National Storage Affiliates Trust ("NSA" or the "Company")
(NYSE: NSA) today reported the Company’s second quarter 2024
results.
Second Quarter 2024 Highlights
- Reported net income of $32.3 million for the second quarter of
2024, a decrease of 29.0% compared to the second quarter of 2023.
Reported diluted earnings per share of $0.16 for the second quarter
of 2024 compared to $0.28 for the second quarter of 2023.
- Reported core funds from operations ("Core FFO") of $71.2
million, or $0.62 per share for the second quarter of 2024, a
decrease of 8.8% per share compared to the second quarter of
2023.
- Reported a decrease in same store net operating income ("NOI")
of 5.6% for the second quarter of 2024 compared to the same period
in 2023, driven by a 2.8% decrease in same store total revenues and
an increase of 4.8% in same store property operating expenses.
- Reported same store period-end occupancy of 87.0% as of June
30, 2024, a decrease of 280 basis points compared to June 30,
2023.
- Acquired three wholly-owned self storage properties for
approximately $25.2 million during the second quarter of 2024.
- Repurchased 1,908,397 of the Company's common shares for
approximately $71.6 million under the Company's previously
announced share repurchase program.
Highlights Subsequent to Quarter-End
- Effective July 1, 2024 (the "Closing Date"), the Company
completed the internalization of its participating regional
operator ("PRO") structure. As a result, the Company purchased the
PROs' management contracts, and in some cases, their brand names,
related intellectual property and certain rights to the PROs'
tenant insurance programs. As of the Closing Date, the Company will
no longer pay supervisory and administrative fees or reimbursements
under the previous agreements with the PROs. The Company plans to
transition the majority of operations in a phased approach, which
is expected to occur over the 12 month period following the Closing
Date, and the Company has executed new asset management and
property management agreements with a number of the PROs for all or
a part of this transitionary period at newly negotiated management
fees. In connection with the internalization, on July 1, 2024,
11,906,167 subordinated performance units and DownREIT subordinated
performance units converted into 17,984,787 OP units and DownREIT
OP units.
- On July 29, 2024, the Company repaid in full the remaining
$145.0 million of Term Loan Tranche B using the revolving line of
credit.
- On July 30, 2024, a joint venture between a subsidiary of NSA
and a state pension fund advised by Heitman Capital Management, LLC
(the "2023 Joint Venture") acquired a portfolio of five self
storage properties for approximately $71.9 million. The venture
financed the acquisition with capital contributions from the
venture members, of which the Company contributed approximately
$18.0 million.
David Cramer, President and Chief Executive Officer, commented,
“We are focused on the internalization of the PRO structure that we
announced in early June and closed on July 1st. We’ve made
significant progress on our strategic initiatives over the past few
quarters, including the sale of non-core assets, repayment of
floating rate debt, formation of two new joint ventures, repurchase
of common shares, and now the internalization of the PRO structure,
all of which position NSA for growth going forward. I'd like to
acknowledge and thank our PROs and the NSA team members for the
significant time and effort that they have devoted to these
initiatives as well as our People, Process and Platform projects,
which we expect will significantly benefit our results going
forward.”
Mr. Cramer further commented, “We continue to feel pressure on
operating results in this very competitive environment due to
factors including less demand as a result of a muted housing market
and the absorption of new supply, which is felt most prominently in
the Sunbelt markets. We believe that these pressures will remain
throughout the back half of the year. We also acknowledge that the
transition of the PRO-managed stores creates an additional lift for
our team in the near-term. We are acutely focused on navigating
today’s challenges and remain well-positioned to benefit when
sector headwinds subside.”
Financial Results
($ in thousands, except per share
and unit data)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
Growth
2024
2023
Growth
Net income
$
32,280
$
45,476
(29.0
)%
$
127,368
$
85,868
48.3
%
Funds From Operations
("FFO")(1)
$
70,118
$
88,478
(20.8
)%
$
142,012
$
172,744
(17.8
)%
Add back acquisition costs
480
239
100.8
%
987
1,083
(8.9
)%
Add integration and executive severance
costs(2)
626
—
—
%
626
—
—
%
Subtract casualty-related
recoveries(3)
—
(522
)
—
%
—
(522
)
—
%
Add loss on early extinguishment of
debt
—
—
—
%
—
758
—
%
Core FFO(1)
$
71,224
$
88,195
(19.2
)%
$
143,625
$
174,063
(17.5
)%
Earnings per share - basic and
diluted
$
0.16
$
0.28
(42.9
)%
$
0.85
$
0.56
51.8
%
FFO per share and unit(1)
$
0.61
$
0.68
(10.3
)%
$
1.20
$
1.32
(9.1
)%
Core FFO per share and unit(1)
$
0.62
$
0.68
(8.8
)%
$
1.22
$
1.34
(9.0
)%
(1)
Non-GAAP financial measures, including
FFO, Core FFO and NOI, are defined in the Glossary in the
supplemental financial information and, where appropriate,
reconciliations of these measures and other non-GAAP financial
measures to their most directly comparable GAAP measures are
included in the Schedules to this press release and in the
supplemental financial information.
(2)
Integration and executive severance costs
are recorded within the line items "General and administrative
expenses" and "Non-operating income (expense)" in our condensed
consolidated statements of operations. Integration costs relate to
expenses incurred as a part of the internalization of the PRO
structure.
(3)
Casualty-related recoveries relate to
casualty-related expenses incurred during 2022 and are recorded in
the line item "Other" within operating expenses in our consolidated
statements of operations.
Net income decreased $13.2 million for the second quarter of
2024 and increased $41.5 million for the six months ended June 30,
2024 ("year-to-date") as compared to the same periods in 2023. The
decrease in net income in the second quarter of 2024 was primarily
due to a decrease in NOI, primarily driven by (i) the sale of 32
self storage properties to a third party in December 2023, (ii) the
contribution of 56 self storage properties to a joint venture
between a subsidiary of NSA and a subsidiary of Heitman Capital
Management, LLC (the "2024 Joint Venture"), in the first quarter of
2024, and (iii) the sale of 40 self storage properties to third
parties in the six months ended June 30, 2024, partially offset by
decreases in depreciation expense of $10.0 million and interest
expense of $2.5 million. The year-to-date increase in net income
resulted primarily from the gain on the sale of 40 self storage
properties to third parties and 56 self storage properties
contributed to the 2024 Joint Venture during the six months ended
June 30, 2024.
The decreases in FFO and Core FFO for the second quarter of 2024
and year-to-date were the result of a decrease in NOI of 14.1% and
11.3%, respectively, which were partially offset by a decrease in
interest expense of 6.2% and 3.0%, respectively, as compared to the
same periods in 2023. The decrease in FFO and Core FFO per share
and unit for the second quarter of 2024 and year-to-date was
largely driven by a decrease in same store NOI and an increase in
general and administrative expenses.
Same Store Operating Results (776 Stores)
($ in thousands, except per square foot
data)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
Growth
2024
2023
Growth
Total revenues
$
174,182
$
179,243
(2.8
)%
$
348,053
$
355,771
(2.2
)%
Property operating expenses
49,840
47,576
4.8
%
99,495
95,108
4.6
%
Net Operating Income (NOI)
$
124,342
$
131,667
(5.6
)%
$
248,558
$
260,663
(4.6
)%
NOI Margin
71.4
%
73.5
%
(2.1
)%
71.4
%
73.3
%
(1.9
)%
Average Occupancy
86.4
%
89.6
%
(3.2
)%
86.0
%
89.5
%
(3.5
)%
Average Annualized Rental Revenue Per
Occupied Square Foot
$
15.66
$
15.57
0.6
%
$
15.73
$
15.50
1.5
%
Year-over-year same store total revenues decreased 2.8% for the
second quarter of 2024 and 2.2% year-to-date as compared to the
same period in 2023. The decrease for the second quarter was driven
primarily by a 320 basis point decrease in average occupancy,
partially offset by a 0.6% increase in average annualized rental
revenue per occupied square foot. The year-to-date same store total
revenue decrease was driven primarily by a 350 basis point decrease
in average occupancy, partially offset by a 1.5% increase in
average annualized rental revenue per occupied square foot. Markets
which generated above portfolio average same store total revenue
growth for the second quarter of 2024 include: San Juan, Wichita
and New Orleans. Markets which generated below portfolio average
same store total revenue growth for the second quarter of 2024
include: Atlanta, Phoenix and Sarasota-Bradenton.
Year-over-year same store property operating expenses increased
4.8% for the second quarter of 2024 and 4.6% year-to-date as
compared to the same periods in 2023. The increases primarily
resulted from increases in marketing and insurance expense.
Disposition and Investment Activity
During the second quarter, NSA invested $25.2 million in the
acquisition of three self storage properties completed under a 1031
exchange, consisting of approximately 200,000 rentable square feet
configured in approximately 1,300 storage units. Total
consideration for these acquisitions included approximately $25.1
million of net cash and the assumption of approximately $0.1
million of other liabilities.
During the second quarter, NSA sold one self storage property,
consisting of approximately 155,000 rentable square feet configured
in approximately 1,000 storage units for approximately $8.0
million.
On July 1, 2024, as part of the internalization of the PRO
structure, the Company paid consideration in cash and equity for
the purchase of the PRO management contracts and, in some cases,
their brand names and related intellectual property at a value of
approximately $34.6 million and to acquire certain rights with
respect to each PROs' tenant insurance programs at a value of
approximately $60.3 million. The total cash and equity
consideration for these transactions consisted of approximately
$32.6 million in cash and the issuance of 1,548,866 OP units. On
June 28, 2024, NSA repurchased 194,888 subordinated performance
units for approximately $8.5 million in cash in connection with the
PRO structure internalization.
Balance Sheet
During the second quarter, NSA repurchased 1,908,397 of the
Company's common shares for approximately $71.6 million under the
previously approved share repurchase program.
Common Share Dividends
On May 16, 2024, NSA's Board of Trustees declared a quarterly
cash dividend of $0.56 per common share. The second quarter 2024
dividend was paid on June 28, 2024 to shareholders of record as of
June 14, 2024.
2024 Guidance
The following table outlines NSA's updated and prior Core FFO
guidance estimates and related assumptions for the year ended
December 31, 2024. The Company's revisions to Core FFO guidance
estimates are primarily driven by lower same store growth
assumptions. Certain line items in the table below have been
adjusted for the impact of the internalization of the PRO
structure, such as general and administrative expenses, management
fees and other revenue, and subordinated performance unit
distributions. Additionally, the Core FFO per share guidance
incorporates an estimated weighted average share count of
approximately 135.0 million beginning July 1, 2024, or
approximately 126.6 million for the full year 2024.
Current Ranges for Full
Year 2024
Prior Ranges for Full
Year 2024
Actual Results for Full Year
2023
Low
High
Low
High
Core FFO per share(1)
$
2.36
$
2.44
$
2.40
$
2.56
$
2.69
Same store operations(2)
Total revenue growth
(3.75
)%
(2.25
)%
(4.0
)%
0.0
%
2.4
%
Property operating expenses growth
3.5
%
5.0
%
3.0
%
5.0
%
4.7
%
NOI growth
(6.5
)%
(4.5
)%
(6.0
)%
(2.0
)%
1.6
%
General and administrative expenses
General and administrative expenses
(excluding equity-based compensation), in millions
$
50.0
$
52.0
$
54.5
$
56.5
$
52.6
Equity-based compensation, in millions
$
7.75
$
8.25
$
7.25
$
7.75
$
6.7
Management fees and other revenue, in
millions
$
39.5
$
41.5
$
32.0
$
34.0
$
34.4
Core FFO from unconsolidated real estate
ventures, in millions
$
22.0
$
24.0
$
23.5
$
25.5
$
24.6
Subordinated performance unit
distributions, in millions
$
21.6
$
21.6
$
40.0
$
44.0
$
49.0
Acquisitions of self storage properties,
in millions
$
100.0
$
300.0
$
100.0
$
300.0
$
229.5
Current Ranges for Full
Year 2024
Prior Ranges for Full
Year 2024
Low
High
Low
High
Earnings per share - diluted
$
1.10
$
1.17
$
1.31
$
1.48
Impact of the difference in weighted
average number of shares and GAAP accounting for noncontrolling
interests, two-class method and treasury stock method
0.18
0.11
0.05
(0.01
)
Add real estate depreciation and
amortization
1.45
1.49
1.57
1.66
Add (subtract) equity in losses (earnings)
of unconsolidated real estate ventures
0.11
0.13
0.11
0.09
Add NSA's share of FFO of unconsolidated
real estate ventures
0.17
0.19
0.20
0.22
FFO attributable to subordinated
unitholders
(0.17
)
(0.17
)
(0.34
)
(0.38
)
Less gain on sale of self storage
properties
(0.50
)
(0.50
)
(0.51
)
(0.51
)
Add integration and executive severance
costs
0.01
0.01
—
—
Add acquisition costs and NSA's share of
unconsolidated real estate venture acquisition costs
0.01
0.01
0.01
0.01
Core FFO per share and unit
$
2.36
$
2.44
$
2.40
$
2.56
(1)
The table above provides a reconciliation
of the range of estimated earnings per share - diluted to estimated
Core FFO per share and unit.
(2)
2024 guidance reflects NSA's 2024 same
store pool comprising 776 stores. 2023 actual results reflect NSA's
2023 same store pool comprising 724 stores.
Supplemental Financial Information
The full text of this earnings release and supplemental
financial information, including certain financial information
referenced in this release, are available on NSA's website at
http://ir.nationalstorageaffiliates.com/quarterly-reporting and as
exhibit 99.1 to the Company's Form 8-K furnished to the SEC on
August 5, 2024.
Non-GAAP Financial Measures & Glossary
This press release contains certain non-GAAP financial measures.
These non-GAAP measures are presented because NSA's management
believes these measures help investors understand NSA's business,
performance and ability to earn and distribute cash to its
shareholders by providing perspectives not immediately apparent
from net income (loss). These measures are also frequently used by
securities analysts, investors and other interested parties. The
presentations of FFO, Core FFO and NOI in this press release are
not intended to be considered in isolation or as a substitute for,
or superior to, the financial information prepared and presented in
accordance with GAAP. In addition, NSA's method of calculating
these measures may be different from methods used by other
companies, and, accordingly, may not be comparable to similar
measures as calculated by other companies that do not use the same
methodology as NSA. These measures, and other words and phrases
used herein, are defined in the Glossary in the supplemental
financial information and, where appropriate, reconciliations of
these measures and other non-GAAP financial measures to their most
directly comparable GAAP measures are included in the Schedules to
this press release and in the supplemental financial
information.
Quarterly Teleconference and Webcast
The Company will host a conference call at 1:00 pm Eastern
Daylight Time on Tuesday, August 6, 2024 to discuss its second
quarter 2024 financial results. At the conclusion of the call,
management will accept questions from certified financial analysts.
All other participants are encouraged to listen to a webcast of the
call by accessing the link found on the Company's website at
www.nationalstorageaffiliates.com.
Conference Call and Webcast:
Date/Time: Tuesday, August 6, 2024, 1:00 pm EDT
Webcast available at: www.nationalstorageaffiliates.com
Domestic (Toll Free US & Canada): 877.407.9711
International: 412.902.1014
A replay of the webcast will be available for 30 days on NSA's
website at www.nationalstorageaffiliates.com.
Upcoming Industry Conference
NSA management is scheduled to participate in the upcoming 2024
BofA Securities Global Real Estate Conference on September 10-11,
2024, in New York City, New York.
About National Storage Affiliates Trust
National Storage Affiliates Trust is a real estate investment
trust headquartered in Greenwood Village, Colorado, focused on the
ownership, operation and acquisition of self storage properties
predominantly located within the top 100 metropolitan statistical
areas throughout the United States. As of June 30, 2024, the
Company held ownership interests in and operated 1,052 self storage
properties located in 42 states and Puerto Rico with approximately
68.8 million rentable square feet. NSA is one of the largest owners
and operators of self storage properties among public and private
companies in the United States. For more information, please visit
the Company’s website at www.nationalstorageaffiliates.com. NSA is
included in the MSCI US REIT Index (RMS/RMZ), the Russell 1000
Index of Companies and the S&P MidCap 400 Index.
NOTE REGARDING FORWARD LOOKING
STATEMENTS
Certain statements contained in this press release constitute
forward-looking statements as such term is defined in Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and such statements
are intended to be covered by the safe harbor provided by the same.
Forward-looking statements are subject to substantial risks and
uncertainties, many of which are difficult to predict and are
generally beyond the Company's control. These forward-looking
statements include information about possible or assumed future
results of the Company's business, financial condition, liquidity,
results of operations, plans and objectives. Changes in any
circumstances may cause the Company's actual results to differ
significantly from those expressed in any forward-looking
statement. When used in this release, the words "believe,"
"expect," "anticipate," "estimate," "plan," "continue," "intend,"
"should," "may" or similar expressions are intended to identify
forward-looking statements. Statements regarding the following
subjects, among others, may be forward-looking: market trends in
the Company's industry, interest rates, inflation, the debt and
lending markets or the general economy; the Company's business and
investment strategy; the acquisition of properties, including those
under contract and the Company's ability to execute on its
acquisition pipeline; the timing of acquisitions under contract;
and the Company's guidance estimates for the year ended December
31, 2024. For a further list and description of such risks and
uncertainties, see the Company's most recent Annual Report on Form
10-K and subsequent Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K filed with the Securities and Exchange
Commission, and the other documents filed by the Company with the
Securities and Exchange Commission. The forward-looking statements,
and other risks, uncertainties and factors are based on the
Company's beliefs, assumptions and expectations of its future
performance, taking into account all information currently
available to the Company. Forward-looking statements are not
predictions of future events. The Company disclaims any intention
or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
National Storage Affiliates
Trust
Consolidated Statements of
Operations
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
REVENUE
Rental revenue
$
174,369
$
199,311
$
354,751
$
393,440
Other property-related revenue
6,557
7,613
13,249
14,420
Management fees and other revenue
9,522
8,587
18,596
15,644
Total revenue
190,448
215,511
386,596
423,504
OPERATING EXPENSES
Property operating expenses
52,201
57,094
106,895
113,577
General and administrative expenses
16,189
14,404
31,863
29,225
Depreciation and amortization
46,710
56,705
94,041
112,163
Other
3,375
3,220
6,867
4,393
Total operating expenses
118,475
131,423
239,666
259,358
OTHER INCOME (EXPENSE)
Interest expense
(37,228
)
(39,693
)
(75,345
)
(77,641
)
Loss on early extinguishment of debt
—
—
—
(758
)
Equity in (losses) earnings of
unconsolidated real estate ventures
(4,449
)
1,861
(6,079
)
3,539
Acquisition costs
(480
)
(239
)
(987
)
(1,083
)
Non-operating income (expense)
337
196
435
(402
)
Gain on sale of self storage
properties
2,668
—
63,841
—
Other expense, net
(39,152
)
(37,875
)
(18,135
)
(76,345
)
Income before income taxes
32,821
46,213
128,795
87,801
Income tax expense
(541
)
(737
)
(1,427
)
(1,933
)
Net income
32,280
45,476
127,368
85,868
Net income attributable to noncontrolling
interests
(15,218
)
(16,028
)
(51,279
)
(27,461
)
Net income attributable to National
Storage Affiliates Trust
17,062
29,448
76,089
58,407
Distributions to preferred
shareholders
(5,110
)
(5,119
)
(10,220
)
(8,799
)
Net income attributable to common
shareholders
$
11,952
$
24,329
$
65,869
$
49,608
Earnings per share - basic and
diluted
$
0.16
$
0.28
$
0.85
$
0.56
Weighted average shares outstanding -
basic and diluted
75,160
88,312
77,698
88,902
National Storage Affiliates
Trust
Consolidated Balance
Sheets
(dollars in thousands, except per
share amounts)
(unaudited)
June 30,
December 31,
2024
2023
ASSETS
Real estate
Self storage properties
$
5,818,388
$
5,792,174
Less accumulated depreciation
(961,977
)
(874,359
)
Self storage properties, net
4,856,411
4,917,815
Cash and cash equivalents
58,975
64,980
Restricted cash
8,064
22,713
Debt issuance costs, net
7,055
8,442
Investment in unconsolidated real estate
ventures
230,295
211,361
Other assets, net
138,522
134,002
Assets held for sale, net
—
550,199
Operating lease right-of-use assets
21,779
22,299
Total assets
$
5,321,101
$
5,931,811
LIABILITIES AND EQUITY
Liabilities
Debt financing
$
3,365,836
$
3,658,205
Accounts payable and accrued
liabilities
93,042
92,766
Interest rate swap liabilities
—
3,450
Operating lease liabilities
23,731
24,195
Deferred revenue
21,427
27,354
Total liabilities
3,504,036
3,805,970
Equity
Series A Preferred shares of beneficial
interest, par value $0.01 per share. 50,000,000 authorized,
9,017,588 and 9,017,588 issued and outstanding at June 30, 2024 and
December 31, 2023, respectively, at liquidation preference
225,439
225,439
Series B Preferred shares of beneficial
interest, par value $0.01 per share. 7,000,000 authorized,
5,668,128 and 5,668,128 issued and outstanding at June 30, 2024 and
December 31, 2023, respectively, at liquidation preference
115,212
115,212
Common shares of beneficial interest, par
value $0.01 per share. 250,000,000 shares authorized, 75,169,162
and 82,285,995 shares issued and outstanding at June 30, 2024 and
December 31, 2023, respectively
752
823
Additional paid-in capital
1,293,694
1,509,563
Distributions in excess of earnings
(469,768
)
(449,907
)
Accumulated other comprehensive income
25,881
21,058
Total shareholders' equity
1,191,210
1,422,188
Noncontrolling interests
625,855
703,653
Total equity
1,817,065
2,125,841
Total liabilities and equity
$
5,321,101
$
5,931,811
Reconciliation of Net Income to FFO and
Core FFO
(in thousands, except per share and unit
amounts) (unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net income
$
32,280
$
45,476
$
127,368
$
85,868
Add (subtract):
Real estate depreciation and
amortization
46,339
56,398
93,302
111,551
Equity in losses (earnings) of
unconsolidated real estate ventures
4,449
(1,861
)
6,079
(3,539
)
Company's share of FFO in unconsolidated
real estate ventures
6,177
6,176
11,862
12,325
Gain on sale of self storage
properties
(2,668
)
—
(63,841
)
—
Distributions to preferred shareholders
and unitholders
(5,568
)
(5,402
)
(11,136
)
(9,365
)
FFO attributable to subordinated
performance units(1)
(10,891
)
(12,309
)
(21,622
)
(24,096
)
FFO attributable to common
shareholders, OP unitholders, and LTIP unitholders
70,118
88,478
142,012
172,744
Add (subtract):
Acquisition costs
480
239
987
1,083
Integration and executive severance
costs(2)
626
—
626
—
Casualty-related recoveries(3)
—
(522
)
—
(522
)
Loss on early extinguishment of debt
—
—
—
758
Core FFO attributable to common
shareholders, OP unitholders, and LTIP unitholders
$
71,224
$
88,195
$
143,625
$
174,063
Weighted average shares and units
outstanding - FFO and Core FFO:(4)
Weighted average shares outstanding -
basic
75,160
88,312
77,698
88,902
Weighted average restricted common shares
outstanding
21
28
22
26
Weighted average OP units outstanding
37,644
38,755
37,638
38,746
Weighted average DownREIT OP unit
equivalents outstanding
2,120
2,120
2,120
2,120
Weighted average LTIP units
outstanding
673
523
683
537
Total weighted average shares and units
outstanding - FFO and Core FFO
115,618
129,738
118,161
130,331
FFO per share and unit
$
0.61
$
0.68
$
1.20
$
1.32
Core FFO per share and unit
$
0.62
$
0.68
$
1.22
$
1.34
(1)
Amounts represent distributions declared
for subordinated performance unitholders and DownREIT subordinated
performance unitholders for the periods presented.
(2)
Integration and executive severance costs
are recorded within the line items "General and administrative
expenses" and "Non-operating income (expense)" in our condensed
consolidated statements of operations. Integration costs relate to
expenses incurred as a part of the internalization of the PRO
structure.
(3)
Casualty-related recoveries relate to
casualty-related expenses incurred during 2022 and are recorded in
the line item "Other" within operating expenses in our consolidated
statements of operations.
(4)
NSA combines OP units and DownREIT OP
units with common shares because, after the applicable lock-out
periods, OP units in the Company's operating partnership are
redeemable for cash or, at NSA's option, exchangeable for common
shares on a one-for-one basis and DownREIT OP units are also
redeemable for cash or, at NSA's option, exchangeable for OP units
in the Company's operating partnership on a one-for-one basis,
subject to certain adjustments in each case. Subordinated
performance units, DownREIT subordinated performance units and LTIP
units may also, under certain circumstances, be convertible into or
exchangeable for common shares (or other units that are convertible
into or exchangeable for common shares). See footnote(5) for
additional discussion of subordinated performance units, DownREIT
subordinated performance units, and LTIP units in the calculation
of FFO and Core FFO per share and unit.
Reconciliation of Earnings Per Share -
Diluted to FFO and Core FFO Per Share and Unit
(in thousands, except per share and unit
amounts) (unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Earnings per share - diluted
$
0.16
$
0.28
$
0.85
$
0.56
Impact of the difference in weighted
average number of shares(5)
(0.06
)
(0.09
)
(0.29
)
(0.18
)
Impact of GAAP accounting for
noncontrolling interests, two-class method and treasury stock
method(6)
0.13
0.12
0.42
0.21
Add real estate depreciation and
amortization
0.40
0.43
0.79
0.85
Add (subtract) equity in losses (earnings)
of unconsolidated real estate ventures
0.04
(0.02
)
0.05
(0.03
)
Add Company's share of FFO in
unconsolidated real estate ventures
0.05
0.05
0.10
0.09
Subtract gain on sale of self storage
properties
(0.02
)
—
(0.54
)
—
FFO attributable to subordinated
performance unitholders
(0.09
)
(0.09
)
(0.18
)
(0.18
)
FFO per share and unit
0.61
0.68
1.20
1.32
Add acquisition costs
—
—
0.01
0.01
Add integration and executive severance
costs
0.01
—
0.01
—
Add loss on early extinguishment of
debt
—
—
—
0.01
Core FFO per share and unit
$
0.62
$
0.68
$
1.22
$
1.34
(5)
Adjustment accounts for the difference
between the weighted average number of shares used to calculate
diluted earnings per share and the weighted average number of
shares used to calculate FFO and Core FFO per share and unit.
Diluted earnings per share is calculated using the two-class method
for the company's restricted common shares and the treasury stock
method for certain unvested LTIP units, and assumes the conversion
of vested LTIP units into OP units on a one-for-one basis and the
hypothetical conversion of subordinated performance units, and
DownREIT subordinated performance units into OP units, even though
such units may only be convertible into OP units (i) after a
lock-out period and (ii) upon certain events or conditions. For
additional information about the conversion of subordinated
performance units and DownREIT subordinated performance units into
OP units, see Note 10 to the Company's most recent Annual Report on
Form 10-K, filed with the Securities and Exchange Commission. The
computation of weighted average shares and units for FFO and Core
FFO per share and unit includes all restricted common shares and
LTIP units that participate in distributions and excludes all
subordinated performance units and DownREIT subordinated
performance units because their effect has been accounted for
through the allocation of FFO to the related unitholders based on
distributions declared.
(6)
Represents the effect of adjusting the
numerator to consolidated net income prior to GAAP allocations for
noncontrolling interests, after deducting preferred share and unit
distributions, and before the application of the two-class method
and treasury stock method, as described in footnote(5).
Net Operating Income
(dollars in thousands) (unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net income
$
32,280
$
45,476
$
127,368
$
85,868
(Subtract) add:
Management fees and other revenue
(9,522
)
(8,587
)
(18,596
)
(15,644
)
General and administrative expenses
16,189
14,404
31,863
29,225
Other
3,375
3,220
6,867
4,393
Depreciation and amortization
46,710
56,705
94,041
112,163
Interest expense
37,228
39,693
75,345
77,641
Equity in losses (earnings) of
unconsolidated real estate ventures
4,449
(1,861
)
6,079
(3,539
)
Loss on early extinguishment of debt
—
—
—
758
Acquisition costs
480
239
987
1,083
Income tax expense
541
737
1,427
1,933
Gain on sale of self storage
properties
(2,668
)
—
(63,841
)
—
Non-operating (income) expense
(337
)
(196
)
(435
)
402
Net Operating Income
$
128,725
$
149,830
$
261,105
$
294,283
EBITDA and Adjusted EBITDA
(dollars in thousands) (unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net income
$
32,280
$
45,476
$
127,368
$
85,868
Add:
Depreciation and amortization
46,710
56,705
94,041
112,163
Company's share of unconsolidated real
estate ventures depreciation and amortization
5,141
4,315
9,693
8,786
Interest expense
37,228
39,693
75,345
77,641
Income tax expense
541
737
1,427
1,933
Loss on early extinguishment of debt
—
—
—
758
EBITDA
121,900
146,926
307,874
287,149
Add (subtract):
Acquisition costs
480
239
987
1,083
Effect of hypothetical liquidation at book
value (HLBV) accounting for unconsolidated 2024 Joint
Venture(1)
5,485
—
8,249
—
Gain on sale of self storage
properties
(2,668
)
—
(63,841
)
—
Integration and executive severance costs,
excluding equity-based compensation(2)
223
—
223
—
Casualty-related recoveries(3)
—
(522
)
—
(522
)
Equity-based compensation expense
2,331
1,677
4,186
3,326
Adjusted EBITDA
$
127,751
$
148,320
$
257,678
$
291,036
(1)
Reflects the non-cash impact of applying
HLBV to the 2024 Joint Venture, which allocates GAAP income (loss)
on a hypothetical liquidation of the underlying joint venture at
book value as of the reporting date.
(2)
Integration and executive severance costs
are recorded within the line items "General and administrative
expenses" and "Non-operating income (expense)" in our condensed
consolidated statements of operations. Integration costs relate to
expenses incurred as a part of the internalization of the PRO
structure.
(3)
Casualty-related recoveries relate to
casualty-related expenses incurred during 2022 and are recorded in
the line item "Other" within operating expenses in our consolidated
statements of operations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240805039849/en/
National Storage Affiliates Trust
Investor/Media Relations
George Hoglund, CFA Vice President - Investor Relations
720.630.2160 ghoglund@nsareit.net
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