NSA National Storage Affiliates Trust

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

Third Quarter 2023 Highlights

• Reported net income of $43.1 million for the third quarter of 2023, an increase of 7.2% compared to the third quarter of 2022. Reported diluted earnings per share of $0.26 for the third quarter of 2023 compared to $0.21 for the third quarter of 2022.

• Reported core funds from operations ("Core FFO") of $85.8 million, or $0.67 per share for the third quarter of 2023, a decrease of 6.9% per share compared to the third quarter of 2022. An increase in net operating income (“NOI”) of $6.0 million was more than offset by an increase in interest expense of $14.2 million, primarily due to an increase in average effective interest rates.

• Reported a decrease in same store NOI of 0.1% for the third quarter of 2023 compared to the same period in 2022, driven by a 1.1% increase in same store total revenues, which was more than offset by an increase of 4.2% in same store property operating expenses.

• Reported same store period-end occupancy of 88.5% as of September 30, 2023, a decrease of 360 basis points compared to September 30, 2022.

• Acquired two wholly-owned self storage properties for approximately $30.1 million during the third quarter of 2023. Consideration for these acquisitions included the issuance of $16.4 million of OP equity.

• Repurchased 6,360,994 of the Company's common shares for approximately $213.4 million under the previously announced share repurchase program.

Highlights Subsequent to Quarter-End

• Issued $250.0 million of senior unsecured notes with a weighted average interest rate of 6.58% and a weighted average maturity of 5.8 years in a private placement with institutional investors.

• Acquired two wholly-owned self storage properties for approximately $25.4 million. Consideration for these acquisitions included approximately $17.1 million of net cash and OP equity of approximately $8.1 million.

David Cramer, President and Chief Executive Officer, commented, “Despite the current headwinds in self storage demand, our team did a good job navigating and responding to this dynamic environment. As a result of these efforts, we’ve maintained our guidance ranges for full-year 2023.”

Mr. Cramer further commented, “We’re also pleased to have completed our $250 million debt private placement prior to the recent increase in debt costs. This transaction demonstrates our healthy access to capital and commitment to enhancing our balance sheet through reducing our floating rate exposure and increasing our weighted average maturity.”

Financial Results

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

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

Growth

 

 

2023

 

 

 

2022

 

Growth

Net income

$

43,064

$

40,177

7.2

%

$

128,932

 

$

133,388

(3.3

)%

 

 

 

 

 

 

 

Funds From Operations ("FFO")(1)

$

85,418

$

86,215

(0.9

)%

$

258,161

 

$

264,003

(2.2

)%

Add back acquisition costs

 

341

 

1,142

(70.1

)%

 

1,424

 

 

2,377

(40.1

)%

Add (Subtract) casualty-related expenses (recoveries)(2)

 

—

 

5,754

—

%

 

(522

)

 

5,754

(109.1

)%

Add loss on early extinguishment of debt

 

—

 

—

—

%

 

758

 

 

—

—

%

Core FFO(1)

$

85,759

$

93,111

(7.9

)%

$

259,821

 

$

272,134

(4.5

)%

 

 

 

 

 

 

 

Earnings per share - basic

$

0.28

$

0.21

33.3

%

$

0.83

 

$

0.68

22.1

%

Earnings per share - diluted

$

0.26

$

0.21

23.8

%

$

0.77

 

$

0.68

13.2

%

 

 

 

 

 

 

 

FFO per share and unit(1)

$

0.67

$

0.67

—

%

$

1.99

 

$

2.04

(2.5

)%

Core FFO per share and unit(1)

$

0.67

$

0.72

(6.9

)%

$

2.01

 

$

2.10

(4.3

)%

(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 increased $2.9 million for the third quarter of 2023 and decreased $4.5 million for the nine months ended September 30, 2023 ("year-to-date") as compared to the same periods in 2022. The increase in net income in the third quarter of 2023 was primarily due to an increase in NOI of $6.0 million and $5.8 million of casualty-related expense in the third quarter of 2022 that did not recur in 2023, partially offset by an increase in interest expense of $14.2 million. The year-to-date decrease in net income was a result of an increase in interest expense of $44.7 million for the nine months ended September 30, 2023, partially offset by an increase in NOI of $31.2 million year-to-date driven primarily from additional NOI generated from the 18 wholly-owned self storage properties acquired during 2023 and 45 self storage properties acquired during 2022, that were owned during the entire nine months ended September 30, 2023.

The decreases in FFO and Core FFO for the third quarter of 2023 and year-to-date were the result of an increase in NOI of 4.2% and 7.5%, respectively, which were more than offset by an increase in interest expense of 49.2% and 58.9%, respectfully, as compared to the same periods in 2022.

Same Store Operating Results (834 Stores)

($ in thousands, except per square foot data)

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

Growth

 

 

2023

 

 

 

2022

 

 

Growth

Total revenues

$

188,700

 

$

186,718

 

1.1

%

$

559,323

 

$

542,199

 

3.2

%

Property operating expenses

 

52,403

 

 

50,285

 

4.2

%

 

153,017

 

 

146,306

 

4.6

%

Net Operating Income (NOI)

$

136,297

 

$

136,433

 

(0.1

)%

$

406,306

 

$

395,893

 

2.6

%

NOI Margin

 

72.2

%

 

73.1

%

(0.9

)%

 

72.6

%

 

73.0

%

(0.4

)%

 

 

 

 

 

 

 

Average Occupancy

 

89.5

%

 

93.5

%

(4.0

)%

 

89.6

%

 

93.7

%

(4.1

)%

Average Annualized Rental Revenue Per Occupied Square Foot

$

15.51

 

$

14.77

 

5.0

%

$

15.31

 

$

14.33

 

6.8

%

Year-over-year same store total revenues increased 1.1% for the third quarter of 2023 and 3.2% year-to-date as compared to the same period in 2022. The increase for the third quarter was driven primarily by a 5.0% increase in average annualized rental revenue per occupied square foot, partially offset by a 4.0% decrease in average occupancy. The year-to-date same store total revenue increase was driven primarily by a 6.8% increase in average annualized rental revenue per occupied square foot, partially offset by a 4.1% decrease in average occupancy. Markets which generated above portfolio average same store total revenue growth for the third quarter of 2023 include: Riverside, McAllen and Oklahoma City. Markets which generated below portfolio average same store total revenue growth for the third quarter of 2023 include: Las Vegas, Phoenix and San Antonio.

Year-over-year same store property operating expenses increased 4.2% for the third quarter of 2023 and 4.6% year-to-date as compared to the same periods in 2022. The increases primarily resulted from increases in marketing and insurance expense, partially offset by decreases in personnel expense.

Investment Activity

During the third quarter, NSA invested $30.1 million in the acquisition of two self storage properties sourced from our captive pipeline, consisting of approximately 144,200 rentable square feet configured in approximately 1,100 storage units. Total consideration for these acquisitions included approximately $13.7 million of net cash, $9.2 million of subordinated performance units, $6.2 million of 6.000% Series A-1 cumulative redeemable preferred units, $0.9 million of OP units and LTIP units and the assumption of approximately $0.1 million of other liabilities.

Balance Sheet

During the third quarter, NSA repurchased 6,360,994 of the Company's common shares for approximately $213.4 million under the previously announced share repurchase program. Under the program, the Company has remaining capacity of approximately $27.6 million out of a total of $400.0 million authorized.

On October 5, 2023, NSA issued $65.0 million of 6.46% senior unsecured notes due October 5, 2026, $100.0 million of 6.55% senior unsecured notes due October 5, 2028, $35.0 million of 6.66% senior unsecured notes due October 5, 2030 and $50.0 million of 6.73% senior unsecured notes due October 5, 2033 in a private placement with institutional investors. The Company used the proceeds to repay outstanding amounts on its revolving line of credit and for general corporate purposes. In Schedule 4 of the supplemental financial information, the Company has presented its debt summary as of September 30, 2023, giving pro forma effect for the unsecured notes and repayment of outstanding amounts on the line of credit.

Common Share Dividends

On August 17, 2023, NSA's Board of Trustees declared a quarterly cash dividend of $0.56 per common share, representing a 1.8% increase from the third quarter 2022. The third quarter 2023 dividend was paid on September 29, 2023 to shareholders of record as of September 15, 2023.

2023 Guidance

NSA reaffirms its previously provided Core FFO guidance estimates and related assumptions for the year ended December 31, 2023.

 

Current Ranges for Full Year 2023

 

Actual Results for Full Year 2022

 

Low

 

High

 

Core FFO per share(1)

$

2.63

 

$

2.69

 

$

2.81

 

 

 

 

 

Same store operations(2)

 

 

 

Total revenue growth

 

1.50

%

 

2.75

%

 

12.1

%

Property operating expenses growth

 

4.50

%

 

5.75

%

 

4.8

%

NOI growth

 

0.25

%

 

1.75

%

 

14.9

%

 

 

 

 

General and administrative expenses

 

 

 

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

$

51.0

 

$

53.0

 

$

53.1

 

Equity-based compensation, in millions

$

6.5

 

$

7.0

 

$

6.3

 

 

 

 

 

Management fees and other revenue, in millions

$

32.0

 

$

34.0

 

$

27.6

 

Core FFO from unconsolidated real estate ventures, in millions

$

23.5

 

$

25.0

 

$

24.8

 

 

 

 

 

Subordinated performance unit distributions, in millions

$

46.0

 

$

48.0

 

$

58.8

 

 

 

 

 

Acquisitions of self storage properties, in millions

$

200.0

 

$

300.0

 

$

569.2

 

 

 

Current Ranges for Full Year 2023

 

Low

 

High

Earnings per share - diluted

$

1.02

 

$

1.05

 

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

 

0.11

 

 

0.12

 

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

 

1.83

 

 

1.87

 

FFO attributable to subordinated unitholders

 

(0.35

)

 

(0.37

)

Add loss on early extinguishment of debt

 

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

$

2.63

 

$

2.69

 

(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 November 1, 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 Thursday, November 2, 2023 to discuss its third 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: Thursday, November 2, 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 upcoming Nareit REITworld 2023 Annual Conference on November 14 – 16, 2023 in Los Angeles, California.

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, 2023, the Company held ownership interests in and operated 1,119 self storage properties located in 42 states and Puerto Rico with approximately 73.0 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.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 September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

REVENUE

 

 

 

 

Rental revenue

$

201,833

 

$

193,724

 

$

595,273

 

$

552,829

 

Other property-related revenue

 

7,764

 

 

6,400

 

 

22,184

 

 

18,907

 

Management fees and other revenue

 

9,550

 

 

6,649

 

 

25,194

 

 

21,111

 

Total revenue

 

219,147

 

 

206,773

 

 

642,651

 

 

592,847

 

OPERATING EXPENSES

 

 

 

 

Property operating expenses

 

58,581

 

 

55,132

 

 

172,158

 

 

157,678

 

General and administrative expenses

 

15,100

 

 

15,298

 

 

44,325

 

 

43,966

 

Depreciation and amortization

 

55,842

 

 

59,631

 

 

168,005

 

 

175,594

 

Other

 

4,138

 

 

6,356

 

 

8,531

 

 

7,351

 

Total operating expenses

 

133,661

 

 

136,417

 

 

393,019

 

 

384,589

 

OTHER (EXPENSE) INCOME

 

 

 

 

Interest expense

 

(43,065

)

 

(28,871

)

 

(120,706

)

 

(75,966

)

Loss on early extinguishment of debt

 

—

 

 

—

 

 

(758

)

 

—

 

Equity in earnings of unconsolidated real estate ventures

 

1,930

 

 

2,134

 

 

5,469

 

 

5,590

 

Acquisition costs

 

(341

)

 

(1,142

)

 

(1,424

)

 

(2,377

)

Non-operating income (expense)

 

(24

)

 

(226

)

 

(426

)

 

(599

)

Gain on sale of self storage properties

 

—

 

 

—

 

 

—

 

 

2,134

 

Other expense, net

 

(41,500

)

 

(28,105

)

 

(117,845

)

 

(71,218

)

Income before income taxes

 

43,986

 

 

42,251

 

 

131,787

 

 

137,040

 

Income tax expense

 

(922

)

 

(2,074

)

 

(2,855

)

 

(3,652

)

Net income

 

43,064

 

 

40,177

 

 

128,932

 

 

133,388

 

Net income attributable to noncontrolling interests

 

(13,827

)

 

(17,966

)

 

(41,290

)

 

(60,911

)

Net income attributable to National Storage Affiliates Trust

 

29,237

 

 

22,211

 

 

87,642

 

 

72,477

 

Distributions to preferred shareholders

 

(5,110

)

 

(3,382

)

 

(13,908

)

 

(10,043

)

Net income attributable to common shareholders

$

24,127

 

$

18,829

 

$

73,734

 

$

62,434

 

 

 

 

 

 

Earnings per share - basic

$

0.28

 

$

0.21

 

$

0.83

 

$

0.68

 

Earnings per share - diluted

$

0.26

 

$

0.21

 

$

0.77

 

$

0.68

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

87,004

 

 

91,471

 

 

88,263

 

 

91,446

 

Weighted average shares outstanding - diluted

 

146,118

 

 

91,471

 

 

147,610

 

 

91,446

 

 

National Storage Affiliates Trust

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(unaudited)

 

 

 

 

 

September 30,

 

December 31,

 

 

2023

 

 

 

2022

 

ASSETS

 

 

Real estate

 

 

Self storage properties

$

6,616,687

 

$

6,391,572

 

Less accumulated depreciation

 

(930,885

)

 

(772,661

)

Self storage properties, net

 

5,685,802

 

 

5,618,911

 

Cash and cash equivalents

 

58,846

 

 

35,312

 

Restricted cash

 

1,801

 

 

6,887

 

Debt issuance costs, net

 

8,976

 

 

1,393

 

Investment in unconsolidated real estate ventures

 

215,150

 

 

227,441

 

Other assets, net

 

171,530

 

 

156,228

 

Operating lease right-of-use assets

 

23,067

 

 

23,835

 

Total assets

$

6,165,172

 

$

6,070,007

 

LIABILITIES AND EQUITY

 

 

Liabilities

 

 

Debt financing

$

3,846,976

 

$

3,551,179

 

Accounts payable and accrued liabilities

 

109,361

 

 

80,377

 

Interest rate swap liabilities

 

—

 

 

483

 

Operating lease liabilities

 

25,095

 

 

25,741

 

Deferred revenue

 

27,009

 

 

23,213

 

Total liabilities

 

4,008,441

 

 

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 September 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 September 30, 2023

 

115,212

 

 

—

 

Common shares of beneficial interest, par value $0.01 per share. 250,000,000 shares authorized, 82,955,797 and 89,842,145 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

830

 

 

898

 

Additional paid-in capital

 

1,539,279

 

 

1,777,984

 

Distributions in excess of earnings

 

(468,611

)

 

(396,650

)

Accumulated other comprehensive income

 

44,402

 

 

40,530

 

Total shareholders' equity

 

1,456,551

 

 

1,648,201

 

Noncontrolling interests

 

700,180

 

 

740,813

 

Total equity

 

2,156,731

 

 

2,389,014

Total liabilities and equity

$

6,165,172

$

6,070,007

 

 

 

 

 

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,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income

$

43,064

 

$

40,177

 

$

128,932

 

$

133,388

 

Add (subtract):

 

 

 

 

Real estate depreciation and amortization

 

55,528

 

 

59,303

 

 

167,078

 

 

174,643

 

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

 

4,287

 

 

4,441

 

 

13,073

 

 

12,611

 

Gain on sale of self storage properties

 

—

 

 

—

 

 

—

 

 

(2,134

)

Distributions to preferred shareholders and unitholders

 

(5,393

)

 

(3,653

)

 

(14,758

)

 

(10,857

)

FFO attributable to subordinated performance unitholders(1)

 

(12,068

)

 

(14,053

)

 

(36,164

)

 

(43,648

)

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

 

85,418

 

 

86,215

 

 

258,161

 

 

264,003

 

Add (subtract):

 

 

 

 

Acquisition costs

 

341

 

 

1,142

 

 

1,424

 

 

2,377

 

Casualty-related expense (recoveries)(2)

 

—

 

 

5,754

 

 

(522

)

 

5,754

 

Loss on early extinguishment of debt

 

—

 

 

—

 

 

758

 

 

—

 

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

$

85,759

 

$

93,111

 

$

259,821

 

$

272,134

 

 

 

 

 

 

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

 

 

 

 

Weighted average shares outstanding - basic

 

87,004

 

 

91,471

 

 

88,263

 

 

91,446

 

Weighted average restricted common shares outstanding

 

25

 

 

26

 

 

26

 

 

27

 

Weighted average OP units outstanding

 

38,030

 

 

35,334

 

 

38,504

 

 

35,361

 

Weighted average DownREIT OP unit equivalents outstanding

 

2,120

 

 

1,925

 

 

2,120

 

 

1,925

 

Weighted average LTIP units outstanding

 

562

 

 

477

 

 

545

 

 

526

 

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

 

127,741

 

 

129,233

 

 

129,458

 

 

129,285

 

 

 

 

 

 

FFO per share and unit

$

0.67

 

$

0.67

 

$

1.99

 

$

2.04

 

Core FFO per share and unit

$

0.67

 

$

0.72

 

$

2.01

 

$

2.10

 

(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 September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Earnings per share - diluted

$

0.26

 

$

0.21

 

$

0.77

 

$

0.68

 

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

 

0.04

 

 

(0.06

)

 

0.11

 

 

(0.20

)

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

 

—

 

 

0.14

 

 

—

 

 

0.47

 

Add real estate depreciation and amortization

 

0.44

 

 

0.46

 

 

1.29

 

 

1.35

 

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

 

0.03

 

 

0.03

 

 

0.10

 

 

0.10

 

Subtract gain on sale of self storage properties

 

—

 

 

—

 

 

—

 

 

(0.02

)

FFO attributable to subordinated performance unitholders

 

(0.10

)

 

(0.11

)

 

(0.28

)

 

(0.34

)

FFO per share and unit

 

0.67

 

 

0.67

 

 

1.99

 

 

2.04

 

Add acquisition costs

 

—

 

 

0.01

 

 

0.01

 

 

0.02

 

Add casualty-related expenses

 

—

 

 

0.04

 

 

—

 

 

0.04

 

Add loss on early extinguishment of debt

 

—

 

 

—

 

 

0.01

 

 

—

 

Core FFO per share and unit

$

0.67

 

$

0.72

 

$

2.01

 

$

2.10

 

(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 September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income

$

43,064

 

$

40,177

 

$

128,932

 

$

133,388

 

(Subtract) add:

 

 

 

 

Management fees and other revenue

 

(9,550

)

 

(6,649

)

 

(25,194

)

 

(21,111

)

General and administrative expenses

 

15,100

 

 

15,298

 

 

44,325

 

 

43,966

 

Other

 

4,138

 

 

6,356

 

 

8,531

 

 

7,351

 

Depreciation and amortization

 

55,842

 

 

59,631

 

 

168,005

 

 

175,594

 

Interest expense

 

43,065

 

 

28,871

 

 

120,706

 

 

75,966

 

Equity in earnings of unconsolidated real estate ventures

 

(1,930

)

 

(2,134

)

 

(5,469

)

 

(5,590

)

Loss on early extinguishment of debt

 

—

 

 

—

 

 

758

 

 

—

 

Acquisition costs

 

341

 

 

1,142

 

 

1,424

 

 

2,377

 

Income tax expense

 

922

 

 

2,074

 

 

2,855

 

 

3,652

 

Gain on sale of self storage properties

 

—

 

 

—

 

 

—

 

 

(2,134

)

Non-operating expense

 

24

 

 

226

 

 

426

 

 

599

 

Net Operating Income

$

151,016

 

$

144,992

 

$

445,299

 

$

414,058

 

 

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

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

 

2022

 

Net income

$

43,064

$

40,177

$

128,932

 

$

133,388

 

Add:

 

 

 

 

Depreciation and amortization

 

55,842

 

59,631

 

168,005

 

 

175,594

 

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

 

4,287

 

4,441

 

13,073

 

 

12,611

 

Interest expense

 

43,065

 

28,871

 

120,706

 

 

75,966

 

Income tax expense

 

922

 

2,074

 

2,855

 

 

3,652

 

Loss on early extinguishment of debt

 

—

 

—

 

758

 

 

—

 

EBITDA

 

147,180

 

135,194

 

434,329

 

 

401,211

 

Add (subtract):

 

 

 

 

Acquisition costs

 

341

 

1,142

 

1,424

 

 

2,377

 

Gain on sale of self storage properties

 

—

 

—

 

—

 

 

(2,134

)

Casualty-related expenses (recoveries)

 

—

 

5,754

 

(522

)

 

5,754

 

Equity-based compensation expense

 

1,702

 

1,546

 

5,028

 

 

4,670

 

Adjusted EBITDA

$

149,223

$

143,636

$

440,259

 

$

411,878

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231101663888/en/

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