NSA National Storage Affiliates Trust

National Storage Affiliates Trust ("NSA" or the "Company") (NYSE: NSA) today reported the Company’s third quarter 2024 results.

Third Quarter 2024 Highlights

• Reported net income of $29.8 million for the third quarter of 2024, a decrease of 30.9% compared to the third quarter of 2023. Reported diluted earnings per share of $0.18 for the third quarter of 2024 compared to $0.26 for the third quarter of 2023.
• Reported core funds from operations ("Core FFO") of $83.9 million, or $0.62 per share and unit for the third quarter of 2024, a decrease of 7.5% per share compared to the third quarter of 2023.
• Reported a decrease in same store net operating income ("NOI") of 5.3% for the third quarter of 2024 compared to the same period in 2023, driven by a 3.5% decrease in same store total revenues and an increase of 1.2% in same store property operating expenses.
• Reported same store period-end occupancy of 85.6% as of September 30, 2024, a decrease of 270 basis points compared to September 30, 2023.
• One of the Company's unconsolidated real estate ventures acquired 18 self storage properties for approximately $147.9 million, in two separate transactions. The venture financed the acquisitions with capital contributions from the venture members, of which the Company contributed approximately $37.0 million.
• On September 5, 2024, the Company issued $350.0 million of senior unsecured notes with a weighted average interest rate of 5.6% and a weighted average maturity of 7.6 years in a private placement with institutional investors.
• As previously announced, 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 related 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 continues to transition the majority of operations in a phased approach, which has begun and is expected to continue 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 were converted into 17,984,787 OP units and DownREIT OP units.

David Cramer, President and Chief Executive Officer, commented, “We are pleased to announce that all our team members are safe following Hurricanes Helene and Milton. We hope that all affected by these storms remain safe, and we wish them the best as they work their way through the tough recovery period. While several of our facilities in the path of these storms experienced minor damage, largely impacting gates, roofs, and signage, all of our stores are back open for business. Separately, we made meaningful progress on our PRO internalization during the quarter, and I am very proud of our team’s effort on this significant transition for our company. Although still early, we are encouraged by the benefits that we are already starting to realize from implementing consistent marketing and pricing strategies while utilizing a centralized web platform.”

Mr. Cramer further commented, “Results for the quarter were in line with our expectations, as our team did a good job navigating the competitive operating environment while working on the PRO transition. On a positive note, the transaction environment is improving as we are seeing more deals come to market, with sellers becoming more realistic about pricing. As a result, we acquired 18 properties totaling almost $150 million through our 2023 Joint Venture during the quarter. Further, we opportunistically accessed the debt private placement market by issuing $350 million of senior unsecured notes with a weighted average coupon of 5.6%. The combination of an improving acquisition environment, more attractive cost of capital and the benefits from the internalization of the PRO structure, make us excited about what the future holds for NSA.”

Financial Results

($ in thousands, except per share and unit data)

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

Change

 

2024

 

2023

 

 

Change

Net income

$

29,771

 

$

43,064

 

(30.9

)%

 

$

157,139

 

$

128,932

 

 

21.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations ("FFO")(1)

$

82,365

 

$

85,418

 

(3.6

)%

 

$

224,377

 

$

258,161

 

 

(13.1

)%

Add back acquisition costs

 

287

 

 

341

 

(15.8

)%

 

 

1,274

 

 

1,424

 

 

(10.5

)%

Add integration and executive severance costs(2)

 

907

 

 

—

 

—

%

 

 

1,534

 

 

—

 

 

—

%

Subtract casualty-related recoveries(3)

 

—

 

 

—

 

—

%

 

 

—

 

 

(522

)

 

—

%

Add loss on early extinguishment of debt

 

323

 

 

—

 

—

%

 

 

323

 

 

758

 

 

(57.4

)%

Core FFO(1)

$

83,882

 

$

85,759

 

(2.2

)%

 

$

227,508

 

$

259,821

 

 

(12.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

$

0.18

 

$

0.28

 

(35.7

)%

 

$

1.03

 

$

0.83

 

 

24.1

%

Earnings per share - diluted

$

0.18

 

$

0.26

 

(30.8

)%

 

$

1.03

 

$

0.77

 

 

33.8

%

 

 

 

 

 

 

 

 

 

 

 

 

FFO per share and unit(1)

$

0.61

 

$

0.67

 

(9.0

)%

 

$

1.81

 

$

1.99

 

 

(9.0

)%

Core FFO per share and unit(1)

$

0.62

 

$

0.67

 

(7.5

)%

 

$

1.84

 

$

2.01

 

 

(8.5

)%

(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 costs relate to expenses incurred as a part of the internalization of the PRO structure. Executive severance costs are recorded within the line items "General and administrative expenses" and "Non-operating (expense) income" in our consolidated statements of operations.

(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 $13.3 million for the third quarter of 2024 and increased $28.2 million for the nine months ended September 30, 2024 ("year-to-date") as compared to the same periods in 2023. The decrease in net income in the third 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 nine months ended September 30, 2024, partially offset by decreases in depreciation expense of $8.2 million and interest expense of $3.5 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 nine months ended September 30, 2024.

The decreases in FFO and Core FFO for the third quarter of 2024 and year-to-date were the result of a decrease in NOI of 14.5% and 12.4%, respectively, which were partially offset by a decrease in interest expense of 8.1% and 4.8%, respectively, as compared to the same periods in 2023. The decrease in FFO and Core FFO per share and unit for the third quarter of 2024 and year-to-date was largely driven by a decrease in same store NOI, partially offset by decreased management fees paid to former PROs, reflected within general and administrative expenses, following the internalization of the PRO structure.

Same Store Operating Results (776 Stores)

($ in thousands, except per square foot data)

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

Change

 

2024

 

2023

 

Change

Total revenues

$

174,808

 

 

$

181,211

 

 

(3.5

)%

 

$

522,861

 

 

$

536,982

 

 

(2.6

)%

Property operating expenses

 

50,164

 

 

 

49,566

 

 

1.2

%

 

 

149,659

 

 

 

144,674

 

 

3.4

%

Net Operating Income (NOI)

$

124,644

 

 

$

131,645

 

 

(5.3

)%

 

$

373,202

 

 

$

392,308

 

 

(4.9

)%

NOI Margin

 

71.3

%

 

 

72.6

%

 

(1.3

)%

 

 

71.4

%

 

 

73.1

%

 

(1.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

Average Occupancy

 

86.3

%

 

 

89.2

%

 

(2.9

)%

 

 

86.1

%

 

 

89.4

%

 

(3.3

)%

Average Annualized Rental Revenue Per Occupied Square Foot

$

15.67

 

 

$

15.81

 

 

(0.9

)%

 

$

15.72

 

 

$

15.61

 

 

0.7

%

Year-over-year same store total revenues decreased 3.5% for the third quarter of 2024 and 2.6% year-to-date as compared to the same period in 2023. The decrease for the third quarter was driven primarily by a 290 basis point decrease in average occupancy and a 0.9% decrease in average annualized rental revenue per occupied square foot. The year-to-date same store total revenue decrease was driven primarily by a 330 basis point decrease in average occupancy, partially offset by a 0.7% increase in average annualized rental revenue per occupied square foot. Markets which generated above portfolio average same store total revenue growth for the third quarter of 2024 include: San Juan, Wichita and Portland. Markets which generated below portfolio average same store total revenue growth for the third quarter of 2024 include: Atlanta, Phoenix and Sarasota-Bradenton.

Year-over-year same store property operating expenses increased 1.2% for the third quarter of 2024 and 3.4% year-to-date as compared to the same periods in 2023. The increases in the third quarter of 2024 primarily resulted from increases in property tax and insurance expense.

Investment Activity

During the third quarter, a joint venture between a subsidiary of NSA and a state pension fund advised by Heitman Capital Management, LLC (the "2023 Joint Venture") acquired 18 self storage properties for approximately $147.9 million in two separate transactions. The 2023 Joint Venture financed the acquisitions with capital contributions from the venture members, of which the Company contributed approximately $37.0 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.

Balance Sheet

On September 5, 2024, NSA issued $75.0 million of 5.40% senior unsecured notes due September 5, 2028, $125.0 million of 5.55% senior unsecured notes due September 5, 2031 and $150.0 million of 5.74% senior unsecured notes due September 5, 2034 in a private placement with institutional investors. The Company used the proceeds from the private placement to repay its $325.0 million Tranche C term loan, which addresses all debt maturities in 2025, a portion of the revolving line of credit and for general corporate purposes.

Common Share Dividends

On August 15, 2024, NSA's Board of Trustees declared a quarterly cash dividend of $0.56 per common share. The third quarter 2024 dividend was paid on September 30, 2024 to shareholders of record as of September 13, 2024.

2024 Guidance

NSA reaffirms its previously provided Core FFO guidance estimates and related assumptions for the year ended December 31, 2024.

 

Current Ranges for Full Year 2024

 

Actual Results for Full Year 2023

 

Low

 

High

 

Core FFO per share(1)

$

2.36

 

 

$

2.44

 

 

$

2.69

 

 

 

 

 

 

 

Same store operations(2)

 

 

 

 

 

Total revenue growth

 

(3.75

)%

 

 

(2.25

)%

 

 

2.4

%

Property operating expenses growth

 

3.5

%

 

 

5.0

%

 

 

4.7

%

NOI growth

 

(6.5

)%

 

 

(4.5

)%

 

 

1.6

%

 

 

 

 

 

 

General and administrative expenses

 

 

 

 

 

General and administrative expenses (excluding equity-based compensation), in millions

$

50.0

 

 

$

52.0

 

 

$

52.6

 

Equity-based compensation, in millions

$

7.75

 

 

$

8.25

 

 

$

6.7

 

 

 

 

 

 

 

Management fees and other revenue, in millions

$

39.5

 

 

$

41.5

 

 

$

34.4

 

Core FFO from unconsolidated real estate ventures, in millions

$

22.0

 

 

$

24.0

 

 

$

24.6

 

 

 

 

 

 

 

Subordinated performance unit distributions, in millions

$

21.6

 

 

$

21.6

 

 

$

49.0

 

 

 

 

 

 

 

Acquisitions of self storage properties, in millions

$

100.0

 

 

$

300.0

 

 

$

229.5

 

 

 

Current Ranges for Full Year 2024

 

Low

 

High

Earnings per share - diluted

$

1.10

 

 

$

1.17

 

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

 

Add real estate depreciation and amortization

 

1.45

 

 

 

1.49

 

Add (subtract) equity in losses (earnings) of unconsolidated real estate ventures

 

0.11

 

 

 

0.13

 

Add NSA's share of FFO of unconsolidated real estate ventures

 

0.17

 

 

 

0.19

 

FFO attributable to subordinated unitholders

 

(0.17

)

 

 

(0.17

)

Less gain on sale of self storage properties

 

(0.50

)

 

 

(0.50

)

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

 

Core FFO per share and unit

$

2.36

 

 

$

2.44

 

 

 

 

 

(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 https://ir.nsastorage.com and as exhibit 99.1 to the Company's Form 8-K furnished to the SEC on October 30, 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 Thursday, October 31, 2024 to discuss its third 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.nsastorage.com.

Conference Call and Webcast:

Date/Time: Thursday, October 31, 2024, 1:00 pm EDT

Webcast available at: www.nsastorage.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.nsastorage.com.

Upcoming Industry Conference

NSA management is scheduled to participate in the upcoming Nareit REITworld 2024 Annual Conference on November 18 – 20, 2024 in Las Vegas, Nevada, and the Jefferies Real Estate Conference on December 10 – 11, 2024 in Miami Beach, Florida.

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 September 30, 2024, the Company held ownership interests in and operated 1,070 self storage properties located in 42 states and Puerto Rico with approximately 70.0 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.nsastorage.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 September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

REVENUE

 

 

 

 

 

 

 

Rental revenue

$

174,467

 

 

$

201,833

 

 

$

529,218

 

 

$

595,273

 

Other property-related revenue

 

7,405

 

 

 

7,764

 

 

 

20,654

 

 

 

22,184

 

Management fees and other revenue

 

11,749

 

 

 

9,550

 

 

 

30,345

 

 

 

25,194

 

Total revenue

 

193,621

 

 

 

219,147

 

 

 

580,217

 

 

 

642,651

 

OPERATING EXPENSES

 

 

 

 

 

 

 

Property operating expenses

 

52,712

 

 

 

58,581

 

 

 

159,607

 

 

 

172,158

 

General and administrative expenses

 

13,114

 

 

 

15,100

 

 

 

44,977

 

 

 

44,325

 

Depreciation and amortization

 

47,661

 

 

 

55,842

 

 

 

141,702

 

 

 

168,005

 

Other

 

3,643

 

 

 

4,138

 

 

 

10,510

 

 

 

8,531

 

Total operating expenses

 

117,130

 

 

 

133,661

 

 

 

356,796

 

 

 

393,019

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

Interest expense

 

(39,575

)

 

 

(43,065

)

 

 

(114,920

)

 

 

(120,706

)

Loss on early extinguishment of debt

 

(323

)

 

 

—

 

 

 

(323

)

 

 

(758

)

Equity in (losses) earnings of unconsolidated real estate ventures

 

(4,712

)

 

 

1,930

 

 

 

(10,791

)

 

 

5,469

 

Acquisition and integration costs

 

(1,164

)

 

 

(341

)

 

 

(2,151

)

 

 

(1,424

)

Non-operating (expense) income

 

(83

)

 

 

(24

)

 

 

352

 

 

 

(426

)

Gain on sale of self storage properties

 

—

 

 

 

—

 

 

 

63,841

 

 

 

—

 

Other expense, net

 

(45,857

)

 

 

(41,500

)

 

 

(63,992

)

 

 

(117,845

)

Income before income taxes

 

30,634

 

 

 

43,986

 

 

 

159,429

 

 

 

131,787

 

Income tax expense

 

(863

)

 

 

(922

)

 

 

(2,290

)

 

 

(2,855

)

Net income

 

29,771

 

 

 

43,064

 

 

 

157,139

 

 

 

128,932

 

Net income attributable to noncontrolling interests

 

(11,070

)

 

 

(13,827

)

 

 

(62,349

)

 

 

(41,290

)

Net income attributable to National Storage Affiliates Trust

 

18,701

 

 

 

29,237

 

 

 

94,790

 

 

 

87,642

 

Distributions to preferred shareholders

 

(5,112

)

 

 

(5,110

)

 

 

(15,332

)

 

 

(13,908

)

Net income attributable to common shareholders

$

13,589

 

 

$

24,127

 

 

$

79,458

 

 

$

73,734

 

 

 

 

 

 

 

 

 

Earnings per share - basic

$

0.18

 

 

$

0.28

 

 

$

1.03

 

 

$

0.83

 

Earnings per share - diluted

$

0.18

 

 

$

0.26

 

 

$

1.03

 

 

$

0.77

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

75,760

 

 

 

87,004

 

 

 

77,047

 

 

 

88,263

 

Weighted average shares outstanding - diluted

 

75,760

 

 

 

146,118

 

 

 

77,047

 

 

147,610

National Storage Affiliates Trust Consolidated Balance Sheets (dollars in thousands, except per share amounts) (unaudited)

 

 

September 30,

 

December 31,

 

2024

 

2023

ASSETS

 

 

 

Real estate

 

 

 

Self storage properties

$

5,821,364

 

 

$

5,792,174

 

Less accumulated depreciation

 

(1,006,543

)

 

 

(874,359

)

Self storage properties, net

 

4,814,821

 

 

 

4,917,815

 

Cash and cash equivalents

 

69,886

 

 

 

64,980

 

Restricted cash

 

8,539

 

 

 

22,713

 

Debt issuance costs, net

 

6,343

 

 

 

8,442

 

Investment in unconsolidated real estate ventures

 

257,381

 

 

 

211,361

 

Other assets, net

 

211,176

 

 

 

134,002

 

Assets held for sale, net

 

—

 

 

 

550,199

 

Operating lease right-of-use assets

 

21,515

 

 

 

22,299

 

Total assets

$

5,389,661

 

 

$

5,931,811

 

LIABILITIES AND EQUITY

 

 

 

Liabilities

 

 

 

Debt financing

$

3,428,304

 

 

$

3,658,205

 

Accounts payable and accrued liabilities

 

108,424

 

 

 

92,766

 

Interest rate swap liabilities

 

7,774

 

 

 

3,450

 

Operating lease liabilities

 

23,493

 

 

 

24,195

 

Deferred revenue

 

20,778

 

 

 

27,354

 

Total liabilities

 

3,588,773

 

 

 

3,805,970

 

Equity

 

 

 

Preferred shares of beneficial interest, par value $0.01 per share. 50,000,000 authorized, 14,692,381 and 14,685,716 issued (in series) and outstanding at September 30, 2024 and December 31, 2023, respectively, at liquidation preference

 

340,818

 

 

 

340,651

 

Common shares of beneficial interest, par value $0.01 per share. 250,000,000 shares authorized, 76,216,680 and 82,285,995 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

 

762

 

 

 

823

 

Additional paid-in capital

 

1,124,533

 

 

 

1,509,563

 

Distributions in excess of earnings

 

(498,787

)

 

 

(449,907

)

Accumulated other comprehensive income

 

19,543

 

 

 

21,058

 

Total shareholders' equity

 

986,869

 

 

 

1,422,188

 

Noncontrolling interests

 

814,019

 

 

 

703,653

 

Total equity

 

1,800,888

 

 

 

2,125,841

 

Total liabilities and equity

$

5,389,661

 

 

$

5,931,811

 

Reconciliation of Net Income to FFO and Core FFO

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Net income

$

29,771

 

 

$

43,064

 

 

$

157,139

 

 

$

128,932

 

Add (subtract):

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

47,286

 

 

 

55,528

 

 

 

140,588

 

 

 

167,078

 

Equity in losses (earnings) of unconsolidated real estate ventures

 

4,712

 

 

 

(1,930

)

 

 

10,791

 

 

 

(5,469

)

Company's share of FFO in unconsolidated real estate ventures

 

6,164

 

 

 

6,217

 

 

 

18,026

 

 

 

18,542

 

Gain on sale of self storage properties

 

—

 

 

 

—

 

 

 

(63,841

)

 

 

—

 

Distributions to preferred shareholders and unitholders

 

(5,568

)

 

 

(5,393

)

 

 

(16,704

)

 

 

(14,758

)

FFO attributable to subordinated performance units(1)

 

—

 

 

 

(12,068

)

 

 

(21,622

)

 

 

(36,164

)

FFO attributable to common shareholders, OP unitholders, and LTIP unitholders

 

82,365

 

 

 

85,418

 

 

 

224,377

 

 

 

258,161

 

Add (subtract):

 

 

 

 

 

 

 

Acquisition costs

 

287

 

 

 

341

 

 

 

1,274

 

 

 

1,424

 

Integration and executive severance costs(2)

 

907

 

 

 

—

 

 

 

1,534

 

 

 

—

 

Casualty-related recoveries(3)

 

—

 

 

 

—

 

 

 

—

 

 

 

(522

)

Loss on early extinguishment of debt

 

323

 

 

 

—

 

 

 

323

 

 

 

758

 

Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders

$

83,882

 

 

$

85,759

 

 

$

227,508

 

 

$

259,821

 

 

 

 

 

 

 

 

 

Weighted average shares and units outstanding - FFO and Core FFO:(4)

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

75,760

 

 

 

87,004

 

 

 

77,047

 

 

 

88,263

 

Weighted average restricted common shares outstanding

 

19

 

 

 

25

 

 

 

21

 

 

 

26

 

Weighted average OP units outstanding

 

52,740

 

 

 

38,030

 

 

 

42,709

 

 

 

38,504

 

Weighted average DownREIT OP unit equivalents outstanding

 

5,769

 

 

 

2,120

 

 

 

3,346

 

 

 

2,120

 

Weighted average LTIP units outstanding

 

663

 

 

 

562

 

 

 

676

 

 

 

545

 

Total weighted average shares and units outstanding - FFO and Core FFO

 

134,951

 

 

 

127,741

 

 

 

123,799

 

 

 

129,458

 

 

 

 

 

 

 

 

 

FFO per share and unit

$

0.61

 

 

$

0.67

 

 

$

1.81

 

 

$

1.99

 

Core FFO per share and unit

$

0.62

 

 

$

0.67

 

 

$

1.84

 

 

$

2.01

 

(1)

 

Amounts represent distributions declared for subordinated performance unitholders and DownREIT subordinated performance unitholders for the periods presented.

(2)

 

Integration costs relate to expenses incurred as a part of the internalization of the PRO structure. Executive severance costs are recorded within the line items "General and administrative expenses" and "Non-operating (expense) income" in our consolidated statements of operations.

(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. 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). All subordinated performance units and DownREIT subordinated performance units were converted into OP units on July 1, 2024, in connection with the internalization of the PRO structure. 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 September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Earnings per share - diluted

$

0.18

 

 

$

0.26

 

 

$

1.03

 

 

$

0.77

 

Impact of the difference in weighted average number of shares(5)

 

(0.08

)

 

 

0.04

 

 

 

(0.39

)

 

 

0.11

 

Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method(6)

 

0.08

 

 

 

—

 

 

 

0.49

 

 

 

—

 

Add real estate depreciation and amortization

 

0.35

 

 

 

0.44

 

 

 

1.14

 

 

 

1.29

 

Add (subtract) equity in losses (earnings) of unconsolidated real estate ventures

 

0.03

 

 

 

(0.02

)

 

 

0.08

 

 

 

(0.04

)

Add Company's share of FFO in unconsolidated real estate ventures

 

0.05

 

 

 

0.05

 

 

 

0.15

 

 

 

0.14

 

Subtract gain on sale of self storage properties

 

—

 

 

 

—

 

 

 

(0.52

)

 

 

—

 

FFO attributable to subordinated performance unitholders

 

—

 

 

 

(0.10

)

 

 

(0.17

)

 

 

(0.28

)

FFO per share and unit

 

0.61

 

 

 

0.67

 

 

 

1.81

 

 

 

1.99

 

Add acquisition costs

 

—

 

 

 

—

 

 

 

0.01

 

 

 

0.01

 

Add integration and executive severance costs

 

0.01

 

 

 

—

 

 

 

0.02

 

 

 

—

 

Add loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

—

 

 

 

0.01

 

Core FFO per share and unit

$

0.62

 

 

$

0.67

 

 

$

1.84

 

 

$

2.01

 

(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. All outstanding subordinated performance units and DownREIT subordinated performance units were converted into OP units on July 1, 2024, in connection with the internalization of the PRO structure. 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 September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Net income

$

29,771

 

 

$

43,064

 

 

$

157,139

 

 

$

128,932

 

(Subtract) add:

 

 

 

 

 

 

 

Management fees and other revenue

 

(11,749

)

 

 

(9,550

)

 

 

(30,345

)

 

 

(25,194

)

General and administrative expenses

 

13,114

 

 

 

15,100

 

 

 

44,977

 

 

 

44,325

 

Other

 

3,643

 

 

 

4,138

 

 

 

10,510

 

 

 

8,531

 

Depreciation and amortization

 

47,661

 

 

 

55,842

 

 

 

141,702

 

 

 

168,005

 

Interest expense

 

39,575

 

 

 

43,065

 

 

 

114,920

 

 

 

120,706

 

Equity in losses (earnings) of unconsolidated real estate ventures

 

4,712

 

 

 

(1,930

)

 

 

10,791

 

 

 

(5,469

)

Loss on early extinguishment of debt

 

323

 

 

 

—

 

 

 

323

 

 

 

758

 

Acquisition and integration costs

 

1,164

 

 

 

341

 

 

 

2,151

 

 

 

1,424

 

Income tax expense

 

863

 

 

 

922

 

 

 

2,290

 

 

 

2,855

 

Gain on sale of self storage properties

 

—

 

 

 

—

 

 

 

(63,841

)

 

 

—

 

Non-operating expense (income)

 

83

 

 

 

24

 

 

 

(352

)

 

 

426

 

Net Operating Income

$

129,160

 

 

$

151,016

 

 

$

390,265

 

 

$

445,299

 

 

EBITDA and Adjusted EBITDA (dollars in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Net income

$

29,771

 

 

$

43,064

 

 

$

157,139

 

 

$

128,932

 

Add:

 

 

 

 

 

 

 

Depreciation and amortization

 

47,661

 

 

 

55,842

 

 

 

141,702

 

 

 

168,005

 

Company's share of unconsolidated real estate ventures depreciation and amortization

 

5,418

 

 

 

4,287

 

 

 

15,110

 

 

 

13,073

 

Interest expense

 

39,575

 

 

 

43,065

 

 

 

114,920

 

 

 

120,706

 

Income tax expense

 

863

 

 

 

922

 

 

 

2,290

 

 

 

2,855

 

Loss on early extinguishment of debt

 

323

 

 

 

—

 

 

 

323

 

 

 

758

 

EBITDA

 

123,611

 

 

 

147,180

 

 

 

431,484

 

 

 

434,329

 

Add (subtract):

 

 

 

 

 

 

 

Acquisition costs

 

287

 

 

 

341

 

 

 

1,274

 

 

 

1,424

 

Effect of hypothetical liquidation at book value (HLBV) accounting for unconsolidated 2024 Joint Venture(1)

 

5,458

 

 

 

—

 

 

 

13,707

 

 

 

—

 

Gain on sale of self storage properties

 

—

 

 

 

—

 

 

 

(63,841

)

 

 

—

 

Integration and executive severance costs, excluding equity-based compensation(2)

 

877

 

 

 

—

 

 

 

1,100

 

 

 

—

 

Casualty-related recoveries(3)

 

—

 

 

 

—

 

 

 

—

 

 

 

(522

)

Equity-based compensation expense

 

1,911

 

 

 

1,702

 

 

 

6,097

 

 

 

5,028

 

Adjusted EBITDA

$

132,144

 

 

$

149,223

 

 

$

389,821

 

 

$

440,259

 

(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 costs relate to expenses incurred as a part of the internalization of the PRO structure. Executive severance costs are recorded within the line items "General and administrative expenses" and "Non-operating (expense) income" in our consolidated statements of operations.

(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/20241030797986/en/

National Storage Affiliates Trust

Investor/Media Relations

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