NSA National Storage Affiliates Trust

National Storage Affiliates Trust ("NSA" or the "Company") (NYSE: NSA) today reported the Company’s second quarter 2023 results.

Second Quarter 2023 Highlights

• Reported net income of $45.5 million for the second quarter of 2023, a decrease of 6.1% compared to the second quarter of 2022. Reported diluted earnings per share of $0.28 for the second quarter of 2023 compared to $0.24 for the second quarter of 2022.
• Reported core funds from operations ("Core FFO") of $88.2 million, or $0.68 per share for the second quarter of 2023, a decrease of 4.2% per share compared to the second quarter of 2022, driven by same store growth and net operating income (“NOI”) contribution from non-same store properties, which was more than offset by elevated interest expense due primarily to higher interest rates.
• Reported an increase in same store NOI of 3.4% for the second quarter of 2023 compared to the same period in 2022, driven by a 2.8% increase in same store total revenues partially offset by an increase of 1.4% in same store property operating expenses.
• Reported same store period-end occupancy of 90.0% as of June 30, 2023, a decrease of 450 basis points compared to June 30, 2022.
• Acquired two properties that are considered annexes to existing properties for approximately $13.8 million during the second quarter of 2023. Consideration for these acquisitions included the issuance of $5.6 million of OP equity, consisting of subordinated performance units.
• Issued the previously announced $120.0 million of senior unsecured notes due July 5, 2028, with an effective interest rate of 5.75%, in a private placement to certain institutional investors.

Highlights Subsequent to Quarter-End

• Acquired one self storage property for approximately $17.8 million. Consideration for this acquisition included approximately $7.8 million of net cash and OP equity of approximately $9.9 million, consisting primarily of subordinated performance units.

David Cramer, President and Chief Executive Officer, commented, “Our team did a great job controlling expenses during the quarter as opex growth of just 1.4% helped drive same store NOI growth of 3.4%. Contract rates grew a healthy 7% year-over-year, and our average tenant duration is over 40 months which allowed us to remain assertive on our existing customer rate increase program. We experienced a softer spring leasing season than we anticipated, and the interest rate environment was tougher than expected, leading us to lower our full-year same store and Core FFO per share guidance.”

Mr. Cramer further commented, “As we work through the tough year-over-year comps, we remain bullish on the medium and long-term outlook for both NSA and the overall self storage sector. We are confident in our targeted concentration in attractive Sunbelt markets and will continue to focus on enhancing our People, Process and Platform initiatives. We believe that this strategic focus will position us well to deliver on both operational initiatives to drive internal growth and balance sheet repositioning so we can opportunistically execute on external growth when the time is right.”

Financial Results

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

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023

 

 

 

2022

 

Growth

 

 

2023

 

 

 

2022

 

Growth

Net income

$

45,476

 

 

$

48,425

 

(6.1

)%

 

$

85,868

 

 

$

93,211

 

(7.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations ("FFO")(1)

$

88,478

 

 

$

90,932

 

(2.7

)%

 

$

172,744

 

 

$

177,788

 

(2.8

)%

Add back acquisition costs

 

239

 

 

 

682

 

(65.0

)%

 

 

1,083

 

 

 

1,235

 

(12.3

)%

Subtract casualty-related recoveries(2)

 

(522

)

 

 

—

 

—

%

 

 

(522

)

 

 

—

 

—

%

Add loss on early extinguishment of debt

 

—

 

 

 

—

 

—

%

 

 

758

 

 

 

—

 

—

%

Core FFO(1)

$

88,195

 

 

$

91,614

 

(3.7

)%

 

$

174,063

 

 

$

179,023

 

(2.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic and diluted

$

0.28

 

 

$

0.24

 

16.7

%

 

$

0.56

 

 

$

0.48

 

16.7

%

 

 

 

 

 

 

 

 

 

 

 

 

FFO per share and unit(1)

$

0.68

 

 

$

0.70

 

(2.9

)%

 

$

1.32

 

 

$

1.37

 

(3.6

)%

Core FFO per share and unit(1)

$

0.68

 

 

$

0.71

 

(4.2

)%

 

$

1.34

 

 

$

1.38

 

(2.9

)%

(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)

Casualty-related recoveries relate to casualty-related expenses incurred during 2022.

Net income decreased $2.9 million for the second quarter of 2023 and $7.3 million for the six months ended June 30, 2023 ("year-to-date") as compared to the same periods in 2022, resulting from total revenue and NOI increasing by $16.6 million and $12.0 million, respectively, for the second quarter of 2023 and $37.4 million and $25.2 million, respectively, for the six months ended June 30, 2023 resulting primarily from additional NOI generated from the 41 wholly-owned self storage properties acquired between July 1, 2022 and June 30, 2023, and same store NOI growth. These increases in total revenue and NOI were offset by an increase in interest expense of $15.2 million for the second quarter of 2023 and $30.5 million for the six months ended June 30, 2023 as compared to the same periods in 2022.

The decrease in FFO and Core FFO for the second quarter of 2023 and year-to-date was primarily the result of a decrease in net income of 6.1% and 7.9%, respectively, partially offset by a decrease in distributions on subordinated performance units, as compared to the same periods in 2022.

Same Store Operating Results (834 Stores)

($ in thousands, except per square foot data)

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023

 

 

 

2022

 

 

Growth

 

 

2023

 

 

 

2022

 

 

Growth

Total revenues

$

186,708

 

 

$

181,549

 

 

2.8

%

 

$

370,623

 

 

$

355,481

 

 

4.3

%

Property operating expenses

 

50,194

 

 

 

49,477

 

 

1.4

%

 

 

100,614

 

 

 

96,018

 

 

4.8

%

Net Operating Income (NOI)

$

136,514

 

 

$

132,072

 

 

3.4

%

 

$

270,009

 

 

$

259,463

 

 

4.1

%

NOI Margin

 

73.1

%

 

 

72.7

%

 

0.4

%

 

 

72.9

%

 

 

73.0

%

 

(0.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

Average Occupancy

 

90.0

%

 

 

94.1

%

 

(4.1

)%

 

 

89.9

%

 

 

93.9

%

 

(4.0

)%

Average Annualized Rental Revenue Per Occupied Square Foot

$

15.27

 

 

$

14.26

 

 

7.1

%

 

$

15.19

 

 

$

13.99

 

 

8.6

%

Year-over-year same store total revenues increased 2.8% for the second quarter of 2023 and 4.3% year-to-date as compared to the same period in 2022. The increase for the second quarter was driven primarily by a 7.1% increase in average annualized rental revenue per occupied square foot, partially offset by a 4.1% decrease in average occupancy. The year-to-date same store total revenue increase was driven primarily by an 8.6% increase in average annualized rental revenue per occupied square foot, partially offset by a 4.0% decrease in average occupancy. Markets which generated above portfolio average same store total revenue growth for the second quarter of 2023 include: Atlanta, McAllen and Oklahoma City. Markets which generated below portfolio average same store total revenue growth for the second quarter of 2023 include: Las Vegas, New Orleans and San Antonio.

Year-over-year same store property operating expenses increased 1.4% for the second quarter of 2023 and 4.8% year-to-date as compared to the same periods in 2022. The increase primarily resulted from increases in marketing and insurance expense, partially offset by decreases in personnel and repairs and maintenance expenses.

Investment Activity

During the second quarter, NSA invested $13.8 million in the acquisition of two annexes to existing properties, consisting of approximately 81,600 rentable square feet configured in approximately 500 storage units. Total consideration for these acquisitions included approximately $8.2 million of net cash, and $5.6 million of subordinated performance units.

Balance Sheet

On April 27, 2023, NSA closed on its private placement of $120.0 million of senior unsecured notes due July 5, 2028, with an effective interest rate of 5.75%, after taking into account the effect of interest rate swaps. NSA used the proceeds to repay outstanding amounts on its revolving line of credit and for general corporate purposes.

Common Share Dividends

On May 25, 2023, NSA's Board of Trustees declared a quarterly cash dividend of $0.56 per common share, representing a 1.8% increase from the second quarter 2022 and from the previous quarter in 2023. The second quarter 2023 dividend was paid on June 30, 2023 to shareholders of record as of June 15, 2023.

2023 Guidance

The following table outlines NSA's updated and prior Core FFO guidance estimates and related assumptions for the year ended December 31, 2023. The Company's revisions to Core FFO per share estimates are primarily driven by lower same store growth assumptions and higher interest rates. Due to an improvement in our tenant insurance program, “Management fees and other revenue” are expected to be higher than previously estimated.

 

Current Ranges for Full Year 2023

 

Prior Ranges for Full Year 2023

 

Actual Results for Full Year 2022

 

Low

 

High

 

Low

 

High

 

Core FFO per share(1)

$2.63

 

$2.69

 

$2.78

 

$2.86

 

$2.81

 

 

 

 

 

 

 

 

 

 

Same store operations(2)

 

 

 

 

 

 

 

 

 

Total revenue growth

1.50%

 

2.75%

 

3.75%

 

5.25%

 

12.1%

Property operating expenses growth

4.50%

 

5.75%

 

4.50%

 

6.00%

 

4.8%

NOI growth

0.25%

 

1.75%

 

3.00%

 

5.50%

 

14.9%

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

 

 

 

 

 

 

 

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

$51.0

 

$53.0

 

$53.0

 

$55.0

 

$53.1

Equity-based compensation, in millions

$6.5

 

$7.0

 

$6.5

 

$7.0

 

$6.3

 

 

 

 

 

 

 

 

 

 

Management fees and other revenue, in millions

$32.0

 

$34.0

 

$28.0

 

$30.0

 

$27.6

Core FFO from unconsolidated real estate ventures, in millions

$23.5

 

$25.0

 

$25.0

 

$26.5

 

$24.8

 

 

 

 

 

 

 

 

 

 

Subordinated performance unit distributions, in millions

$46.0

 

$48.0

 

$51.0

 

$53.0

 

$58.8

 

 

 

 

 

 

 

 

 

 

Acquisitions of self storage properties, in millions

$200.0

 

$300.0

 

$200.0

 

$400.0

 

$569.2

 

 

Current Ranges for Full Year 2023

 

Prior Ranges for Full Year 2023

 

Low

 

High

 

Low

 

High

Earnings per share - diluted

$1.12

 

$1.16

 

$1.25

 

$1.31

Impact of the difference in weighted average number of shares and GAAP accounting for noncontrolling interests, two-class method and treasury stock method

0.01

 

0.01

 

0.07

 

0.02

Add real estate depreciation and amortization, including NSA's share of unconsolidated venture real estate depreciation and amortization

1.83

 

1.87

 

1.83

 

1.91

FFO attributable to subordinated unitholders

(0.35)

 

(0.37)

 

(0.38)

 

(0.41)

Add loss on early extinguishment of debt

0.01

 

0.01

 

—

 

0.01

Add acquisition costs and NSA's share of unconsolidated real estate venture acquisition costs

0.01

 

0.01

 

0.01

 

0.02

Core FFO per share and unit

$2.63

 

$2.69

 

$2.78

 

$2.86

(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)

2023 guidance reflects NSA's 2023 same store pool comprising 834 stores. 2022 actual results reflect NSA's 2022 same store pool comprising 628 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 7, 2023.

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 8, 2023 to discuss its second quarter 2023 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 8, 2023, 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 Bank of America Securities 2023 Global Real Estate Conference on September 12 - 13, 2023 in New York, New York and the Evercore ISI 9th Annual Storage Symposium on October 4, 2023 in New York, 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, 2023, the Company held ownership interests in and operated 1,117 self storage properties located in 42 states and Puerto Rico with approximately 72.8 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; the internalization of retiring participating regional operators ("PROs") into the Company; and the Company's guidance estimates for the year ended December 31, 2023. 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,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

REVENUE

 

 

 

 

 

 

 

Rental revenue

$

199,311

 

 

$

184,636

 

 

$

393,440

 

 

$

359,105

 

Other property-related revenue

 

7,613

 

 

 

6,341

 

 

 

14,420

 

 

 

12,507

 

Management fees and other revenue

 

8,587

 

 

 

7,913

 

 

 

15,644

 

 

 

14,462

 

Total revenue

 

215,511

 

 

 

198,890

 

 

 

423,504

 

 

 

386,074

 

OPERATING EXPENSES

 

 

 

 

 

 

 

Property operating expenses

 

57,094

 

 

 

53,188

 

 

 

113,577

 

 

 

102,546

 

General and administrative expenses

 

14,404

 

 

 

14,702

 

 

 

29,225

 

 

 

28,668

 

Depreciation and amortization

 

56,705

 

 

 

57,891

 

 

 

112,163

 

 

 

115,963

 

Other

 

3,220

 

 

 

525

 

 

 

4,393

 

 

 

995

 

Total operating expenses

 

131,423

 

 

 

126,306

 

 

 

259,358

 

 

 

248,172

 

OTHER (EXPENSE) INCOME

 

 

 

 

 

 

 

Interest expense

 

(39,693

)

 

 

(24,448

)

 

 

(77,641

)

 

 

(47,095

)

Loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

(758

)

 

 

—

 

Equity in earnings of unconsolidated real estate ventures

 

1,861

 

 

 

1,962

 

 

 

3,539

 

 

 

3,456

 

Acquisition costs

 

(239

)

 

 

(682

)

 

 

(1,083

)

 

 

(1,235

)

Non-operating income (expense)

 

196

 

 

 

(261

)

 

 

(402

)

 

 

(373

)

Gain on sale of self storage properties

 

—

 

 

 

—

 

 

 

—

 

 

 

2,134

 

Other expense, net

 

(37,875

)

 

 

(23,429

)

 

 

(76,345

)

 

 

(43,113

)

Income before income taxes

 

46,213

 

 

 

49,155

 

 

 

87,801

 

 

 

94,789

 

Income tax expense

 

(737

)

 

 

(730

)

 

 

(1,933

)

 

 

(1,578

)

Net income

 

45,476

 

 

 

48,425

 

 

 

85,868

 

 

 

93,211

 

Net income attributable to noncontrolling interests

 

(16,028

)

 

 

(23,387

)

 

 

(27,461

)

 

 

(42,945

)

Net income attributable to National Storage Affiliates Trust

 

29,448

 

 

 

25,038

 

 

 

58,407

 

 

 

50,266

 

Distributions to preferred shareholders

 

(5,119

)

 

 

(3,382

)

 

 

(8,799

)

 

 

(6,661

)

Net income attributable to common shareholders

$

24,329

 

 

$

21,656

 

 

$

49,608

 

 

$

43,605

 

 

 

 

 

 

 

 

 

Earnings per share - basic and diluted

$

0.28

 

 

$

0.24

 

 

$

0.56

 

 

$

0.48

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic and diluted

 

88,312

 

 

 

91,541

 

 

 

88,902

 

 

 

91,433

 

 

National Storage Affiliates Trust

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(unaudited)

 

 

June 30,

 

December 31,

 

 

2023

 

 

 

2022

 

ASSETS

 

 

 

Real estate

 

 

 

Self storage properties

$

6,579,167

 

 

$

6,391,572

 

Less accumulated depreciation

 

(877,707

)

 

 

(772,661

)

Self storage properties, net

 

5,701,460

 

 

 

5,618,911

 

Cash and cash equivalents

 

44,022

 

 

 

35,312

 

Restricted cash

 

3,299

 

 

 

6,887

 

Debt issuance costs, net

 

9,607

 

 

 

1,393

 

Investment in unconsolidated real estate ventures

 

219,060

 

 

 

227,441

 

Other assets, net

 

160,618

 

 

 

156,228

 

Operating lease right-of-use assets

 

23,325

 

 

 

23,835

 

Total assets

$

6,161,391

 

 

$

6,070,007

 

LIABILITIES AND EQUITY

 

 

 

Liabilities

 

 

 

Debt financing

$

3,639,547

 

 

$

3,551,179

 

Accounts payable and accrued liabilities

 

87,007

 

 

 

80,377

 

Interest rate swap liabilities

 

—

 

 

 

483

 

Operating lease liabilities

 

25,314

 

 

 

25,741

 

Deferred revenue

 

25,122

 

 

 

23,213

 

Total liabilities

 

3,776,990

 

 

 

3,680,993

 

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, 2023 and December 31, 2022, respectively, at liquidation preference

 

225,439

 

 

 

225,439

 

Series B Preferred shares of beneficial interest, par value $0.01 per share. 7,000,000 authorized, 5,668,128 issued and outstanding at June 30, 2023

 

115,212

 

 

 

—

 

Common shares of beneficial interest, par value $0.01 per share. 250,000,000 shares authorized, 88,649,794 and 89,842,145 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

 

886

 

 

 

898

 

Additional paid-in capital

 

1,692,741

 

 

 

1,777,984

 

Distributions in excess of earnings

 

(445,813

)

 

 

(396,650

)

Accumulated other comprehensive income

 

36,906

 

 

 

40,530

 

Total shareholders' equity

 

1,625,371

 

 

 

1,648,201

 

Noncontrolling interests

 

759,030

 

 

 

740,813

 

Total equity

 

2,384,401

 

 

 

2,389,014

 

Total liabilities and equity

$

6,161,391

 

 

$

6,070,007

 

 

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,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income

$

45,476

 

 

$

48,425

 

 

$

85,868

 

 

$

93,211

 

Add (subtract):

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

56,398

 

 

 

57,581

 

 

 

111,551

 

 

 

115,340

 

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

 

4,315

 

 

 

4,324

 

 

 

8,786

 

 

 

8,170

 

Gain on sale of self storage properties

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,134

)

Distributions to preferred shareholders and unitholders

 

(5,402

)

 

 

(3,652

)

 

 

(9,365

)

 

 

(7,204

)

FFO attributable to subordinated performance unitholders(1)

 

(12,309

)

 

 

(15,746

)

 

 

(24,096

)

 

 

(29,595

)

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

 

88,478

 

 

 

90,932

 

 

 

172,744

 

 

 

177,788

 

Add (subtract):

 

 

 

 

 

 

 

Acquisition costs

 

239

 

 

 

682

 

 

 

1,083

 

 

 

1,235

 

Casualty-related recoveries(2)

 

(522

)

 

 

—

 

 

 

(522

)

 

 

—

 

Loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

758

 

 

 

—

 

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

$

88,195

 

 

$

91,614

 

 

$

174,063

 

 

$

179,023

 

 

 

 

 

 

 

 

 

Weighted average shares and units outstanding - FFO and Core FFO:(3)

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

88,312

 

 

 

91,541

 

 

 

88,902

 

 

 

91,433

 

Weighted average restricted common shares outstanding

 

28

 

 

 

28

 

 

 

26

 

 

 

28

 

Weighted average OP units outstanding

 

38,755

 

 

 

35,390

 

 

 

38,746

 

 

 

35,370

 

Weighted average DownREIT OP unit equivalents outstanding

 

2,120

 

 

 

1,925

 

 

 

2,120

 

 

 

1,925

 

Weighted average LTIP units outstanding

 

523

 

 

 

501

 

 

 

537

 

 

 

552

 

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

 

129,738

 

 

 

129,385

 

 

 

130,331

 

 

 

129,308

 

 

 

 

 

 

 

 

 

FFO per share and unit

$

0.68

 

 

$

0.70

 

 

$

1.32

 

 

$

1.37

 

Core FFO per share and unit

$

0.68

 

 

$

0.71

 

 

$

1.34

 

 

$

1.38

 

(1)

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

(2)

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 statement of operations.

(3)

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(4) 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,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Earnings per share - diluted

$

0.28

 

 

$

0.24

 

 

$

0.56

 

 

$

0.48

 

Impact of the difference in weighted average number of shares(4)

 

(0.09

)

 

 

(0.07

)

 

 

(0.18

)

 

 

(0.14

)

Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method(5)

 

0.12

 

 

 

0.18

 

 

 

0.21

 

 

 

0.33

 

Add real estate depreciation and amortization

 

0.43

 

 

 

0.44

 

 

 

0.85

 

 

 

0.89

 

Add Company's share of unconsolidated real estate venture real estate depreciation and amortization

 

0.03

 

 

 

0.03

 

 

 

0.06

 

 

 

0.06

 

Subtract gain on sale of self storage properties

 

—

 

 

 

—

 

 

 

—

 

 

 

(0.02

)

FFO attributable to subordinated performance unitholders

 

(0.09

)

 

 

(0.12

)

 

 

(0.18

)

 

 

(0.23

)

FFO per share and unit

 

0.68

 

 

 

0.70

 

 

 

1.32

 

 

 

1.37

 

Add acquisition costs

 

—

 

 

 

0.01

 

 

 

0.01

 

 

 

0.01

 

Subtract casualty-related recoveries

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Add loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

0.01

 

 

 

—

 

Core FFO per share and unit

$

0.68

 

 

$

0.71

 

 

$

1.34

 

 

$

1.38

 

(4)

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.

(5)

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(4).

  Net Operating Income(dollars in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income

$

45,476

 

 

$

48,425

 

 

$

85,868

 

 

$

93,211

 

(Subtract) add:

 

 

 

 

 

 

 

Management fees and other revenue

 

(8,587

)

 

 

(7,913

)

 

 

(15,644

)

 

 

(14,462

)

General and administrative expenses

 

14,404

 

 

 

14,702

 

 

 

29,225

 

 

 

28,668

 

Other

 

3,220

 

 

 

525

 

 

 

4,393

 

 

 

995

 

Depreciation and amortization

 

56,705

 

 

 

57,891

 

 

 

112,163

 

 

 

115,963

 

Interest expense

 

39,693

 

 

 

24,448

 

 

 

77,641

 

 

 

47,095

 

Equity in earnings of unconsolidated real estate ventures

 

(1,861

)

 

 

(1,962

)

 

 

(3,539

)

 

 

(3,456

)

Loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

758

 

 

 

—

 

Acquisition costs

 

239

 

 

 

682

 

 

 

1,083

 

 

 

1,235

 

Income tax expense

 

737

 

 

 

730

 

 

 

1,933

 

 

 

1,578

 

Gain on sale of self storage properties

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,134

)

Non-operating (income) expense

 

(196

)

 

 

261

 

 

 

402

 

 

 

373

 

Net Operating Income

$

149,830

 

 

$

137,789

 

 

$

294,283

 

 

$

269,066

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

 

2022

 

Net income

$

45,476

 

 

$

48,425

 

$

85,868

 

 

$

93,211

 

Add:

 

 

 

 

 

 

 

Depreciation and amortization

 

56,705

 

 

 

57,891

 

 

112,163

 

 

 

115,963

 

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

 

4,315

 

 

 

4,324

 

 

8,786

 

 

 

8,170

 

Interest expense

 

39,693

 

 

 

24,448

 

 

77,641

 

 

 

47,095

 

Income tax expense

 

737

 

 

 

730

 

 

1,933

 

 

 

1,578

 

Loss on early extinguishment of debt

 

—

 

 

 

—

 

 

758

 

 

 

—

 

EBITDA

 

146,926

 

 

 

135,818

 

 

287,149

 

 

 

266,017

 

Add (subtract):

 

 

 

 

 

 

 

Acquisition costs

 

239

 

 

 

682

 

 

1,083

 

 

 

1,235

 

Gain on sale of self storage properties

 

—

 

 

 

—

 

 

—

 

 

 

(2,134

)

Casualty-related recoveries

 

(522

)

 

 

—

 

 

(522

)

 

 

—

 

Equity-based compensation expense

 

1,677

 

 

 

1,580

 

 

3,326

 

 

 

3,124

 

Adjusted EBITDA

$

148,320

 

 

$

138,080

 

$

291,036

 

 

$

268,242

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230807059088/en/

National Storage Affiliates Trust Investor/Media Relations George Hoglund, CFA Vice President - Investor Relations 720.630.2160 ghoglund@nsareit.net