NSA National Storage Affiliates Trust

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.”

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.

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.

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.

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.

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.

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

 

 

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

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income to FFO and Core FFO

(in thousands, except per share and unit amounts) (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

 

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.

 

 

 

 

 

 

 

 

Reconciliation of Earnings Per Share - Diluted to FFO and Core FFO Per Share and Unit

(in thousands, except per share and unit amounts) (unaudited)

 

 

 

 

 

 

 

 

 

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).

 

 

Net Operating Income

(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

 

(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

(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

 

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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240805039849/en/

National Storage Affiliates Trust

Investor/Media Relations

George Hoglund, CFA Vice President - Investor Relations 720.630.2160 ghoglund@nsareit.net