August 5, 2024 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

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 June 30, 2024

☐ 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
Series B Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share	NSA Pr B	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 August 2, 2024, 75,968,109 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	3
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	5
	Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (Unaudited)	10
	Notes to Condensed Consolidated Financial Statements (Unaudited)	12
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	54
ITEM 4.	Controls and Procedures	54
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	55
ITEM 1A.	Risk Factors	55
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
ITEM 3.	Defaults Upon Senior Securities	56
ITEM 4.	Mine Safety Disclosures	56
ITEM 5.	Other Information	56
ITEM 6.	Exhibits	57
Signatures		59

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

NATIONAL STORAGE AFFILIATES TRUST

CONDENSED 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
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 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 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

See notes to condensed consolidated financial statements.

NATIONAL STORAGE AFFILIATES TRUST

CONDENSED 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 (EXPENSE) INCOME
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



Dividends declared per common share	$	0.56	$	0.56	$	1.12	$	1.11

See notes to condensed consolidated financial statements.

NATIONAL STORAGE AFFILIATES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	32,280	$	45,476	$	127,368	$	85,868
Other comprehensive income (loss)
Unrealized gain on derivative contracts	6,581		28,226		26,994		15,273
Realized loss on derivative contracts	—		(1,643)		—		(1,643)
Reclassification of other comprehensive income to interest expense	(9,322)		(9,460)		(18,636)		(17,221)
Other comprehensive (loss) income	(2,741)		17,123		8,358		(3,591)
Comprehensive income	29,539		62,599		135,726		82,277
Comprehensive income attributable to noncontrolling interests	(14,259)		(21,493)		(54,040)		(26,374)
Comprehensive income attributable to National Storage Affiliates Trust	$	15,280	$	41,106	$	81,686	$	55,903

See notes to condensed consolidated financial statements.

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	—		—		—		—		—		—
Vesting and forfeitures of restricted common shares, net	—	—		(2,977)	—		(89)		—		—		—		(89)
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
OP equity issued:
Acquisition of properties	—	—		—	—		—		—		—		5,577		5,577
Redemptions of OP units	—	—		354,936	3		5,530		—		113		(5,646)		—
Effect of changes in ownership for consolidated entities	—	—		—	—		(1,833)		—		(18)		1,851		—
Equity-based compensation expense	—	—		—	—		125		—		—		1,552		1,677
Issuance of restricted common shares	—	—		439	—		—		—		—		—		—

See notes to condensed consolidated financial statements.

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
Vesting and forfeitures of restricted common shares, net	—	—		(1,723)	—		(217)		—		—		—		(217)
Preferred share dividends	—	—		—	—		—		(5,402)		—		—		(5,402)
Common share dividends	—	—		—	—		—		(49,451)		—		—		(49,451)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(35,456)		(35,456)
Other comprehensive income	—	—		—	—		—		—		11,658		5,465		17,123
Net income	—	—		—	—		—		29,448		—		16,028		45,476
Balances, June 30, 2023	14,685,716	$	340,651	88,649,794	$	886	$	1,692,741	$	(445,813)	$	36,906	$	759,030	$	2,384,401

See notes to condensed consolidated financial statements.

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, 2023	14,685,716	$	340,651	82,285,995	$	823	$	1,509,563	$	(449,907)	$	21,058	$	703,653	$	2,125,841
Redemptions of OP units	—	—		72,802	1		1,025		—		19		(1,426)		(381)
Repurchase of common shares	—	—		(5,491,925)	(55)		(203,518)		—		—		—		(203,573)
Effect of changes in ownership for consolidated entities	—	—		—	—		40,676		—		(620)		(40,056)		—
Equity-based compensation expense	—	—		—	—		109		—		—		1,746		1,855
Issuance of restricted common shares	—	—		8,886	—		—		—		—		—		—
Vesting and forfeitures of restricted common shares, net	—	—		(2,658)	—		(88)		—		—		—		(88)
Equity offering costs	—	—		—	—		(255)		—		—		—		(255)
Preferred share dividends	—	—		—	—		—		(5,110)		—		—		(5,110)
Common share dividends	—	—		—	—		—		(43,751)		—		—		(43,751)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(33,653)		(33,653)
Other comprehensive income	—	—		—	—		—		—		7,379		3,720		11,099
Net income	—	—		—	—		—		59,027		—		36,061		95,088
Balances, March 31, 2024	14,685,716	$	340,651	76,873,100	$	769	$	1,347,512	$	(439,741)	$	27,836	$	670,045	$	1,947,072






Redemptions of OP equity	—	—		205,910	2		2,668		—		84		(11,877)		(9,123)
Repurchase of common shares	—	—		(1,908,397)	(19)		(71,648)		—		—		—		(71,667)
Effect of changes in ownership for consolidated entities	—	—		—	—		15,115		—		(257)		(14,858)		—
Equity-based compensation expense	—	—		—	—		139		—		—		2,192		2,331

Vesting and forfeitures of restricted common shares, net	—	—		(1,451)	—		(35)		—		—		—		(35)
Equity offering costs	—	—		—	—		(57)		—		—		—		(57)
Preferred share dividends	—	—		—	—		—		(5,110)		—		—		(5,110)
Common share dividends	—	—		—	—		—		(41,979)		—		—		(41,979)

See notes to condensed consolidated financial statements.

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
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(33,906)		(33,906)
Other comprehensive loss	—	—		—	—		—		—		(1,782)		(959)		(2,741)
Net income	—	—		—	—		—		17,062		—		15,218		32,280
Balances, June 30, 2024	14,685,716	$	340,651	75,169,162	$	752	$	1,293,694	$	(469,768)	$	25,881	$	625,855	$	1,817,065

See notes to condensed consolidated financial statements.

NATIONAL STORAGE AFFILIATES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)


	Six Months Ended June 30,
	2024		2023
OPERATING ACTIVITIES
Net income	$	127,368	$	85,868
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	94,041		112,163
Amortization of debt issuance costs	3,418		3,235
Amortization of debt discount and premium, net	(373)		(292)
Gain on sale of self storage properties	(63,841)		—
Other	—		969
Equity-based compensation expense	4,186		3,326
Equity in losses (earnings) of unconsolidated real estate ventures	6,079		(3,539)
Distributions from unconsolidated real estate ventures	11,136		11,921
Change in assets and liabilities, net of effects of self storage property acquisitions:
Other assets	2,449		(2,729)
Accounts payable and accrued liabilities	(1,234)		5,979
Deferred revenue	(6,012)		1,284
Net Cash Provided by Operating Activities	177,217		218,185
INVESTING ACTIVITIES
Acquisition of self-storage properties	(25,063)		(18,087)
Capital expenditures	(9,084)		(17,933)
Deposits and advances for self storage properties and other acquisitions	(1,495)		—
Investment in unconsolidated real estate venture	(36,149)		—
Expenditures for corporate furniture, equipment and other	(367)		(678)
Acquisition of management company assets and interest in reinsurance company from PRO retirement	—		(16,924)
Proceeds from sale of self storage properties	616,812		—
Net Cash Provided by (Used In) Investing Activities	544,654		(53,622)
FINANCING ACTIVITIES



Borrowings under debt financings	419,000		578,815


Redemption of OP equity	(9,504)		—
Repurchase of common shares	(275,195)		(69,311)
Principal payments under debt financings	(712,964)		(489,311)

Payment of dividends to common shareholders	(85,730)		(98,206)
Payment of dividends to preferred shareholders	(10,220)		(9,364)
Distributions to noncontrolling interests	(66,640)		(69,969)



Debt issuance costs	(700)		(2,095)
Equity offering costs	(572)		—
Net Cash Used In Financing Activities	(742,525)		(159,441)
(Decrease) Increase in Cash, Cash Equivalents and Restricted Cash	(20,654)		5,122

See notes to condensed consolidated financial statements.

NATIONAL STORAGE AFFILIATES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)


	Six Months Ended June 30,
	2024		2023
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period	87,693		42,199
End of period	$	67,039	$	47,321


Supplemental Cash Flow Information
Cash paid for interest	$	74,895	$	64,536
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Consideration exchanged in investment activity
Issuance of OP units and subordinated performance units	—		42,834
Issuance of Series B preferred shares	—		113,274

Other net liabilities assumed	174		119
Change in accrued capital spending	(433)		750

See notes to condensed consolidated financial statements.

NATIONAL STORAGE AFFILIATES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

(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 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 811 consolidated self storage properties in 38 states and Puerto Rico with approximately 52.1 million rentable square feet in approximately 407,000 storage units as of June 30, 2024. These properties are managed with local operational focus and expertise by the Company and its participating regional operators ("PROs"). As of June 30, 2024, the Company directly managed 478 of these self storage properties through its corporate brands of iStorage, SecurCare, Northwest and Move It, and the PROs managed the remaining 333 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, LLC, a strategic partnership between Argus Professional Storage Management and GYS Development LLC ("Blue Sky").

On June 3, 2024, the Company announced an agreement for the internalization of its PRO structure, effective July 1, 2024 (the "Closing Date"). As a result of the internalization, the Company purchased certain of each PRO's assets, which included each PRO's asset management and property management contracts (collectively, the "management contracts"), certain of each PRO's intellectual property and brands ("PRO IP"), and certain rights with respect to each PRO's tenant insurance program. 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, all 11,906,167 outstanding subordinated performance units and DownREIT subordinated performance units converted into an aggregate of 17,984,787 OP units and DownREIT OP units. See Note 13 for additional information related to the internalization of the PRO structure.

As of June 30, 2024, the Company also managed through its property management platform an additional portfolio of 241 properties owned by the Company's unconsolidated real estate ventures. These properties contain approximately 16.7 million rentable square feet, configured in approximately 135,000 storage units and located across 24 states. The Company owns a 25% equity interest in each of its unconsolidated real estate ventures.

As of June 30, 2024, in total, the Company operated and held ownership interests in 1,052 self storage properties located across 42 states and Puerto Rico with approximately 68.8 million rentable square feet in approximately 542,000 storage units.

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.

On January 3, 2023, the operating partnership, as borrower, the Company, and certain of the operating partnership's subsidiaries, as subsidiary guarantors, entered into a third amended and restated credit agreement with KeyBank National Association, as administrative agent, and a syndicated group of lenders party thereto, which expanded the total borrowing capacity of its credit facility by $405.0 million to $1.955 billion. The Company presented changes in borrowings from certain lenders on a net basis in its prior year interim condensed consolidated statement of cash flows. The Company has corrected this error in the accompanying condensed consolidated statement of cash flows for the six month period ended June 30, 2023 to present on a gross basis the constructive receipts and payments under debt financings of $129.8 million and $129.8 million, respectively. The corrections had no impact to the total net cash used in financing activities in any interim period. The Company evaluated this adjustment both qualitatively and quantitatively and has concluded that this adjustment is immaterial to all impacted periods.

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 June 30, 2024, the Company's operating partnership was the primary beneficiary of, and therefore consolidated, 22 partnerships that are considered VIEs, which owned 49 self storage properties. The net book value of the real estate owned by these VIEs was $413.1 million and $418.9 million as of June 30, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023, 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 June 30, 2024 and 2023, the Company recognized $5.3 million and $6.1 million, respectively, of tenant insurance and tenant warranty protection plan revenues and during the six months ended June 30, 2024 and 2023, the Company recognized $10.9 million and $11.6 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 June 30, 2024 and 2023, the Company recognized retail sales of $0.6 million and $0.7 million, respectively and during the six months ended June 30, 2024 and 2023, the Company recognized retail sales of $1.1 million and $1.3 million, respectively.

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 the 2016 Joint Venture, the 2018 Joint Venture, the 2023 Joint Venture and the 2024 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 for the 2016 Joint Venture, 2018 Joint Venture and 2023 Joint Venture 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. The property management fees for the 2024 Joint Venture are equal to 4% of monthly gross revenues and net sales revenues from the assets of the unconsolidated real estate venture. With respect to the 2016 Joint Venture, the 2023 Joint Venture and 2024 Joint Venture, the call center fee is equal to 1% of each of monthly gross revenues and net sales revenues from the 2016 Joint Venture and 2024 Joint Venture properties, respectively. During the three months ended June 30, 2024 and 2023, the Company recognized property management fees, call center fees and platform fees of $4.5 million and $4.2 million, respectively and during the six months ended June 30, 2024 and 2023, the Company recognized property management fees, call center fees and platform fees of $8.7 million and $8.4 million, respectively.

The Company also earns acquisition fees for properties acquired by the unconsolidated real estate ventures subsequent to the initial portfolios of each of the 2016 Joint Venture, the 2018 Joint Venture and the 2024 Joint Venture (each as defined in Note 5). The 2023 Joint Venture (as defined in Note 5) does not currently hold any properties. These fees are based on a percentage of the gross capitalization of the acquired assets determined by the members of the 2016 Joint Venture, the 2018 Joint Venture, the 2023 Joint Venture and the 2024 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 June 30, 2024 and 2023, the Company recognized acquisition fees of $0 and $0, respectively and during the six months ended June 30, 2024 and 2023, the Company recognized acquisition fees of $0 and $0, 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 all 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 June 30, 2024 and 2023, the Company recognized $4.8 million and $4.3 million, respectively, of revenue related to these activities and during the six months ended June 30, 2024 and 2023, the Company recognized $9.5 million and $7.1 million, respectively, of revenue related to these activities.

Gain on sale of self storage properties

The Company recognizes gains from disposition of properties 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 25% ownership interest in the earnings (losses) of the unconsolidated real estate ventures, except for the 2024 JV, for which the Company follows the hypothetical liquidation at book value ("HLBV") method. 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.

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 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. The Company has never experienced a loss that resulted from exceeding federally insured limits.

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, and 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 six months ended June 30, 2024, the Company did not sell any common shares through the ATM program. As of June 30, 2024, the Company had $169.1 million of capacity remaining under its most recent 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. On December 1, 2023, the Company approved a new share repurchase program authorizing, but not obligating, the repurchase of up to $275.0 million of the Company's common shares 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 six months ended June 30, 2024, the Company repurchased 7,400,322 common shares for approximately $275.2 million, including commissions and fees.

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 June 30, 2024 and December 31, 2023, units reflecting noncontrolling interests consisted of the following:


	June 30, 2024	December 31, 2023
Series A-1 preferred units	1,212,340	1,212,340
OP units	37,464,684	37,635,683
Subordinated performance units	7,772,693	7,991,271
LTIP units	870,670	785,932
DownREIT units
DownREIT OP units	2,120,491	2,120,491
DownREIT subordinated performance units	4,133,474	4,133,474
Total	53,574,352	53,879,191

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.

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 decrease in OP units outstanding from December 31, 2023 to June 30, 2024 was due to 43,556 OP units issued upon the voluntary conversion of 23,690 subordinated performance units and the conversion of 92,174 LTIP units into an equivalent number of OP units, partially offset by the redemption of 278,712 OP units for an equal number of common shares and the redemption of 28,017 OP units for cash.

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.

The decrease in subordinated performance units outstanding from December 31, 2023 to June 30, 2024 was due to the voluntary conversion of 23,690 subordinated performance units into 43,556 OP units and the redemption of 194,888 subordinated performance units for cash.

Effective July 1, 2024, in connection with the internalization of the PRO structure, all 11,906,167 outstanding subordinated performance units (including all DownREIT subordinated performance units) were converted into an aggregate of 17,984,787 OP units and DownREIT OP units. Each subordinated performance unit and DownREIT subordinated performance unit was converted into the number of OP units and DownREIT OP units determined by dividing the average cash available for distribution (CAD) per unit on the series subordinated performance units over the one-year period ending December 31, 2023, by 110% of the CAD per unit on the OP units determined over the same period. See Note 13 for additional information related to the internalization of the PRO structure.

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, 2023 to June 30, 2024 was due to issuance of 176,912 compensatory LTIP units to employees and trustees, net of forfeitures, partially offset by the conversion of 92,174 LTIP units into an equivalent number of OP units.

4. SELF STORAGE PROPERTIES

Self storage properties are summarized as follows (dollars in thousands):


	June 30, 2024		December 31, 2023
Land	$	1,038,183	$	1,035,562
Buildings and improvements	4,768,865		4,746,105
Furniture and equipment	11,340		10,507
Total 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

Depreciation expense related to self storage properties amounted to $45.4 million and $53.1 million during the three months ended June 30, 2024 and 2023, respectively and $90.8 million and $105.2 million during the six months ended June 30, 2024 and 2023, respectively.

5. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

2024 Joint Venture

During the six months ended June 30, 2024, a wholly owned subsidiary of the Company (the "2024 NSA Member") entered into an agreement (the "2024 JV Agreement") to form a joint venture (the "2024 Joint Venture") with an affiliate of Heitman Capital Management LLC (the "2024 JV Investor" and, together with the 2024 NSA Member, the "2024 JV Members"). The 2024 Joint Venture was capitalized with approximately $140.8 million in equity (approximately $35.2 million from the 2024 NSA Member in exchange for a 25% ownership interest and approximately $105.6 million from the 2024 JV Investor in exchange for a 75% ownership interest) and proceeds from a $210.0 million interest-only secured debt financing with an interest rate of 6.05% per annum and a term of five years.

A subsidiary of the Company is acting as the non-member manager of the 2024 Joint Venture (the "2024 NSA Manager"). The 2024 NSA Manager directs, manages and controls the day-to-day operations and affairs of the 2024 Joint Venture but may not cause the 2024 Joint Venture to make certain major decisions involving the business of the 2024 Joint Venture without the consent of both 2024 JV Members, including the approval of annual budgets, sales and acquisitions of properties, financings, and certain actions relating to bankruptcy.

The Company's investment in the 2024 Joint Venture is accounted for using the equity method of accounting and is included in investment in unconsolidated real estate ventures in the Company’s condensed consolidated balance sheets. The Company’s earnings from its investment in the 2024 Joint Venture are presented in equity in (losses) earnings of unconsolidated real estate ventures on the Company’s condensed consolidated statements of operations.

During the six months ended June 30, 2024, pursuant to a contribution agreement executed by the 2024 JV Members on December 21, 2023, in exchange for cash the Company contributed to the 2024 Joint Venture 56 self storage properties located across seven states, consisting of approximately 3.2 million rentable square feet configured in over 24,000 storage units.

2023 Joint Venture

During the year ended December 31, 2023, the Company, through a newly formed subsidiary (the "2023 NSA Member"), entered into an agreement (the "2023 JV Agreement") to form a joint venture (the "2023 Joint Venture") with a state pension fund advised by Heitman Capital Management LLC (the "2023 JV Investor," together with the 2023 NSA Member, the "2023 JV Members") to acquire and operate self storage properties. The 2023 JV Agreement provides for equity capital contributions by the 2023 JV Members of up to $400.0 million over a twenty-four month investment period (subject to two six-month extension options if both of the 2023 JV Members agree) starting in December 2023, with the 2023 JV Investor holding a 75% ownership interest and the 2023 NSA Member holding a 25% ownership interest.

A subsidiary of the Company is acting as the non-member manager of the 2023 Joint Venture (the "2023 NSA Manager"). The 2023 NSA Manager directs, manages and controls the day-to-day operations and affairs of the 2023 Joint Venture but may not cause the 2023 Joint Venture to make certain major decisions involving the business of the 2023 Joint Venture without the consent of both 2023 JV Members, including the approval of annual budgets, sales and acquisitions of properties, financings, and certain actions relating to bankruptcy.

The Company's investment in the 2023 Joint Venture is accounted for using the equity method of accounting and is included in investment in unconsolidated real estate ventures in the Company’s condensed consolidated balance sheets. The Company’s earnings from its investment in the 2023 Joint Venture are presented in equity in (losses) earnings of unconsolidated real estate ventures on the Company’s condensed consolidated statements of operations. As of June 30, 2024, the 2023 Joint Venture had not completed any acquisition activity and had no operations. See Note 13 for additional information related to acquisitions subsequent to June 30, 2024.

2018 Joint Venture

As of June 30, 2024, 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 June 30, 2024, 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 5.7 million rentable square feet, configured in approximately 47,000 storage units and located across 13 states.

The following table presents the combined condensed financial position of the Company's unconsolidated real estate ventures as of June 30, 2024 and December 31, 2023 (dollars in thousands):


	June 30, 2024		December 31, 2023
ASSETS
Self storage properties	$	2,547,923	$	2,200,522
Less accumulated depreciation	(405,518)		(369,412)
Self storage properties, net	2,142,405		1,831,110
Other assets	45,696		37,826
Total assets	$	2,188,101	$	1,868,936
LIABILITIES AND EQUITY
Debt financing	$	1,212,592	$	1,003,223
Other liabilities	34,110		28,333
Equity	941,399		837,380
Total liabilities and equity	$	2,188,101	$	1,868,936

The following tables present the combined condensed operating information of the Company's unconsolidated real estate ventures for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):


	Three Months Ended June 30,
	2024		2023
Total revenue	$	60,716	$	53,685
Property operating expenses	(19,449)		(15,113)
Supervisory, administrative and other expenses	(3,875)		(3,561)
Depreciation and amortization	(20,564)		(17,260)
Interest expense	(13,655)		(10,419)

Other income	904		45
Net income	$	4,077	$	7,377


	Six Months Ended June 30,
	2024		2023
Total revenue	$	116,812	$	107,437
Property operating expenses	(37,052)		(30,162)
Supervisory, administrative and other expenses	(7,533)		(7,090)
Depreciation and amortization	(38,770)		(35,143)
Interest expense	(25,755)		(20,830)

Acquisition and other income (expenses)	845		(187)
Net income	$	8,547	$	14,025

6. ACQUISITIONS AND DISPOSITIONS

Acquisitions

The Company acquired three self storage properties for $25.2 million during the three months ended June 30, 2024. All of these acquisitions were acquired by the Company from third parties. The self storage property acquisitions were accounted for as asset acquisitions and accordingly, $0.1 million of transaction costs related to the acquisitions were capitalized as part of the basis of the acquired properties. 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 $0.5 million, resulting in a total value of $24.7 million allocated to real estate.

The following table summarizes the investment in self storage property acquisitions completed by the Company during the six months ended June 30, 2024 (dollars in thousands):

Acquisitions Closed During the Three Months Ended:

Number of Properties

Summary of Investment

Cash and Acquisition Costs

Value of Equity

Other Liabilities

Total

June 30, 2024

25,063

—

174

25,237

Dispositions

During the six months ended June 30, 2024, the Company sold 40 self storage properties to third parties for net proceeds of $273.1 million and contributed 56 self storage properties to the 2024 Joint Venture for net cash proceeds of $343.7 million. The Company recorded a net gain on the dispositions of $63.8 million.

7. OTHER ASSETS

Other assets consist of the following (dollars in thousands):


	June 30, 2024		December 31, 2023
Customer in-place leases, net of accumulated amortization of $1,022 and $3,263, respectively	$	715	$	1,609
Receivables:
Trade, net	9,448		9,842
PROs and other affiliates	6,936		7,784
Receivables from unconsolidated real estate ventures	8,228		4,446
Property acquisition and other deposits	1,495		—
Interest rate swaps	34,436		29,610
Prepaid expenses and other	12,704		14,743
Corporate furniture, equipment and other, net	2,641		2,659
Trade names	8,851		8,851
Management contracts, net of accumulated amortization of $7,471 and $6,777, respectively	13,355		14,049
Tenant reinsurance intangible, net of accumulated amortization of $4,534 and $3,839, respectively	31,531		32,227
Goodwill	8,182		8,182
Total	$	138,522	$	134,002

Amortization expense related to customer in-place leases amounted to $0.4 million and $2.8 million for the three months ended June 30, 2024 and 2023, respectively and $1.4 million and $5.3 million for the six months ended June 30, 2024 and 2023, respectively. Amortization expense related to management contracts amounted to $0.4 million and $0.4 million for the three months ended June 30, 2024 and 2023, respectively and $0.7 million and $0.7 million for the six months ended June 30, 2024 and 2023, respectively. Amortization expense related to the tenant reinsurance intangible amounted to $0.4 million and $0.4 million for the three months ended June 30, 2024 and 2023, respectively and $0.7 million and $0.7 million for the six months ended June 30, 2024 and 2023, respectively.

8. DEBT FINANCING

The Company's outstanding debt as of June 30, 2024 and December 31, 2023 is summarized as follows (dollars in thousands):


	Interest Rate(1)		June 30, 2024		December 31, 2023
Credit Facility:
Revolving line of credit	6.71	%	$	222,000	$	381,000
Term loan B	2.95	%	145,000		275,000
Term loan C	2.93	%	325,000		325,000
Term loan D	3.96	%	275,000		275,000
Term loan E	4.79	%	130,000		130,000
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
May 2026 Senior Unsecured Notes	2.16	%	35,000		35,000
October 2026 Senior Unsecured Notes	6.46	%	65,000		65,000
July 2028 Senior Unsecured Notes	5.75	%	120,000		120,000
October 2028 Senior Unsecured Notes	6.55	%	100,000		100,000
2029 Senior Unsecured Notes	3.98	%	100,000		100,000
August 2030 Senior Unsecured Notes	2.99	%	150,000		150,000
October 2030 Senior Unsecured Notes	6.66	%	35,000		35,000
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
October 2033 Senior Unsecured Notes	6.73	%	50,000		50,000
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	3.60	%	217,665		222,757
Total principal			3,374,665		3,668,757
Unamortized debt issuance costs and debt premium, net			(8,829)		(10,552)
Total debt			$	3,365,836	$	3,658,205

(1)Represents the effective interest rate as of June 30, 2024. 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.

As of June 30, 2024, the Company's unsecured credit facility provided for total borrowing capacity of $1.825 billion (the "credit facility") consisting of the following components: (i) a revolving line of credit (the "Revolver") which provides for a total borrowing commitment up to $950.0 million, under which the Company may borrow, repay and re-borrow amounts, (ii) a $145.0 million tranche B term loan facility (the "Term Loan B"), (iii) a $325.0 million tranche C term loan facility (the "Term Loan C"), (iv) a $275.0 million tranche D term loan facility (the "Term Loan D") and (v) a $130.0 million tranche E term loan facility (the "Term Loan E"). As of June 30, 2024, the Company had an expansion option under the credit facility, which, if exercised in full, would provide for a total credit facility of $2.370 billion.

As of June 30, 2024, the Company had outstanding letters of credit totaling $6.5 million and would have had the capacity to borrow remaining Revolver commitments of $721.5 million while remaining in compliance with the credit facility's financial covenants. At June 30, 2024, the Company was in compliance with all such covenants.

Future Debt Obligations

Based on existing debt agreements in effect as of June 30, 2024, the scheduled principal and maturity payments for the Company's outstanding borrowings are presented in the table below (dollars in thousands):

Year Ending December 31,

Scheduled Principal and Maturity Payments

Amortization of Premium and Unamortized Debt Issuance Costs

Form: 10-Q

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