.73% | Fixed | October 2033 | — | — | — | — | — | — | — | 50,000 | 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
November 2033 Senior Unsecured Notes | 2.96% | Fixed | November 2033 | — | — | — | — | — | — | — | 125,000 | 125,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2036 Senior Unsecured Notes | 3.06% | Fixed | November 2036 | — | — | — | — | — | — | — | 75,000 | 75,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate mortgages payable | 3.60% | Fixed | August 2027 - October 2031 | 15,828 | — | — | 84,900 | 88,000 | — | — | 28,937 | 217,665 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Principal/Weighted Average |
4.20% | 4.7 years | $ | 160,828 | $ | 325,000 | $ | 375,000 | $ | 436,900 | $ | 383,000 | $ | 485,000 | $ | 260,000 | $ | 948,937 | $ | 3,374,665 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted average effective interest rate of maturing debt | 3.08% | 2.93% | 4.22% | 5.64% | 5.05% | 4.86% | 3.41% | 3.70% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unamortized debt issuance costs and debt premium, net |
(8,829) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Debt |
$ | 3,365,836 |
(1) | Effective interest rate incorporates the stated rate plus the impact of interest rate cash flow hedges and discount and premium amortization, if applicable. |
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(2) | NSA may, at its election, extend the maturity date of the revolving line of credit to January 2028, subject to meeting customary conditions and payment of an extension fee. |
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(3) | For the $950 million revolving line of credit, the effective interest rate is calculated based on Daily Simple SOFR plus an applicable margin of 1.30% and a SOFR Index Adjustment of .10%, and excludes fees which range from 0.15% to 0.20% for unused borrowings. |
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(4) | Term loan - Tranche B was repaid in full on July 29, 2024 using the revolving line of credit. |
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(5) | NSA has $250 million of interest rate swaps that mature in August 2024, and effectively fix Daily Simple SOFR at 1.59%. The impact of these interest rate swaps are reflected in the effective interest rates shown herein, with the notional amount allocated by tranche as follows: Tranche B ($145 million), Tranche C ($100 million), Tranche E ($5 million). |
14
Supplemental Schedule 4 (continued) | |||||||||||||||||
Debt and Equity Capitalization | |||||||||||||||||
As of June 30, 2024 | |||||||||||||||||
(unaudited) | |||||||||||||||||
Debt Ratios | |||||||||||||||||
Covenant |
Amount |
||||||||||||||||
Net Debt to Annualized Current Quarter Adjusted EBITDA | n/a | 6.5x | |||||||||||||||
Trailing Twelve Month Fixed Charge Coverage Ratio |
> 1.5x | 2.9x | |||||||||||||||
Total Leverage Ratio | < 60.0% | 42.5% | |||||||||||||||
Preferred Shares and Units | |||||||||||
Outstanding | |||||||||||
6.000% Series A cumulative redeemable preferred shares of beneficial interest | 9,017,588 | ||||||||||
6.000% Series B cumulative redeemable preferred shares of beneficial interest(5)
|
4,608,445 | ||||||||||
6.000% Series A-1 cumulative redeemable preferred units | 1,212,340 | ||||||||||
Common Shares and Units | |||||||||||
Outstanding as June 30, 2024 |
As of July 1, 2024(6)
|
||||||||||
Common shares of beneficial interest | 75,149,671 | 75,149,671 | |||||||||
Restricted common shares | 19,491 | 19,225 | |||||||||
Total shares outstanding |
75,169,162 | 75,168,896 | |||||||||
Operating partnership units | 37,464,684 | 53,349,614 | |||||||||
DownREIT operating partnership unit equivalents |
2,120,491 | 5,769,214 | |||||||||
Total operating partnership units |
39,585,175 | 59,118,828 | |||||||||
Long-term incentive plan units(7)
|
662,270 | 662,270 | |||||||||
Total shares and Class A equivalents outstanding |
115,416,607 | 134,949,994 | |||||||||
Subordinated performance units | 7,772,693 | — | |||||||||
DownREIT subordinated performance unit equivalents | 4,133,474 | — | |||||||||
Total subordinated partnership units |
11,906,167 | — | |||||||||
Total common shares and units outstanding |
127,322,774 | 134,949,994 |
(5) | We have reflected 4,608,445 Series B Preferred Shares herein, which corresponds to the $115.2 million liquidation preference reflected on the balance sheet at June 30, 2024, although the Company’s balance sheet describes 5,668,128 Series B Preferred Shares issued and outstanding at June 30, 2024. As part of a March 16, 2023 property acquisition of 15 properties from an affiliate of Personal Mini, the Company recorded a $26.1 million promissory note receivable from the Personal Mini affiliate, and the affiliate of Personal Mini used the loan proceeds 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 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 promissory note receivable, $26.1 million of Series B Preferred Shares value, and dividends on such Series B Preferred Shares have been offset for presentation purposes in the accompanying consolidated balance sheets and consolidated statements of operations. |
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(6) | The July 1, 2024 balance reflects the conversion of all subordinated performance units (including each DownREIT subordinated performance unit) into OP units effective July 1, 2024, in connection with the internalization of the PRO structure, at a weighted average conversion ratio of approximately 1.51. The conversion ratios were calculated by dividing the average cash available for distribution (CAD) per subordinated performance unit by 110% of the CAD per OP unit over a one-year period ending December 31, 2023. The July 1, 2024 balance also includes 775,210 OP units issued in connection with the purchase of the PRO management contracts and specified intellectual property, and 773,656 OP units issued in connection with the purchase of rights to the PRO tenant insurance business. These newly issued OP units, as well as OP units issued upon conversion of SP units, will generally have a one-year lockup on resales. |
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(7) | Balances exclude 208,400 long-term incentive plan ("LTIP") units which only vest and participate in dividend distributions upon the future contribution of properties from the PROs. |
15
Supplemental Schedule 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized Information for Unconsolidated Real Estate Ventures | ||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) (unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Venture Balance Sheet Data as of June 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Number of Stores at June 30, |
Occupancy at Period End | |||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Ventures |
Carrying Value of NSA's Investment(1)
|
Gross Book Value of Real Estate Assets | Outstanding Debt | 2024 |
2023 |
Total Rentable Square Feet | Q2 2024 |
Q2 2023 |
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2016 Joint Venture | $ | 102,139 | $ | 925,289 | $ | 357,912 | 81 | 81 | 5,657,024 | 88.4 | % | 88.4 | % | |||||||||||||||||||||||||||||||||||||
2018 Joint Venture | 101,866 | 1,280,387 | 645,773 | 104 | 104 | 7,831,434 | 88.8 | % | 90.2 | % | ||||||||||||||||||||||||||||||||||||||||
2024 Joint Venture | 26,290 | 342,247 | 208,907 | 56 | — | 3,227,743 | 88.0 | % | — | |||||||||||||||||||||||||||||||||||||||||
Total | $ | 230,295 | $ | 2,547,923 | $ | 1,212,592 | 241 | 185 | 16,716,201 | 88.5 | % | 89.4 | % |
Combined Operating Information(2)
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2024 |
Six Months Ended June 30, 2024 |
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2016 Joint Venture | 2018 Joint Venture | 2024 Joint Venture | Total | 2016 Joint Venture | 2018 Joint Venture | 2024 Joint Venture | Total | |||||||||||||||||||||||||||||||||||||||||||
Total revenue | $ | 22,562 | $ | 28,487 | $ | 9,667 | $ | 60,716 | $ | 45,289 | $ | 56,907 | $ | 14,616 | $ | 116,812 | ||||||||||||||||||||||||||||||||||
Property operating expenses | 7,185 | 8,396 | 3,868 | 19,449 | 14,258 | 16,999 | 5,795 | 37,052 | ||||||||||||||||||||||||||||||||||||||||||
Net operating income | 15,377 | 20,091 | 5,799 | 41,267 | 31,031 | 39,908 | 8,821 | 79,760 | ||||||||||||||||||||||||||||||||||||||||||
Supervisory, administrative and other expenses |
(1,632) | (1,750) | (493) | (3,875) | (3,276) | (3,495) | (762) | (7,533) | ||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | (5,765) | (10,053) | (4,746) | (20,564) | (11,563) | (20,102) | (7,105) | (38,770) | ||||||||||||||||||||||||||||||||||||||||||
Interest expense | (3,270) | (7,145) | (3,240) | (13,655) | (6,540) | (14,289) | (4,926) | (25,755) | ||||||||||||||||||||||||||||||||||||||||||
Acquisition and other (expenses) income | (13) | 902 | 15 | 904 | (11) | 882 | (26) | 845 | ||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 4,697 | $ | 2,045 | $ | (2,665) | $ | 4,077 | $ | 9,641 | $ | 2,904 | $ | (3,998) | $ | 8,547 | ||||||||||||||||||||||||||||||||||
Add (subtract): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Unconsolidated real estate venture real estate depreciation and amortization |
5,765 | 10,053 | 4,746 | 20,564 | 11,563 | 20,102 | 7,105 | 38,770 | ||||||||||||||||||||||||||||||||||||||||||
FFO and Core FFO for unconsolidated real estate ventures |
$ | 10,462 | $ | 12,098 | $ | 2,081 | $ | 24,641 | $ | 21,204 | $ | 23,006 | $ | 3,107 | $ | 47,317 |
(1) | NSA's investment in its unconsolidated real estate ventures are recorded under the equity method of accounting. Under the equity method, NSA’s investments in unconsolidated real estate ventures are stated at cost and adjusted for NSA’s share of net earnings or losses and reduced by distributions. | |||||||||||||
(2) | 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%. 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
Supplemental Schedule 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Same Store Performance Summary By MSA(1)
|
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(dollars in thousands, except per square foot data) (unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2024 compared to Three Months Ended June 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Revenue | Property Operating Expenses | Net Operating Income | Net Operating Income Margin | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MSA(1)
|
Stores | 2Q 2024 | 2Q 2023 | Growth | 2Q 2024 | 2Q 2023 | Growth | 2Q 2024 | 2Q 2023 | Growth | 2Q 2024 | 2Q 2023 | Growth | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portland-Vancouver-Hillsboro, OR-WA | 52 | $ | 11,056 | $ | 11,364 | (2.7) | % | $ | 2,864 | $ | 2,581 | 11.0 | % | $ | 8,192 | $ | 8,783 | (6.7) | % | 74.1 | % | 77.3 | % | (3.2) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Riverside-San Bernardino-Ontario, CA | 48 | 13,431 | 13,891 | (3.3) | % | 3,087 | 2,817 | 9.6 | % | 10,344 | 11,074 | (6.6) | % | 77.0 | % | 79.7 | % | (2.7) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Houston-The Woodlands-Sugar Land, TX | 37 | 8,126 | 8,378 | (3.0) | % | 2,845 | 3,074 | (7.4) | % | 5,281 | 5,304 | (0.4) | % | 65.0 | % | 63.3 | % | 1.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Atlanta-Sandy Springs-Alpharetta, GA | 30 | 5,933 | 6,496 | (8.7) | % | 1,655 | 1,438 | 15.1 | % | 4,278 | 5,058 | (15.4) | % | 72.1 | % | 77.9 | % | (5.8) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dallas-Fort Worth-Arlington, TX | 27 | 4,931 | 5,051 | (2.4) | % | 1,866 | 1,743 | 7.1 | % | 3,065 | 3,308 | (7.3) | % | 62.2 | % | 65.5 | % | (3.3) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Phoenix-Mesa-Chandler, AZ | 25 | 5,810 | 6,238 | (6.9) | % | 1,502 | 1,545 | (2.8) | % | 4,308 | 4,693 | (8.2) | % | 74.1 | % | 75.2 | % | (1.1) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
McAllen-Edinburg-Mission, TX | 21 | 4,643 | 4,910 | (5.4) | % | 1,282 | 1,336 | (4.0) | % | 3,361 | 3,574 | (6.0) | % | 72.4 | % | 72.8 | % | (0.4) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Oklahoma City, OK | 20 | 3,301 | 3,339 | (1.1) | % | 958 | 834 | 14.9 | % | 2,343 | 2,505 | (6.5) | % | 71.0 | % | 75.0 | % | (4.0) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brownsville-Harlingen, TX | 16 | 2,876 | 2,999 | (4.1) | % | 786 | 837 | (6.1) | % | 2,090 | 2,162 | (3.3) | % | 72.7 | % | 72.1 | % | 0.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
San Antonio-New Braunfels, TX | 15 | 2,796 | 2,982 | (6.2) | % | 806 | 1,183 | (31.9) | % | 1,990 | 1,799 | 10.6 | % | 71.2 | % | 60.3 | % | 10.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
North Port-Sarasota-Bradenton, FL | 15 | 4,433 | 4,850 | (8.6) | % | 1,427 | 1,351 | 5.6 | % | 3,006 | 3,499 | (14.1) | % | 67.8 | % | 72.1 | % | (4.3) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Los Angeles-Long Beach-Anaheim, CA | 14 | 6,039 | 6,221 | (2.9) | % | 1,510 | 1,401 | 7.8 | % | 4,529 | 4,820 | (6.0) | % | 75.0 | % | 77.5 | % | (2.5) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Colorado Springs, CO | 14 | 2,160 | 2,205 | (2.0) | % | 655 | 682 | (4.0) | % | 1,505 | 1,523 | (1.2) | % | 69.7 | % | 69.1 | % | 0.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
San Juan-Bayamón-Caguas, PR | 14 | 9,110 | 8,768 | 3.9 | % | 1,735 | 1,706 | 1.7 | % | 7,375 | 7,062 | 4.4 | % | 81.0 | % | 80.5 | % | 0.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tulsa, OK | 13 | 2,074 | 2,089 | (0.7) | % | 586 | 524 | 11.8 | % | 1,488 | 1,565 | (4.9) | % | 71.7 | % | 74.9 | % | (3.2) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shreveport-Bossier City, LA | 12 | 1,570 | 1,623 | (3.3) | % | 535 | 479 | 11.7 | % | 1,035 | 1,144 | (9.5) | % | 65.9 | % | 70.5 | % | (4.6) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Austin-Round Rock-Georgetown, TX | 12 | 3,348 | 3,444 | (2.8) | % | 1,084 | 1,067 | 1.6 | % | 2,264 | 2,377 | (4.8) | % | 67.6 | % | 69.0 | % | (1.4) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Las Vegas-Henderson-Paradise, NV | 12 | 2,722 | 2,773 | (1.8) | % | 685 | 683 | 0.3 | % | 2,037 | 2,090 | (2.5) | % | 74.8 | % | 75.4 | % | (0.6) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Orleans-Metairie, LA | 12 | 2,215 | 2,213 | 0.1 | % | 671 | 645 | 4.0 | % | 1,544 | 1,568 | (1.5) | % | 69.7 | % | 70.9 | % | (1.2) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wichita, KS | 12 | 1,757 | 1,731 | 1.5 | % | 594 | 543 | 9.4 | % | 1,163 | 1,188 | (2.1) | % | 66.2 | % | 68.6 | % | (2.4) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other MSAs | 355 | 75,851 | 77,678 | (2.4) | % | 22,707 |