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Table of Contents
Page
 
 
 
Earnings Release
 
 
Consolidated Statements of Operations
 
 
Consolidated Balance Sheets
 
 
Schedule 1 - Funds From Operations and Core Funds From Operations
 
 
Schedule 2 - Other Non-GAAP Financial Measurements
 
 
Schedule 3 - Portfolio Summary
 
 
Schedule 4 - Debt and Equity Capitalization
 
 
Schedule 5 - Summarized Information for Unconsolidated Real Estate Venture
 
 
Schedule 6 - Same Store Performance Summary
 
 
Schedule 7 - Reconciliation of Same Store Data and Net Operating Income to Net Income
 
 
Schedule 8 - Selected Financial Information
 
 
Glossary
 
 
 
 
 
 
 
 



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May 2, 2018

National Storage Affiliates Trust Reports First Quarter 2018 Results; Net Income Increases $4.8 million; Core FFO per Share Increases 10.3%, Same Store NOI Increases 4.4%, Acquired 25 Self Storage Properties
GREENWOOD VILLAGE, Colo. - (BUSINESS WIRE) - National Storage Affiliates Trust (“NSA” or the "Company") (NYSE: NSA) today reported the Company’s first quarter 2018 results.
First Quarter 2018 Highlights
Net income was $12.0 million for the first quarter of 2018, an increase of $4.8 million compared to $7.2 million for the first quarter of 2017.
Core funds from operations ("Core FFO") was $25.9 million, or $0.32 per share, for the first quarter of 2018, an increase of 10.3% per share compared to $21.3 million, or $0.29 per share, for the first quarter of 2017.
Same store net operating income ("NOI") was $40.9 million for the first quarter of 2018, an increase of 4.4% compared to $39.2 million for the first quarter of 2017, driven by a 4.2% increase in same store total revenues and a 3.9% increase in same store property operating expenses.
Acquired 25 wholly-owned self storage properties for $135.8 million and one joint venture property for $9.5 million during the first quarter of 2018.
Arlen Nordhagen, Chief Executive Officer and Chairman, commented, "We are very pleased that our combination of same store organic improvement plus strong external growth is continuing to drive double digit increases in Core FFO per share. Our same store performance for the quarter was right on budget, and we acquired another 25 wholly-owned properties during the quarter, making this our strongest first quarter acquisition pace on record. Despite the increased headwinds of new supply in several markets, our unique growth strategy has allowed us to benefit from both the fragmentation and the fundamental strengths of the self storage industry. We remain focused on our commitment to creating long-term shareholder value through the continued execution of our differentiated strategy."
Financial Results
($ in thousands, except per share and unit data)
Three Months Ended March 31,
 
2018
 
2017
 
Growth
Net income
$
11,973

 
$
7,181

 
66.7
%
 
 
 
 
 
 
Funds From Operations ("FFO")(1)
$
25,678

 
$
21,155

 
21.4
%
Add back acquisition costs and NSA's share of unconsolidated real estate venture acquisition costs
180

 
163

 
10.4
%
Core FFO(1)
$
25,858

 
$
21,318

 
21.3
%
 
 
 
 
 
 
Earnings (loss) per share - basic
$
0.16

 
$
0.01

 
1,500.0
%
Earnings (loss) per share - diluted
$
0.09

 
$
0.01

 
800.0
%
 
 
 
 
 
 
FFO per share and unit(1)
$
0.31

 
$
0.29

 
6.9
%
Core FFO per share and unit(1)
$
0.32

 
$
0.29

 
10.3
%
 
 
 
 
 
 
(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. 

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First quarter 2018 net income increased $4.8 million, driven primarily by incremental NOI generated from 85 self storage properties acquired between April 1, 2017 and March 31, 2018 and same store NOI growth, partially offset by increases in depreciation and amortization and interest expense.
First quarter 2018 basic earnings per share increased $0.15 per share and diluted earnings per share increased $0.08 per share. In addition to the items affecting net income described above, the comparison of earnings per share amounts between periods is affected by the allocation of net income to noncontrolling interests pursuant to GAAP. Additional information on NSA's allocation of net income (loss) can be found in the Glossary to the supplemental financial information under "Hypothetical Liquidation at Book Value Method."
First quarter 2018 FFO per share increased 6.9% and Core FFO per share increased 10.3%. The increases in FFO and Core FFO were primarily the result of $7.5 million of incremental NOI from 85 self storage properties acquired between April 1, 2017 and March 31, 2018 and same store NOI growth of $1.7 million, partially offset by higher interest expense and the payment of dividends on preferred shares issued during the fourth quarter of 2017 to fund the Company's growth.
Total Consolidated Portfolio Operating Results
($ in thousands, except per square foot data)
Three Months Ended March 31,
 
2018
 
2017
 
Growth
Total rental and other property-related revenue
$
74,332

 
$
59,725

 
24.5
 %
Property operating expenses
25,226

 
19,749

 
27.7
 %
Net Operating Income (NOI)
$
49,106

 
$
39,976

 
22.8
 %
 
 
 
 
 
 
Average Occupancy
87.2
%
 
88.3
%
 
(1.1
)%
Average Annualized Rental Revenue Per Occupied Square Foot
$
11.87

 
$
11.36

 
4.5
 %
First quarter 2018 total rental and other property-related revenue increased 24.5%, driven by $12.4 million of incremental revenues from 85 self storage properties acquired between April 1, 2017 and March 31, 2018 and a $2.5 million increase in same store total revenues.
First quarter 2018 total property operating expenses increased 27.7% resulting from $4.8 million of incremental property operating expenses generated by 85 self storage properties acquired between April 1, 2017 and March 31, 2018, and an increase of $0.8 million in same store property operating expenses.
Total consolidated portfolio NOI was $49.1 million for the first quarter of 2018, an increase of 22.8% compared to NOI of $40.0 million for the first quarter of 2017.
NSA's consolidated portfolio included 468 self storage properties, approximately 28.5 million rentable square feet, with period-end occupancy of 87.8% as of March 31, 2018.
Same Store Operating Results (376 Properties)
($ in thousands, except per square foot data)
Three Months Ended March 31,
 
2018
 
2017
 
Growth
Total rental and other property-related revenue
$
60,866

 
$
58,403

 
4.2
 %
Property operating expenses
19,990

 
19,231

 
3.9
 %
Net Operating Income (NOI)
$
40,876

 
$
39,172

 
4.4
 %
NOI Margin
67.2
%
 
67.1
%
 
0.1
 %
 
 
 
 
 
 
Average Occupancy
88.1
%
 
88.5
%
 
(0.4
)%
Average Annualized Rental Revenue Per Occupied Square Foot
$
11.75

 
$
11.25

 
4.4
 %

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Year-over-year, first quarter 2018 same store total revenues increased 4.2%, driven primarily by a 4.4% increase in average annualized rental revenue per occupied square foot partially offset by a 40 basis point decrease in average occupancy. Same store property operating expenses were $20.0 million for the first quarter of 2018, an increase of 3.9% compared to $19.2 million for the first quarter of 2017 driven primarily by increases in property taxes, personnel costs and advertising.
Tamara Fischer, Chief Financial Officer, commented, "We were very pleased with customer demand during the first quarter, and especially the strong pace of move-in activity toward quarter-end. Our same store revenues came in slightly above plan, but some operating expenses were higher than forecast, so first quarter same store NOI was right in line with our expectations."
Investment Activity
During the first quarter of 2018, NSA invested $135.8 million in the acquisition of 25 consolidated self storage properties located in six states, encompassing approximately 1.4 million rentable square feet configured in approximately 12,000 storage units. Consideration for these acquisitions included approximately $105.1 million of net cash, the assumption of $8.3 million of mortgages and other working capital liabilities and OP equity of approximately $22.4 million. The OP equity included the issuance of $8.1 million of NSA's 6.000% Series A-1 Cumulative Redeemable Preferred Units (the "Series A-1 Preferred Units") in NSA's operating partnership which have a stated value of $25.00 per unit and receive cumulative distributions at an annual rate of 6.000%.
NSA's unconsolidated real estate venture invested $9.5 million in the acquisition of one self storage property located in New Jersey, encompassing approximately 0.1 million rentable square feet configured in approximately 500 storage units. NSA owns a 25% interest in its unconsolidated real estate venture and contributed approximately $2.4 million to the venture to fund the acquisition.
Balance Sheet
On January 29, 2018, NSA entered into an increase agreement and amendment with a syndicated group of lenders to increase the total borrowing capacity under the Company's credit facility by $125.0 million for a total credit facility of over $1.0 billion, which included entry into a new $125.0 million five-year term loan tranche D. NSA has an expansion option under the credit facility, which, if exercised in full, would provide for a total credit facility of $1.3 billion.
Common Share Dividends
On February 22, 2018, NSA's Board of Trustees declared a quarterly cash dividend of $0.28 per common share, which was paid on March 29, 2018 to shareholders of record as of March 15, 2018.
2018 Guidance
NSA reaffirms its previously provided guidance estimates for the year ended December 31, 2018.
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 May 2, 2018.

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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 presentation 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 1:00pm Eastern Time on Thursday, May 3, 2018 to discuss its 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, May 3, 2018, 1:00pm ET
Webcast available at: www.nationalstorageaffiliates.com
Domestic (Toll Free US & Canada): 877.407.9711
International: 412.902.1014
Replay:
Domestic (Toll Free US & Canada): 877.660.6853
International: 201.612.7415
Conference ID: 13646795
A replay of the call will be available for one week through Thursday, May 10, 2018. A replay of the webcast will be available for 30 days on NSA's website at www.nationalstorageaffiliates.com.
Upcoming Industry Conferences
NSA management is scheduled to participate in the Nareit REITWeek 2018 Investor Conference from June 5 -7 in New York, New York.
About National Storage Affiliates Trust
National Storage Affiliates Trust is a Maryland real estate investment trust focused on the ownership, operation and acquisition of self storage properties located within the top 100 metropolitan statistical areas throughout the United States. The Company currently holds ownership interests in and operates 541 self storage properties located in 29 states with approximately 34 million rentable square feet. NSA is the sixth largest owner and operator of self storage properties among public and private companies in the U.S. 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 2000 Index of Companies and the S&P SmallCap 600 Index.

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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, the debt and lending markets or the general economy; the Company's business and investment strategy; and the acquisition of properties, including the timing of acquisitions, and the Company's guidance estimates for the year ended December 31, 2018. For a further list and description of such risks and uncertainties, see the Company's most recent Annual Report on Form 10-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.
CONTACT:
National Storage Affiliates Trust
Investor/Media Relations
Marti Dowling
Director - Investor Relations
720.630.2624
mdowling@nsareit.net

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National Storage Affiliates Trust
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

 
Three Months Ended March 31,
 
2018
 
2017
REVENUE
 
 
 
Rental revenue
$
72,011

 
$
57,844

Other property-related revenue
2,321

 
1,881

Management fees and other revenue
2,161

 
1,838

Total revenue
76,493

 
61,563

OPERATING EXPENSES
 
 
 
Property operating expenses
25,226

 
19,749

General and administrative expenses
8,306

 
7,181

Depreciation and amortization
21,368

 
18,683

Total operating expenses
54,900

 
45,613

Income from operations
21,593

 
15,950

OTHER (EXPENSE) INCOME

 

Interest expense
(9,635
)
 
(7,471
)
Equity in losses of unconsolidated real estate venture
(52
)
 
(785
)
Acquisition costs
(180
)
 
(144
)
Non-operating expense
(84
)
 
(52
)
Gain on sale of self storage properties
474

 

Other expense
(9,477
)
 
(8,452
)
Income before income taxes
12,116

 
7,498

Income tax expense
(143
)
 
(317
)
Net income
11,973

 
7,181

Net income attributable to noncontrolling interests
(1,513
)
 
(6,626
)
Net income attributable to National Storage Affiliates Trust
10,460

 
555

Distributions to preferred shareholders
(2,588
)
 

Net income attributable to common shareholders
$
7,872

 
$
555

 
 
 
 
Earnings (loss) per share - basic
$
0.16

 
$
0.01

Earnings (loss) per share - diluted
$
0.09

 
$
0.01

 
 
 
 
Weighted average shares outstanding - basic
50,299

 
43,401

Weighted average shares outstanding - diluted
99,935

 
43,401



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

 
March 31,
 
December 31,
 
2018
 
2017
ASSETS
 
 
 
Real estate
 
 
 
Self storage properties
$
2,411,453

 
$
2,275,233

Less accumulated depreciation
(188,407
)
 
(170,358
)
Self storage properties, net
2,223,046

 
2,104,875

Cash and cash equivalents
15,262

 
13,366

Restricted cash
2,929

 
3,041

Debt issuance costs, net
1,943

 
2,185

Investment in unconsolidated real estate venture
90,092

 
89,093

Other assets, net
58,637

 
52,615

Assets held for sale

 
1,555

Total assets
$
2,391,909

 
$
2,266,730

LIABILITIES AND EQUITY
 
 
 
Liabilities
 
 
 
Debt financing
$
1,069,600

 
$
958,097

Accounts payable and accrued liabilities
24,079

 
24,459

Deferred revenue
13,542

 
12,687

Total liabilities
1,107,221

 
995,243

Equity
 
 
 
Preferred shares of beneficial interest, par value $0.01 per share. 50,000,000 authorized, 6,900,000 issued and outstanding at March 31, 2018 and December 31, 2017, at liquidation preference
172,500

 
172,500

Common shares of beneficial interest, par value $0.01 per share. 250,000,000 shares authorized, 50,438,731 and 50,284,934 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
504

 
503

Additional paid-in capital
700,762

 
711,467

Distributions in excess of earnings
(61,956
)
 
(55,729
)
Accumulated other comprehensive income
17,485

 
12,282

Total shareholders' equity
829,295

 
841,023

Noncontrolling interests
455,393

 
430,464

Total equity
1,284,688

 
1,271,487

Total liabilities and equity
$
2,391,909

 
$
2,266,730





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Supplemental Schedule 1
 
 
 
 
 
 
 
Funds From Operations and Core Funds From Operations
(in thousands, except per share and unit amounts) (unaudited)
 
 
 
 
Reconciliation of Net Income to FFO and Core FFO
 
 
 
 
 
Three Months Ended March 31,
 
2018
 
2017
Net income
$
11,973

 
$
7,181

Add (subtract):
 
 
 
Real estate depreciation and amortization
21,075

 
18,243

Company's share of unconsolidated real estate venture real estate depreciation and amortization
1,377

 
1,872

Gain on sale of self storage properties
(474
)
 

Distributions to preferred shareholders and unitholders
(2,689
)
 

FFO attributable to subordinated performance unitholders (1)
(5,584
)
 
(6,141
)
FFO attributable to common shareholders, OP unitholders, and LTIP unitholders
25,678

 
21,155

Add:
 
 
 
Acquisition costs
180

 
144

Company's share of unconsolidated real estate venture acquisition costs

 
19

Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders
$
25,858

 
$
21,318

 
 
 
 
Weighted average shares and units outstanding - FFO and Core FFO:(2)
 
 
 
Weighted average shares outstanding - basic
50,299

 
43,401

Weighted average restricted common shares outstanding
30

 
17

Weighted average OP units outstanding
29,135

 
25,959

Weighted average DownREIT OP unit equivalents outstanding
1,835

 
1,835

Weighted average LTIP units outstanding
665

 
1,468

Total weighted average shares and units outstanding - FFO and Core FFO
81,964

 
72,680

 
 
 
 
FFO per share and unit
$
0.31

 
$
0.29

Core FFO per share and unit
$
0.32

 
$
0.29

 
 
 
 
 
 
 
 
(1) Amounts represent distributions declared for subordinated performance unitholders and DownREIT subordinated performance unitholders for the periods presented.
(2) 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(3) 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.

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Supplemental Schedule 1 (continued)
 
 
 
 
 
 
 
Funds From Operations and Core Funds From Operations
(in thousands, except per share and unit amounts) (unaudited)
 
 
 
 
Reconciliation of Earnings (Loss) Per Share - Diluted to FFO and Core FFO Per Share and Unit
 
 
 
 
 
Three Months Ended March 31,
 
2018
 
2017
Earnings (loss) per share - diluted
$
0.09

 
$
0.01

Impact of the difference in weighted average number of shares(3)
0.02

 
(0.01
)
Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method(4)

 
0.09

Add real estate depreciation and amortization
0.26

 
0.25

Add Company's share of unconsolidated real estate venture real estate depreciation and amortization
0.02

 
0.03

Subtract gain on sale of self storage properties
(0.01
)
 

FFO attributable to subordinated performance unitholders
(0.07
)
 
(0.08
)
FFO per share and unit
0.31

 
0.29

Add acquisition costs and Company's share of unconsolidated real estate venture acquisition costs
0.01

 

Core FFO per share and unit
$
0.32

 
$
0.29

 
 
 
 
(3) 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.
(4) 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(3).

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Supplemental Schedule 2
 
 
 
 
 
 
 
Other Non-GAAP Financial Measurements
 
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
Net Operating Income
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
2018
 
2017
Net income
$
11,973

 
$
7,181

(Subtract) add:
 
 
 
Management fees and other revenue
(2,161
)
 
(1,838
)
General and administrative expenses
8,306

 
7,181

Depreciation and amortization
21,368

 
18,683

Interest expense
9,635

 
7,471

Equity in losses of unconsolidated real estate venture
52

 
785

Acquisition costs
180

 
144

Income tax expense
143

 
317

Gain on sale of self storage properties
(474
)
 

Non-operating expense
84

 
52

Net Operating Income
$
49,106

 
$
39,976

 
 
 
 
EBITDA and Adjusted EBITDA
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
2018
 
2017
Net income
$
11,973

 
$
7,181

Add:
 
 
 
Depreciation and amortization
21,368

 
18,683

Company's share of unconsolidated real estate venture depreciation and amortization
1,377

 
1,872

Interest expense
9,635

 
7,471

Income tax expense
143

 
317

EBITDA
44,496

 
35,524

Add (subtract):
 
 
 
Acquisition costs
180

 
144

Company's share of unconsolidated real estate venture acquisition costs

 
19

Gain on sale of self storage properties
(474
)
 

Equity-based compensation expense(1)
867

 
983

Adjusted EBITDA
$
45,069

 
$
36,670

 
 
 
 
 
 
 
 
 
 
 
 
(1) Equity-based compensation expense is a non-cash item that is included in general and administrative expenses in NSA's consolidated statements of operations.

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Supplemental Schedule 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Summary
 
 
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Consolidated and Unconsolidated Property Portfolio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stores at Period End March 31,
 
Units at Period End
March 31,
 
Rentable Square Feet at Period End March 31,
 
Occupancy at Period End March 31,
State
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
 
Growth
California
 
81

 
77

 
48,645

 
46,456

 
6,123,795

 
5,820,640

 
91.5
%
 
90.9
%
 
0.6
 %
Texas
 
60

 
52

 
24,083

 
20,306

 
3,415,171

 
2,861,018

 
88.4
%
 
87.6
%
 
0.8
 %
Oregon
 
58

 
56

 
23,580

 
22,721

 
2,983,414

 
2,864,932

 
85.8
%
 
89.2
%
 
(3.4
)%
Georgia
 
33

 
20

 
13,554

 
6,552

 
1,830,110

 
872,593

 
86.8
%
 
93.6
%
 
(6.8
)%
Florida
 
32

 
23

 
23,238

 
17,605

 
2,240,457

 
1,620,869

 
85.6
%
 
83.9
%
 
1.7
 %
Oklahoma
 
30

 
30

 
13,876

 
13,985

 
1,902,874

 
1,903,039

 
83.8
%
 
85.3
%
 
(1.5
)%
Arizona
 
29

 
16

 
16,038

 
9,130

 
1,820,753

 
1,064,686

 
87.9
%
 
89.3
%
 
(1.4
)%
North Carolina
 
29

 
30

 
13,103

 
13,436

 
1,599,784

 
1,650,671

 
89.4
%
 
89.5
%
 
(0.1
)%
Indiana
 
16

 
14

 
8,790

 
7,846

 
1,135,022

 
1,007,745

 
85.4
%
 
83.3
%
 
2.1
 %
Washington
 
15

 
15

 
4,950

 
5,064

 
624,046

 
644,680

 
89.1
%
 
90.6
%
 
(1.5
)%
Louisiana
 
14

 
10

 
6,325

 
4,520

 
859,187

 
630,103

 
83.7
%
 
84.4
%
 
(0.7
)%
Colorado
 
11

 
10

 
5,056

 
4,640

 
615,308

 
564,604

 
89.0
%
 
91.4
%
 
(2.4
)%
Nevada
 
11

 
6

 
5,755

 
3,135

 
727,616

 
419,567

 
92.9
%
 
92.0
%
 
0.9
 %
New Hampshire
 
10

 
9

 
4,190

 
3,667

 
509,470

 
444,200

 
89.1
%
 
91.9
%
 
(2.8
)%
Other(1)
 
39

 
18

 
15,955

 
7,066

 
2,122,892

 
937,525

 
85.1
%
 
86.6
%
 
(1.5
)%
Total Consolidated/Weighted Average
 
468

 
386

 
227,138

 
186,129

 
28,509,899

 
23,306,872

 
87.8
%
 
88.6
%
 
(0.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Unconsolidated/Weighted Average(2)
 
72

 
66

 
39,598

 
35,572

 
5,004,976

 
4,517,744

 
87.2
%
 
87.6
%
 
(0.4
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Consolidated and Unconsolidated/Weighted Average
 
540

 
452

 
266,736

 
221,701

 
33,514,875

 
27,824,616

 
87.8
%
 
88.5
%
 
(0.7
)%






(1) Other states in NSA's consolidated portfolio as of March 31, 2018 include Alabama, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, South Carolina and Virginia.
(2) Refer to Supplemental Schedule 5 for additional information about NSA's unconsolidated real estate venture.

11

image0a77.jpg

Supplemental Schedule 3 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Summary
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018 Acquisition & Investment Activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Self storage properties
acquired during the
quarter ended:
 
 
 
 
 
 
 
Summary of Investment
 
Stores
 
Units
 
Rentable Square Feet
 
Cash and Acquisition Costs
 
Value of OP Equity
 
Mortgages Assumed
 
Other Liabilities
 
Total
 
 
 
 
 
 
March 31, 2018(3)
 
25
 
12,002
 
1,352,592

 
$
105,135

 
$
22,403

 
$
7,581

 
$
670

 
$
135,789

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated real estate venture (venture at 100%)(4)
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
March 31, 2018
 
1
 
481
 
64,745

 
9,394

 

 

 
66

 
9,460

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total 2018 Investments(4)
 
26
 
12,483
 
1,417,337

 
$
114,529

 
$
22,403

 
$
7,581

 
$
736

 
$
145,249


 
2018 Disposition Activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dispositions Closed During the Quarter Ended:
 
Stores
 
Units
 
Rentable Square Feet
 
Gross Proceeds
 
 
March 31, 2018(5)
 
1
 
327
 
44,689

 
$
2,200













(3) NSA acquired self storage properties located in Arizona, Florida, Kansas, Maryland, Texas and Washington during 2018.
(4) Values represent entire unconsolidated real estate venture at 100%, not NSA's proportionate share. NSA's ownership in the unconsolidated real estate venture is 25%. Refer to Supplemental Schedule 5 for additional information about NSA's unconsolidated real estate venture.
(5) NSA disposed of a self storage property located in Washington during 2018.

12

image0a77.jpg

Supplemental Schedule 4
 
 
 
 
 
 
 
 
 
 
 
Debt and Equity Capitalization
 
 
 
 
 
As of March 31, 2018
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
Debt Balances and Characteristics (dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
Effective Interest Rate(1)
 
Weighted Average Maturity (In Years)
 
Balance
Credit Facility:
 
 
 
 
 
Revolving line of credit
3.28%
 
2.10
 
$
72,625

Term loan - Tranche A
2.91%
 
3.10
 
235,000

Term loan - Tranche B
3.24%
 
4.10
 
155,000

Term loan - Tranche C
3.71%
 
5.84
 
105,000

Term loan - Tranche D
3.79%
 
4.84
 
125,000

Term loan facility
3.08%
 
5.25
 
100,000

Fixed rate mortgages payable
4.17%
 
7.43
 
274,540

Total Principal/Weighted Average
3.51%
 
4.99
 
1,067,165

Unamortized debt issuance costs and debt premium, net
 
 
 
 
2,435

Total Debt
 
 
 
 
$
1,069,600

Debt Maturities (dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
chart-ce819cd6019770384d9.jpg
Debt Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Covenant
 
Amount
Net Debt to Annualized Current Quarter Adjusted EBITDA
 
n/a
 
5.8x
Trailing Twelve Month Fixed Charge Coverage Ratio
 
> 1.5x
 
3.5x
Total Leverage Ratio
 
 
< 60.0%
 
38.6%
 
 
 
 
 
 
(1) Effective interest rate incorporates the stated rate plus the impact of interest rate cash flow hedges and discount and premium amortization, if applicable. For the revolving line of credit, the effective interest rate excludes fees which range from 0.15% to 0.25% for unused borrowings.


13

image0a77.jpg

Supplemental Schedule 4 (continued)
 
 
 
 
 
 
 
Debt and Equity Capitalization
 
 
 
As of March 31, 2018
 
 
 
(unaudited)
 
 
 
 
 
 
 
Preferred Shares and Units
 
 
 
 
 
 
 
Outstanding
 
 
6.000% Series A perpetual preferred shares of beneficial interest
6,900,000

 
 
6.000% Series A-1 cumulative redeemable preferred units
316,103

 
 
 
 
 
 
Common Shares and Units
 
 
 
 
 
 
 
Outstanding
 
If Converted
Common shares of beneficial interest
50,408,683

 
50,408,683

Restricted common shares
30,048

 
30,048

Total shares outstanding
50,438,731

 
50,438,731

Operating partnership units
29,062,706

 
29,062,706

DownREIT operating partnership unit equivalents
1,834,786

 
1,834,786

Total operating partnership units
30,897,492

 
30,897,492

Long-term incentive plan units(2)
666,169

 
666,169

Total shares and Class A equivalents outstanding
82,002,392

 
82,002,392

Subordinated performance units(3)
10,663,892

 
15,249,366

DownREIT subordinated performance unit equivalents(3)
4,386,999

 
6,273,409

Total subordinated partnership units
15,050,891

 
21,522,775

Total common shares and units outstanding
97,053,283

 
103,525,167

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2) Balances exclude 224,000 long-term incentive plan ("LTIP") units which only vest and participate in dividend distributions upon the future contribution of properties from the PROs.
(3) If converted balance assumes that each subordinated performance unit (including each DownREIT subordinated performance unit) is convertible into OP units, notwithstanding the two-year lock-out period on conversions for certain series of subordinated performance units, and that each subordinated performance unit would on average convert on a hypothetical basis into an estimated 1.43 OP units based on historical financial information for the trailing twelve months ended March 31, 2018. The hypothetical conversions are calculated by dividing the average cash available for distribution, or CAD, per subordinated performance unit by 110% of the CAD per OP unit over the same period. The Company anticipates that as CAD grows over time, the conversion ratio will also grow, including to levels that may exceed these amounts.

14

image0a77.jpg

Supplemental Schedule 5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summarized Information for Unconsolidated Real Estate Venture
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated Real Estate Venture Properties as of March 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
State
 
Stores at Period End
 
Units at Period End
 
Rentable Square Feet at Period End
 
Occupancy at Period End
 
1Q 2018 Average Occupancy
Florida
 
21

 
11,483

 
1,331,415

 
86.2
%
 
86.0
%
Alabama
 
11

 
4,065

 
611,002

 
87.7
%
 
86.8
%
California
 
11

 
6,919

 
942,193

 
85.9
%
 
85.3
%
New Jersey
 
11

 
8,005

 
989,900

 
88.5
%
 
88.1
%
Other(1)
 
18

 
9,126

 
1,130,466

 
87.8
%
 
86.6
%
Total/Weighted Average
 
72

 
39,598

 
5,004,976

 
87.2
%
 
86.5
%
Balance Sheet Information
 
 
 
 
 
 Total Venture at 100%(2)
 
March 31, 2018
 
December 31, 2017
ASSETS
 
 
 
 
Self storage properties, net
 
$
660,645

 
$
655,973

Other assets
 
8,727

 
8,397

Total assets
 
$
669,372

 
$
664,370

LIABILITIES AND EQUITY
 
 
 
 
Debt financing
 
$
317,440

 
$
317,359

Other liabilities
 
5,693

 
4,855

Equity
 
346,239

 
342,156

Total liabilities and equity
 
$
669,372

 
$
664,370

 
 
 
 
 
Operating Information for the Three Months Ended March 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 Total Venture at 100%(2)
 
NSA Proportionate Share (Venture at 25%)(3)
 
Three Months Ended March 31,
 
Three Months Ended March 31,
 
2018
 
2017
 
2018
 
2017
Total revenue
$
14,806

 
$
12,507

 
$
3,702

 
$
3,127

Property operating expenses
5,293

 
4,068

 
1,323

 
1,017

Net operating income
9,513

 
8,439

 
2,379

 
2,110

Supervisory, administrative and other expenses
(1,057
)
 
(898
)
 
(264
)
 
(225
)
Depreciation and amortization
(5,507
)
 
(7,489
)
 
(1,377
)
 
(1,872
)
Interest expense
(2,899
)
 
(2,826
)
 
(725
)
 
(707
)
Acquisition and other expenses
(262
)
 
(366
)
 
(65
)
 
(91
)
Net loss
$
(212
)
 
$
(3,140
)
 
$
(52
)
 
$
(785
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Other states in the unconsolidated real estate venture include Arizona, Delaware, Georgia, New Mexico, Nevada, Pennsylvania, Ohio, Texas and Virginia.
(2) Values represent entire unconsolidated real estate venture at 100%, not NSA's proportionate share. NSA's ownership in the unconsolidated real estate venture is 25%.
(3) NSA's proportionate share of its unconsolidated real estate venture is derived by applying NSA's 25% ownership interest to each line item in the GAAP financial statements of the unconsolidated real estate venture to calculate NSA's share of that line item. NSA believes this information offers insights into the financial performance of the Company, although the presentation of such information, and its combination with NSA's consolidated results, may not accurately depict the legal and economic implications of holding a noncontrolling interest in the unconsolidated real estate venture. The operating agreement of the unconsolidated real estate venture provides for the distribution of net cash flow to the unconsolidated real estate venture’s investors no less than monthly, generally in proportion to the investors’ respective ownership interests, subject to a promoted distribution to NSA upon the achievement of certain performance benchmarks by the non-NSA investor.

15

image0a77.jpg

Supplemental Schedule 6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2018 compared to Three Months Ended March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
Property Operating Expenses
 
Net Operating Income
 
Net Operating Income Margin
State
Stores
1Q 2018
 
1Q 2017
 
Growth
 
1Q 2018
 
1Q 2017
 
Growth
 
1Q 2018
 
1Q 2017
 
Growth
 
1Q 2018
 
1Q 2017
 
Growth
California
77

 
$
17,603

 
$
16,368

 
7.5
 %
 
$
5,350

 
$
5,335

 
0.3
 %
 
$
12,253

 
$
11,033

 
11.1
 %
 
69.6
%
 
67.4
%
 
2.2
 %
Oregon
55

 
8,919

 
8,740

 
2.0
 %
 
2,579

 
2,452

 
5.2
 %
 
6,340

 
6,288

 
0.8
 %
 
71.1
%
 
71.9
%
 
(0.8
)%
Texas
51

 
6,105

 
5,956

 
2.5
 %
 
2,410

 
2,280

 
5.7
 %
 
3,695

 
3,676

 
0.5
 %
 
60.5
%
 
61.7
%
 
(1.2
)%
Oklahoma
30

 
3,623

 
3,600

 
0.6
 %
 
1,210

 
1,196

 
1.2
 %
 
2,413

 
2,404

 
0.4
 %
 
66.6
%
 
66.8
%
 
(0.2
)%
North Carolina
28

 
3,803

 
3,666

 
3.7
 %
 
1,179

 
1,131

 
4.2
 %
 
2,624

 
2,535

 
3.5
 %
 
69.0
%
 
69.1
%
 
(0.1
)%
Florida
20

 
4,826

 
4,560

 
5.8
 %
 
1,508

 
1,436

 
5.0
 %
 
3,318

 
3,124

 
6.2
 %
 
68.8
%
 
68.5
%
 
0.3
 %
Georgia
20

 
1,921

 
1,885

 
1.9
 %
 
733

 
707

 
3.7
 %
 
1,188

 
1,178

 
0.8
 %
 
61.8
%
 
62.5
%
 
(0.7
)%
Arizona
15

 
2,928

 
2,837

 
3.2
 %
 
883

 
865

 
2.1
 %
 
2,045

 
1,972

 
3.7
 %
 
69.8
%
 
69.5
%
 
0.3
 %
Indiana
14

 
2,075

 
2,095

 
(1.0
)%
 
753

 
742

 
1.5
 %
 
1,322

 
1,353

 
(2.3
)%
 
63.7
%
 
64.6
%
 
(0.9
)%
Washington
13

 
1,751

 
1,652

 
6.0
 %
 
550

 
483

 
13.9
 %
 
1,201

 
1,169

 
2.7
 %
 
68.6
%
 
70.8
%
 
(2.2
)%
Colorado
10

 
1,583

 
1,507

 
5.0
 %
 
568

 
474

 
19.8
 %
 
1,015

 
1,033

 
(1.7
)%
 
64.1
%
 
68.5
%
 
(4.4
)%
Louisiana
10

 
1,426

 
1,418

 
0.6
 %
 
505

 
506

 
(0.2
)%
 
921

 
912

 
1.0
 %
 
64.6
%
 
64.3
%
 
0.3
 %
Other(1)
33

 
4,303

 
4,119

 
4.5
 %
 
1,762

 
1,624

 
8.5
 %
 
2,541

 
2,495

 
1.8
 %
 
59.1
%
 
60.6
%
 
(1.5
)%
Total/Weighted Average
376

 
$
60,866

 
$
58,403

 
4.2
 %
 
$
19,990

 
$
19,231

 
3.9
 %
 
$
40,876

 
$
39,172

 
4.4
 %
 
67.2
%
 
67.1
%
 
0.1
 %















(1) Other states in NSA's same store portfolio include Alabama, Kentucky, Mississippi, Nevada, New Hampshire, New Mexico, Ohio and South Carolina.

16

image0a77.jpg

Supplemental Schedule 6 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2018 compared to Three Months Ended March 31, 2017
 
 
Rentable Square Feet
 
Occupancy at Period End
 
Average Occupancy
 
Average Annualized Rental Revenue per Occupied Square Foot
State
Units
 
1Q 2018
 
1Q 2017
 
Growth
 
1Q 2018
 
1Q 2017
 
Growth
 
1Q 2018
 
1Q 2017
 
Growth
California
46,451

5,819,291

 
91.4
%
 
90.9
%
 
0.5
 %
 
90.7
%
 
90.7
%
 
 %
 
$
12.72

 
$
11.78

 
8.0
 %
Oregon
22,406

2,826,583

 
86.5
%
 
89.2
%
 
(2.7
)%
 
85.8
%
 
88.5
%
 
(2.7
)%
 
14.45

 
13.79

 
4.8
 %
Texas
19,946

2,815,351

 
89.3
%
 
87.7
%
 
1.6
 %
 
88.5
%
 
87.3
%
 
1.2
 %
 
9.53

 
9.41

 
1.3
 %
Oklahoma
13,876

1,902,874

 
83.8
%
 
85.3
%
 
(1.5
)%
 
83.5
%
 
84.7
%
 
(1.2
)%
 
8.87

 
8.70

 
2.0
 %
North Carolina
12,583

1,536,384

 
89.5
%
 
89.4
%
 
0.1
 %
 
89.3
%
 
89.1
%
 
0.2
 %
 
10.65

 
10.28

 
3.6
 %
Florida
13,715

1,427,893

 
87.8
%
 
86.1
%
 
1.7
 %
 
88.1
%
 
86.0
%
 
2.1
 %
 
14.91

 
14.57

 
2.3
 %
Georgia
6,720

895,430

 
89.4
%
 
93.6
%
 
(4.2
)%
 
88.7
%
 
92.7
%
 
(4.0
)%
 
9.34

 
8.94

 
4.5
 %
Arizona
8,365

978,870

 
89.1
%
 
89.1
%
 
 %
 
87.6
%
 
89.0
%
 
(1.4
)%
 
13.15

 
12.48

 
5.4
 %
Indiana
7,840

1,007,452

 
86.5
%
 
83.3
%
 
3.2
 %
 
84.4
%
 
83.5
%
 
0.9
 %
 
9.52

 
9.73

 
(2.2
)%
Washington
4,462

557,471

 
89.0
%
 
90.6
%
 
(1.6
)%
 
88.0
%
 
89.0
%
 
(1.0
)%
 
14.05

 
13.15

 
6.8
 %
Colorado
4,634

564,359

 
89.6
%
 
91.4
%
 
(1.8
)%
 
89.2
%
 
89.8
%
 
(0.6
)%
 
12.28

 
11.61

 
5.8
 %
Louisiana
4,519

629,928

 
84.2
%
 
84.4
%
 
(0.2
)%
 
83.8
%
 
84.7
%
 
(0.9
)%
 
10.63

 
10.58

 
0.5
 %
Other(1)
13,828

1,795,207

 
90.6
%
 
89.2
%
 
1.4
 %
 
89.7
%
 
89.5
%
 
0.2
 %
 
10.43

 
10.00

 
4.3
 %
Total/Weighted Average
179,345

22,757,093

 
88.8
%
 
88.8
%
 
 %
 
88.1
%
 
88.5
%
 
(0.4
)%
 
$
11.75

 
$
11.25

 
4.4
 %















(1) Other states in NSA's same store portfolio include Alabama, Kentucky, Mississippi, Nevada, New Hampshire, New Mexico, Ohio and South Carolina.

17

image0a77.jpg

Supplemental Schedule 7
 
Reconciliation of Same Store Data and Net Operating Income to Net Income
(dollars in thousands) (unaudited)

 
 
 

Three Months Ended March 31,

2018
 
2017
Rental revenue
 
 
 
Same store portfolio
$
58,904

 
$
56,562

Non-same store portfolio
13,107

 
1,282

Total rental revenue
72,011

 
57,844

 
 
 
 
Other property-related revenue
 
 
 
Same store portfolio
1,962

 
1,841

Non-same store portfolio
359

 
40

Total other property-related revenue
2,321


1,881

 
 
 
 
Property operating expenses
 
 
 
Same store portfolio
19,990

 
19,231

Non-same store portfolio
5,236

 
518

Total property operating expenses
25,226


19,749

 
 
 
 
Net operating income
 
 
 
Same store properties
40,876

 
39,172

Non-same store properties
8,230

 
804

Total net operating income
49,106


39,976


 
 
 
Management fees and other revenue
2,161

 
1,838

General and administrative expenses
(8,306
)
 
(7,181
)
Depreciation and amortization
(21,368
)
 
(18,683
)
Income from operations
21,593

 
15,950

 
 
 
 
Other (expense) income
 
 
 
Interest expense
(9,635
)
 
(7,471
)
Equity in losses of unconsolidated real estate venture
(52
)
 
(785
)
Acquisition costs
(180
)
 
(144
)
Non-operating expense
(84
)
 
(52
)
Gain on sale of self storage properties
474

 

Other expense
(9,477
)
 
(8,452
)
Income before income taxes
12,116

 
7,498

Income tax expense
(143
)
 
(317
)
Net income
$
11,973

 
$
7,181



18

image0a77.jpg

Supplemental Schedule 8
 
Selected Financial Information
(in thousands, except per square foot data) (unaudited)
 
 
 
 
 
Three Months Ended March 31,
 
2018
 
2017
 
 
 
 
Average Annualized Rental Revenue Per Occupied Square Foot
 
 
 
 
Same store
$
11.75

 
$
11.25

Total consolidated portfolio
$
11.87

 
$
11.36

 
 
 
 
Total Consolidated Portfolio Capital Expenditures
 
 
 
 
 
 
 
Recurring capital expenditures
$
1,258

 
$
758

Revenue enhancing capital expenditures
757

 
85

Acquisitions capital expenditures
1,917

 
2,260

Total Consolidated Portfolio Capital Expenditures
$
3,932

 
$
3,103

 
 
 
 
Property Operating Expenses Detail
 
 
 
 
 
 
 
Store payroll and related costs
$
7,282

 
$
5,845

Property tax expense
6,266

 
4,783

Other property operating expenses
11,678

 
9,121

Property operating expenses on the Company's statements of operations
$
25,226

 
$
19,749

 
 
 
 
General and Administrative Expenses Detail
 
 
 
 
 
 
 
Supervisory and administrative expenses
$
4,059

 
$
3,349

Equity-based compensation expense
867

 
983

Other general and administrative expenses
3,380

 
2,849

General and administrative expenses on the Company's statements of operations
$
8,306

 
$
7,181

 
 
 
 




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Glossary
 
 
 
 
 
This Earnings Release and Supplemental Information include certain financial and operating measures used by NSA management that are not calculated in accordance with accounting principles generally accepted in the United States, or GAAP. NSA's definitions and calculations of these non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other real estate companies and, accordingly, may not be comparable. These non-GAAP financial and operating measures should not be considered an alternative to GAAP net income or any other GAAP measurement of performance and should not be considered an alternative measure of liquidity.
 
 
 
 
 
AVERAGE ANNUALIZED RENTAL REVENUE PER OCCUPIED SQUARE FOOT: Average annualized rental revenue per occupied square foot is computed by dividing annualized rental revenue per the Company's statements of operations (which includes fees and is net of any discounts) by average occupied square feet.
AVERAGE OCCUPANCY: Average occupancy is calculated based on the average of the month-end occupancy immediately preceding the period presented and the month-end occupancies included in the respective period presented.
CAPITAL EXPENDITURES DEFINITIONS
ACQUISITIONS CAPITAL EXPENDITURES: Acquisitions capital expenditures represents the portion of capital expenditures capitalized during the current period that were identified and underwritten prior to a property's acquisition.
RECURRING CAPITAL EXPENDITURES: Recurring capital expenditures represents the portion of capital expenditures that are deemed to replace the consumed portion of acquired capital assets and extend their useful lives.
REVENUE ENHANCING CAPITAL EXPENDITURES: Revenue enhancing capital expenditures represents the portion of capital expenditures that are made to enhance the revenue and value of an asset from its original purchase condition.
EBITDA: NSA defines EBITDA as net income (loss), as determined under GAAP, plus interest expense, loss on early extinguishment of debt, income taxes, depreciation and amortization expense and the Company's share of unconsolidated real estate venture depreciation and amortization. NSA defines ADJUSTED EBITDA as EBITDA plus acquisition costs, the Company's share of unconsolidated real estate venture acquisition costs, organizational and offering expenses, equity-based compensation expense, losses on sale of properties, and impairment of long-lived assets; and by subtracting gains on sale of properties and debt forgiveness. These further adjustments eliminate the impact of items that the Company does not consider indicative of its core operating performance. In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in this presentation. NSA's presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items.
NSA presents EBITDA and Adjusted EBITDA because the Company believes they assist investors and analysts in comparing the Company's performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. EBITDA and Adjusted EBITDA have limitations as an analytical tool. Some of these limitations are:
EBITDA and Adjusted EBITDA do not reflect the Company's cash expenditures, or future requirements, for capital expenditures, contractual commitments or working capital needs;
EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debts;
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;

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Adjusted EBITDA excludes equity-based compensation expense, which is and will remain a key element of the Company's overall long-term incentive compensation package, although the Company excludes it as an expense when evaluating its ongoing operating performance for a particular period;
EBITDA and Adjusted EBITDA do not reflect the impact of certain cash charges resulting from matters the Company considers not to be indicative of its ongoing operations; and
other companies in NSA's industry may calculate EBITDA and Adjusted EBITDA differently than NSA does, limiting its usefulness as a comparative measure.
NSA compensates for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with the Company's analysis of net income (loss). EBITDA and Adjusted EBITDA should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, income from operations, and net income (loss).
FUNDS FROM OPERATIONS: Funds from operations, or FFO, is a widely used performance measure for real estate companies and is provided here as a supplemental measure of the Company's operating performance. The April 2002 National Policy Bulletin of Nareit, which the Company refers to as the White Paper, as amended, defines FFO as net income (as determined under GAAP), excluding gains (or losses) from sales of real estate and related impairment charges, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. NSA includes amortization of customer in-place leases in real estate depreciation and amortization in the calculation of FFO because the Company believes the amortization of customer in-place leases is analogous to real estate depreciation, as the value of such intangibles is inextricably connected to the real estate acquired. Distributions declared on subordinated performance units and DownREIT subordinated performance units represent NSA's allocation of FFO to noncontrolling interests held by subordinated performance unitholders and DownREIT subordinated performance unitholders. For purposes of calculating FFO attributable to common shareholders, OP unitholders, and LTIP unitholders, NSA excludes distributions declared on subordinated performance units, DownREIT subordinated performance units, preferred shares and preferred units. NSA defines CORE FFO as FFO, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of its core operating performance. These further adjustments consist of acquisition costs, organizational and offering costs, gains on debt forgiveness, gains (losses) on early extinguishment of debt, and after adjustments for unconsolidated partnerships and joint ventures.
Management uses FFO and Core FFO as key performance indicators in evaluating the operations of NSA's properties. Given the nature of NSA's business as a real estate owner and operator, the Company considers FFO and Core FFO as key supplemental measures of its operating performance that are not specifically defined by GAAP. NSA believes that FFO and Core FFO are useful to management and investors as a starting point in measuring the Company's operational performance because FFO and Core FFO exclude various items included in net income (loss) that do not relate to or are not indicative of the Company's operating performance such as gains (or losses) from sales of self storage properties and depreciation, which can make periodic and peer analyses of operating performance more difficult. NSA's computation of FFO and Core FFO may not be comparable to FFO reported by other REITs or real estate companies.
FFO and Core FFO should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, operating income and net income (loss). FFO and Core FFO do not represent cash generated from operating activities determined in accordance with GAAP and are not a measure of liquidity or an indicator of NSA's ability to make cash distributions. NSA believes that to further understand the Company's performance, FFO and Core FFO should be compared with the Company's reported net income (loss) and considered in addition to cash flows computed in accordance with GAAP, as presented in the Company's consolidated financial statements.
HYPOTHETICAL LIQUIDATION AT BOOK VALUE METHOD: In accordance with GAAP, the Company allocates income (loss) utilizing the hypothetical liquidation at book value ("HLBV") method, in which the Company allocates income or loss based on the change in each unitholders’ claim on the net assets of the Company's operating partnership at period end after adjusting for any distributions or contributions made during such period. The Company uses this method because of the difference between the distribution rights and priorities set forth in the operating partnership's Agreement of Limited Partnership and what is reflected by the underlying percentage ownership interests of the unitholders.

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The HLBV method is a balance sheet-focused approach to income (loss) allocation. A calculation is prepared at each balance sheet date to determine the amount that unitholders would receive if the operating partnership were to liquidate all of its assets (at GAAP net book value) and distribute the resulting proceeds to its creditors and unitholders based on the contractually defined liquidation priorities. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is used to derive each unitholder's share of the income (loss) for the period. Due to the stated liquidation priorities and because the HLBV method incorporates non-cash items such as depreciation expense, in any given period, income or loss may be allocated disproportionately to unitholders as compared to their respective ownership percentage in the operating partnership, and net income (loss) attributable to National Storage Affiliates Trust could be more or less net income than actual cash distributions received and more or less income or loss than what may be received in the event of an actual liquidation. Additionally, the HLBV method could result in net income (or net loss) attributable to National Storage Affiliates Trust during a period when the Company reports consolidated net loss (or net income), or net income (or net loss) attributable to National Storage Affiliates Trust in excess of the Company's consolidated net income (or net loss). The computations of basic and diluted earnings (loss) per share may be materially affected by these disproportionate income (loss) allocations, resulting in volatile fluctuations of basic and diluted earnings (loss) per share. Readers and investors are cautioned not to place undue reliance on NSA's income (loss) allocations or earnings (loss) per share without considering the effects described above, including the effect that depreciation and amortization have on income (loss), net book value and the application of the HLBV method.
LONG-TERM INCENTIVE PLAN UNITS: Long-term incentive plan units, or LTIP units, are a special class of partnership interest in NSA's operating partnership that allow the holder to participate in the ordinary and liquidating distributions received by holders of the operating partnership units (subject to the achievement of specified levels of profitability by our operating partnership or the achievement of certain events). Upon vesting, and after achieving parity with operating partnership units, vested LTIP units may be converted into an equal number of operating partnership units, and thereafter have all the rights of operating partnership units, including redemption rights.
NET DEBT TO ANNUALIZED CURRENT QUARTER ADJUSTED EBITDA: NSA calculates net debt to Adjusted EBITDA as total debt (inclusive of $9.1 million of fair value of debt adjustments and $6.7 million of debt issuance costs) less cash and cash equivalents, divided by annualized current quarter Adjusted EBITDA.
NET OPERATING INCOME:  NSA defines net operating income, or NOI, as net income (loss), as determined under GAAP, plus general and administrative expenses, depreciation and amortization, interest expense, loss on early extinguishment of debt, equity in earnings (losses) of unconsolidated real estate ventures, acquisition costs, organizational and offering expenses, income tax expense, impairment of long-lived assets, losses on the sale of properties and non-operating expense and by subtracting management fees and other revenue, gains on sale of properties, debt forgiveness, and non-operating income. NOI is not a measure of performance calculated in accordance with GAAP.
NSA believes NOI is useful to investors in evaluating the Company's operating performance because:
NOI is one of the primary measures used by NSA's management and the Company's PROs to evaluate the economic productivity of the Company's properties, including the Company's ability to lease its properties, increase pricing and occupancy and control the Company's property operating expenses;
NOI is widely used in the real estate industry and the self storage industry to measure the performance and value of real estate assets without regard to various items included in net income that do not relate to or are not indicative of operating performance, such as depreciation and amortization, which can vary depending upon accounting methods, the book value of assets, and the impact of NSA's capital structure; and
NSA believes NOI helps the Company's investors to meaningfully compare the results of its operating performance from period to period by removing the impact of the Company's capital structure (primarily interest expense on the Company's outstanding indebtedness) and depreciation of the cost basis of NSA's assets from its operating results.
There are material limitations to using a non-GAAP measure such as NOI, including the difficulty associated with comparing results among more than one company and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect the Company's net income (loss). NSA

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compensates for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with the Company's analysis of net income (loss). NOI should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, income from operations and net loss.
NET OPERATING INCOME MARGIN: The ratio of NOI divided by total rental and other property-related revenue.
NON-SAME STORE PORTFOLIO: Non-same store portfolio comprises those properties that do not meet the Same Store portfolio property definition. 
OCCUPANCY AT PERIOD END:  Represents total occupied rentable square feet divided by total rentable square feet at period end.
OPERATING PARTNERSHIP UNITS:  Operating partnership units, or OP Units, are Class A common units of limited partner interest in the Company's operating partnership which are economically equivalent to NSA's common shares. NSA also owns certain of the Company's self storage properties through other consolidated limited partnership subsidiaries of the Company's operating partnership, which the Company refers to as "DownREIT partnerships." The DownREIT partnerships issue certain units of limited partner or limited liability company interest that are intended to be economically equivalent to the Company's OP units, which the Company defines as DOWNREIT OPERATING PARTNERSHIP UNIT EQUIVALENTS, or DownREIT OP units.
PROs: Participating regional operators, or "PROs", are NSA's experienced regional self storage operators with local operational focus and expertise. As of March 31, 2018, the Company had eight PROs, SecurCare Self Storage, Northwest Self Storage, Optivest Properties, Guardian Storage Centers, Move It Self Storage, Storage Solutions, Hide-Away and Personal Mini.
RENTABLE SQUARE FEET: Rentable square feet includes all enclosed self storage units but excludes commercial, residential, and covered parking space.
RESTRICTED COMMON SHARES: Restricted common shares are common shares that are subject to restrictions on transferability subject to vesting and such other restrictions. Generally, a participant granted restricted common shares has all of the rights of a shareholder, including, without limitation, the right to vote and the right to receive dividends on the restricted common shares. Holders of restricted common shares are prohibited from selling such shares until they vest.
SAME STORE PORTFOLIO: NSA's same store portfolio is defined as those properties owned and operated since the first day of the earliest year presented, excluding any properties sold, expected to be sold or subject to significant changes such as expansions or casualty events which cause the portfolio's year-over-year operating results to no longer be comparable.
SUBORDINATED PERFORMANCE UNITS:  Subordinated performance units, or SP Units, are Class B common units of limited partner interest in the Company's operating partnership. SP units, which are linked to the performance of specific contributed portfolios, are intended to incentivize the Company's PROs to drive operating performance and support the sustainability of the operating cash flow generated by the contributed self storage properties that the PROs continue to manage on NSA's behalf. Because subordinated performance unit holders receive distributions only after portfolio-specific minimum performance thresholds are satisfied, the Company believes SP units play a key role in aligning the interests of the Company's PROs with NSA and the Company's shareholders. The DownREIT partnerships also issue units of limited partner interest that are intended to be economically equivalent to the Company's SP units, which the Company defines as DOWNREIT SUBORDINATED PERFORMANCE UNIT EQUIVALENTS, or DownREIT SP units.

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