NSA National Storage Affiliates Trust

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

Fourth Quarter 2023 Highlights

• Reported net income of $108.1 million for the fourth quarter of 2023, an increase of 114.5% compared to the fourth quarter of 2022. Reported diluted earnings per share of $0.72 for the fourth quarter of 2023 compared to $0.31 for the fourth quarter of 2022.

• Reported core funds from operations ("Core FFO") of $83.6 million, or $0.68 per share for the fourth quarter of 2023, a decrease of 4.2% per share compared to the fourth quarter of 2022.

• Reported a decrease in same store net operating income ("NOI") of 1.6% for the fourth quarter of 2023 compared to the same period in 2022, driven by a negligible increase in same store total revenues, which was more than offset by an increase of 4.8% in same store property operating expenses.

• Reported same store period-end occupancy of 86.0% as of December 31, 2023, a decrease of 410 basis points compared to December 31, 2022.

• Acquired two wholly-owned self storage properties for approximately $25.0 million during the fourth quarter of 2023. Consideration for these acquisitions included the issuance of $8.1 million of OP equity.

• As previously announced, 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.

• Repurchased 852,771 of the Company's common shares for approximately $27.4 million under the previously announced share repurchase program. Approved a new share repurchase program authorizing, but not obligating, the repurchase of up to $275.0 million of NSA's common shares of beneficial interest from time to time.

• Entered into an agreement to sell 71 wholly-owned self storage properties for approximately $540.0 million during the fourth quarter of 2023. 32 of the properties were sold in December 2023, while the remaining 39 properties are classified as held for sale as of December 31, 2023, of which 38 were sold in February 2024.

• Entered into a joint venture (the "2023 Joint Venture") agreement between a subsidiary of NSA (the "2023 JV NSA Member") and a state pension fund advised by Heitman Capital Management LLC (the "2023 JV Investor," together with the 2023 JV NSA Member, the "2023 JV Members"), to acquire and operate self storage properties. The 2023 Joint Venture agreement provides for equity capital contributions from the 2023 JV Members of up to $400 million over a twenty-four month period starting in December 2023, with the 2023 JV Investor holding a 75% ownership interest and the 2023 JV NSA Member holding a 25% ownership interest. A subsidiary of NSA will serve as the manager of the new venture. As of the date of this release, there have been no properties acquired by the 2023 Joint Venture.

Full Year 2023 Highlights

• Reported net income of $237.0 million for full year 2023, an increase of 29.0% compared to full year 2022. Reported diluted earnings per share of $1.48 for full year 2023 compared to $0.99 for full year 2022.

• Reported Core FFO of $343.4 million, or $2.69 per share for full year 2023, a decrease of 4.3% per share compared to full year 2022.

• Reported an increase in same store NOI of 1.6% for full year 2023 compared to full year 2022, driven by a 2.4% increase in same store total revenues partially offset by an increase of 4.7% in same store property operating expenses.

• Acquired 20 wholly-owned self storage properties for approximately $229.5 million during full year 2023. Consideration for these acquisitions included the net issuance of $113.2 million of 6.000% Series B Cumulative Redeemable Preferred Shares and $67.3 million of OP equity.

• Repurchased 8,836,639 of the Company's common shares for approximately $310.2 million under the previously announced share repurchase program.

Highlights Subsequent to Quarter-End

• Entered into a new joint venture (the "2024 Joint Venture") agreement between a subsidiary of NSA (the "2024 JV NSA Member") and a subsidiary of Heitman Capital Management LLC (the "2024 JV Investor" and together with the 2024 JV NSA Member, the "2024 JV Members"), with NSA as a 25% owner and the 2024 JV Investor as a 75% owner. NSA contributed 56 wholly-owned properties, which were classified as held for sale as of December 31, 2023, for approximately $346.5 million, to the 2024 Joint Venture. A subsidiary of NSA will serve as the manager of the 2024 Joint Venture. As a result of assets sold or held for sale at year-end, our 2023 same store pool has been reset to 724 stores.

• Through February 23, 2024, repurchased 2,479,388 of the Company's common shares for approximately $92.5 million under the previously announced share repurchase program.

• Repaid in full the outstanding borrowings under the revolving line of credit and $130.0 million of Term Loan Tranche B. After giving effect to these repayments, on a pro forma basis as of December 31, 2023, our remaining debt had a weighted average effective interest rate of 4.03% and a weighted average maturity of 5.34 years.

David Cramer, President and Chief Executive Officer, commented, “We are pleased with our results this quarter, as we balanced rate and occupancy to drive revenues, while remaining focused on cost efficiencies across our platform. Looking back at the full year, I’m very proud of our team’s focus on People, Process and Platform initiatives, which we believe will enhance our results going forward.”

Mr. Cramer further commented, “We’ve made significant progress on our strategic initiatives during the fourth quarter and thus far in 2024, including the sale of approximately $540 million of properties, the formation of two new joint ventures, the repurchase of approximately $120 million of common shares, and fully repaying our line of credit as of February 23, 2024. These key steps improve our portfolio quality and concentration, while putting us in an attractive position to take advantage of external growth opportunities as they arise.”

Financial Results

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

Three Months Ended December 31,

 

Year Ended December 31,

 

 

2023

 

 

2022

 

Growth

 

 

2023

 

 

 

2022

 

Growth

Net income

$

108,056

 

$

50,377

 

114.5

%

 

$

236,988

 

 

$

183,765

 

29.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations ("FFO")(1)

$

83,369

 

$

89,890

 

(7.3

)%

 

$

341,528

 

 

$

353,893

 

(3.5

)%

Add back acquisition costs

 

235

 

 

368

 

(36.1

)%

 

 

1,659

 

 

 

2,745

 

(39.6

)%

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

 

—

 

 

634

 

—

%

 

 

(522

)

 

 

6,388

 

(108.2

)%

Add loss on early extinguishment of debt

 

—

 

 

—

 

—

%

 

 

758

 

 

 

—

 

—

%

Core FFO(1)

$

83,604

 

$

90,892

 

(8.0

)%

 

$

343,423

 

 

$

363,026

 

(5.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

$

0.77

 

$

0.31

 

148.4

%

 

$

1.58

 

 

$

0.99

 

59.6

%

Earnings per share - diluted

$

0.72

 

$

0.31

 

132.3

%

 

$

1.48

 

 

$

0.99

 

49.5

%

 

 

 

 

 

 

 

 

 

 

 

 

FFO per share and unit(1)

$

0.68

 

$

0.70

 

(2.9

)%

 

$

2.67

 

 

$

2.74

 

(2.6

)%

Core FFO per share and unit(1)

$

0.68

 

$

0.71

 

(4.2

)%

 

$

2.69

 

 

$

2.81

 

(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 in 2023 relate to casualty-related expenses incurred during 2022.

Net income increased $57.7 million for the fourth quarter of 2023 and increased by $53.2 million for the year ended December 31, 2023 ("year-to-date") as compared to the same periods in 2022. The increases resulted primarily from a gain on the sale of 32 self storage properties during the fourth quarter of 2023 and additional NOI generated from the 20 wholly-owned self storage properties acquired during the year ended December 31, 2023, partially offset by increases in interest expense.

The decreases in FFO and Core FFO for the fourth quarter of 2023 and year-to-date were primarily the result of increases in interest expense of 31.2% and 50.2%, respectively, partially offset by an increase in NOI of 0.3% and 5.6%, respectively, as compared to the same periods in 2022.

Same Store Operating Results (724 Stores)

($ in thousands, except per square foot data)

Three Months Ended December 31,

 

Year Ended December 31,

 

 

2023

 

 

 

2022

 

 

Growth

 

 

2023

 

 

 

2022

 

 

Growth

Total revenues

$

166,905

 

 

$

166,832

 

 

—

%

 

$

670,527

 

 

$

654,529

 

 

2.4

%

Property operating expenses

 

43,932

 

 

 

41,902

 

 

4.8

%

 

 

178,006

 

 

 

169,987

 

 

4.7

%

Net Operating Income (NOI)

$

122,973

 

 

$

124,930

 

 

(1.6

)%

 

$

492,521

 

 

$

484,542

 

 

1.6

%

NOI Margin

 

73.7

%

 

 

74.9

%

 

(1.2

)%

 

 

73.5

%

 

 

74.0

%

 

(0.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

Average Occupancy

 

87.2

%

 

 

91.0

%

 

(3.8

)%

 

 

89.1

%

 

 

93.1

%

 

(4.0

)%

Average Annualized Rental Revenue Per Occupied Square Foot

$

16.05

 

 

$

15.49

 

 

3.6

%

 

$

15.80

 

 

$

14.89

 

 

6.1

%

Year-over-year same store total revenues remained relatively consistent for the fourth quarter of 2023 and increased 2.4% year-to-date as compared to the same periods in 2022. The fourth quarter same store total revenue result was driven primarily by a 3.6% increase in average annualized rental revenue per occupied square foot offset by a 380 basis point decrease in average occupancy. The year-to-date increase was driven primarily by a 6.1% increase in average annualized rental revenue per occupied square foot, partially offset by a 400 basis point decrease in average occupancy. Markets which generated above portfolio average same store total revenue growth include: Riverside-San Bernardino, Atlanta, and Oklahoma City. Markets which generated below portfolio average same store total revenue growth include: Phoenix, New Orleans and Las Vegas.

Year-over-year same store property operating expenses increased 4.8% for the fourth quarter of 2023 and 4.7% year-to-date as compared to the same periods in 2022. The increases primarily resulted from increases in marketing, insurance, and property tax expense offset by a decrease in personnel costs.

Disposition and Investment Activity

During the fourth quarter, NSA invested $25.0 million in the acquisition of two wholly-owned self storage properties consisting of approximately 113,000 rentable square feet configured in approximately 900 storage units. Total consideration for these acquisitions included approximately $17.0 million of net cash, $4.0 million of subordinated performance units, $3.8 million of 6.000% Series A-1 cumulative redeemable preferred units and $0.2 million of LTIP units.

During the fourth quarter, NSA entered into an agreement to sell 71 wholly-owned self storage properties consisting of approximately 4.4 million rentable square feet configured in approximately 34,000 storage units for approximately $540.0 million, before disposition costs and credits (the "Portfolio Sale"). The agreement provides for separate disposition dates with 32 self storage properties, consisting of approximately 2.0 million rentable square feet configured in approximately 16,000 storage units for approximately $263.2 million, sold in December 2023, and 39 self storage properties, consisting of approximately 2.4 million rentable square feet configured in approximately 18,000 storage units for approximately $266.8 million, to be sold in 2024, of which 38 were sold in February.

During the fourth quarter, NSA entered into an agreement to form the 2024 Joint Venture with the 2024 JV Investor. On February 13, 2024, NSA contributed to the 2024 Joint Venture 56 self storage properties located across seven states, consisting of approximately 3.2 million rentable square feet configured in over 24,000 storage units for approximately $346.5 million. The 2024 Joint Venture was capitalized with approximately $140.8 million in equity (approximately $35.2 million from NSA in exchange for a 25% ownership interest and approximately $105.6 million from the 2024 JV Investor in exchange for a 75% ownership interest) and proceeds from a $210.0 million interest-only secured debt financing with an interest rate of 6.05% per annum and a term of five years. All of the properties in the 2024 Joint Venture will continue to be operated by NSA's management platform.

The Portfolio Sale and 2024 Joint Venture contribution generated aggregate net proceeds to NSA of approximately $835 million, which NSA used to fully pay down its revolving line of credit and $130.0 million of Term Loan Tranche B and for general corporate purposes.

Balance Sheet

During the fourth quarter, NSA repurchased 852,771 of its common shares for approximately $27.4 million under the previously announced share repurchase program. For the full year 2023, the Company repurchased 8,836,639 shares for approximately $310.2 million. On December 1, 2023, NSA approved a new share repurchase program authorizing, but not obligating, the repurchase of up to $275.0 million of its common shares of beneficial interest from time to time. NSA expects to acquire the common shares through open market or privately negotiated transactions. The timing and amount of repurchase transactions, if any, will be determined by NSA's management based on its evaluation of market conditions, share price, legal requirements and other factors.

Common Share Dividends

On November 8, 2023, NSA's Board of Trustees declared a quarterly cash dividend of $0.56 per common share, representing a 1.8% increase from the fourth quarter 2022. The fourth quarter 2023 dividend was paid on December 29, 2023 to shareholders of record as of December 15, 2023.

For full year 2023, NSA's Board of Trustees declared cash dividends of $2.23 per common share, representing a 3.7% increase from 2022.

2024 Guidance

The following table outlines NSA's Core FFO per share guidance estimates and related assumptions for the year ended December 31, 2024.

 

Ranges for Full Year 2024

 

Actual Results for Full Year 2023

 

Low

 

High

 

Core FFO per share(1)

$

2.40

 

$

2.56

 

$

2.69

 

 

 

 

 

Same store operations(2)

 

 

 

Total revenue growth

 

(4.0

)%

 

0.0

%

 

2.4

%

Property operating expenses growth

 

3.0

%

 

5.0

%

 

4.7

%

NOI growth

 

(6.0

)%

 

(2.0

)%

 

1.6

%

 

 

 

 

General and administrative expenses

 

 

 

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

$

54.5

 

$

56.5

 

$

52.6

 

Equity-based compensation, in millions

$

7.25

 

$

7.75

 

$

6.7

 

 

 

 

 

Management fees and other revenue, in millions

$

32.0

 

$

34.0

 

$

34.4

 

Core FFO from unconsolidated real estate ventures, in millions

$

23.5

 

$

25.5

 

$

24.6

 

 

 

 

 

Subordinated performance unit distributions, in millions

$

40.0

 

$

44.0

 

$

49.0

 

 

 

 

 

Acquisitions of self storage properties, in millions

$

100.0

 

$

300.0

 

$

229.5

 

 

 

Ranges for Full Year 2024

 

Low

 

High

Earnings per share - diluted

$

1.43

 

 

$

1.59

 

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

 

0.08

 

 

 

0.02

 

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

 

1.73

 

 

 

1.83

 

FFO attributable to subordinated unitholders

 

(0.34

)

 

 

(0.38

)

Less gain on sale of self storage properties

 

(0.51

)

 

 

(0.51

)

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

 

0.01

 

 

 

0.01

 

Core FFO per share and unit

$

2.40

 

 

$

2.56

 

(1)

The table above provides a reconciliation of the range of estimated earnings per share - diluted to estimated Core FFO per share and unit.

(2)

2024 guidance reflects NSA's 2024 same store pool comprising 776 stores. 2023 actual results reflect NSA's 2023 same store pool comprising 724 stores.

Supplemental Financial Information

The full text of this earnings release and supplemental financial information, including certain financial information referenced in this release, are available on NSA's website at http://ir.nationalstorageaffiliates.com/quarterly-reporting and as exhibit 99.1 to the Company's Form 8-K furnished to the SEC on February 28, 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 Time on Thursday, February 29, 2024 to discuss its fourth 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, February 29, 2024, 1:00 pm ET

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 Citi's 2024 Global Property CEO Conference on March 3 - 6, 2024 in Hollywood, 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 December 31, 2023, the Company held ownership interests in and operated 1,050 self storage properties, located in 42 states and Puerto Rico with approximately 68.6 million rentable square feet, which excludes 39 self storage properties classified as held for sale to be sold to a third party. 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, 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 December 31,

 

Year Ended December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

REVENUE

 

 

 

 

 

 

 

Rental revenue

$

198,693

 

 

$

195,985

 

 

$

793,966

 

 

$

748,814

 

Other property-related revenue

 

7,502

 

 

 

6,224

 

 

 

29,686

 

 

 

25,131

 

Management fees and other revenue

 

9,217

 

 

 

6,513

 

 

 

34,411

 

 

 

27,624

 

Total revenue

 

215,412

 

 

 

208,722

 

 

 

858,063

 

 

 

801,569

 

OPERATING EXPENSES

 

 

 

 

 

 

 

Property operating expenses

 

56,828

 

 

 

53,347

 

 

 

228,986

 

 

 

211,025

 

General and administrative expenses

 

14,956

 

 

 

15,345

 

 

 

59,281

 

 

 

59,311

 

Depreciation and amortization

 

53,988

 

 

 

57,564

 

 

 

221,993

 

 

 

233,158

 

Other

 

2,577

 

 

 

1,186

 

 

 

11,108

 

 

 

8,537

 

Total operating expenses

 

128,349

 

 

 

127,442

 

 

 

521,368

 

 

 

512,031

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

Interest expense

 

(45,441

)

 

 

(34,633

)

 

 

(166,147

)

 

 

(110,599

)

Loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

(758

)

 

 

—

 

Equity in earnings of unconsolidated real estate ventures

 

2,084

 

 

 

2,155

 

 

 

7,553

 

 

 

7,745

 

Acquisition costs

 

(235

)

 

 

(368

)

 

 

(1,659

)

 

 

(2,745

)

Non-operating expense

 

(590

)

 

 

(352

)

 

 

(1,016

)

 

 

(951

)

Gain on sale of self storage properties

 

63,910

 

 

 

3,332

 

 

 

63,910

 

 

 

5,466

 

Other income (expense), net

 

19,728

 

 

 

(29,866

)

 

 

(98,117

)

 

 

(101,084

)

Income before income taxes

 

106,791

 

 

 

51,414

 

 

 

238,578

 

 

 

188,454

 

Income tax benefit (expense)

 

1,265

 

 

 

(1,037

)

 

 

(1,590

)

 

 

(4,689

)

Net income

 

108,056

 

 

 

50,377

 

 

 

236,988

 

 

 

183,765

 

Net income attributable to noncontrolling interests

 

(39,031

)

 

 

(19,117

)

 

 

(80,319

)

 

 

(80,028

)

Net income attributable to National Storage Affiliates Trust

 

69,025

 

 

 

31,260

 

 

 

156,669

 

 

 

103,737

 

Distributions to preferred shareholders

 

(5,110

)

 

 

(3,382

)

 

 

(19,019

)

 

 

(13,425

)

Net income attributable to common shareholders

$

63,915

 

 

$

27,878

 

 

$

137,650

 

 

$

90,312

 

 

 

 

 

 

 

 

 

Earnings per share - basic

$

0.77

 

 

$

0.31

 

 

$

1.58

 

 

$

0.99

 

Earnings per share - diluted

$

0.72

 

 

$

0.31

 

 

$

1.48

 

 

$

0.99

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

82,642

 

 

 

90,627

 

 

 

86,846

 

 

 

91,239

 

Weighted average shares outstanding - diluted

 

141,319

 

 

 

90,627

 

 

 

146,023

 

 

 

91,239

 

 

National Storage Affiliates Trust

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(unaudited)

 

December 31,

 

December 31,

 

 

2023

 

 

 

2022

 

ASSETS

 

 

 

Real estate

 

 

 

Self storage properties

$

5,792,174

 

 

$

6,391,572

 

Less accumulated depreciation

 

(874,359

)

 

 

(772,661

)

Self storage properties, net

 

4,917,815

 

 

 

5,618,911

 

Cash and cash equivalents

 

64,980

 

 

 

35,312

 

Restricted cash

 

22,713

 

 

 

6,887

 

Debt issuance costs, net

 

8,442

 

 

 

1,393

 

Investment in unconsolidated real estate ventures

 

211,361

 

 

 

227,441

 

Other assets, net

 

134,002

 

 

 

156,228

 

Assets held for sale, net

 

550,199

 

 

 

—

 

Operating lease right-of-use assets

 

22,299

 

 

 

23,835

 

Total assets

$

5,931,811

 

 

$

6,070,007

 

LIABILITIES AND EQUITY

 

 

 

Liabilities

 

 

 

Debt financing

$

3,658,205

 

 

$

3,551,179

 

Accounts payable and accrued liabilities

 

92,766

 

 

 

80,377

 

Interest rate swap liabilities

 

3,450

 

 

 

483

 

Operating lease liabilities

 

24,195

 

 

 

25,741

 

Deferred revenue

 

27,354

 

 

 

23,213

 

Total liabilities

 

3,805,970

 

 

 

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 December 31, 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 December 31, 2023 at liquidation preference

 

115,212

 

 

 

—

 

Common shares of beneficial interest, par value $0.01 per share. 250,000,000 shares authorized, 82,285,995 and 89,842,145 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively

 

823

 

 

 

898

 

Additional paid-in capital

 

1,509,563

 

 

 

1,777,984

 

Distributions in excess of earnings

 

(449,907

)

 

 

(396,650

)

Accumulated other comprehensive income

 

21,058

 

 

 

40,530

 

Total shareholders' equity

 

1,422,188

 

 

 

1,648,201

 

Noncontrolling interests

 

703,653

 

 

 

740,813

 

Total equity

 

2,125,841

 

 

 

2,389,014

 

Total liabilities and equity

$

5,931,811

 

 

$

6,070,007

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income to FFO and Core FFO (in thousands, except per share and unit amounts) (unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income

$

108,056

 

 

$

50,377

 

 

$

236,988

 

 

$

183,765

 

Add (subtract):

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

53,659

 

 

 

57,227

 

 

 

220,737

 

 

 

231,870

 

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

 

4,011

 

 

 

4,461

 

 

 

17,083

 

 

 

17,072

 

Gain on sale of self storage properties

 

(63,910

)

 

 

(3,332

)

 

 

(63,910

)

 

 

(5,466

)

Distributions to preferred shareholders and unitholders

 

(5,572

)

 

 

(3,653

)

 

 

(20,330

)

 

 

(14,510

)

FFO attributable to subordinated performance unitholders(1)

 

(12,875

)

 

 

(15,190

)

 

 

(49,040

)

 

 

(58,838

)

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

 

83,369

 

 

 

89,890

 

 

 

341,528

 

 

 

353,893

 

Add:

 

 

 

 

 

 

 

Acquisition costs

 

235

 

 

 

368

 

 

 

1,659

 

 

 

2,745

 

Casualty-related expenses (recoveries)(2)

 

—

 

 

 

634

 

 

 

(522

)

 

 

6,388

 

Loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

758

 

 

 

—

 

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

$

83,604

 

 

$

90,892

 

 

$

343,423

 

 

$

363,026

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

82,642

 

 

 

90,627

 

 

 

86,846

 

 

 

91,239

 

Weighted average restricted common shares outstanding

 

23

 

 

 

25

 

 

 

25

 

 

 

27

 

Weighted average OP units outstanding

 

37,701

 

 

 

35,601

 

 

 

38,302

 

 

 

35,421

 

Weighted average DownREIT OP unit equivalents outstanding

 

2,120

 

 

 

1,925

 

 

 

2,120

 

 

 

1,925

 

Weighted average LTIP units outstanding

 

577

 

 

 

476

 

 

 

553

 

 

 

514

 

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

 

123,063

 

 

 

128,654

 

 

 

127,846

 

 

 

129,126

 

 

 

 

 

 

 

 

 

FFO per share and unit

$

0.68

 

 

$

0.70

 

 

$

2.67

 

 

$

2.74

 

Core FFO per share and unit

$

0.68

 

 

$

0.71

 

 

$

2.69

 

 

$

2.81

 

(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 statements 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 December 31,

 

Year Ended December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Earnings per share - diluted

$

0.72

 

 

$

0.31

 

 

$

1.48

 

 

$

0.99

 

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

 

0.11

 

 

 

(0.08

)

 

 

0.23

 

 

 

(0.28

)

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

 

—

 

 

 

0.15

 

 

 

—

 

 

 

0.62

 

Add real estate depreciation and amortization

 

0.44

 

 

 

0.44

 

 

 

1.73

 

 

 

1.79

 

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

 

0.03

 

 

 

0.03

 

 

 

0.13

 

 

 

0.13

 

Subtract gain on sale of self storage properties

 

(0.52

)

 

 

(0.03

)

 

 

(0.52

)

 

 

(0.05

)

FFO attributable to subordinated performance unitholders

 

(0.10

)

 

 

(0.12

)

 

 

(0.38

)

 

 

(0.46

)

FFO per share and unit

 

0.68

 

 

 

0.70

 

 

 

2.67

 

 

 

2.74

 

Add acquisition costs

 

—

 

 

 

—

 

 

 

0.01

 

 

 

0.02

 

Add casualty-related expenses

 

—

 

 

 

0.01

 

 

 

—

 

 

 

0.05

 

Add loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

0.01

 

 

 

—

 

Core FFO per share and unit

$

0.68

 

 

$

0.71

 

 

$

2.69

 

 

$

2.81

 

(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 (loss) 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 December 31,

 

Year Ended December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income

$

108,056

 

 

$

50,377

 

 

$

236,988

 

 

$

183,765

 

(Subtract) add:

 

 

 

 

 

 

 

Management fees and other revenue

 

(9,217

)

 

 

(6,513

)

 

 

(34,411

)

 

 

(27,624

)

General and administrative expenses

 

14,956

 

 

 

15,345

 

 

 

59,281

 

 

 

59,311

 

Other

 

2,577

 

 

 

1,186

 

 

 

11,108

 

 

 

8,537

 

Depreciation and amortization

 

53,988

 

 

 

57,564

 

 

 

221,993

 

 

 

233,158

 

Interest expense

 

45,441

 

 

 

34,633

 

 

 

166,147

 

 

 

110,599

 

Equity in earnings of unconsolidated real estate ventures

 

(2,084

)

 

 

(2,155

)

 

 

(7,553

)

 

 

(7,745

)

Loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

758

 

 

 

—

 

Acquisition costs

 

235

 

 

 

368

 

 

 

1,659

 

 

 

2,745

 

Income tax (benefit) expense

 

(1,265

)

 

 

1,037

 

 

 

1,590

 

 

 

4,689

 

Gain on sale of self storage properties

 

(63,910

)

 

 

(3,332

)

 

 

(63,910

)

 

 

(5,466

)

Non-operating expense

 

590

 

 

 

352

 

 

 

1,016

 

 

 

951

 

Net Operating Income

$

149,367

 

 

$

148,862

 

 

$

594,666

 

 

$

562,920

 

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

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income

$

108,056

 

 

$

50,377

 

 

$

236,988

 

 

$

183,765

 

Add:

 

 

 

 

 

 

 

Depreciation and amortization

 

53,988

 

 

 

57,564

 

 

 

221,993

 

 

 

233,158

 

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

 

4,011

 

 

 

4,461

 

 

 

17,083

 

 

 

17,072

 

Interest expense

 

45,441

 

 

 

34,633

 

 

 

166,147

 

 

 

110,599

 

Income tax (benefit) expense

 

(1,265

)

 

 

1,037

 

 

 

1,590

 

 

 

4,689

 

Loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

758

 

 

 

—

 

EBITDA

 

210,231

 

 

 

148,072

 

 

 

644,559

 

 

 

549,283

 

Add (subtract):

 

 

 

 

 

 

 

Acquisition costs

 

235

 

 

 

368

 

 

 

1,659

 

 

 

2,745

 

Gain on sale of self storage properties

 

(63,910

)

 

 

(3,332

)

 

 

(63,910

)

 

 

(5,466

)

Casualty related expenses (recoveries)

 

—

 

 

 

634

 

 

 

(522

)

 

 

6,388

 

Equity-based compensation expense

 

1,651

 

 

 

1,588

 

 

 

6,679

 

 

 

6,258

 

Adjusted EBITDA

$

148,207

 

 

$

147,330

 

 

$

588,465

 

 

$

559,208

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240228388705/en/

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