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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 Ventures
 
 
Schedule 6 - Same Store Performance Summary By State
 
 
Schedule 7 - Same Store Performance Summary By MSA
 
 
Schedule 8 - Same Store Operating Data - Trailing Five Quarters
 
 
Schedule 9 - Reconciliation of Same Store Data and Net Operating Income to Net Income
 
 
Schedule 10 - Selected Financial Information
 
 
Glossary
 
 
 
 
 
 
 
 



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August 1, 2019
National Storage Affiliates Trust Reports Second Quarter 2019 Results
GREENWOOD VILLAGE, Colo. - (BUSINESS WIRE) - National Storage Affiliates Trust (“NSA” or the "Company") (NYSE: NSA) today reported the Company’s second quarter 2019 results.
Second Quarter 2019 Highlights
Reported net income of $17.7 million for the second quarter of 2019, an increase of 36.0% compared to the second quarter of 2018. Reported loss per share of $0.19 for the second quarter of 2019, primarily relating to the HLBV method for allocating net income among the various classes of equity.
Reported core funds from operations ("Core FFO") of $34.3 million, or $0.38 per share for the second quarter of 2019, an increase of 11.8% per share compared to the second quarter of 2018.
Achieved same store net operating income ("NOI") growth of 5.5% for the second quarter of 2019 compared to the same period in 2018, driven by a 4.7% increase in same store total revenues and a 2.8% increase in same store property operating expenses.
Acquired 24 wholly-owned self storage properties for $185.3 million during the second quarter of 2019. Consideration for these acquisitions included the issuance of approximately $15.5 million of OP equity.
Received approximately $116 million of gross proceeds from the sale of 2.4 million Common Shares of Beneficial Interest ("common shares") and 1.8 million 6.000% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest ("Series A preferred shares") under the Company's at the market (“ATM”) program during the second quarter of 2019.
Entered into an agreement with a lender for a $100 million term loan which matures in ten years and has an effective interest rate of 4.27%, after taking into account the effect of interest rate swaps for the term of the loan.
Increased the second quarter 2019 dividend to $0.32 per common share, which is the eighth common share dividend increase since the Company’s IPO in the second quarter of 2015.
Announced an executive management transition whereby the Company's Board of Trustees has elevated Arlen Nordhagen, Chairman, Chief Executive Officer and founder, to Executive Chairman and Tamara Fischer will be appointed Chief Executive Officer, in addition to her current role as President, effective January 1, 2020. It is expected that she will join the Board of Trustees on the same date. The Board further announced the appointment of Brandon Togashi to Executive Vice President and Chief Financial Officer effective January 1, 2020. 
Highlights Subsequent to the End of the Second Quarter
Entered into an agreement to issue $100.0 million of 3.98% senior unsecured notes due August 30, 2029 and $50.0 million of 4.08% senior unsecured notes due August 30, 2031 in a private placement.
Entered into an agreement with lenders to extend maturities and increase the total borrowing capacity under the Company's credit facility by $255.0 million for a total credit facility of $1.275 billion.
Arlen Nordhagen, Chairman and Chief Executive Officer, commented, "We are very pleased with our 2019 results to-date, which demonstrate the benefits of our PRO platform and distinguish NSA from our peers. The robust 5.5% same store NOI growth in the second quarter combined with the healthy acquisition volume of approximately $185 million drove another double digit quarterly increase in Core FFO per share."
Tamara Fischer, President and Chief Financial Officer, added, "We've taken a number of steps recently to further strengthen our balance sheet, which position us well for future acquisition opportunities. Specifically, since quarter-end, we amended our credit facility, increasing our borrowing capacity, extending the maturities, and enhancing the terms in line with the current market. We also priced our inaugural private placement in the debt capital markets, a $150 million transaction that will close in the third quarter and further extend our average debt maturity. After giving effect to these transactions, our $500 million line of credit will be undrawn and available to fund our external growth strategy."
Ms. Fischer continued, "We're especially encouraged by our results during the first half of 2019. Accordingly, we've increased our full-year 2019 guidance for Core FFO per share and same store growth assumptions."

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Financial Results
($ in thousands, except per share and unit data)
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
Growth
 
2019
 
2018
 
Growth
Net income
$
17,733

 
$
13,041

 
36.0
 %
 
$
30,673

 
$
25,014

 
22.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
Funds From Operations ("FFO")(1)
$
33,978

 
$
27,416

 
23.9
 %
 
$
66,558

 
$
53,094

 
25.4
 %
Add back acquisition costs
305

 
150

 
103.3
 %
 
462

 
330

 
40.0
 %
Core FFO(1)
$
34,283

 
$
27,566

 
24.4
 %
 
$
67,020

 
$
53,424

 
25.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per share - basic
$
(0.19
)
 
$
0.07

 
(371.4
)%
 
$
(0.11
)
 
$
0.22

 
(150.0
)%
Earnings (loss) per share - diluted
$
(0.19
)
 
$
0.07

 
(371.4
)%
 
$
(0.11
)
 
$
0.19

 
(157.9
)%
 
 
 
 
 
 
 
 
 
 
 
 
FFO per share and unit(1)
$
0.38

 
$
0.33

 
15.2
 %
 
$
0.74

 
$
0.65

 
13.8
 %
Core FFO per share and unit(1)
$
0.38

 
$
0.34

 
11.8
 %
 
$
0.75

 
$
0.65

 
15.4
 %
(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. 
Net income increased $4.7 million for the second quarter of 2019 and increased $5.7 million for the six months ended June 30, 2019 ("year-to-date") as compared to the same periods in 2018. These increases were the result of additional NOI generated primarily from 76 wholly-owned self storage properties acquired between July 1, 2018 and June 30, 2019, same store NOI growth and gain on sale of self storage properties, partially offset by increases in interest expense, depreciation and amortization, general and administrative expenses and GAAP losses from the Company's unconsolidated real estate ventures.
The increases in FFO and Core FFO for the second quarter of 2019 and year-to-date were primarily the result of incremental NOI from properties acquired between July 1, 2018 and June 30, 2019, same store NOI growth, and incremental FFO from the Company's unconsolidated real estate ventures, partially offset by higher interest expense, general and administrative expenses and increases in distributions to subordinated performance unitholders.
Same Store Operating Results (439 Stores)
($ in thousands, except per square foot data)
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
Growth
 
2019
 
2018
 
Growth
Total revenues
$
74,061

 
$
70,770

 
4.7
%
 
$
146,370

 
$
139,745

 
4.7
%
Property operating expenses
22,053

 
21,462

 
2.8
%
 
44,336

 
43,547

 
1.8
%
Net Operating Income (NOI)
$
52,008

 
$
49,308

 
5.5
%
 
$
102,034

 
$
96,198

 
6.1
%
NOI Margin
70.2
%
 
69.7
%
 
0.5
%
 
69.7
%
 
68.8
%
 
0.9
%
 
 
 
 
 
 
 
 
 
 
 
 
Average Occupancy
89.6
%
 
89.2
%
 
0.4
%
 
88.7
%
 
88.3
%
 
0.4
%
Average Annualized Rental Revenue Per Occupied Square Foot
$
11.81

 
$
11.38

 
3.8
%
 
$
11.82

 
$
11.36

 
4.0
%
Year-over-year same store total revenues increased 4.7% for the second quarter of 2019 and year-to-date as compared to the same periods in 2018. The increases were driven primarily by a 3.8% increase in average annualized rental revenue per occupied square foot for the second quarter of 2019 and a 4.0% increase in average annualized rental revenue per occupied square foot year-to-date combined with a 40 basis point increase in average occupancy in both periods. Markets that generated above portfolio average same store total revenue growth include: Atlanta, Indianapolis, and Las Vegas.  Markets that generated below portfolio average same store total revenue growth include: Portland, Dallas and Phoenix.

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Year-over-year same store property operating expenses increased 2.8% for the second quarter of 2019 and 1.8% year-to-date as compared to the same periods in 2018. These increases primarily resulted from increases in property taxes and repairs and maintenance expenses partially offset by decreases in insurance costs.
Investment Activity
NSA acquired 24 wholly-owned self storage properties located across eight states consisting of approximately 1.8 million rentable square feet configured in approximately 12,300 storage units during the second quarter of 2019. Total consideration for these acquisitions of $185.3 million included approximately $168.4 million of net cash, the issuance of approximately $4.7 million of OP units, $6.2 million of subordinated performance units, $4.6 million of Series A-1 preferred units and the assumption of approximately $1.4 million of other working capital liabilities.
Balance Sheet
During the second quarter of 2019, NSA entered into an agreement with a lender for a $100 million unsecured term loan. The term loan matures in ten years and has an effective interest rate of 4.27%, after taking into account the effect of interest rate swaps for the term of the loan. NSA used the proceeds from the term loan to repay outstanding amounts under its revolving line of credit.
During the second quarter of 2019, NSA issued 2,375,000 common shares at an average offering price of $30.06 per share and 1,785,680 Series A preferred shares at an average offering price of $24.84 per share under the Company's ATM program for gross proceeds of approximately $116 million. NSA used the proceeds from the issuances to repay outstanding amounts under its revolving line of credit.
On July 29, 2019, NSA entered into agreements with a syndicated group of lenders to amend its credit facility, increasing the total capacity by $255.0 million for a total credit facility of $1.275 billion (the "amended credit facility"), which included an additional $100 million of revolving line of credit capacity and $155.0 million of additional term loan borrowings. The agreement also reduced the spread for the revolving line of credit by 10 basis points and the weighted average interest rate of the credit facility's term loan borrowings by 7 basis points, after taking into account the effect of interest rate swaps.
The Company's amended credit facility consists of the following components: (i) a revolving line of credit that matures in January 2024 that provides for a total borrowing commitment up to $500.0 million, (ii) a $125.0 million Term Loan A that matures in January 2023, (iii) a $250.0 million Term Loan B that matures in July 2024, (iv) a $225.0 million Term Loan C that matures in January 2025, and (v) a $175.0 million Term Loan D that matures in July 2026. The Company has an expansion option under the credit facility, which if exercised in full, would provide for a total borrowing capacity under the credit facility of $1.750 billion. Additional details of the amended credit facility will be provided in the Company's second quarter Form 10-Q.
On July 30, 2019, the Company's operating partnership entered into an agreement to issue $100.0 million of 3.98% senior unsecured notes due August 30, 2029 and $50.0 million of 4.08% senior unsecured notes due August 30, 2031 (the "Senior Unsecured Notes") in a private placement to certain institutional accredited investors. The funding of the Senior Unsecured Notes is expected to occur on August 30, 2019, subject to customary closing conditions.
Investment Grade Rating
During the second quarter of 2019, Kroll Bond Rating Agency ("KBRA") assigned an issuer rating of BBB with Stable Outlook to NSA OP, LP, NSA's operating partnership. KBRA has also assigned a BBB- rating to the Company’s outstanding Series A preferred shares. Subsequent to the end of the second quarter, KBRA assigned a rating of BBB with Stable Outlook to NSA's Senior Unsecured Notes.
Common Share Dividends
On May 22, 2019, NSA's Board of Trustees declared a quarterly cash dividend of $0.32 per common share, which was paid on June 28, 2019 to shareholders of record as of June 14, 2019. The second quarter 2019 dividend represents an annualized dividend rate of $1.28, a 10.3% increase from the second quarter 2018 dividend rate and a 6.7% increase from the first quarter 2019 dividend rate. 

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2019 Guidance
The following table outlines NSA's prior and updated FFO guidance estimates and related assumptions for the year ended December 31, 2019:
 
Current Ranges for
Full Year 2019
 
Prior Ranges for
Full Year 2019
 
Low
 
High
 
Low
 
High
Core FFO per share(1)
$1.51
 
$1.54
 
$1.48
 
$1.52
 
 
 
 
 
 
 
 
Same store operations (439 stores)
 
 
 
 
 
 
 
Total revenue growth
3.5%
 
4.0%
 
2.5%
 
3.5%
Property operating expenses growth
2.75%
 
3.25%
 
2.5%
 
3.5%
NOI growth
3.5%
 
4.5%
 
2.5%
 
3.5%
 
 
 
 
 
 
 
 
General and administrative expenses (as a percent of revenue)
11.0%
 
12.0%
 
11.0%
 
12.0%
General and administrative expenses (excluding equity-based compensation)
10.0%
 
10.5%
 
10.0%
 
10.5%
Equity-based compensation
1.0%
 
1.5%
 
1.0%
 
1.5%
 
 
 
 
 
 
 
 
Management fees and other revenue, in millions
$20.0
 
$21.0
 
$20.0
 
$21.0
Core FFO from unconsolidated real estate ventures, in millions
$15.0
 
$16.0
 
$15.0
 
$16.0
 
 
 
 
 
 
 
 
Subordinated performance unit distributions, in millions
$33.0
 
$35.0
 
$32.0
 
$34.0
 
 
 
 
 
 
 
 
Wholly-owned acquisitions, in millions
$400.0
 
$500.0
 
$300.0
 
$500.0
Joint venture acquisitions, in millions
$20.0
 
$100.0
 
$20.0
 
$100.0
(1) The following table provides a reconciliation of the range of estimated earnings (loss) per share - diluted to estimated Core FFO per share and unit:
 
Current Ranges for
Full Year 2019
 
Prior Ranges for
Full Year 2019
 
Low
 
High
 
Low
 
High
Earnings (loss) per share - diluted
$(0.20)
 
$(0.10)
 
$0.10
 
$0.20
Impact of the difference in weighted average number of shares and GAAP accounting for noncontrolling interests, two-class method and treasury stock method
0.79
 
0.70
 
0.44
 
0.36
Add real estate depreciation and amortization, including NSA's share of unconsolidated venture real estate depreciation and amortization
1.30
 
1.34
 
1.29
 
1.33
Subtract gain on sale of self storage properties
(0.03)
 
(0.03)
 
 
FFO attributable to subordinated unitholders
(0.36)
 
(0.38)
 
(0.36)
 
(0.38)
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
$1.51
 
$1.54
 
$1.48
 
$1.52
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 1, 2019.

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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 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 1:00pm Eastern Time on Friday, August 2, 2019 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: Friday, August 2, 2019, 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: 13692161
A replay of the call will be available for one week through Friday, August 9, 2019. 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 Bank of America Merrill Lynch Global Real Estate Conference 2019 on September 10 – 11, 2019 in New York, New York, the BMO 14th Annual Real Estate Conference on September 17 – 18, 2019 in Chicago, Illinois and the Evercore 5th Annual Storage Symposium on September 25, 2019 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. As of June 30, 2019, the Company held ownership interests in and operated 729 self storage properties located in 35 states and Puerto Rico with approximately 46.5 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 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; the acquisition of properties, including those under contract, our ability to execute on our acquisition pipeline; the timing of acquisitions under contract; and the Company's guidance estimates for the year ended December 31, 2019. 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
George Hoglund, CFA
Vice President - Investor Relations
720.630.2160
ghoglund@nsareit.net

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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, 2019
 
2019
 
2018
 
2019
 
2018
REVENUE
 
 
 
 
 
 
 
Rental revenue
$
87,175

 
$
75,019

 
$
170,030

 
$
147,030

Other property-related revenue
3,128

 
2,549

 
5,952

 
4,870

Management fees and other revenue
5,116

 
2,155

 
10,009

 
4,316

Total revenue
95,419

 
79,723

 
185,991

 
156,216

OPERATING EXPENSES
 
 
 
 
 
 
 
Property operating expenses
27,190

 
25,184

 
53,647

 
50,410

General and administrative expenses
11,170

 
8,460

 
21,936

 
16,766

Depreciation and amortization
25,829

 
22,389

 
50,178

 
43,757

Total operating expenses
64,189

 
56,033

 
125,761

 
110,933

OTHER (EXPENSE) INCOME

 

 

 

Interest expense
(13,947
)
 
(10,472
)
 
(27,158
)
 
(20,107
)
Equity in (losses) earnings of unconsolidated real estate ventures
(1,646
)
 
100

 
(3,748
)
 
48

Acquisition costs
(305
)
 
(150
)
 
(462
)
 
(330
)
Non-operating expense
(169
)
 

 
(267
)
 
(84
)
Gain (loss) on sale of self storage properties
2,814

 
(83
)
 
2,814

 
391

Other expense
(13,253
)
 
(10,605
)
 
(28,821
)
 
(20,082
)
Income before income taxes
17,977

 
13,085

 
31,409

 
25,201

Income tax expense
(244
)
 
(44
)
 
(736
)
 
(187
)
Net income
17,733

 
13,041

 
30,673

 
25,014

Net income attributable to noncontrolling interests
(25,389
)
 
(7,150
)
 
(30,918
)
 
(8,663
)
Net (loss) income attributable to National Storage Affiliates Trust
(7,656
)
 
5,891

 
(245
)
 
16,351

Distributions to preferred shareholders
(3,257
)
 
(2,587
)
 
(5,845
)
 
(5,175
)
Net (loss) income attributable to common shareholders
$
(10,913
)
 
$
3,304

 
$
(6,090
)
 
$
11,176

 
 
 
 
 
 
 
 
Earnings (loss) per share - basic
$
(0.19
)
 
$
0.07

 
$
(0.11
)
 
$
0.22

Earnings (loss) per share - diluted
$
(0.19
)
 
$
0.07

 
$
(0.11
)
 
$
0.19

 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
57,543

 
50,486

 
57,101

 
50,393

Weighted average shares outstanding - diluted
57,543

 
50,486

 
57,101

 
100,492


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National Storage Affiliates Trust
Consolidated Balance Sheets
(dollars in thousands, except per share amounts)
(unaudited)
 
June 30,
 
December 31,
 
2019
 
2018
ASSETS
 
 
 
Real estate
 
 
 
Self storage properties
$
3,015,549

 
$
2,637,723

Less accumulated depreciation
(289,886
)
 
(246,261
)
Self storage properties, net
2,725,663

 
2,391,462

Cash and cash equivalents
15,255

 
13,181

Restricted cash
4,498

 
3,182

Debt issuance costs, net
810

 
1,260

Investment in unconsolidated real estate ventures
233,295

 
245,125

Other assets, net
59,363

 
75,053

Operating lease right-of-use assets
22,971

 

Total assets
$
3,061,855

 
$
2,729,263

LIABILITIES AND EQUITY
 
 
 
Liabilities
 
 
 
Debt financing
$
1,469,647

 
$
1,278,102

Accounts payable and accrued liabilities
53,054

 
33,130

Operating lease liabilities
24,152

 

Deferred revenue
16,218

 
15,732

Total liabilities
1,563,071

 
1,326,964

Equity
 
 
 
Preferred shares of beneficial interest, par value $0.01 per share. 50,000,000 authorized, 8,685,680 and 6,900,000 issued and outstanding at June 30, 2019 and December 31, 2018, respectively, at liquidation preference
217,142

 
172,500

Common shares of beneficial interest, par value $0.01 per share. 250,000,000 shares authorized, 59,296,969 and 56,654,009 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
593

 
567

Additional paid-in capital
901,499

 
844,276

Distributions in excess of earnings
(156,192
)
 
(114,122
)
Accumulated other comprehensive (loss) income
(5,466
)
 
13,618

Total shareholders' equity
957,576

 
916,839

Noncontrolling interests
541,208

 
485,460

Total equity
1,498,784

 
1,402,299

Total liabilities and equity
$
3,061,855

 
$
2,729,263



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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 June 30,
 
Six Months Ended June 30, 2019
 
2019
 
2018
 
2019
 
2018
Net income
$
17,733

 
$
13,041

 
$
30,673

 
$
25,014

Add (subtract):
 
 
 
 
 
 
 
Real estate depreciation and amortization
25,510

 
22,093

 
49,537

 
43,168

Company's share of unconsolidated real estate venture real estate depreciation and amortization
5,472

 
1,378

 
10,929

 
2,755

(Gain) loss on sale of self storage properties
(2,814
)
 
83

 
(2,814
)
 
(391
)
Company's share of unconsolidated real estate venture loss on sale of properties

 

 
202

 

Distributions to preferred shareholders and unitholders
(3,461
)
 
(2,706
)
 
(6,214
)
 
(5,395
)
FFO attributable to subordinated performance unitholders(1)
(8,462
)
 
(6,473
)
 
(15,755
)
 
(12,057
)
FFO attributable to common shareholders, OP unitholders, and LTIP unitholders
33,978

 
27,416

 
66,558

 
53,094

Add:
 
 
 
 
 
 
 
Acquisition costs
305

 
150

 
462

 
330

Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders
$
34,283

 
$
27,566

 
$
67,020

 
$
53,424

 
 
 
 
 
 
 
 
Weighted average shares and units outstanding - FFO and Core FFO:(2)
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
57,543

 
50,486

 
57,101

 
50,393

Weighted average restricted common shares outstanding
29

 
30

 
29

 
30

Weighted average OP units outstanding
30,213

 
28,985

 
30,081

 
29,059

Weighted average DownREIT OP unit equivalents outstanding
1,848

 
1,835

 
1,848

 
1,835

Weighted average LTIP units outstanding
537

 
687

 
641

 
676

Total weighted average shares and units outstanding - FFO and Core FFO
90,170

 
82,023

 
89,700

 
81,993

 
 
 
 
 
 
 
 
FFO per share and unit
$
0.38

 
$
0.33

 
$
0.74

 
$
0.65

Core FFO per share and unit
$
0.38

 
$
0.34

 
$
0.75

 
$
0.65

 
 
 
 
 
 
 
 
(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.

9

image0a89.jpg

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 June 30,
 
Six Months Ended June 30, 2019
 
2019
 
2018
 
2019
 
2018
Earnings (loss) per share - diluted
$
(0.19
)
 
$
0.07

 
$
(0.11
)
 
$
0.19

Impact of the difference in weighted average number of shares(3)
0.07

 
(0.03
)
 
0.04

 
0.05

Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method(4)
0.28

 
0.08

 
0.35

 

Add real estate depreciation and amortization
0.28

 
0.27

 
0.55

 
0.53

Add Company's share of unconsolidated real estate venture real estate depreciation and amortization
0.06

 
0.02

 
0.12

 
0.03

Subtract gain on sale of self storage properties
(0.03
)
 

 
(0.03
)
 

FFO attributable to subordinated performance unitholders
(0.09
)
 
(0.08
)
 
(0.18
)
 
(0.15
)
FFO per share and unit
0.38

 
0.33

 
0.74

 
0.65

Add acquisition costs

 
0.01

 
0.01

 

Core FFO per share and unit
$
0.38

 
$
0.34

 
$
0.75

 
$
0.65

 
 
 
 
 
 
 
 
(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).

10

image0a89.jpg

Supplemental Schedule 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Non-GAAP Financial Measurements
 
 
 
 
 
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Operating Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30, 2019
 
2019
 
2018
 
2019
 
2018
Net income
$
17,733

 
$
13,041

 
$
30,673

 
$
25,014

(Subtract) add:
 
 
 
 
 
 
 
Management fees and other revenue
(5,116
)
 
(2,155
)
 
(10,009
)
 
(4,316
)
General and administrative expenses
11,170

 
8,460

 
21,936

 
16,766

Depreciation and amortization
25,829

 
22,389

 
50,178

 
43,757

Interest expense
13,947

 
10,472

 
27,158

 
20,107

Equity in losses (earnings) of unconsolidated real estate ventures
1,646

 
(100
)
 
3,748

 
(48
)
Acquisition costs
305

 
150

 
462

 
330

Income tax expense
244

 
44

 
736

 
187

(Gain) loss on sale of self storage properties
(2,814
)
 
83

 
(2,814
)
 
(391
)
Non-operating expense
169

 

 
267

 
84

Net Operating Income
$
63,113

 
$
52,384

 
$
122,335

 
$
101,490

 
 
 
 
 
 
 
 
EBITDA and Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30, 2019
 
2019
 
2018
 
2019
 
2018
Net income
$
17,733

 
$
13,041

 
$
30,673

 
$
25,014

Add:
 
 
 
 
 
 
 
Depreciation and amortization
25,829

 
22,389

 
50,178

 
43,757

Company's share of unconsolidated real estate venture depreciation and amortization
5,472

 
1,378

 
10,929

 
2,755

Interest expense
13,947

 
10,472

 
27,158

 
20,107

Income tax expense
244

 
44

 
736

 
187

EBITDA
63,225

 
47,324

 
119,674

 
91,820

Add (subtract):
 
 
 
 
 
 
 
Acquisition costs
305

 
150

 
462

 
330

(Gain) loss on sale of self storage properties
(2,814
)
 
83

 
(2,814
)
 
(391
)
Company's share of unconsolidated real estate venture loss on sale of properties

 

 
202

 

Equity-based compensation expense
1,108

 
919

 
2,220

 
1,786

Adjusted EBITDA
$
61,824

 
$
48,476

 
$
119,744

 
$
93,545


11

image0a89.jpg

Supplemental Schedule 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Summary
As of June 30, 2019
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholly-Owned Store Data by State (Consolidated)
 
Total Operated Store Data by State (Consolidated & Unconsolidated)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State/Territories
 
Stores
 
Units
 
Rentable Square Feet
 
Occupancy at Period End
 
State/Territories
 
Stores
 
Units
 
Rentable Square Feet
 
Occupancy at Period End
California
 
83

 
49,555

 
6,222,878

 
91.9
%
 
California
 
93

 
55,761

 
6,977,748

 
91.8
%
Texas
 
70

 
29,018

 
4,162,447

 
89.4
%
 
Texas
 
74

 
31,355

 
4,439,636

 
89.1
%
Oregon
 
61

 
24,499

 
3,106,459

 
86.8
%
 
Florida
 
68

 
42,762

 
4,516,025

 
87.0
%
Florida
 
41

 
27,373

 
2,794,015

 
88.8
%
 
Oregon
 
61

 
24,499

 
3,106,459

 
86.8
%
Georgia
 
41

 
17,467

 
2,338,413

 
91.2
%
 
Georgia
 
52

 
23,608

 
3,210,721

 
91.0
%
North Carolina
 
33

 
15,382

 
1,885,529

 
95.9
%
 
Oklahoma
 
36

 
16,112

 
2,197,414

 
90.4
%
Arizona
 
31

 
16,867

 
1,924,960

 
89.1
%
 
Arizona
 
33

 
17,876

 
2,034,790

 
88.9
%
Oklahoma
 
30

 
13,868

 
1,903,492

 
90.1
%
 
North Carolina
 
33

 
15,382

 
1,885,529

 
95.9
%
Louisiana
 
25

 
12,030

 
1,501,409

 
85.5
%
 
Louisiana
 
25

 
12,030

 
1,501,409

 
85.5
%
Indiana
 
16

 
8,789

 
1,134,830

 
93.0
%
 
Michigan
 
24

 
15,624

 
1,977,623

 
90.0
%
Kansas
 
16

 
5,727

 
763,249

 
90.5
%
 
Ohio
 
22

 
12,357

 
1,518,964

 
91.7
%
Washington
 
14

 
4,497

 
578,723

 
86.1
%
 
New Jersey
 
18

 
11,962

 
1,416,962

 
91.2
%
Nevada
 
13

 
6,677

 
845,336

 
90.9
%
 
Nevada
 
17

 
8,295

 
1,097,413

 
90.7
%
Colorado
 
11

 
5,053

 
615,513

 
91.8
%
 
Indiana
 
16

 
8,789

 
1,134,830

 
93.0
%
New Hampshire
 
11

 
4,676

 
570,845

 
94.0
%
 
Kansas
 
16

 
5,727

 
763,249

 
90.5
%
Ohio
 
8

 
3,574

 
454,168

 
92.8
%
 
Alabama
 
15

 
6,308

 
937,241

 
90.5
%
Other(1)
 
50

 
24,292

 
3,035,575

 
89.6
%
 
Washington
 
14

 
4,497

 
578,723

 
86.1
%
Total
 
554

 
269,344

 
33,837,841

 
90.2
%
 
Colorado
 
11

 
5,053

 
615,513

 
91.8
%
 
 

 

 

 
 
 
New Hampshire
 
11

 
4,676

 
570,845

 
94.0
%
 
 
 
 
 
 
 
 
 
 
Other(2)
 
90

 
49,839

 
5,973,417

 
88.7
%
 
 

 

 

 
 
 
Total
 
729

 
372,512

 
46,454,511

 
89.9
%






(1) Other states and territories in NSA's owned portfolio as of June 30, 2019 include Alabama, Idaho, Illinois, Kentucky, Maryland, Massachusetts, Mississippi, Missouri, New Jersey, New Mexico, Pennsylvania, South Carolina, Virginia and Puerto Rico.
(2) Other states and territories in NSA's operated portfolio as of June 30, 2019 include Delaware, Idaho, Illinois, Kentucky, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, New Mexico, New York, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia and Puerto Rico.

12

image0a89.jpg

Supplemental Schedule 3 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Summary
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 Acquisition 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
 
Other Liabilities
 
Total
 
 
 
 
 
March 31, 2019
 
32
 
14,952
 
1,745,495

 
$
160,531

 
$
33,356

 
$
674

 
$
194,561

June 30, 2019
 
24
 
12,327
 
1,762,895

 
168,442

 
15,515

 
1,378

 
185,335

Total Acquisitions(3)
 
56
 
27,279
 
3,508,390

 
$
328,973

 
$
48,871

 
$
2,052

 
$
379,896

 
2019 Disposition & Divestiture Activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dispositions Closed During the Quarter Ended:
 
Stores
 
Units
 
Rentable Square Feet
 
Gross Proceeds
 
 
June 30, 2019(4)
 
1
 
453
 
45,273

 
$
6,500

 
Unconsolidated Real Estate Ventures (at 100%)(5)
 
 
 
 
 
 
 
 
 
March 31, 2019(6)
 
1
 
318
 
40,930

 
4,075

 
Total 2019 Divestitures(5)
 
2
 
771
 
86,203

 
$
10,575
















(3) NSA acquired self storage properties located in Arizona (2), Florida (7), Georgia (7), Idaho (3), Louisiana (11), Maryland (1), New Hampshire (1), New Jersey (3), New Mexico (4), Oregon (1), Pennsylvania (6) and Texas (10).
(4) NSA disposed of a self storage property located in Washington during 2019.
(5) Values represent entire unconsolidated real estate ventures at 100%, not NSA's proportionate share. NSA's ownership in each of the unconsolidated real estate ventures is 25%.
(6) The divestiture completed during the quarter ended March 31, 2019 was a sale from one of NSA's unconsolidated real estate ventures into the consolidated portfolio of NSA.

13

image0a89.jpg

Supplemental Schedule 4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt and Equity Capitalization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Summary (dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Interest Rate(1)
 
Basis of Rate
 
Maturity Date
 
2019
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
Total
Credit Facility:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving line of credit
3.80%
 
Variable
 
May 2020
 
$

 
$
234,500

 
$

 
$

 
$

 
$

 
$

 
$
234,500

Term loan - Tranche A
2.91%
 
Swapped To Fixed
 
May 2021
 

 

 
235,000

 

 

 

 

 
235,000

Term loan - Tranche B
2.94%
 
Swapped To Fixed
 
May 2022
 

 

 

 
155,000

 

 

 

 
155,000

Term loan - Tranche C
3.71%
 
Swapped To Fixed
 
February 2024
 

 

 

 

 

 
105,000

 

 
105,000

Term loan - Tranche D
3.79%
 
Swapped To Fixed
 
January 2023
 

 

 

 

 
125,000

 

 

 
125,000

Term loan facility - 2023
2.83%
 
Swapped To Fixed
 
June 2023
 

 

 

 

 
175,000

 

 

 
175,000

Term loan facility - 2028
4.62%
 
Swapped To Fixed
 
December 2028
 

 

 

 

 

 

 
75,000

 
75,000

Term loan facility - 2029
4.27%
 
Swapped To Fixed
 
April 2029
 

 

 

 

 

 

 
100,000

 
100,000

Fixed rate mortgages payable
4.18%
 
Fixed
 
October 2020 - October 2031
 

 
35,985

 
3,714

 

 
82,878

 
20,331

 
122,693

 
265,601

Total Principal/Weighted Average
3.59%
 
 
 
4.14 years
 
$

 
$
270,485

 
$
238,714

 
$
155,000

 
$
382,878

 
$
125,331

 
$
297,693

 
$
1,470,101

Unamortized debt issuance costs and debt premium, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(454
)
Total Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
$
1,469,647

Debt Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Covenant
 
Amount
Net Debt to Annualized Current Quarter Adjusted EBITDA
 
n/a
 
5.9x
Trailing Twelve Month Fixed Charge Coverage Ratio
 
> 1.5x
 
3.1x
Total Leverage Ratio
 
 
< 60.0%
 
40.6%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 $400 million revolving line of credit, the effective interest rate excludes fees which range from 0.15% to 0.25% for unused borrowings.

14

image0a89.jpg

Supplemental Schedule 4 (continued)
 
 
 
 
Debt and Equity Capitalization
 
 
 
 
As of June 30, 2019
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
Preferred Shares and Units
 
 
 
 
 
 
 
Outstanding
 
 
6.000% Series A cumulative redeemable preferred shares of beneficial interest
8,685,680

 
 
6.000% Series A-1 cumulative redeemable preferred units
684,421

 
 
 
 
 
 
Common Shares and Units
 
 
 
 
 
 
 
Outstanding
 
If Converted
Common shares of beneficial interest
59,269,086

 
59,269,086

Restricted common shares
27,883

 
27,883

Total shares outstanding
59,296,969

 
59,296,969

Operating partnership units
30,491,509

 
30,491,509

DownREIT operating partnership unit equivalents
1,848,261

 
1,848,261

Total operating partnership units
32,339,770

 
32,339,770

Long-term incentive plan units(2)
532,267

 
532,267

Total shares and Class A equivalents outstanding
92,169,006

 
92,169,006

Subordinated performance units(3)
10,932,635

 
15,196,363

DownREIT subordinated performance unit equivalents(3)
4,371,622

 
6,076,555

Total subordinated partnership units
15,304,257

 
21,272,918

Total common shares and units outstanding
107,473,263

 
113,441,924










(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 1.39 OP units based on historical financial information for the trailing twelve months ended June 30, 2019. 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.

15

image0a89.jpg

Supplemental Schedule 5
 
 
 
 
 
Summarized Information for Unconsolidated Real Estate Ventures
(dollars in thousands) (unaudited)
 
 
Combined Balance Sheet Information
 
 
 
 
 
 Total Ventures at 100%(1)
 
June 30, 2019
 
December 31, 2018
ASSETS
 
 
 
 
Self storage properties, net
 
$
1,863,002

 
$
1,894,412

Other assets
 
29,489

 
50,915

Total assets
 
$
1,892,491

 
$
1,945,327

LIABILITIES AND EQUITY
 
 
 
 
Debt financing
 
$
947,493

 
$
956,357

Other liabilities
 
19,973

 
16,516

Equity
 
925,025

 
972,454

Total liabilities and equity
 
$
1,892,491

 
$
1,945,327

 
 
 
 
 
Combined Operating Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 2019
 
 
 Total Ventures at 100%(1)
 
NSA Proportionate Share (Ventures at 25%)(2)
 
 Total Ventures at 100%(1)
 
NSA Proportionate Share (Ventures at 25%)(2)
Total revenue
 
$
40,858

 
$
10,214

 
$
80,653

 
$
20,163

Property operating expenses
 
12,544

 
3,136

 
25,088

 
6,272

Net operating income
 
28,314

 
7,078

 
55,565

 
13,891

Supervisory, administrative and other expenses
 
(2,706
)
 
(677
)
 
(5,359
)
 
(1,340
)
Depreciation and amortization
 
(21,888
)
 
(5,472
)
 
(43,714
)
 
(10,929
)
Interest expense
 
(9,941
)
 
(2,485
)
 
(19,961
)
 
(4,990
)
Loss on sale of self storage properties
 

 

 
(806
)
 
(202
)
Acquisition and other expenses
 
(419
)
 
(105
)
 
(827
)
 
(207
)
Net loss
 
$
(6,640
)
 
$
(1,661
)
 
$
(15,102
)
 
$
(3,777
)
Add (subtract):
 
 
 
 
 
 
 
 
Equity in earnings adjustments related to amortization of basis differences
 
 
 
15

 
 
 
29

Company's share of unconsolidated real estate venture real estate depreciation and amortization
 
 
 
5,472

 
 
 
10,929

Company's share of unconsolidated real estate venture loss on sale of properties
 
 
 

 
 
 
202

Company's share of FFO and Core FFO from unconsolidated real estate ventures
 
 
 
$
3,826

 
 
 
$
7,383


(1) Values represent entire unconsolidated real estate ventures at 100%, not NSA's proportionate share. NSA's ownership in each of the unconsolidated real estate ventures is 25%.
(2) NSA's proportionate share of its unconsolidated real estate ventures is derived by applying NSA's 25% ownership interest to each line item in the GAAP financial statements of the unconsolidated real estate ventures 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 ventures. The operating agreements of the unconsolidated real estate ventures provide for the distribution of net cash flow to the unconsolidated real estate ventures' 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.

16

image0a89.jpg

Supplemental Schedule 6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By State
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2019 compared to Three Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
Property Operating Expenses
 
Net Operating Income
 
Net Operating Income Margin
State
Stores
2Q 2019
 
2Q 2018
 
Growth
 
2Q 2019
 
2Q 2018
 
Growth
 
2Q 2019
 
2Q 2018
 
Growth
 
2Q 2019
 
2Q 2018
 
Growth
California
80

 
$
18,994

 
$
18,327

 
3.6
%
 
$
5,115

 
$
5,058

 
1.1
 %
 
$
13,879

 
$
13,269

 
4.6
 %
 
73.1
%
 
72.4
%
 
0.7
 %
Oregon
58

 
9,684

 
9,520

 
1.7
%
 
2,486

 
2,416

 
2.9
 %
 
7,198

 
7,104

 
1.3
 %
 
74.3
%
 
74.6
%
 
(0.3
)%
Texas
58

 
7,423

 
7,106

 
4.5
%
 
2,811

 
2,692

 
4.4
 %
 
4,612

 
4,414

 
4.5
 %
 
62.1
%
 
62.1
%
 

Georgia
33

 
4,226

 
3,809

 
10.9
%
 
1,417

 
1,253

 
13.1
 %
 
2,809

 
2,556

 
9.9
 %
 
66.5
%
 
67.1
%
 
(0.6
)%
Oklahoma
30

 
3,689

 
3,543

 
4.1
%
 
1,181

 
1,117

 
5.7
 %
 
2,508

 
2,426

 
3.4
 %
 
68.0
%
 
68.5
%
 
(0.5
)%
North Carolina
29

 
4,207

 
3,959

 
6.3
%
 
1,285

 
1,167

 
10.1
 %
 
2,922

 
2,792

 
4.7
 %
 
69.5
%
 
70.5
%
 
(1.0
)%
Florida
28

 
6,639

 
6,408

 
3.6
%
 
1,968

 
2,019

 
(2.5
)%
 
4,671

 
4,389

 
6.4
 %
 
70.4
%
 
68.5
%
 
1.9
 %
Arizona
16

 
3,212

 
3,088

 
4.0
%
 
918

 
898

 
2.2
 %
 
2,294

 
2,190

 
4.7
 %
 
71.4
%
 
70.9
%
 
0.5
 %
Indiana
16

 
2,535

 
2,386

 
6.2
%
 
615

 
671

 
(8.3
)%
 
1,920

 
1,715

 
12.0
 %
 
75.7
%
 
71.9
%
 
3.8
 %
Louisiana
14

 
1,858

 
1,823

 
1.9
%
 
679

 
642

 
5.8
 %
 
1,179

 
1,181

 
(0.2
)%
 
63.5
%
 
64.8
%
 
(1.3
)%
Washington
13

 
1,806

 
1,776

 
1.7
%
 
468

 
489

 
(4.3
)%
 
1,338

 
1,287

 
4.0
 %
 
74.1
%
 
72.5
%
 
1.6
 %
Nevada
11

 
1,978

 
1,789

 
10.6
%
 
553

 
550

 
0.5
 %
 
1,425

 
1,239

 
15.0
 %
 
72.0
%
 
69.3
%
 
2.7
 %
Colorado
11

 
1,770

 
1,695

 
4.4
%
 
594

 
538

 
10.4
 %
 
1,176

 
1,157

 
1.6
 %
 
66.4
%
 
68.3
%
 
(1.9
)%
New Hampshire
10

 
1,591

 
1,476

 
7.8
%
 
499

 
474

 
5.3
 %
 
1,092

 
1,002

 
9.0
 %
 
68.6
%
 
67.9
%
 
0.7
 %
Other(1)
32

 
4,449

 
4,065

 
9.4
%
 
1,464

 
1,478

 
(0.9
)%
 
2,985

 
2,587

 
15.4
 %
 
67.1
%
 
63.6
%
 
3.5
 %
Total/Weighted Average
439

 
$
74,061

 
$
70,770

 
4.7
%
 
$
22,053

 
$
21,462

 
2.8
 %
 
$
52,008

 
$
49,308

 
5.5
 %
 
70.2
%
 
69.7
%
 
0.5
 %













(1) Other states in NSA's same store portfolio include Alabama, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, South Carolina and Virginia.

17

image0a89.jpg

Supplemental Schedule 6 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By State
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2019 compared to Three Months Ended June 30, 2018
 
 
Rentable Square Feet
 
Occupancy at Period End
 
Average Occupancy
 
Average Annualized Rental Revenue per Occupied Square Foot
State
Units
 
2Q 2019
 
2Q 2018
 
Growth
 
2Q 2019
 
2Q 2018
 
Growth
 
2Q 2019
 
2Q 2018
 
Growth
California
48,015

6,070,355

 
92.2
%
 
92.9
%
 
(0.7
)%
 
91.7
%
 
92.4
%
 
(0.7
)%
 
$
13.04

 
$
12.51

 
4.2
%
Oregon
23,661

2,990,534

 
86.8
%
 
88.5
%
 
(1.7
)%
 
85.2
%
 
86.9
%
 
(1.7
)%
 
14.86

 
14.37

 
3.4
%
Texas
23,234

3,296,931

 
91.8
%
 
91.5
%
 
0.3
 %
 
90.0
%
 
89.7
%
 
0.3
 %
 
9.74

 
9.34

 
4.3
%
Georgia
13,640

1,850,061

 
92.0
%
 
89.4
%
 
2.6
 %
 
90.4
%
 
87.5
%
 
2.9
 %
 
9.79

 
9.17

 
6.8
%
Oklahoma
13,868

1,903,492

 
90.1
%
 
86.7
%
 
3.4
 %
 
88.0
%
 
85.0
%
 
3.0
 %
 
8.54

 
8.50

 
0.5
%
North Carolina
13,086

1,599,554

 
96.1
%
 
92.8
%
 
3.3
 %
 
93.6
%
 
90.7
%
 
2.9
 %
 
10.76

 
10.43

 
3.2
%
Florida
18,817

1,994,396

 
88.8
%
 
88.8
%
 

 
88.0
%
 
87.9
%
 
0.1
 %
 
14.55

 
14.28

 
1.9
%
Arizona
9,131

1,068,129

 
89.3
%
 
90.5
%
 
(1.2
)%
 
88.9
%
 
89.1
%
 
(0.2
)%
 
13.08

 
12.57

 
4.1
%
Indiana
8,789

1,134,830

 
93.0
%
 
91.7
%
 
1.3
 %
 
91.0
%
 
88.3
%
 
2.7
 %
 
9.54

 
9.20

 
3.7
%
Louisiana
6,325

858,719

 
87.4
%
 
85.6
%
 
1.8
 %
 
85.5
%
 
84.3
%
 
1.2
 %
 
9.92

 
9.85

 
0.7
%
Washington
4,285

554,988

 
86.2
%
 
89.6
%
 
(3.4
)%
 
85.3
%
 
88.6
%
 
(3.3
)%
 
14.96

 
14.17

 
5.6
%
Nevada
5,827

736,740

 
91.4
%
 
94.2
%
 
(2.8
)%
 
91.7
%
 
93.9
%
 
(2.2
)%
 
11.21

 
10.05

 
11.5
%
Colorado
5,053

615,513

 
91.8
%
 
93.7
%
 
(1.9
)%
 
90.3
%
 
91.2
%
 
(0.9
)%
 
12.44

 
11.78

 
5.6
%
New Hampshire
4,198

509,770

 
93.3
%
 
91.6
%
 
1.7
 %
 
92.3
%
 
90.8
%
 
1.5
 %
 
13.14

 
12.40

 
6.0
%
Other(1)
13,409

1,821,312

 
91.4
%
 
89.8
%
 
1.6
 %
 
89.9
%
 
87.3
%
 
2.6
 %
 
10.41

 
9.81

 
6.1
%
Total/Weighted Average
211,338

27,005,324

 
90.9
%
 
90.6
%
 
0.3
 %
 
89.6
%
 
89.2
%
 
0.4
 %
 
$
11.81

 
$
11.38

 
3.8
%














(1) Other states in NSA's same store portfolio include Alabama, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, South Carolina and Virginia.

18

image0a89.jpg

Supplemental Schedule 6 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By State
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2019 compared to Six Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
Property Operating Expenses
 
Net Operating Income
 
Net Operating Income Margin
State
Stores
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
California
80

 
$
37,810

 
$
36,184

 
4.5
%
 
$
10,259

 
$
10,186

 
0.7
 %
 
$
27,551

 
$
25,998

 
6.0
%
 
72.9
%
 
71.8
%
 
1.1
 %
Oregon
58

 
18,959

 
18,689

 
1.4
%
 
4,986

 
4,964

 
0.4
 %
 
13,973

 
13,725

 
1.8
%
 
73.7
%
 
73.4
%
 
0.3
 %
Texas
58

 
14,645

 
14,026

 
4.4
%
 
5,516

 
5,427

 
1.6
 %
 
9,129

 
8,599

 
6.2
%
 
62.3
%
 
61.3
%
 
1.0
 %
Georgia
33

 
8,362

 
7,559

 
10.6
%
 
2,824

 
2,512

 
12.4
 %
 
5,538

 
5,047

 
9.7
%
 
66.2
%
 
66.8
%
 
(0.6
)%
Oklahoma
30

 
7,290

 
7,086

 
2.9
%
 
2,317

 
2,246

 
3.2
 %
 
4,973

 
4,840

 
2.7
%
 
68.2
%
 
68.3
%
 
(0.1
)%
North Carolina
29

 
8,264

 
7,828

 
5.6
%
 
2,568

 
2,333

 
10.1
 %
 
5,696

 
5,495

 
3.7
%
 
68.9
%
 
70.2
%
 
(1.3
)%
Florida
28

 
13,129

 
12,696

 
3.4
%
 
3,965

 
4,001

 
(0.9
)%
 
9,164

 
8,695

 
5.4
%
 
69.8
%
 
68.5
%
 
1.3
 %
Arizona
16

 
6,363

 
6,124

 
3.9
%
 
1,802

 
1,769

 
1.9
 %
 
4,561

 
4,355

 
4.7
%
 
71.7
%
 
71.1
%
 
0.6
 %
Indiana
16

 
5,037

 
4,670

 
7.9
%
 
1,454

 
1,481

 
(1.8
)%
 
3,583

 
3,189

 
12.4
%
 
71.1
%
 
68.3
%
 
2.8
 %
Louisiana
14

 
3,697

 
3,625

 
2.0
%
 
1,323

 
1,280

 
3.4
 %
 
2,374

 
2,345

 
1.2
%
 
64.2
%
 
64.7
%
 
(0.5
)%
Washington
13

 
3,549

 
3,494

 
1.6
%
 
953

 
995

 
(4.2
)%
 
2,596

 
2,499

 
3.9
%
 
73.1
%
 
71.5
%
 
1.6
 %
Nevada
11

 
3,877

 
3,492

 
11.0
%
 
1,077

 
1,146

 
(6.0
)%
 
2,800

 
2,346

 
19.4
%
 
72.2
%
 
67.2
%
 
5.0
 %
Colorado
11

 
3,487

 
3,365

 
3.6
%
 
1,163

 
1,124

 
3.5
 %
 
2,324

 
2,241

 
3.7
%
 
66.6
%
 
66.6
%
 

New Hampshire
10

 
3,153

 
2,909

 
8.4
%
 
1,059

 
1,005

 
5.4
 %
 
2,094

 
1,904

 
10.0
%
 
66.4
%
 
65.5
%
 
0.9
 %
Other(1)
32

 
8,748

 
7,998

 
9.4
%
 
3,070

 
3,078

 
(0.3
)%
 
5,678

 
4,920

 
15.4
%
 
64.9
%
 
61.5
%
 
3.4
 %
Total/Weighted Average
439

 
$
146,370

 
$
139,745

 
4.7
%
 
$
44,336

 
$
43,547

 
1.8
 %
 
$
102,034

 
$
96,198

 
6.1
%
 
69.7
%
 
68.8
%
 
0.9
 %













(1) Other states in NSA's same store portfolio include Alabama, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, South Carolina and Virginia.

19

image0a89.jpg

Supplemental Schedule 6 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By State
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2019 compared to Six Months Ended June 30, 2018
 
 
Rentable Square Feet
 
Occupancy at Period End
 
Average Occupancy
 
Average Annualized Rental Revenue per Occupied Square Foot
State
Units
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
California
48,015

6,070,355

 
92.2
%
 
92.9
%
 
(0.7
)%
 
90.8
%
 
91.7
%
 
(0.9
)%
 
$
13.12

 
$
12.43

 
5.6
%
Oregon
23,661

2,990,534

 
86.8
%
 
88.5
%
 
(1.7
)%
 
84.0
%
 
86.0
%
 
(2.0
)%
 
14.78

 
14.28

 
3.5
%
Texas
23,234

3,296,931

 
91.8
%
 
91.5
%
 
0.3
 %
 
89.0
%
 
88.5
%
 
0.5
 %
 
9.71

 
9.35

 
3.9
%
Georgia
13,640

1,850,061

 
92.0
%
 
89.4
%
 
2.6
 %
 
89.3
%
 
86.8
%
 
2.5
 %
 
9.80

 
9.18

 
6.8
%
Oklahoma
13,868

1,903,492

 
90.1
%
 
86.7
%
 
3.4
 %
 
86.7
%
 
84.3
%
 
2.4
 %
 
8.58

 
8.58

 

North Carolina
13,086

1,599,554

 
96.1
%
 
92.8
%
 
3.3
 %
 
92.2
%
 
90.0
%
 
2.2
 %
 
10.73

 
10.41

 
3.1
%
Florida
18,817

1,994,396

 
88.8
%
 
88.8
%
 

 
87.6
%
 
87.7
%
 
(0.1
)%
 
14.50

 
14.27

 
1.6
%
Arizona
9,131

1,068,129

 
89.3
%
 
90.5
%
 
(1.2
)%
 
87.5
%
 
88.1
%
 
(0.6
)%
 
13.17

 
12.61

 
4.4
%
Indiana
8,789

1,134,830

 
93.0
%
 
91.7
%
 
1.3
 %
 
89.9
%
 
85.9
%
 
4.0
 %
 
9.60

 
9.30

 
3.2
%
Louisiana
6,325

858,719

 
87.4
%
 
85.6
%
 
1.8
 %
 
84.3
%
 
83.7
%
 
0.6
 %
 
10.02

 
9.87

 
1.5
%
Washington
4,285

554,988

 
86.2
%
 
89.6
%
 
(3.4
)%
 
84.4
%
 
88.2
%
 
(3.8
)%
 
14.86

 
14.03

 
5.9
%
Nevada
5,827

736,740

 
91.4
%
 
94.2
%
 
(2.8
)%
 
91.5
%
 
93.2
%
 
(1.7
)%
 
11.05

 
9.89

 
11.7
%
Colorado
5,053

615,513

 
91.8
%
 
93.7
%
 
(1.9
)%
 
88.9
%
 
90.1
%
 
(1.2
)%
 
12.45

 
11.84

 
5.2
%
New Hampshire
4,198

509,770

 
93.3
%
 
91.6
%
 
1.7
 %
 
92.1
%
 
89.7
%
 
2.4
 %
 
13.07

 
12.43

 
5.1
%
Other(1)
13,409

1,821,312

 
91.4
%
 
89.8
%
 
1.6
 %
 
89.1
%
 
85.8
%
 
3.3
 %
 
10.35

 
9.84

 
5.2
%
Total/Weighted Average
211,338

27,005,324

 
90.9
%
 
90.6
%
 
0.3
 %
 
88.7
%
 
88.3
%
 
0.4
 %
 
$
11.82

 
$
11.36

 
4.0
%














(1) Other states in NSA's same store portfolio include Alabama, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, South Carolina and Virginia.

20

image0a89.jpg

Supplemental Schedule 7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By MSA(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2019 compared to Three Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
Property Operating Expenses
 
Net Operating Income
 
Net Operating Income Margin
MSA(1)
Stores
2Q 2019
 
2Q 2018
 
Growth
 
2Q 2019
 
2Q 2018
 
Growth
 
2Q 2019
 
2Q 2018
 
Growth
 
2Q 2019
 
2Q 2018
 
Growth
Riverside-San Bernardino-Ontario, CA
46

 
$
9,423

 
$
9,080

 
3.8
%
 
$
2,384

 
$
2,316

 
2.9
 %
 
$
7,039

 
$
6,764

 
4.1
%
 
74.7
%
 
74.5
%
 
0.2
 %
Portland-Vancouver-Hillsboro, OR-WA
45

 
7,698

 
7,553

 
1.9
%
 
1,953

 
1,897

 
3.0
 %
 
5,745

 
5,656

 
1.6
%
 
74.6
%
 
74.9
%
 
(0.3
)%
Atlanta-Sandy Springs-Roswell, GA
25

 
3,652

 
3,252

 
12.3
%
 
1,145

 
1,029

 
11.3
 %
 
2,507

 
2,223

 
12.8
%
 
68.6
%
 
68.4
%
 
0.2
 %
Dallas-Fort Worth-Arlington, TX
17

 
2,269

 
2,212

 
2.6
%
 
876

 
874

 
0.2
 %
 
1,393

 
1,338

 
4.1
%
 
61.4
%
 
60.5
%
 
0.9
 %
Oklahoma City, OK
17

 
2,037

 
1,951

 
4.4
%
 
675

 
636

 
6.1
 %
 
1,362

 
1,315

 
3.6
%
 
66.9
%
 
67.4
%
 
(0.5
)%
Indianapolis-Carmel-Anderson, IN
16

 
2,535

 
2,386

 
6.2
%
 
615

 
671

 
(8.3
)%
 
1,920

 
1,715

 
12.0
%
 
75.7
%
 
71.9
%
 
3.8
 %
Los Angeles-Long Beach-Anaheim, CA
14

 
4,927

 
4,816

 
2.3
%
 
1,307

 
1,296

 
0.8
 %
 
3,620

 
3,520

 
2.8
%
 
73.5
%
 
73.1
%
 
0.4
 %
Tulsa, OK
13

 
1,652

 
1,592

 
3.8
%
 
507

 
480

 
5.6
 %
 
1,145

 
1,112

 
3.0
%
 
69.3
%
 
69.8
%
 
(0.5
)%
North Port-Sarasota-Bradenton, FL
12

 
2,669

 
2,554

 
4.5
%
 
824

 
864

 
(4.6
)%
 
1,845

 
1,690

 
9.2
%
 
69.1
%
 
66.2
%
 
2.9
 %
Phoenix-Mesa-Scottsdale, AZ
12

 
2,556

 
2,488

 
2.7
%
 
732

 
717

 
2.1
 %
 
1,824

 
1,771

 
3.0
%
 
71.4
%
 
71.2
%
 
0.2
 %
Las Vegas-Henderson-Paradise, NV
11

 
1,978

 
1,789

 
10.6
%
 
553

 
549

 
0.7
 %
 
1,425

 
1,240

 
14.9
%
 
72.0
%
 
69.3
%
 
2.7
 %
Other MSAs
211

 
32,665

 
31,097

 
5.0
%
 
10,482

 
10,133

 
3.4
 %
 
22,183

 
20,964

 
5.8
%
 
67.9
%
 
67.4
%
 
0.5
 %
Total/Weighted Average
439

 
$
74,061

 
$
70,770

 
4.7
%
 
$
22,053

 
$
21,462

 
2.8
 %
 
$
52,008

 
$
49,308

 
5.5
%
 
70.2
%
 
69.7
%
 
0.5
 %

















(1) MSA (Metropolitan Statistical Area) as defined by the United States Census Bureau.

21

image0a89.jpg

Supplemental Schedule 7 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By MSA(1)
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2019 compared to Three Months Ended June 30, 2018
 
 
Rentable Square Feet
 
Occupancy at Period End
 
Average Occupancy
 
Average Annualized Rental Revenue per Occupied Square Foot
MSA(1)
Units
 
2Q 2019
 
2Q 2018
 
Growth
 
2Q 2019
 
2Q 2018
 
Growth
 
2Q 2019
 
2Q 2018
 
Growth
Riverside-San Bernardino-Ontario, CA
24,818

3,338,730

 
92.1
%
 
93.5
%
 
(1.4
)%
 
91.8
%
 
93.1
%
 
(1.3
)%
 
$
11.68

 
$
11.11

 
5.1
%
Portland-Vancouver-Hillsboro, OR-WA
17,619

2,153,543

 
86.7
%
 
87.6
%
 
(0.9
)%
 
85.5
%
 
86.1
%
 
(0.6
)%
 
16.39

 
15.99

 
2.5
%
Atlanta-Sandy Springs-Roswell, GA
11,510

1,579,581

 
92.3
%
 
88.5
%
 
3.8
 %
 
90.5
%
 
86.7
%
 
3.8
 %
 
9.91

 
9.28

 
6.8
%
Dallas-Fort Worth-Arlington, TX
6,436

858,852

 
89.1
%
 
89.7
%
 
(0.6
)%
 
88.5
%
 
89.1
%
 
(0.6
)%
 
11.58

 
11.25

 
2.9
%
Oklahoma City, OK
7,742

1,088,527

 
90.0
%
 
86.0
%
 
4.0
 %
 
87.5
%
 
84.3
%
 
3.2
 %
 
8.31

 
8.27

 
0.5
%
Indianapolis-Carmel-Anderson, IN
8,789

1,134,830

 
93.0
%
 
91.7
%
 
1.3
 %
 
91.0
%
 
88.3
%
 
2.7
 %
 
9.54

 
9.20

 
3.7
%
Los Angeles-Long Beach-Anaheim, CA
9,737

1,062,914

 
89.7
%
 
91.9
%
 
(2.2
)%
 
89.8
%
 
91.6
%
 
(1.8
)%
 
19.76

 
18.98

 
4.1
%
Tulsa, OK
6,126

814,965

 
90.3
%
 
87.6
%
 
2.7
 %
 
88.7
%
 
85.9
%
 
2.8
 %
 
8.85

 
8.80

 
0.6
%
North Port-Sarasota-Bradenton, FL
7,780

756,133

 
86.4
%
 
86.4
%
 

 
85.1
%
 
86.2
%
 
(1.1
)%
 
15.96

 
15.60

 
2.3
%
Phoenix-Mesa-Scottsdale, AZ
7,403

833,819

 
87.7
%
 
88.9
%
 
(1.2
)%
 
87.4
%
 
87.6
%
 
(0.2
)%
 
13.51

 
13.18

 
2.5
%
Las Vegas-Henderson-Paradise, NV
5,827

736,740

 
91.4
%
 
94.2
%
 
(2.8
)%
 
91.7
%
 
93.9
%
 
(2.2
)%
 
11.21

 
10.05

 
11.5
%
Other MSAs
97,551

12,646,690

 
91.8
%
 
91.3
%
 
0.5
 %
 
90.2
%
 
89.5
%
 
0.7
 %
 
11.08

 
10.64

 
4.1
%
Total/Weighted Average
211,338

27,005,324

 
90.9
%
 
90.6
%
 
0.3
 %
 
89.6
%
 
89.2
%
 
0.4
 %
 
$
11.81

 
$
11.38

 
3.8
%
















(1) MSA (Metropolitan Statistical Area) as defined by the United States Census Bureau.

22

image0a89.jpg

Supplemental Schedule 7 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By MSA(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2019 compared to Six Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
Property Operating Expenses
 
Net Operating Income
 
Net Operating Income Margin
MSA(1)
Stores
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
Riverside-San Bernardino-Ontario, CA
46

 
$
18,745

 
$
17,917

 
4.6
%
 
$
4,776

 
$
4,708

 
1.4
 %
 
$
13,969

 
$
13,209

 
5.8
%
 
74.5
%
 
73.7
%
 
0.8
 %
Portland-Vancouver-Hillsboro, OR-WA
45

 
15,111

 
14,890

 
1.5
%
 
3,890

 
3,914

 
(0.6
)%
 
11,221

 
10,976

 
2.2
%
 
74.3
%
 
73.7
%
 
0.6
 %
Atlanta-Sandy Springs-Roswell, GA
25

 
7,226

 
6,456

 
11.9
%
 
2,295

 
2,065

 
11.1
 %
 
4,931

 
4,391

 
12.3
%
 
68.2
%
 
68.0
%
 
0.2
 %
Dallas-Fort Worth-Arlington, TX
17

 
4,492

 
4,373

 
2.7
%
 
1,767

 
1,762

 
0.3
 %
 
2,725

 
2,611

 
4.4
%
 
60.7
%
 
59.7
%
 
1.0
 %
Oklahoma City, OK
17

 
4,024

 
3,903

 
3.1
%
 
1,336

 
1,284

 
4.0
 %
 
2,688

 
2,619

 
2.6
%
 
66.8
%
 
67.1
%
 
(0.3
)%
Indianapolis-Carmel-Anderson, IN
16

 
5,037

 
4,670

 
7.9
%
 
1,454

 
1,481

 
(1.8
)%
 
3,583

 
3,189

 
12.4
%
 
71.1
%
 
68.3
%
 
2.8
 %
Los Angeles-Long Beach-Anaheim, CA
14

 
9,837

 
9,509

 
3.4
%
 
2,618

 
2,591

 
1.0
 %
 
7,219

 
6,918

 
4.4
%
 
73.4
%
 
72.8
%
 
0.6
 %
Tulsa, OK
13

 
3,266

 
3,183

 
2.6
%
 
982

 
961

 
2.2
 %
 
2,284

 
2,222

 
2.8
%
 
69.9
%
 
69.8
%
 
0.1
 %
North Port-Sarasota-Bradenton, FL
12

 
5,281

 
5,065

 
4.3
%
 
1,686

 
1,717

 
(1.8
)%
 
3,595

 
3,348

 
7.4
%
 
68.1
%
 
66.1
%
 
2.0
 %
Phoenix-Mesa-Scottsdale, AZ
12

 
5,083

 
4,967

 
2.3
%
 
1,439

 
1,398

 
2.9
 %
 
3,644

 
3,569

 
2.1
%
 
71.7
%
 
71.9
%
 
(0.2
)%
Las Vegas-Henderson-Paradise, NV
11

 
3,877

 
3,492

 
11.0
%
 
1,077

 
1,145

 
(5.9
)%
 
2,800

 
2,347

 
19.3
%
 
72.2
%
 
67.2
%
 
5.0
 %
Other MSAs
211

 
64,391

 
61,320

 
5.0
%
 
21,016

 
20,521

 
2.4
 %
 
43,375

 
40,799

 
6.3
%
 
67.4
%
 
66.5
%
 
0.9
 %
Total/Weighted Average
439

 
$
146,370

 
$
139,745

 
4.7
%
 
$
44,336

 
$
43,547

 
1.8
 %
 
$
102,034

 
$
96,198

 
6.1
%
 
69.7
%
 
68.8
%
 
0.9
 %

















(1) MSA (Metropolitan Statistical Area) as defined by the United States Census Bureau.

23

image0a89.jpg

Supplemental Schedule 7 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary By MSA(1)
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2019 compared to Six Months Ended June 30, 2018
 
 
Rentable Square Feet
 
Occupancy at Period End
 
Average Occupancy
 
Average Annualized Rental Revenue per Occupied Square Foot
MSA(1)
Units
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
 
YTD 2019
 
YTD 2018
 
Growth
Riverside-San Bernardino-Ontario, CA
24,818

3,338,730

 
92.1
%
 
93.5
%
 
(1.4
)%
 
90.8
%
 
92.3
%
 
(1.5
)%
 
$
11.75

 
$
11.04

 
6.4
 %
Portland-Vancouver-Hillsboro, OR-WA
17,619

2,153,543

 
86.7
%
 
87.6
%
 
(0.9
)%
 
84.5
%
 
85.3
%
 
(0.8
)%
 
16.30

 
15.93

 
2.3
 %
Atlanta-Sandy Springs-Roswell, GA
11,510

1,579,581

 
92.3
%
 
88.5
%
 
3.8
 %
 
89.3
%
 
85.9
%
 
3.4
 %
 
9.92

 
9.30

 
6.7
 %
Dallas-Fort Worth-Arlington, TX
6,436

858,852

 
89.1
%
 
89.7
%
 
(0.6
)%
 
87.6
%
 
88.2
%
 
(0.6
)%
 
11.58

 
11.26

 
2.8
 %
Oklahoma City, OK
7,742

1,088,527

 
90.0
%
 
86.0
%
 
4.0
 %
 
86.0
%
 
83.3
%
 
2.7
 %
 
8.36

 
8.38

 
(0.2
)%
Indianapolis-Carmel-Anderson, IN
8,789

1,134,830

 
93.0
%
 
91.7
%
 
1.3
 %
 
89.9
%
 
85.9
%
 
4.0
 %
 
9.60

 
9.30

 
3.2
 %
Los Angeles-Long Beach-Anaheim, CA
9,737

1,062,914

 
89.7
%
 
91.9
%
 
(2.2
)%
 
89.3
%
 
91.2
%
 
(1.9
)%
 
19.85

 
18.81

 
5.5
 %
Tulsa, OK
6,126

814,965

 
90.3
%
 
87.6
%
 
2.7
 %
 
87.7
%
 
85.6
%
 
2.1
 %
 
8.86

 
8.83

 
0.3
 %
North Port-Sarasota-Bradenton, FL
7,780

756,133

 
86.4
%
 
86.4
%
 

 
84.7
%
 
85.9
%
 
(1.2
)%
 
15.94

 
15.71

 
1.5
 %
Phoenix-Mesa-Scottsdale, AZ
7,403

833,819

 
87.7
%
 
88.9
%
 
(1.2
)%
 
86.1
%
 
86.8
%
 
(0.7
)%
 
13.66

 
13.26

 
3.0
 %
Las Vegas-Henderson-Paradise, NV
5,827

736,740

 
91.4
%
 
94.2
%
 
(2.8
)%
 
91.5
%
 
93.2
%
 
(1.7
)%
 
11.05

 
9.89

 
11.7
 %
Other MSAs
97,551

12,646,690

 
91.8
%
 
91.3
%
 
0.5
 %
 
84.9
%
 
82.4
%
 
2.5
 %
 
9.29

 
9.13

 
1.8
 %
Total/Weighted Average
211,338

27,005,324

 
90.9
%
 
90.6
%
 
0.3
 %
 
88.7
%
 
88.3
%
 
0.4
 %
 
$
11.82

 
$
11.36

 
4.0
 %
















(1) MSA (Metropolitan Statistical Area) as defined by the United States Census Bureau.

24

image0a89.jpg

Supplemental Schedule 8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Operating Data (439 Stores) - Trailing Five Quarters
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2Q 2019
 
1Q 2019
 
4Q 2018
 
3Q 2018
 
2Q 2018
 
YTD 2019
 
YTD 2018
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental revenue
$
71,481

 
$
69,935

 
$
70,430

 
$
70,873

 
$
68,366

 
$
141,416

 
$
135,074

Other property-related revenue
2,580

 
2,374

 
2,345

 
2,427

 
2,404

 
4,954

 
4,671

Total revenue
74,061

 
72,309

 
72,775

 
73,300

 
70,770

 
146,370

 
139,745

Property operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Store payroll and related costs
6,848

 
6,911

 
6,742

 
6,637

 
6,684

 
13,759

 
13,573

Property tax expense
5,929

 
6,206

 
6,006

 
5,963

 
5,714

 
12,135

 
11,699

Other property operating expenses
9,276

 
9,166

 
8,957

 
9,410

 
9,064

 
18,442

 
18,275

Total property operating expenses
22,053

 
22,283

 
21,705

 
22,010

 
21,462

 
44,336

 
43,547

Net operating income
$
52,008

 
$
50,026

 
$
51,070

 
$
51,290

 
$
49,308

 
$
102,034

 
$
96,198

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income margin
70.2
%
 
69.2
%
 
70.2
%
 
70.0
%
 
69.7
%
 
69.7
%
 
68.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Occupancy at period end
90.9
%
 
88.6
%
 
87.4
%
 
89.3
%
 
90.6
%
 
90.9
%
 
90.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average occupancy
89.6
%
 
87.7
%
 
88.2
%
 
89.9
%
 
89.2
%
 
88.7
%
 
88.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average annualized rental revenue per occupied square foot
$
11.81

 
$
11.82

 
$
11.83

 
$
11.68

 
$
11.38

 
$
11.82

 
$
11.36

 
 
 
 
 
 
 
 
 
 
 
 
 
 

25

image0a89.jpg

Supplemental Schedule 9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Same Store Data and Net Operating Income to Net Income
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2Q 2019
 
1Q 2019
 
4Q 2018
 
3Q 2018
 
2Q 2018
 
YTD 2019
 
YTD 2018
Rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Same store portfolio
$
71,481

 
$
69,935

 
$
70,430

 
$
70,873

 
$
68,366

 
$
141,416

 
$
135,074

Non-same store portfolio
15,694

 
12,920

 
9,071

 
6,372

 
4,691

 
28,614

 
8,019

Effect of bad debt expense classification resulting from adoption of leasing standard(1)

 

 
2,325

 
2,302

 
1,962

 

 
3,937

Total rental revenue (as reported)
87,175

 
82,855

 
81,826

 
79,547

 
75,019

 
170,030

 
147,030

Other property-related revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Same store portfolio
2,580

 
2,374

 
2,345

 
2,427

 
2,404

 
4,954

 
4,671

Non-same store portfolio
548

 
450

 
281

 
260

 
145

 
998

 
199

Total other property-related revenue
3,128

 
2,824

 
2,626

 
2,687

 
2,549

 
5,952

 
4,870

Property operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Same store portfolio
22,053

 
22,283

 
21,705

 
22,010

 
21,462

 
44,336

 
43,547

Non-same store portfolio
5,137

 
4,174

 
2,883

 
2,240

 
1,760

 
9,311

 
2,926

Effect of bad debt expense classification resulting from adoption of leasing standard(1)

 

 
2,325

 
2,302

 
1,962

 

 
3,937

Total property operating expenses (as reported)
27,190

 
26,457

 
26,913

 
26,552

 
25,184

 
53,647

 
50,410

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income
63,113

 
59,222

 
57,539

 
55,682

 
52,384

 
122,335

 
101,490

Management fees and other revenue
5,116

 
4,893

 
4,846

 
3,148

 
2,155

 
10,009

 
4,316

General and administrative expenses
(11,170
)
 
(10,766
)
 
(10,606
)
 
(8,848
)
 
(8,460
)
 
(21,936
)
 
(16,766
)
Depreciation and amortization
(25,829
)
 
(24,349
)
 
(22,921
)
 
(22,469
)
 
(22,389
)
 
(50,178
)
 
(43,757
)
Interest expense
(13,947
)
 
(13,211
)
 
(11,961
)
 
(10,656
)
 
(10,472
)
 
(27,158
)
 
(20,107
)
Equity in (losses) earnings of unconsolidated real estate ventures
(1,646
)
 
(2,102
)
 
(1,713
)
 
242

 
100

 
(3,748
)
 
48

Acquisition costs
(305
)
 
(157
)
 
(192
)
 
(141
)
 
(150
)
 
(462
)
 
(330
)
Non-operating (expense) income
(169
)
 
(98
)
 
(160
)
 
153

 

 
(267
)
 
(84
)
Gain (loss) on sale of self storage properties
2,814

 

 

 

 
(83
)
 
2,814

 
391

Income tax expense
(244
)
 
(492
)
 
(349
)
 
(282
)
 
(44
)
 
(736
)
 
(187
)
Net Income
$
17,733

 
$
12,940

 
$
14,483

 
$
16,829

 
$
13,041

 
$
30,673

 
$
25,014




(1) As a result of the new leasing standard adoption, beginning on January 1, 2019, activity related to uncollectible accounts is presented within revenue. For periods prior to 2019, such amounts were previously included in operating expenses, and as such, for comparability, NSA has presented activity related to uncollectible accounts as a reduction to same store and non-same store revenue and operating expenses.

26

image0a89.jpg

Supplemental Schedule 10
 
 
 
Selected Financial Information
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30, 2019
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Average Annualized Rental Revenue Per Occupied Square Foot
 
 
 
 
 
 
 
 
Same store
$
11.81

 
$
11.38

 
$
11.82

 
$
11.36

Total consolidated portfolio
11.95

 
11.78

 
$
11.97

 
$
11.83

 
 
 
 
 
 
 
 
Average Occupancy
 
 
 
 
 
 
 
 
Same store
89.6
%
 
89.2
%
 
88.7
%
 
88.3
%
Total consolidated portfolio
89.1
%
 
88.9
%
 
88.2
%
 
88.1
%
 
 
 
 
 
 
 
 
Total Consolidated Portfolio Capital Expenditures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recurring capital expenditures
$
2,598

 
$
1,177

 
$
4,757

 
$
2,435

Value enhancing capital expenditures
1,207

 
1,918

 
2,152

 
2,675

Acquisitions capital expenditures
2,335

 
2,832

 
4,328

 
4,749

Total Consolidated Portfolio Capital Expenditures
$
6,140

 
$
5,927

 
$
11,237

 
$
9,859

 
 
 
 
 
 
 
 
Property Operating Expenses Detail
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Store payroll and related costs
$
8,392

 
$
7,244

 
$
16,657

 
$
14,526

Property tax expense
7,184

 
6,145

 
14,419

 
12,411

Other property operating expenses
11,614

 
9,833

 
22,571

 
19,536

Bad debt expense

 
1,962

 

 
3,937

Property operating expenses on the Company's statements of operations
$
27,190

 
$
25,184

 
$
53,647

 
$
50,410

 
 
 
 
 
 
 
 
General and Administrative Expenses Detail
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supervisory and administrative expenses
$
4,926

 
$
4,183

 
$
9,606

 
$
8,242

Equity-based compensation expense
1,108

 
919

 
2,220

 
1,786

Other general and administrative expenses
5,136

 
3,358

 
10,110

 
6,738

General and administrative expenses on the Company's statements of operations
$
11,170

 
$
8,460

 
$
21,936

 
$
16,766

 
 
 
 
 
 
 
 




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Glossary
 
 
 
 
 
This Earnings Release and Supplemental Financial Information includes 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.
 
 
 
 
 
2016 JOINT VENTURE: NSA's 2016 Joint Venture was formed in 2016 with a major state pension fund advised by Heitman Capital Management LLC. NSA's ownership in the 2016 Joint Venture is 25% and NSA earns customary fees for managing and operating the 2016 Joint Venture properties. In connection with the 2016 Joint Venture’s acquisition of an initial portfolio of self storage properties, NSA separately acquired the property management platform related to the initial portfolio, including a property management company, a captive insurance company, and related intellectual property, including the iStorage brand, under which NSA's management platform operates the 2016 Joint Venture.
2018 JOINT VENTURE: NSA's 2018 Joint Venture was formed in 2018 with an affiliate of Heitman America Real Estate REIT LLC to acquire a portfolio of over 100 self storage properties. NSA's ownership in the 2018 Joint Venture is 25% and NSA earns customary fees for managing and operating the 2018 Joint Venture properties. Substantially all of the 2018 Joint Venture properties are operated by NSA's management platform under NSA's iStorage brand.
AVERAGE ANNUALIZED RENTAL REVENUE PER OCCUPIED SQUARE FOOT: Average annualized rental revenue per occupied square foot is computed by dividing annualized rental revenue (including fees and net of any discounts and uncollectible customer amounts) 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.
VALUE ENHANCING CAPITAL EXPENDITURES: Value 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, organizational and offering expenses, equity-based compensation expense, losses on sale of properties and impairment of long-lived assets, minus gains on sale of properties and debt forgiveness, and after adjustments for unconsolidated partnerships and joint ventures. 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:

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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;
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 their usefulness as comparative measures.
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 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 December 2018 Nareit Funds From Operations White Paper - 2018 Restatement, which the Company refers to as the White Paper, defines FFO as net income (as determined under GAAP), excluding: real estate depreciation and amortization, gains and losses from the sale of certain real estate assets, gains and losses from change in control, impairment write-downs of certain real estate assets and impairment of investments in entities when it is directly attributable to decreases in the value of depreciable real estate held by the entity and after items to record unconsolidated partnerships and joint ventures on the same basis. 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

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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.
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 $7.3 million of fair value of debt adjustments and $7.8 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 compensates for these

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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 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 June 30, 2019, the Company had ten PROs, SecurCare Self Storage, Northwest Self Storage, Optivest Properties, Guardian Storage Centers, Move It Self Storage, Storage Solutions, Hide-Away, Personal Mini, Southern Self Storage and Moove In Self Storage.
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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Equity Research Coverage
 
 
 
 
 
 
 
 
 
 
Baird Equity Research
 
BMO Capital Markets
 
Citi Investment Research
RJ Milligan
 
R. Jeremy Metz
 
Michael Bilerman / Smedes Rose
813.273.8252
 
212.885.4053
 
212.816.1383 / 212.816.6243
 
 
 
 
 
Jefferies LLC
 
KeyBanc Capital Markets
 
Morgan Stanley
Jonathan Petersen / Reuben Treatman
 
Todd Thomas / Jordan Sadler
 
Ronald Kamdem
212.284.1705 / 212.323.3307
 
917.368.2286 / 917.368.2280
 
212.296.8319
 
 
 
 
 
SunTrust Robinson Humphrey
 
Wells Fargo Securities, LLC
 
 
Ki Bin Kim / Ian Gaule
 
Todd Stender / Philip Defelice
 
 
212.303.4124 / 212.590.0948
 
562.637.1371 / 443.263.6442
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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