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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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October 30, 2019
National Storage Affiliates Trust Reports Third Quarter 2019 Results
GREENWOOD VILLAGE, Colo. - (BUSINESS WIRE) - National Storage Affiliates Trust (“NSA” or the "Company") (NYSE: NSA) today reported the Company’s third quarter 2019 results.
Third Quarter 2019 Highlights
Reported net income of $16.5 million for the third quarter of 2019, a decrease of 1.9% compared to the third quarter of 2018. Reported loss per share of $0.20 for the third 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 $36.7 million, or $0.40 per share for the third quarter of 2019, an increase of 11.1% per share compared to the third quarter of 2018.
Achieved same store net operating income ("NOI") growth of 4.2% for the third quarter of 2019 compared to the same period in 2018, driven by a 3.7% increase in same store total revenues and a 2.7% increase in same store property operating expenses.
Acquired six wholly-owned self storage properties for $35.8 million during the third quarter of 2019. Consideration for these acquisitions included the issuance of approximately $1.0 million of OP equity.
Issued $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 the Company's inaugural debt private placement.
Executed 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, "Once again, our quarterly results were slightly ahead of expectations and included strong 4.2% same store NOI growth driven by a 3.7% increase in same store total revenues. These operating results combined with the acquisition of 62 self storage properties during the first three quarters of 2019 generated an excellent 11.1% increase in third quarter 2019 Core FFO per share."
Tamara Fischer, President and Chief Financial Officer, added, "With the amendment of our credit facility and the closing of a debt private placement during the third quarter, our balance sheet is well positioned to fund our long-term growth plans. We ended the third quarter with a weighted average cost of debt of 3.5%, a weighted average maturity of 6.2 years and the full borrowing capacity available under our $500.0 million revolving line of credit."
Ms. Fischer continued, "Given third quarter results were slightly ahead of expectations, and we expect fourth quarter operating expenses to be lower than prior forecasts, we are again increasing guidance for Core FFO per share and same store NOI growth assumptions for full-year 2019."


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Financial Results
($ in thousands, except per share and unit data)
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
Growth
 
2019
 
2018
 
Growth
Net income
$
16,514

 
$
16,829

 
(1.9
)%
 
$
47,187

 
$
41,843

 
12.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
Funds From Operations ("FFO")(1)
$
36,375

 
$
31,083

 
17.0
 %
 
$
102,933

 
$
84,177

 
22.3
 %
Add back acquisition costs
321

 
141

 
127.7
 %
 
783

 
471

 
66.2
 %
Core FFO(1)
$
36,696

 
$
31,224

 
17.5
 %
 
$
103,716

 
$
84,648

 
22.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per share - basic and diluted
$
(0.20
)
 
$
0.03

 
(766.7
)%
 
$
(0.32
)
 
$
0.25

 
(228.0
)%
 
 
 
 
 
 
 
 
 
 
 
 
FFO per share and unit(1)
$
0.39

 
$
0.36

 
8.3
 %
 
$
1.14

 
$
1.01

 
12.9
 %
Core FFO per share and unit(1)
$
0.40

 
$
0.36

 
11.1
 %
 
$
1.15

 
$
1.01

 
13.9
 %
(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 decreased $0.3 million for the third quarter of 2019 and increased $5.3 million for the nine months ended September 30, 2019 ("year-to-date") as compared to the same periods in 2018. The decrease for the third quarter of 2019 resulted from increases in depreciation and amortization, interest expense, general and administrative expenses and GAAP losses from the Company's unconsolidated real estate ventures substantially offset by additional NOI generated primarily from 69 wholly-owned self storage properties acquired between October 1, 2018 and September 30, 2019 and same store NOI growth. The year-to-date increase was the result of additional NOI generated primarily from 69 wholly-owned self storage properties acquired between October 1, 2018 and September 30, 2019, same store NOI growth and gain on sale of self storage properties, partially offset by increases in interest expense, depreciation and amortization, general and administrative expenses and GAAP losses from the Company's unconsolidated real estate ventures.
The increases in FFO and Core FFO for the third quarter of 2019 and year-to-date were primarily the result of incremental NOI from properties acquired between October 1, 2018 and September 30, 2019, same store NOI growth, and incremental FFO from the Company's unconsolidated real estate ventures, partially offset by higher interest expense, general and administrative expenses and increases in distributions to subordinated performance unitholders.
Same Store Operating Results (439 Stores)
($ in thousands, except per square foot data)
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
Growth
 
2019
 
2018
 
Growth
Total revenues
$
76,015

 
$
73,300

 
3.7
%
 
$
222,385

 
$
213,045

 
4.4
%
Property operating expenses
22,595

 
22,010

 
2.7
%
 
66,931

 
65,557

 
2.1
%
Net Operating Income (NOI)
$
53,420

 
$
51,290

 
4.2
%
 
$
155,454

 
$
147,488

 
5.4
%
NOI Margin
70.3
%
 
70.0
%
 
0.3
%
 
69.9
%
 
69.2
%
 
0.7
%
 
 
 
 
 
 
 
 
 
 
 
 
Average Occupancy
90.2
%
 
89.9
%
 
0.3
%
 
89.0
%
 
88.7
%
 
0.3
%
Average Annualized Rental Revenue Per Occupied Square Foot
$
12.06

 
$
11.68

 
3.3
%
 
$
11.91

 
$
11.49

 
3.7
%
Year-over-year same store total revenues increased 3.7% for the third quarter of 2019 and 4.4% year-to-date as compared to the same periods in 2018. The increases were driven primarily by a 3.3% increase in average annualized rental revenue per occupied square foot for the third quarter of 2019 and a 3.7% increase in average annualized rental revenue per occupied square foot year-to-date combined with a 30 basis point increase in average occupancy in both periods. Markets that generated above portfolio average same store total revenue growth include: Riverside-San

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Bernardino, Atlanta, and Las Vegas. Markets that generated below portfolio average same store total revenue growth include: Portland, Dallas and Tulsa.
Year-over-year same store property operating expenses increased 2.7% for the third quarter of 2019 and 2.1% year-to-date as compared to the same periods in 2018. These increases primarily resulted from increases in property taxes, personnel costs and repairs and maintenance expenses partially offset by decreases in insurance costs.
Investment Activity
NSA acquired six wholly-owned self storage properties located across four states consisting of approximately 0.3 million rentable square feet configured in approximately 3,200 storage units during the third quarter of 2019. Total consideration for these acquisitions of $35.8 million included approximately $34.6 million of net cash, the issuance of approximately $1.0 million of subordinated performance units and the assumption of approximately $0.2 million of other working capital liabilities.
Balance Sheet
On July 29, 2019, NSA executed an agreement 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 which 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 fully exercised, would provide for a total borrowing capacity under the credit facility of $1.750 billion.
On August 30, 2019, the Company's operating partnership issued $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.
Common Share Dividends
On August 22, 2019, NSA's Board of Trustees declared a quarterly cash dividend of $0.32 per common share, which was paid on September 30, 2019 to shareholders of record as of September 13, 2019.

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2019 Guidance
The following table outlines NSA's updated and prior 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)
$1.52
 
$1.54
 
$1.51
 
$1.54
 
 
 
 
 
 
 
 
Same store operations (439 stores)
 
 
 
 
 
 
 
Total revenue growth
3.5%
 
4.0%
 
3.5%
 
4.0%
Property operating expenses growth
2.25%
 
2.75%
 
2.75%
 
3.25%
NOI growth
4.25%
 
4.75%
 
3.5%
 
4.5%
 
 
 
 
 
 
 
 
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
 
$33.0
 
$35.0
 
 
 
 
 
 
 
 
Wholly-owned acquisitions, in millions
$425.0
 
$475.0
 
$400.0
 
$500.0
Joint venture acquisitions, in millions
$—
 
$25.0
 
$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
$(0.40)
 
$(0.30)
 
$(0.20)
 
$(0.10)
Impact of the difference in weighted average number of shares and GAAP accounting for noncontrolling interests, two-class method and treasury stock method
0.94
 
0.85
 
0.79
 
0.70
Add real estate depreciation and amortization, including NSA's share of unconsolidated venture real estate depreciation and amortization
1.36
 
1.39
 
1.30
 
1.34
Subtract gain on sale of self storage properties
(0.03)
 
(0.03)
 
(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
$1.52
 
$1.54
 
$1.51
 
$1.54
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 October 30, 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 Thursday, October 31, 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: Thursday, October 31, 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 Thursday, November 7, 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 Nareit REITworld 2019 Annual Conference on November 12-14, 2019 in Los Angeles, California.
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 September 30, 2019, the Company held ownership interests in and operated 735 self storage properties located in 35 states and Puerto Rico with approximately 46.8 million rentable square feet. NSA is one of the largest owners and operators of self storage properties among public and private companies in the United States. For more information, please visit the Company’s website at www.nationalstorageaffiliates.com. NSA is included in the MSCI US REIT Index (RMS/RMZ), the Russell 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 September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
REVENUE
 
 
 
 
 
 
 
Rental revenue
$
92,746

 
$
79,547

 
$
262,776

 
$
226,577

Other property-related revenue
3,217

 
2,687

 
9,169

 
7,557

Management fees and other revenue
5,374

 
3,148

 
15,383

 
7,464

Total revenue
101,337

 
85,382

 
287,328

 
241,598

OPERATING EXPENSES
 
 
 
 
 
 
 
Property operating expenses
28,988

 
26,552

 
82,635

 
76,962

General and administrative expenses
12,039

 
8,848

 
33,975

 
25,614

Depreciation and amortization
27,598

 
22,469

 
77,776

 
66,226

Total operating expenses
68,625

 
57,869

 
194,386

 
168,802

OTHER (EXPENSE) INCOME

 

 

 

Interest expense
(14,432
)
 
(10,656
)
 
(41,590
)
 
(30,763
)
Equity in (losses) earnings of unconsolidated real estate ventures
(1,214
)
 
242

 
(4,962
)
 
290

Acquisition costs
(321
)
 
(141
)
 
(783
)
 
(471
)
Non-operating (expense) income
(8
)
 
153

 
(275
)
 
69

Gain on sale of self storage properties

 

 
2,814

 
391

Other expense
(15,975
)
 
(10,402
)
 
(44,796
)
 
(30,484
)
Income before income taxes
16,737

 
17,111

 
48,146

 
42,312

Income tax expense
(223
)
 
(282
)
 
(959
)
 
(469
)
Net income
16,514

 
16,829

 
47,187

 
41,843

Net income attributable to noncontrolling interests
(25,374
)
 
(12,435
)
 
(56,292
)
 
(21,098
)
Net (loss) income attributable to National Storage Affiliates Trust
(8,860
)
 
4,394

 
(9,105
)
 
20,745

Distributions to preferred shareholders
(3,272
)
 
(2,588
)
 
(9,117
)
 
(7,763
)
Net (loss) income attributable to common shareholders
$
(12,132
)
 
$
1,806

 
$
(18,222
)
 
$
12,982

 
 
 
 
 
 
 
 
Earnings (loss) per share - basic and diluted
$
(0.20
)
 
$
0.03

 
$
(0.32
)
 
$
0.25

 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic and diluted
59,278

 
55,722

 
57,835

 
52,189


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National Storage Affiliates Trust
Consolidated Balance Sheets
(dollars in thousands, except per share amounts)
(unaudited)
 
September 30,
 
December 31,
 
2019
 
2018
ASSETS
 
 
 
Real estate
 
 
 
Self storage properties
$
3,055,597

 
$
2,637,723

Less accumulated depreciation
(313,694
)
 
(246,261
)
Self storage properties, net
2,741,903

 
2,391,462

Cash and cash equivalents
44,749

 
13,181

Restricted cash
5,457

 
3,182

Debt issuance costs, net
3,464

 
1,260

Investment in unconsolidated real estate ventures
228,446

 
245,125

Other assets, net
63,271

 
75,053

Operating lease right-of-use assets
23,507

 

Total assets
$
3,110,797

 
$
2,729,263

LIABILITIES AND EQUITY
 
 
 
Liabilities
 
 
 
Debt financing
$
1,533,936

 
$
1,278,102

Accounts payable and accrued liabilities
78,849

 
33,130

Operating lease liabilities
24,777

 

Deferred revenue
16,029

 
15,732

Total liabilities
1,653,591

 
1,326,964

Equity
 
 
 
Preferred shares of beneficial interest, par value $0.01 per share. 50,000,000 authorized, 8,727,119 and 6,900,000 issued and outstanding at September 30, 2019 and December 31, 2018, respectively, at liquidation preference
218,178

 
172,500

Common shares of beneficial interest, par value $0.01 per share. 250,000,000 shares authorized, 59,328,388 and 56,654,009 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
593

 
567

Additional paid-in capital
901,530

 
844,276

Distributions in excess of earnings
(187,305
)
 
(114,122
)
Accumulated other comprehensive (loss) income
(17,294
)
 
13,618

Total shareholders' equity
915,702

 
916,839

Noncontrolling interests
541,504

 
485,460

Total equity
1,457,206

 
1,402,299

Total liabilities and equity
$
3,110,797

 
$
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 September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
16,514

 
$
16,829

 
$
47,187

 
$
41,843

Add (subtract):
 
 
 
 
 
 
 
Real estate depreciation and amortization
27,279

 
22,164

 
76,816

 
65,332

Company's share of unconsolidated real estate venture real estate depreciation and amortization
5,197

 
1,954

 
16,126

 
4,709

Gain on sale of self storage properties

 

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

 
205

 
202

 
205

Distributions to preferred shareholders and unitholders
(3,515
)
 
(2,711
)
 
(9,729
)
 
(8,106
)
FFO attributable to subordinated performance unitholders(1)
(9,100
)
 
(7,358
)
 
(24,855
)
 
(19,415
)
FFO attributable to common shareholders, OP unitholders, and LTIP unitholders
36,375

 
31,083

 
102,933

 
84,177

Add:
 
 
 
 
 
 
 
Acquisition costs
321

 
141

 
783

 
471

Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders
$
36,696

 
$
31,224

 
$
103,716

 
$
84,648

 
 
 
 
 
 
 
 
Weighted average shares and units outstanding - FFO and Core FFO:(2)
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
59,278

 
55,722

 
57,835

 
52,189

Weighted average restricted common shares outstanding
27

 
29

 
29

 
30

Weighted average OP units outstanding
30,483

 
28,910

 
30,217

 
29,009

Weighted average DownREIT OP unit equivalents outstanding
1,848

 
1,835

 
1,848

 
1,835

Weighted average LTIP units outstanding
535

 
715

 
605

 
689

Total weighted average shares and units outstanding - FFO and Core FFO
92,171

 
87,211

 
90,534

 
83,752

 
 
 
 
 
 
 
 
FFO per share and unit
$
0.39

 
$
0.36

 
$
1.14

 
$
1.01

Core FFO per share and unit
$
0.40

 
$
0.36

 
$
1.15

 
$
1.01

 
 
 
 
 
 
 
 
(1) Amounts represent distributions declared for subordinated performance unitholders and DownREIT subordinated performance unitholders for the periods presented.
(2) NSA combines OP units and DownREIT OP units with common shares because, after the applicable lock-out periods, OP units in the Company's operating partnership are redeemable for cash or, at NSA's option, exchangeable for common shares on a one-for-one basis and DownREIT OP units are also redeemable for cash or, at NSA's option, exchangeable for OP units in the Company's operating partnership on a one-for-one basis, subject to certain adjustments in each case. Subordinated performance units, DownREIT subordinated performance units and LTIP units may also, under certain circumstances, be convertible into or exchangeable for common shares (or other units that are convertible into or exchangeable for common shares). See footnote(3) for additional discussion of subordinated performance units, DownREIT subordinated performance units, and LTIP units in the calculation of FFO and Core FFO per share and unit.

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Supplemental Schedule 1 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funds From Operations and Core Funds From Operations
(in thousands, except per share and unit amounts) (unaudited)
 
 
 
 
 
 
 
 
Reconciliation of Earnings (Loss) Per Share - Diluted to FFO and Core FFO Per Share and Unit
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Earnings (loss) per share - diluted
$
(0.20
)
 
$
0.03

 
$
(0.32
)
 
$
0.25

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

 

 
0.11

 
(0.10
)
Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method(4)
0.26

 
0.14

 
0.62

 
0.25

Add real estate depreciation and amortization
0.30

 
0.25

 
0.85

 
0.78

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

 
0.02

 
0.18

 
0.06

Subtract gain on sale of self storage properties

 

 
(0.03
)
 

FFO attributable to subordinated performance unitholders
(0.10
)
 
(0.08
)
 
(0.27
)
 
(0.23
)
FFO per share and unit
0.39

 
0.36

 
1.14

 
1.01

Add acquisition costs
0.01

 

 
0.01

 

Core FFO per share and unit
$
0.40

 
$
0.36

 
$
1.15

 
$
1.01

 
 
 
 
 
 
 
 
(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

image0a93.jpg

Supplemental Schedule 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Non-GAAP Financial Measurements
 
 
 
 
 
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Operating Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
16,514

 
$
16,829

 
$
47,187

 
$
41,843

(Subtract) add:
 
 
 
 
 
 
 
Management fees and other revenue
(5,374
)
 
(3,148
)
 
(15,383
)
 
(7,464
)
General and administrative expenses
12,039

 
8,848

 
33,975

 
25,614

Depreciation and amortization
27,598

 
22,469

 
77,776

 
66,226

Interest expense
14,432

 
10,656

 
41,590

 
30,763

Equity in losses (earnings) of unconsolidated real estate ventures
1,214

 
(242
)
 
4,962

 
(290
)
Acquisition costs
321

 
141

 
783

 
471

Income tax expense
223

 
282

 
959

 
469

Gain on sale of self storage properties

 

 
(2,814
)
 
(391
)
Non-operating expense (income)
8

 
(153
)
 
275

 
(69
)
Net Operating Income
$
66,975

 
$
55,682

 
$
189,310

 
$
157,172

 
 
 
 
 
 
 
 
EBITDA and Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
16,514

 
$
16,829

 
$
47,187

 
$
41,843

Add:
 
 
 
 
 
 
 
Depreciation and amortization
27,598

 
22,469

 
77,776

 
66,226

Company's share of unconsolidated real estate venture depreciation and amortization
5,197

 
1,954

 
16,126

 
4,709

Interest expense
14,432

 
10,656

 
41,590

 
30,763

Income tax expense
223

 
282

 
959

 
469

EBITDA
63,964

 
52,190

 
183,638

 
144,010

Add (subtract):
 
 
 
 
 
 
 
Acquisition costs
321

 
141

 
783

 
471

Gain on sale of self storage properties

 

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

 
205

 
202

 
205

Equity-based compensation expense
1,153

 
1,022

 
3,373

 
2,808

Adjusted EBITDA
$
65,438

 
$
53,558

 
$
185,182

 
$
147,103


11

image0a93.jpg

Supplemental Schedule 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Summary
As of September 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

 
49,607

 
6,227,213

 
89.9
%
 
California
 
93

 
55,804

 
6,981,567

 
89.6
%
Texas
 
70

 
29,006

 
4,159,442

 
88.1
%
 
Texas
 
74

 
31,341

 
4,436,231

 
87.6
%
Oregon
 
61

 
24,498

 
3,105,159

 
84.5
%
 
Florida
 
69

 
43,175

 
4,566,339

 
86.0
%
Georgia
 
43

 
18,480

 
2,459,489

 
90.9
%
 
Oregon
 
61

 
24,498

 
3,105,159

 
84.5
%
Florida
 
42

 
27,798

 
2,844,274

 
87.8
%
 
Georgia
 
54

 
24,621

 
3,331,797

 
90.2
%
North Carolina
 
33

 
15,379

 
1,885,479

 
94.2
%
 
Oklahoma
 
36

 
16,093

 
2,196,964

 
89.4
%
Arizona
 
31

 
16,896

 
1,927,092

 
89.0
%
 
Arizona
 
33

 
17,905

 
2,036,922

 
88.8
%
Oklahoma
 
30

 
13,849

 
1,903,042

 
88.9
%
 
North Carolina
 
33

 
15,379

 
1,885,479

 
94.2
%
Louisiana
 
26

 
12,348

 
1,539,774

 
85.6
%
 
Louisiana
 
26

 
12,348

 
1,539,774

 
85.6
%
Indiana
 
16

 
8,783

 
1,134,830

 
91.9
%
 
Michigan
 
24

 
15,622

 
1,977,623

 
88.4
%
Kansas
 
16

 
5,716

 
763,249

 
88.8
%
 
Ohio
 
22

 
12,424

 
1,526,139

 
88.5
%
Washington
 
14

 
4,497

 
578,723

 
82.5
%
 
New Jersey
 
18

 
11,962

 
1,417,062

 
89.4
%
Nevada
 
13

 
6,677

 
844,761

 
90.6
%
 
Nevada
 
17

 
8,295

 
1,096,918

 
89.7
%
Colorado
 
11

 
5,050

 
615,468

 
89.8
%
 
Indiana
 
16

 
8,783

 
1,134,830

 
91.9
%
New Hampshire
 
11

 
4,667

 
571,045

 
90.6
%
 
Kansas
 
16

 
5,716

 
763,249

 
88.8
%
Ohio
 
8

 
3,640

 
461,393

 
90.3
%
 
Alabama
 
15

 
6,297

 
937,091

 
87.6
%
Other(1)
 
52

 
25,654

 
3,128,429

 
88.5
%
 
Washington
 
14

 
4,497

 
578,723

 
82.5
%
Total
 
560

 
272,545

 
34,148,862

 
88.8
%
 
Massachusetts
 
11

 
7,800

 
836,596

 
88.7
%
 
 
 
 
 
 
 
 
 
 
Colorado
 
11

 
5,050

 
615,468

 
89.8
%
 
 

 

 

 
 
 
New Hampshire
 
11

 
4,667

 
571,045

 
90.6
%
 
 
 
 
 
 
 
 
 
 
Other(2)
 
81

 
43,387

 
5,228,815

 
86.3
%
 
 

 

 

 
 
 
Total
 
735

 
375,664

 
46,763,791

 
88.2
%





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

12

image0a93.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

September 30, 2019
 
6
 
3,193
 
329,002

 
34,624

 
950

 
197

 
35,771

Total Acquisitions(3)
 
62
 
30,472
 
3,837,392

 
$
363,597

 
$
49,821

 
$
2,249

 
$
415,667

 
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 (8), Georgia (9), Idaho (3), Louisiana (12), Maryland (1), Massachusetts (2), 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

image0a93.jpg

Supplemental Schedule 4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt and Equity Capitalization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Summary (dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Interest Rate(1)
 
Basis of Rate
 
Maturity Date
 
2019
 
2020
 
2021
 
2022
 
2023
 
2024
 
2025
 
Thereafter
 
Total
Credit Facility:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving line of credit
3.32%
 
Variable(2)
 
January 2024
 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
$

Term loan - Tranche A
3.74%
 
Swapped To Fixed
 
January 2023
 

 

 

 

 
125,000

 

 

 

 
125,000

Term loan - Tranche B
2.91%
 
Swapped To Fixed
 
July 2024
 

 

 

 

 

 
250,000

 

 

 
250,000

Term loan - Tranche C
2.80%
 
Swapped To Fixed
 
January 2025
 

 

 

 

 

 

 
225,000

 

 
225,000

Term loan - Tranche D
3.57%
 
Swapped To Fixed
 
July 2026
 

 

 

 

 

 

 

 
175,000

 
175,000

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

2029 Senior Unsecured Notes
3.98%
 
Fixed
 
August 2029
 

 

 

 

 

 

 

 
100,000

 
100,000

2031 Senior Unsecured Notes
4.08%
 
Fixed
 
August 2031
 

 

 

 

 

 

 

 
50,000

 
50,000

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

 
35,669

 
3,683

 

 
82,349

 
20,311

 

 
122,311

 
264,323

Total Principal/Weighted Average
3.53%
 
 
 
6.17 years
 
$

 
$
35,669

 
$
3,683

 
$

 
$
382,349

 
$
270,311

 
$
225,000

 
$
622,311

 
$
1,539,323

Unamortized debt issuance costs and debt premium, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(5,387
)
Total Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
$
1,533,936

Debt Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Covenant
 
Amount
Net Debt to Annualized Current Quarter Adjusted EBITDA
 
n/a
 
5.7x
Trailing Twelve Month Fixed Charge Coverage Ratio
 
> 1.5x
 
3.1x
Total Leverage Ratio
 
 
< 60.0%
 
41.6%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Effective interest rate incorporates the stated rate plus the impact of interest rate cash flow hedges and discount and premium amortization, if applicable.
(2) For the $500 million revolving line of credit, the effective interest rate is calculated based on one month LIBOR plus an applicable margin of 1.30% and excludes fees which range from 0.15% to 0.20% for unused borrowings.

14

image0a93.jpg

Supplemental Schedule 4 (continued)
 
 
 
 
Debt and Equity Capitalization
 
 
 
 
As of September 30, 2019
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
Preferred Shares and Units
 
 
 
 
 
 
 
Outstanding
 
 
6.000% Series A cumulative redeemable preferred shares of beneficial interest
8,727,119

 
 
6.000% Series A-1 cumulative redeemable preferred units
642,982

 
 
 
 
 
 
Common Shares and Units
 
 
 
 
 
 
 
Outstanding
 
If Converted
Common shares of beneficial interest
59,302,037

 
59,302,037

Restricted common shares
26,351

 
26,351

Total shares outstanding
59,328,388

 
59,328,388

Operating partnership units
30,458,558

 
30,458,558

DownREIT operating partnership unit equivalents
1,848,261

 
1,848,261

Total operating partnership units
32,306,819

 
32,306,819

Long-term incentive plan units(3)
536,173

 
536,173

Total shares and Class A equivalents outstanding
92,171,380

 
92,171,380

Subordinated performance units(4)
10,961,146

 
15,893,662

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

 
6,338,852

Total subordinated partnership units
15,332,768

 
22,232,514

Total common shares and units outstanding
107,504,148

 
114,403,894










(3) 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.
(4) 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 1.45 OP units based on historical financial information for the trailing twelve months ended September 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

image0a93.jpg

Supplemental Schedule 5
 
 
 
 
 
Summarized Information for Unconsolidated Real Estate Ventures
(dollars in thousands) (unaudited)
 
 
Combined Balance Sheet Information
 
 
 
 
 
 Total Ventures at 100%(1)
 
September 30, 2019
 
December 31, 2018
ASSETS
 
 
 
 
Self storage properties, net
 
$
1,849,177

 
$
1,894,412

Other assets
 
27,632

 
50,915

Total assets
 
$
1,876,809

 
$
1,945,327

LIABILITIES AND EQUITY
 
 
 
 
Debt financing
 
$
947,678

 
$
956,357

Other liabilities
 
23,559

 
16,516

Equity
 
905,572

 
972,454

Total liabilities and equity
 
$
1,876,809

 
$
1,945,327

 
 
 
 
 
Combined Operating Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2019
 
Nine Months Ended September 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
 
$
41,600

 
$
10,400

 
$
122,253

 
$
30,563

Property operating expenses
 
12,727

 
3,182

 
37,815

 
9,454

Net operating income
 
28,873

 
7,218

 
84,438

 
21,109

Supervisory, administrative and other expenses
 
(2,750
)
 
(688
)
 
(8,109
)
 
(2,027
)
Depreciation and amortization
 
(20,788
)
 
(5,197
)
 
(64,502
)
 
(16,126
)
Interest expense
 
(9,934
)
 
(2,484
)
 
(29,895
)
 
(7,474
)
Loss on sale of self storage properties
 

 

 
(806
)
 
(202