National Storage Affiliates Trust [NSA] Filings

10-Q 1 nsa-20210930.htm 10-Q nsa-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-37351

National Storage Affiliates Trust

(Exact name of Registrant as specified in its charter)


Maryland						46-5053858
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

8400 East Prentice Avenue, 9th Floor

Greenwood Village, Colorado 80111

(Address of principal executive offices) (Zip code)

(720) 630-2600

(Registrant's telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbols	Name of each exchange on which registered
Common Shares of Beneficial Interest, $0.01 par value per share	NSA	New York Stock Exchange
Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share	NSA Pr A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange

Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of November 2, 2021, 89,068,571 common shares of beneficial interest, $0.01 par value per share, were outstanding.


NATIONAL STORAGE AFFILIATES TRUST

TABLE OF CONTENTS
FORM 10-Q
		Page
PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 (Unaudited)	4
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020 (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2021 and 2020 (Unaudited)	6
	Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2021 and 2020 (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (Unaudited)	12
	Notes to Condensed Consolidated Financial Statements (Unaudited)	14
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	51
ITEM 4.	Controls and Procedures	52
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	52
ITEM 1A.	Risk Factors	52
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
ITEM 3.	Defaults Upon Senior Securities	53
ITEM 4.	Mine Safety Disclosures	53
ITEM 5.	Other Information	53
ITEM 6.	Exhibits	53
Signatures		55

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

NATIONAL STORAGE AFFILIATES TRUST

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share amounts)

(Unaudited)


	September 30,		December 31,
	2021		2020
ASSETS
Real estate
Self storage properties	$	4,670,821	$	3,639,192
Less accumulated depreciation	(537,772)		(443,623)
Self storage properties, net	4,133,049		3,195,569
Cash and cash equivalents	69,246		18,723
Restricted cash	4,357		2,978
Debt issuance costs, net	1,896		2,496
Investment in unconsolidated real estate ventures	192,015		202,533
Other assets, net	98,227		68,149
Operating lease right-of-use assets	22,444		23,129
Total assets	$	4,521,234	$	3,513,577
LIABILITIES AND EQUITY
Liabilities
Debt financing	$	2,128,485	$	1,916,971
Accounts payable and accrued liabilities	62,562		47,043
Interest rate swap liabilities	48,153		77,918
Operating lease liabilities	24,181		24,756
Deferred revenue	20,189		16,414
Total liabilities	2,283,570		2,083,102
Commitments and contingencies (Note 11)
Equity
Preferred shares of beneficial interest, par value $0.01 per share. 50,000,000 authorized, 8,736,719 and 8,732,719 issued and outstanding at September 30, 2021 and December 31, 2020, respectively, at liquidation preference	218,418		218,318
Common shares of beneficial interest, par value $0.01 per share. 250,000,000 authorized, 88,945,849 and 71,293,117 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	889		713
Additional paid-in capital	1,692,481		1,050,714
Distributions in excess of earnings	(272,636)		(251,704)
Accumulated other comprehensive loss	(30,303)		(49,084)
Total shareholders' equity	1,608,849		968,957
Noncontrolling interests	628,815		461,518
Total equity	2,237,664		1,430,475
Total liabilities and equity	$	4,521,234	$	3,513,577

See notes to condensed consolidated financial statements.

NATIONAL STORAGE AFFILIATES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
REVENUE
Rental revenue	$	139,420	$	99,690	$	379,857	$	290,394
Other property-related revenue	5,141		3,883		14,107		10,672
Management fees and other revenue	6,282		5,901		18,117		17,047
Total revenue	150,843		109,474		412,081		318,113
OPERATING EXPENSES
Property operating expenses	39,465		31,546		110,723		92,395
General and administrative expenses	13,012		10,818		36,700		32,241
Depreciation and amortization	38,983		28,933		107,458		87,347
Other	994		479		1,701		1,330
Total operating expenses	92,454		71,776		256,582		213,313

OTHER (EXPENSE) INCOME
Interest expense	(18,144)		(15,262)		(52,275)		(46,403)

Equity in earnings (losses) of unconsolidated real estate ventures	1,682		37		3,615		(251)
Acquisition costs	(512)		(596)		(922)		(1,681)
Non-operating expense	(241)		(120)		(562)		(629)

Other expense	(17,215)		(15,941)		(50,144)		(48,964)
Income before income taxes	41,174		21,757		105,355		55,836
Income tax expense	(444)		(346)		(1,315)		(875)
Net income	40,730		21,411		104,040		54,961
Net income attributable to noncontrolling interests	(10,506)		(7,924)		(24,260)		(24,404)
Net income attributable to National Storage Affiliates Trust	30,224		13,487		79,780		30,557
Distributions to preferred shareholders	(3,276)		(3,275)		(9,827)		(9,822)
Net income attributable to common shareholders	$	26,948	$	10,212	$	69,953	$	20,735

Earnings (loss) per share - basic	$	0.31	$	0.15	$	0.89	$	0.32
Earnings (loss) per share - diluted	$	0.26	$	0.15	$	0.71	$	0.32


Weighted average shares outstanding - basic	86,257		68,887		78,307		65,643
Weighted average shares outstanding - diluted	140,025		68,887		130,983		65,643


Dividends declared per common share	$	0.41	$	0.34	$	1.14	$	1.00

See notes to condensed consolidated financial statements.

NATIONAL STORAGE AFFILIATES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	40,730	$	21,411	$	104,040	$	54,961
Other comprehensive income (loss)
Unrealized gain (loss) on derivative contracts	243		(562)		14,418		(77,354)
Reclassification of other comprehensive loss to interest expense	5,242		4,973		15,323		9,519
Other comprehensive income (loss)	5,485		4,411		29,741		(67,835)
Comprehensive income (loss)	46,215		25,822		133,781		(12,874)
Comprehensive income attributable to noncontrolling interests	(12,009)		(9,323)		(33,304)		(146)
Comprehensive income (loss) attributable to National Storage Affiliates Trust	$	34,206	$	16,499	$	100,477	$	(13,020)

See notes to condensed consolidated financial statements.

NATIONAL STORAGE AFFILIATES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(dollars in thousands, except number of shares)

(Unaudited)


											Accumulated
							Additional		Distributions		Other
	Preferred Shares			Common Shares			Paid-in		In Excess Of		Comprehensive		Noncontrolling		Total
	Number	Amount		Number	Amount		Capital		Earnings		(Loss) Income		Interests		Equity
Balances, December 31, 2019	8,727,119	$	218,178	59,659,108	$	597	$	905,763	$	(197,075)	$	(7,833)	$	532,471	$	1,452,101

OP equity issued for property acquisitions:
OP units and subordinated performance units, net of offering costs	—	—		—	—		—		—		—		6,206		6,206
LTIP units	—	—		—	—		—		—		—		1,011		1,011

Redemptions of OP units	—	—		118,961	1		1,437		—		(62)		(1,376)		—
Issuance of common shares, net of offering costs	—	—		125,000	1		4,248		—		—		—		4,249
Merger and internalization of PRO, net of issuance costs	—	—		8,105,192	81		43,499		—		(402)		(33,583)		9,595
Redemptions of Series A-1 preferred units	5,600	140		—	—		—		—		—		(140)		—
Effect of changes in ownership for consolidated entities	—	—		—	—		15,857		—		(2,265)		(13,592)		—

Equity-based compensation expense	—	—		—	—		76		—		—		698		774
Issuance of LTIP units for acquisition expenses	—	—		—	—		—		—		—		40		40
Issuance of restricted common shares	—	—		21,861	—		—		—		—		—		—
Vesting and forfeitures of restricted common shares, net	—	—		(2,910)	—		(94)		—		—		—		(94)

Preferred share dividends	—	—		—	—		—		(3,273)		—		—		(3,273)
Common share dividends	—	—		—	—		—		(19,747)		—		—		(19,747)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(19,813)		(19,813)
Other comprehensive loss	—	—		—	—		—		—		(42,293)		(23,464)		(65,757)
Net income	—	—		—	—		—		6,648		—		9,115		15,763
Balances, March 31, 2020	8,732,719	$	218,318	68,027,212	$	680	$	970,786	$	(213,447)	$	(52,855)	$	457,573	$	1,381,055

OP equity issued for property acquisitions:
OP units and subordinated performance units, net of offering costs	—	—		—	—		—		—		—		5,842		5,842


Redemptions of OP units	—	—		292,291	3		3,438		—		(238)		(3,203)		—

See notes to condensed consolidated financial statements.

NATIONAL STORAGE AFFILIATES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(dollars in thousands, except number of shares)

(Unaudited)


											Accumulated
							Additional		Distributions		Other
	Preferred Shares			Common Shares			Paid-in		In Excess Of		Comprehensive		Noncontrolling		Total
	Number	Amount		Number	Amount		Capital		Earnings		(Loss) Income		Interests		Equity
Issuance of common shares, net of offering costs	—	—		387,000	4		11,912		—		—		—		11,916

Effect of changes in ownership for consolidated entities	—	—		—	—		(1,286)		—		(73)		1,359		—

Equity-based compensation expense	—	—		—	—		100		—		—		1,051		1,151


Vesting and forfeitures of restricted common shares, net	—	—		(2,770)	—		—		—		—		—		—
Reduction in receivables from partners of the operating partnership	—	—		—	—		—		—		—		225		225
Preferred share dividends	—	—		—	—		—		(3,274)		—		—		(3,274)
Common share dividends	—	—		—	—		—		(22,625)		—		—		(22,625)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(16,843)		(16,843)
Other comprehensive loss	—	—		—	—		—				(4,296)		(2,193)		(6,489)
Net income	—	—		—	—		—		10,422		—		7,365		17,787
Balances, June 30, 2020	8,732,719	$	218,318	68,703,733	$	687	$	984,950	$	(228,924)	$	(57,462)	$	451,176	$	1,368,745

OP equity issued for property acquisitions:
OP units and subordinated performance units, net of offering costs	—	—		—	—		—		—		—		3,427		3,427



Redemptions of OP units	—	—		293,083	3		3,417		—		(249)		(3,171)		—
Issuance of common shares, net of offering costs	—	—		181,915	2		5,866		—		—		—		5,868

Effect of changes in ownership for consolidated entities	—	—		—	—		(1,170)		—		(24)		1,194		—

Equity-based compensation expense	—	—		—	—		101		—		—		1,082		1,183


Vesting and forfeitures of restricted common shares, net	—	—		(859)	—		—		—		—		—		—
Reduction in receivables from partners of the operating partnership	—	—		—	—		—		—		—		37		37
Preferred share dividends	—	—		—	—		—		(3,275)		—		—		(3,275)
Common share dividends	—	—		—	—		—		(23,510)		—		—		(23,510)

See notes to condensed consolidated financial statements.

NATIONAL STORAGE AFFILIATES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(dollars in thousands, except number of shares)

(Unaudited)


											Accumulated
							Additional		Distributions		Other
	Preferred Shares			Common Shares			Paid-in		In Excess Of		Comprehensive		Noncontrolling		Total
	Number	Amount		Number	Amount		Capital		Earnings		(Loss) Income		Interests		Equity
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(17,897)		(17,897)
Other comprehensive income	—	—		—	—		—		—		3,012		1,399		4,411
Net income	—	—		—	—		—		13,487		—		7,924		21,411
Balances, September 30, 2020	8,732,719	$	218,318	69,177,872	$	692	$	993,164	$	(242,222)	$	(54,723)	$	445,171	$	1,360,400

See notes to condensed consolidated financial statements.

NATIONAL STORAGE AFFILIATES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(dollars in thousands, except number of shares)

(Unaudited)


											Accumulated
							Additional		Distributions		Other
	Preferred Shares			Common Shares			Paid-in		In Excess Of		Comprehensive		Noncontrolling		Total
	Number	Amount		Number	Amount		Capital		Earnings		(Loss) Income		Interests		Equity
Balances, December 31, 2020	8,732,719	$	218,318	71,293,117	$	713	$	1,050,714	$	(251,704)	$	(49,084)	$	461,518	$	1,430,475

OP equity issued for property acquisitions:
OP units and subordinated performance units, net of offering costs	—	—		—	—		—		—		—		22,897		22,897


Redemptions of OP units	—	—		190,248	2		2,332		—		(108)		(2,226)		—
Issuance of common shares, net of offering costs	—	—		3,692,216	37		122,375		—		—		—		122,412

Contributions from noncontrolling interests	—	—		—	—		—		—		—		103		103


Effect of changes in ownership for consolidated entities	—	—		—	—		(18,983)		—		(290)		19,273		—
Equity-based compensation expense	—	—		—	—		92		—		—		1,194		1,286

Issuance of restricted common shares	—	—		15,369	—		—		—		—		—		—
Vesting and forfeitures of restricted common shares, net	—	—		(4,823)	—		(152)		—		—		—		(152)

Preferred share dividends	—	—		—	—		—		(3,275)		—		—		(3,275)
Common share dividends	—	—		—	—		—		(25,014)		—		—		(25,014)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(20,604)		(20,604)
Other comprehensive income	—	—		—	—		—		—		17,840		8,017		25,857
Net income	—	—		—	—		—		20,838		—		6,797		27,635
Balances, March 31, 2021	8,732,719	$	218,318	75,186,127	$	752	$	1,156,378	$	(259,155)	$	(31,642)	$	496,969	$	1,581,620

OP equity issued for property acquisitions:
OP units and subordinated performance units, net of offering costs	—	—		—	—		—		—		—		24,102		24,102


Redemptions of OP units	—	—		121,923	1		1,554		—		(52)		(1,503)		—
Issuance of common shares, net of offering costs	—	—		2,390,000	24		103,646		—		—		—		103,670
Redemptions of Series A-1 preferred units	4,000	100		—	—		—		—		—		(100)		—
Effect of changes in ownership for consolidated entities	—	—		—	—		(17,420)		—		(227)		17,647		—

See notes to condensed consolidated financial statements.

NATIONAL STORAGE AFFILIATES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(dollars in thousands, except number of shares)

(Unaudited)


							Accumulated
					Additional	Distributions	Other
	Preferred Shares		Common Shares		Paid-in	In Excess Of	Comprehensive	Noncontrolling	Total
	Number	Amount	Number	Amount	Capital	Earnings	(Loss) Income	Interests	Equity
Equity-based compensation expense	—	—	—	—	113	—	—	1,235	1,348

Issuance of restricted common shares	—	—	13,255	—	—	—	—	—	—
Vesting and forfeitures of restricted common shares, net	—	—	(2,474)	—	(2)	—	—	—	(2)

Preferred share dividends	—	—	—	—	—	(3,276)	—	—	(3,276)
Common share dividends	—	—	—	—	—	(29,404)	—	—	(29,404)
Distributions to noncontrolling interests	—	—	—	—	—	—	—	(24,606)	(24,606)
Other comprehensive loss	—	—	—	—	—	—	(1,125)	(476)

National Storage Affiliates Trust [NSA] Filings
National Storage Affiliates Trust [NSA-PA] Filings
10-Q	[2021-11-04]
10-Q	[2021-08-04]
10-Q	[2021-05-05]
10-K	[2021-02-26]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-11]
10-K	[2020-02-26]
10-Q	[2019-11-01]
10-Q	[2019-08-02]
10-Q	[2019-05-03]
10-K	[2019-02-26]
10-Q	[2018-11-02]
10-Q	[2018-08-07]
10-Q	[2018-05-04]
10-K	[2018-02-27]
10-Q	[2017-11-07]
10-Q	[2017-08-03]
10-Q	[2017-05-04]
10-K	[2017-02-28]
10-Q	[2016-11-04]
10-Q	[2016-08-09]
10-Q	[2016-05-10]
10-K	[2016-03-10]
10-Q	[2015-11-10]
10-Q	[2015-08-12]
10-Q	[2015-06-05]

National Storage Affiliates Trust [NSA] Filings

National Storage Affiliates Trust [NSA-PA] Filings