PROACTIVE
2019 ANNUAL REPORT
DEAR FELLOW SHAREHOLDERS,
We’re looking forward to celebrating our fifth year as a public
company in 2020, which follows another year of industry leading
internal and external growth in 2019. The combination of our
geographically diversified portfolio, the downside protection
inherent in our Participating Regional Operator (“PRO”) structure,
and our multi-faceted external growth strategy has been and will
continue to be a differentiator as we deliver outsized growth in
same-store NOI and core FFO per share.
In 2019, we invested nearly $450 million in the acquisition of self
storage properties and welcomed two new PROs, Southern Self
Storage and Moove In Self Storage, to the NSA family. We also
delivered sector-leading growth in same-store NOI of 5% and
core FFO per share of 11.6% in 2019. These solid results drove
a 32% total return for NSA shares in 2019, which outpaced
all of our storage peers, the MSCI US REIT (RMS) index and
the S&P 500 index.
2020 promises to be a significant year of transition for NSA as
Tammy stepped into the role of CEO effective January 1, and we
will complete the internalization of our largest PRO, SecurCare
Self Storage by April. Tammy’s appointment as CEO is not only
a significant milestone for NSA, but also for the broader REIT
industry, as she is one of just ten female REIT CEOs among over
200 REITs in the United States. The internalization of SecurCare,
which is immediately accretive to core FFO per share and nearly
doubles the number of corporate-managed facilities, delivers on a
key part of the longer-term strategy that we’ve articulated since
our IPO in 2015.
“In 2019, we invested nearly
$450 million in the acquisition of self
storage properties and welcomed
two new PROs to the NSA Family...”
Of course, our outlook for the coming year is also impacted by the
unprecedented challenges to the broader economy related to the
impact from COVID-19, moderating fundamentals due to elevated
new supply in the self storage sector, and potential volatility due
to election-year dynamics. During such periods of heightened
uncertainty, NSA remains well-positioned to withstand the
inevitable strain of changing economic conditions. The self storage
industry has historically demonstrated resilience through turbulent
times, and we believe we have an operational advantage with
the expertise and experience of our PROs and the financial
strength of our investment grade balance sheet. Key attributes
of our balance sheet as of December 31, 2019 include:
no significant debt maturities until 2023;
a weighted average debt maturity of 5.9 years with an average
interest rate of 3.5%;
net debt to Adjusted EBITDA ratio of 5.7 times;
an investment grade BBB Rating by Kroll Bond Rating Agency
(KBRA); and
proven access to multiple sources of capital.
We are prepared to weather any potential storm, and we will
remain disciplined and flexible as opportunities present themselves
in 2020 and beyond. Here is what you should expect from us
going forward:
continued focus on maintaining a conservative balance sheet
and access to multiple sources of capital;
validation of the benefits of our innovative PRO structure;
continued execution on our multi-faceted external
growth strategy;
further development of the value-add benefits of our
technology platform; and
additional progress on our environmental, social and
governance (“ESG”) program as we formalize and
communicate our initiatives.
Since our IPO in 2015, all of our stakeholders have benefitted
from outsized growth driven by our unique PRO structure.
In the midst of a time of increased volatility and economic
uncertainty, we’re confident that the risk-mitigating aspects of
our differentiated PRO structure and our focus on ownership of
stabilized properties rather than development-stage properties
will prove very beneficial. We believe that dedication to our core
values of Integrity, Accountability, Humility and Compassion will
serve us well as we navigate through these uncertain times.
We are committed to continuing our service as prudent
stewards of your capital, while striving to deliver robust
returns for the foreseeable future.
Finally, we thank our team members nationwide for your
dedication, our PROs for your continued leadership, our investors
and other stakeholders for your continued support and our Board
of Trustees for your wise advice and counsel.
ARLEN D. NORDHAGEN
Executive Chairman of the Board of Trustees
TAMARA D. FISCHER
President and Chief Exectuive Officer
ARLEN D. NORDHAGEN
TAMARA D. FISCHER
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
OR
☐ 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
(State or other jurisdiction of
incorporation or organization)
46-5053858
(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
Common Shares of Beneficial Interest, $0.01 par
value per share
Series A Cumulative Redeemable Preferred Shares
of Beneficial Interest, par value $0.01 per share
Trading symbols Name of each exchange on which registered
NSA
New York Stock Exchange
NSA Pr A
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ☐ No ☒
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,
or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Non-accelerated Filer
☒
☐
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 ☒
The aggregate market value of the voting and non-voting common shares of beneficial interest of National Storage
Affiliates Trust held by non-affiliates of National Storage Affiliates Trust was approximately $1.7 billion as of
June 30, 2019. As of February 25, 2020, 59,683,668 common shares of beneficial interest, $0.01 par value per share,
were outstanding.
Portions of the registrant's definitive proxy statement for its annual meeting of shareholders are incorporated by
reference into Part III of this Annual Report on Form 10-K.
Documents Incorporated by Reference
NATIONAL STORAGE AFFILIATES TRUST
TABLE OF CONTENTS
ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended December 31, 2019
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
PART I
PART II
Market for the Registrant's Common Equity, Related Shareholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
Controls and Procedures
Other Information
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
PART IV
Page
5
15
33
33
34
34
35
37
38
55
56
56
56
57
57
57
57
57
57
57
61
Item
1.
1A.
1B.
2.
3.
4.
5.
6.
7.
7A.
8.
9.
9A.
9B.
10.
11.
12.
13.
14.
15.
16.
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FORWARD-LOOKING STATEMENTS
National Storage Affiliates Trust and its consolidated subsidiaries (the "Company", "NSA," "we," "our", and
"us") make forward-looking statements in this report that are subject to risks and uncertainties. These forward-
looking statements include information about possible or assumed future results of our business, financial condition,
liquidity, results of operations, plans and objectives. When we use the words "believe," "expect," "anticipate,"
"estimate," "plan," "continue," "intend," "should," "may," or similar expressions, we intend to identify forward-
looking statements.
The forward-looking statements contained in this report reflect our current views about future events and are
subject to numerous known and unknown risks, uncertainties, assumptions, and changes in circumstances that may
cause our actual results to differ significantly from those expressed in any forward-looking statement.
Statements regarding the following subjects, among others, may be forward-looking:
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market trends in our industry, interest rates, the debt and lending markets or the general economy;
our business and investment strategy;
the acquisition of properties, including those under contract, and the ability of our acquisitions to
achieve underwritten capitalization rates and our ability to execute on our acquisition pipeline;
the internalization of existing participating regional operators ("PROs") into the Company;
the timing of acquisitions;
our relationships with, and our ability and timing to attract additional, PROs;
our ability to effectively align the interests of our PROs with us and our shareholders;
the integration of our PROs and their managed portfolios into the Company, including into our financial
and operational reporting infrastructure and internal control framework;
our operating performance and projected operating results, including our ability to achieve market rents
and occupancy levels, reduce operating expenditures and increase the sale of ancillary products and
services;
our ability to access additional off-market acquisitions;
actions and initiatives of the U.S. federal, state and local government and changes to U.S. federal, state
and local government policies and the execution and impact of these actions, initiatives and policies;
the state of the U.S. economy generally or in specific geographic regions, states, territories or
municipalities;
economic trends and economic recoveries;
our ability to obtain and maintain financing arrangements on favorable terms;
general volatility of the securities markets in which we participate;
changes in the value of our assets;
projected capital expenditures;
the impact of technology on our products, operations, and business;
the implementation of our technology and best practices programs (including our ability to effectively
implement our integrated Internet marketing strategy);
changes in interest rates and the degree to which our hedging strategies may or may not protect us from
interest rate volatility;
impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar
matters;
our ability to continue to qualify and maintain our qualification as a real estate investment trust for U.S.
federal income tax purposes ("REIT");
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•
•
•
•
•
availability of qualified personnel;
the timing of conversions of each series of Class B common units of limited partner interest
("subordinated performance units") in NSA OP, LP (our "operating partnership") and subsidiaries of
our operating partnership into Class A common units of limited partner interest ("OP units") in our
operating partnership, the conversion ratio in effect at such time and the impact of such convertibility on
our diluted earnings (loss) per share;
the risks of investing through joint ventures, including whether the anticipated benefits from a joint
venture are realized or may take longer to realize than expected;
estimates relating to our ability to make distributions to our shareholders in the future; and
our understanding of our competition.
The forward-looking statements are based on our beliefs, assumptions and expectations of our future
performance, taking into account all information currently available to us. Forward-looking statements are not
predictions of future events. These beliefs, assumptions, and expectations can change as a result of many possible
events or factors, not all of which are known to us. Readers should carefully review our financial statements and the
notes thereto, as well as the sections entitled "Business," "Risk Factors," "Properties," and "Management's
Discussion and Analysis of Financial Condition and Results of Operations," described in Item 1, Item 1A, Item 2
and Item 7, respectively, of this Annual Report on Form 10-K and the other documents we file from time to time with
the Securities and Exchange Commission. If a change occurs, our business, financial condition, liquidity and results
of operations may vary materially from those expressed in our forward-looking statements. Any forward-looking
statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not
possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to,
and do not intend to, update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
PART I
Item 1. Business
General
National Storage Affiliates Trust is a fully integrated, self-administered and self-managed real estate investment
trust organized in the state of Maryland on May 16, 2013. We have elected and we believe that we have qualified to
be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31,
2015. We serve as the sole general partner of our operating partnership subsidiary, NSA OP, LP (our "operating
partnership"), a Delaware limited partnership formed on February 13, 2013 to conduct our business, which is
focused on the ownership, operation, and acquisition of self storage properties located within the top
100 metropolitan statistical areas ("MSAs") throughout the United States. As of December 31, 2019, we held
ownership interests in and operated a geographically diversified portfolio of 742 self storage properties, located in
35 states and Puerto Rico, comprising approximately 47.1 million rentable square feet, configured in approximately
378,000 storage units. According to the 2020 Self-Storage Almanac, we are the sixth largest owner and operator of
self storage properties in the United States based on number of properties, self storage units, and rentable square
footage. We completed our initial public offering in 2015 and our common shares of beneficial interest, $0.01 par
value per share ("common shares") are listed on the New York Stock Exchange under the symbol "NSA."
Our executive chairman of the board of trustees and former chief executive officer, Arlen D. Nordhagen, co-
founded SecurCare Self Storage, Inc. in 1988 to invest in and manage self storage properties. While growing
SecurCare to over 150 self storage properties, Mr. Nordhagen recognized a market opportunity for a differentiated
public self storage REIT that would leverage the benefits of national scale by integrating multiple experienced
regional self storage operators with local operational focus and expertise. We believe that his vision, which is the
foundation of the Company, aligns the interests of our participating regional operators ("PROs"), with those of our
public shareholders by allowing our PROs to participate alongside our shareholders in our financial performance and
the performance of our PROs' "managed portfolios", which means, with respect to each PRO, the portfolio of
properties that such PRO manages on our behalf. A key component of this strategy is to capitalize on the local
market expertise and knowledge of regional self storage operators by maintaining the continuity of their roles as
property managers.
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We believe that our structure creates the right financial incentives to accomplish these objectives. We require
our PROs to exchange the self storage properties they contribute to the Company for a combination of OP units and
subordinated performance units in our operating partnership or subsidiaries of our operating partnership that issue
units intended to be economically equivalent to the OP units and subordinated performance units issued by our
operating partnership ("DownREIT partnerships"). OP units, which are economically equivalent to our common
shares, create alignment with the performance of the Company as a whole. Subordinated performance units, which
are linked to the performance of specific managed portfolios, incentivize our PROs to drive operating performance
and support the sustainability of the operating cash flow generated by the self storage properties that they manage on
our behalf. Because subordinated performance unit holders receive distributions only after portfolio-specific
minimum performance thresholds are satisfied, subordinated performance units play a key role in aligning the
interests of our PROs with us and our shareholders. Our structure thus offers PROs a unique opportunity to serve as
regional property managers for their managed portfolios and directly participate in the potential upside of those
properties while simultaneously diversifying their investment
to include a broader portfolio of self storage
properties. We believe our structure provides us with a competitive growth advantage over self storage companies
that do not offer property owners the ability to participate in the performance and potential future growth of their
managed portfolios.
We believe that our national platform has significant potential for continued external and internal growth. We
seek to further expand our platform by continuing to recruit additional established self storage operators as well as
opportunistically partnering with institutional funds and other institutional investors in strategic joint venture
arrangements while integrating our operations through the implementation of centralized initiatives, including
management information systems, revenue enhancement, and cost optimization programs. We are currently engaged
in preliminary discussions with additional self storage operators and believe that we could add one to three more
PROs in addition to the PROs we have currently, which will enhance our existing geographic footprint and allow us
to enter regional markets in which we currently have limited or no market share. We are also currently under
contract to internalize an existing PRO, subject to the satisfaction of customary closing conditions. See "SecurCare
Internalization" below.
Our PROs
The Company had ten PROs as of December 31, 2019: SecurCare Self Storage, Inc. and its controlled affiliates
("SecurCare"), Kevin Howard Real Estate Inc., d/b/a Northwest Self Storage and its controlled affiliates
("Northwest"), Optivest Properties LLC and its controlled affiliates ("Optivest"), Guardian Storage Centers LLC and
its controlled affiliates ("Guardian"), Move It Self Storage and its controlled affiliates ("Move It"), Arizona Mini
Storage Management Company d/b/a Storage Solutions and its controlled affiliates ("Storage Solutions"), Hide-
Away Storage Services, Inc. and its controlled affiliates ("Hide-Away"), an affiliate of Shader Brothers Corporation
d/b/a Personal Mini Storage ("Personal Mini"), Southern Storage Management Systems, Inc. d/b/a Southern Self
Storage ("Southern") and affiliates of Investment Real Estate Management, LLC d/b/a Moove In Self Storage
("Moove In").
To capitalize on their recognized and established local brands, our PROs continue to function as property
managers for their managed portfolios under their existing brands (which include various brands in addition to those
discussed below). Over the long-run, we may seek to brand or co-brand each location as part of NSA.
•
•
SecurCare, which is headquartered in Lone Tree, Colorado, has been operating since 1988 and is one of our
PROs responsible for covering the west, mountain, midwest and southeast regions. SecurCare provided
property management services to 215 of our properties located in California, Colorado, Florida, Georgia,
Indiana, Kentucky, Louisiana, Mississippi, North Carolina, Ohio, Oklahoma, South Carolina and Texas as
of December 31, 2019. SecurCare is currently managed by David Cramer, who has worked in the self
storage industry for more than 20 years.
Northwest, which is headquartered in Portland, Oregon, is our PRO responsible for covering the northwest
region. Northwest provided property management services to 78 of our properties located in Idaho, Oregon
and Washington as of December 31, 2019. Northwest is led by Kevin Howard, a former member of our
board of trustees, who founded Northwest over 30 years ago and is recognized in the industry for his
successful track record as a self storage specialist in the areas of design and development, operations and
property management, consultation, and brokerage.
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•
•
Optivest, which is based in Dana Point, California, is one of our PROs responsible for covering portions of
the northeast and southwest regions. Optivest managed 64 of our properties located in Arizona, California,
Massachusetts, Nevada, New Hampshire, New Mexico and Texas as of December 31, 2019. Optivest is run
by its co-founder, Warren Allan, who has more than 25 years of financial and operational management
experience in the self storage industry and is recognized as a self storage acquisition and development
specialist.
Guardian, which is based in Irvine, California, is one of our PROs responsible for covering portions of the
southern California and southwest regions. Guardian managed 55 of our properties located in California,
Arizona and Nevada as of December 31, 2019. Guardian is led by John Minar, who has nearly 40 years of
self storage acquisition, rehabilitation, ownership, operations and development experience.
• Move It, which is based in Dallas, Texas, is one of our PROs responsible for covering portions of the Texas
and southeast markets. Move It managed 33 of our properties located in Alabama, Florida, Louisiana,
Mississippi and Texas as of December 31, 2019. Move It is led by its founder, Tracy Taylor, who has more
than 40 years of experience in self storage development, acquisition and management, and is currently on
the board of directors for the Large Owners Council of the Self Storage Association and is a former
Chairman of the Self Storage Association.
•
•
•
•
Storage Solutions, which is based in Chandler, Arizona, is our PRO responsible for covering portions of the
Arizona and Nevada markets. Storage Solutions managed 10 of our properties in Arizona and Nevada as of
December 31, 2019. Storage Solutions is led by its founder, Bill Bohannan, who is one of the largest
operators in Phoenix and has more than 35 years of self storage acquisition, development and management
experience. Mr. Bohannan is recognized in the industry as a self storage acquisition, development and
management specialist.
Hide-Away, which is based in Sarasota, Florida, is our PRO responsible for covering the western Florida
market. Hide-Away managed 22 of our properties in western Florida as of December 31, 2019. Hide-Away
is led by its founder, Steve Wilson, one of the early developers of the self storage business, who served for
more than 35 years as the President of Hide-Away and its related entities, and is a former Chairman of the
Self Storage Association.
Personal Mini, which is based in Orlando, Florida, is our PRO responsible for covering portions of the
central Florida market. Personal Mini managed eight of our properties in central Florida as of December 31,
2019. Personal Mini is led by Marc Smith, a self storage investor who has been involved in all facets of the
self storage business. Mr. Smith is a past Chairman of the Self Storage Association, and also previously
served as president of the Southeast Region of the Self Storage Association.
Southern, which is based in Palm Beach Gardens, Florida, is one of our PROs responsible for covering
portions of Arizona and the southeast region, including New Orleans, the Florida Panhandle, southern
Georgia, and Puerto Rico. Southern managed 29 of our properties in Arizona, Louisiana, the Florida
Panhandle, southern Georgia, and Puerto Rico as of December 31, 2019. Southern is led by Bob McIntosh
and Peter Cowie, who are active real estate operators with more than 30 years of self storage experience.
• Moove In, which is based in York, Pennsylvania, is our PRO responsible for covering portions of the
northeast region, including portions of Pennsylvania, Massachusetts, and New Jersey. Moove In managed
11 of our properties in Pennsylvania, Massachusetts, and New Jersey as of December 31, 2019. Moove In
is led by John Gilliland, a past Chairman of the Self Storage Association.
We benefit from the local market knowledge and active presence of our PROs, allowing us to build and foster
important customer and industry relationships. These local relationships provide attractive off-market acquisition
opportunities that we believe will continue to fuel additional external growth.
We believe our structure allows our PROs to optimize their established property management platforms while
addressing financial and operational hurdles. Before joining us, our PROs faced challenges in securing low cost
capital and had to manage multiple investors and lending relationships, making it difficult to compete with larger
competitors, including public REITs, for acquisition and investment opportunities. Our PROs were also limited in
their ability to raise growth capital through the sale of assets, a portfolio refinancing, or capital contributions from
new equity partners. Serving as our on-the-ground acquisition teams, our PROs now have access to our broader
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financing sources and lower cost of capital, while our national platform allows them to benefit from economies of
scale to drive operating efficiencies in a rapidly evolving, technology-driven industry.
SecurCare Internalization
On February 24, 2020, we entered into a definitive agreement with SecurCare to merge SecurCare into a wholly
owned subsidiary of the Company. As a result of the merger, SecurCare's property management platform and related
intellectual property will be internalized by us. As part of the internalization, most of SecurCare's employees,
including its president and chief executive officer, David Cramer, and its other key persons, will be offered
employment by us and will continue managing SecurCare's portfolio of properties under the brand SecurCare as
members of our existing property management platform. Mr. Cramer will replace Steven B. Treadwell as our chief
operating officer and executive vice president effective at or around the closing of the merger. As a result of the
merger, we will no longer pay any fees or reimbursements to SecurCare and distributions on the series of
subordinated performance units related to SecurCare's managed portfolio will be discontinued. The transactions are
expected to close during the second quarter of 2020, subject to customary closing conditions. However, there is no
assurance that the transactions will be consummated at all or at the time or pursuant to the terms currently
contemplated. For additional information, see the current report on Form 8-K that we filed with the Securities and
Exchange Commission on February 24, 2020.
Our Consolidated Properties
We seek to own properties that are well located in high quality sub-markets with highly accessible street access
and attractive supply and demand characteristics, providing our properties with strong and stable cash flows that are
less sensitive to the fluctuations of the general economy. Many of these markets have multiple barriers to entry
against increased supply, including zoning restrictions against new construction and new construction costs that we
believe are higher than our properties' fair market value. As of December 31, 2019, we owned a geographically
diversified portfolio of 567 self storage properties, located in 29 states and Puerto Rico, comprising approximately
34.5 million rentable square feet, configured in approximately 275,000 storage units. Of these properties, 265 were
acquired by us from our PROs, 301 were acquired by us from third-party sellers and one was acquired by us from
the 2016 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8). A complete listing
of, and additional information about, our self storage properties is included in Item 2 of this report.
During the year ended December 31, 2019, we acquired 69 consolidated self storage properties, of which 19
were acquired by us from our PROs, 49 were acquired by us from third-party sellers and one was acquired by us
from the 2016 Joint Venture. The following is a summary of our 2019 consolidated acquisition activity (dollars in
thousands):
State
2019 Acquisitions:
Florida
Louisiana
Texas
Georgia
Pennsylvania
Idaho
New Jersey
New Mexico
Arizona
Massachusetts
Missouri
Other(1)
Total
Number of
Properties
Number of
Units
Rentable
Square Feet
Fair Value
12
12
11
10
6
3
3
3
2
2
2
3
69
5,400
6,052
5,292
5,113
2,665
925
1,436
1,950
801
1,454
861
1,011
32,960
653,564
682,729
801,344
658,636
299,125
202,545
191,304
233,868
97,320
124,200
103,726
128,937
4,177,298
$
$
90,580
69,330
79,688
70,134
33,162
12,450
18,182
28,221
11,475
12,312
9,066
13,230
447,830
(1) Self storage properties in other states acquired during the year ended December 31, 2019 include Maryland, New Hampshire and Oregon.
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During the year ended December 31, 2019, we sold one self storage property to an unrelated third party for $6.5
million. The self storage property comprised less than 0.1 million rentable square feet configured in approximately
500 storage units.
During the year ended December 31, 2018, we acquired 57 consolidated self storage properties and an
expansion project adjacent to an existing property, of which four were acquired by us from our PROs and 53 were
acquired by us from third-party sellers. The following is a summary of our 2018 consolidated acquisition activity
(dollars in thousands):
State/Territory
2018 Acquisitions:
Arizona
Kansas
Florida
Missouri
North Carolina
California
Nevada
Oregon
Texas
Other(1)
Total
Number of
Properties
Number of
Units
Rentable
Square Feet
Fair Value
13
13
5
4
4
2
2
2
2
10
57
6,943
4,443
2,893
2,000
2,296
895
837
486
956
6,411
28,160
$
758,623
548,415
322,111
235,300
285,975
102,207
108,065
63,805
125,087
662,175
3,211,763
74,168
59,876
32,483
28,175
39,596
15,741
11,172
8,137
9,549
77,752
356,649
(1) Self storage properties in other states and territories acquired during the year ended December 31, 2018 include Georgia, Maryland, Ohio,
Washington, and Puerto Rico.
During the year ended December 31, 2018, we sold two self storage properties to unrelated third parties for $5.5
million. The self storage properties comprised approximately 0.1 million rentable square feet configured in
approximately 1,500 storage units.
Our Unconsolidated Real Estate Ventures
We seek to opportunistically partner with institutional funds and other institutional investors to acquire
attractive portfolios utilizing a promoted return structure. We believe there is significant opportunity for continued
external growth by partnering with institutional investors seeking to deploy capital in the self storage industry.
2018 Joint Venture
As of December 31, 2019, our 2018 Joint Venture (as defined in Note 5 to the consolidated financial statements
in Item 8), in which we have a 25% ownership interest, owned and operated 103 self storage properties containing
approximately 7.7 million rentable square feet, configured in over 63,000 storage units and located across 17 states.
2016 Joint Venture
As of December 31, 2019, our 2016 Joint Venture, in which we have a 25% ownership interest, owned and
operated a portfolio of 72 properties containing approximately 4.9 million rentable square feet, configured in
approximately 40,000 storage units and located across 13 states. During the year ended December 31, 2019, our
2016 Joint Venture sold to the Company one self storage property for $4.1 million, comprising less than 0.1 million
rentable square feet, configured in approximately 300 storage units.
Our Property Management Platform
Through our property management platform, branded iStorage, we direct, manage and control the day-to-day
operations and affairs of certain consolidated properties and our unconsolidated real estate ventures. We earn certain
customary fees for managing and operating the properties in the unconsolidated real estate ventures and we facilitate
tenant insurance and/or tenant warranty protection programs for tenants at these properties in exchange for half of all
proceeds from such programs. Over time, as PROs retire, we may we transfer management of all or part of an
existing PRO's managed portfolio to our or another PRO's property management platform.
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As of December 31, 2019, our property management platform managed and controlled 42 of our consolidated
properties in select markets in California, Illinois, Kansas, Maryland, Missouri, Ohio, Texas and Virginia.
Our Competitive Strengths
We believe our unique PRO structure combined with our property management platform allows us to
differentiate ourselves from other self storage operators, and the following competitive strengths enable us to
effectively compete against our industry peers:
High Quality Properties in Key Growth Markets. We held ownership interests in and operated a
geographically diversified portfolio of 742 self storage properties, located in 35 states and Puerto Rico, comprising
approximately 47.1 million rentable square feet, configured in approximately 378,000 storage units as of
December 31, 2019. Over 75% of our consolidated portfolio is located in the top 100 MSAs, based on our 2019 net
operating income ("NOI"). We believe that these properties are primarily located in high quality growth markets that
have attractive supply and demand characteristics and are less sensitive to the fluctuations of the general economy.
Many of these markets have multiple barriers to entry against increased supply, including zoning restrictions against
new construction and new construction costs that we believe are higher than our properties' fair market value.
Furthermore, we believe that our significant size and the overall geographic diversification of our portfolio reduces
risks associated with specific local or regional economic downturns or natural disasters.
Differentiated, Growth-Oriented Strategy Focused on Established Operators. We are a self storage REIT
with a unique structure that supports our differentiated external growth strategy. Our PRO structure appeals to
operators who are looking for access to growth capital while maintaining an economic stake in the self storage
properties that each manages on the Company's behalf. These attributes entice operators to join the Company rather
than sell their properties for cash consideration. Through our PRO structure, we seek to attract operators who are
confident in the future performance of their properties and desire to participate in the growth of the Company. We
have successfully recruited established operators across the United States with a history of efficient property
management and a track record of successful acquisitions. Our structure and differentiated strategy have enabled us
to build a substantial captive pipeline from existing operators as well as potentially create external growth from the
recruitment of additional PROs.
Integrated Platform Utilizing Advanced Technology for Enhanced Operational Performance and Best
Practices. Our national platform allows us to capture cost savings through integration and centralization, thereby
eliminating redundancies and utilizing economies of scale across the property management platforms of us and our
PROs. As compared to a stand-alone operator, our national platform has greater access to lower-cost capital, reduced
Internet marketing costs per customer lead, discounted property insurance expense, and reduced overhead costs. In
addition, the Company has sufficient scale for various centralized functions, including financial reporting, the
operation of call centers, expanding cell tower leasing, a national credit card processing program, marketing,
information technology, legal support, and capital market functions, to achieve substantial cost savings over smaller,
individual operators.
Our national platform utilizes advanced technology for our data warehouse program, Internet marketing, our
centralized call centers, financial and property analytic dashboards, revenue optimization analytics and expense
management tools to enhance operational performance. These centralized programs, which are run through our
Technology and Best Practices Group, are positively impacting our business performance, and we believe that they
will continue to be a driver of organic growth going forward. We will continue to utilize our Technology and Best
Practices Group to help us benefit from the collective sharing of key operating strategies among our PROs in areas
like human resource management, local marketing and operating procedures and building tenant insurance-related
arrangements.
Aligned Incentive Structure with Shareholder Downside Protection. Our structure promotes operator
accountability as subordinated performance units issued to our PROs in exchange for the contribution of their
properties are entitled to distributions only after those properties satisfy minimum performance thresholds. In the
event of a material reduction in operating cash flow, distributions on our subordinated performance units will be
reduced before or disproportionately to distributions on our common shares held by our common shareholders. In
addition, we expect our PROs will generally co-invest subordinated equity in the form of subordinated performance
units in each acquisition that they source from a third-party seller, and the value of these subordinated performance
units will fluctuate with the performance of their managed portfolios. Therefore, our PROs are incentivized to select
acquisitions that are expected to exceed minimum performance thresholds, thereby increasing the value of their
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subordinated equity stake. We expect that our shareholders will benefit from the higher levels of property
performance that our PROs are incentivized to deliver.
Our Business and Growth Strategies
By capitalizing on our competitive strengths, we seek to increase scale, achieve optimal revenue-producing
occupancy and rent levels, and increase long-term shareholder value by achieving sustainable long-term growth. Our
business and growth strategies to achieve these objectives are as follows:
Maximize Property Level Cash Flow. We strive to maximize the cash flows at our properties by leveraging
the economies of scale provided by our national platform, including through the implementation of new ideas
derived from our Technology and Best Practices Group. We believe that our unique PRO structure, centralized
infrastructure and efficient national platform will enable us to achieve optimal market rents and occupancy, reduce
operating expenses and increase the sale by our PROs of ancillary products and services, including tenant insurance,
of which we receive a portion of the proceeds, truck rentals and packing supplies.
Acquire Built-in Captive Pipeline of Target Properties from Existing PROs. We have an attractive, high
quality potential acquisition pipeline (our "captive pipeline") of approximately 140 self storage properties valued at
approximately $1.4 billion that will continue to drive our future growth. We consider a property to be in our captive
pipeline if it (i) is under a management service agreement with one of our PROs, (ii) meets our property quality
criteria, and (iii) is either required to be offered to us under the applicable facilities portfolio management agreement
or a PRO has a reasonable basis to believe that the controlling owner of the property intends to sell the property in
the next seven years.
Our PROs have management service agreements with all of the properties in our captive pipeline and hold
controlling and non-controlling ownership interests in some of these properties. With respect to each property in our
captive pipeline in which a PRO holds a controlling ownership interest, such PRO has agreed that it will not transfer
(or permit the transfer of, to the extent possible) any interest in such self storage property without first offering or
causing to be offered (if permissible) such interest to us. In addition, upon maturity of the outstanding mortgage
indebtedness encumbering such property, so long as occupancy is consistent with or exceeds average local market
levels, which we determine in our sole discretion, such PRO has agreed to offer or cause to be offered (if
permissible) such interest to us. With respect to captive pipeline properties in which our PROs have a non-
controlling ownership interest or no ownership interest, each PRO has agreed to use commercially reasonable good
faith efforts to facilitate our purchase of such property. We preserve the discretion to accept or reject any of the
properties that our PROs are required to, or elect to, offer (or cause to be offered) to us.
Access Additional Off-Market Acquisition Opportunities. Our PROs and their "on-the-ground" personnel
have established an extensive network of industry relationships and contacts in their respective markets. Through
these local connections, our PROs are able to access acquisition opportunities that are not publicly marketed or sold
through auctions. Our structure incentivizes our PROs to source acquisitions in their markets from third-party sellers
and consolidate these properties into the Company. Other public self storage companies generally have acquisition
teams located at their central offices, which in many instances are far removed from regional and local markets. We
believe our operators' networks and close familiarity with the other operators in their markets provide us clear
competitive advantages in identifying and selecting attractive acquisition opportunities. Our PROs have sourced
265 acquisitions from third-party sellers comprising approximately 18.0 million rentable square feet as of
December 31, 2019.
Recruit Additional New PROs in Target Markets. We intend to continue to execute on our external growth
strategy through additional acquisitions and contributions from future PROs in key markets. We believe there is
significant opportunity for growth through consolidation of the highly fragmented composition of the market. We
believe that future operators will be attracted to our unique structure, providing them with lower cost of capital,
better economies of scale, and greater operational and overhead efficiencies while preserving their existing property
management platforms. We intend to add one to three additional PROs to complement our existing geographic
footprint and to achieve our goal of creating a highly diversified nationwide portfolio of properties focused in the top
100 MSAs. When considering a PRO candidate, we consider various factors, including the size of the potential
PRO's portfolio, the quality and location of its properties, its market exposure, its operating expertise, its ability to
grow its business, and its reputation with industry participants.
Strategic Joint Venture Arrangements. We intend to continue to opportunistically partner with institutional
funds and other institutional investors to acquire attractive portfolios utilizing a promoted return structure. We
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believe there is significant opportunity for continued external growth by partnering with institutional investors
seeking to deploy capital in the self storage industry. We intend to leverage our property management platform to
provide property and asset management services for future strategic joint ventures, generating additional operating
profits and third party fee income.
Our Financing Strategy
We expect to maintain a flexible approach in financing new property acquisitions. In general, we expect to fund
our property acquisitions through a combination of borrowings under bank credit facilities (including term loans and
revolving facilities), property-level debt, issuances of OP equity and public and private equity and debt issuances.
As of December 31, 2019, our unsecured credit facility provided for total borrowings of $1.275 billion (the
"credit facility"). The credit facility consists of the following components: (i) a revolving line of credit (the
"Revolver") which provides for a total borrowing commitment up to $500.0 million, under which we may borrow,
repay and re-borrow amounts, (ii) a $125.0 million tranche A term loan facility (the "Term Loan A"), (iii) a $250.0
million tranche B term loan facility (the "Term Loan B"), (iv) a $225.0 million tranche C term loan facility (the
"Term Loan C"), and (v) a $175.0 million tranche D term loan facility (the "Term Loan D"). As of December 31,
2019, we had the entire amounts drawn on Term Loan A, Term Loan B, Term Loan C and Term Loan D and we had
no outstanding borrowings under the Revolver, and the capacity to borrow an additional $494.3 million under the
Revolver while remaining in compliance with the credit facility's financial covenants. As of December 31, 2019, we
have an expansion option under the credit facility, which, if exercised in full, would provide for a total credit facility
of $1.750 billion.
We have a credit agreement with a syndicated group of lenders for a term loan facility that matures in June 2023
(the "2023 Term Loan Facility") and is separate from the credit facility in an aggregate amount of $175.0 million. As
of December 31, 2019 the entire amount was outstanding under the 2023 Term Loan Facility with an effective
interest rate of 2.83%. We have an expansion option under the 2023 Term Loan Facility, which, if exercised in full,
would provide for total borrowings in an aggregate amount of $400.0 million.
We have a credit agreement with a lender for a term loan facility that matures in December 2028 (the "2028
Term Loan Facility") and is separate from the credit facility and 2023 Term Loan Facility in an aggregate amount of
$75.0 million. As of December 31, 2019 the entire amount was outstanding under the 2028 Term Loan Facility with
an effective interest rate of 4.62%. We have an expansion option under the 2028 Term Loan Facility, which, if
exercised in full, would provide for total borrowings in an aggregate amount up to $125.0 million.
On April 24, 2019, we entered into a credit agreement with a lender for a term loan facility that matures in April
2029 (the "2029 Term Loan Facility") and is separate from the credit facility, 2023 Term Loan Facility and 2028
Term Loan Facility in an aggregate amount of $100.0 million. As of December 31, 2019 the entire amount was
outstanding under the 2029 Term Loan Facility with an effective interest rate of 4.27%.
The credit facility, 2023 Term Loan Facility, 2028 Term Loan Facility and 2029 Term Loan Facility each
contain the same financial covenants and customary affirmative and negative covenants that, among other things,
could limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into
certain transactions.
On August 30, 2019, our operating partnership issued $100.0 million of 3.98% senior unsecured notes due
August 30, 2029 (the "2029 Senior Unsecured Notes") and $50.0 million of 4.08% senior unsecured notes due
August 30, 2031 (the "2031 Senior Unsecured Notes" and together with the 2029 Senior Unsecured Notes, the
"Senior Unsecured Notes") in a private placement to certain institutional accredited investors. The Senior Unsecured
Notes are subject to customary affirmative and negative covenants that, among other things, limit the Company's
ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
We expect to employ leverage in our capital structure in amounts determined from time to time by our board of
trustees. Although our board of trustees has not adopted a policy which limits the total amount of indebtedness that
we may incur, it will consider a number of factors in evaluating our level of indebtedness from time to time, as well
as the amount of such indebtedness that will be either fixed and variable-rate, and in making financial decisions,
including, among others, the following:
•
•
the interest rate of the proposed financing;
the extent to which the financing impacts our flexibility in managing our properties;
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•
•
•
•
•
•
•
•
•
•
prepayment penalties and restrictions on refinancing;
the purchase price of properties we acquire with debt financing;
our long-term objectives with respect to the financing;
our target investment returns;
the ability of particular properties, and the Company as a whole, to generate cash flow sufficient to cover
expected debt service payments;
overall level of consolidated indebtedness;
timing of debt maturities;
provisions that require recourse and cross-collateralization;
corporate credit ratios including debt service coverage, debt to total market capitalization and debt to
undepreciated assets; and
the overall ratio of fixed- and variable-rate debt.
Our indebtedness may be recourse, non-recourse or cross-collateralized. If the indebtedness is non-recourse, the
collateral will be limited to the particular properties to which the indebtedness relates. In addition, we may invest in
properties subject to existing loans secured by mortgages or similar liens on our properties, or may refinance
properties acquired on a leveraged basis. We may use the proceeds from any borrowings to refinance existing
indebtedness, to refinance investments, including the redevelopment of existing properties, for general working
capital or for other purposes when we believe it is advisable.
Dividend Reinvestment Plan
In the future, we may adopt a dividend reinvestment plan that will permit shareholders who elect to participate
in the plan to have their cash dividends reinvested in additional common shares.
Regulation
General
Generally, self storage properties are subject to various laws, ordinances and regulations, including those
relating to lien sale rights and procedures, public accommodations, insurance, and the environment. Changes in any
of these laws, ordinances or regulations could increase the potential liability existing or created by tenants or others
on our properties. Laws, ordinances, or regulations affecting development, construction, operation, upkeep, safety
and taxation requirements may result in significant unanticipated expenditures, loss of self storage sites or other
impairments to operations, which would adversely affect our cash flows from operating activities.
Under the Americans with Disabilities Act of 1990 (the "ADA"), all places of public accommodation are
required to meet certain federal requirements related to access and use by disabled persons. For additional
information on the ADA, see "Item 1A. Risk Factors—Risks Related to Our Business—Costs associated with
complying with the ADA may result in unanticipated expenses."
Insurance activities are subject to state insurance laws and regulations as determined by the particular insurance
commissioner for each state in accordance with the McCarran-Ferguson Act, as well as subject to the Gramm-
Leach-Bliley Act and the privacy regulations promulgated by the Federal Trade Commission pursuant thereto.
Under the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended
("CERCLA"), and comparable state laws, we may be required to investigate and remediate regulated hazardous
materials at one or more of our properties. For additional information on environmental matters and regulation, see
"Item 1A. Risk Factors—Risks Related to Our Business—Environmental compliance costs and liabilities associated
with operating our properties may affect our results of operations."
Property management activities are often subject to state real estate brokerage laws and regulations as
determined by the particular real estate commission for each state.
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REIT Qualification
We have elected and we believe that we have qualified to be taxed as a REIT under the Internal Revenue Code
of 1986, as amended, (the "Code"), commencing with our taxable year ended on December 31, 2015. We generally
will not be subject to U.S. federal income tax on our net taxable income to the extent that we distribute annually all
of our net taxable income to our shareholders and maintain our qualification as a REIT. We believe that we have
been organized and have operated in conformity with the requirements for qualification and taxation as a REIT
under the Code, and we expect that our intended manner of operation will enable us to continue to meet the
requirements for qualification and taxation as a REIT. To qualify, and maintain our qualification, as a REIT, we
must meet on a continuing basis, through our organization and actual investment and operating results, various
requirements under the Code relating to, among other things, the sources of our gross income, the composition and
values of our assets, our distribution levels and the diversity of ownership of our shares. If we fail to qualify as a
REIT in any taxable year and do not qualify for certain statutory relief provisions, we will be subject to U.S. federal
income tax at regular corporate rates and may be precluded from qualifying as a REIT for the subsequent four
taxable years following the year during which we failed to qualify as a REIT. Even if we qualify for taxation as a
REIT, we still may be subject to some U.S. federal, state and local taxes on our income or assets. In addition, subject
to maintaining our qualification as a REIT, a portion of our business is conducted through, and a portion of our
income is earned by, one or more taxable REIT subsidiaries ("TRSs"), which are subject to U.S. federal corporate
income tax at regular rates. Distributions paid by us generally will not be eligible for taxation at the preferential U.S.
federal
income tax rates that currently apply to certain distributions received by individuals from taxable
corporations, unless such distributions are attributable to dividends received by us from a TRS.
U.S. Federal Income Tax Legislation
On December 22, 2017, Congress enacted H.R. 1, also known as the Tax Cuts and Jobs Act of 2017 ("TCJA").
The TCJA made major changes to the Internal Revenue Code, including the reduction of the tax rates applicable to
individuals and subchapter C corporations, a reduction or elimination of certain deductions (including new
limitations on the deductibility of interest expense), permitting immediate expensing of capital expenditures and
significant changes in the taxation of earnings from non-U.S. sources. The effect of the significant changes made by
the TCJA remains uncertain, and additional administrative guidance is still required in order to fully evaluate the
effect of many provisions. In addition, final regulations implementing certain of these new rules have not yet been
issued and additional changes or corrections may still be forthcoming. While we do not currently expect this reform
to have a significant impact to the Company's consolidated financial statements, stockholders are urged to consult
with their tax advisors regarding the effects of the TCJA or other legislative, regulatory or administrative
developments on an investment in the Company's common stock.
Competition
We compete with many other entities engaged in real estate investment activities for customers and acquisitions
of self storage properties and other assets, including national, regional, and local owners, operators, and developers
of self storage properties. We compete based on a number of factors including location, rental rates, security,
suitability of the property's design to prospective tenants' needs, and the manner in which the property is operated
and marketed. We believe that the primary competition for potential customers comes from other self storage
properties within a three to five mile radius. We have positioned our properties within their respective markets as
high-quality operations that emphasize tenant convenience, security, and professionalism.
We also may compete with numerous other potential buyers when pursuing a possible property for acquisition,
which can increase the potential cost of a project. These competing bidders also may possess greater resources than
us and therefore be in a better position to acquire a property. However, our use of OP units and subordinated
performance units as transactional currency allows us to structure our acquisitions in tax-deferred transactions. As a
result, potential targets who are tax-sensitive might favor us as a suitor.
Our primary national competitors in many of our markets for both tenants and acquisition opportunities include
local and regional operators, institutional investors, private equity funds, as well as the other public self storage
REITs, including Public Storage, CubeSmart, Extra Space Storage Inc. and Life Storage, Inc. These entities also
seek financing through similar channels to the Company. Therefore, we will continue to compete for institutional
investors in a market where funds for real estate investment may decrease.
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Employees
As of December 31, 2019, the Company had 459 employees, which includes employees of our property
management platform but does not include persons employed by our PROs. As of December 31, 2019, our PROs,
collectively, had approximately 1,100 full-time and part-time employees involved in management, operations, and
reporting with respect to our self storage property portfolio.
Available Information
We file registration statements, proxy statements, our Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K, and all amendments to those statements and reports with the Securities
and Exchange Commission (the "SEC"). Investors may obtain copies of these statements and reports by accessing
the SEC's website at www.sec.gov. Our statements and reports and any amendments to any of those statements and
reports that we file with the Securities and Exchange Commission are available free of charge as soon as reasonably
practicable on our website at www.nationalstorageaffiliates.com. The information contained on our website is not
incorporated into this Annual Report on Form 10-K. Our common shares are listed on the New York Stock
Exchange under the symbol "NSA."
Item 1A. Risk Factors
An investment in our common shares involves a high degree of risk. Before making an investment decision, you
should carefully consider the following risk factors, together with the other information contained in this Annual
Report on Form 10-K. If any of the risks discussed in this Annual Report on Form 10-K occurs, our business,
financial condition, liquidity and results of operations could be materially and adversely affected.
Risks Related to Our Business
Adverse economic or other conditions in the markets in which we do business and more broadly associated with
the real estate industry could negatively affect our occupancy levels and rental rates and therefore our operating
results and the value of our self storage properties.
Our operating results are dependent upon our ability to achieve optimal occupancy levels and rental rates at our
self storage properties. Adverse economic or other conditions in the markets in which we do business, particularly in
our markets in California, Oregon, Florida, Texas, Georgia, Arizona and North Carolina, which accounted for
approximately 22%, 11%, 10%, 10%, 6%, 6% and 5%, respectively, of our total rental and other property-related
revenues for the year ended December 31, 2019, may lower our occupancy levels and limit our ability to maintain or
increase rents or require us to offer rental discounts. No single customer represented a significant concentration of
our 2019 revenues. The following adverse developments, among others, in the markets in which we do business may
adversely affect the operating performance of our properties:
•
•
•
•
business layoffs or downsizing, industry slowdowns, relocation of businesses and changing demographics;
periods of economic slowdown or recession, declining demand for self storage or the public perception that
any of these events may occur;
local or regional real estate market conditions, such as competing properties or products, the oversupply of
self storage, vacancies or changes in self storage space market rents, or a reduction in demand for self
storage in a particular area; and
perceptions by prospective tenants of the safety, convenience and attractiveness of our properties and the
neighborhoods in which they are located.
We are also susceptible to the effects of adverse macro-economic events and business conditions that can result
in higher unemployment, shrinking demand for products, large-scale business failures and tight credit markets. Our
results of operations are sensitive to changes in overall economic conditions that impact consumer spending,
including discretionary spending, as well as to increased bad debts due to recessionary pressures. Adverse economic
conditions affecting disposable consumer income, such as employment levels, business conditions, interest rates and
the availability of financing, tax rates, fuel and energy costs, could reduce consumer spending or cause consumers to
shift their spending to other products and services. A general reduction in the level of discretionary spending or
shifts in consumer discretionary spending could adversely affect our growth and profitability. Our operating results
and cash available for distribution could also be adversely impacted if we experience increased operating costs,
including maintenance, insurance premiums and real estate taxes, whether due to economic conditions, government
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In addition, our operating expenses, including taxes, insurance, maintenance and debt
regulation or otherwise.
service payments, may not be reduced even if we experience a reduction in revenues, which may exacerbate the
impact on our profitability.
We may not be successful in identifying and consummating suitable acquisitions, adding additional suitable new
PROs, or integrating and operating such acquisitions, including integrating them into our financial and
operational reporting infrastructure and internal control framework in a timely manner, which may impede our
growth.
Our ability to expand through acquisitions is integral to our business strategy and requires us to identify suitable
acquisition candidates or investment opportunities that meet our criteria and are compatible with our growth
strategy. We may not be successful in identifying suitable properties or other assets that meet our acquisition criteria
or in consummating acquisitions on satisfactory terms or at all. Failure to identify or consummate acquisitions will
slow our growth, which could in turn adversely affect our share price.
For the potential acquisitions in our captive pipeline, we have not entered into negotiations with the respective
owners of these properties and there can be no assurance as to whether we will acquire any of these properties or the
actual timing of any such acquisitions. Each captive pipeline property is subject to additional due diligence and the
determination by us to pursue the acquisition of the property. In addition, with respect to the captive pipeline
properties in which our PROs have a non-controlling ownership interest or no ownership interest, the current owner
of each property is not required to offer such property to us and there can be no assurance that we will acquire these
properties.
Our ability to acquire properties on favorable terms and successfully integrate and operate them, including
integrating them into our financial and operational reporting infrastructure in a timely manner, may be constrained
by the following significant risks:
•
•
•
•
•
•
we face competition from national (e.g., large public and private self storage companies, institutional
investors and private equity funds), regional and local owners, operators and developers of self storage
properties, which may result in higher property acquisition prices and reduced yields;
we may not be able to achieve satisfactory completion of due diligence investigations and other customary
closing conditions;
we may fail to finance an acquisition on favorable terms or at all;
we may spend more time and incur more costs than budgeted to make necessary improvements or
renovations to acquired properties;
we may experience difficulties in effectively integrating the financial and operational reporting systems of
the properties or portfolios we acquire into (or supplanting such systems with) our financial and operational
reporting infrastructure and internal control framework in a timely manner; and
we may acquire properties subject to liabilities without any recourse, or with only limited recourse, with
respect to unknown liabilities such as liabilities for clean-up of undisclosed environmental contamination,
tax liabilities, claims by persons dealing with the former owners of the properties and claims for
indemnification by general partners, trustees, officers and others indemnified by the former owners of the
properties. The sellers or contributors of properties may make limited representations and warranties to us
about the properties and may agree to indemnify us for a certain period of time following the closing for
breaches of those representations and warranties. However, any resulting liabilities identified may not fall
within the scope or time frame covered by the indemnification, and we may be required to bear those
liabilities, which may materially and adversely affect our operating results, financial condition and
business.
We face competition for tenants.
We compete with many other entities engaged in real estate investment activities for tenants, including national,
regional and local owners, operators and developers of self storage properties. Our primary national competitors for
tenants in many of our markets are the large public and private self storage companies, institutional investors, and
private equity funds. Actions by our competitors may decrease or prevent increases in the occupancy and rental
rates, while increasing the operating expenses of our properties.
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Rental revenues are significantly influenced by demand for self storage space generally, and a decrease in such
demand would likely have a greater adverse effect on our rental revenues than if we owned a more diversified
real estate portfolio.
Because our portfolio of properties consists primarily of self storage properties, we are subject to risks inherent
in investments in a single industry. A decrease in the demand for self storage space would have a greater adverse
effect on our rental revenues than if we owned a more diversified real estate portfolio. Demand for self storage space
has been and could be adversely affected by weakness in the national, regional and local economies, changes in
supply of, or demand for, similar or competing self storage properties in an area and the excess amount of self
storage space in a particular market. To the extent that any of these conditions occur, they are likely to affect market
rents for self storage space, which could cause a decrease in our rental revenue. Any such decrease could impair our
operating results, ability to satisfy debt service obligations and ability to make cash distributions to our shareholders.
Increases in taxes and regulatory compliance costs may reduce our income and adversely impact our cash flows.
Increases in income or other taxes generally are not passed through to tenants under leases and may reduce our
net income, funds from operations ("FFO"), cash flows, financial condition, ability to pay or refinance our debt
obligations, ability to make cash distributions to shareholders, and the trading price of our securities. Similarly,
changes in laws increasing the potential liability for environmental conditions existing on properties or increasing
the restrictions on discharges or other conditions may result in significant unanticipated expenditures, which could
result in similar adverse effects.
Many states and jurisdictions are facing severe budgetary problems. Action that may be taken in response to
these problems, such as changes to sales taxes or other governmental efforts, including mandating medical insurance
for employees, could adversely impact our business and results of operations.
Our property taxes could increase due to various reasons, including changes in law and a reassessment as a
result of our contribution transactions, which could adversely impact our operating results and cash flow.
The value of our properties may be reassessed for property tax purposes by taxing authorities including as a
result of our acquisition and contribution transactions. Our property taxes could also increase due to changes in tax
rates or removal of limitations on the amount by which our property taxes or property reassessments may increase.
For example, there is a vote to remove certain Proposition 13 protections in the State of California for owners of
commercial real estate, including self storage properties, which will be included on California's November 2020
ballot. Proposition 13 currently limits annual real estate tax increases of assessed value of real property. If the vote
to remove these protections is successful, it would increase the assessed value and/or tax rates applicable to
commercial property in California, including self storage properties. We currently have 83 consolidated properties
and 10 unconsolidated properties in California. Accordingly, the amount of property taxes we pay in the future may
increase substantially from what we have paid in the past or from what we expected in connection with our
underwriting activities. If the property taxes we pay increase, our operating results and cash flow would be adversely
impacted, and our ability to pay any expected dividends to our shareholders could be adversely affected.
Our storage leases are relatively short-term in nature, which exposes us to the risk that we may have to re-lease
our units and we may be unable to do so on attractive terms, on a timely basis or at all.
Our storage leases are relatively short-term in nature, typically month-to-month, which exposes us to the risk
that we may have to re-lease our units frequently and we may be unable to do so on attractive terms, on a timely
basis or at all. Because these leases generally permit the tenant to leave at the end of the month without penalty, our
revenues and operating results may be impacted by declines in market rental rates more quickly than if our leases
were for longer terms. In addition, any delay in re-leasing units as vacancies arise would reduce our revenues and
harm our operating results.
Security breaches through cyber-attacks, cyber-intrusions, or other methods could disrupt our information
technology networks and related systems.
We and our PROs are increasingly dependent upon automated information technology processes and Internet
commerce, and many of our and their tenants come from the telephone or over the Internet. Moreover, the nature of
our and our PROs' business involves the receipt and retention of certain personal information about such tenants. In
many cases, we and our PROs also rely significantly on third-party vendors to retain data, process transactions and
provide other systems services. Our networks and operations could be disrupted, and sensitive data could be
compromised, by physical or electronic security breaches, targeted against us, our PROs, our vendors or other
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organizations, including financial markets or institutions, including by way of or through cyber-attacks or cyber-
intrusions over the Internet, malware, computer viruses, attachments to e-mails, phishing, employee theft or misuse,
or inadequate security controls. Although we make efforts to protect the security and integrity of our networks and
systems, there can be no assurance that these efforts and measures will be effective or that attempted security
breaches or disruptions would not be successful, as such attacks and breaches may be difficult to detect (or not
detected at all) and are becoming more sophisticated. In such event, we may experience business interruptions; data
loss, ransom, misappropriation, or corruption; theft or misuse of confidential or proprietary information; or litigation
and investigation by tenants, governmental or regulatory agencies, or other third parties, which could result in the
payment of fines, penalties and other damages. Such events could also have other adverse impacts on us, including
breaches of debt covenants or other contractual or REIT compliance obligations, late or misstated financial reports,
and significant diversion of management attention and resources. As a result, such events could have a material
adverse effect on our financial condition, results of operations and cash flows and harm our business reputation or
have such effects on our PROs.
We may become subject to litigation or threatened litigation that may divert management's time and attention,
require us to pay damages and expenses or restrict the operation of our business.
We may become subject to disputes, including class or collective actions, with customers (or prospective
customers), employees, commercial parties with whom we maintain relationships or other parties with whom we do
business or have interacted. Any such dispute could result in litigation between us and the other parties. Whether or
not any dispute actually proceeds to litigation, we may be required to devote significant management time and
attention to its successful resolution (through litigation, settlement or otherwise), which would detract from our
management's ability to focus on our business. Any such resolution could involve the payment of damages or
expenses by us, which may be significant and may not be covered by insurance. In addition, any such resolution
could involve our agreement with terms that restrict the operation of our business.
There are other commercial parties, at both a local and national level, that may assert that our use of our brand
names and other intellectual property conflict with their rights to use brand names and other intellectual property
that they consider to be similar to ours. Any such commercial dispute and related resolution would involve all of the
risks described above, including, in particular, our agreement to restrict the use of our brand name or other
intellectual property.
We also could be sued for personal injuries and/or property damage occurring on our properties. The liability
insurance we maintain may not cover all costs and expenses arising from such lawsuits.
The acquisition of new properties that lack operating history with us will make it more difficult to predict our
operating results.
With respect to acquisitions, if we fail to accurately estimate occupancy levels, rental rates, operating costs or
costs of improvements to bring an acquired property up to the standards established for our intended market
position, the performance of the property may be below expectations. Acquired properties may have characteristics
or deficiencies affecting their valuation or profitability potential that we have not yet discovered. We cannot assure
that the performance of properties acquired by us will increase or be maintained following our acquisition.
Costs associated with complying with the ADA may result in unanticipated expenses.
Under the ADA, places of public accommodation are required to meet certain federal requirements related to
access and use by disabled persons. A number of additional U.S. federal, state and local laws may also require
modifications to our properties, or restrict certain further renovations of the properties, with respect to access thereto
by disabled persons. Noncompliance with the ADA could result in the imposition of fines or an award of damages to
private litigants and also could result in an order to correct any non-complying feature, which could result in
substantial capital expenditures. If one or more of our properties is not in compliance with the ADA or other
legislation, then we would be required to incur additional costs to bring the property into compliance. If we incur
substantial costs to comply with the ADA or other legislation, our financial condition, results of operations, cash
flow, per share trading price of our common shares and our ability to satisfy our debt service obligations and to
make cash distributions to our shareholders could be adversely affected.
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Environmental compliance costs and liabilities associated with operating our properties may affect our results of
operations.
Under various U.S. federal, state and local laws, ordinances and regulations, owners and operators of real estate
may be liable for the costs of investigating and remediating certain hazardous substances or other regulated materials
on or in such property. CERCLA and comparable state laws typically impose strict joint and several liabilities
without regard to whether the owner or operator knew of, or was responsible for, the presence of such substances or
materials. The presence of such substances or materials, or the failure to properly remediate such substances, may
adversely affect the owner's or operator's ability to lease, sell or rent such property or to borrow using such property
as collateral. Persons who arrange for the disposal or treatment of hazardous substances or other regulated materials
may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility, whether
or not such facility is owned or operated by such person. Certain environmental laws impose liability for release of
asbestos-containing materials into the air and third-parties may seek recovery from owners or operators of real
properties for personal injury associated with asbestos-containing materials.
Certain environmental laws also impose liability, without regard to knowledge or fault, for removal or
remediation of hazardous substances or other regulated materials upon owners and operators of contaminated
property even after they no longer own or operate the property. Moreover, the past or present owner or operator of a
property from which a release emanates could be liable for any personal injuries or property damages that may result
from such releases, as well as any damages to natural resources that may arise from such releases.
Certain environmental laws impose compliance obligations on owners and operators of real property with
respect to the management of hazardous materials and other regulated substances. For example, environmental laws
govern the management of asbestos-containing materials and lead-based paint. Failure to comply with these laws
can result in penalties or other sanctions.
In connection with the ownership, operation and management of our current or past properties and any
properties that we may acquire and/or manage in the future, we could be legally responsible for environmental
liabilities or costs relating to a release of hazardous substances or other regulated materials at or emanating from
such property. In order to assess the potential for such liability, we conduct an environmental assessment of each
property prior to acquisition and manage our properties in accordance with environmental laws while we own or
operate them. We have engaged qualified, reputable and adequately insured environmental consulting firms to
perform environmental site assessments of all of our properties prior to acquisition and are not aware of any
environmental issues that are expected to materially impact the operations of any property.
liabilities,
No assurances can be given that existing environmental studies with respect to any of our properties reveal all
that any prior owner or operator of our properties did not create any material
environmental
environmental condition not known to us, or that a material environmental condition does not otherwise exist as to
any one or more of our properties. There also exists the risk that material environmental conditions, liabilities or
compliance concerns may have arisen after the review was completed or may arise in the future. Finally, future laws,
ordinances or regulations and future interpretations of existing laws, ordinances or regulations may impose
additional material environmental liability.
We rely on on-site personnel to maximize tenant satisfaction at each of our properties, and any difficulties we or
they encounter in hiring,
training and maintaining skilled on-site personnel may harm our operating
performance.
The general professionalism of site managers and staff are contributing factors to a site's ability to successfully
secure rentals and retain tenants and we rely on on-site personnel to maintain clean and secure self storage
properties. If we or our PROs are unable to successfully recruit, train and retain qualified on-site personnel, the
quality of service we and our PROs strive to provide at our properties could be adversely affected, which could lead
to decreased occupancy levels and reduced operating performance of our properties.
We and certain of our PROs have tenant insurance- and/or tenant protection plan-related arrangements that are
in some cases subject to state-specific governmental regulation, which may adversely affect our results.
We and certain of our PROs have tenant insurance- and/or tenant protection plan-related arrangements with
regulated insurance companies and our tenants. Some of our PROs earn access fees in connection with these
arrangements. We receive a portion of the fees from these PROs. The tenant insurance and tenant protection plan
businesses, including the payments associated with these arrangements, are in some cases subject to state-specific
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governmental regulation. State regulatory authorities generally have broad discretion to grant, renew and revoke
licenses and approvals, to promulgate, interpret and implement regulations, and to evaluate compliance with
regulations through periodic examinations, audits and investigations of the affairs of insurance industry participants.
Although these arrangements are managed by our property management platform and/or certain of our PROs who
have developed marketing programs and management procedures to navigate the regulatory environment, as a result
of regulatory or private action in any jurisdiction in which we operate, we may be temporarily or permanently
suspended from continuing some or all of our tenant insurance- and/or tenant protection plan-related activities, or
otherwise fined or penalized or suffer an adverse judgment, which could adversely affect our business and results of
operations.
Privacy concerns could result in regulatory changes that may harm our business.
Personal privacy has become a significant issue in the jurisdictions in which we operate. Many jurisdictions in
which we operate have imposed or in the future may impose restrictions and requirements on the use of personal
information by those collecting such information. For example, the California Consumer Privacy Act of 2018, which
became effective as of January 1, 2020, provides consumers with expansive rights and control over personal
information obtained by or shared with certain covered businesses. Changes to law or regulations or the passage of
new laws affecting privacy, if applicable to our business, could impose additional costs and liability on us and could
limit our use and disclosure of such information.
Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition,
operating results and cash flow.
We maintain comprehensive liability, fire, flood, earthquake, wind (as deemed necessary or as required by our
lenders), extended coverage and rental loss insurance with respect to our properties. Certain types of losses,
however, may be either uninsurable or not economically insurable either in total or in part (due to location or
otherwise), such as losses due to earthquakes, hurricanes, tornadoes, floods, riots, acts of war or terrorism. Should an
uninsured loss occur, we could lose both our investment in and anticipated profits and cash flow from a property. In
addition, if any such loss is insured, we may be required to pay significant amounts on any claim for recovery of
such a loss prior to our insurer being obligated to reimburse us for the loss, or the amount of the loss may exceed our
coverage for the loss. We currently self-insure a portion of our commercial insurance deductible risk through our
captive insurance company. To the extent that our captive insurance company is unable to bear that risk, we may be
required to fund additional capital to our captive insurance company or we may be required to bear that loss. As a
result, our operating results may be adversely affected.
Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the
performance of our properties.
Because real estate investments are relatively illiquid, our ability to promptly sell one or more properties in our
portfolio in response to changing economic, financial and investment conditions is limited. The real estate market is
affected by many factors, such as general economic conditions, availability of financing, interest rates and other
factors, including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell
any property for the price or on the terms set by us or whether any price or other terms offered by a prospective
purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser
and to close the sale of a property. In addition, we may be required to expend funds to correct defects or to make
improvements before a property can be sold. We cannot assure you that we will have funds available to correct those
defects or to make those improvements.
In acquiring a property, we may agree to transfer restrictions that materially restrict us from selling that property
for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or
repaid on that property. For example, we are party to certain agreements with our PROs that provide that, until
March 31, 2023, our operating partnership shall not, and shall cause its subsidiaries not to, sell, dispose or otherwise
transfer any property that is a part of the applicable self storage property portfolio relating to a series of subordinated
performance units without the consent of the partners (including us) holding at least 50% of the then outstanding OP
units and the partners holding at least 50% of the then outstanding series of subordinated performance units that
relate to the applicable property, except for sales, dispositions or other transfers of a property to wholly owned
subsidiaries of our operating partnership. These restrictions may require us to keep certain properties that we would
otherwise sell, which could have an adverse effect on our results of operations, financial condition, cash flow and
ability to execute our business plan.
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Our business could be harmed if key personnel terminate their employment with us.
Our success depends, to a significant extent, on the continued services of Arlen D. Nordhagen, Tamara D.
Fischer and Brandon S. Togashi and the other members of our senior management team. We have entered into
employment agreements with Mr. Nordhagen, Ms. Fischer and Mr. Togashi and these employment agreements
provide for an initial three-year term of employment and automatic one-year extensions thereafter unless either party
provides at least 90 days' notice of non-renewal. Notwithstanding these agreements, there can be no assurance that
any of them will remain employed by us. The loss of services of one or more members of our senior management
team could harm our business and our prospects.
We invest in strategic joint ventures that subject us to additional risks.
Some of our investments are, and in the future may be, structured as strategic joint ventures. Part of our strategy
is to opportunistically partner with institutional funds and other institutional investors to acquire attractive portfolios
through a promoted return structure. These arrangements are driven by the magnitude of capital required to complete
the acquisitions and maintain the acquired portfolios. Such arrangements involve risks not present where a third
party is not involved, including the possibility that partners or co-venturers might become bankrupt or otherwise fail
to fund their share of required capital contributions. Additionally, partners or co-venturers might at any time have
economic or other business interests or goals different from us and or in competition with us.
Joint ventures generally provide for a reduced level of control over an acquired project because governance
rights are shared with others. Accordingly, certain major decisions relating to joint ventures, including decisions
relating to, among other things, the approval of annual budgets, sales and acquisitions of properties, financings, and
certain actions relating to bankruptcy, are often made by a majority vote of the investors or by separate agreements
that are reached with respect to individual decisions. In addition, such decisions may be subject to the risk that the
partners or co-venturers may make business, financial or management decisions with which we do not agree or take
risks or otherwise act in a manner that does not serve our best interests. Because we may not have the ability to
exercise control over such operations, we may not be able to realize some or all of the benefits that we believe will
be created from our involvement. At times, we and our partners or co-venturers may also each have the right to
trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partners' or co-venturers'
interest, at a time when we otherwise would not have initiated such a transaction. If any of the foregoing were to
occur, our business, financial condition and results of operations could suffer as a result.
Risks Related to Our Structure and Our Relationships with Our PROs
Some of our PROs have limited experience operating under the Company's capital structure, and we may not be
able to achieve the desired outcomes that the structure is intended to produce.
Some of our PROs have limited experience operating under our capital structure. As a means of incentivizing
our PROs to drive operating performance and support the sustainability of the operating cash flow from the
properties they manage on our behalf, we issued each PRO subordinated performance units aimed at aligning the
interests of our PROs with our interests and those of our shareholders. The subordinated performance units are
entitled to distributions exclusively tied to the performance of each PRO's managed portfolios but only after
minimum performance thresholds are satisfied. Our issuance of such units, however, may have been and could be
based on inaccurate valuations and thus misallocated, which would limit or eliminate the effectiveness of our
intended incentive-based program. Moreover, difficulties in aligning incentives and implementing our structure
could allow a PRO to underperform without triggering our right to terminate the applicable facilities portfolio and
asset management agreements and transfer management rights of the PRO to us (or a designee) or cause our
management to be distracted from other aspects of our business, which could adversely affect our operating results
and business.
We are restricted in making certain property sales on account of agreements with our PROs that may require us
to keep certain properties that we would otherwise sell.
The partnership unit designations related to our subordinated performance units provide that, until March 31,
2023, our operating partnership may not sell, dispose or otherwise transfer any property that is a part of the
applicable self storage property portfolio relating to a series of subordinated performance units without the consent
of the partners (including us) holding at least 50% of the then outstanding OP units and the consent of partners
holding at least 50% of the then outstanding series of subordinated performance units that relate to the applicable
property, except for sales, dispositions or other transfers of a property to wholly owned subsidiaries of our operating
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partnership. This restriction may require us to keep certain properties that we would otherwise sell, which could
have an adverse effect on our results of operations, financial condition, cash flow and ability to execute our business
plan. In addition, we may enter into agreements with future PROs that contain the same or similar restrictions or that
impose such restrictions for different periods.
Our ability to terminate our facilities portfolio management agreements and asset management agreements with
a PRO is limited, which may adversely affect our ability to execute our business plan.
We may elect to terminate our facilities portfolio management agreements and asset management agreements
with a PRO and transfer property management responsibilities over the properties managed by such PRO to us (or
our designee), (i) upon certain defaults by a PRO as set forth in these agreements, or (ii) if the PRO's properties, on a
portfolio basis, fail to meet certain pre-determined performance thresholds for more than two consecutive calendar
years or if the operating cash flow generated by the properties of the PRO for any calendar year falls below a level
that will enable us to fund minimum levels of distributions, debt service payments attributable to the properties, and
fund the properties' allocable operating expenses. Consequently, to the extent a PRO complies with these covenants,
standards, and minimum requirements, we may not be able to terminate the applicable facilities portfolio
management agreements and asset management agreements and transfer property management responsibilities over
such properties even if our board of trustees believes that such PRO is not properly executing our business plan and/
or is failing to operate its properties to their full potential. Moreover, transferring the management responsibilities
over the properties managed by a PRO may be costly or difficult to implement or may be delayed, even if we are
able to and believe that such a change in portfolio and property management would be beneficial to us and our
shareholders.
We may less vigorously pursue enforcement of terms of agreements entered into with our PROs because of
conflicts of interest with our PROs.
Our PROs are entities that have contributed or will contribute through contribution agreements, self storage
properties, or legal entities owning self storage properties, to our operating partnership or DownREIT partnerships in
exchange for ownership interests in our operating partnership or DownREIT partnerships. As part of each
transaction, our PROs make and have made limited representations and warranties to our operating partnership
regarding the entities, properties and other assets to be acquired by our operating partnership or DownREIT
partnerships in the contribution and generally agree to indemnify our operating partnership for 12 months after the
closing of the contribution for breaches of such representations. Such indemnification is limited, however, and our
operating partnership is not entitled to any other indemnification in connection with the contributions. In addition,
following each contribution from a PRO, the day-to-day operations of each of the managed properties will be
managed by the PRO who was the principal of the applicable self storage property portfolios prior to the
contribution. In addition, certain key persons of our PROs are members of our board of trustees, members of our
PRO advisory committee or are executive officers of the Company. Consequently, we may choose not to enforce, or
to enforce less vigorously, our rights under these agreements and any other agreements with our PROs due to our
desire to maintain our ongoing relationship with our PROs, which could adversely affect our operating results and
business.
We own self storage properties in some of the same geographic regions as our PROs and may compete for tenants
with other properties managed by our PROs.
Pursuant to the facilities portfolio management agreements with our PROs, each PRO has agreed that, without
our consent, the PRO will not, and it will cause its affiliates not to, enter into any new agreements or arrangements
for the management of additional self storage properties, other than the properties we are not acquiring and the
properties each PRO contributes to our operating partnership. However, we have not and will not acquire all of the
self storage properties of our PROs. We will therefore own self storage properties in some of the same geographic
regions as our PROs, and, as a result, we may compete for tenants with our PROs. This competition may affect our
ability to attract and retain tenants and may reduce the rental rates we are able to charge, which could adversely
affect our operating results and business.
Our PROs may engage in other activities, diverting their attention from the management of our properties, which
could adversely affect the execution of our business plan and our operating results.
Our PROs and their employees and personnel are in the business of managing self storage properties. We have
agreed that our PROs may continue to manage properties not included in our portfolio, and our PROs are not
obligated to dedicate any specific employees or personnel exclusively to the management of our properties. As a
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result, their time and efforts may be diverted from the management of our properties, which could adversely affect
the execution of our business plan and our operating results.
When a PRO elects or is required to "retire" we may become exposed to new and additional costs and risks.
Under the facilities portfolio management agreements, after a two year period following the later of completion
of our initial public offering or the initial contribution of their properties to us, a PRO may elect, or be required, to
"retire" from the self storage business. Upon a retirement event, management of the properties will be transferred to
us (or our designee) in exchange for OP units with a value equal to four times the average of the normalized annual
EBITDA from the management contracts related to such PRO's managed portfolio over the immediately preceding
24-month period. As a result of this transfer, we may become exposed to new and additional costs and risks.
Accordingly, the retirement of a PRO may adversely effect our financial condition and operating results. For
example, in connection with a retiring PRO's internalization into the Company, there can be no assurance that the
Company will be able to retain such retiring PRO's employees, successfully hire new employees, or effectively
integrate such employees and the retiring PRO's property management platform into the Company's or another
PRO's property management platforms.
Our formation transactions and subsequent contribution transactions were generally not negotiated on an arm's-
length basis and may not be as favorable to us as if they had been negotiated with unaffiliated third parties.
We did not conduct arm's-length negotiations with certain of the parties involved regarding the terms of the
formation transactions and subsequent contribution transactions, including the contribution agreements, facilities
portfolio management agreements, sales commission agreements, asset management agreements and registration
rights agreements. In the course of structuring the formation transactions and subsequent contribution transactions,
certain members of our senior management team and other contributors had the ability to influence the type and
level of benefits that they received from us. Accordingly, the terms of the formation transactions and subsequent
contribution transactions may not solely reflect the best interests of us or our shareholders and may be overly
favorable to the other party to such transactions and agreements.
Conflicts of interest could arise with respect to certain transactions between the holders of OP units (including
subordinated performance units), which include our PROs, on the one hand, and us and our shareholders, on the
other.
Conflicts of interest could arise with respect to the interests of holders of OP units (including subordinated
performance units), on the one hand, which include members of our senior management team, PROs, and trustees
(including Arlen D. Nordhagen, our executive chairman of the board of trustees and former chief executive officer)
and us and our shareholders, on the other. In particular, the consummation of certain business combinations, the sale,
disposition or transfer of certain of our assets or the repayment of certain indebtedness that may be desirable to us
and our shareholders could have adverse tax consequences to such unit holders. In addition, our trustees and officers
have duties to the Company under applicable Maryland law in connection with their management of the Company.
At the same time, we have fiduciary duties, as a general partner, to our operating partnership and to the limited
partners under Delaware law in connection with the management of our operating partnership. Our duties as a
general partner to our operating partnership and its partners may come into conflict with the duties of our trustees
and officers to the Company and our shareholders. The partnership agreement of our operating partnership does not
require us to resolve such conflicts in favor of either the Company or the limited partners in our operating
partnership. Further, there can be no assurance that any procedural protections we implement to address these or
other conflicts of interest will result in optimal outcomes for us and our shareholders.
The partnership agreement of our operating partnership contains provisions that may delay, defer or prevent a
change in control.
The partnership agreement of our operating partnership provides that subordinated performance unit holders
holding more than 50% of the voting power of the subordinated performance units must approve certain change of
control transactions involving us unless, as a result of such transactions, the holders of subordinated performance
units are offered a choice (1) to allow their subordinated performance units to remain outstanding without the terms
thereof being materially and adversely changed or the subordinated performance units are converted into or
exchanged for equity securities of the surviving entity having terms and conditions that are substantially similar to
those of the subordinated performance units (it being understood that we may not be the surviving entity and that the
parent of the surviving entity or the surviving entity may not be publicly traded) or (2) to receive for each
subordinated performance unit an amount of cash, securities or other property payable to a holder of OP units had
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such holder exercised its right to exchange its subordinated performance units for OP units without taking into
consideration a specified conversion penalty associated with such an exchange. In addition, in the case of any such
change of control transactions in which we have not received the consent of OP unit holders holding more than 50%
of the OP units (other than those held by the Company or its subsidiaries) and of subordinated performance unit
holders holding more than 50% of the voting power of the subordinated performance units (other than those held by
the Company or its subsidiaries), such transaction is required to be approved by a companywide vote of limited
partners holding more than 50% of our outstanding OP units in which OP units (including for this purpose OP units
held by us and our subsidiaries) are voted and subordinated performance units (not held by us and our subsidiaries)
are voted on an applicable as converted basis and in which we will be deemed to vote the OP units held by us and
our subsidiaries in proportion to the manner in which all of our outstanding common shares were voted at a
shareholders meeting relating to such transaction. These approval rights could delay, deter, or prevent a transaction
or a change in control that might involve a premium price for our common shares or otherwise be in the best
interests of our shareholders.
We may change our investment and financing strategies and enter into new lines of business without shareholder
consent, which may subject us to different risks.
We may change our business and financing strategies and enter into new lines of business at any time without
the consent of our shareholders, which could result in our making investments and engaging in business activities
that are different from, and possibly riskier than, the investments and businesses described in this document. A
change in our strategy or our entry into new lines of business may increase our exposure to other risks or real estate
market fluctuations.
Certain provisions of Maryland law could inhibit a change in our control.
Certain provisions of the Maryland General Corporation Law (the "MGCL") applicable to a Maryland real
estate investment trust may have the effect of inhibiting a third-party from making a proposal to acquire us or of
impeding a change in our control under circumstances that otherwise could provide the holders of our common
shares with the opportunity to realize a premium over the then prevailing market price of such shares. The "business
combination" provisions of the MGCL, subject to limitations, prohibit certain business combinations between a
REIT and an "interested shareholder" (defined generally as any person who beneficially owns 10% or more of the
voting power of our then outstanding voting shares or an affiliate or associate of ours who, at any time within the
two-year period prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of our
then outstanding voting shares) or an affiliate thereof for five years after the most recent date on which the
shareholder becomes an interested shareholder and,
imposes special appraisal rights and special
shareholder voting requirements on these combinations. These provisions of the MGCL do not apply, however, to
business combinations that are approved or exempted by the board of trustees of a REIT prior to the time that the
interested shareholder becomes an interested shareholder. Pursuant to the statute, our board of trustees has by
resolution exempted business combinations between us and (1) any other person, provided that the business
combination is first approved by our board of trustees (including a majority of trustees who are not affiliates or
associates of such person), (2) Arlen D. Nordhagen and any of his affiliates and associates and (3) any person acting
in concert with the foregoing, from these provisions of the MGCL. As a result, such persons may be able to enter
into business combinations with us that may not be in the best interests of our shareholders without compliance by
us with the supermajority vote requirements and other provisions of the statute. This resolution, however, may be
altered or repealed in whole or in part at any time. If this resolution is repealed, or our board of trustees does not
otherwise approve a business combination, this statute may discourage others from trying to acquire control of us
and increase the difficulty of consummating any offer.
thereafter,
The "control share" provisions of the MGCL provide that holders of "control shares" of a Maryland real estate
trust (defined as voting shares which, when aggregated with all other shares controlled by the
investment
shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in the election of
trustees) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or
control of issued and outstanding "control shares," subject to certain exceptions) have no voting rights with respect
to such shares except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all
the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our
officers and our trustees who are also our employees. Our bylaws contain a provision exempting from the control
share acquisition statute any and all acquisitions by any person of our shares. There can be no assurance that this
provision will not be amended or eliminated at any time in the future.
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Our authorized but unissued common and preferred shares may prevent a change in our control.
Our declaration of trust authorizes us to issue additional authorized but unissued common shares and preferred
shares. In addition, our board of trustees may, without common shareholder approval, increase the aggregate number
of our authorized shares or the number of shares of any class or series that we have authority to issue and classify or
reclassify any unissued common shares or preferred shares, and may set or change the preferences, rights and other
terms of any unissued classified or reclassified shares. As a result, among other things, our board may establish a
class or series of common shares or preferred shares that could delay or prevent a transaction or a change in our
control that might involve a premium price for our common shares or otherwise be in the best interests of our
shareholders.
Our rights and the rights of our shareholders to take action against our trustees and officers are limited, which
could limit your recourse in the event of actions not in your best interest.
Our declaration of trust limits the liability of our present and former trustees and officers to us and our
shareholders for money damages to the maximum extent permitted under Maryland law. Under current Maryland
law, our present and former trustees and officers will not have any liability to us or our shareholders for money
damages other than liability resulting from:
•
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actual receipt of an improper benefit or profit in money, property or services; or
active and deliberate dishonesty by the trustee or officer that was established by a final judgment and is
material to the cause of action.
Our declaration of trust authorizes us to indemnify our present and former trustees and officers for actions taken
by them in those capacities to the maximum extent permitted by Maryland law. Our bylaws require us to indemnify
each present and former trustee or officer, to the maximum extent permitted by Maryland law, in connection with
any proceeding to which he or she is made, or threatened to be made, a party to or witness in by reason of his or her
service to us as a trustee or officer or in certain other capacities. In addition, we may be obligated to pay or
reimburse the expenses incurred by our present and former trustees and officers without requiring a preliminary
determination of their ultimate entitlement to indemnification. As a result, we and our shareholders may have more
limited rights against our present and former trustees and officers than might otherwise exist absent the current
provisions in our declaration of trust and bylaws or that might exist with other companies, which could limit your
recourse in the event of actions not in your best interest.
Our declaration of trust contains provisions that make removal of our trustees difficult, which could make it
difficult for our shareholders to effect changes to our management.
Our declaration of trust provides that, subject to the rights of holders of one or more classes or series of
preferred shares, a trustee may be removed with or without cause, by the affirmative vote of at least two-thirds of the
votes entitled to be cast generally in the election of trustees. Vacancies on our board of trustees generally may be
filled only by a majority of the remaining trustees in office, even if less than a quorum. These requirements make it
more difficult to change our management by removing and replacing trustees and may prevent a change in our
control that is in the best interests of our shareholders.
Restrictions on ownership and transfer of our shares may restrict change of control or business combination
opportunities in which our shareholders might receive a premium for their shares.
In order for us to qualify as a REIT for each taxable year, no more than 50% in value of our outstanding shares
may be owned, directly or constructively, by five or fewer individuals during the last half of any calendar year, and
at least 100 persons must beneficially own our shares during at least 335 days of a taxable year of 12 months, or
during a proportionate portion of a shorter taxable year. "Individuals" for this purpose include natural persons,
private foundations, some employee benefit plans and trusts, and some charitable trusts. To assist us in preserving
our REIT qualification, among other purposes, our declaration of trust generally prohibits, among other limitations,
any person from beneficially or constructively owning more than 9.8% in value or in number of shares, whichever is
more restrictive, of our aggregate outstanding shares of all classes and series, the outstanding shares of any class or
series of our preferred shares or our outstanding common shares. These ownership limits and the other restrictions
on ownership and transfer of our shares contained in our declaration of trust could have the effect of discouraging a
takeover or other transaction in which holders of our common shares might receive a premium for their shares over
the then prevailing market price or which holders might believe to be otherwise in their best interests. Our board of
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trustees has established exemptions from these ownership limits which permits certain of our institutional investors
to hold up to 20% of our common shares and up to 25% of our preferred shares.
Risks Related to Our Debt Financings
There are risks associated with our indebtedness.
There is no assurance that we will succeed in securing expansions of our credit facility, 2023 Term Loan
Facility or 2028 Term Loan Facility, if we desire to do so.
Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse
consequences, including the following:
•
•
•
•
•
•
•
•
•
•
•
our cash flow may be insufficient to meet our required principal and interest payments;
we may be unable to borrow additional funds as needed or on favorable terms, including to make
acquisitions or to continue to make distributions required to maintain our qualification as a REIT;
we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable
than the terms of our original indebtedness;
because a portion of our debt may bear interest at variable rates that are not hedged, a material increase in
interest rates could materially increase our interest expense;
we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms;
our debt level could place us at a competitive disadvantage compared to our competitors with less debt;
we may experience increased vulnerability to economic and industry downturns, reducing our ability to
respond to changing business and economic conditions;
we may default on our obligations and the lenders or mortgagees may foreclose on our properties that
secure their loans and receive an assignment of rents and leases;
we may default on our obligations and the lenders or mortgagees may enforce our guarantees;
we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate
our debt obligations; and
our default under any one of our mortgage loans with cross-default or cross-collateralization provisions
could result in a default on other indebtedness or result in the foreclosures of other properties.
Disruptions in the financial markets could affect our ability to obtain debt financing on reasonable terms or at all
and have other adverse effects on us.
Uncertainty in the credit markets may negatively impact our ability to access additional debt financing or to
refinance existing debt maturities on favorable terms (or at all), which may negatively affect our ability to make
acquisitions. A downturn in the credit markets may cause us to seek alternative sources of potentially less attractive
financing, and may require us to adjust our business plans accordingly. In addition, these factors may make it more
difficult for us to sell properties or may adversely affect the price we receive for properties that we do sell, as
prospective buyers may experience increased costs of debt financing or difficulties in obtaining debt financing.
We depend on external sources of capital that are outside of our control, which could adversely affect our ability
to acquire or develop properties, satisfy our debt obligations and/or make distributions to shareholders.
We depend on external sources of capital to acquire properties, to satisfy our debt obligations and to make
distributions to our shareholders required to maintain our qualification as a REIT, and these sources of capital may
not be available on favorable terms, or at all. Our access to external sources of capital depends on a number of
factors, including the market's perception of our growth potential and our current and potential future earnings and
our ability to continue to qualify as a REIT for U.S. federal income tax purposes. If we are unable to obtain external
sources of capital, we may not be able to acquire properties when strategic opportunities exist, satisfy our debt
obligations or make cash distributions to our shareholders that would permit us to qualify as a REIT or avoid paying
tax on all of our net taxable income.
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Increases in interest rates may increase our interest expense and adversely affect our cash flow and our ability to
service our indebtedness and make cash distributions to our shareholders, and our decision to hedge against
interest rate risk might not be effective.
As of December 31, 2019, we had approximately $1.5 billion of debt outstanding, of which all debt subject to
variable interest rates was fixed pursuant to interest rate swap agreements with no debt subject to variable interest
rates (excluding variable-rate debt subject to interest rate swaps). Although the credit markets have recently
experienced historic lows in interest rates, if interest rates rise, the interest rates on variable-rate debt that we may
incur in the future could be higher than current levels, which could increase our financing costs and decrease our
cash flow and our ability to pay cash distributions to our shareholders.
Although we have historically sought, and may in the future seek, to manage our exposure to interest rate
volatility by using interest rate hedging arrangements, these arrangements may not be effective. Developing an
effective interest rate risk strategy is complex and no strategy can completely insulate us from risks associated with
interest rate fluctuations. Failure to hedge effectively against interest rate changes may adversely affect our financial
condition, results of operations and ability to make cash distributions to our shareholders.
The terms and covenants relating to our indebtedness could adversely impact our economic performance.
Our credit facility, 2023 Term Loan Facility, 2028 Term Loan Facility, 2029 Term Loan Facility and Senior
Unsecured Notes contain (and any new or amended facility we may enter into from time to time will likely contain)
customary affirmative and negative covenants, including financial covenants that, among other things, cap our total
leverage at 60% of our gross asset value, provided, however, that we are permitted to maintain a ratio of up to 65%
up to two (2) consecutive fiscal quarters immediately following the quarter in which a material acquisition (as
defined in our credit facility, 2023 Term Loan Facility, 2028 Term Loan Facility, 2029 Term Loan Facility and
Senior Unsecured Notes) occurs, require us to have a maximum unsecured debt to unencumbered asset value ratio
not to exceed 60%, provided, however, the we are be permitted to maintain a ratio of up to 65% up to two (2)
consecutive fiscal quarters immediately following the quarter in which a material acquisition (as defined in our
credit facility, 2023 Term Loan Facility, 2028 Term Loan Facility, 2029 Term Loan Facility and Senior Unsecured
Notes) occurs. In the event that we fail to satisfy our covenants, we would be in default under our credit agreements
or note purchase agreement and may be required to repay such debt with capital from other sources. Under such
circumstances, other sources of debt or equity capital may not be available to us, or may be available only on
unattractive terms. Moreover, the presence of such covenants could cause us to operate our business with a view
toward compliance with such covenants, which might not produce optimal returns for shareholders.
Uncertainty regarding the London interbank offered rate ("LIBOR") may adversely impact our borrowings and
interest rating hedging.
In July 2017, the U.K. Financial Conduct Authority announced that it would cease to compel banks to
participate in setting LIBOR as a benchmark by the end of 2021 (the "LIBOR Transition Date"). It is unclear if
LIBOR will cease to exist at that time, whether new methods of calculating LIBOR will be established, or if an
alternative reference rate will be established. The Alternative Reference Rates Committee, a steering committee
comprised of large U.S. financial institutions convened by the U.S. Federal Reserve, has recommended the Secured
Overnight Financing Rate ("SOFR") as a more robust reference rate alternative to U.S. dollar LIBOR. SOFR is
calculated based on overnight transactions under repurchase agreements, backed by Treasury securities. SOFR is
observed and backward looking, which stands in contrast with LIBOR under the current methodology, which is an
estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members.
Given that SOFR is a secured rate backed by government securities, it will be a rate that does not take into account
bank credit risk (as is the case with LIBOR). SOFR is therefore likely to be lower than LIBOR and is less likely to
correlate with the funding costs of financial institutions. Whether or not SOFR attains market traction as a LIBOR
replacement tool remains in question. As such, the future of LIBOR at this time is uncertain. Many of our debt
agreements and our interest rate swap agreements are linked to LIBOR, including our Credit Facility, 2023 Term
Loan Facility, 2028 Term Loan Facility and 2029 Term Loan Facility. Before the LIBOR Transition Date, we may
need to amend such agreements that utilize LIBOR as a factor in determining the interest rate based on a new
standard that is established, if any. However, these efforts may not be successful in mitigating the legal and financial
risk from changing the reference rate in our legacy agreements. Furthermore, the transition away from LIBOR may
adversely impact our ability to manage and hedge exposures to fluctuations in interest rates using derivative
instruments. There is no guarantee that a transition from LIBOR to an alternative will not result in financial market
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disruptions, significant increases in benchmark rates, or borrowing costs to borrowers, any of which could have an
adverse effect on our business, results of operations, financial condition, and the market price of our common shares.
Risks Related to Our Qualification as a REIT
Our failure to remain qualified as a REIT would subject us to U.S. federal income tax and applicable state and
local taxes, which would reduce the amount of operating cash flow to our shareholders.
We have elected and we believe that we have qualified to be taxed as a REIT commencing with our taxable year
ended December 31, 2015. We have not requested, and do not intend to request a ruling from the Internal Revenue
Service ("IRS"), that we qualify as a REIT. Qualification as a REIT involves the application of highly technical and
complex Code provisions and Treasury Regulations promulgated thereunder for which there are limited judicial and
administrative interpretations. The complexity of these provisions and of applicable Treasury Regulations is greater
in the case of a REIT that,
like us, holds its assets through partnerships, and judicial and administrative
interpretations of the U.S. federal income tax laws governing REIT qualification are limited. To qualify as a REIT,
we must meet, on an ongoing basis through actual operating results, various tests regarding the nature and
diversification of our assets and our income, the ownership of our outstanding shares and the amount of our
distributions. Our compliance with the REIT income and quarterly asset requirements also depends upon our ability
to manage successfully the composition of our income and assets on an ongoing basis. Our ability to satisfy these
asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are
not susceptible to a precise determination, and for which we will not obtain independent appraisals. Moreover, new
legislation, court decisions or administrative guidance may, in each case possibly with retroactive effect, make it
more difficult or impossible for us to qualify as a REIT. Thus, while we believe that we have been organized and
operated and we intend to operate so that we will continue to qualify as a REIT, given the highly complex nature of
the rules governing REITs, the ongoing importance of factual determinations and the possibility of future changes in
our circumstances, no assurance can be given that we have qualified or will so qualify for any particular year. These
considerations also might restrict the types of assets that we can acquire or services that we can provide in the future.
If we fail to qualify as a REIT in any taxable year, and we do not qualify for certain statutory relief provisions,
we would be required to pay U.S. federal income tax on our taxable income at regular corporate rates, and
distributions to our shareholders would not be deductible by us in determining our taxable income. In such a case,
we might need to borrow money, sell assets, or reduce or even cease making distributions in order to pay our taxes.
Our payment of income tax would reduce significantly the amount of operating cash flow to our shareholders.
Furthermore, if we fail to maintain our qualification as a REIT, we no longer would be required to make
distributions to our shareholders. In addition, unless we were eligible for certain statutory relief provisions, we could
not re-elect to be taxed as a REIT until the fifth calendar year following the year in which we failed to qualify.
Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flow.
Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our
income and assets, including taxes on any undistributed income, state or local income and property and transfer
taxes, including real property transfer taxes. In addition, we could, in certain circumstances, be required to pay an
excise or penalty tax (which could be significant in amount) in order to utilize one or more relief provisions under
the Code to maintain our qualification as a REIT. Any of these taxes would decrease operating cash flow to our
shareholders. In addition, in order to meet the REIT qualification requirements, or to avert the imposition of a 100%
tax that applies to certain gains derived by a REIT from dealer property or inventory, we may hold some of our
assets or provide certain services to our tenants through one or more TRSs, or other subsidiary corporations that will
be subject to corporate-level income tax at regular corporate rates. Any TRSs or other taxable corporations in which
we invest will be subject to U.S. federal, state and local corporate taxes. Furthermore, if we acquire appreciated
assets from a corporation that is or has been a subchapter C corporation in a transaction in which the adjusted tax
basis of such assets in our hands is less than the fair market value of the assets, determined at the time we acquired
such assets, and if we subsequently dispose of any such assets during the 5-year period following the acquisition of
the assets from the C corporation, we will be subject to tax at the highest corporate tax rates on any gain from the
disposition of such assets to the extent of the excess of the fair market value of the assets on the date that we
acquired such assets over the basis of such assets on such date, which we refer to as built-in gains. Payment of these
taxes generally could materially and adversely affect our income, cash flow, results of operations, financial
condition, liquidity and prospects, and could adversely affect the value of our common shares and our ability to
make distributions to our shareholders.
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Failure to make required distributions would subject us to tax, which would reduce the operating cash flow to our
shareholders.
In order to qualify as a REIT, we must distribute to our shareholders each calendar year at least 90% of our net
taxable income (excluding net capital gain). To the extent that we satisfy the 90% distribution requirement, but
distribute less than 100% of our net taxable income (including net capital gain), we would be subject to U.S. federal
corporate income tax on our undistributed net taxable income. In addition, we will incur a 4% non-deductible excise
tax on the amount, if any, by which our distributions in any calendar year are less than a minimum amount specified
under U.S. federal income tax laws. Although we intend to distribute our net taxable income to our shareholders in a
manner intended to satisfy the REIT 90% distribution requirement and to avoid the 4% non-deductible excise tax, it
is possible that we, from time to time, may not have sufficient cash to distribute 100% of our net taxable income.
There may be timing differences between our actual receipt of cash and the inclusion of items in our income for U.S.
federal income tax purposes. Accordingly, there can be no assurance that we will be able to distribute net taxable
income to shareholders in a manner that satisfies the REIT distribution requirements and avoids the 4% non-
deductible excise tax.
To maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions.
In order to maintain our REIT qualification and avoid the payment of income and excise taxes, we may need to
borrow funds to meet the REIT distribution requirements even if the then prevailing market conditions are not
favorable for these borrowings. These borrowing needs could result from, among other things, timing differences
between the actual receipt of cash and inclusion of income for federal income tax purposes, or the effect of non-
deductible capital expenditures, the creation of reserves or required debt or amortization payments. These sources,
however, may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a
number of factors, including the market's perception of our growth potential, our current debt levels, the per share
trading price of our common shares, and our current and potential future earnings. We cannot assure you that we
will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail our
investment activities and/or to dispose of assets at inopportune times, and could adversely affect our financial
condition, results of operations, cash flows and our ability to pay distributions on, and the per share trading price of,
our common shares.
Complying with the REIT requirements may cause us to forgo and/or liquidate otherwise attractive investments.
To qualify as a REIT, we must ensure that at least 75% of our gross income for each taxable year, excluding
certain amounts, is derived from certain real property-related sources, and at least 95% of our gross income for each
taxable year, excluding certain amounts, is derived from certain real property-related sources and passive income
such as dividends and interest. In addition, we must ensure that, at the end of each calendar quarter, at least 75% of
the value of our total assets consists of cash, cash items, U.S. government securities and qualified real estate assets.
The remainder of our investment in securities generally cannot include more than 10% of the outstanding voting
securities of any one issuer (other than U.S. government securities, securities of corporations that are treated as
TRSs and qualified real estate assets) or more than 10% of the total value of the outstanding securities of any one
issuer (other than government securities, securities of corporations that are treated as TRSs and qualified real estate
assets). In addition, in general, no more than 5% of the value of our assets can consist of the securities of any one
issuer (other than U.S. government securities, securities of corporations that are treated as TRSs and qualified real
estate assets), no more than 20% of the value of our total assets can be represented by securities of one or more
TRSs and no more than 25% of the value of our assets can consist of debt instruments issued by publicly offered
REITs that are not otherwise secured by real property. If we fail to comply with these asset requirements at the end
of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for
certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences.
To meet these tests, we may be required to take or forgo taking actions that we would otherwise consider
advantageous. For instance, in order to satisfy the gross income or asset tests applicable to REITs under the Code,
we may be required to forgo investments that we otherwise would make. Furthermore, we may be required to
liquidate from our portfolio otherwise attractive investments. In addition, we may be required to make distributions
to shareholders at disadvantageous times or when we do not have funds readily available for distribution. These
actions could reduce our income and amounts available for distribution to our shareholders. Thus, compliance with
the REIT requirements may hinder our investment performance.
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We may be subject to a 100% tax on income from "prohibited transactions," and this tax may limit our ability to
sell assets or require us to restructure certain of our activities in order to avoid being subject to the tax.
We will be subject to a 100% tax on any income from a prohibited transaction. "Prohibited transactions"
generally include sales or other dispositions of property (other than property treated as foreclosure property under
the Code) that is held as inventory or primarily for sale to customers in the ordinary course of a trade or business by
a REIT, either directly or indirectly through certain pass-through subsidiaries. The characterization of an asset sale
as a prohibited transaction depends on the particular facts and circumstances.
The 100% tax will not apply to gains from the sale of inventory that is held through a TRS or other taxable
corporation, although such income will be subject to tax in the hands of the corporation at regular corporate income
tax rates.
Our TRSs will be subject to U.S. federal income tax and will be required to pay a 100% penalty tax on certain
income or deductions if our transactions with our TRSs are not conducted on arm's length terms.
We may conduct certain activities (such as facilitating sales by our PROs of tenant insurance, of which we
receive a portion of the proceeds, selling packing supplies and locks and renting trucks or other moving equipment)
through one or more TRSs.
A TRS is a corporation other than a REIT in which a REIT directly or indirectly holds stock, and that has made
a joint election with such REIT to be treated as a TRS. If a TRS owns more than 35% of the total voting power or
value of the outstanding securities of another corporation, such other corporation will also be treated as a TRS. Other
than some activities relating to lodging and health care properties, a TRS may generally engage in any business,
including the provision of customary or non-customary services to tenants of its parent REIT. A TRS is subject to
U.S. federal income tax as a regular C corporation.
No more than 20% of the value of a REIT's total assets may consist of stock or securities of one or more TRSs.
This requirement limits the extent to which we can conduct our activities through TRSs. The values of some of our
assets, including assets that we hold through TRSs, may not be subject to precise determination, and values are
subject to change in the future. Furthermore, if a REIT lends money to a TRS, the TRS may be unable to deduct all
or a portion of the interest paid to the REIT, which could increase the tax liability of the TRS. In addition, the Code
imposes a 100% tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm's
length basis. We intend to structure transactions with any TRS on terms that we believe are arm's length to avoid
incurring the 100% excise tax described above. There can be no assurances, however, that we will be able to avoid
application of the 100% tax.
If our operating partnership is treated as a corporation for U.S. federal income tax purposes, we will cease to
qualify as a REIT.
We believe our operating partnership qualifies as a partnership for U.S. federal income tax purposes. As a
partnership for U.S. federal income tax purposes, our operating partnership will not be subject to U.S. federal
income tax on its income. Instead, each of its partners, including us, will be required to pay tax on its allocable share
of our operating partnership's income. No assurance can be provided, however, that the IRS will not challenge our
operating partnership's status as a partnership for U.S. federal income tax purposes, or that a court would not sustain
such a challenge. If the IRS were successful in treating our operating partnership as a corporation for U.S. federal
income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs.
As a result, we would cease to qualify as a REIT and both we and our operating partnership would become subject
to U.S. federal, state and local income tax. The payment by our operating partnership of income tax would reduce
significantly the amount of cash available to our operating partnership to satisfy obligations to make principal and
interest payments on its debt and to make distribution to its partners, including us.
Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax
liabilities.
The REIT provisions of the Code may limit our ability to hedge our assets and operations. Under these
provisions, any income that we generate from transactions intended to hedge our interest rate risk will be excluded
from gross income for purposes of the REIT 75% and 95% gross income tests if (i) the instrument (a) hedges interest
rate risk on liabilities used to carry or acquire real estate assets or (b) hedges an instrument described in clause (a)
for a period following the extinguishment of the liability or the disposition of the asset that was previously hedged
is properly identified under applicable Treasury
instrument
by the hedged instrument, and (ii) the relevant
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regulations. Income from hedging transactions that does not meet these requirements will generally constitute non-
qualifying income for purposes of both the REIT 75% and 95% gross income tests. As a result of these rules, we
may have to limit our use of hedging techniques that might otherwise be advantageous or implement those hedges
through a TRS. This could increase the cost of our hedging activities because our TRS would be subject to tax on
gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In
addition, losses in our TRS will generally not provide any tax benefit to us, although, subject to limitation, such
losses may be carried forward to offset future taxable income of the TRS.
The ability of our board of trustees to revoke our REIT election without shareholder approval may cause adverse
consequences to our shareholders.
Our declaration of trust provides that the board of trustees may revoke or otherwise terminate our REIT
election, without the approval of our shareholders, if the board determines that it is no longer in our best interest to
attempt to, or continue to, qualify as a REIT. If we cease to qualify as a REIT, we would become subject to U.S.
federal income tax on our net taxable income and we generally would no longer be required to distribute any of our
net
taxable income to our shareholders, which may have adverse consequences on our total return to our
shareholders.
Legislative or regulatory tax changes related to REITs could materially and adversely affect our business.
At any time,
the U.S. federal
income tax laws or regulations governing REITs or the administrative
interpretations of those laws or regulations may be changed, possibly with retroactive effect. We cannot predict if or
when any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any
existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or
become effective or whether any such law, regulation or interpretation may take effect retroactively. We and our
shareholders could be adversely affected by any such change in, or any new, U.S. federal income tax law, regulation
or administrative interpretation.
The TCJA, which was signed into law on December 22, 2017, significantly changes U.S. federal income tax
laws applicable to businesses and their owners, including REITs and their shareholders, and may lessen the relative
competitive advantage of operating as a REIT rather than as a C corporation. For additional discussion, see "U.S.
Federal Income Tax Legislation".
Risks Related to Our Common Shares and Preferred Shares
Common shares and preferred shares eligible for future sale may have adverse effects on our share price.
Subject to applicable law and the rules of any stock exchange on which our shares may be listed or traded, our
board of trustees, without common shareholder approval, may authorize us to issue additional authorized and
unissued common shares and preferred shares on the terms and for the consideration it deems appropriate and may
amend our declaration of trust to increase the total number of shares, or the number of shares of any class or series,
that we are authorized to issue. In addition, our operating partnership may issue OP units, which are redeemable for
cash or, at our option exchangeable on a one-for-one basis into common shares after an agreed period of time and
certain other conditions, preferred units of limited partnership interest, which are redeemable for cash or, at our
option exchangeable on a one-for-one basis into our 6.000% Series A cumulative redeemable preferred shares of
beneficial interest ("Series A Preferred Shares") and subordinated performance units, which are only convertible into
OP units beginning two years following the initial issuance of the applicable series and then (i) at the holder's
election only upon the achievement of certain performance thresholds relating to the properties to which such
subordinated performance units relate or (ii) at our election upon a retirement event of a PRO that holds such
subordinated performance units or upon certain qualifying terminations. Notwithstanding the two-year lock out
period on conversions of subordinated performance units into OP units, if all such subordinated performance units
were convertible into OP units as of December 31, 2019, each subordinated performance unit would on average
hypothetically convert into 1.48 OP units, or into an aggregate of approximately 22.8 million OP units. These
amounts are based on historical financial information for the trailing twelve months ended December 31, 2019. The
hypothetical conversion is 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. We anticipate that as our
CAD grows over time, the conversion ratio will also grow, including to levels that may exceed this amount. The
actual number of OP units into which such subordinated performance units will become convertible may vary
significantly and will depend upon the applicable conversion penalty and the actual CAD to the OP units and the
actual CAD to the converted subordinated performance units in the one-year period ending prior to conversion. We
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have also granted registration rights to those persons who will be eligible to receive common shares issuable upon
exchange of OP units issued in our formation transactions and certain contribution transactions.
Pursuant to the registration rights agreements, we have filed a shelf registration statement on Form S-3 to
register the offer and resale of the common shares issuable upon exchange of OP units (or securities convertible into
or exchangeable for OP units and we expect to file a shelf registration statement on Form S-3 to register the offer
and resale of the Series A Preferred Shares issuable upon the exchange of our 6.000% Series A-1 cumulative
redeemable preferred units of limiting partnership interest ("Series A-1 preferred units") in the Company's operating
partnership). We have the right to include common shares to be sold for our own account or other holders in the
shelf registration statement. We are required to use all commercially reasonable efforts to keep such shelf
registration statement continuously effective for a period ending when all common shares covered by the shelf
registration statement are no longer Registrable Shares, as defined in the shelf registration statement.
We intend to bear the expenses incident to these registration requirements except that we will not bear the costs
of (i) any underwriting fees, discounts or commissions, (ii) out-of-pocket expenses of the persons exercising the
registration rights or (iii) transfer taxes.
We cannot predict the effect, if any, of future sales of our common or preferred shares or the availability of
shares for future sales, on the market price of our common or preferred shares. The market price of our common
shares may decline significantly when the restrictions on resale by certain of our shareholders lapse. Sales of
substantial amounts of common or preferred shares or the perception that such sales could occur may adversely
affect the prevailing market price for our common shares.
We cannot assure our ability to pay dividends in the future.
Historically, we have paid quarterly common share dividends to our shareholders and quarterly distributions to
our operating partnership unitholders, and we intend to continue to pay quarterly dividends to our shareholders and
to make quarterly distributions to our operating partnership unitholders in amounts such that all or substantially all
of our net taxable income in each year is distributed, which, along with other factors, should enable us to continue to
qualify for the tax benefits accorded to a REIT under the Code. We have not established a minimum dividends
payment level, and all future distributions will be made at the discretion of our board of trustees. Our ability to pay
dividends will depend upon, among other factors:
•
•
•
the operational and financial performance of our properties;
capital expenditures with respect to existing and newly acquired properties;
general and administrative expenses associated with our operation as a publicly-held REIT;
• maintenance of our REIT qualification;
•
•
•
the amount of, and the interest rates on, our debt and the ability to refinance our debt;
the absence of significant expenditures relating to environmental and other regulatory matters; and
other risk factors described in this Annual Report on Form 10-K.
Certain of these matters are beyond our control and any significant difference between our expectations and
actual results could have a material adverse effect on our cash flow and our ability to make distributions to
shareholders.
Future offerings of debt or equity securities, which may rank senior to our common shares, may adversely affect
the market price of our common shares.
If we decide to issue debt securities in the future, which would rank senior to our common shares, it is likely
that they will be governed by an indenture or other instrument containing covenants restricting our operating
flexibility. Additionally, any equity securities or convertible or exchangeable securities that we issue in the future
may have rights, preferences and privileges more favorable than those of our common shares and may result in
dilution to owners of our common shares. We and, indirectly, our shareholders will bear the cost of issuing and
servicing such securities. Because our decision to issue debt or equity securities in any future offering will depend
on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or
nature of our future offerings. Thus, holders of our common shares will bear the risk of our future offerings reducing
the market price of our common shares and diluting the value of their share holdings in us.
32
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
As of December 31, 2019, we held ownership interests in and operated a geographically diversified portfolio of
742 self storage properties, located in 35 states and Puerto Rico, comprising approximately 47.1 million rentable
square feet, configured in approximately 378,000 storage units. Of these properties, we consolidated 567 self
storage properties that contain approximately 34.5 million rentable square feet and we held a 25% ownership interest
in 175 unconsolidated real estate venture properties that contain approximately 12.6 million rentable square feet.
The following table sets forth summary information regarding our consolidated properties by state as of
December 31, 2019.
State/Territory
California(1)
Texas
Oregon
Florida
Georgia
North Carolina
Arizona
Oklahoma
Louisiana(1)
Indiana
Kansas
Washington
Nevada
Colorado
New Hampshire
Missouri
Ohio
Puerto Rico
Pennsylvania
New Mexico
Illinois
Maryland
South Carolina
Idaho
Massachusetts
Mississippi
New Jersey
Kentucky
Alabama
Virginia
Total/Weighted Average
Number of
Properties
83
71
61
46
44
33
31
30
26
16
16
14
13
11
11
9
8
6
6
5
4
4
4
3
3
3
3
1
1
1
567
Number of
Units
Rentable
Square Feet
% of Rentable
Square Feet
Period-end
Occupancy
49,618
29,465
24,498
28,956
19,044
15,377
16,893
13,848
12,336
8,777
5,713
4,496
6,678
5,048
4,727
3,859
3,642
4,460
2,647
3,108
1,993
1,993
1,212
843
1,737
864
1,436
380
762
597
275,007
6,226,952
4,218,584
3,105,199
3,021,295
2,547,949
1,885,479
1,925,442
1,902,842
1,538,959
1,134,820
763,249
578,723
844,811
615,456
576,995
490,023
461,393
431,612
298,615
389,743
271,136
214,337
147,580
170,229
166,650
114,311
191,124
60,950
110,616
80,335
34,485,409
18.1 %
12.2 %
8.9 %
8.8 %
7.4 %
5.5 %
5.6 %
5.5 %
4.5 %
3.3 %
2.2 %
1.7 %
2.4 %
1.8 %
1.7 %
1.4 %
1.3 %
1.3 %
0.9 %
1.1 %
0.8 %
0.6 %
0.4 %
0.5 %
0.5 %
0.3 %
0.6 %
0.2 %
0.3 %
0.2 %
100.0 %
88.4 %
86.6 %
81.1 %
86.4 %
87.7 %
90.8 %
86.9 %
87.5 %
84.8 %
89.6 %
86.6 %
80.1 %
89.4 %
84.2 %
90.3 %
74.7 %
88.5 %
89.9 %
89.4 %
87.1 %
86.0 %
88.5 %
91.2 %
94.3 %
95.0 %
79.6 %
83.7 %
83.7 %
84.7 %
83.4 %
86.8 %
(1) Six of the California properties and two of the Louisiana properties are subject to non-cancelable leasehold interest agreements that are classified as operating leases. See
"Note 13. Leases" in Item 8. "Financial Statements and Supplementary Data."
33
The following table sets forth summary information regarding our unconsolidated real estate venture properties
by state as of December 31, 2019.
State
Florida
Michigan
New Jersey
Alabama
Ohio
Georgia
California
Other(1)
Total
Number of
Properties
27
24
15
14
14
11
10
60
175
Number of
Units
Rentable
Square Feet
% of Rentable
Square Feet
Period-end
Occupancy
15,374
15,616
10,524
5,533
8,787
6,141
6,197
34,938
103,110
1,721,835
1,977,773
1,225,838
826,475
1,064,746
872,333
754,379
4,171,544
12,614,923
13.6 %
15.7 %
9.7 %
6.6 %
8.4 %
6.9 %
6.0 %
33.1 %
100.0 %
81.7 %
87.6 %
88.1 %
86.1 %
85.6 %
87.0 %
87.2 %
84.6 %
85.5 %
(1) Other states in the unconsolidated real estate ventures include Arizona, Delaware, Illinois, Massachusetts, Minnesota, Mississippi, Nevada,
New York, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Texas and Virginia.
Our portfolio consists of self storage properties that are designed to offer customers convenient, affordable, and
secure storage units. Generally, our properties are in highly visible locations clustered in states or markets with
strong population and job growth and are specifically designed to accommodate residential and commercial tenants
with features such as security systems, electronic gate entry, easy access, climate control, and pest control. Our units
typically range from 25 square feet to 300 square feet, and some of our properties also offer outside storage for
vehicles, boats, and equipment. We provide 24-hour access to many storage units through computer controlled
access systems, as well as alarm and sprinkler systems on many of our individual storage units. Almost all of the
storage units in our portfolio are leased on a month-to-month basis providing us the flexibility to increase rental rates
over time as market conditions permit. Additional information on our consolidated self storage properties is
contained in "Schedule III - Real Estate and Accumulated Depreciation" in this Annual Report on Form 10-K.
Item 3. Legal Proceedings
We are not currently subject to any legal proceedings that we consider to be material.
Item 4. Mine Safety Disclosures
Not applicable.
34
Table of Contents
PART II
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Market Information
Our common shares have been listed and traded on the NYSE under the symbol "NSA" since April 22, 2015.
Prior to that time there was no public market for our common shares.
Holders
As of February 25, 2020, the Company had 55 record holders of its common shares. The 55 holders of record do
not include the beneficial owners of common shares whose shares are held by a broker or bank. Such information
was obtained from our transfer agent and registrar.
Dividends
Since our initial quarter as a publicly-traded REIT, we have made regular quarterly distributions to our
shareholders. Holders of common shares are entitled to receive distributions when declared by our board of trustees
out of any assets legally available for that purpose. In order to maintain our status as a REIT, we are required to
distribute at least 90% of our "REIT taxable income," which is generally equivalent to our net taxable ordinary
income, determined without regard to the deduction for dividends paid and excluding net capital gains to our
shareholders annually in order to maintain our REIT qualification for U.S. federal income tax purposes.
Common share dividends are characterized for U.S. federal income tax purposes as ordinary income, capital
gains, return of capital or a combination thereof. Each year we communicate to shareholders the tax characterization
of the common share dividends paid during the preceding year. Our tax return for the year ended December 31, 2019
has not yet been filed and consequently, the taxability information presented for our dividends paid in 2019 is based
upon management's estimate. The following table summarizes the taxability of our dividends per common share for
the year ended December 31, 2019:
Ordinary Income
Return of Capital
Total
Equity Compensation Plan Information
Year Ended
December 31, 2019
$
$
0.841586
0.428414
1.270000
66.3 %
33.7 %
100.0 %
Information about our equity compensation plans is incorporated by reference to Item 12 of Part III of this
Annual Report on Form 10-K.
Unregistered Sales of Equity Securities
During the three months ended December 31, 2019, the Company, in its capacity as general partner of its
operating partnership, caused the operating partnership to issue 293,522 common shares to satisfy redemption
requests from certain limited partners.
On October 24, 2019, the operating partnership issued 21,752 subordinated performance units to an affiliate of
Moove In, one of the Company's existing PROs, in exchange for cash in connection with the acquisition of a self
storage property.
On December 18, 2019, the operating partnership issued 6,662 OP units and 20,197 subordinated performance
units to an affiliate of Hide-Away, one of the Company's existing PROs, in connection with the acquisition of a self
storage property.
On December 19, 2019, the operating partnership issued 11,100 subordinated performance units to an affiliate
of Personal Mini, one of the Company's existing PROs, in exchange for cash in connection with the acquisition of a
self storage property.
On January 16, 2020, the operating partnership issued 73,329 OP units to an unrelated third party in connection
with the acquisition of a self storage property.
35
Table of Contents
On January 16, 2020, the operating partnership issued 13,105 subordinated performance units to an affiliate of
Move It, one of the Company's existing PROs, in exchange for cash in connection with the acquisition of a self
storage property.
As of February 25, 2020, other than those OP units held by the Company, 33,301,798 OP units were
outstanding (including 773,568 outstanding Long-Term Incentive Plan Units ("LTIP units") and 1,848,261
outstanding OP units in certain consolidated subsidiaries of the operating partnership ("DownREIT OP units"),
which are convertible into, or exchangeable for, OP units on a one-for-one basis, subject to certain conditions).
These issuances were exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
Performance Graph
The following chart compares the yearly cumulative total shareholder return for our common shares with the
cumulative shareholder return of companies on (i) the S&P 500 Index, (ii) the Russell 2000 and (iii) the Nareit All
Equity REIT Index as provided by Nareit for the period beginning April 23, 2015 and ending December 31, 2019.
Period Ending
Index
4/23/2015
12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019
National Storage Affiliates Trust
$
S&P 500
Russell 2000
Nareit All Equity REIT Index
100
100
100
100
$
137
$
98
91
101
$
184
110
109
109
238
134
126
119
$
240 $
128
112
114
318
168
140
147
The foregoing item assumes $100.00 invested on April 23, 2015, with dividends reinvested. The Performance
Graph will not be deemed to be incorporated by reference into any filing by NSA under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that NSA specifically
incorporates the same by reference.
36
Period EndingIndex ValueTotal Return PerformanceNational Storage Affiliates TrustS&P 500Russell 2000Nareit All Equity REIT Index04/23/1512/31/1512/31/1612/31/1712/31/1812/31/19050100150200250300350 Table of Contents
Item 6. Selected Financial Data
The following table sets forth our selected historical financial and operating data as of and for the periods
indicated. You should read the information below in conjunction with the financial statements and notes thereto
included in Item 8. "Financial Statements and Supplementary Data" and Item 7. "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in this Annual Report on Form 10-K or in previous
filings with the SEC. Dollars in the following table are in thousands, except per share amounts.
2019
Year Ended December 31,
2017
2016
2018
2015
OPERATING DATA:
Total revenue
Total operating expenses
Net income
Net (income) loss attributable to
noncontrolling interests
Net income attributable to the
Company
Earnings (loss) per share—basic
Earnings (loss) per share—diluted
Weighted average shares outstanding
—basic (in thousands)
Weighted average shares outstanding
—diluted (in thousands)
Dividends declared per common
$
387,896
$
330,896
$
268,130
$
199,046
$
133,919
261,047
66,013
229,242
56,326
189,630
45,998
141,390
24,866
102,328
4,796
(62,030)
(42,217)
(43,037)
(6,901)
7,644
3,983
14,109
$
$
(0.15) $
(0.15) $
0.07
0.07
$
$
2,961
0.01
0.01
$
$
17,965
12,440
0.60
0.31
$
$
0.80
0.17
58,208
53,293
44,423
29,887
15,463
58,208
53,293
44,423
78,747
45,409
share
$
1.27
$
1.16
$
1.04
$
0.88
$
0.54
BALANCE SHEET DATA (at end of period)
Self storage properties, net
$ 2,753,897
$ 2,391,462
$ 2,104,875
$ 1,733,533
$ 1,079,101
Total assets
Debt financing
Total equity
OTHER DATA (at end of period)
Number of properties(1)
Rentable square feet (in thousands)(2)
Occupancy percentage(3)
3,084,245
1,534,047
2,729,263
1,278,102
2,266,730
1,892,092
1,099,049
958,097
878,954
567,795
$ 1,452,101
$ 1,402,299
$ 1,271,487
$
979,068
$
516,047
567
34,485
87 %
499
30,366
87 %
444
27,182
87 %
382
23,077
88 %
277
15,770
89 %
(1) For a discussion of our acquisition and disposition activity during the years ended December 31, 2019 and 2018, see "Note 6. Self Storage
Property Acquisitions and Dispositions" in Item 8. "Financial Statements and Supplementary Data."
(2) Rentable square feet includes all enclosed self storage units but excludes commercial, residential, and covered parking space.
(3) Represents total occupied rentable square feet divided by total rentable square feet as of the end of the period.
37
Table of Contents
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations in
conjunction with the financial statements and notes thereto included in Item 8. "Financial Statements and
Supplementary Data" as well as Item 1. "Business," Item 1A. "Risk Factors," and Item 2. "Properties," respectively,
in this Annual Report on Form 10-K.
Overview
National Storage Affiliates Trust is a fully integrated, self-administered and self-managed real estate investment
trust organized in the state of Maryland on May 16, 2013. We have elected and we believe that we have qualified to
be taxed as a REIT commencing with our taxable year ended December 31, 2015. We serve as the sole general
partner of our operating partnership, a Delaware limited partnership formed on February 13, 2013 to conduct our
business, which is focused on the ownership, operation, and acquisition of self storage properties located within the
top 100 MSAs throughout the United States.
Our Structure
Our structure promotes operator accountability as subordinated performance units issued to our PROs in
exchange for the contribution of their properties are entitled to distributions only after those properties satisfy
minimum performance thresholds. In the event of a material reduction in operating cash flow, distributions on our
subordinated performance units will be reduced before or disproportionately to distributions on our common shares
held by our common shareholders. In addition, we expect our PROs will generally co-invest subordinated equity in
the form of subordinated performance units in each acquisition that they source, and the value of these subordinated
performance units will fluctuate with the performance of their managed portfolios. Therefore, our PROs are
incentivized to select acquisitions that are expected to exceed minimum performance thresholds, thereby increasing
the value of their subordinated equity stake. We expect that our shareholders will benefit from the higher levels of
property performance that our PROs are incentivized to deliver.
Our PROs
We had ten PROs as of December 31, 2019: SecurCare, Northwest, Optivest, Guardian, Move It, Storage
Solutions, Hide Away, Personal Mini, Southern and Moove In. We seek to further expand our platform by
continuing to recruit additional established self storage operators, while integrating our operations through the
implementation of centralized initiatives, including management information systems, revenue enhancement, and
cost optimization programs. Our national platform allows us to capture cost savings by eliminating redundancies and
utilizing economies of scale across the property management platforms of our PROs while also providing greater
access to lower-cost capital.
Our Consolidated Properties
We seek to own properties that are well located in high quality sub-markets with highly accessible street access
and attractive supply and demand characteristics, providing our properties with strong and stable cash flows that are
less sensitive to the fluctuations of the general economy. Many of these markets have multiple barriers to entry
against increased supply, including zoning restrictions against new construction and new construction costs that we
believe are higher than our properties' fair market value.
As of December 31, 2019, we owned a geographically diversified portfolio of 567 self storage properties,
located in 29 states and Puerto Rico, comprising approximately 34.5 million rentable square feet, configured in
approximately 275,000 storage units. Of these properties, 265 were acquired by us from our PROs, 301 were
acquired by us from third-party sellers and one was acquired by us from the 2016 Joint Venture.
Our Unconsolidated Real Estate Ventures
We seek to opportunistically partner with institutional funds and other institutional investors to acquire
attractive portfolios utilizing a promoted return structure. We believe there is significant opportunity for continued
external growth by partnering with institutional investors seeking to deploy capital in the self storage industry.
38
Table of Contents
2018 Joint Venture
As of December 31, 2019, our 2018 Joint Venture, in which we have a 25% interest, owned and operated a
portfolio of 103 properties containing approximately 7.7 million rentable square feet, configured in approximately
63,000 storage units and located across 17 states.
2016 Joint Venture
As of December 31, 2019, our 2016 Joint Venture, in which we have a 25% ownership interest, owned and
operated a portfolio of 72 properties containing approximately 4.9 million rentable square feet, configured in
approximately 40,000 storage units and located across 13 states.
During the year ended December 31, 2019, our 2016 Joint Venture sold to the Company one self storage
property for $4.1 million, comprising less than 0.1 million rentable square feet, configured in approximately 300
storage units.
Our Property Management Platform
Through our property management platform, branded iStorage, we direct, manage and control the day-to-day
operations and affairs of certain consolidated properties and our unconsolidated real estate ventures. We earn certain
customary fees for managing and operating the properties in the unconsolidated real estate ventures and we facilitate
tenant insurance and/or tenant warranty protection programs for tenants at these properties in exchange for half of all
proceeds from such programs.
As of December 31, 2019, our property management platform managed and controlled 42 of our consolidated
properties in select markets in California, Illinois, Kansas, Maryland, Missouri, Ohio, Texas and Virginia.
Results of Operations
When reviewing our results of operations it is important to consider the timing of acquisition activity. We
acquired 69 self storage properties during the year ended December 31, 2019 and 57 self storage properties during
the year ended December 31, 2018. As a result of these and other factors, we do not believe that our historical results
of operations discussed and analyzed below are comparable or necessarily indicative of our future results of
operations or cash flows.
To help analyze the operating performance of our self storage properties, we also discuss and analyze operating
results relating to our same store portfolio. Our 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.
The following discussion and analysis of the results of our operations and financial condition for the year ended
December 31, 2019 compared to the year ended December 31, 2018 should be read in conjunction with the
accompanying consolidated financial statements included in Item 8. The discussion and analysis of the results of our
operations and financial condition for the year ended December 31, 2018 compared to the year ended December 31,
2017, can be found in Part II, "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations" of our Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the
SEC on February 26, 2019.
Certain figures, such as interest rates and other percentages, included in this section have been rounded for ease
of presentation. Percentage figures included in this section have not in all cases been calculated on the basis of such
rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this
section may vary slightly from those obtained by performing the same calculations using the figures in our
consolidated financial statements or in the associated text. Certain other amounts that appear in this section may
similarly not sum due to rounding.
39
Table of Contents
Year Ended December 31, 2019 compared to the Year Ended December 31, 2018
Net income was $66.0 million for the year ended December 31, 2019, compared to $56.3 million for the year
ended December 31, 2018, an increase of $9.7 million. The increase was primarily due to an increase in net
operating income ("NOI") resulting from self storage properties acquired during 2018 and 2019, increases in
management fees and other revenue, partially offset by increases in depreciation and amortization, interest expense
and general and administrative expenses. For a description of NOI, see "Non-GAAP Financial measures – NOI".
Overview
As of December 31, 2019, our same store portfolio consisted of 439 self storage properties. See "---Results of
Operations" above for the definition of our same store portfolio. The following table illustrates the changes in rental
revenue, other property-related revenue, management fees and other revenue, property operating expenses, and other
expenses for the year ended December 31, 2019 compared to the year ended December 31, 2018 (dollars in
thousands):
Year Ended December 31,
2018
2019
Change
Rental revenue
Same store portfolio
Non-same store portfolio
Effect of bad debt expense classification resulting from
$
287,179
67,680
$
276,377
23,462
$
adoption of leasing standard
Total rental revenue
Other property-related revenue
Same store portfolio
Non-same store portfolio
Total other property-related revenue
Property operating expenses
Same store portfolio
Non-same store portfolio
Effect of bad debt expense classification resulting from
adoption of leasing standard
Total property operating expenses
Net operating income
Same store portfolio
Non-same store portfolio
Total net operating income
Management fees and other revenue
General and administrative expenses
Depreciation and amortization
Other (expense) income
Interest expense
Equity in losses of unconsolidated real estate ventures
Acquisition costs
Non-operating income (expense)
Gain on sale of self storage properties
Other expense
Income before income taxes
Income tax expense
Net income
40
—
354,859
9,998
2,304
12,302
88,694
21,653
—
110,347
208,483
48,331
256,814
20,735
(45,581)
(105,119)
(56,464)
(4,970)
(1,317)
452
2,814
(59,485)
67,364
(1,351)
66,013
8,564
308,403
9,443
740
10,183
87,262
8,049
8,564
103,875
198,558
16,153
214,711
12,310
(36,220)
(89,147)
(42,724)
(1,423)
(663)
(91)
391
(44,510)
57,144
(818)
56,326
10,802
44,218
(8,564)
46,456
555
1,564
2,119
1,432
13,604
(8,564)
6,472
9,925
32,178
42,103
8,425
(9,361)
(15,972)
(13,740)
(3,547)
(654)
543
2,423
(14,975)
10,220
(533)
9,687
Table of Contents
Net income attributable to noncontrolling interests
Net income attributable to National Storage
Affiliates Trust
Distributions to preferred shareholders
Net (loss) income attributable to common
shareholders
Total Revenue
Year Ended December 31,
2018
2019
Change
(62,030)
(42,217)
(19,813)
3,983
(12,390)
14,109
(10,350)
(10,126)
(2,040)
$
(8,407) $
3,759
$
(12,166)
Our total revenue increased by $57.0 million, or 17.2%, for the year ended December 31, 2019, as compared to
the year ended December 31, 2018. This increase was primarily attributable to incremental revenue from 69 self
storage properties acquired during the year ended December 31, 2019, increases in management fees and other
revenue from our unconsolidated real estate ventures and regular rental increases for in-place tenants.
Rental Revenue
Rental revenue increased by $46.5 million, or 15.1%, for the year ended December 31, 2019, as compared to the
year ended December 31, 2018. As discussed in Note 2 to the consolidated financial statements in Item 8, we
adopted ASU 2016-02 and ASU 2018-11 effective January 1, 2019. As a result of this adoption, beginning on
January 1, 2019, activity related to uncollectible accounts is recognized as a current-period adjustment within
revenue. For periods prior to January 1, 2019, such amounts were previously included in operating expenses, and as
such, for comparability, we have presented $8.6 million of activity related to uncollectible accounts as a reduction to
same store and non-same store rental revenue for the year ended December 31, 2018. The increase in rental revenue
was due to a $44.2 million increase in non-same store rental revenue which was primarily attributable to incremental
rental revenue of $29.6 million from 69 self storage properties acquired during 2019, and $15.4 million from 57 self
storage properties acquired during 2018. Same store portfolio rental revenues increased $10.8 million, or 3.9%, due
to a 3.5% increase, from $11.58 to $11.98, in annualized same store rental revenue (including fees and net of any
discounts and uncollectible customer amounts) divided by average occupied square feet ("average annualized rental
revenue per occupied square foot"), driven primarily by increased contractual lease rates for in-place tenants and
fees and an increase in average occupancy from 88.5% for the year ended December 31, 2018 to 88.8% for the year
ended December 31, 2019. 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.
Other Property-Related Revenue
Other property-related revenue represents ancillary income from our self storage properties, such as tenant
insurance-related access fees and sales of storage supplies. Other property-related revenue increased by $2.1 million,
or 20.8%, for the year ended December 31, 2019, as compared to the year ended December 31, 2018. This increase
primarily resulted from a $1.6 million increase in non-same store other property-related revenue which was
primarily attributable to incremental other property-related revenue of $0.8 million from 69 self storage properties
acquired during 2019, and $0.8 million from 57 self storage properties acquired during 2018.
Management Fees and Other Revenue
Management fees and other revenue, which are primarily related to managing and operating the unconsolidated
real estate ventures, were $20.7 million for the year ended December 31, 2019, compared to $12.3 million for the
year ended December 31, 2018, an increase of $8.4 million or 68.4%. This increase was primarily attributable to
incremental fees earned from the 2018 Joint Venture following the acquisition of the Initial 2018 JV Portfolio (as
defined in Note 2 to the consolidated financial statements in Item 8) in September 2018.
Property Operating Expenses
Property operating expenses were $110.3 million for the year ended December 31, 2019 compared to $103.9
million for the year ended December 31, 2018, an increase of $6.4 million, or 6.2%. As discussed in Note 2 to the
consolidated financial statements in Item 8, we adopted ASU 2016-02 and ASU 2018-11 effective January 1, 2019.
As a result of this adoption, beginning on January 1, 2019, activity related to uncollectible accounts is recognized as
a current-period adjustment within revenue. For periods prior to January 1, 2019, such amounts were previously
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included in operating expenses, and as such, for comparability, we have presented $8.6 million of activity related to
uncollectible accounts as a reduction to same store and non-same store property operating expenses for the year
ended December 31, 2018. The increase in property operating expenses resulted from a $13.6 million increase in
non-same store property operating expenses that was primarily attributable to incremental property operating
expenses of $9.3 million from 69 self storage properties acquired during 2019, and $4.6 million from 57 self storage
properties acquired during 2018.
General and Administrative Expenses
General and administrative expenses increased $9.4 million, or 25.8%, for the year ended December 31, 2019,
compared to the year ended December 31, 2018. This increase was attributable to increases in supervisory and
administrative fees charged by our PROs of $3.1 million primarily as a result of incremental fees related to the 69
self storage properties acquired during 2019, costs related to our property management platform of $2.3 million,
salaries and benefits of $2.2 million, equity-based compensation expense of $0.7 million and $1.1 million of other
general and administrative expenses.
Depreciation and Amortization
Depreciation and amortization increased $16.0 million, or 17.9%, for the year ended December 31, 2019,
compared to the year ended December 31, 2018. This increase was primarily attributable to incremental depreciation
expense related to the 69 self storage properties acquired during 2019, partially offset by a decrease in amortization
of customer in-place leases from $11.6 million for the year ended December 31, 2018 to $11.3 million for the year
ended December 31, 2019.
Interest Expense
Interest expense increased $13.7 million, or 32.2%, for the year ended December 31, 2019, compared to the
year ended December 31, 2018. The increase in interest expense was primarily attributable to additional borrowings
consisting of $155.0 million of additional term loan borrowings under the Company's credit facility on July 29, 2019
and $100.0 million of borrowings under the 2029 Term Loan Facility. Additionally, on August 30, 2019, our
operating partnership issued the $150.0 million Senior Unsecured Notes in a private placement to certain accredited
investors. The increase in interest expense from these additional borrowings was partially offset by lower
outstanding borrowings under the Revolver.
Equity In Losses Of Unconsolidated Real Estate Ventures
Equity in losses of unconsolidated real estate ventures represents our share of losses incurred through our 25%
ownership interests in the 2018 Joint Venture and the 2016 Joint Venture. During the year ended December 31,
2019, we recorded $5.0 million of equity in losses from our unconsolidated real estate ventures compared to $1.4
million of losses for the year ended December 31, 2018. This was primarily the result of incremental losses from our
2018 Joint Venture driven by real estate depreciation and amortization of customer in-place leases following the
acquisition of the Initial 2018 JV Portfolio in September 2018.
Gain On Sale of Self Storage Properties
Gain on sale of self storage properties was $2.8 million for the year ended December 31, 2019, compared to
$0.4 million for the year ended December 31, 2018. During the year ended December 31, 2019, we sold one self
storage property to an unrelated third party for gross proceeds of $6.5 million and during the year ended December
31, 2018, we sold two self storage properties to unrelated third parties for gross proceeds of $5.5 million.
Net Income Attributable to Noncontrolling Interests
As discussed in Note 2 to the consolidated financial statements in Item 8, we allocate U.S. generally accepted
accounting principles ("GAAP") income (loss) utilizing the HLBV method, in which we allocate income or loss
based on the change in each unitholders' claim on the net assets of our operating partnership at period end after
adjusting for any distributions or contributions made during such 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 noncontrolling
interests. Net income attributable to noncontrolling interests was $62.0 million for the year ended December 31,
2019, compared to $42.2 million for the year ended December 31, 2018.
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Critical Accounting Policies and Use of Estimates
Our financial statements have been prepared on the accrual basis of accounting in accordance with GAAP. The
preparation of these financial statements requires us to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we
evaluate our estimates and assumptions, including those that impact our most critical accounting policies. We base
our estimates and assumptions on historical experience and on various other factors that we believe are reasonable
under the circumstances. Actual results may differ from these estimates. We believe the following are our most
critical accounting policies.
Principles of Consolidation and Presentation of Noncontrolling Interests
Our consolidated financial statements include the accounts of our operating partnership and its controlled
subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidation of
entities.
The limited partner ownership interests in our operating partnership that are held by owners other than us are
referred to as noncontrolling interests. Noncontrolling interests also include ownership interests in DownREIT
partnerships held by entities other than our operating partnership. Noncontrolling interests in a subsidiary are
generally reported as a separate component of equity in our consolidated balance sheets. In our statements of
operations, the revenues, expenses and net income or loss related to noncontrolling interests in our operating
partnership are included in the consolidated amounts, with net income or loss attributable to the noncontrolling
interests deducted separately to arrive at the net income or loss solely attributable to us.
When we obtain an economic interest in an entity, we evaluate the entity to determine if the entity is deemed a
variable interest entity ("VIE"), and if we are deemed to be the primary beneficiary, in accordance with authoritative
guidance issued on the consolidation of VIEs. When an entity is not deemed to be a VIE, we consider the provisions
of additional guidance to determine whether the general partner controls a limited partnership or similar entity when
the limited partners have certain rights. We consolidate all entities that are VIEs and of which the Company is
deemed to be the primary beneficiary.
Self Storage Properties and Customer In-Place Leases
Self storage properties are carried at historical cost less accumulated depreciation and any impairment losses.
When self storage properties are acquired, the purchase price is allocated to the tangible and intangible assets
acquired and liabilities assumed based on estimated fair values. The purchase price is allocated to the individual
properties based on the fair value determined using an income approach or a cash flow analysis using appropriate
risk adjusted capitalization rates, which take into account the relative size, age, and location of the individual
properties along with current and projected occupancy and relative rental rates or appraised values, if available.
Tangible assets are allocated to land, buildings and related improvements, and furniture and equipment.
In allocating the purchase price for a self storage property acquisition, we determine whether the acquisition
includes intangible assets. We allocate a portion of the purchase price to an intangible asset attributed to the value of
customer in-place leases. Because the majority of tenant leases are on a month-to-month basis, this intangible asset
represents the estimated value of the leases in effect on the acquisition date. This intangible asset is amortized to
expense using the straight-line method over 12 months, the estimated average remaining rental period for the leases.
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Non-GAAP Financial Measures
FFO and Core FFO
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 we refer 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, mark-to-market changes in value recognized on
equity securities, 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 our 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, we
exclude distributions declared on subordinated performance units, DownREIT subordinated performance units,
preferred shares and preferred units. We define Core FFO as FFO, as further adjusted to eliminate the impact of
certain items that we do not consider indicative of our 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 our
properties. Given the nature of our business as a real estate owner and operator, we consider FFO and Core FFO as
key supplemental measures of our operating performance that are not specifically defined by GAAP. We believe
that FFO and Core FFO are useful to management and investors as a starting point in measuring our 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 our 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. Our 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 our ability to make cash distributions. We believe that to further
understand our performance, FFO and Core FFO should be compared with our reported net income (loss) and
considered in addition to cash flows computed in accordance with GAAP, as presented in our consolidated financial
statements.
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The following table presents a reconciliation of net income (loss) to FFO and Core FFO for the periods
presented (in thousands, except per share and unit amounts):
Net income
Add (subtract):
Real estate depreciation and amortization
Company's share of unconsolidated real estate venture real
estate depreciation and amortization
Gain on sale of self storage properties
Mark-to-market changes in value on equity securities
Company's share of unconsolidated real estate venture loss
on sale of properties
Distributions to preferred shareholders and unitholders
FFO attributable to subordinated performance unitholders(1)
FFO attributable to common shareholders, OP
unitholders, and LTIP unitholders
Add:
Acquisition costs
Company's share of unconsolidated real estate venture
acquisition costs
Core FFO attributable to common shareholders, OP
unitholders, and LTIP unitholders
Weighted average shares and units outstanding - FFO
and Core FFO:(2)
Weighted average shares outstanding - basic
Weighted average restricted common shares outstanding
Weighted average OP units outstanding
Weighted average DownREIT OP unit equivalents outstanding
Weighted average LTIP units outstanding
Total weighted average shares and units outstanding -
FFO and Core FFO
Year Ended December 31,
2018
2017
2019
$
66,013
$
56,326
$
45,998
103,835
19,889
(2,814)
(610)
202
(13,243)
(34,121)
87,938
10,233
(391)
—
205
(10,822)
(27,111)
73,669
7,296
(5,715)
—
—
(2,300)
(28,364)
139,151
116,378
90,584
1,317
—
663
—
593
22
$
140,468
$
117,041
$
91,199
58,208
28
30,277
1,848
585
90,946
53,293
29
28,977
1,835
694
84,828
44,423
25
26,126
1,835
957
73,366
1.23
1.24
FFO per share and unit
Core FFO per share and unit
$
$
1.53
1.54
$
$
1.37
1.38
$
$
(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 our 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(1) to the following table 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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The following table presents a reconciliation of earnings (loss) per share - diluted to FFO and Core FFO per
share and unit for the periods presented:
Year Ended December 31,
2018
2017
2019
Earnings (loss) per share - diluted
$
(0.15) $
0.07
$
Impact of the difference in weighted average number of
shares(1)
Impact of GAAP accounting for noncontrolling interests,
two-class method and treasury stock method(2)
Add real estate depreciation and amortization
Add Company's share unconsolidated venture real estate
depreciation and amortization
Subtract gain on sale of self storage properties
Mark-to-market changes in value recognized on equity
securities
FFO attributable to subordinated performance unitholders
FFO per share and unit
0.05
0.69
1.14
0.22
(0.03)
(0.01)
(0.38)
1.53
(0.03)
0.49
1.04
0.12
—
—
(0.32)
1.37
Add acquisition costs and Company's share of unconsolidated
real estate venture acquisition costs
Core FFO per share and unit
0.01
1.54
$
0.01
1.38
$
$
0.01
—
0.59
1.00
0.10
(0.08)
—
(0.39)
1.23
0.01
1.24
(1) 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, the treasury stock method for certain unvested LTIP units, and includes
the assumption of a 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, DownREIT subordinated performance units and LTIP units
into OP units, see Note 10 to the consolidated financial statements in Item 8. 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.
(2) 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 (1).
NOI
We define 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.
We believe NOI is useful to investors in evaluating our operating performance because:
•
•
NOI is one of the primary measures used by our management and our PROs to evaluate the economic
productivity of our properties, including our ability to lease our properties, increase pricing and occupancy
and control our 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 our capital structure; and
• We believe NOI helps our investors to meaningfully compare the results of our operating performance from
period to period by removing the impact of our capital structure (primarily interest expense on our
outstanding indebtedness) and depreciation of the cost basis of our assets from our operating results.
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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 our net income (loss). We compensate for these
limitations by considering the economic effect of the excluded expense items independently as well as in connection
with our analysis of net income (loss). NOI should be considered in addition to, but not as a substitute for, other
measures of financial performance reported in accordance with GAAP, such as total revenues, income from
operations and net loss.
The following table presents a reconciliation of net income (loss) to NOI for the periods presented (dollars in
thousands):
Net income
(Subtract) add:
Management fees and other revenue
General and administrative expenses
Depreciation and amortization
Interest expense
Equity in losses of unconsolidated real estate venture
Acquisition costs
Income tax expense
Gain on sale of self storage properties
Non-operating (income) expense
Net operating income
Year Ended December 31,
2018
2017
2019
$
66,013
$
56,326
$
45,998
(20,735)
45,581
105,119
56,464
4,970
1,317
1,351
(2,814)
(452)
256,814
$
(12,310)
36,220
89,147
42,724
1,423
663
818
(391)
91
214,711
$
(8,061)
30,060
75,115
34,068
2,339
593
1,159
(5,715)
58
175,614
$
Our consolidated NOI shown in the table above does not include our proportionate share of NOI for our
unconsolidated real estate ventures. For additional information about our 2018 Joint Venture and 2016 Joint
Venture see Note 5 to the consolidated financial statements in Item 8.
EBITDA and Adjusted EBITDA
We define 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. We define 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 we do not consider indicative of our core operating performance. In evaluating EBITDA and Adjusted
EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of
the adjustments in this presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as
an inference that our future results will be unaffected by unusual or non-recurring items.
We present EBITDA and Adjusted EBITDA because we believe they assist investors and analysts in comparing
our performance across reporting periods on a consistent basis by excluding items that we do not believe are
indicative of our core operating performance. EBITDA and Adjusted EBITDA have limitations as an analytical tool.
Some of these limitations are:
•
•
•
EBITDA and Adjusted EBITDA do not reflect our 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 our debts;
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized
will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash
requirements for such replacements;
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•
•
•
Adjusted EBITDA excludes equity-based compensation expense, which is and will remain a key element of
our overall long-term incentive compensation package, although we exclude it as an expense when
evaluating our ongoing operating performance for a particular period;
EBITDA and Adjusted EBITDA do not reflect the impact of certain cash charges resulting from matters we
consider not to be indicative of our ongoing operations; and
other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do,
limiting their usefulness as comparative measures.
We compensate for these limitations by considering the economic effect of the excluded expense items
independently as well as in connection with our analysis of net income (loss). EBITDA and Adjusted EBITDA
should be considered in addition to, but not as a substitute for, other measures of financial performance reported in
accordance with GAAP, such as total revenues, income from operations, and net income (loss).
The following table presents a reconciliation of net loss to EBITDA and Adjusted EBITDA for the periods
presented (dollars in thousands):
Net income
Add:
Depreciation and amortization
Company's share of unconsolidated real estate venture
depreciation and amortization
Income tax expense
Interest expense
EBITDA
Add:
Acquisition costs
Company's share of unconsolidated real estate venture
acquisition costs
Gain on sale of self storage properties
Company's share of unconsolidated real estate venture loss
on sale of properties
Equity-based compensation expense
Adjusted EBITDA
Liquidity and Capital Resources
Liquidity Overview
Year Ended December 31,
2018
2017
2019
$
66,013
$
56,326
$
45,998
105,119
89,147
75,115
19,889
1,351
56,464
248,836
1,317
—
(2,814)
10,233
818
42,724
199,248
663
—
(391)
7,296
1,159
34,068
163,636
593
22
(5,715)
202
4,527
252,068
$
205
3,837
203,562
$
—
3,764
162,300
$
Liquidity is the ability to meet present and future financial obligations. Our primary source of liquidity is cash
flow from our operations. Additional sources are proceeds from equity and debt offerings, and debt financings
including borrowings under the credit facility, 2023 Term Loan Facility, 2028 Term Loan Facility and 2029 Term
Loan Facility.
Our short-term liquidity requirements consist primarily of property operating expenses, property acquisitions,
capital expenditures, general and administrative expenses and principal and interest on our outstanding indebtedness.
A further short-term liquidity requirement relates to distributions to our common and preferred shareholders and
holders of preferred units, OP units, subordinated performance units, DownREIT OP units and DownREIT
subordinated performance units. We expect to fund short-term liquidity requirements from our operating cash flow,
cash on hand and borrowings under our credit facility.
Our long-term liquidity needs consist primarily of the repayment of debt, property acquisitions, and capital
expenditures. We acquire properties through the use of cash, preferred units, OP units and subordinated performance
to meet our long-term liquidity
units in our operating partnership or DownREIT partnerships. We expect
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requirements with operating cash flow, cash on hand, secured and unsecured indebtedness, and the issuance of
equity and debt securities.
The availability of credit and its related effect on the overall economy may affect our liquidity and future
financing activities, both through changes in interest rates and access to financing. Currently, interest rates are low
compared to historical levels and many lenders are active in the market. We believe that, as a publicly-traded REIT,
we will have access to multiple sources of capital to fund our long-term liquidity requirements, including the
incurrence of additional debt and the issuance of debt and additional equity securities. However, we cannot assure
you that this will be the case.
Cash Flows
At December 31, 2019, we had $20.6 million in cash and cash equivalents and $3.7 million of restricted cash,
an increase in cash and cash equivalents of $7.4 million and an increase in restricted cash of $0.5 million from
December 31, 2018. Restricted cash primarily consists of escrowed funds deposited with financial institutions for
real estate taxes, insurance, and other reserves for capital improvements in accordance with our loan agreements.
The following discussion relates to changes in cash due to operating, investing, and financing activities, which are
presented in our consolidated statements of cash flows included in Item 8 of this report.
Operating Activities
Cash provided by our operating activities was $196.7 million for the year ended December 31, 2019 compared
to $161.8 million for the year ended December 31, 2018, an increase of $34.9 million. Our operating cash flow
increased primarily due to 57 self storage properties acquired during the year ended December 31, 2018 that
generated cash flow for the entire year ended December 31, 2019 and 69 self storage properties that were acquired
during the year ended December 31, 2019. In addition, operating distributions from our unconsolidated real estate
ventures increased by $6.4 million for the year ended December 31, 2019 compared to the year ended December 31,
2018. These increases were partially offset by higher cash payments for general and administrative expenses and
interest expense.
Investing Activities
Cash used in investing activities was $393.0 million for the year ended December 31, 2019 compared to $514.5
million for the year ended December 31, 2018. The primary uses of cash for the year ended December 31, 2019
were for our acquisition of 69 self storage properties for cash consideration of $371.1 million, the acquisition of
equity securities for $12.7 million, deposits for potential acquisitions of $4.4 million, capital expenditures of $20.6
million and the acquisition of the interest in a reinsurance company and related cash flows of $6.6 million, partially
offset by distributions from unconsolidated real estate ventures of $11.5 million, $6.3 million of proceeds from the
sale of one self storage property and $5.4 million of proceeds from the sale of equity securities. The primary uses of
cash for the year ended December 31, 2018 were for our acquisition of 57 self storage properties and an expansion
project for cash consideration of $313.7 million, investments in our unconsolidated real estate ventures of $165.6
million, deposits for acquisitions of $21.0 million and capital expenditures of $19.0 million, partially offset by $5.3
million of proceeds from the sale of two self storage properties.
Capital expenditures totaled $20.6 million, $19.0 million and $14.7 million during the years ended
December 31, 2019, 2018 and 2017 respectively, we generally fund post-acquisition capital additions from cash
provided by operating activities.
We categorize our capital expenditures broadly into three primary categories:
•
•
•
recurring capital expenditures, which represent the portion of capital expenditures that are deemed
to replace the consumed portion of acquired capital assets and extend their useful life;
value enhancing capital expenditures, which represent the portion of capital expenditures that are made to
enhance the revenue and value of an asset from its original purchase condition; and
acquisitions capital expenditures, which represent the portion of capital expenditures capitalized during
the current period that were identified and underwritten prior to a property's acquisition.
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The following table presents a summary of the capital expenditures for these categories, along with a
reconciliation of the total for these categories to the capital expenditures reported in the accompanying consolidated
statements of cash flows for the periods presented (dollars in thousands):
Recurring capital expenditures
Value enhancing capital expenditures
Acquisitions capital expenditures
Total capital expenditures
Change in accrued capital spending
Year Ended December 31,
2018
2017
2019
$
8,708
$
6,001
$
4,420
8,305
21,433
(839)
3,563
9,356
18,920
94
3,495
2,755
8,953
15,203
(547)
Capital expenditures per statement of cash flows
$
20,594
$
19,014
$
14,656
Financing Activities
Cash provided by our financing activities was $204.3 million for the year ended December 31, 2019 compared
to $352.6 million for the year ended December 31, 2018. Our sources of financing cash flows for the year ended
December 31, 2019 primarily consisted of $572.0 million of borrowings under our credit facility, $100.0 million of
borrowings under our 2029 Term Loan Facility, $150.0 million of borrowings under our Senior Unsecured Notes,
$70.6 million of proceeds from the issuance of common shares and $43.6 million of proceeds from the issuance of
Series A Preferred Shares. Our primary uses of financing cash flows for the year ended December 31, 2019 were
for principal payments on existing debt of $561.6 million (which included $556.5 million of principal repayments
under the Revolver and $5.1 million of scheduled fixed rate mortgage principal payments), distributions to
noncontrolling interests of $76.0 million, distributions to common shareholders of $74.5 million and distributions to
preferred shareholders of $12.4 million. Our sources of financing cash flows for the year ended December 31, 2018
primarily consisted of $175.6 million of proceeds from the issuance of common shares, $672.5 million of
borrowings under our credit facility, $75.0 million of borrowings under our 2023 Term Loan Facility and $75.0
million of borrowings under our 2028 Term Loan Facility. Our primary uses of financing cash flows for the year
ended December 31, 2018 were for principal payments on existing debt of $507.2 million (which included $496.5
million of principal repayments under the Revolver, $5.8 million of fixed rate mortgage principal payoffs and $4.9
million of scheduled fixed rate mortgage principal payments), distributions to noncontrolling interests of $63.4
million, distributions to common shareholders of $62.2 million and distributions to preferred shareholders of $10.4
million.
Credit Facility and Term Loan Facilities
As of December 31, 2019, our credit facility provided for total borrowings of $1.275 billion, consisting of five
components: (i) a Revolver which provides for a total borrowing commitment up to $500.0 million, whereby we
may borrow, repay and re-borrow amounts under the Revolver, (ii) a $125.0 million Term Loan A, (iii) a $250.0
million Term Loan B, (iv) a $225.0 million Term Loan C and (v) a $175.0 million Term Loan D. The Revolver
matures in January 2024; provided that we may elect to extend the maturity to July 2024 by paying an extension fee
of 0.075% of the total borrowing commitment thereunder at the time of extension and meeting other customary
conditions with respect to compliance. The Term Loan A matures in January 2023, the Term Loan B matures in July
2024, the Term Loan C matures in January 2025 and the Term Loan D matures in July 2026. The Revolver, Term
Loan A, Term Loan B, Term Loan C and Term Loan D are not subject to any scheduled reduction or amortization
payments prior to maturity. As of December 31, 2019, we have an expansion option under the credit facility, which,
if exercised in full, would provide for a total credit facility of $1.750 billion.
As of December 31, 2019, $125.0 million was outstanding under the Term Loan A with an effective interest rate
of 3.74%, $250.0 million was outstanding under the Term Loan B with an effective interest rate of 2.91%, $225.0
million was outstanding under the Term Loan C with an effective interest rate of 2.80%, $175.0 million was
outstanding under the Term Loan D with an effective interest rate of 3.57%. As of December 31, 2019, we would
have had the capacity to borrow remaining Revolver commitments of $494.3 million while remaining in compliance
with the credit facility's financial covenants.
We have a 2023 Term Loan Facility that matures in June 2023 and is separate from the credit facility in an
aggregate amount of $175.0 million. As of December 31, 2019 the entire amount was outstanding under the 2023
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Term Loan Facility with an effective interest rate of 2.83%. We have an expansion option under the 2023 Term
Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount of $400.0
million.
We have a 2028 Term Loan Facility that matures in December 2028 and is separate from the credit facility and
2023 Term Loan Facility in an aggregate amount of $75.0 million. As of December 31, 2019 the entire amount was
outstanding under the 2028 Term Loan Facility with an effective interest rate of 4.62%. We have an expansion
option under the 2028 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an
aggregate amount up to $125.0 million.
During the year ended December 31, 2019, we entered into a credit agreement with a lender for the 2029 Term
Loan Facility that matures in April 2029 and is separate from the credit facility, 2023 Term Loan Facility and 2028
Term Loan Facility in an aggregate amount of $100.0 million. As of December 31, 2019 the entire amount was
outstanding under the 2029 Term Loan Facility with an effective interest rate of 4.27%.
For a summary of our financial covenants and additional detail regarding our credit facility, 2023 Term Loan
Facility, 2028 Term Loan Facility and 2029 Term Loan Facility, please see Note 8 to the consolidated financial
statements in Item 8.
2029 And 2031 Senior Unsecured Notes
As discussed in Note 8 to the consolidated financial statements in Item 8, on August 30, 2019, our 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 in a private placement to certain accredited investors.
Contractual Obligations
The following table summarizes information contained elsewhere in this Annual Report on Form 10-K
regarding payments due under contractual obligations and commitments on an undiscounted basis as of
December 31, 2019 (dollars in thousands):
2020
Year Ending December 31,
2023
2022
2021
2024
Thereafter
Total
Debt financings:
Principal(1)
Interest(2)
Real estate leasehold
interests
Office lease
Total
$ 40,647
$
7,603
$
4,205
$ 377,049
$ 271,964
$ 837,792
$1,539,260
54,498
53,571
53,381
44,468
36,474
89,512
331,904
1,419
1,444
1,459
1,464
1,470
36,728
43,984
286
$ 96,850
387
$ 63,005
381
$ 59,426
346
$ 423,327
353
$ 310,261
691
$ 964,723
2,444
$1,917,592
(1) Includes scheduled principal and maturity payments related to our debt financings.
(2) Interest is calculated until the maturity date (without regard to any extension that may be elected by the Company) based on the outstanding
principal balance and the effective interest rate as of December 31, 2019.
Equity Transactions
Issuance of Common Shares and Series A Preferred Shares
During the year ended December 31, 2019, we sold 2,375,000 of our common shares and 1,785,680 of our
Series A Preferred Shares through at the market offerings. The common shares were sold at an average offering
price of $30.06 per share, resulting in net proceeds to us of approximately $70.6 million after deducting
compensation payable by us to such agents and offering expenses. The Series A Preferred Shares were sold at an
average offering price of $24.84 per share, resulting in net proceeds to us of approximately $43.6 million after
deducting compensation payable by us to such agents and offering expenses.
During the year ended December 31, 2019, after receiving notices of redemption from certain OP unitholders,
we elected to issue 581,001 common shares to such holders in exchange for 581,001 OP units in satisfaction of the
operating partnership's redemption obligations.
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During the year ended December 31, 2019, the Company issued 37,770 common shares in exchange for $1.3
million of principal payment reimbursements received during the year ended December 31, 2019 related to
mortgages assumed in connection with the acquisition of self storage properties from PROs during the year ended
December 31, 2014.
Issuance of OP Equity
In connection with the 69 properties acquired during the year ended December 31, 2019, $51.8 million of OP
equity was issued (consisting of 350,319 OP units, 340,702 Series A-1 preferred units and 1,178,400 subordinated
performance units).
During the year ended December 31, 2019, the Company issued 863,148 OP units upon conversion of 913,680
subordinated performance units and 13,475 DownREIT OP units upon conversion of 15,377 DownREIT
subordinated performance units as further described under "Subordinated Performance Units and DownREIT
Subordinated Performance Units" in Note 3 to the consolidated financial statements in Item 8.
Dividends and Distributions
During the year ended December 31, 2019, the Company paid $74.5 million of distributions to common
shareholders, $12.4 million of distributions to preferred shareholders and distributed $76.0 million to noncontrolling
interests.
On February 20, 2020, our board of trustees declared a cash dividend and distribution, respectively, of $0.33 per
common share and OP unit to shareholders and OP unitholders of record as of March 13, 2020. On February 20,
2020, our board of trustees also declared cash distributions of $0.375 per Series A Preferred Share and Series A-1
preferred unit to shareholders and unitholders of record as of March 13, 2020. In addition, we expect to declare a
cash distribution in the first quarter of 2020 to our subordinated performance unitholders of record as of March 13,
2020. Such dividends and distributions are expected to be paid on March 31, 2020.
Cash Distributions from our Operating Partnership
Under the LP Agreement of our operating partnership, to the extent that we, as the general partner of our
operating partnership, determine to make distributions to the partners of our operating partnership out of the
operating cash flow or capital transaction proceeds generated by a real property portfolio managed by one of our
PROs, the holders of the series of subordinated performance units that relate to such portfolio are entitled to share in
such distributions. Under the LP Agreement of our operating partnership, operating cash flow with respect to a
portfolio of properties managed by one of our PROs is generally an amount determined by us, as general partner of
our operating partnership, equal to the excess of property revenues over property related expenses from that
portfolio. In general, property revenue from the portfolio includes:
(i)
(ii)
(iii)
(iv)
all receipts, including rents and other operating revenues;
any incentive, financing, break-up and other fees paid to us by third parties;
amounts released from previously set aside reserves; and
any other amounts received by us, which we allocate to the particular portfolio of properties.
In general, property-related expenses include all direct expenses related to the operation of the properties in that
portfolio, including real property taxes, insurance, property-level general and administrative expenses, employee
costs, utilities, property marketing expense, property maintenance and property reserves and other expenses incurred
at the property level. In addition, other expenses incurred by our operating partnership will also be allocated by us,
as general partner, to the property portfolio and will be included in the property-related expenses of that portfolio.
Examples of such other expenses include:
(i)
(ii)
(iii)
(iv)
corporate-level general and administrative expenses;
out-of-pocket costs, expenses and fees of our operating partnership, whether or not capitalized;
the costs and expenses of organizing and operating our operating partnership;
amounts paid or due in respect of any loan or other indebtedness of our operating partnership during such
period;
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(v)
(vi)
extraordinary expenses of our operating partnership not previously or otherwise deducted under item (ii)
above;
any third-party costs and expenses associated with identifying, analyzing, and presenting a proposed
property to us and/or our operating partnership; and
(vii)
reserves to meet anticipated operating expenditures, debt service or other liabilities, as determined by us.
To the extent that we, as the general partner of our operating partnership, determine to make distributions to the
partners of our operating partnership out of the operating cash flow of a real property portfolio managed by one of
our PROs, operating cash flow from a property portfolio is required to be allocated to OP unitholders and to the
holders of series of subordinated performance units that relate to such property portfolio as follows:
First, an amount is allocated to OP unitholders in order to provide OP unitholders (together with any prior
allocations of capital transaction proceeds) with a cumulative preferred allocation on the unreturned capital
contributions attributed to the OP units in respect of such property portfolio. The preferred allocation for all of our
existing portfolios is 6%. As of December 31, 2019, our operating partnership had an aggregate of $1,632.2 million
of unreturned capital contributions with respect to common shareholders and OP unitholders, with respect to the
various property portfolios.
Second, an amount is allocated to the holders of the series of subordinated performance units relating to such
property portfolio in order to provide such holders with an allocation (together with prior distributions of capital
transaction proceeds) on their unreturned capital contributions. Although the subordinated allocation for the
subordinated performance units is non-cumulative from period to period, if the operating cash flow from a property
portfolio related to a series of subordinated performance units is sufficient, in the judgment of the general partner
(with the approval of a majority of our independent trustees), to fund distributions to the holders of such series of
subordinated performance units, but we, as the general partner of our operating partnership, decline to make
distributions to such holders, the amount available but not paid as distributions will be added to the subordinated
allocation corresponding to such series of subordinated performance units. The subordinated allocation for the
outstanding subordinated performance units is 6%. As of December 31, 2019, an aggregate of $152.8 million of
unreturned capital contributions has been allocated to the various series of subordinated performance units.
Thereafter, any additional operating cash flow is allocated to OP unitholders and the applicable series of
subordinated performance units equally.
Following the allocation described above, we as the general partner of our operating partnership, will generally
cause our operating partnership to distribute the amounts allocated to the relevant series of subordinated
performance units to the holders of such series of subordinated performance units. We, as the general partner, may
cause our operating partnership to distribute the amounts allocated to OP unitholders or may cause our operating
partnership to retain such amounts to be used by our operating partnership for any purpose. Any operating cash flow
that is attributable to amounts retained by our operating partnership pursuant to the preceding sentence will generally
be available to be allocated as an additional capital contribution to the various property portfolios.
The foregoing description of the allocation of operating cash flow between the OP unitholders and subordinated
performance unitholders is used for purposes of determining distributions to holders of subordinated performance
units but does not necessarily represent the operating cash flow that will be distributed to OP unitholders (or paid as
dividends to holders of our common shares). Any distribution of operating cash flow allocated to the OP unitholders
will be made at our discretion (and paid as dividends to holders of our common shares at the discretion of our board
of trustees).
Under the LP Agreement of our operating partnership, capital transactions are transactions that are outside the
ordinary course of our operating partnership's business, involve the sale, exchange, other disposition, or refinancing
of any property, and are designated as capital transactions by us, as the general partner. To the extent the general
partner determines to distribute capital transaction proceeds, the proceeds from capital transactions involving a
particular property portfolio are required to be allocated to OP unitholders and to the series of subordinated
performance units that relate to such property portfolio as follows:
First, an amount determined by us, as the general partner, of such capital transaction proceeds is allocated to OP
unitholders in order to provide OP unitholders (together with any prior allocations of operating cash flow) with a
cumulative preferred allocation on the unreturned capital contributions attributed to the OP unitholders in respect of
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such property portfolio that relate to such capital transaction plus an additional amount equal to such unreturned
capital contributions.
Second, an amount determined by us, as the general partner, is allocated to the holders of the series of
subordinated performance units relating to such property portfolio in order to provide such holders with a non-
cumulative subordinated allocation on the unreturned capital contributions made by such holders in respect of such
property portfolio that relate to such capital transaction plus an additional amount equal to such unreturned capital
contributions.
The preferred allocation and subordinated allocation with respect to capital transaction proceeds for each
portfolio is equal to the preferred allocation and subordinated allocation for distributions of operating cash flow with
respect to that portfolio.
Thereafter, any additional capital transaction proceeds are allocated to OP unitholders and the applicable series
of subordinated performance units equally.
Following the allocation described above, we, as the general partner of our operating partnership, will generally
cause our operating partnership to distribute the amounts allocated to the relevant series of subordinated
performance units to the holders of such series of subordinated performance units. We, as general partner of our
operating partnership, may cause our operating partnership to distribute the amounts allocated to the OP unitholders
or may cause our operating partnership to retain such amounts to be used by our operating partnership for any
purpose. Any capital transaction proceeds that are attributable to amounts retained by our operating partnership
pursuant to the preceding sentence will generally be available to be allocated as an additional capital contribution to
the various property portfolios.
The foregoing allocation of capital
transaction proceeds between the OP unitholders and subordinated
performance unitholders is used for purposes of determining distributions to holders of subordinated performance
units but does not necessarily represent the capital transaction proceeds that will be distributed to OP unitholders (or
paid as dividends to holders of our common shares). Any distribution of capital transaction proceeds allocated to the
OP unitholders will be made at our discretion (and paid as dividends to holders of our common shares at the
discretion of our board of trustees).
Our OP units are redeemable for cash or, at our option exchangeable on a one-for-one basis into common shares
after an agreed period of time and certain other conditions. Our subordinated performance units are only convertible
into OP units following a two year lock-out period and then (i) at the holder's election only upon the achievement of
certain performance thresholds relating to the properties to which such subordinated performance units relate or
(ii) at our election upon a retirement event of a PRO that holds such subordinated performance units or upon certain
qualifying terminations.
Notwithstanding the two-year lock out period on conversions of subordinated performance units into OP units,
if such subordinated performance units were convertible into OP units as of December 31, 2019, each subordinated
performance unit would on average hypothetically convert into 1.48 OP units, or into an aggregate of approximately
22.8 million OP units. These amounts are based on historical financial information for the trailing twelve months
ended December 31, 2019. The hypothetical conversion is 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. We
anticipate that as our CAD grows over time, the conversion ratio will also grow, including to levels that may exceed
this amount. The actual number of OP units into which such subordinated performance units will become
convertible may vary significantly and will depend upon the applicable conversion penalty and the actual CAD to
the OP units and the actual CAD to the converted subordinated performance units in the one-year period ending
prior to conversion. We have also granted registration rights to those persons who will be eligible to receive
common shares issuable upon exchange of OP units issued in our formation transactions and certain contribution
transactions.
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Allocation of Capital Contributions
We, as the general partner of our operating partnership, in our discretion, have the right to increase or decrease,
as appropriate, the amount of capital contributions allocated to our operating partnership in general and to each
series of subordinated performance units to reflect capital expenditures made by our operating partnership in respect
of each portfolio, the sale or refinancing of all or a portion of the properties comprising the portfolio, the distribution
of capital transaction proceeds by our operating partnership, the retention by our operating partnership of cash for
working capital purposes and other events impacting the amount of capital contributions allocated to the holders. In
addition, to avoid conflicts of interests, any decision by us to increase or decrease allocations of capital contributions
must also be approved by a majority of our independent trustees.
Off-Balance Sheet Arrangements
Except as disclosed in the notes to our financial statements, as of December 31, 2019, we did not have any
relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured
finance or special purposes entities, which typically are established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes. Further, except as disclosed in the notes to our
financial statements, as of December 31, 2019, we have not guaranteed any obligations of unconsolidated entities
nor made any commitments to provide funding to any such entities that creates any material exposure to any
financing, liquidity, market or credit risk.
Segment
We manage our business as one reportable segment consisting of investments in self storage properties located
in the United States. Although we operate in several markets, these operations have been aggregated into one
reportable segment based on the similar economic characteristics among all markets.
Seasonality
The self storage business is subject to minor seasonal fluctuations. A greater portion of revenues and profits are
realized from May through September. Historically, our highest level of occupancy has typically been in July, while
our lowest level of occupancy has typically been in February. Results for any quarter may not be indicative of the
results that may be achieved for the full fiscal year.
Inflation
Inflation in the United States has been relatively low in recent years and did not have a material impact on our
results of operations for the years ended December 31, 2019, 2018 and 2017. Although the impact of inflation has
been relatively insignificant in recent years, it remains a factor in the U.S. economy and may increase the cost of
acquiring or replacing self storage properties and related improvements, as well as real estate property taxes,
employee salaries, wages and benefits, utilities, and other expenses. Because our tenant leases are month-to-month,
we may be able to rapidly adjust our rental rates to minimize the adverse impact of any inflation which could
mitigate our exposure to increases in costs and expenses resulting from inflation.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk refers to the risk of loss from adverse changes in market prices and interest rates. Our future
income, cash flows, and fair values of financial instruments are dependent upon prevailing market interest rates. The
primary market risk to which we believe we are exposed is interest rate risk. Interest rate risk is highly sensitive to
many factors, including governmental monetary and tax policies, domestic and international economic and political
considerations, and other factors beyond our control. We use interest rate swaps to moderate our exposure to interest
rate risk by effectively converting the interest on variable rate debt to a fixed rate. We make limited use of other
derivative financial instruments and we do not use them for trading or other speculative purposes.
As of December 31, 2019, all our debt subject to variable interest rates was fixed pursuant to interest rate swap
agreements.
When we have variable interest rate debt, we determine the interest rate risk amounts by considering the impact
of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in
overall economic activity that could occur. Further, in the event of a change, we may take actions to further mitigate
our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their
possible effects, these analyses would assume no changes in our financial structure.
55
Item 8. Financial Statements and Supplementary Data
The independent registered public accounting firm's reports, consolidated financial statements and schedule
listed in the accompanying index are filed as part of this report and incorporated herein by this reference. See "Index
to Financial Statements" on page F-1 of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
A review and evaluation was performed by our management, including our Chief Executive Officer (the
"CEO") and Chief Financial Officer (the "CFO"), of the effectiveness of the design and operation of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of
the end of the period covered by this Annual Report on Form 10-K. Based on that review and evaluation, the CEO
and CFO have concluded that our current disclosure controls and procedures, as designed and implemented, were
effective.
Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material
information otherwise required to be set forth in our periodic reports.
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under
the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal
financial officers and effected by our board of trustees, audit committee, management and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with U.S. GAAP and includes those policies and procedures that:
•
•
•
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in
accordance with authorizations of our management and trustees; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial statements.
Because of its inherent
internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls
may become inadequate because of changes in conditions or that the degree of compliance with the policies or
procedures may deteriorate.
limitations,
Our management assessed the effectiveness of our internal control over financial reporting as of December 31,
2019. In making this assessment, our management used criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework).
Based on this assessment, our management believes that, as of December 31, 2019, our internal control over
financial reporting was effective based on those criteria.
The Company’s independent registered public accounting firm has issued an attestation report on the
Company’s internal control over financial reporting.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter
ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
56
Item 9B. Other Information
None.
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information regarding our trustees, executive officers and certain other matters required by Item 401 of
Regulation S-K is incorporated herein by reference to our definitive proxy statement relating to our annual meeting
of shareholders (the "Proxy Statement"), to be filed with the SEC within 120 days after December 31, 2019.
The information regarding compliance with Section 16(a) of the Exchange Act required by Item 405 of
Regulation S-K is incorporated herein by reference to the Proxy Statement to be filed with the SEC within 120 days
after December 31, 2019.
The information regarding our Code of Business Conduct and Ethics required by Item 406 of Regulation S-K is
to be filed with the SEC within 120 days after
incorporated herein by reference to the Proxy Statement
December 31, 2019.
The information regarding certain matters pertaining to our corporate governance required by Item 407(c)(3),
(d)(4) and (d)(5) of Regulation S-K is incorporated by reference to the Proxy Statement to be filed with the SEC
within 120 days after December 31, 2019.
Item 11. Executive Compensation
The information regarding executive compensation and other compensation related matters required by Items
402 and 407(e)(4) and (e)(5) of Regulation S-K is incorporated herein by reference to the Proxy Statement to be
filed with the SEC within 120 days after December 31, 2019.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The tables on equity compensation plan information and beneficial ownership of the Company required by
Items 201(d) and 403 of Regulation S-K are incorporated herein by reference to the Proxy Statement to be filed with
the SEC within 120 days after December 31, 2019.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information regarding transactions with related persons, promoters and certain control persons and trustee
independence required by Items 404 and 407(a) of Regulation S-K is incorporated herein by reference to the Proxy
Statement to be filed with the SEC within 120 days after December 31, 2019.
Item 14. Principal Accounting Fees and Services
The information concerning principal accounting fees and services and the Audit Committee's pre-approval
policies and procedures required by Item 14 is incorporated herein by reference to the Proxy Statement to be filed
with the SEC within 120 days after December 31, 2019.
Item 15. Exhibits, Financial Statement Schedules
PART IV
(a)(1) The financial statements listed in the Index to Financial Statements on Page F-1 of this report are
filed as part of this report and incorporated herein by reference.
(a)(2) The financial statement schedule listed in the Index to Financial Statements on Page F-1 of this
report is filed as part of this report and incorporated herein by reference.
(a)(3) The Exhibit Index is incorporated herein by reference.
Exhibit
Number
INDEX TO EXHIBITS
Exhibit Description
57
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3.1 Articles of Amendment and Restatement of National Storage Affiliates Trust (Exhibit 3.1 to the
Quarterly Report on Form 10-Q, filed with the SEC on June 5, 2015, is incorporated herein by this
reference)
3.2 Second Amended and Restated Bylaws of National Storage Affiliates Trust (Exhibit 3.1 to the Current
Report on Form 8-K, filed with the SEC on April 3, 2018, is incorporated herein by this reference)
3.3 Articles Supplementary designating the Series A Preferred Shares of National Storage Affiliates Trust
(Exhibit 3.3 to the Form 8-A filed with the SEC on October 10, 2017, is incorporated herein by this
reference)
3.4 Articles Supplementary designating the Series A Preferred Shares of National Storage Affiliates Trust
(Exhibit 3.4 to the Form S-3ASR, filed with the SEC on March 14, 2018, is incorporated herein by this
reference)
3.5 Articles Supplementary designating the Series A Preferred Shares of National Storage Affiliates Trust
(Exhibit 3.5 to the Quarterly Report on Form 10-Q, filed with the SEC on May 3, 2019, is incorporated
herein by this reference)
4.1 Specimen Common Share Certificate of National Storage Affiliates Trust (Exhibit 4.1 to the
Registration Statement on Form S-11/A filed with the SEC on April 20, 2015, is incorporated herein
by this reference)
4.2 Form of Specimen Certificate of Series A Preferred Shares of National Storage Affiliates Trust
(Exhibit 4.1 to the Registration Statement on Form 8-A filed with the SEC on October 10, 2017, is
incorporated herein by this reference)
4.3* Description of Common Shares of Beneficial Interest and 6.000% Series A Cumulative Redeemable
Preferred Shares of Beneficial Interest
10.1 Third Amended and Restated Agreement of Limited Partnership of NSA OP, LP (Exhibit 3.3 to the
Quarterly Report on Form 10-Q, filed with the SEC on June 5, 2015, is incorporated herein by this
reference)
10.2 Amended and Restated Partnership Unit Designation of Series GN Class B OP Units of NSA OP, LP
(Exhibit 3.4 to the Quarterly Report on Form 10-Q, filed with the SEC on June 5, 2015, is incorporated
herein by this reference)
10.3 Third Amended and Restated Partnership Unit Designation of Series NW Class B OP Units of NSA
OP, LP (Exhibit 3.5 to the Quarterly Report on Form 10-Q, filed with the SEC on June 5, 2015, is
incorporated herein by this reference)
10.4 Third Amended and Restated Partnership Unit Designation of Series OV Class B OP Units of NSA
OP, LP (Exhibit 3.6 to the Quarterly Report on Form 10-Q, filed with the SEC on June 5, 2015, is
incorporated herein by this reference)
10.5 Second Amended and Restated Partnership Unit Designation of Series SC Class B OP Units of NSA
OP, LP (Exhibit 3.7 to the Quarterly Report on Form 10-Q, filed with the SEC on June 5, 2015, is
incorporated herein by this reference)
10.6 Partnership Unit Designation of Series SS Class B OP Units of NSA OP, LP (Exhibit 3.8 to the
Quarterly Report on Form 10-Q, filed with the SEC on June 5, 2015, is incorporated herein by this
reference)
10.7 Partnership Unit Designation of Series HA Class B OP Units of NSA OP, LP (Exhibit 10.1 to the
Quarterly Report on Form 10-Q, filed with SEC on August 9, 2016, is incorporated herein by this
reference)
10.8 First Amendment to Partnership Unit Designation of Series HA Class B OP Units of NSA OP, LP
(Exhibit 10.8 to the Annual Report on Form 10-K, filed with SEC on February 28, 2017, is
incorporated herein by this reference)
10.9 Partnership Unit Designation of Series PM Class B OP Units of NSA OP, LP (Exhibit 10.2 to the
Quarterly Report on Form 10-Q, filed with the SEC on May 4, 2017, is incorporated herein by this
reference)
10.10 Partnership Unit Designation of Series MI Class B OP Units of NSA OP, LP (Exhibit 10.1 to the
Quarterly Report on Form 10-Q, filed with the SEC on November 7, 2017, is incorporated herein by
this reference)
10.11 Partnership Unit Designation of Series A-1 Preferred Units of NSA OP, LP dated as of January 5,
2018 (Exhibit 10.12 to the Annual Report on Form 10-K, filed with the SEC on February 27, 2018, is
incorporated herein by this reference)
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10.12 Partnership Unit Designation of Series SO Class B OP Units of NSA OP, LP (Exhibit 10.1 to the
Quarterly Report on Form 10-Q, filed with the SEC on May 3, 2019, is incorporated herein by this
reference)
10.13 Partnership Unit Designation of Series MO Class B OP Units of NSA OP, LP (Exhibit 10.2 to the
Quarterly Report on Form 10-Q, filed with the SEC on May 3, 2019, is incorporated herein by this
reference)
10.14 Sixty-First Amendment to the Third Amended and Restated Agreement of Limited Partnership of
NSA OP, LP (Exhibit 10.1 to the Form 8-K filed with the SEC on October 11, 2017, is incorporated
herein by this reference)
10.15 Form of Second Amended and Restated DownREIT Partnership Agreement (including a schedule of
existing DownREIT limited partnership agreements and limited liability company agreements)
(Exhibit 10.7 to the Quarterly Report on Form 10-Q, filed with the SEC on November 10, 2015, is
incorporated herein by this reference)
10.16 Second Amended and Restated Credit Agreement dated as of July 29, 2019 by and among NSA OP,
LP, as Borrower, the lenders from time to time party hereto, and KeyBank National Association, as
Administrative Agent, and joined in for certain purposes by certain Subsidiaries of the Borrower and
National Storage Affiliates Trust, with Keybanc Capital Markets Inc., and PNC Capital Markets LLC,
as Co-Bookrunners and Co-Lead Arrangers, PNC Bank, National Association, as Syndication Agent,
U.S. Bank National Association and BMO Capital Markets Corp. as Co-Lead Arrangers and Co-
Documentation Agents, Wells Fargo Securities, LLC as Co-Lead Arranger, Wells Fargo Bank,
National Association, as Co-Documentation Agent, and CitiBank, N.A., as Co-Lead Arranger and Co-
Documentation Agent for the Revolving Credit Facility (Exhibit 10.1 to the Quarterly Report on Form
10-Q, filed with the SEC on November 1, 2019, is incorporated herein by this reference)
10.17 National Storage Affiliates Trust Equity Incentive Plan (Exhibit 10.1 to the Quarterly Report on Form
10-Q, filed with the SEC on June 5, 2015, is incorporated herein by this reference)
10.18 NSA OP, LP, 2013 Long-Term Incentive Plan (Exhibit 10.2 to the Registration Statement on Form
S-11/A, filed with SEC on April 1, 2015, is incorporated herein by this reference).
10.19 Amended and Restated Registration Rights Agreement, by and among National Storage Affiliates
Trust and the parties listed on Schedule I thereto (Exhibit 10.2 to the Quarterly Report on Form 10-Q,
filed with the SEC on June 5, 2015, is incorporated herein by reference)
10.20 Registration Rights Agreement, by and among National Storage Affiliates Trust and the parties listed
on Schedule 1 thereto (Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the SEC on May
4, 2018, is incorporated by this reference)
10.21 Employment Agreement, dated April 28, 2015, by and between National Storage Affiliates Trust and
Arlen D. Nordhagen (Exhibit 10.3 to the Quarterly Report on Form 10-Q, filed with the SEC on June
5, 2015, is incorporated herein by this reference)
10.22 Employment Agreement, dated April 28, 2015, by and between National Storage Affiliates Trust and
Tamara D. Fischer (Exhibit 10.4 to the Quarterly Report on Form 10-Q, filed with the SEC on June 5,
2015, is incorporated herein by this reference)
10.23 Employment Agreement, dated April 28, 2015, by and between National Storage Affiliates Trust and
Steven B. Treadwell (Exhibit 10.5 to the Quarterly Report on Form 10-Q, filed with the SEC on June
5, 2015, is incorporated herein by this reference)
10.24 Employment Agreement, dated January 1, 2017, by and between National Storage Affiliates Trust and
Brandon Togashi (Exhibit 10.19 to the Annual Report on Form 10-K, filed with SEC on February 28,
2017, is incorporated by this reference)
10.25 First Amendment to Employment Agreement, dated March 29, 2018, by and between National Storage
Affiliates Trust and Arlen D. Nordhagen (Exhibit 10.3 to the Quarterly Report on Form 10-Q, filed
with the SEC on May 4, 2018, is incorporated herein by this reference)
10.26 First Amendment to Employment Agreement, dated March 29, 2018, by and between National Storage
Affiliates Trust and Tamara D. Fischer (Exhibit 10.4 to the Quarterly Report on Form 10-Q, filed with
the SEC on May 4, 2018, is incorporated herein by this reference)
10.27 First Amendment to Employment Agreement, dated March 29, 2018, by and between National Storage
Affiliates Trust and Steven B. Treadwell (Exhibit 10.5 to the Quarterly Report on Form 10-Q, filed
with the SEC on May 4, 2018, is incorporated herein by this reference)
10.28 First Amendment to Employment Agreement, dated March 29, 2018, by and between National Storage
Affiliates Trust and Brandon Togashi (Exhibit 10.6 to the Quarterly Report on Form 10-Q, filed with
the SEC on May 4, 2018, is incorporated herein by this reference)
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10.29 Form of Amended and Restated Restricted Share Unit Award Agreement (Exhibit 10.17 to the Annual
Report on Form 10-K, filed with the SEC on March 10, 2016, is incorporated herein by this reference)
10.30 Form of Amended and Restated Restricted Share Award Agreement (Exhibit 10.18 to the Annual
Report on Form 10-K, filed with the SEC on March 10, 2016, is incorporated herein by this reference)
10.31 Form of LTIP Unit Award Agreement to Trustees under the NSA OP, LP, 2013 Long-Term Incentive
Plan (Exhibit 10.5 to the Registration Statement on Form S-11/A, filed with the SEC on April 1, 2015,
is incorporated herein by this reference)
10.32 Form of LTIP Unit Award Agreement for Executive Officers (Exhibit 10.28 to the Annual Report on
Form 10-K, filed with the SEC on February 27, 2018, is incorporated herein by this reference)
10.33 Form of Contribution Agreement among each contributor named therein, NSA OP, LP and any
indirectly wholly owned subsidiary of NSA OP, LP named therein (Exhibit 10.13 to the Registration
Statement on Form S-11/A, filed with the SEC on April 1, 2015, is incorporated herein by this
reference)
10.34 Form of Purchase and Sale Agreement among each seller named therein, National Storage Affiliates
Trust and NSA OP, LP (Exhibit 10.14 to the Registration Statement on Form S-11/A, filed with the
SEC on April 1, 2015, is incorporated herein by this reference)
10.35 Form of Indemnification Agreement (Exhibit 10.7 to the Registration Statement on Form S-11/A, filed
with the SEC on April 1, 2015, is incorporated herein by this reference)
10.36 Facilities Portfolio Management Agreement, dated April 28, 2015, by and among (i) NSA OP, LP, (ii)
the property owners listed therein, (iii) Guardian Storage Centers, LLC, a California limited liability
company d/b/a StorAmerica Management, and (iv) John Minar and David Lamb, each an individual
(Exhibit 10.6 to the Quarterly Report on Form 10-Q, filed with the SEC on June 5, 2015, is
incorporated herein by this reference)
10.37 Facilities Portfolio Management Agreement, dated April 28, 2015, by and among (i) NSA OP, LP, (ii)
the property owners listed therein, (iii) Kevin Howard Real Estate, Inc., an Oregon corporation, and
(iv) Kevin Howard, an individual (Exhibit 10.7 to the Quarterly Report on Form 10-Q, filed with the
SEC on June 5, 2015, is incorporated herein by this reference)
10.38 Facilities Portfolio Management Agreement, dated April 28, 2015, by and among (i) NSA OP, LP, (ii)
the property owners listed therein, (iv) Optivest Properties, LLC, a California limited liability
company, and (iv) Warren Allen, an individual (Exhibit 10.8 to the Quarterly Report on Form 10-Q,
filed with the SEC on June 5, 2015, is incorporated herein by this reference)
10.39 Facilities Portfolio Management Agreement, dated April 28, 2015, by and among (i) NSA OP, LP, (ii)
the property owners listed therein, (iii) SecurCare Self Storage, Inc. a Colorado corporation, and (iv)
David Cramer, Justin Hlibichuk and Arlen Nordhagen, each an individual (Exhibit 10.9 to the
Quarterly Report on Form 10-Q, filed with the SEC on June 5, 2015, is incorporated herein by this
reference)
10.40 Facilities Portfolio Management Agreement, dated April 28, 2015, by and among (i) NSA OP, LP, (ii)
the property owners listed therein (iii) Arizona Mini Storage Management Company, an Arizona
corporation, and (iv) William F. Bohannan, Jr. and Raymond McRae, each an individual (Exhibit
10.10 to the Quarterly Report on Form 10-Q, filed with the SEC on June 5, 2015, is incorporated
herein by this reference)
10.41 Facilities Portfolio Management Agreement, dated April 1, 2016, by and among (i) NSA OP, LP, (ii)
the property owners listed therein (iii) the property owners listed as "Deferred Management Property
Owners" therein (iv) Hide-Away Storage Services, Inc., a Florida Corporation and, (v) Stephen A.
Wilson, Paul Feikema, and Meisha Wilson, each an individual (Exhibit 10.2 to the Quarterly Report
on Form 10-Q, filed with the SEC on August 9, 2016, is incorporated herein by this reference)
10.42 Facilities Portfolio Management Agreement, dated February 24, 2017, by and among (i) NSA OP, LP,
(ii) the property owners listed therein (iii) Shader Brothers Corporation, and (iv) Marc M. Smith and
Laurie Shader Smith, each an individual (Exhibit 10.3 to the Quarterly Report on Form 10-Q, filed
with the SEC on May 4, 2017, is incorporated herein by this reference)
10.43 Facilities Portfolio Management Agreement, dated July 1, 2017, by and among (i) NSA OP, LP, (ii)
the property owners listed therein, (iii) Move It Self Storage, LP, a Texas limited partnership, and (iv)
Austin Starke Taylor III, an individual (Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with
the SEC on November 7, 2017, is incorporated herein by this reference)
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10.44 Facilities Portfolio Management Agreement, dated January 1, 2019, by and among (i) NSA OP, LP,
(ii) the property owners listed as "Owners" therein, (iii) the property owners listed as "Deferred
Management Property Owners" therein, (iv) Southern Storage Management Systems, Inc., a Florida
Corporation, and (v) Robert A. McIntosh and Peter V. Cowie, each an individual (Exhibit 10.3 to the
Quarterly Report on Form 10-Q, filed with the SEC on May 3, 2019, is incorporated herein by this
reference)
10.45 Facilities Portfolio Management Agreement, dated March 1, 2019, by and among (i) NSA OP, LP, (ii)
the property owners listed as "Owners" therein, (iii) the property owners listed as "Deferred
Management Property Owners" therein, (iv) Investment Real Estate Management, LLC, a
Pennsylvania Limited Liability Company, and (v) John H. Gilliland, an individual (Exhibit 10.4 to the
Quarterly Report on Form 10-Q, filed with the SEC on May 3, 2019, is incorporated herein by this
reference)
10.46 Sales Agreement dated February 27, 2019, by and among (i) National Storage Affiliates Trust, (ii)
NSA OP, LP and (iii) the Agents listed therein (Exhibit 1.1 to the Form 8-K filed with the SEC on
March 1, 2019, is incorporated herein by this reference)
21.1* List of subsidiaries of National Storage Affiliates Trust
23.1* Consent of KPMG LLP for National Storage Affiliates Trust
24.1* Power of Attorney (included on signature page)
31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities
Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
31.2* Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities
Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
32.1* Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS* XBRL Instance Document - the instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document.
101.SCH* Inline XBRL Taxonomy Extension Schema
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase
104* Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
* Filed herewith.
Item 16. Form 10-K Summary
None.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SIGNATURES
National Storage Affiliates Trust
By:
/s/ TAMARA D. FISCHER
Tamara D. Fischer
president and chief executive officer
(principal executive officer)
Date: February 26, 2020
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Tamara D. Fischer and Brandon S. Togashi, and each of them, with full power to act without the other,
such person's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him
or her and in his or her name, place and stead, in any and all capacities, to sign this Form 10-K and any and all
amendments thereto, and to file the same, with exhibits and schedules thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done
in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned and in the capacities and on the dates indicated.
Signature
National Storage Affiliates Trust
Title
Date
/s/ TAMARA D. FISCHER
trustee, president and chief executive officer February 26, 2020
Tamara D. Fischer
(principal executive officer)
/s/ BRANDON S. TOGASHI
chief financial officer
February 26, 2020
Brandon S. Togashi
(principal accounting and financial officer)
/s/ ARLEN D. NORDHAGEN
executive chairman of the board of trustees
February 26, 2020
Arlen D. Nordhagen
/s/ GEORGE L. CHAPMAN
trustee
February 26, 2020
George L. Chapman
/s/ PAUL W. HYLBERT, JR.
trustee
February 26, 2020
Paul W. Hylbert, Jr.
/s/ CHAD L. MEISINGER
Chad L. Meisinger
/s/ STEVEN G. OSGOOD
Steven G. Osgood
trustee
trustee
February 26, 2020
February 26, 2020
/s/ DOMINIC M. PALAZZO
trustee
February 26, 2020
Dominic M. Palazzo
/s/ REBECCA L. STEINFORT
trustee
February 26, 2020
Rebecca L. Steinfort
/s/ MARK VAN MOURICK
trustee
February 26, 2020
Mark Van Mourick
/s/ J. TIMOTHY WARREN
trustee
February 26, 2020
J. Timothy Warren
63
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NATIONAL STORAGE AFFILIATES TRUST
INDEX TO FINANCIAL STATEMENTS
Financial Statements:
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2019 and 2018
Consolidated Statements of Operations for the Years Ended December 31, 2019, 2018 and 2017
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2019,
2018 and 2017
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2019, 2018 and
2017
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018 and 2017
Notes to the Consolidated Financial Statements
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation
Page
F-1
F-5
F-6
F-7
F-8
F-11
F-13
F-42
All other schedules are omitted because they are not applicable or the required information is shown in the
financial statements or notes thereto.
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees
National Storage Affiliates Trust:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of National Storage Affiliates Trust and subsidiaries
(the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive
income (loss), changes in equity, and cash flows for each of the years in the three-year period ended December 31,
2019, and the related notes, and the financial statement schedule, Schedule III – Real Estate and Accumulated
Depreciation (collectively,
the consolidated financial
the consolidated financial statements). In our opinion,
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019
and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended
December 31, 2019, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated February 26, 2020 expressed an unqualified
opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks
of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1)
relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgment. The communication of a critical audit matter does not alter
in any way our opinion on the consolidated financial statements,
taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Evaluation of purchase price allocation for self storage property acquisitions
As discussed in Notes 2 and 6 to the consolidated financial statements, during 2019, the Company acquired
$447.8 million of self storage properties that were recorded as asset acquisitions. The purchase price in an
asset acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on
their relative fair value. Assets acquired and liabilities assumed primarily comprise land, buildings and
related improvements, customer in-place leases, furniture and equipment, and assumed mortgage loans.
We identified the evaluation of purchase price allocation of self storage property acquisitions as a critical
audit matter. This is due to the subjective and complex auditor judgment that was required to evaluate the
Company’s estimated fair value of land, buildings, and improvements. In particular, there was a high
F-2
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degree of auditor judgment required to evaluate the comparable sales information and costs that would be
incurred to replace building and improvement assets.
The primary procedures we performed to address this critical audit matter included the following. We
tested certain internal controls over the Company’s process to estimate fair value, including developing
estimated fair values of land, buildings, and improvements. We compared and evaluated estimated fair
value of land, buildings, and improvements against purchase price allocations for similar land, buildings,
and improvements acquired by the Company. With the assistance of valuation professionals with
specialized skills and knowledge, we evaluated the estimated fair value of land by comparing the
Company’s estimates to independently developed ranges using publicly available market data of recent land
sales. We evaluated the Company’s estimated costs of replacing buildings and improvements. We
compared the estimated costs to market data, including appraisal guides used to estimate the depreciated
value of similar self storage structures.
/s/ KPMG LLP
We have served as the Company’s auditor since 2013.
Denver, Colorado
February 26, 2020
F-3
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees
National Storage Affiliates Trust:
Opinion on Internal Control Over Financial Reporting
We have audited National Storage Affiliates Trust and subsidiaries’ (the Company) internal control over financial
reporting as of December 31, 2019 based on criteria established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related
consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for each of
the years in the three-year period ended December 31, 2019, and the related notes, and the financial statement
schedule, Schedule III - Real Estate and Accumulated Depreciation (collectively,
the consolidated financial
statements), and our report dated February 26, 2020 expressed an unqualified opinion on those consolidated
financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit
also included performing such other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Denver, Colorado
February 26, 2020
/s/ KPMG LLP
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NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
ASSETS
Real estate
Self storage properties
Less accumulated depreciation
Self storage properties, net
Cash and cash equivalents
Restricted cash
Debt issuance costs, net
Investment in unconsolidated real estate ventures
Other assets, net
Operating lease right-of-use assets
Total assets
LIABILITIES AND EQUITY
Liabilities
Debt financing
Accounts payable and accrued liabilities
Operating lease liabilities
Deferred revenue
Total liabilities
Commitments and contingencies (Note 12)
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 December 31, 2019 and 2018, at liquidation preference
Common shares of beneficial interest, par value $0.01 per share.
250,000,000 authorized, 59,659,108 and 56,654,009 shares issued and
outstanding at December 31, 2019 and 2018, respectively
Additional paid-in capital
Distributions in excess of earnings
Accumulated other comprehensive (loss) income
Total shareholders' equity
Noncontrolling interests
Total equity
Total liabilities and equity
December 31,
2019
2018
$
3,091,719
$
2,637,723
(337,822)
2,753,897
(246,261)
2,391,462
20,558
3,718
3,264
214,061
65,441
23,306
13,181
3,182
1,260
245,125
75,053
—
3,084,245
$
2,729,263
1,534,047
$
1,278,102
57,909
24,665
15,523
33,130
—
15,732
1,632,144
1,326,964
$
$
218,178
172,500
597
905,763
(197,075)
(7,833)
919,630
532,471
567
844,276
(114,122)
13,618
916,839
485,460
1,452,101
1,402,299
$
3,084,245
$
2,729,263
See notes to consolidated financial statements.
F-5
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NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
REVENUE
Rental revenue
Other property-related revenue
Management fees and other revenue
Total revenue
OPERATING EXPENSES
Property operating expenses
General and administrative expenses
Depreciation and amortization
Total operating expenses
OTHER (EXPENSE) INCOME
Interest expense
Equity in losses of unconsolidated real estate ventures
Acquisition costs
Non-operating income (expense)
Gain on sale of self storage properties
Other expense
Income before income taxes
Income tax expense
Net income
Net income attributable to noncontrolling interests
Net income attributable to National Storage
Affiliates Trust
Distributions to preferred shareholders
Net (loss) income attributable to common
shareholders
Earnings (loss) per share - basic and diluted
Year Ended December 31,
2018
2017
2019
$
354,859
$
308,403
$
251,814
12,302
20,735
387,896
110,347
45,581
105,119
261,047
(56,464)
(4,970)
(1,317)
452
2,814
(59,485)
67,364
(1,351)
66,013
(62,030)
3,983
(12,390)
10,183
12,310
330,896
103,875
36,220
89,147
229,242
(42,724)
(1,423)
(663)
(91)
391
(44,510)
57,144
(818)
56,326
(42,217)
14,109
(10,350)
$
$
(8,407) $
3,759
(0.15) $
0.07
$
$
8,255
8,061
268,130
84,455
30,060
75,115
189,630
(34,068)
(2,339)
(593)
(58)
5,715
(31,343)
47,157
(1,159)
45,998
(43,037)
2,961
(2,300)
661
0.01
Weighted average shares outstanding - basic and diluted
58,208
53,293
44,423
See notes to consolidated financial statements.
F-6
Table of Contents
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(dollars in thousands)
Net income
Other comprehensive income (loss)
Unrealized (loss) gain on derivative contracts
Reclassification of other comprehensive (income) loss to
interest expense
Other comprehensive (loss) income
Comprehensive income
Comprehensive income attributable to noncontrolling
interests
Comprehensive (loss) income attributable to National
Storage Affiliates Trust
Year Ended December 31,
2018
2017
2019
$
66,013
$
56,326
$
45,998
(29,941)
3,598
(3,337)
(33,278)
32,735
(1,817)
1,781
58,107
1,935
2,308
4,243
50,241
(49,977)
(43,244)
(44,697)
$
(17,242) $
14,863
$
5,544
See notes to consolidated financial statements.
F-7
Table of Contents
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(dollars in thousands, except share amounts)
Preferred Shares
Common Shares
Number
Amount
Number
Amount
Additional
Paid-in
Capital
Distributions
in Excess of
Earnings
Accumulated
Other
Comprehensive Noncontrolling
(Loss) Income
Interests
Total
Equity
Balances, December 31, 2016
— $
— 43,110,362
$
431
$
576,365
$
(8,719) $
9,025
$
401,966
$ 979,068
Issuance of preferred shares, net
of offering costs
OP equity recorded in connection
with property acquisitions:
OP units and subordinated
performance units, net of
offering costs
LTIP units
Issuance of subordinated
performance units
Redemptions of OP units
Issuance of common shares, net
of offering costs
Issuance of common shares,
share based compensation
plans
Effect of changes in ownership
for consolidated entities
Issuance of OP units
Equity-based compensation
expense
Issuance of LTIP units for
acquisition expenses
Issuance of restricted common
shares
Vesting and forfeitures of
restricted common shares
Reduction in receivables from
partners of OP
Preferred share dividends
Common share dividends
Distributions to noncontrolling
interests
6,900,000
172,500
—
—
(5,934)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,409,715
5,750,000
6,862
—
—
—
—
16,525
(8,530)
—
—
—
—
—
—
—
14
58
—
—
—
—
—
—
—
—
—
—
—
—
—
—
18,389
140,203
—
(17,749)
—
244
—
—
(51)
—
—
—
—
See notes to consolidated financial statements.
F-8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(2,300)
(47,671)
—
—
—
166,566
—
—
—
289
—
—
385
—
—
—
—
—
—
—
—
—
29,900
854
7,000
(18,692)
29,900
854
7,000
—
—
140,261
—
17,364
1,262
—
—
1,262
3,520
3,764
15
—
—
812
—
—
15
—
(51)
812
(2,300)
(47,671)
(58,234)
(58,234)
Table of Contents
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
(dollars in thousands, except share amounts)
Preferred Shares
Common Shares
Number
Amount
Number
Amount
Additional
Paid-in
Capital
Distributions
in Excess of
Earnings
Accumulated
Other
Comprehensive Noncontrolling
(Loss) Income
Interests
Total
Equity
Other comprehensive income
Net income
—
—
—
—
—
—
Balances, December 31, 2017
6,900,000
172,500
50,284,934
—
—
503
—
—
—
2,961
711,467
(55,729)
2,583
—
12,282
1,660
43,037
4,243
45,998
430,464
1,271,487
OP equity recorded in connection
with property acquisitions:
Series A-1 preferred units, OP
units and subordinated
performance units, net of
offering costs
Redemptions of OP units
Issuance of common shares, net
of offering costs
Effect of changes in ownership
for consolidated entities
Issuance of OP units
Equity-based compensation
expense
Issuance of restricted common
shares
Vesting and forfeitures of
restricted common shares, net
Reduction in receivables from
partners of the operating
partnership
Preferred share dividends
Common share dividends
Distributions to noncontrolling
interests
Other comprehensive income
Net income
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
462,778
5,900,000
—
—
—
12,311
(6,014)
—
—
—
—
—
—
—
5
59
—
—
—
—
—
—
—
—
—
—
—
—
5,904
175,557
(48,830)
—
253
—
(75)
—
—
—
—
—
—
Balances, December 31, 2018
6,900,000
172,500
56,654,009
567
844,276
—
—
—
—
—
—
—
—
—
(10,350)
(62,152)
—
—
14,109
(114,122)
—
172
—
410
—
—
—
—
—
—
—
—
754
—
27,962
(6,081)
27,962
—
—
175,616
48,420
1,236
—
1,236
3,584
3,837
—
—
642
—
—
—
(75)
642
(10,350)
(62,152)
(64,011)
(64,011)
1,027
42,217
1,781
56,326
13,618
485,460
1,402,299
Issuance of preferred shares, net
of offering costs
OP equity issued for property
acquisitions:
1,785,680
44,642
—
—
(1,018)
—
—
—
43,624
See notes to consolidated financial statements.
F-9
Table of Contents
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
(dollars in thousands, except share amounts)
Preferred Shares
Common Shares
Number
Amount
Number
Amount
Additional
Paid-in
Capital
Distributions
in Excess of
Earnings
Accumulated
Other
Comprehensive Noncontrolling
(Loss) Income
Interests
Total
Equity
—
—
41,439
1,036
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
581,001
2,412,770
—
—
—
—
18,218
(6,890)
—
—
—
—
—
—
—
—
6
24
—
—
—
—
—
—
—
—
—
—
—
—
—
20
4,794
71,867
(14,429)
—
322
—
—
(69)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(12,390)
(74,546)
—
—
3,983
—
—
(41)
—
(185)
—
—
—
—
—
—
—
—
—
(21,225)
—
51,321
51,321
(1,056)
(4,759)
—
—
—
71,891
14,614
8,540
—
8,540
4,205
4,527
179
—
—
505
—
—
(76,515)
(12,053)
62,030
179
—
(69)
505
(12,390)
(74,546)
(76,515)
(33,278)
66,013
Series A-1 preferred units, OP
units and subordinated
performance units, net of
offering costs
Redemptions of Series A-1
preferred units
Redemptions of OP units
Issuance of common shares, net
of offering costs
Effect of changes in ownership
for consolidated entities
Issuance of OP units
Equity-based compensation
expense
Issuance of LTIP units for
acquisition expenses
Issuance of restricted common
shares
Vesting and forfeitures of
restricted common shares, net
Reduction in receivables from
partners of the operating
partnership
Preferred share dividends
Common share dividends
Distributions to noncontrolling
interests
Other comprehensive loss
Net income
Balances, December 31, 2019
8,727,119
$ 218,178
59,659,108
$
597
$
905,763
$
(197,075) $
(7,833) $
532,471
$ 1,452,101
See notes to consolidated financial statements.
F-10
Table of Contents
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Year Ended December 31,
2018
2017
2019
66,013
$
56,326
$
45,998
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided
$
by operating activities:
Depreciation and amortization
Amortization of debt issuance costs
Amortization of debt discount and premium, net
Gain on sale of self storage properties
Mark-to-market changes in value on equity securities
Equity-based compensation expense
Equity in losses of unconsolidated real estate ventures
Distributions from unconsolidated real estate ventures
Change in assets and liabilities, net of effects of self
storage property acquisitions:
Other assets
Accounts payable and accrued liabilities
Deferred revenue
Net Cash Provided by Operating Activities
INVESTING ACTIVITIES
Acquisition of self storage properties
Capital expenditures
Investments in and advances to unconsolidated real estate
ventures
Distributions from unconsolidated real estate ventures
Deposits and advances for self storage property and other
acquisitions
Expenditures for corporate furniture, equipment and other
Acquisition of equity securities
Proceeds from sale of equity securities
Acquisition of interest in reinsurance company and
related cash flows
Net proceeds from sale of self storage properties
105,119
2,913
(1,427)
(2,814)
(610)
4,527
4,970
14,551
110
5,617
(2,318)
196,651
(371,096)
(20,594)
—
11,543
(4,438)
(862)
(12,674)
5,356
(6,600)
6,335
89,147
2,569
(1,469)
(391)
—
3,837
1,423
8,187
(5,713)
6,597
1,283
75,115
2,175
(1,570)
(5,715)
—
3,764
2,339
5,093
(2,398)
1,200
(1,713)
161,796
124,288
(313,712)
(19,014)
(165,642)
—
(20,977)
(403)
—
—
—
5,259
(391,619)
(14,656)
(15,289)
250
(4,923)
(588)
—
—
—
17,534
(409,291)
140,261
166,566
7,000
760,900
1,150
Net Cash Used In Investing Activities
(393,030)
(514,489)
FINANCING ACTIVITIES
Proceeds from issuance of common shares
Proceeds from issuance of preferred shares
Proceeds from issuance of subordinated performance
units
Borrowings under debt financings
Receipts for OP unit subscriptions
70,637
43,624
—
822,000
1,271
175,616
—
—
822,500
1,211
Principal payments under debt financings
(561,628)
(507,239)
(679,104)
Payment of dividends to common shareholders
Payment of dividends to preferred shareholders
Distributions to noncontrolling interests
(74,546)
(12,390)
(76,010)
(62,152)
(10,350)
(63,350)
(47,671)
(2,300)
(57,314)
See notes to consolidated financial statements.
F-11
Table of Contents
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(dollars in thousands)
Debt issuance costs
Equity offering costs
Net Cash Provided by Financing Activities
Increase (Decrease) in Cash, Cash Equivalents and
Restricted Cash
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH
Beginning of year
End of year
Year Ended December 31,
2018
2017
2019
(8,487)
(179)
204,292
(2,860)
(727)
352,649
(2,381)
(1,034)
286,073
7,913
(44)
1,070
16,363
16,407
$
24,276
$
16,363
$
15,337
16,407
Supplemental Cash Flow Information
Cash paid for interest
Supplemental Disclosure of Non-Cash Investing and
Financing Activities
Consideration exchanged in property acquisitions:
Issuance of OP units and subordinated performance
units
Deposits on acquisitions applied to purchase price
LTIP units vesting upon acquisition of properties
$
$
Assumption of mortgages payable
Other net liabilities assumed
Issuance of OP unit subscription liability through reduced
distributions
Settlement of acquisition receivables through reduced
distributions
Increase in OP unit subscription liability through reduced
distributions
Change in payables for offering costs
Settlement of offering expenses from equity issuance
proceeds
Operating lease right-of-use assets on balance sheet due
to implementation of leases standard
Operating lease liabilities on balance sheet due to
implementation of leases standard
52,666
$
40,475
$
32,951
51,826
$
28,063
$
30,327
20,977
—
—
2,403
1,253
505
—
(321)
1,241
23,306
24,665
5,050
—
7,581
2,167
1,236
642
19
626
575
—
—
350
854
—
3,616
1,262
812
108
600
12,299
—
—
See notes to consolidated financial statements.
F-12
Table of Contents
NATIONAL STORAGE AFFILIATES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF OPERATIONS
National Storage Affiliates Trust was organized in the state of Maryland on May 16, 2013 and is a fully
integrated, self-administered and self-managed real estate investment trust focused on the self storage sector. As
used herein, "NSA," the "Company," "we," "our," and "us" refers to National Storage Affiliates Trust and its
consolidated subsidiaries, except where the context indicates otherwise. The Company has elected and believes that
it has qualified to be taxed as a real estate investment trust for U.S. federal income tax purposes ("REIT")
commencing with its taxable year ended December 31, 2015.
Through its controlling interest as the sole general partner of NSA OP, LP (its "operating partnership"), a
Delaware limited partnership formed on February 13, 2013, the Company is focused on the ownership, operation,
and acquisition of self storage properties located within the top 100 MSAs in the United States. Pursuant to the
Agreement of Limited Partnership (as amended, the "LP Agreement") of its operating partnership, the Company's
operating partnership is authorized to issue preferred units, Class A Units ("OP units"), different series of Class B
Units ("subordinated performance units"), and Long-Term Incentive Plan Units ("LTIP units"). The Company also
owns certain of its self storage properties through other consolidated limited partnership subsidiaries of its operating
partnership, which the Company refers to as "DownREIT partnerships." The DownREIT partnerships issue equity
ownership interests that are intended to be economically equivalent to the Company's OP units ("DownREIT OP
units") and subordinated performance units ("DownREIT subordinated performance units").
The Company owned 567 consolidated self storage properties in 29 states and Puerto Rico with approximately
34.5 million rentable square feet (unaudited) in approximately 275,000 storage units as of December 31, 2019.
These properties are managed with local operational focus and expertise by the Company and its participating
regional operators ("PROs"). These PROs are SecurCare Self Storage,
Inc. and its controlled affiliates
("SecurCare"), Kevin Howard Real Estate Inc., d/b/a Northwest Self Storage and its controlled affiliates
("Northwest"), Optivest Properties LLC and its controlled affiliates ("Optivest"), Guardian Storage Centers LLC and
its controlled affiliates ("Guardian"), Move It Self Storage and its controlled affiliates ("Move It"), Arizona Mini
Storage Management Company d/b/a Storage Solutions and its controlled affiliates ("Storage Solutions"), Hide-
Away Storage Services, Inc. and its controlled affiliates ("Hide-Away"), an affiliate of Shader Brothers Corporation
d/b/a Personal Mini Storage ("Personal Mini"), Southern Storage Management Systems, Inc. d/b/a Southern Self
Storage ("Southern") and affiliates of Investment Real Estate Management, LLC d/b/a Moove In Self Storage
("Moove In").
As of December 31, 2019, the Company also managed through its property management platform an additional
portfolio of 175 properties owned by the Company's unconsolidated real estate ventures. These properties contain
approximately 12.6 million rentable square feet, configured in approximately 103,000 storage units and located
across 21 states. The Company owns a 25% equity interest in each of its unconsolidated real estate ventures.
As of December 31, 2019, in total, the Company operated and held ownership interests in 742 self storage
properties located across 35 states and Puerto Rico with approximately 47.1 million rentable square feet in
approximately 378,000 storage units.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements are presented on the accrual basis of accounting in
accordance with U.S. generally accepted accounting principles ("GAAP").
F-13
Table of Contents
Principles of Consolidation
The Company's consolidated financial statements include the accounts of its operating partnership and its
intercompany balances and transactions have been eliminated in the
controlled subsidiaries. All significant
consolidation of entities.
When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if
the entity is deemed a variable interest entity ("VIE"), and if the Company is deemed to be the primary beneficiary,
in accordance with authoritative guidance issued on the consolidation of VIEs. When an entity is not deemed to be a
VIE, the Company considers the provisions of additional guidance to determine whether the general partner controls
a limited partnership or similar entity when the limited partners have certain rights. The Company consolidates all
entities that are VIEs and of which the Company is deemed to be the primary beneficiary. The Company has
determined that its operating partnership is a VIE. The sole significant asset of National Storage Affiliates Trust is
its investment in its operating partnership, and consequently, substantially all of the Company's assets and liabilities
represent those assets and liabilities of its operating partnership.
As of December 31, 2019, the Company's operating partnership was the primary beneficiary of, and therefore
consolidated, 21 DownREIT partnerships that are considered VIEs, which owned 34 self storage properties. The net
book value of the real estate owned by these VIEs was $233.1 million and $240.4 million as of December 31, 2019
and December 31, 2018, respectively. For certain DownREIT partnerships which are subject to fixed rate mortgages
payable, the carrying value of such fixed rate mortgages payable held by these VIEs was $136.4 million and $138.4
million as of December 31, 2019 and December 31, 2018, respectively. The creditors of the consolidated VIEs do
not have recourse to the Company's general credit.
Noncontrolling Interests
All of the limited partner equity interests ("OP equity") in its operating partnership not held by the Company are
reflected as noncontrolling interests. Noncontrolling interests also include ownership interests in DownREIT
partnerships held by entities other than the Company's operating partnership. In the consolidated statements of
operations, the Company allocates net income (loss) attributable to noncontrolling interests to arrive at net income
(loss) attributable to National Storage Affiliates Trust.
For transactions that result in changes to the Company's ownership interest in its operating partnership, the
carrying amount of noncontrolling interests is adjusted to reflect such changes. The difference between the fair value
of the consideration received or paid and the amount by which the noncontrolling interests is adjusted is reflected as
an adjustment to additional paid-in capital on the consolidated balance sheets.
Self Storage Properties
Self storage properties are carried at historical cost less accumulated depreciation and any impairment losses.
Major replacements and betterments, which improve or extend the life of an asset, are capitalized. Expenditures for
ordinary repairs and maintenance are expensed as incurred and are included in property operating expenses.
Estimated depreciable lives of self storage properties are determined by considering the age and other indicators
about the condition of the assets at the respective dates of acquisition, resulting in a range of estimated useful lives
for assets within each category. All self storage property assets are depreciated using the straight-line method.
Buildings and improvements are depreciated over estimated useful lives primarily between seven and 40 years;
furniture and equipment are depreciated over estimated useful lives primarily between three and 10 years.
When a self storage property is acquired, the purchase price of the acquired self storage property is allocated to
land, buildings and improvements, furniture and equipment, customer in-place leases, assumed real estate leasehold
interests, and other assets acquired and liabilities assumed, based on the estimated fair value of each component.
When a portfolio of self storage properties is acquired, the purchase price is allocated to the individual self storage
properties based on the fair value determined using an income approach with appropriate risk-adjusted capitalization
rates, which take into account the relative size, age and location of the individual self storage properties.
Cash and Cash Equivalents
The Company considers all highly-liquid investments purchased with original maturities of three months or less
to be cash equivalents. From time to time, the Company maintains cash balances in financial institutions in excess of
federally insured limits. The Company has never experienced a loss that resulted from exceeding federally insured
limits.
F-14
Table of Contents
Restricted Cash
The Company's restricted cash consists of escrowed funds deposited with financial institutions for real estate
taxes, insurance and other reserves for capital improvements in accordance with the Company's loan agreements.
Customer In-place Leases
In allocating the purchase price for a self storage property acquisition, the Company determines whether the
acquisition includes intangible assets. The Company allocates a portion of the purchase price to an intangible asset
attributed to the value of customer in-place leases. This intangible asset is amortized to expense using the straight-
line method over 12 months, the estimated average rental period for the leases. Substantially all of the leases in place
at acquired properties are at market rates, as the leases are month-to-month contracts.
Impairment of Long-Lived Assets
The Company evaluates long-lived assets for impairment when events and circumstances indicate that there
may be impairment. When events or changes in circumstances indicate that the Company's long-lived assets may not
be recoverable, the carrying value of these long-lived assets is compared to the undiscounted future net operating
cash flows, plus a terminal value attributable to the assets. If an asset's carrying value is not considered recoverable,
an impairment loss is recorded to the extent the net carrying value of the asset exceeds the fair value. For the periods
presented, no assets were determined to be impaired under this policy.
Costs of Raising Capital
Commissions, legal fees and other costs that are directly associated with equity offerings are capitalized as
deferred offering costs, pending a determination of the success of the offering. Deferred offering costs related to
successful offerings are charged to additional paid-in capital within equity in the period it is determined that the
offering was successful.
Debt issuance costs are amortized over the estimated life of the related debt using the straight-line method,
which approximates the effective interest rate method. Amortization of debt issuance costs is included in interest
expense in the accompanying statements of operations.
Revenue Recognition
Rental revenue
Rental revenue consists of space rentals and related fees. Management has determined that all of the Company's
leases are operating leases. Substantially all leases may be terminated on a month-to-month basis and rental income
is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and
recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts
and other incentives are recognized as a reduction to rental income over the applicable lease term.
Other property-related revenue
Other property-related revenue primarily consists of ancillary revenues such as tenant insurance and/or tenant
warranty protection-related access fees and sales of storage supplies which are recognized in the period earned.
The Company and certain of the Company’s PROs have tenant insurance- and/or tenant warranty protection
plan-related arrangements with insurance companies and the Company’s tenants. During the years ended
December 31, 2019, 2018 and 2017, the Company recognized $9.1 million, $7.5 million and $6.0 million,
respectively, of tenant insurance and tenant warranty protection plan revenues.
The Company sells boxes, packing supplies, locks and other retail merchandise at its properties. During the
years ended December 31, 2019, 2018 and 2017, the Company recognized retail sales of $1.7 million, $1.5 million
and $1.3 million, respectively.
Management fees and other revenue
Management fees and other revenue consist of property management fees, platform fees, call center fees,
acquisition fees, and a portion of tenant warranty protection or tenant insurance proceeds that the Company earns for
managing and operating its unconsolidated real estate ventures.
With respect to both the 2018 Joint Venture and the 2016 Joint Venture, the Company provides supervisory and
administrative property management services, centralized call center services, and technology platform and revenue
F-15
Table of Contents
management services to the properties in the unconsolidated real estate ventures. The property management fees are
equal to 6% of monthly gross revenues and net sales revenues from the assets of the unconsolidated real estate
ventures, and the platform fees are equal to $1,250 per month per unconsolidated real estate venture property. With
respect to the 2016 Joint Venture only, the call center fees are equal to 1% of each of monthly gross revenues and
net sales revenues from the 2016 Joint Venture properties. During the years ended December 31, 2019, 2018 and
2017, the Company recognized property management fees, call center fees and platform fees of $12.8 million, $7.8
million and $4.8 million, respectively.
For acquisition fees,
the Company provides sourcing, underwriting and administration services to the
unconsolidated real estate ventures. The 2016 Joint Venture paid the Company a $4.1 million acquisition fee equal
to 0.65% of the gross capitalization (including debt and equity) of the original 66-property 2016 Joint Venture
portfolio (the "Initial 2016 JV Portfolio") in 2016, at the time of the Initial 2016 JV Portfolio acquisition. The 2018
Joint Venture paid the Company a $4.0 million acquisition fee related to the initial acquisition of properties by the
2018 Joint Venture (the "Initial 2018 JV Portfolio") during the year ended December 31, 2018, at the time of the
Initial 2018 JV Portfolio acquisition. These fees are refundable to the unconsolidated real estate ventures, on a
prorated basis, if the Company is removed as the managing member during the initial four year life of the
unconsolidated real estate ventures and as such, the Company's performance obligation for these acquisition fees are
satisfied over a four year period. As of December 31, 2019 and 2018, the Company had deferred revenue related to
the acquisition fees of $2.8 million and $4.6 million, respectively.
The Company also earns acquisition fees for properties acquired by the unconsolidated real estate ventures
subsequent to the Initial 2016 JV Portfolio and the Initial 2018 JV Portfolio. These fees are based on a percentage of
the gross capitalization of the acquired assets determined by the members of the 2016 Joint Venture and the 2018
Joint Venture, and are generally earned when the unconsolidated real estate ventures obtain title and control of an
acquired property. During the years ended December 31, 2019, 2018 and 2017, the Company recognized acquisition
fees of $1.8 million, $1.6 million and $1.5 million, respectively.
An affiliate of the Company facilitates tenant warranty protection or tenant insurance programs for tenants of
the properties in the unconsolidated real estate ventures in exchange for 50% of all proceeds from such programs at
each unconsolidated real estate venture property. During the years ended December 31, 2019, 2018 and 2017, the
Company recognized $4.7 million, $2.4 million and $1.9 million, respectively, of revenue related to these activities.
Advertising Costs
The Company incurs advertising costs primarily attributable to internet, directory and other advertising.
Advertising costs are included in property operating expenses in the accompanying statements of operations. These
costs are expensed in the period in which the cost is incurred. The Company incurred advertising costs of $5.2
million, $4.1 million and $3.7 million for the years ended December 31, 2019, 2018 and 2017, respectively.
Acquisition Costs
The Company incurs title, legal and consulting fees, and other costs associated with the completion of
acquisitions. During the year ended December 31, 2017, the Company adopted Accounting Standards Update
("ASU") 2017-01 and as a result, the Company's self storage property acquisitions during the years ended
December 31, 2019 and 2018 were accounted for as asset acquisitions, and accordingly, acquisition costs directly
related to the self storage property acquisitions were capitalized as part of the basis of the acquired properties.
Indirect acquisition costs remain included in acquisition costs in the accompanying statements of operations in the
period in which they were incurred. Prior to the Company's adoption of ASU 2017-01, direct and indirect costs were
included in acquisition costs in the accompanying statements of operations in the period in which they were
incurred.
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Income Taxes
The Company has elected and believes it has qualified to be taxed as a REIT under sections 856 through 860 of
the U.S. Internal Revenue Code (the "Code") commencing with the taxable year ended December 31, 2015. To
qualify as a REIT, among other things, the Company is required to distribute at least 90% of its REIT taxable
income to its shareholders and meet certain tests regarding the nature of its income and assets. As a REIT, the
Company is not subject to federal income tax on the earnings distributed currently to its shareholders that it derives
from its REIT qualifying activities. If the Company fails to qualify as a REIT in any taxable year, and is unable to
avail itself of certain provisions set forth in the Code, all of the Company's taxable income would be subject to
federal and state income taxes at regular corporate rates.
The Company will not be required to make distributions with respect to income derived from the activities
conducted through subsidiaries that the Company elects to treat as taxable REIT subsidiaries ("TRS") for federal
income tax purposes. Certain activities that the Company undertakes must be conducted by a TRS, such as
performing non-customary services for its customers, facilitating sales by PROs of tenant insurance and holding
assets that the Company is not permitted to hold directly. A TRS is subject to federal and state income taxes.
On June 25, 2014, the Company formed NSA TRS, LLC ("NSA TRS"), a Delaware limited liability company.
The Company has elected to treat NSA TRS as a TRS, and consequently, NSA TRS is subject to U.S. federal and
state corporate income taxes. Deferred tax assets and liabilities are recognized to the extent of any differences
between the financial reporting and tax bases of assets and liabilities. No material deferred tax assets and liabilities
were recorded as of December 31, 2019 and 2018.
The Company did not have any unrecognized tax benefits related to uncertain tax positions as of December 31,
2019 and 2018. Future amounts of accrued interest and penalties, if any, related to uncertain tax positions will be
recorded as a component of income tax expense. The Company does not expect that the amount of unrecognized tax
benefits will change significantly in the next 12 months.
The Company's material taxing jurisdiction is the U.S. federal jurisdiction; the 2016 tax year is the earliest
period that remains open to examination by these taxing jurisdictions.
Earnings per Share
Basic earnings per share is calculated based on the weighted average number of the Company's common shares
of beneficial interest, $0.01 par value per share ("common shares"), outstanding during the period. Diluted earnings
per share is calculated by further adjusting for the dilutive impact using the treasury stock method for any share
options and unvested share equivalents outstanding during the period and the if-converted method for any
convertible securities outstanding during the period.
As more fully described below under "–Allocation of Net Income (Loss)", the Company allocates GAAP income
(loss) utilizing the hypothetical liquidation at book value ("HLBV") method, which 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.
Equity-Based Awards
The measurement and recognition of compensation cost for all equity-based awards granted to officers,
employees and consultants is based on estimated fair values. Compensation cost is recognized on a straight-line
basis over the requisite service periods of each award with non-graded vesting. For awards granted which contain a
graded vesting schedule and the only condition for vesting is a service condition, compensation cost is recognized as
an expense on a straight-line basis over the requisite service period as if the award was, in substance, a single award.
For awards granted for which vesting is subject to a performance condition, compensation cost is recognized over
the requisite service period if and when the Company concludes it is probable that the performance condition will be
achieved.
The estimated fair value of all equity-based awards issued to PROs and their affiliates in connection with self
storage property acquisitions is included in the cost of the respective acquisitions. The estimated fair value of such
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awards is measured at the date the self storage properties are acquired, as this date represents satisfaction of the
performance condition and coincides with the award vesting.
Derivative Financial Instruments
The Company carries all derivative financial instruments on the balance sheet at fair value. Fair value of
derivatives is determined by reference to observable prices that are based on inputs not quoted on active markets, but
corroborated by market data. The accounting for changes in the fair value of a derivative instrument depends on
whether the derivative has been designated and qualifies as part of a hedging relationship. The Company's use of
derivative instruments has been limited to interest rate swap and cap agreements. The fair values of derivative
instruments are included in other assets and accounts payable and accrued liabilities in the accompanying balance
sheets. For derivative instruments not designated as cash flow hedges, the unrealized gains and losses are included in
interest expense in the accompanying statements of operations. For derivatives designated as cash flow hedges, the
effective portion of the changes in the fair value of the derivatives is initially reported in accumulated other
comprehensive income (loss) in the Company's balance sheets and subsequently reclassified into earnings when the
hedged transaction affects earnings.
The valuation of interest rate swap and cap agreements is determined using widely accepted valuation
techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis
reflects the contractual terms of derivatives, including the period to maturity, and uses observable market-based
inputs, including interest rate curves. The fair values of interest rate swaps are determined using the market standard
methodology of netting the discounted future fixed cash payments and the discounted expected variable cash
receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from
observable market interest rate forward curves. The Company may enter into derivative contracts that are intended to
economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to
apply hedge accounting.
Fair Value Measurements
When measuring fair value of financial instruments that are required to be recorded or disclosed at fair value,
the Company uses a three-tier measurement hierarchy which prioritizes the inputs used to calculate fair value. These
tiers include Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs
other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as
unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own
assumptions.
Investments in Unconsolidated Real Estate Ventures
The Company’s investments in its unconsolidated real estate ventures are recorded under the equity method of
accounting in the accompanying consolidated financial statements. Under the equity method, the Company’s
investments in unconsolidated real estate ventures are stated at cost and adjusted for the Company’s share of net
earnings or losses and reduced by distributions. Equity in earnings (losses) is recognized based on the Company’s
ownership interest in the earnings (losses) of the unconsolidated real estate ventures. The Company follows the
"nature of the distribution approach" for classification of distributions from its unconsolidated real estate ventures in
its consolidated statements of cash flows. Under this approach, distributions are reported on the basis of the nature of
the activity or activities that generated the distributions as either a return on investment, which are classified as
operating cash flows, or a return of investment (e.g., proceeds from the unconsolidated real estate ventures' sale of
assets) which are reported as investing cash flows.
Segment Reporting
The Company manages its business as one reportable segment consisting of investments in self storage
properties located in the United States. Although the Company operates in several markets, these operations have
been aggregated into one reportable segment based on the similar economic characteristics among all markets.
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Allocation of Net Income (Loss)
The distribution rights and priorities set forth in the operating partnership's LP Agreement differ from what is
reflected by the underlying percentage ownership interests of the operating partnership's unitholders. Accordingly,
the Company allocates GAAP income (loss) utilizing the HLBV method, in which the Company allocates income or
loss based on the change in each unitholders’ claim on the net assets of its operating partnership at period end after
adjusting for any distributions or contributions made during such period. The HLBV method is commonly applied to
equity investments where cash distribution percentages vary at different points in time and are not directly linked to
an equity holder’s ownership percentage.
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.
Other Comprehensive Income (Loss)
The Company has cash flow hedge derivative instruments that are measured at fair value with unrealized gains
or losses recognized in other comprehensive income (loss) with a corresponding adjustment to accumulated other
comprehensive income (loss) within equity, as discussed further in Note 14. Under the HLBV method of allocating
income (loss) discussed above, a calculation is prepared at each balance sheet date by applying the HLBV method
including, and excluding, the assets and liabilities resulting from the Company's cash flow hedge derivative
instruments to determine comprehensive income (loss) attributable to National Storage Affiliates Trust. As a result
of the distribution rights and priorities set forth in the operating partnership's LP Agreement, in any given period,
other comprehensive income (loss) may be allocated disproportionately to unitholders as compared to their
respective ownership percentage in the operating partnership and as compared to their respective allocation of net
income (loss).
Gain on sale of self storage properties
The Company recognizes gains from disposition of facilities only upon closing in accordance with the guidance
on sales of nonfinancial assets. Profit on real estate sold is recognized upon closing when all, or substantially all, of
the promised consideration has been received and is nonrefundable and the Company has transferred control of the
facilities to the purchaser.
Goodwill
Goodwill represents the costs of business acquisitions in excess of the fair value of identifiable net assets
acquired. The Company evaluates goodwill for potential impairment annually, or whenever impairment indicators
are present. The Company determined that
to goodwill during the years ended
December 31, 2019 and 2018.
there was no impairment
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases, which
amends the existing guidance for accounting for leases, including requiring lessors to account for leases using an
approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and
operating leases and lessees to recognize most leases on-balance sheet as lease liabilities with corresponding right-
of-use assets. In July 2018, the FASB issued ASU 2018-11, Leases - Targeted Improvements, which allows entities
the option to apply the new standard at adoption date with a cumulative-effect adjustment in the period of adoption.
The Company adopted ASU 2016-02 and ASU 2018-11 effective January 1, 2019 and applied it to leases that
were in place on the effective date. The Company elected the practical expedients which permit the Company to
combine lease and nonlease components and to not reassess (i) whether any expired or existing contracts are or
contain leases, (ii) the lease classification for any expired or existing leases, and (iii) any initial direct costs for any
existing leases as of the effective date. Results for reporting periods beginning January 1, 2019 are presented under
ASU 2016-02 and ASU 2018-11. As a result, beginning on January 1, 2019, activity related to uncollectible
accounts are recognized as a current-period adjustment within revenue. For periods prior to January 1, 2019, such
amounts were previously included in operating expenses. The adoption of the lease standard did not result in a
cumulative catch-up adjustment to opening equity. See Note 13 for additional detail about the Company's non-
cancelable leasehold interest agreements where the Company is a lessee.
3. SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS
Shareholders' Equity
At the Market ("ATM") Program
On February 27, 2019, the Company entered into a sales agreement with certain sales agents, pursuant to which
the Company may sell from time to time up to $250.0 million of the Company's common shares and 6.000% Series
A Preferred Shares in sales deemed to be "at the market" offerings. The sales agreement contemplates that, in
addition to the issuance and sale by the Company of offered shares to or through the sale agents, the Company may
enter into separate forward sale agreements with any forward purchaser. Forward sale agreements, if any, will
include only the Company's common shares and will not include any Series A Preferred Shares. If the Company
enters into a forward sale agreement with any forward purchaser, such forward purchaser will attempt to borrow
from third parties and sell, through the related agent, acting as sales agent for such forward purchaser (each, a
"forward seller"), offered shares, in an amount equal to the offered shares subject to such forward sale agreement, to
hedge such forward purchaser’s exposure under such forward sale agreement. The Company may offer the common
shares and Series A Preferred Shares through the agents, as the Company's sales agents, or, as applicable, as forward
seller, or directly to the agents or forward sellers, acting as principals, by means of, among others, ordinary brokers’
transactions on the NYSE or otherwise at market prices prevailing at the time of sale or at negotiated prices.
During the year ended December 31, 2019, the Company sold 2,375,000 of its common shares through the
ATM program at an average offering price of $30.06 per share, resulting in net proceeds to the Company of
approximately $70.6 million, after deducting compensation payable by the Company to such agents and offering
expenses. In addition, during the year ended December 31, 2019, the Company sold 1,785,680 of its Series A
Preferred Shares through the ATM program at an average offering price of $24.84 per share, resulting in net
proceeds to the Company of approximately $43.6 million, after deducting compensation payable by the Company to
such agents and offering expenses.
Common Share Offerings
On July 13, 2018, the Company closed a follow-on offering of 5,900,000 of its common shares at an offering
price of $29.86 per share. The Company received aggregate net proceeds from the offering of approximately $175.6
million after deducting expenses associated with the offering.
On December 11, 2017, the Company closed a follow-on public offering of 5,750,000 of its common shares,
which included 750,000 common shares sold upon the exercise in full by the underwriters of their option to purchase
additional common shares, at a public offering price of $25.50 per share. The Company received aggregate net
proceeds from the offering of approximately $140.3 million after deducting the underwriting discount and additional
expenses associated with the offering.
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Series A Preferred Share Offering
On October 11, 2017, the Company completed an underwritten public offering of 6,900,000 of its 6.000%
Series A Preferred Shares, which included 900,000 Series A Preferred Shares sold upon the exercise in full by the
underwriters of their option to purchase additional Series A Preferred Shares, resulting in net proceeds to the
Company of approximately $166.6 million, after deducting the underwriting discount and the Company's other
offering expenses. Dividends on the Series A Preferred Shares, which are payable quarterly in arrears, are
cumulative from the date of original issuance in the amount of $1.50 per share each year. The Series A Preferred
Shares rank senior to the Company's common shares with respect to rights and rights upon our liquidation,
dissolution or winding up. Generally, the Series A Preferred Shares become redeemable by the Company beginning
in October 2022 for a cash redemption price of $25.00 per share, plus accrued but unpaid dividends.
Noncontrolling Interests
All of the OP equity in the Company's operating partnership not held by the Company is reflected as
noncontrolling interests. Noncontrolling interests also include ownership interests in DownREIT partnerships held
by entities other than the Company's operating partnership. NSA is the general partner of its operating partnership
and is authorized to cause its operating partnership to issue additional partner interests, including OP units and
subordinated performance units, at such prices and on such other terms as it determines in its sole discretion.
As of December 31, 2019 and 2018, units reflecting noncontrolling interests consisted of the following:
Series A-1 preferred units
OP units
Subordinated performance units
LTIP units
DownREIT units
DownREIT OP units
DownREIT subordinated performance units
Total
Series A-1 Preferred Units
December 31,
2019
642,982
30,188,305
11,014,195
743,566
2018
343,719
28,874,103
10,749,475
931,671
1,848,261
4,371,622
1,834,786
4,386,999
48,808,931
47,120,753
The 6.000% Series A-1 Cumulative Redeemable Preferred Units ("Series A-1 preferred units") rank senior to
OP units and subordinated performance units in the Company's operating partnership with respect to distributions
and liquidation. The Series A-1 preferred units have a stated value of $25.00 per unit and receive distributions at an
annual rate of 6.000%. These distributions are cumulative. The Series A-1 preferred units are redeemable at the
option of the holder after the first anniversary of the date of issuance, which redemption obligations may be satisfied
at the Company’s option in cash in an amount equal to the market value of an equivalent number of the Company's
6.000% Series A Preferred Shares or the issuance of 6.000% Series A Preferred Shares on a one-for-one basis,
subject to adjustments. Generally, the Series A-1 preferred units become redeemable by the Company beginning ten
years after the initial issuance of each Series A-1 preferred unit at a stated value of $25.00 per unit, plus accrued but
unpaid distributions. The increase in Series A-1 preferred units outstanding from December 31, 2018 to
December 31, 2019 was due to the issuance of Series A-1 preferred units in connection with the acquisition of self
storage properties partially offset by the redemption of 41,439 Series A-1 preferred units for Series A preferred
shares.
OP Units and DownREIT OP units
OP units in the Company's operating partnership are redeemable for cash or, at the Company's option,
exchangeable for common shares on a one-for-one basis, and DownREIT OP units are redeemable for cash or, at the
Company's option, exchangeable for OP units in its operating partnership on a one-for-one basis, subject to certain
adjustments in each case. The holders of OP units are generally not entitled to elect redemption until one year after
the issuance of the OP units. The holders of DownREIT OP units are generally not entitled to elect redemption until
five years after the date of the contributor's initial contribution.
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The increase in OP Units outstanding from December 31, 2018 to December 31, 2019 was due to the issuance
of 863,148 OP units related to the voluntary conversions of 913,680 subordinated performance units (as discussed
further below), the issuance of 350,319 OP units in connection with the acquisition of self storage properties,
396,224 LTIP units which were converted into OP units and the issuance of 285,512 OP units in connection with the
acquisition of an interest in a tenant reinsurance company and related cash flows, as discussed in Note 11, partially
offset by the redemption of 581,001 OP units for common shares.
The increase in DownREIT OP units outstanding from December 31, 2018 to December 31, 2019 was due to
the issuance of 13,475 DownREIT OP units related to the conversion of 15,377 DownREIT subordinated
performance units (as discussed further below).
Subordinated Performance Units and DownREIT Subordinated Performance Units
Subordinated performance units may also, under certain circumstances, be convertible into OP units which are
exchangeable for common shares as described above, and DownREIT subordinated performance units may, under
certain circumstances, be exchangeable for subordinated performance units on a one-for-one basis. Subordinated
performance units are only convertible into OP units after a two year lock-out period and then generally (i) at the
holder’s election only upon the achievement of certain performance thresholds relating to the properties to which
such subordinated performance units relate or (ii) at the Company's election upon a retirement event of a PRO that
holds such subordinated performance units or upon certain qualifying terminations. The holders of DownREIT
subordinated performance units are generally not entitled to elect redemption until at least five years after the date of
the contributor's initial contribution.
Following such lock-out period, a holder of subordinated performance units in the Company's operating
partnership may elect a voluntary conversion one time each year on or prior to December 1st to convert a pre-
determined portion of such subordinated performance units into OP units in the Company's operating partnership,
with such conversion effective January 1st of the following year, with each subordinated performance unit being
converted into the number of OP units determined by dividing the average cash available for distribution, or CAD,
per unit on the series of specific subordinated performance units over the one-year period prior to conversion
by 110% of the CAD per unit on the OP units determined over the same period. CAD per unit on the series of
specific subordinated performance units and OP units is determined by the Company based generally upon the
application of the provisions of the LP Agreement applicable to the distributions of operating cash flow and capital
transactions proceeds.
The increase in subordinated performance units outstanding from December 31, 2018 to December 31, 2019
was due to the issuance of 1,178,400 subordinated performance units for co-investment by certain of the Company's
PROs in connection with the acquisition of self storage properties partially offset by the voluntary conversion of
913,680 subordinated performance units into 863,148 OP units.
The decrease in DownREIT subordinated performance units outstanding from December 31, 2018 to
December 31, 2019 was due to the conversion of 15,377 DownREIT subordinated performance units into
13,475 DownREIT OP units.
LTIP Units
LTIP units are a special class of partnership interest in the Company's operating partnership that allow the
holder to participate in the ordinary and liquidating distributions received by holders of the OP units (subject to the
achievement of specified levels of profitability by the Company's operating partnership or the achievement of certain
events). LTIP units may also, under certain circumstances, be convertible into OP units on a one-for-one basis,
which are then exchangeable for common shares as described above. LTIP units do not have full parity with OP
units with respect to liquidating distributions and may not receive ordinary distributions until such parity is reached
pursuant to the terms of the LP Agreement. If such parity is reached under the LP Agreement, upon vesting, vested
LTIP units may be converted into an equal number of OP units, and thereafter have all the rights of OP units,
including redemption rights. See Note 9 for additional information about the Company's LTIP Units.
The decrease in LTIP units outstanding from December 31, 2018 to December 31, 2019 was due to the
conversion of 396,224 LTIP units into OP units partially offset by the issuance of 208,119 compensatory LTIP units
to employees, trustees and consultants, net of forfeitures.
F-22
4. SELF STORAGE PROPERTIES
Self storage properties are summarized as follows (dollars in thousands):
Land
Buildings and improvements
Furniture and equipment
Total self storage properties
Less accumulated depreciation
Self storage properties, net
$
December 31,
$
2019
649,938
2,435,171
6,610
3,091,719
(337,822)
2018
583,455
2,048,281
5,987
2,637,723
(246,261)
$
2,753,897
$
2,391,462
Depreciation expense related to self storage properties amounted to $92.2 million, $76.3 million and $60.5
million for the years ended December 31, 2019, 2018 and 2017, respectively.
5. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES
2018 Joint Venture
As of December 31, 2019, the Company's unconsolidated real estate venture, formed in September 2018 with an
affiliate of Heitman America Real Estate REIT LLC (the "2018 Joint Venture"), in which the Company has a 25%
ownership interest, owned and operated a portfolio of 103 self storage properties containing approximately
7.7 million rentable square feet, configured in over 63,000 storage units and located across 17 states.
2016 Joint Venture
As of December 31, 2019, the Company's unconsolidated real estate venture, formed in September 2016 with a
state pension fund advised by Heitman Capital Management LLC (the "2016 Joint Venture"), in which the Company
has a 25% ownership interest, owned and operated a portfolio of 72 properties containing approximately 4.9 million
rentable square feet, configured in approximately 40,000 storage units and located across 13 states.
During the year ended December 31, 2019, the 2016 Joint Venture sold to the Company one self storage
property for a gross sales price of $4.1 million. See Note 11 for additional details about the Company's acquisition of
the self storage property from the 2016 Joint Venture.
The Company's investments in the 2018 Joint Venture and 2016 Joint Venture are accounted for using the
equity method of accounting and are included in investment in unconsolidated real estate ventures in the Company’s
consolidated balance sheets. The Company’s earnings from its investments in the 2018 Joint Venture and 2016 Joint
Venture are presented in equity in earnings (losses) of unconsolidated real estate ventures on the Company’s
consolidated statements of operations.
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The following table presents the combined condensed financial position of the Company's unconsolidated real
estate ventures as of December 31, 2019 and December 31, 2018 (in thousands):
ASSETS
Self storage properties, net
Other assets
Total assets
LIABILITIES AND EQUITY
Debt financing
Other liabilities
Equity
Total liabilities and equity
December 31,
2019
2018
$
$
$
$
1,835,235
22,413
1,857,648
989,182
20,487
847,979
1,857,648
$
$
$
$
1,894,412
50,915
1,945,327
956,357
16,516
972,454
1,945,327
The following table presents the combined condensed operating information of the Company's unconsolidated
real estate ventures for the years ended December 31, 2019 and 2018 and the period ended December 31, 2017 (in
thousands):
2019
Year Ended December 31,
2018
2017
Total revenue
Property operating expenses
Net operating income
Supervisory, administrative and other
expenses
Depreciation and amortization
Interest expense
Loss on sale of self storage properties
Acquisition and other expenses
Net loss
$
$
$
162,827
49,845
112,982
(10,818)
(79,556)
(39,936)
(806)
(1,971)
(20,105) $
$
94,507
30,229
64,278
(6,397)
(40,930)
(20,718)
(820)
(1,188)
(5,775) $
54,747
18,463
36,284
(3,921)
(29,192)
(11,389)
—
(1,146)
(9,364)
The combined condensed operating information in the table above only includes information for the 2018 Joint
Venture following the acquisition of the Initial 2018 JV Portfolio in September 2018.
6. SELF STORAGE PROPERTY ACQUISITIONS AND DISPOSITIONS
Acquisitions
The Company acquired 69 self storage properties with an estimated fair value of $447.8 million during the year
ended December 31, 2019 and 57 self storage properties and an expansion project adjacent to an existing property
with an estimated fair value of $356.6 million during the year ended December 31, 2018. Of these acquisitions,
during the year ended December 31, 2019, 19 self storage properties with an estimated fair value of $131.3 million
were acquired by the Company from its PROs and one self storage property with an estimated fair value of
$4.1 million was acquired by the Company from the 2016 Joint Venture. During the year ended December 31, 2018,
four self storage properties and the expansion project adjacent to an existing property with an estimated fair value of
$23.1 million were acquired by the Company from its PROs.
The self storage property acquisitions were accounted for as asset acquisitions and accordingly, during the years
ended December 31, 2019 and 2018, $3.6 million and $1.9 million, respectively, of transaction costs related to the
acquisitions were capitalized as part of the basis of the acquired properties. The Company recognized the estimated
fair value of the acquired assets and assumed liabilities on the respective dates of such acquisitions. The Company
allocated a portion of the purchase price to identifiable intangible assets consisting of customer in-place leases which
were recorded at estimated fair values of $10.9 million and $9.1 million during the years ended December 31, 2019
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and 2018, respectively, resulting in a total fair value of $436.9 million and $347.5 million allocated to real estate
during the years ended December 31, 2019 and 2018, respectively.
The following table summarizes, by calendar quarter, the investments in self storage property acquisitions
completed by the Company during the years ended December 31, 2019 and 2018 (dollars in thousands):
Summary of Investment
Acquisitions closed
during the Three
Months Ended:
Number of
Properties
Cash and
Acquisition
Costs
Value of OP
Equity(1)
Liabilities Assumed
Other
Total
March 31, 2019
June 30, 2019
September 30, 2019
December 31, 2019
Total
March 31, 2018
June 30, 2018
September 30, 2018
December 31, 2018
Total
32
24
6
7
69
25
12
13
7
57
$
160,531
$
$
$
168,442
34,624
30,004
393,601
105,135
62,470
102,012
49,221
$
$
33,356
15,515
950
2,005
51,826
22,403
—
3,660
2,000
Mortgages(2)
$
— $
—
—
—
674
$
1,378
197
154
$
$
$
$
— $
2,403
7,581
$
—
—
—
670
467
856
174
194,561
185,335
35,771
32,163
447,830
135,789
62,937
106,528
51,395
$
318,838
$
28,063
$
7,581
$
2,167
$
356,649
(1) Value of OP equity represents the fair value of Series A-1 preferred units, OP units, subordinated performance units, and LTIP units.
(2) Includes fair value of debt adjustment for assumed mortgages of approximately $0.2 million during the year ended December 31, 2018.
The results of operations for these self storage acquisitions are included in the Company's statements of
operations beginning on the respective closing date for each acquisition. The accompanying statements of operations
includes aggregate revenue of $30.4 million and operating income of $2.5 million related to the 69 self storage
properties acquired during the year ended December 31, 2019. For the year ended December 31, 2018, the
accompanying statements of operations includes aggregate revenue of $21.9 million and operating income of
$2.5 million related to the 57 self storage properties acquired during such period.
Dispositions
During the year ended December 31, 2019, the Company sold one self storage property to an unrelated third
party. The gross sales price was $6.5 million and the Company recognized $2.8 million of gain on the sale.
During the year ended December 31, 2018, the Company sold to unrelated third parties two self storage
properties. The gross sales price was $5.5 million and the Company recognized $0.4 million of gains on the sales.
F-25
7. OTHER ASSETS
Other assets consist of the following (dollars in thousands):
Customer in-place leases, net of accumulated amortization of $7,267 and
$5,090, respectively
Receivables:
Trade, net
PROs and other affiliates
Receivable from unconsolidated real estate ventures
Property acquisition deposits
Interest rate swaps
Equity securities
Prepaid expenses and other
Corporate furniture, equipment and other, net
Trade name
Management contract, net of accumulated amortization of $2,272 and $1,564,
respectively
Tenant reinsurance intangible, net of accumulated amortization of $317
Goodwill
Total
December 31,
2019
2018
$
3,704
$
4,063
2,809
2,773
4,765
4,438
980
7,703
4,762
1,925
3,200
8,349
14,283
5,750
$
65,441
$
3,402
2,027
4,573
20,977
16,164
—
4,266
1,574
3,200
9,057
—
5,750
75,053
Amortization expense related to customer in-place leases amounted to $11.3 million, $11.6 million and
$13.5 million for the years ended December 31, 2019, 2018 and 2017, respectively.
The Company measured the fair value of the trade name, which has an indefinite life and is not amortized, using
the relief from royalty method at acquisition.
The management contract asset is charged to amortization expense on a straight-line basis over 15 years, which
represents the time period over which the majority of value was attributed in the Company’s discounted cash flow
model. Amortization expense related to the management contract amounted to $0.7 million, $0.7 million and
$0.7 million for the years ended December 31, 2019, 2018 and 2017 respectively.
Amortization expense related to the tenant reinsurance intangible amounted to $0.3 million for the year ended
December 31, 2019. See Note 11 for additional details about the Company's tenant reinsurance intangible asset.
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8. DEBT FINANCING
The Company's outstanding debt as of December 31, 2019 and 2018 is summarized as follows (dollars in
thousands):
Interest Rate(1)
2019
2018
December 31,
Credit Facility:
Revolving line of credit
Term loan A
Term loan B
Term loan C
Term loan D
2023 Term loan facility
2028 Term loan facility
2029 Term loan facility
2029 Senior Unsecured Notes
2031 Senior Unsecured Notes
Fixed rate mortgages payable
Total principal
Unamortized debt issuance costs and
debt premium, net
Total debt
3.06%
3.74%
2.91%
2.80%
3.57%
2.83%
4.62%
4.27%
3.98%
4.08%
4.16%
$
— $
125,000
250,000
225,000
175,000
175,000
75,000
100,000
100,000
50,000
264,260
1,539,260
(5,213)
$
1,534,047
$
139,500
235,000
155,000
105,000
125,000
175,000
75,000
—
—
—
268,138
1,277,638
464
1,278,102
(1) Represents the effective interest rate as of December 31, 2019. Effective interest rate incorporates the stated rate plus the impact of interest rate
cash flow hedges and discount and premium amortization, if applicable. For the revolving line of credit, the effective interest rate excludes fees
for unused borrowings.
Credit Facility
On July 29, 2019,
the operating partnership, as borrower,
the Company, and certain of the operating
partnership's subsidiaries, as subsidiary guarantors, entered into a second amended and restated credit agreement
with a syndicated group of lenders, which extended the maturities, enhanced the terms in line with the current
market and increased the total borrowing capacity under the Company's unsecured credit facility by $255.0 million
for a total of $1.275 billion (the "credit facility"). The credit facility consists of the following components: (i) a
revolving line of credit (the "Revolver") which provides for a total borrowing commitment up to $500.0 million,
under which the Company may borrow, repay and re-borrow amounts, (ii) a $125.0 million tranche A term loan
facility (the "Term Loan A"), (iii) a $250.0 million tranche B term loan facility (the "Term Loan B"), (iv) a $225.0
million tranche C term loan facility (the "Term Loan C"), and (v) a $175.0 million tranche D term loan facility (the
"Term Loan D"). 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.
The Revolver matures in January 2024; provided that the Company may elect to extend the maturity to July
2024 by paying an extension fee of 0.075% of the total borrowing commitment thereunder at the time of extension
and meeting other customary conditions with respect to compliance. The Term Loan A matures in January 2023, the
Term Loan B matures in July 2024, the Term Loan C matures in January 2025 and the Term Loan D matures in July
2026. The credit facility is not subject to any scheduled reduction or amortization payments prior to maturity.
Interest rates applicable to loans under the credit facility are determined based on a 1, 2, 3 or 6 month LIBOR
period (as elected by the Company at the beginning of any applicable interest period) plus an applicable margin or a
base rate, determined by the greatest of the Key Bank prime rate, the federal funds rate plus 0.50% or one month
LIBOR plus 1.00%, plus an applicable margin. The applicable margins for the credit facility are leverage based and
range from 1.15% to 2.20% for LIBOR loans and 0.15% to 1.20% for base rate loans; provided that after such time
as the Company achieves an investment grade rating as defined in the credit facility, the Company may elect (but is
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not required to elect) (a "credit rating pricing election") that the credit facility be subject to applicable margins
ranging from 0.78% to 2.25% for LIBOR loans and 0.00% to 1.25% for base rate loans. The Company is also
required to pay usage based fees ranging from 0.15% to 0.20% with respect to the unused portion of the Revolver;
provided that if the Company makes a credit rating pricing election under the credit facility, the Company will be
required to pay rating based fees ranging from 0.125% to 0.300% with respect to the entire Revolver in lieu of any
usage based fees.
On July 29, 2019, the Company entered into interest rate swap agreements which together with the Company's
existing interest rate swap agreements, fix the interest rates through maturity for the Term Loan A, Term Loan B,
Term Loan C and Term Loan D. As of December 31, 2019, the Term Loan A, Term Loan B, Term Loan C and
Term Loan D had effective interest rates of 3.74%, 2.91%, 2.80% and 3.57%, respectively.
As of December 31, 2019, the Company had outstanding letters of credit totaling $5.7 million and would have
had the capacity to borrow remaining Revolver commitments of $494.3 million while remaining in compliance with
the credit facility's financial covenants described in the following paragraph.
The Company is required to comply with the following financial covenants under the credit facility:
• Maximum total leverage ratio not to exceed 60%, provided, however, the Company is permitted to maintain
a ratio of up to 65% up to two (2) consecutive fiscal quarters immediately following the quarter in which a
material acquisition (as defined in the credit facility) occurs
• Minimum fixed charge coverage ratio of at least 1.5x
• Maximum unsecured debt to unencumbered asset value ratio not to exceed 60%, provided, however, the
Company shall be permitted to maintain a ratio of up to 65% up to two (2) consecutive fiscal quarters
immediately following the quarter in which a material acquisition (as defined in the credit facility) occurs
•
Unencumbered adjusted net operating income to unsecured interest expense of at least 2.0x
On July 29, 2019, the financial covenants and certain other terms of the 2023 Term Loan Facility, 2028 Term
Loan Facility and 2029 Term Loan Facility were amended to make such terms substantially similar to those in the
credit facility.
In addition, the terms of the credit facility contain customary affirmative and negative covenants that, among
other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and
enter into certain transactions. At December 31, 2019, the Company was in compliance with all such covenants.
2023 Term Loan Facility
On June 30, 2016, the Company entered into a credit agreement with a syndicated group of lenders to make
available a term loan facility that matures in June 2023 (the "2023 Term Loan Facility") in an aggregate amount of
$100.0 million. On June 5, 2018, the Company's operating partnership and the Company entered into the Second
Amendment (the "Second Amendment") to the Credit Agreement, whereby the Company's operating partnership,
among other things, partially exercised its existing $100.0 million expansion option in an aggregate amount equal to
$75.0 million, increasing the aggregate amount outstanding under the 2023 Term Loan Facility to $175.0 million.
The Company also increased the remaining expansion option by $200.0 million, for a total expansion option of
$225.0 million. If the remaining expansion option is exercised in full, the total expansion option would provide for a
total borrowing capacity under the 2023 Term Loan Facility in an aggregate amount of $400.0 million.
The entire outstanding principal amount of, and all accrued but unpaid interest, is due on the maturity date.
Interest rates applicable to loans under the 2023 Term Loan Facility are payable during such periods as such loans
are LIBOR loans, at the applicable LIBOR based on a 1, 2, 3 or 6 month LIBOR period (as elected by the Company
at the beginning of any applicable interest period) plus an applicable margin, and during the period that such loans
are base rate loans, at the base rate under the 2023 Term Loan Facility in effect from time to time plus an applicable
margin. The base rate under the 2023 Term Loan Facility is equal to the greatest of the Capital One prime rate, the
federal funds rate plus 0.50% or one month LIBOR plus 1.00%. The applicable margin for the 2023 Term Loan
Facility is leverage-based and ranges from 1.30% to 1.70% for LIBOR loans and 0.30% to 0.70% for base rate
loans; provided that after such time as the Company achieves an investment grade rating from at least two rating
agencies, the Company may elect (but is not required to elect) that the 2023 Term Loan Facility is subject to the
rating based on applicable margins ranging from 0.90% to 1.75% for LIBOR Loans and 0.00% to 0.75% for base
rate loans.
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Table of Contents
The Company is required to comply with the same financial covenants under the 2023 Term Loan Facility as it
is with the credit facility. In addition, the terms of the 2023 Term Loan Facility contain customary affirmative and
negative covenants that, among other things,
the Company's ability to make distributions or certain
investments, incur debt, incur liens and enter into certain transactions.
limit
2028 Term Loan Facility
On December 21, 2018, the Company entered into a credit agreement with Huntington National Bank to make
available a term loan facility that matures in December 2028 (the "2028 Term Loan Facility") in an aggregate
amount of $75.0 million. The entire outstanding principal amount of, and all accrued but unpaid interest, is due on
the maturity date. The Company has an expansion option under the 2028 Term Loan Facility, which, if exercised in
full, would provide for a total 2028 Term Loan Facility in an aggregate amount of $125.0 million.
Interest rates applicable to loans under the 2028 Term Loan Facility are payable during such periods as such
loans are LIBOR loans, at the applicable LIBOR based on a 1, 2, 3 or 6 month LIBOR period (as elected by the
Company at the beginning of any applicable interest period) plus an applicable margin, and during the period that
such loans are base rate loans, at the base rate under the 2028 Term Loan Facility in effect from time to time plus an
applicable margin. The base rate under the 2028 Term Loan Facility is equal to the greatest of the Huntington
National Bank prime rate, the federal funds rate plus 0.50% or one month LIBOR plus 1.00%. The applicable
margin for the 2028 Term Loan Facility is leverage-based and ranges from 1.80% to 2.35% for LIBOR loans and
0.80% to 1.35% for base rate loans; provided that after such time as the Company achieves an investment grade
rating from at least two rating agencies, the Company may elect (but is not required to elect) that the 2028 Term
Loan Facility is subject to the rating based on applicable margins ranging from 1.40% to 2.25% for LIBOR Loans
and 0.40% to 1.25% for base rate loans.
The Company is required to comply with the same financial covenants under the 2028 Term Loan Facility as it
is with the credit facility and the 2023 Term Loan Facility. In addition, the terms of the 2028 Term Loan Facility
contain customary affirmative and negative covenants that, among other things, limit the Company's ability to make
distributions or certain investments, incur debt, incur liens and enter into certain transactions.
2029 Term Loan Facility
On April 24, 2019, the Company entered into a credit agreement with BMO Harris Bank N.A. to make available
an unsecured term loan facility that matures in April 2029 (the "2029 Term Loan Facility") in an aggregate amount
of $100.0 million. The entire outstanding principal amount of, and all accrued but unpaid interest, is due on the
maturity date.
Interest rates applicable to loans under the 2029 Term Loan Facility are payable during such periods as such
loans are LIBOR loans, at the applicable LIBOR based on a 1, 2, 3 or 6 month LIBOR period (as elected by the
Company at the beginning of any applicable interest period) plus an applicable margin, and during the period that
such loans are base rate loans, at the base rate under the 2029 Term Loan Facility in effect from time to time plus an
applicable margin. The base rate under the 2029 Term Loan Facility is equal to the greatest of the BMO Harris Bank
prime rate, the federal funds rate plus 0.50% or one month LIBOR plus 1.00%. The applicable margin for the 2029
Term Loan Facility is leverage-based and ranges from 1.85% to 2.30% for LIBOR loans and 0.85% to 1.30% for
base rate loans; provided that after such time as the Company achieves an investment grade rating from at least two
rating agencies, the Company may elect (but is not required to elect) that the 2029 Term Loan Facility be subject to
rating-based margins ranging from 1.40% to 2.25% for LIBOR Loans and 0.40% to 1.25% for base rate loans.
On April 24, 2019, the Company also entered into an interest rate swap agreement with a notional amount of
$100.0 million that matures in April 2029 fixing the interest rate of the 2029 Term Loan Facility at an effective
interest rate of 4.27%.
The Company is required to comply with the same financial covenants under the 2029 Term Loan Facility as it
is with the credit facility, 2023 Term Loan Facility and the 2028 Term Loan Facility. In addition, the terms of the
2029 Term Loan Facility contain customary affirmative and negative covenants that are consistent with those
contained in the 2023 Term Loan Facility and 2028 Term Loan Facility, and, among other things, limit the
Company's ability to make distributions, make certain investments, incur debt, incur liens and enter into certain
transactions.
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2029 And 2031 Senior Unsecured Notes
On August 30, 2019, the operating partnership issued $100.0 million of 3.98% senior unsecured notes due
August 30, 2029 (the "2029 Senior Unsecured Notes") and $50.0 million of 4.08% senior unsecured notes due
August 30, 2031 (the "2031 Senior Unsecured Notes" and together with the 2029 Senior Unsecured Notes, the
"Senior Unsecured Notes") in a private placement to certain institutional accredited investors. The Senior Unsecured
Notes are governed by a Note Purchase Agreement, dated July 30, 2019 (the "Note Purchase Agreement"), by and
among the operating partnership as issuer, the Company, and the purchasers of Senior Unsecured Notes.
Interest is payable semiannually, on August 30th and February 28th of each year, commencing on February 28,
2020. The Senior Unsecured Notes are senior unsecured obligations of the Company and will be jointly and
severally guaranteed by certain of the Company's subsidiaries, as subsidiary guarantors, upon issuance. The Senior
Unsecured Notes rank pari passu with the credit facility, the 2023 Term Loan Facility, 2028 Term Loan Facility, and
the 2029 Term Loan Facility. The Note Purchase Agreement contains financial covenants that are substantially
In addition, the terms of the Note Purchase
similar to those described under the heading "Credit Facility" above.
Agreement contain customary affirmative and negative covenants that, among other things, limit the Company's
ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
Fixed Rate Mortgages Payable
Fixed rate mortgages have scheduled maturities at various dates through October 2031, and have effective
interest rates that range from 3.63% to 5.00%. Principal and interest are generally payable monthly or in monthly
interest-only payments with balloon payments due at maturity.
The Company assumed fixed rate mortgages of $7.6 million in connection with four of the properties acquired
during the year ended December 31, 2018.
Future Debt Maturities
Based on existing debt agreements in effect as of December 31, 2019, the scheduled principal and maturity
payments for the Company's outstanding borrowings are presented in the table below (in thousands):
Year Ending December 31,
2020
2021
2022
2023
2024
After 2025
Scheduled
Principal and
Maturity
Payments
Premium
Amortization and
Unamortized Debt
Issuance Costs
$
40,647
$
(1,161) $
7,603
4,205
377,049
271,964
837,792
(1,509)
(1,511)
(1,159)
(790)
917
Total
39,486
6,094
2,694
375,890
271,174
838,709
$
1,539,260
$
(5,213) $
1,534,047
9. EQUITY-BASED AWARDS
The Company grants awards in the form of LTIP units and restricted common shares to provide equity based
incentive compensation to members of its senior management team, independent trustees, advisers, consultants,
other personnel, and as consideration for self storage property acquisitions.
LTIP units were first granted under the 2013 Long-Term Incentive Plan (the "2013 Plan"), which authorized up
to 2.5 million LTIP units for issuance. In connection with the Company's initial public offering, the Company
terminated the 2013 Plan but the awards granted thereunder remained outstanding after its termination. Restricted
common shares were first granted under the 2015 National Storage Affiliates Trust Equity Incentive Plan (the "2015
Plan"), which authorizes the Company's compensation, nominating, and corporate governance committee to grant
share options, restricted common shares, phantom shares, dividend equivalent rights, LTIP units and other restricted
limited partnership units issued by its operating partnership and other equity-based awards up to an aggregate of 5%
of the common shares issued and outstanding from time to time on a fully diluted basis (assuming, if applicable, the
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exercise of all outstanding options and the conversion of all warrants and convertible securities, including OP units
and LTIP units, into common shares).
As of December 31, 2019, the Company did not have outstanding under its equity compensation plan, any
options, warrants or rights to purchase the Company's common shares.
LTIP Units
Through December 31, 2019, an aggregate of 2,474,710 LTIP units have been issued under the 2013 Plan,
776,997 LTIP units have been issued under the 2015 Plan, and 315,567 LTIP units have been issued under the
LP Agreement. Some of the granted LTIP units vested immediately or upon completion of the Company's initial
public offering. Others vest upon the contribution of self storage properties or along a schedule at certain times
through May 15, 2022.
Compensatory Grants
The Company grants two types of compensatory LTIP units, time-based LTIP unit awards that are subject to
time-based vesting typically over a period of one to three years from the grant date, so long as such person remains
an employee or trustee, and performance-based LTIP unit awards, which are designed to align the interests of the
Company's executive officers with those of the Company's shareholders in a pay-for-performance structure. The
performance-based LTIP unit awards vest contingent upon the achievement of performance criteria measured over a
period of three years from the grant date, which is based on the Company's total shareholder return ("TSR") relative
to the TSR of the companies in the Morgan Stanley Capital International US REIT Index and the Company's TSR
relative to the TSR of its peers in the self storage industry. The value of the performance-based LTIP unit awards
therefore previously recorded
take into consideration the probability that
compensation expense is not adjusted in the event that the performance criteria is not achieved.
the awards will ultimately vest;
Compensation expense related to compensatory LTIP units granted to members of the Company's senior
management team, the Company's independent trustees, advisers, consultants and other personnel is included in
general and administrative expense in the accompanying statements of operations. Total compensation cost
recognized for the compensatory LTIP unit awards was $4.2 million, $3.6 million and $3.5 million for the years
ended December 31, 2019, 2018 and 2017, respectively. At December 31, 2019, total unvested compensation cost
not yet recognized was $3.7 million. The Company expects to recognize this compensation cost over a period of
approximately 2.4 years.
Time-based LTIP unit awards are granted with a fair value equal to the closing market price of the Company's
common shares on the date of grant. The following table summarizes activity for the time-based LTIP unit awards
for the years ended December 31, 2019, 2018 and 2017:
2019
Time-Based LTIP Unit Awards
2018
2017
Weighted
Average
Grant-Date
Fair Value
Number of
LTIP units
Weighted
Average
Grant-Date
Fair Value
Number of
LTIP units
Weighted
Average
Grant-Date
Fair Value
Number of
LTIP units
Outstanding unvested at
beginning of year
Granted
Vested
Forfeited
223,812
$
101,167
(138,028)
(5,014)
Unvested at end of year
181,937
$
23.54
27.80
22.59
26.25
26.55
227,766
$
100,176
(104,130)
—
20.37
27.08
20.18
—
294,529
$
128,051
(194,814)
—
14.74
22.89
13.43
—
223,812
$
23.54
227,766
$
20.37
The aggregate fair value of the time-based LTIP unit awards that vested during the years ended December 31,
2019, 2018 and 2017 was $3.1 million, $2.1 million and $2.6 million, respectively.
The following table summarizes activity for the performance-based LTIP unit awards granted during the year
ended December 31, 2019, 2018 and 2017, including the minimum, target and maximum number of LTIP units that
may be earned upon the achievement of the performance criteria measured over the period of three years from the
grant date.
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Outstanding unvested at December 31, 2016
Granted
Outstanding unvested at December 31, 2017
Granted
Outstanding unvested at December 31, 2018
Granted
Outstanding unvested at December 31, 2019
Performance-Based LTIP Unit Awards
Minimum
Target
Maximum
Weighted
Average
Grant-Date
Fair Value
—
—
—
—
—
—
—
—
40,390
40,390
46,017
86,407
53,128
139,535
— $
90,874
90,874
69,025
159,899
106,252
266,151
$
$
$
—
27.63
27.63
24.67
26.35
29.76
27.71
The fair value of the performance-based LTIP unit awards, which have a market condition, is estimated on the
date of grant using a Monte Carlo simulation. The simulation requires assumptions for expected volatility, risk-free
rate of return, and dividend yield. The following table summarizes the assumptions used to value the performance-
based LTIP unit awards granted during the years ended December 31, 2019, 2018 and 2017:
Risk-free interest rate
Dividend yield
Expected volatility
Acquisition Consideration Grants
2019
2018
2017
2.51 %
4.54 %
2.04 %
4.11 %
1.58 %
4.35 %
25.40 %
24.44 %
29.96 %
On December 31, 2013, the Company granted 1,683,560 LTIP units under the 2013 Plan to PROs as part of the
consideration for their respective self storage property acquisitions and contributions. The following table presents
the number of units vested for acquisition grants during the years ended December 31, 2019, 2018 and 2017:
Total unvested units, December 31, 2016
Units vested in 2017 related to properties contributed or sourced by PROs
Total unvested units, December 31, 2017
Units vested in 2018 related to properties contributed or sourced by PROs
Total unvested units, December 31, 2018
Units vested in 2019 related to properties contributed or sourced by PROs
Total unvested units, December 31, 2019
Total LTIP units
260,400
(36,400)
224,000
—
224,000
—
224,000
The aggregate fair value of purchase consideration recognized during the years ended December 31,
2017 was $0.9 million. As of December 31, 2019, the remaining unvested LTIP units will vest as additional self
storage properties are contributed or sourced by the PROs. The fair value of such LTIP units will be recorded as
additional acquisition consideration based on the fair value in the period such acquisitions are completed.
Grants to Consultants
During the years ended December 31, 2019, 2018 and 2017, the Company issued 5,714, 174 and 776 LTIP
units, respectively, that were immediately vested to consultants that provided acquisition services. During the years
ended December 31, 2019, 2018 and 2017, the self storage properties acquired were accounted for as asset
acquisitions and accordingly, the acquisition costs related to the LTIP units granted to consultants were capitalized
as part of the basis of the acquired properties. The aggregate fair value of the LTIP units was $0.2 million, less than
$0.1 million and less than $0.1 million for the years ended December 31, 2019, 2018 and 2017, respectively.
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Restricted Common Shares
Through December 31, 2019, an aggregate of 72,354 restricted common shares have been issued under the 2015
Plan. These restricted common shares vest over a weighted average period of approximately 3.0 years. Restricted
common shares are granted with a fair value equal to the closing market price of the Company's common shares on
the date of grant.
The following table summarizes activity for restricted common shares for the years ended December 31, 2019,
2018 and 2017:
2019
Year Ended December 31,
2018
2017
Number of
Restricted
Common
Shares
Weighted
Average
Grant-Date
Fair Value
Number of
Restricted
Common
Shares
Weighted
Average
Grant-Date
Fair Value
Number of
Restricted
Common
Shares
Weighted
Average
Grant-Date
Fair Value
Outstanding at
beginning of year
Granted
Vested
Forfeited
22,589
$
18,218
(10,734)
(4,294)
Unvested at end of year
25,779
$
24.83
26.46
23.54
25.61
26.26
21,585
$
12,311
(8,041)
(3,266)
22,589
$
22.43
27.26
21.88
25.35
24.83
13,590
$
16,525
(8,530)
—
12.40
24.04
14.11
—
21,585
$
22.43
The aggregate fair value of restricted common shares that vested during the years ended December 31, 2019,
2018 and 2017 was $0.3 million, $0.2 million and $0.1 million respectively. Total compensation cost recognized for
restricted common shares during the years ended December 31, 2019, 2018 and 2017 was $0.3 million, $0.3 million
and $0.2 million, respectively. At December 31, 2019, total unvested compensation cost not yet recognized was $0.4
million. The Company expects to recognize this compensation cost over a period of approximately 2.0 years. If the
grantee has a termination of service for any reason during the vesting period, the unvested restricted common shares
will be forfeited. Compensation expense related to restricted common shares is included in general and
administrative expense in the accompanying statements of operations.
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Table of Contents
10. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings (loss) per common share for the
years ended December 31, 2019, 2018 and 2017 (in thousands, except per share amounts):
Year Ended December 31,
2018
2017
2019
Earnings (loss) per common share - basic and diluted
Numerator
Net income
$
66,013
$
56,326
$
Net income attributable to noncontrolling interests
Net income attributable to National Storage Affiliates Trust
Distributions to preferred shareholders
Distributed and undistributed earnings allocated to participating
securities
Net (loss) income attributable to common shareholders -
(62,030)
3,983
(12,390)
(42,217)
14,109
(10,350)
(35)
(27)
basic and diluted
$
(8,442) $
3,732
$
45,998
(43,037)
2,961
(2,300)
(28)
633
Denominator
Weighted average shares outstanding - basic and diluted
58,208
53,293
44,423
Earnings (loss) per share - basic and diluted
Dividends declared per common share
$
$
(0.15) $
1.27
$
0.07
1.16
$
$
0.01
1.04
As discussed in Note 2, the Company allocates GAAP income (loss) utilizing the HLBV method, in which the
Company allocates income or loss based on the change in each unitholders' claim on the net assets of its operating
partnership at period end after adjusting for any distributions or contributions made during such 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 National Storage Affiliates Trust
and noncontrolling interests, resulting in volatile fluctuations of basic and diluted earnings (loss) per share.
Outstanding equity interests of the Company's operating partnership and DownREIT partnerships are
considered potential common shares for purposes of calculating diluted earnings (loss) per share as the unitholders
may, through the exercise of redemption rights, obtain common shares, subject to various restrictions. Basic
earnings per share is calculated based on the weighted average number of common shares outstanding during the
period. Diluted earnings per share is calculated by further adjusting for the dilutive impact using the treasury stock
method for unvested LTIP units subject to a service condition outstanding during the period and the if-converted
method for any convertible securities outstanding during the period.
Generally, following certain lock-out periods, OP units in the Company's operating partnership are redeemable
for cash or, at the Company's option, exchangeable for common shares on a one-for-one basis, subject to certain
adjustments and DownREIT OP units are redeemable for cash or, at the Company's option, exchangeable for OP
units in its operating partnership on a one-for-one basis, subject to certain adjustments in each case.
LTIP units may also, under certain circumstances, be convertible into OP units on a one-for-one basis, which
are then exchangeable for common shares as described above. Vested LTIP units and unvested LTIP units that vest
based on a service condition are allocated income or loss in a similar manner as OP units. Unvested LTIP units
subject to a service condition are evaluated for dilution using the treasury stock method. For the year ended
December 31, 2019, 448,089 unvested LTIP units that vest based on a service condition are excluded from the
calculation of diluted earnings (loss) per share as they are not dilutive to earnings (loss) per share. For the year
ended December 31, 2019, 224,000 unvested LTIP units that vest upon the future acquisition of properties are
excluded from the calculation of diluted earnings (loss) per share because the contingency for the units to vest has
not been attained as of the end of the reported period.
Subordinated performance units may also, under certain circumstances, be convertible into OP units which are
exchangeable for common shares as described above, and DownREIT subordinated performance units may, under
F-34
Table of Contents
certain circumstances, be exchangeable for subordinated performance units on a one-for-one basis. Subordinated
performance units are only convertible into OP units, after a two year lock-out period and then generally (i) at the
holder’s election only upon the achievement of certain performance thresholds relating to the properties to which
such subordinated performance units relate or (ii) at the Company's election upon a retirement event of a PRO that
holds such subordinated performance units or upon certain qualifying terminations. Although subordinated
performance units may only be convertible after a two year lock-out period, the Company assumes a hypothetical
conversion of each subordinated performance unit (including each DownREIT subordinated performance unit) into
OP units (with subsequently assumed redemption into common shares) for the purposes of calculating diluted
weighted average common shares. This hypothetical conversion is calculated using historical financial information,
and as a result, is not necessarily indicative of the results of operations, cash flows or financial position of the
Company upon expiration of the two-year lock out period on conversions.
For the years ended December 31, 2019, 2018 and 2017, potential common shares totaling 54.2 million, 50.6
million and 50.6 million, respectively, related to OP units, DownREIT OP units, subordinated performance units,
DownREIT subordinated performance units and vested LTIP units have been excluded from the calculation of
diluted earnings (loss) per share as they are not dilutive to earnings (loss) per share.
Participating securities, which consist of unvested restricted common shares, receive dividends equal to those
received by common shares. The effect of participating securities for the periods presented above is calculated using
the two-class method of allocating distributed and undistributed earnings.
11. RELATED PARTY TRANSACTIONS
Supervisory and Administrative Fees
For the self storage properties that are managed by the PROs, the Company has entered into asset management
agreements with the PROs to provide leasing, operating, supervisory and administrative services. The asset
management agreements generally provide for fees ranging from 5% to 6% of gross revenue for the managed self
storage properties. During the years ended December 31, 2019, 2018 and 2017, the Company incurred $20.0 million,
$16.9 million and $14.4 million, respectively, for supervisory and administrative fees to the PROs. Such fees are
included in general and administrative expenses in the accompanying statements of operations.
Payroll Services
For the self storage properties that are managed by the PROs, the employees responsible for operation of the
self storage properties are generally employees of the PROs who charge the Company for the costs associated with
the respective employees. For the years ended December 31, 2019, 2018 and 2017, the Company incurred $32.0
million, $29.5 million and $24.6 million, respectively, for payroll and related costs reimbursable to these PROs.
Such costs are included in property operating expenses in the accompanying statements of operations.
Due Diligence Costs
During the years ended December 31, 2019, 2018 and 2017, the Company incurred $0.7 million, $0.4 million
and $0.7 million, respectively, of expenses payable to certain PROs related to self storage property acquisitions
sourced by the PROs. These expenses, which are based on the volume of transactions sourced by the PROs, are
intended to reimburse the PROs for due diligence costs incurred in the sourcing and underwriting process. For the
years ended December 31, 2019, 2018 and 2017 these due diligence costs are capitalized as part of the basis of the
acquired self storage properties.
Notes Receivable
In connection with the acquisition of 16 self storage properties from PROs during the year ended December 31,
2014, the Company assumed certain mortgages that provided for interest at above-market rates. The sellers of the
self storage properties agreed to reimburse the Company for the difference between the fair value and the contractual
value of the assumed mortgages which amounted to $5.2 million. Due to the structure of the transaction, the amount
owed to the Company was considered a receivable for the issuance of equity and was recorded as an offset against
equity. During the years ended December 31, 2019 and 2018, the Company received above-market interest
reimbursements from the sellers totaling $1.3 million and $1.2 million, respectively.
In addition, in exchange for $1.3 million and $1.2 million of principal payment reimbursements received related
to these assumed mortgages during the years ended December 31, 2019 and 2018, the Company issued 37,770
common shares and 44,502 OP units to the sellers during the year ended December 31, 2019 and 2018, respectively.
F-35
Table of Contents
Self Storage Property Acquisitions
During the year ended December 31, 2019, the Company issued 11,100 subordinated performance units to an
affiliate of Personal Mini (the Company's executive chairman and former chief executive officer, Arlen D.
Nordhagen, has a noncontrolling minority ownership interest in this affiliate of Personal Mini), for $0.4 million of
co-investment related to the acquisition of a self storage property from an unrelated third party.
During the year ended December 31, 2019, the Company acquired one self storage property from the 2016 Joint
Venture for $4.1 million.
Acquisition of Interest in Reinsurance Company and Related Cash Flows
On June 1, 2019, the Company, as acquiror, and Ground Up Development LLC ("Ground Up"), an affiliate of
SecurCare and of the Company's executive chairman and former chief executive officer, Arlen D. Nordhagen,
entered into a Contribution and Purchase Agreement (the "Ground Up Contribution Agreement") whereby the
Company acquired Ground Up’s ownership interest (approximately 5.5%) in SBOA TI Reinsurance Ltd. (the
"Reinsurance Company"), a Cayman Islands exempted company. The Reinsurance Company provides reinsurance
for a self storage tenant insurance program issued by a licensed insurance company, whereby tenants of the
Company's self storage facilities and tenants of other operators participating in the program can purchase insurance
to cover damage or destruction to their personal property while stored at such facilities. The Company will now be
entitled to receive its share of distributions of any profits generated by the Reinsurance Company, depending on
actual losses incurred by the program. As part of the transaction, the Company also acquired the rights to the access
fees previously earned by Ground Up associated with the tenant insurance-related arrangements. For the Company's
properties managed by SecurCare, in addition to the tenant insurance revenues the Company received directly from
the program insurer, the Company also receives these additional access fees.
The consideration paid for the interest in the Reinsurance Company was $15.1 million, which consisted of $6.6
million of cash and 285,512 OP units totaling $8.5 million. Of the total consideration transferred, Arlen D.
Nordhagen received $2.2 million of cash and 95,170 OP Units totaling approximately $2.8 million. The Ground Up
Contribution Agreement contains customary representations, warranties, covenants and agreements of the Company
and Ground Up.
The Company allocated the total purchase price to the estimated fair value of the assets acquired, consisting of
$0.5 million of equity interest in the Reinsurance Company and $14.6 million as an intangible related to the acquired
access fees and rights to control the tenant insurance-related arrangements. These assets are reported in other assets,
net in the Company's consolidated balance sheets. The intangible asset is amortized on a straight-line basis over 25
years, which approximates the weighted average remaining useful life of the SecurCare-managed properties, and is
recorded in depreciation and amortization expense in the Company's consolidated statements of operations.
12. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company is subject to litigation, claims, and assessments that may arise in the ordinary course of its
business activities. Such matters include contractual matters, employment related issues, and regulatory proceedings.
Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of
such matters will not have a material adverse effect on the Company's financial position, results of operations, or
liquidity.
13. LEASES
The Company determines if a contractual arrangement is a lease at inception. As a lessee, the Company has
non-cancelable lease agreements for real estate and its corporate office space that are classified as operating leases.
The Company's operating leases are included in operating lease right-of-use ("ROU") assets and operating lease
liabilities in its consolidated balance sheets. Operating lease ROU assets and liabilities are recognized at
commencement date based on the present value of lease payments over the lease term. As the Company's operating
leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information
available at commencement date in determining the discount rate for the present value of the lease payments. To the
extent that the lease agreements provide for fixed increases throughout the term of the lease, the Company
recognizes lease expense on a straight-line basis over the expected lease terms.
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Table of Contents
Real Estate Leasehold Interests
The Company has eight properties that are subject to non-cancelable leasehold interest agreements with
remaining lease terms ranging from 15 to 73 years, inclusive of extension options that the Company anticipates
exercising. Rent expense under these leasehold interest agreements is included in property operating expenses in the
accompanying consolidated statements of operations and amounted to $1.6 million, $1.6 million and $1.2 million for
the years ended December 31, 2019, 2018 and 2017, respectively.
Office Leases
The Company has entered into non-cancelable lease agreements for its corporate office space with remaining
lease terms ranging from three to seven years. Rent expense related to these office leases is included in general and
administrative expenses in the accompanying consolidated statements of operations and amounted to $0.3 million,
$0.2 million and $0.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.
The weighted-average remaining lease term and the weighted-average discount rate for the Company's
operating leases as of December 31, 2019 are as follows:
Weighted-average remaining lease term
Real estate leasehold interests
Office leases
Weighted-average remaining discount rate
Real estate leasehold interests
Office leases
December 31, 2019
29 years
7 years
4.9 %
4.1 %
As of December 31, 2019, the future minimum lease payments under the Company's operating leases, for which
the Company is a lessee, are as follows (in thousands):
Real Estate
Leasehold Interests
1,419
$
Year Ending December 31,
2020
2021
2022
2023
2024
2025 through 2092
Total lease payments
Less imputed interest
Total
$
$
Office Leases
Total
286
387
381
346
353
691
2,444
(323)
2,121
$
$
$
1,705
1,831
1,840
1,810
1,823
37,419
46,428
(21,763)
24,665
$
$
$
1,444
1,459
1,464
1,470
36,728
43,984
(21,440)
22,544
As of December 31, 2018, the future minimum lease payments under the Company's operating leases, for which
the Company is a lessee, are as follows (in thousands):
Year Ending December 31,
2019
2020
2021
2022
2023
2024 through 2092
Total lease payments
$
Real Estate
Leasehold Interests
1,334
$
$
1,379
1,404
1,419
1,424
36,074
43,034
$
F-37
Office Leases
Total
$
345
398
387
381
346
1,073
2,930
$
1,679
1,777
1,791
1,800
1,770
37,147
45,964
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14. FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
The Company sometimes limits its exposure to interest rate fluctuations by entering into interest rate swap
agreements. The interest rate swap agreements moderate the Company's exposure to interest rate risk by effectively
converting the interest on variable rate debt to a fixed rate. The Company measures its interest rate swap derivatives
at fair value on a recurring basis. The effective portion of changes in the fair value of derivatives designated and that
qualify as cash flow hedges are recorded in accumulated other comprehensive income (loss) and are subsequently
reclassified into earnings in the period that the hedged transaction affects earnings. The ineffective portion of the
change in fair value of the derivatives is recognized directly into earnings.
Information regarding the Company's interest rate swaps measured at fair value, which are classified within
Level 2 of the GAAP fair value hierarchy, is presented below (dollars in thousands):
Interest Rate Swaps
Designated as Cash
Flow Hedges
Fair value at December 31, 2017
Gains on interest rate swaps reclassified into interest expense from accumulated other
comprehensive income
Unrealized gains on interest rate swaps included in accumulated other comprehensive
income
Fair value at December 31, 2018
Gains on interest rate swaps reclassified into interest expense from accumulated other
comprehensive income
Unrealized losses on interest rate swaps included in accumulated other comprehensive
income
Fair value at December 31, 2019
$
$
$
12,414
(1,817)
3,598
14,195
(3,337)
(29,941)
(19,083)
As of December 31, 2019 and 2018, the Company had outstanding interest rate swaps designated as cash flow
hedges with aggregate notional amounts of $1,125.0 million and $795.0 million, respectively. As of December 31,
2019, the Company's swaps had a weighted average remaining term of 4.3 years. The fair value of these swaps are
presented within other assets and accounts payable and accrued liabilities in the accompanying balance sheets, and
the Company recognizes any changes in the fair value as an adjustment of accumulated other comprehensive income
(loss) within equity to the extent of their effectiveness. If the forward rates at December 31, 2019 remain constant,
the Company estimates that during the next 12 months, the Company would reclassify into earnings approximately
$3.2 million of the unrealized losses included in accumulated other comprehensive income (loss). If market interest
rates increase above the 1.90% weighted average fixed rate under these interest rate swaps the Company will benefit
from net cash payments due to it from its counterparty to the interest rate swaps.
There were no transfers between levels during the years ended December 31, 2019 and 2018. For financial
assets and liabilities that utilize Level 2 inputs, the Company utilizes both direct and indirect observable price
quotes, including LIBOR yield curves. The Company uses valuation techniques for Level 2 financial assets and
liabilities which include LIBOR yield curves at the reporting date as well as assessing counterparty credit risk.
Counterparties to these contracts are highly rated financial institutions. Although the Company has determined that
the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit
valuation adjustments associated with the Company's derivatives utilize Level 3 inputs, such as estimates of current
credit spreads, to evaluate the likelihood of default by the Company and the counterparties. As of December 31,
2019 and 2018, the Company determined that the effect of credit valuation adjustments on the overall valuation of
its derivative positions are not significant to the overall valuation of its derivatives. Therefore, the Company has
determined that its derivative valuations are appropriately classified in Level 2 of the fair value hierarchy.
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Table of Contents
Fair Value Disclosures
The carrying values of cash and cash equivalents, restricted cash, trade receivables, accounts payable and
accrued liabilities and equity securities reflected in the balance sheets at December 31, 2019 and 2018, approximate
fair value due to the short term nature of these financial assets and liabilities. The carrying value of variable rate debt
financing reflected in the balance sheets at December 31, 2019 and 2018 approximates fair value as the changes in
their associated interest rates reflect the current market and credit risk is similar to when the loans were originally
obtained.
The fair values of fixed rate mortgages were estimated using the discounted estimated future cash payments to
be made on such debt; the discount rates used approximated current market rates for loans, or groups of loans, with
similar maturities and credit quality (categorized within Level 2 of the fair value hierarchy). The combined principal
balance of the Company's fixed rate mortgages payable was approximately $264.3 million as of December 31, 2019
with a fair value of approximately $280.9 million. In determining the fair value, the Company estimated a weighted
average market interest rate of approximately 3.28%, compared to the weighted average contractual interest rate of
4.81%. The combined principal balance of the Company's fixed rate mortgages was approximately $268.1 million as
of December 31, 2018 with a fair value of approximately $276.5 million. In determining the fair value as of
December 31, 2018, the Company estimated a weighted average market interest rate of approximately 4.17%,
compared to the weighted average contractual interest rate of 4.85%.
15. UNAUDITED SELECTED QUARTERLY FINANCIAL DATA
The following is a summary of quarterly financial information for the years ended December 31, 2019 and 2018
(in thousands, except per share data):
Total revenues
Total operating expenses
Gain on sale of self storage properties
Net income
Net income (loss) attributable to
common shareholders
Earnings (loss) per share - basic
Earnings (loss) per share - diluted
Total revenues
Total operating expenses
Gain (loss) on sale of self storage
properties
Net income
Net income (loss) attributable to
common shareholders
Earnings (loss) per share - basic
Earnings (loss) per share - diluted
March 31,
2019
For the three months ended
June 30,
2019
September 30,
2019
December 31,
2019
90,572
$
95,419
$
101,337
$
61,572
—
12,940
64,189
2,814
17,733
68,625
—
16,514
4,823
0.08
0.08
$
$
$
(10,913) $
(12,132) $
(0.19) $
(0.19) $
(0.20) $
(0.20) $
100,568
66,661
—
18,826
9,815
0.17
0.13
March 31,
2018
For the three months ended
June 30,
2018
September 30,
2018
December 31,
2018
76,493
$
79,723
$
85,382
$
54,900
474
11,973
7,872
0.16
0.09
$
$
$
56,033
(83)
13,041
3,304
0.07
0.07
$
$
$
57,869
—
16,829
1,806
0.03
0.03
$
$
$
89,298
60,440
—
14,483
(9,223)
(0.16)
(0.16)
$
$
$
$
$
$
$
$
F-39
Table of Contents
16. SUBSEQUENT EVENTS
Internalization and Acquisition of PRO
On February 24, 2020, the Company entered into a definitive agreement with SecurCare, and, among others,
Arlen Nordhagen, the Company's executive chairman and former chief executive officer, who owns approximately
53% of SecurCare's outstanding shares, to merge SecurCare into a wholly owned subsidiary of the Company. On the
same day, the Company entered into a definitive agreement with DLAN Corporation ("DLAN") to merge DLAN
into another wholly owned subsidiary of the Company. DLAN is an entity controlled by Mr. Nordhagen that was
formed solely to hold OP units and DownREIT OP units, and it is owned by Mr. Nordhagen's spouse, Wendy
Nordhagen, and David Lamb, who is a key person of another existing PRO of the Company.
As a result of the SecurCare merger, SecurCare's property management platform and related intellectual
property will be internalized by the Company, and the Company will no longer pay any supervisory and
administrative fees or reimbursements to SecurCare. In addition, distributions on the series of subordinated
performance units related to SecurCare's managed portfolio (the "Series SC subordinated performance units") will
be discontinued.
As part of the internalization, most of SecurCare's employees and other key persons will be offered employment
by the Company and will continue managing SecurCare's portfolio of properties under the brand SecurCare as
members of the Company's existing property management platform. Under the terms of the Company's facilities
portfolio management agreement with SecurCare, in connection with a retirement event leading to the internalization
of SecurCare's property management platform, SecurCare is entitled to receive OP units in exchange for its property
management platform and related intellectual property based on a contractual formula. The Company has
determined that SecurCare would be entitled to receive 384,020 OP units as part of the internalization transaction.
The Company expects that the acquisition of SecurCare's property management platform and related intellectual
property will be accounted for as a business combination, whereby the Company will allocate the total purchase
price to the estimated fair value of tangible and intangible assets acquired, and liabilities assumed.
Immediately prior to the completion of the mergers, giving effect to the OP units that SecurCare owns or would
be entitled to receive as part of the internalization and the conversion of 2,015,808 of the Series SC subordinated
performance units into 6,769,083 OP units in connection with a retirement event leading to the internalization of
SecurCare's property management platform, SecurCare and DLAN will own, or have the right to receive, an
aggregate of 8,187,052 OP units. While OP units are economically equivalent to and exchangeable for common
shares on a one-to-one basis, in the SecurCare and DLAN mergers, the Company expects to issue 8,105,192
common shares to the owners of SecurCare and DLAN, which represents a 1% discount to the number OP units that
each of SecurCare and DLAN will own or be entitled to receive as set forth above immediately prior to the mergers.
Of the total number of common shares expected to be issued to the owners of SecurCare, approximately 4.1 million
common shares are expected to be issued to Mr. Nordhagen.
Although the Company currently expects to complete the transactions described above during the second
quarter of 2020, they are subject to customary closing conditions, and there is no assurance that the transactions will
be consummated at all or at the time or pursuant to the terms currently contemplated.
Self Storage Property Acquisitions
In January and February 2020, the Company acquired 34 self storage properties for approximately $205.8
million. Consideration for these acquisitions included approximately $200.6 million of net cash, the assumption of
$0.9 million of other working capital liabilities and OP equity of approximately $4.3 million (consisting of the
issuance of 73,329 OP Units, 28,894 LTIP units and 13,105 subordinated performance units). In connection with
these acquisitions, the Company reimbursed the PROs for $0.2 million of due diligence costs related to the self
storage properties sourced by the PROs.
In February 2020, the 2016 Joint Venture acquired two self storage properties for approximately $12.1 million.
The 2016 Joint Venture financed the acquisitions with capital contributions from the 2016 Joint Venture members,
of which the Company contributed $3.0 million.
Subordinated Performance Unit To OP Unit Conversions
Subordinated performance units are convertible into OP units after a two year lock-out period and then
generally (i) at the holder’s election only upon the achievement of certain performance thresholds relating to the
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Table of Contents
properties to which such subordinated performance units relate (a "voluntary conversion") or (ii) at the Company's
election upon a retirement event of a PRO that holds such subordinated performance units or upon certain qualifying
terminations.
Following such lock-out period, a holder of subordinated performance units in the Company's operating
partnership may elect a voluntary conversion one time each year prior to December 1st to convert a pre-determined
portion of such subordinated performance units into OP units in the Company's operating partnership, with such
conversion effective January 1st of the following year with each subordinated performance unit being converted into
the number of OP units determined by dividing the average cash available for distribution, or CAD, per unit on the
series of specific subordinated performance units over the one-year period prior to conversion by 110% of the CAD
per unit on the OP units determined over the same period. CAD per unit on the series of specific subordinated
performance units and OP units is determined by the Company based generally upon the application of the
provisions of the operating partnership agreement applicable to the distributions of operating cash flow and capital
transactions proceeds.
During the year ended December 31, 2019, the Company received notices requesting the conversion of 332,738
subordinated performance units. Effective January 1, 2020, the Company issued 445,701 OP units in satisfaction of
such conversion requests.
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Table of Contents
NATIONAL STORAGE AFFILIATES TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2019
(dollars in thousands)
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Mobile
Lake Havasu City-Kingman
Lake Havasu City-Kingman
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Phoenix-Mesa-Scottsdale
Tucson
Tucson
Tucson
Tucson
Tucson
Bakersfield
Bakersfield
AL
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
CA
CA
$
$
991
671
722
1,089
3,813
1,375
1,653
1,661
1,050
1,198
1,324
3,816
5,576
1,506
2,120
1,809
840
2,111
748
676
1,011
1,125
949
1,419
1,117
1,231
806
421
716
358
439
606
511
1,409
$
753
53
66
89
91
94
47
75
49
49
64
38
283
226
26
53
18
37
204
81
65
78
59
71
224
9
179
116
26
499
54
419
207
203
$
991
671
722
1,089
3,813
1,375
1,653
1,661
1,050
1,198
1,324
3,816
5,576
1,609
2,120
1,809
840
2,111
748
676
1,011
1,125
949
1,419
1,117
1,231
806
421
716
358
439
606
511
1,228
$
4,874
1,572
2,546
6,607
7,831
2,613
7,531
3,311
5,359
1,921
3,626
4,348
6,746
2,881
5,442
4,787
5,274
7,963
4,027
4,098
3,453
3,554
7,351
5,504
5,918
5,107
4,041
3,855
1,365
2,047
2,501
2,580
2,804
3,907
F-42
$
5,627
1,625
2,612
6,696
7,922
2,707
7,578
3,386
5,408
1,970
3,690
4,386
7,029
3,107
5,468
4,840
5,292
8,000
4,231
4,179
3,518
3,632
7,410
5,575
6,142
5,116
4,220
3,971
1,391
2,546
2,555
2,999
3,011
4,110
$
6,618
2,296
3,334
7,785
11,735
4,082
9,231
5,047
6,458
3,168
5,014
8,202
12,605
4,716
7,588
6,649
6,132
10,111
4,979
4,855
4,529
4,757
8,359
6,994
7,259
6,347
5,026
4,392
2,107
2,904
2,994
3,605
3,522
5,338
1,196
486
845
1,657
1,493
906
1,240
703
697
433
668
767
1,343
421
534
397
422
586
367
318
263
317
472
421
383
186
79
709
460
223
216
274
469
572
4/12/2016
4/1/2014
7/1/2014
6/30/2014
9/30/2014
9/30/2014
10/1/2014
10/1/2014
1/1/2015
5/1/2015
5/1/2015
5/1/2015
5/19/2016
7/29/2016
2/13/2017
1/4/2018
1/4/2018
1/4/2018
1/11/2018
1/11/2018
1/11/2018
1/11/2018
1/11/2018
1/11/2018
2/1/2018
1/1/2019
6/19/2019
8/29/2013
8/29/2013
1/4/2018
1/4/2018
1/4/2018
8/1/2016
8/1/2016
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Bakersfield
Bakersfield
Bakersfield
Bakersfield
Bakersfield
Bakersfield
Fresno
Los Angeles-Long Beach-Anaheim
Los Angeles-Long Beach-Anaheim
Los Angeles-Long Beach-Anaheim
Los Angeles-Long Beach-Anaheim
Los Angeles-Long Beach-Anaheim
Los Angeles-Long Beach-Anaheim
Los Angeles-Long Beach-Anaheim(3)
Los Angeles-Long Beach-Anaheim(3)
Los Angeles-Long Beach-Anaheim(3)(4)
Los Angeles-Long Beach-Anaheim(3)
Los Angeles-Long Beach-Anaheim(3)
Los Angeles-Long Beach-Anaheim(3)
Los Angeles-Long Beach-Anaheim(4)
Los Angeles-Long Beach-Anaheim(4)
Modesto
Modesto
Nonmetropolitan Area
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
1,882
1,355
1,306
1,016
1,579
750
840
1,530
2,345
1,350
763
6,641
1,122
14,109
7,186
—
2,366
2,871
5,448
—
—
1,526
773
425
1,842
1,981
3,418
1,913
772
597
3,022
2,897
2,835
2,484
1,139
112
314
133
127
121
128
460
313
684
169
231
79
36
305
278
62
130
49
237
55
124
67
19
22
55
75
203
22
98
80
95
671
858
83
36
1,882
1,355
1,306
1,016
1,579
750
840
1,530
2,345
1,350
763
6,641
1,122
14,109
7,186
—
2,366
2,871
5,448
—
—
1,526
773
425
1,842
1,981
3,418
1,913
772
597
3,022
2,467
2,164
2,484
1,139
3,858
4,678
3,440
3,638
3,357
5,802
7,502
5,799
6,820
11,266
6,258
8,239
1,881
23,112
12,771
7,106
4,892
3,703
10,015
13,150
10,084
12,032
5,655
7,249
3,420
3,323
9,907
6,072
4,044
5,464
8,124
5,725
5,589
5,903
5,054
F-43
3,970
4,992
3,573
3,765
3,478
5,930
7,962
6,112
7,504
11,435
6,489
8,318
1,917
23,417
13,049
7,168
5,022
3,752
10,252
13,205
10,208
12,099
5,674
7,271
3,475
3,398
10,110
6,094
4,142
5,544
8,219
6,396
6,447
5,986
5,090
5,852
6,347
4,879
4,781
5,057
6,680
8,802
7,642
9,849
12,785
7,252
14,959
3,039
37,526
20,235
7,168
7,388
6,623
15,700
13,205
10,208
13,625
6,447
7,696
5,317
5,379
13,528
8,007
4,914
6,141
11,241
8,863
8,611
8,470
6,229
643
740
704
495
577
820
1,495
619
772
1,321
763
1,503
468
5,156
2,782
1,485
1,122
718
2,309
2,219
668
1,509
592
822
603
735
1,629
1,105
918
897
1,517
1,483
1,357
879
880
8/1/2016
8/1/2016
8/1/2016
8/1/2016
8/1/2016
8/1/2016
8/1/2016
8/1/2016
8/1/2016
8/1/2016
8/1/2016
4/1/2014
6/30/2014
9/17/2014
9/17/2014
9/17/2014
9/17/2014
10/7/2014
10/7/2014
1/1/2015
10/3/2017
11/10/2016
11/10/2016
11/10/2016
1/1/2015
1/1/2015
8/5/2015
8/5/2015
8/5/2015
8/5/2015
8/5/2015
8/5/2015
8/5/2015
8/5/2015
10/1/2015
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario(3)
Riverside-San Bernardino-Ontario
Riverside-San Bernardino-Ontario
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
1,401
925
1,174
1,506
631
1,318
1,942
1,339
1,105
1,542
1,478
3,245
670
538
382
806
570
345
252
2,691
302
896
552
1,342
1,672
978
1,068
1,202
1,803
1,337
846
1,026
1,878
3,974
2,018
30
52
107
47
63
56
37
55
59
44
45
1,457
450
384
338
569
360
163
339
209
115
515
130
266
61
307
119
94
148
70
122
83
98
150
728
1,401
925
1,174
1,506
631
1,318
1,942
1,339
1,105
1,542
1,478
3,245
670
538
382
806
570
345
252
2,691
302
896
552
1,342
1,672
978
1,068
1,202
1,803
1,337
846
1,026
1,878
3,974
2,018
4,577
3,459
2,556
2,913
2,307
2,394
2,647
2,830
2,672
2,127
4,534
4,420
8,613
3,921
3,442
3,852
4,238
3,270
4,419
3,950
4,169
6,397
3,010
4,446
2,564
1,854
2,609
2,032
2,758
4,489
2,508
4,552
5,104
6,962
3,478
F-44
4,607
3,511
2,663
2,960
2,370
2,450
2,684
2,885
2,731
2,171
4,579
5,877
9,063
4,305
3,780
4,421
4,598
3,433
4,758
4,159
4,284
6,912
3,140
4,712
2,625
2,161
2,728
2,126
2,906
4,559
2,630
4,635
5,202
7,112
4,206
6,008
4,436
3,837
4,466
3,001
3,768
4,626
4,224
3,836
3,713
6,057
9,122
9,733
4,843
4,162
5,227
5,168
3,778
5,010
6,850
4,586
7,808
3,692
6,054
4,297
3,139
3,796
3,328
4,709
5,896
3,476
5,661
7,080
11,086
6,224
619
627
559
495
537
528
681
564
640
506
632
1,289
1,063
540
475
558
548
460
584
480
489
753
953
1,648
631
710
765
528
929
1,011
812
971
969
1,882
1,430
10/1/2015
10/1/2015
10/1/2015
10/1/2015
10/1/2015
10/1/2015
10/1/2015
10/1/2015
10/1/2015
10/1/2015
10/1/2015
5/16/2016
8/1/2016
8/1/2016
8/1/2016
8/1/2016
8/1/2016
8/1/2016
9/1/2016
9/1/2016
5/8/2017
5/31/2017
5/16/2008
4/1/2013
4/1/2014
5/30/2014
5/30/2014
6/30/2014
6/30/2014
6/30/2014
7/1/2014
9/17/2014
9/17/2014
10/1/2014
10/1/2014
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Riverside-San Bernardino-Ontario
Sacramento-Roseville-Arden-Arcade
Sacramento-Roseville-Arden-Arcade
San Diego-Carlsbad
San Diego-Carlsbad(3)
San Diego-Carlsbad
San Diego-Carlsbad(4)
San Diego-Carlsbad(4)
Stockton-Lodi
Stockton-Lodi
Stockton-Lodi
Colorado Springs
Colorado Springs
Colorado Springs
Colorado Springs
Colorado Springs(3)
Colorado Springs
Denver-Aurora-Lakewood
Denver-Aurora-Lakewood
Fort Collins
Fort Collins
Pueblo
Cape Coral-Fort Myers(3)
Crestview-Fort Walton Beach-Destin
Crestview-Fort Walton Beach-Destin
Crestview-Fort Walton Beach-Destin
Crestview-Fort Walton Beach-Destin
Gainesville
Gainesville
Gainesville(3)
Jacksonville
Jacksonville
Jacksonville
Lakeland-Winter Haven(3)
Naples-Immokalee-Marco Island(3)
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
1,644
1,195
1,652
4,318
3,703
3,544
—
—
559
1,710
1,637
455
588
632
414
300
766
868
938
3,213
2,514
156
4,122
684
2,001
813
1,285
1,072
264
457
2,087
1,629
527
972
3,849
61
35
223
1,087
89
265
127
72
15
50
55
65
1,139
419
351
129
625
2,306
39
226
115
16
55
16
3
7
7
72
94
6
157
315
927
157
118
1,644
1,195
1,652
4,323
3,703
3,544
—
—
559
1,710
1,637
455
588
632
414
300
766
868
938
3,213
2,514
156
4,122
684
2,001
813
1,285
1,072
264
457
2,087
1,629
527
972
3,849
2,588
8,407
9,510
19,775
5,582
4,915
5,568
4,041
5,514
8,995
11,901
1,351
2,162
3,118
1,535
1,801
5,901
128
8,449
3,087
1,786
2,797
8,453
12,857
12,948
3,509
5,292
4,698
2,369
2,120
19,473
4,929
2,434
2,159
16,688
F-45
2,649
8,442
9,733
20,862
5,671
5,180
5,695
4,113
5,529
9,045
11,956
1,416
3,301
3,537
1,886
1,930
6,526
2,434
8,488
3,313
1,901
2,813
8,508
12,873
12,951
3,516
5,299
4,770
2,463
2,126
19,630
5,244
3,361
2,316
16,806
4,293
9,637
11,385
25,185
9,374
8,724
5,695
4,113
6,088
10,755
13,593
1,871
3,889
4,169
2,300
2,230
7,292
3,302
9,426
6,526
4,415
2,969
12,630
13,557
14,952
4,329
6,584
5,842
2,727
2,583
21,717
6,873
3,888
3,288
20,655
223
856
560
2,110
1,079
1,063
795
1,050
584
1,089
915
461
978
1,152
616
521
553
593
771
1,046
599
375
1,128
325
218
5
9
387
117
5
1,808
641
377
438
1,892
5/17/2018
11/10/2016
9/26/2018
8/1/2016
9/17/2014
10/1/2014
1/1/2015
1/31/2015
11/10/2016
11/10/2016
7/31/2017
8/29/2007
3/26/2008
3/26/2008
5/1/2008
6/1/2009
10/19/2017
6/22/2009
11/1/2016
8/29/2007
8/29/2007
2/17/2016
4/1/2016
1/1/2019
6/21/2019
12/17/2019
12/17/2019
1/10/2018
12/18/2018
12/19/2019
11/10/2016
11/10/2016
12/20/2017
5/4/2015
4/1/2016
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
North Port-Sarasota-Bradenton(3)
North Port-Sarasota-Bradenton(3)
North Port-Sarasota-Bradenton(3)
North Port-Sarasota-Bradenton
North Port-Sarasota-Bradenton(3)
North Port-Sarasota-Bradenton
North Port-Sarasota-Bradenton(3)
North Port-Sarasota-Bradenton(3)
North Port-Sarasota-Bradenton(3)
North Port-Sarasota-Bradenton(3)
North Port-Sarasota-Bradenton
North Port-Sarasota-Bradenton
North Port-Sarasota-Bradenton
North Port-Sarasota-Bradenton
Orlando-Kissimmee-Sanford
Orlando-Kissimmee-Sanford
Orlando-Kissimmee-Sanford
Orlando-Kissimmee-Sanford
Palm Bay-Melbourne-Titusville
Panama City
Panama City
Pensacola-Ferry Pass-Brent
Pensacola-Ferry Pass-Brent
Pensacola-Ferry Pass-Brent
Pensacola-Ferry Pass-Brent
Punta Gorda(3)
Tampa-St. Petersburg-Clearwater(3)
Tampa-St. Petersburg-Clearwater(3)
Tampa-St. Petersburg-Clearwater
Tampa-St. Petersburg-Clearwater
Tampa-St. Petersburg-Clearwater
Tampa-St. Petersburg-Clearwater
The Villages
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
GA
GA
2,211
2,488
1,767
2,143
1,924
1,176
1,839
2,507
1,685
437
1,015
1,985
1,336
2,105
2,426
2,166
4,583
4,181
1,125
2,332
810
1,025
841
644
1,182
1,157
5,436
361
3,581
4,708
2,063
1,248
897
515
272
62
152
22
3,863
278
7
40
56
72
206
23
892
2
16
130
103
102
177
8
10
24
120
233
156
4
813
43
98
57
86
188
—
36
111
503
2,211
2,488
1,767
3,373
1,924
1,176
1,839
2,507
1,685
437
1,015
1,985
1,336
2,105
2,426
2,166
4,583
4,181
1,125
2,332
810
1,025
841
644
1,182
1,157
5,436
361
3,581
4,708
2,063
1,248
897
515
272
5,682
7,282
5,955
5,005
4,514
3,421
8,377
7,766
5,439
5,128
3,031
4,299
4,085
8,217
9,314
4,672
8,752
4,268
4,362
6,847
3,105
8,157
5,075
4,785
5,008
2,079
10,092
1,238
2,612
13,984
5,351
2,937
6,132
687
1,357
F-46
5,744
7,434
5,977
8,868
4,792
3,428
8,417
7,822
5,511
5,334
3,054
5,191
4,087
8,233
9,444
4,775
8,854
4,445
4,370
6,857
3,129
8,277
5,308
4,941
5,012
2,892
10,135
1,336
2,669
14,070
5,539
2,937
6,168
798
1,860
7,955
9,922
7,744
12,241
6,716
4,604
10,256
10,329
7,196
5,771
4,069
7,176
5,423
10,338
11,870
6,941
13,437
8,626
5,495
9,189
3,939
9,302
6,149
5,585
6,194
4,049
15,571
1,697
6,250
18,778
7,602
4,185
7,065
1,313
2,132
737
906
831
1,348
708
443
923
941
726
728
376
573
354
320
1,018
579
1,197
496
143
136
39
601
411
212
98
286
1,349
337
407
1,184
248
4
291
280
559
4/1/2016
4/1/2016
4/1/2016
10/11/2016
4/1/2016
4/1/2016
4/1/2016
4/1/2016
4/1/2016
4/1/2016
4/1/2016
1/31/2017
4/6/2017
1/1/2019
11/10/2016
11/10/2016
11/10/2016
6/30/2017
1/1/2019
6/21/2019
8/22/2019
10/3/2017
2/20/2018
12/12/2018
6/21/2019
4/27/2017
4/1/2016
5/4/2015
5/1/2017
5/24/2017
8/28/2018
12/18/2019
1/1/2019
8/29/2007
8/29/2007
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell(3)
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Atlanta-Sandy Springs-Roswell
Augusta-Richmond County
Augusta-Richmond County
Augusta-Richmond County
Augusta-Richmond County
Augusta-Richmond County
Columbus(3)
Macon
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
702
1,413
341
553
85
494
1,614
1,595
666
1,028
748
703
1,873
547
1,499
763
795
1,356
912
570
1,052
430
972
919
520
765
686
527
84
205
1,424
875
1,277
169
180
532
183
135
178
298
255
1,725
2,050
52
56
70
98
93
50
58
61
25
23
53
122
89
53
56
63
28
29
25
3
204
182
59
26
26
171
66
702
1,413
341
553
85
494
1,614
1,595
666
1,028
748
703
1,873
547
1,499
763
600
1,356
912
570
1,052
430
972
919
520
765
686
527
84
205
1,424
875
1,277
169
180
1,999
1,590
562
847
445
2,215
2,476
2,143
5,961
7,041
3,382
4,014
9,109
4,073
5,279
5,135
2,941
7,516
5,074
3,477
7,102
3,470
2,342
3,899
3,708
2,872
3,821
10,404
539
686
10,439
6,231
7,494
342
840
F-47
2,531
1,773
697
1,025
743
2,470
4,201
4,193
6,013
7,097
3,452
4,112
9,202
4,123
5,337
5,196
2,966
7,539
5,127
3,599
7,191
3,523
2,398
3,962
3,736
2,901
3,846
10,407
743
868
10,498
6,257
7,520
513
906
3,233
3,186
1,038
1,578
828
2,964
5,815
5,788
6,679
8,125
4,200
4,815
11,075
4,670
6,836
5,959
3,566
8,895
6,039
4,169
8,243
3,953
3,370
4,881
4,256
3,666
4,532
10,934
827
1,073
11,922
7,132
8,797
682
1,086
821
608
267
383
291
791
529
561
578
749
319
373
773
367
480
389
265
651
393
332
540
527
320
249
138
110
119
133
258
292
310
138
182
158
287
8/29/2007
8/29/2007
8/29/2007
8/29/2007
9/28/2007
9/28/2007
7/29/2015
7/29/2015
7/17/2017
10/19/2017
10/19/2017
10/19/2017
10/19/2017
10/19/2017
10/19/2017
10/19/2017
10/19/2017
10/19/2017
10/19/2017
10/19/2017
10/19/2017
3/29/2016
8/17/2016
5/21/2018
1/4/2019
1/4/2019
1/4/2019
7/24/2019
8/29/2007
8/29/2007
2/5/2019
5/28/2019
5/28/2019
5/1/2009
9/28/2007
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Savannah
Savannah(3)
Savannah
Savannah
Savannah
Valdosta
Nonmetropolitan Area
Nonmetropolitan Area
Nonmetropolitan Area
Nonmetropolitan Area
St. Louis
St. Louis
St. Louis
St. Louis
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Indianapolis-Carmel-Anderson
Kansas City
Kansas City
Kansas City
Kansas City(3)
Kansas City
GA
GA
GA
GA
GA
GA
GA
ID
ID
ID
IL
IL
IL
IL
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
KS
KS
KS
KS
KS
1,741
597
409
811
1,280
1,321
599
1,133
362
413
225
179
226
174
855
815
688
626
1,118
614
619
689
609
532
433
688
575
522
528
1,257
816
975
719
521
640
437
168
30
157
69
4
14
34
4
5
187
335
252
274
24
13
30
36
281
41
20
38
39
34
20
40
65
28
13
29
133
183
168
176
127
1,741
597
409
811
1,280
1,321
599
1,133
362
413
225
179
226
174
855
815
688
626
1,118
614
619
689
609
532
433
688
575
522
528
1,257
816
975
719
521
640
1,160
762
1,335
1,181
7,211
3,320
3,714
5,634
2,523
2,114
4,394
5,154
3,088
3,338
7,273
3,844
3,845
4,049
4,444
5,487
2,140
6,944
3,172
5,441
5,817
5,413
5,168
5,366
2,877
6,694
5,432
6,967
5,143
5,168
3,367
F-48
1,597
930
1,365
1,338
7,280
3,324
3,728
5,668
2,527
2,119
4,581
5,489
3,340
3,612
7,297
3,857
3,875
4,085
4,725
5,528
2,160
6,982
3,211
5,475
5,837
5,453
5,233
5,394
2,890
6,723
5,565
7,150
5,311
5,344
3,494
3,338
1,527
1,774
2,149
8,560
4,645
4,327
6,801
2,889
2,532
4,806
5,668
3,566
3,786
8,152
4,672
4,563
4,711
5,843
6,142
2,779
7,671
3,820
6,007
6,270
6,141
5,808
5,916
3,418
7,980
6,381
8,125
6,030
5,865
4,134
456
323
473
482
176
115
53
203
59
44
424
519
351
336
999
655
663
615
921
734
391
762
483
592
603
685
615
595
315
611
524
711
453
360
242
8/29/2007
9/28/2007
1/31/2014
6/25/2014
5/15/2019
1/1/2019
8/30/2019
4/1/2019
6/24/2019
6/24/2019
8/28/2017
8/28/2017
8/28/2017
9/25/2017
2/16/2016
2/16/2016
2/16/2016
2/25/2016
2/25/2016
2/25/2016
11/10/2016
11/10/2016
11/10/2016
11/10/2016
11/10/2016
11/10/2016
11/10/2016
11/10/2016
10/19/2017
10/19/2017
10/19/2017
10/19/2017
10/19/2017
3/1/2018
5/31/2018
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Kansas City
Kansas City
Kansas City
Wichita(3)
Wichita(3)
Wichita(3)
Wichita
Wichita
Wichita
Wichita
Wichita
Louisville/Jefferson County
Baton Rouge
Baton Rouge
Baton Rouge
Baton Rouge
New Orleans-Metairie
New Orleans-Metairie
New Orleans-Metairie
New Orleans-Metairie
New Orleans-Metairie
New Orleans-Metairie
New Orleans-Metairie
New Orleans-Metairie
New Orleans-Metairie
New Orleans-Metairie
New Orleans-Metairie
New Orleans-Metairie
New Orleans-Metairie(4)
Shreveport-Bossier City
Shreveport-Bossier City
Shreveport-Bossier City
Shreveport-Bossier City
Shreveport-Bossier City
Shreveport-Bossier City
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KS
KY
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
LA
533
499
724
1,156
721
443
630
430
655
393
1,353
2,174
386
1,098
1,203
755
1,287
1,076
1,274
994
607
819
327
852
633
682
773
742
96
971
964
772
479
475
645
98
116
130
164
175
115
123
64
132
142
130
42
114
530
252
275
144
69
40
21
264
287
61
40
31
437
47
19
6
152
104
131
71
85
70
533
499
724
1,156
721
443
630
430
655
393
1,353
2,174
386
1,098
1,203
755
1,287
1,076
1,274
994
607
819
327
852
633
682
773
742
96
1,549
964
772
479
475
645
3,138
4,041
4,245
5,662
3,395
3,635
7,264
1,740
1,831
3,950
2,241
3,667
1,744
5,208
3,156
2,702
6,235
6,677
1,987
8,548
9,211
4,291
4,423
4,138
870
4,790
7,056
3,278
3,615
3,474
3,573
2,906
1,439
854
2,004
F-49
3,236
4,157
4,375
5,826
3,570
3,750
7,387
1,804
1,963
4,092
2,371
3,709
1,858
5,738
3,408
2,977
6,379
6,746
2,027
8,569
9,475
4,578
4,484
4,178
901
5,227
7,103
3,297
3,621
5,036
3,677
3,037
1,510
939
2,074
3,769
4,656
5,099
6,982
4,291
4,193
8,017
2,234
2,618
4,485
3,724
5,883
2,244
6,836
4,611
3,732
7,666
7,822
3,301
9,563
10,082
5,397
4,811
5,030
1,534
5,909
7,876
4,039
3,717
6,585
4,641
3,809
1,989
1,414
2,719
213
282
269
428
266
258
418
132
144
270
193
655
270
895
534
460
875
520
122
232
254
164
133
140
57
165
196
136
45
737
772
626
331
248
307
5/31/2018
5/31/2018
5/31/2018
3/1/2018
3/1/2018
3/1/2018
3/1/2018
3/1/2018
5/31/2018
5/31/2018
8/28/2018
5/1/2015
4/12/2016
4/12/2016
7/21/2016
7/21/2016
4/12/2016
1/10/2019
1/10/2019
1/10/2019
1/10/2019
1/10/2019
1/10/2019
1/10/2019
1/10/2019
1/10/2019
1/10/2019
1/10/2019
9/18/2019
5/5/2015
5/5/2015
5/5/2015
5/5/2015
5/5/2015
10/19/2017
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Shreveport-Bossier City
Shreveport-Bossier City
Shreveport-Bossier City(4)
Springfield
Springfield
Worchester
California-Lexington Park
California-Lexington Park
California-Lexington Park
Washington-Arlington-Alexandria
Kansas City
Kansas City
Kansas City
St. Louis
St. Louis
St. Louis
St. Louis
St. Louis
St. Louis
Gulfport-Biloxi-Pascagoula
Nonmetropolitan Area(3)
Nonmetropolitan Area(3)
Charlotte-Concord-Gastonia
Charlotte-Concord-Gastonia(3)
Charlotte-Concord-Gastonia(3)
Charlotte-Concord-Gastonia(3)
Durham-Chapel Hill
Durham-Chapel Hill
Durham-Chapel Hill(3)
Durham-Chapel Hill
Fayetteville(3)
Fayetteville(3)
Fayetteville
Fayetteville(3)
Fayetteville
LA
LA
LA
MA
MA
MA
MD
MD
MD
MD
MO
MO
MO
MO
MO
MO
MO
MO
MO
MS
MS
MS
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
654
906
—
1,036
891
414
827
965
550
717
541
461
341
1,675
352
163
354
634
1,012
645
224
382
1,871
1,108
2,301
1,862
1,711
390
663
1,024
1,195
830
636
151
1,319
68
56
90
43
62
96
126
144
117
66
203
110
177
188
274
53
135
3
3
275
146
198
101
91
230
96
65
251
267
430
26
69
1,678
479
32
654
906
—
1,036
891
414
827
965
550
717
541
461
341
1,675
352
163
354
634
1,012
645
224
382
1,871
1,108
2,301
1,862
1,711
390
663
1,024
1,195
830
636
151
1,319
3,589
3,618
5,113
5,131
4,944
4,122
4,936
6,738
2,409
3,303
4,874
5,341
3,748
10,606
7,100
1,025
4,034
3,886
3,328
2,413
1,052
803
4,174
3,935
4,458
3,297
4,180
1,025
2,743
1,383
2,072
3,710
2,169
5,392
3,444
F-50
3,657
3,674
5,203
5,174
5,006
4,218
5,062
6,882
2,526
3,369
5,077
5,451
3,925
10,794
7,374
1,078
4,169
3,889
3,331
2,688
1,198
1,001
4,275
4,026
4,688
3,393
4,245
1,276
3,010
1,813
2,098
3,779
3,847
5,871
3,476
4,311
4,580
5,203
6,210
5,897
4,632
5,889
7,847
3,076
4,086
5,618
5,912
4,266
12,469
7,726
1,241
4,523
4,523
4,343
3,333
1,422
1,383
6,146
5,134
6,989
5,255
5,956
1,666
3,673
2,837
3,293
4,609
4,483
6,022
4,795
302
334
364
66
58
394
415
745
304
162
356
344
259
626
732
115
411
6
6
595
333
285
758
727
929
701
679
435
974
577
333
498
1,199
1,786
748
10/19/2017
10/19/2017
10/19/2017
9/17/2019
9/17/2019
6/30/2017
2/16/2018
7/31/2017
9/6/2017
1/3/2019
5/31/2018
5/31/2018
5/31/2018
9/26/2018
8/28/2017
8/28/2017
8/28/2017
12/18/2019
12/18/2019
4/12/2016
5/1/2009
5/1/2009
5/1/2015
5/4/2015
5/4/2015
9/2/2015
5/1/2015
8/29/2007
9/28/2007
9/28/2007
10/1/2015
10/1/2015
8/29/2007
9/28/2007
10/10/2013
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Fayetteville
Fayetteville(3)
Greensboro-High Point
Jacksonville
Nonmetropolitan Area
Nonmetropolitan Area
Nonmetropolitan Area(3)
Nonmetropolitan Area
Nonmetropolitan Area
Raleigh
Raleigh
Raleigh
Raleigh(3)
Wilmington
Wilmington
Wilmington(3)
Wilmington
Wilmington
Wilmington
Winston-Salem
Boston-Cambridge-Newton
Boston-Cambridge-Newton
Boston-Cambridge-Newton
Boston-Cambridge-Newton
Manchester-Nashua
Manchester-Nashua
Nonmetropolitan Area
Nonmetropolitan Area
Nonmetropolitan Area
Nonmetropolitan Area
Nonmetropolitan Area
New York-Newark-Jersey City
New York-Newark-Jersey City
Vineland-Bridgeton
Albuquerque
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NH
NH
NH
NH
NH
NH
NH
NH
NH
NH
NH
NJ
NJ
NJ
NM
772
1,276
873
1,265
530
667
689
2,093
173
396
393
907
1,578
1,881
1,283
860
1,720
2,021
3,083
362
899
1,488
1,597
1,445
1,786
1,395
632
197
2,053
1,528
1,344
742
831
180
1,089
43
46
205
299
13
22
39
60
36
193
218
135
99
62
338
104
36
55
27
75
45
115
93
69
27
36
469
24
52
35
165
25
38
300
178
772
1,276
873
1,265
530
667
689
2,093
173
396
393
907
1,578
1,881
1,141
860
1,720
2,021
3,083
362
899
1,488
1,597
1,445
1,786
1,395
632
197
2,053
1,528
1,344
742
831
180
1,089
3,406
4,527
769
2,123
2,394
2,066
3,153
2,045
2,193
1,700
1,190
2,913
4,678
4,618
1,747
828
9,032
8,136
12,487
529
3,863
7,300
3,138
2,957
6,100
5,573
1,040
901
5,425
2,686
4,872
3,810
6,318
5,831
2,845
F-51
3,449
4,573
974
2,422
2,407
2,088
3,192
2,105
2,229
1,893
1,408
3,048
4,777
4,680
2,085
932
9,068
8,191
12,514
604
3,908
7,415
3,231
3,026
6,127
5,609
1,509
925
5,477
2,721
5,037
3,835
6,356
6,131
3,023
4,221
5,849
1,847
3,687
2,937
2,755
3,881
4,198
2,402
2,289
1,801
3,955
6,355
6,561
3,226
1,792
10,788
10,212
15,597
966
4,807
8,903
4,828
4,471
7,913
7,004
2,141
1,122
7,530
4,249
6,381
4,577
7,187
6,311
4,112
651
793
366
593
465
427
575
300
188
645
462
975
756
781
629
301
333
327
427
213
584
1,641
528
521
852
722
454
355
605
519
175
176
256
183
590
10/10/2013
12/20/2013
8/29/2007
5/1/2015
12/11/2014
12/11/2014
5/6/2015
8/4/2017
7/17/2018
8/29/2007
8/29/2007
8/29/2007
5/4/2015
5/1/2015
8/29/2007
9/28/2007
11/7/2018
11/7/2018
11/7/2018
8/29/2007
9/22/2015
7/1/2014
2/22/2016
2/22/2016
2/22/2016
2/22/2016
6/24/2013
6/24/2013
6/15/2017
2/22/2016
3/8/2019
3/1/2019
3/1/2019
4/15/2019
8/31/2016
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Albuquerque
Albuquerque
Albuquerque
Albuquerque
Carson City
Las Vegas-Henderson-Paradise
Las Vegas-Henderson-Paradise
Las Vegas-Henderson-Paradise
Las Vegas-Henderson-Paradise
Las Vegas-Henderson-Paradise
Las Vegas-Henderson-Paradise
Las Vegas-Henderson-Paradise
Las Vegas-Henderson-Paradise
Las Vegas-Henderson-Paradise
Las Vegas-Henderson-Paradise
Las Vegas-Henderson-Paradise
Las Vegas-Henderson-Paradise
Canton-Massillon
Canton-Massillon
Cincinnati
Cleveland-Elyria
Cleveland-Elyria
Cleveland-Elyria
Cleveland-Elyria
Cleveland-Elyria
Oklahoma City
Oklahoma City
Oklahoma City
Oklahoma City
Oklahoma City
Oklahoma City
Oklahoma City
Oklahoma City
Oklahoma City
Oklahoma City
NM
NM
NM
NM
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
NV
OH
OH
OH
OH
OH
OH
OH
OH
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
854
1,247
2,448
2,386
985
1,757
1,121
2,160
1,047
1,169
389
794
2,362
2,157
1,296
828
3,864
83
292
2,059
169
193
490
845
842
388
213
561
349
466
144
168
220
376
337
89
111
125
77
391
77
117
272
347
227
104
119
183
118
227
275
1,021
48
113
52
50
42
26
33
40
233
106
621
593
109
209
297
124
62
95
854
1,247
2,448
2,386
995
1,757
1,121
2,160
1,047
1,169
389
794
2,362
2,157
1,296
828
3,976
83
292
2,059
169
193
490
845
842
388
213
561
349
466
144
168
220
376
337
3,436
2,753
11,065
7,658
1,438
4,223
1,510
4,544
7,413
3,616
2,850
1,406
8,445
2,753
8,039
2,030
2,870
2,911
2,107
11,660
2,702
3,323
1,050
4,916
2,044
3,142
1,383
2,355
2,368
2,544
1,576
1,696
1,606
1,460
2,788
F-52
3,525
2,864
11,190
7,735
1,829
4,300
1,627
4,816
7,760
3,843
2,954
1,525
8,628
2,871
8,266
2,305
3,891
2,959
2,220
11,712
2,752
3,365
1,076
4,949
2,084
3,375
1,489
2,976
2,961
2,653
1,785
1,993
1,730
1,522
2,883
4,379
4,111
13,638
10,121
2,824
6,057
2,748
6,976
8,807
5,012
3,343
2,319
10,990
5,028
9,562
3,133
7,867
3,042
2,512
13,771
2,921
3,558
1,566
5,794
2,926
3,763
1,702
3,537
3,310
3,119
1,929
2,161
1,950
1,898
3,220
466
90
201
175
122
627
309
521
500
1,391
740
506
647
308
593
274
529
375
564
636
332
364
209
626
420
1,106
493
1,065
1,050
878
625
685
581
487
943
9/19/2016
3/21/2019
5/20/2019
5/20/2019
12/13/2018
9/20/2016
9/20/2016
11/17/2016
4/11/2018
12/23/2013
4/1/2014
7/1/2014
8/15/2017
8/15/2017
8/15/2017
8/29/2017
8/29/2017
11/10/2016
11/10/2016
9/6/2018
11/10/2016
11/10/2016
11/10/2016
11/10/2016
11/10/2016
5/29/2007
5/29/2007
5/29/2007
5/29/2007
5/29/2007
5/29/2007
5/29/2007
5/30/2007
5/30/2007
5/30/2007
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Oklahoma City
Oklahoma City
Oklahoma City
Oklahoma City
Oklahoma City
Oklahoma City
Oklahoma City
Tulsa
Tulsa
Tulsa
Tulsa
Tulsa
Tulsa
Tulsa
Tulsa(3)
Tulsa(3)
Tulsa
Tulsa
Tulsa
Tulsa(3)
Bend-Redmond
Bend-Redmond
Bend-Redmond(3)
Bend-Redmond(3)
Bend-Redmond
Bend-Redmond
Bend-Redmond
Bend-Redmond
Corvallis
Eugene
Eugene
Eugene(3)
Eugene(3)
Eugene
Eugene
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OK
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
814
590
205
701
1,082
736
1,135
548
764
1,305
940
59
426
250
944
892
492
505
466
1,103
295
1,692
571
397
690
722
800
2,688
382
710
842
414
1,149
728
1,601
1,195
1,814
603
3
20
6
18
112
441
172
353
378
299
257
59
30
198
731
157
457
65
67
9
133
853
8
8
102
48
102
46
8
73
151
154
814
590
205
701
1,082
736
1,135
548
764
1,305
940
59
426
250
944
892
492
505
466
1,103
295
1,692
571
397
690
722
800
2,688
382
710
842
414
1,149
728
1,601
3,161
1,502
1,772
4,926
4,218
2,925
3,759
1,892
1,386
2,533
2,196
466
1,424
667
2,085
2,421
1,343
1,346
1,270
4,431
1,369
2,410
1,917
1,180
1,983
2,151
2,836
10,731
1,465
1,539
1,674
1,990
2,061
3,230
2,686
F-53
4,356
3,316
2,375
4,929
4,238
2,931
3,777
2,004
1,827
2,705
2,549
844
1,723
924
2,144
2,451
1,541
2,077
1,427
4,888
1,434
2,477
1,926
1,313
2,836
2,159
2,844
10,833
1,513
1,641
1,720
1,998
2,134
3,381
2,840
5,170
3,906
2,580
5,630
5,320
3,667
4,912
2,552
2,591
4,010
3,489
903
2,149
1,174
3,088
3,343
2,033
2,582
1,893
5,991
1,729
4,169
2,497
1,710
3,526
2,881
3,644
13,521
1,895
2,351
2,562
2,412
3,283
4,109
4,441
1,128
985
800
536
594
500
559
641
624
881
834
284
626
302
653
743
443
815
447
1,923
471
957
509
534
622
538
708
1,492
469
531
593
451
572
693
1,016
5/30/2007
8/29/2007
5/1/2009
9/1/2016
1/1/2016
1/1/2016
1/1/2016
8/29/2007
8/29/2007
8/29/2007
8/29/2007
8/29/2007
8/29/2007
8/29/2007
2/14/2008
2/14/2008
4/1/2008
4/1/2008
4/1/2008
6/10/2013
4/1/2013
4/1/2013
6/10/2013
6/10/2013
5/1/2014
5/1/2014
5/1/2014
4/15/2016
12/30/2013
4/1/2013
4/1/2013
6/10/2013
6/10/2013
12/30/2013
4/1/2014
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Nonmetropolitan Area
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro(3)
Portland-Vancouver-Hillsboro(3)
Portland-Vancouver-Hillsboro(3)
Portland-Vancouver-Hillsboro(3)
Portland-Vancouver-Hillsboro(3)
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
997
2,670
771
2,002
851
1,704
1,254
2,808
1,015
1,077
1,072
2,217
1,334
996
1,496
954
1,627
2,509
787
1,703
738
1,690
1,200
401
1,160
1,435
1,478
1,402
3,538
1,501
1,746
1,014
2,202
1,764
860
16
81
5
35
21
196
64
29
8
180
87
25
138
178
242
141
97
135
81
44
7
180
293
94
34
21
14
41
29
27
33
28
194
30
4
997
2,670
771
2,002
851
1,704
1,254
2,808
1,015
1,077
1,072
2,217
1,334
996
1,496
954
1,627
2,509
787
1,703
738
1,690
1,200
401
1,160
1,435
1,478
1,402
3,398
1,501
1,746
1,014
2,202
1,764
860
1,874
8,709
4,121
14,445
2,063
2,313
2,787
4,437
2,184
3,008
2,629
3,766
2,324
2,525
3,372
3,026
2,388
4,200
1,915
4,729
2,483
2,995
9,531
3,718
3,291
4,342
4,127
3,196
4,938
3,136
3,393
3,017
3,477
7,360
3,740
F-54
1,890
8,790
4,126
14,480
2,084
2,509
2,851
4,466
2,192
3,188
2,716
3,791
2,462
2,703
3,614
3,167
2,485
4,335
1,996
4,773
2,490
3,175
9,824
3,812
3,325
4,363
4,141
3,237
4,007
3,163
3,426
3,045
3,671
7,390
3,744
2,887
11,460
4,897
16,482
2,935
4,213
4,105
7,274
3,207
4,265
3,788
6,008
3,796
3,699
5,110
4,121
4,112
6,844
2,783
6,476
3,228
4,865
11,024
4,213
4,485
5,798
5,619
4,639
7,405
4,664
5,172
4,059
5,873
9,154
4,604
402
1,044
287
1,195
504
795
687
1,292
560
709
731
883
674
712
788
640
615
1,062
453
980
515
513
2,781
879
740
974
918
683
885
698
772
711
859
1,375
363
12/1/2014
8/10/2015
11/15/2017
12/14/2017
4/1/2013
4/1/2013
4/1/2013
4/1/2013
4/1/2013
6/10/2013
6/10/2013
6/10/2013
6/10/2013
6/10/2013
6/24/2013
6/24/2013
6/24/2013
12/30/2013
12/30/2013
4/1/2014
4/1/2014
4/1/2014
5/30/2014
5/30/2014
6/30/2014
6/30/2014
6/30/2014
6/30/2014
6/30/2014
6/30/2014
8/27/2014
8/27/2014
10/20/2014
12/16/2014
1/11/2017
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Nonmetropolitan Area
Nonmetropolitan Area(3)
Salem
Salem
Salem
Salem
Nonmetropolitan Area
Lancaster
Lancaster
Lancaster
Lancaster
Philadelphia-Camden-Wilmington
York-Hanover
Ponce
San Juan-Carolina-Caguas
San Juan-Carolina-Caguas
San Juan-Carolina-Caguas
San Juan-Carolina-Caguas
San Juan-Carolina-Caguas
Charlotte-Concord-Gastonia
Greenville-Anderson-Mauldin
Greenville-Anderson-Mauldin
Spartanburg
Amarillo(3)
Amarillo(3)
Amarillo(3)
Austin-Round Rock
Austin-Round Rock
Austin-Round Rock
Austin-Round Rock
Austin-Round Rock
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
OR
PA
PA
PA
PA
PA
PA
PR
PR
PR
PR
PR
PR
SC
SC
SC
SC
TX
TX
TX
TX
TX
TX
TX
TX
410
1,258
2,334
1,048
427
474
472
1,405
492
408
1,108
1,393
712
599
520
625
586
745
1,095
1,205
1,266
356
573
924
82
92
535
80
78
147
936
937
1,395
768
1,783
182
12
63
30
8
107
4
430
70
55
8
3
3
3
16
235
14
8
21
80
40
32
268
71
179
140
35
113
166
154
199
104
35
296
37
410
1,258
2,339
1,048
427
474
472
1,405
492
408
1,108
1,393
712
599
520
625
586
745
1,095
1,205
1,266
356
573
924
82
92
535
80
78
147
692
937
1,395
768
1,783
622
6,298
7,726
3,549
1,648
1,789
2,880
2,650
1,248
2,221
2,100
6,642
3,821
4,712
2,135
7,377
3,266
4,813
8,073
9,967
15,805
1,892
2,373
3,086
838
976
1,934
877
697
810
6,446
5,319
2,790
1,923
17,579
F-55
804
6,310
7,789
3,579
1,656
1,896
2,884
3,080
1,318
2,276
2,108
6,645
3,824
4,715
2,151
7,612
3,280
4,821
8,094
10,047
15,845
1,924
2,641
3,157
1,017
1,116
1,969
990
863
964
6,645
5,423
2,825
2,219
17,616
1,214
7,568
10,128
4,627
2,083
2,370
3,356
4,485
1,810
2,684
3,216
8,038
4,536
5,314
2,671
8,237
3,866
5,566
9,189
11,252
17,111
2,280
3,214
4,081
1,099
1,208
2,504
1,070
941
1,111
7,337
6,360
4,220
2,987
19,399
144
578
879
237
363
507
115
969
249
91
486
247
154
128
70
207
154
292
375
402
544
117
165
543
317
387
363
287
261
280
442
1,100
892
515
395
7/14/2016
11/21/2016
12/6/2016
8/16/2018
8/27/2014
6/10/2013
10/24/2018
4/1/2014
4/20/2016
2/1/2019
12/5/2014
3/1/2019
3/1/2019
3/1/2019
3/1/2019
4/15/2019
3/1/2019
9/6/2018
9/6/2018
9/6/2018
9/6/2018
9/6/2018
9/6/2018
5/4/2015
8/29/2007
8/29/2007
11/12/2015
5/1/2009
5/1/2009
5/1/2009
10/19/2017
6/24/2013
6/24/2013
10/29/2014
6/7/2019
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Austin-Round Rock
Brownsville-Harlingen
Brownsville-Harlingen
Brownsville-Harlingen
College Station-Bryan
College Station-Bryan
College Station-Bryan
College Station-Bryan
College Station-Bryan
College Station-Bryan
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington(3)
Dallas-Fort Worth-Arlington(3)
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington
Dallas-Fort Worth-Arlington
El Paso
El Paso
Houston-The Woodlands-Sugar Land
Houston-The Woodlands-Sugar Land
Houston-The Woodlands-Sugar Land
Houston-The Woodlands-Sugar Land
Houston-The Woodlands-Sugar Land
Houston-The Woodlands-Sugar Land
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
605
845
639
386
618
551
295
51
110
62
164
155
98
264
376
338
1,388
1,859
379
1,397
2,102
649
396
1,263
1,421
710
421
338
94
698
1,042
1,426
826
649
291
20
76
115
212
141
282
185
80
194
26
53
55
199
167
132
106
60
146
143
98
110
63
482
54
529
142
178
45
170
282
482
132
239
73
12
605
845
639
386
618
551
295
51
110
62
164
155
98
264
376
338
1,388
1,859
379
1,397
2,102
649
396
1,263
1,421
710
421
338
94
698
1,042
1,426
826
649
291
8,703
2,364
1,674
2,798
2,512
349
988
123
372
208
865
105
282
106
803
681
4,195
5,293
2,212
5,250
5,755
1,637
1,411
3,346
2,349
3,578
2,668
1,275
400
2,648
3,061
2,910
3,683
4,077
4,980
F-56
8,723
2,440
1,789
3,010
2,653
631
1,173
203
566
234
918
160
481
273
935
787
4,255
5,439
2,355
5,348
5,865
1,700
1,893
3,400
2,878
3,720
2,846
1,320
570
2,930
3,543
3,042
3,922
4,150
4,992
9,328
3,285
2,428
3,396
3,271
1,182
1,468
254
676
296
1,082
315
579
537
1,311
1,125
5,643
7,298
2,734
6,745
7,967
2,349
2,289
4,663
4,299
4,430
3,267
1,658
664
3,628
4,585
4,468
4,748
4,799
5,283
160
464
415
460
823
209
340
73
154
70
299
64
166
123
326
259
985
1,212
744
1,126
1,421
690
554
765
547
395
269
424
194
541
637
385
385
385
102
6/7/2019
9/4/2014
9/4/2014
5/2/2016
8/29/2007
8/29/2007
4/1/2008
4/1/2008
4/1/2008
4/1/2008
8/29/2007
9/28/2007
9/28/2007
9/28/2007
9/28/2007
9/28/2007
6/24/2013
7/25/2013
7/25/2013
7/25/2013
7/25/2013
7/25/2013
4/29/2015
10/19/2015
6/1/2016
10/19/2017
10/19/2017
8/29/2007
8/29/2007
7/20/2015
1/22/2016
6/13/2017
1/4/2018
1/4/2018
5/7/2019
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Houston-The Woodlands-Sugar Land
Houston-The Woodlands-Sugar Land
Houston-The Woodlands-Sugar Land
Houston-The Woodlands-Sugar Land
Houston-The Woodlands-Sugar Land
Houston-The Woodlands-Sugar Land
Killeen-Temple
Killeen-Temple
Killeen-Temple
Longview(3)
Longview(3)
Longview(3)
Longview
McAllen–Edinburg–Mission
McAllen–Edinburg–Mission
McAllen–Edinburg–Mission
McAllen–Edinburg–Mission
McAllen–Edinburg–Mission
McAllen–Edinburg–Mission
McAllen–Edinburg–Mission
McAllen–Edinburg–Mission
Midland(3)
Nonmetropolitan Area
Odessa(3)
San Angelo(3)
San Antonio-New Braunfels
San Antonio-New Braunfels
San Antonio-New Braunfels
Washington-Arlington-Alexandria
Nonmetropolitan Area(3)
Nonmetropolitan Area(3)
Longview
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro(3)
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
VA
WA
WA
WA
WA
WA
WA
539
4,004
2,959
799
687
295
203
1,128
721
651
104
310
2,466
1,217
1,973
1,295
3,079
1,017
803
2,249
1,118
691
959
168
381
614
715
275
1,516
810
998
448
421
1,903
923
14
51
65
51
36
65
254
229
1
109
167
207
214
295
91
98
116
85
96
74
97
171
59
121
106
81
87
141
71
16
115
17
12
8
15
539
4,004
2,959
799
687
295
203
1,128
721
651
104
310
2,466
1,243
1,973
1,295
3,079
1,017
803
2,249
1,118
691
959
168
381
614
715
275
1,516
810
998
448
421
1,903
923
2,664
4,991
5,875
4,769
3,668
2,403
4,065
6,149
4,166
671
489
966
3,559
2,738
4,517
3,929
7,574
3,261
2,914
4,966
3,568
1,588
1,640
561
986
2,640
4,566
4,893
12,633
1,530
1,862
2,356
2,313
2,239
2,821
F-57
2,678
5,042
5,940
4,820
3,704
2,468
4,319
6,378
4,167
780
656
1,173
3,773
3,033
4,608
4,027
7,690
3,346
3,010
5,040
3,665
1,759
1,699
682
1,092
2,721
4,653
5,034
12,704
1,546
1,977
2,373
2,325
2,247
2,836
3,217
9,046
8,899
5,619
4,391
2,763
4,522
7,506
4,888
1,431
760
1,483
6,239
4,276
6,581
5,322
10,769
4,363
3,813
7,289
4,783
2,450
2,658
850
1,473
3,335
5,368
5,309
14,220
2,356
2,975
2,821
2,746
4,150
3,759
57
174
145
98
85
48
427
606
7
228
184
332
764
888
1,070
918
1,885
750
550
1,202
704
493
377
200
302
710
418
88
945
663
823
408
544
660
656
6/7/2019
6/7/2019
6/7/2019
6/7/2019
6/7/2019
6/7/2019
2/2/2017
8/8/2017
12/13/2019
5/1/2009
5/1/2009
5/1/2009
6/19/2014
7/31/2014
9/4/2014
9/4/2014
9/4/2014
9/4/2014
9/4/2014
9/4/2014
9/4/2014
5/1/2009
6/25/2014
5/1/2009
5/1/2009
4/1/2014
10/19/2017
6/7/2019
7/21/2017
6/10/2013
6/10/2013
9/3/2015
4/1/2013
4/1/2013
6/10/2013
Table of Contents
Location
Initial Cost to Company
Gross Carrying Amount at Year-End
MSA(1)
State/
Territory
Land
Buildings and
Improvements
Subsequent
Additions
Land
Buildings and
Improvements
Total(2)
Accumulated
Depreciation
Date
Acquired
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Portland-Vancouver-Hillsboro
Seattle-Tacoma-Bellevue
Seattle-Tacoma-Bellevue
Total
WA
WA
WA
WA
WA
WA
WA
WA
935
478
2,023
1,870
422
1,105
770
1,438
2,045
2,158
3,484
4,632
2,271
2,121
3,203
3,280
12
173
48
7
8
19
35
65
935
478
2,023
1,870
422
1,105
770
1,438
2,057
2,331
3,532
4,639
2,279
2,140
3,238
3,345
2,992
2,809
5,555
6,509
2,701
3,245
4,008
4,783
448
558
889
557
156
461
817
798
4/1/2014
4/1/2014
8/27/2014
1/11/2017
3/29/2018
10/3/2014
4/1/2014
9/18/2014
$649,872
$
2,347,378
$
93,953
$649,938
$
2,441,781
$ 3,091,719
$
337,822
(1) Refers to metropolitan statistical area (MSA) as defined by the U.S. Census Bureau.
(2) The aggregate cost of land and depreciable property for Federal income tax purposes was approximately $2.7 billion (unaudited) at December 31, 2019.
(3) As of December 31, 2019, 94 of our self storage properties were encumbered by an aggregate of $264.3 million of debt financing.
(4) Property subject to a long-term lease agreement.
Note: The Company only owns one class of real estate, which is self storage properties. The estimated useful lives of the individual assets that comprise buildings and improvements range from 3 years
to 40 years. The category for buildings and improvements in the table above includes furniture and equipment.
F-58
Table of Contents
NATIONAL STORAGE AFFILIATES TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
For the Years Ended December 31, 2019, 2018 and 2017
(in thousands)
Self Storage properties:
Balance at beginning of year
Acquisitions and improvements
Reclassification from assets held for sale
Write-off of fully depreciated assets and other
Dispositions
Reclassification to assets held for sale
Balance at end of year
Accumulated depreciation:
Balance at beginning of year
Depreciation expense
Write-off of fully depreciated assets and other
Dispositions
Assets held for sale
Balance at end of year
2019
2018
2017
$
2,637,723
$
2,275,233
$
458,132
366,522
—
—
(4,136)
—
—
(323)
(3,709)
—
1,844,336
431,542
8,607
(50)
(7,336)
(1,866)
$
$
$
3,091,719
$
2,637,723
$
2,275,233
246,261
$
170,358
$
92,177
—
(616)
—
76,299
—
(396)
—
110,803
60,522
(10)
(646)
(311)
337,822
$
246,261
$
170,358
F-59
CORPORATE INFORMATION
BOARD OF TRUSTEES
ARLEN D. NORDHAGEN
Executive Chairman of the Board of Trustees
TAMARA D. FISCHER
President and Chief Executive Officer
PAUL W. HYLBERT
Lead Independent Trustee
GEORGE L. CHAPMAN
REBECCA L. STEINFORT
CHAD L. MEISINGER
MARK VAN MOURICK
STEVE G. OSGOOD
J. TIMOTHY WARREN
DOMINIC M. PALAZZO
EXECUTIVE OFFICERS
DAVID G. CRAMER
Executive Vice President and Chief Operating Officer
BRANDON S. TOGASHI
Executive Vice President and Chief Financial Officer
CORPORATE HEADQUARTERS
NATIONAL STORAGE AFFILIATES TRUST
8400 East Prentice Avenue, 9th Floor
Greenwood Village, Colorado 80111
720.630.2600
www.nationalstorageaffiliates.com
SHAREHOLDER/OP
UNITHOLDER SERVICES
BROADRIDGE CORPORATE
ISSUER SOLUTIONS, INC.
P.O. Box 1342
Brentwood, New York 11717
Toll-free: 855.449.0975
International: 720.378.5970
Email: shareholder@broadridge.com
STOCK EXCHANGE LISTING
NYSE: NSA
INDEPENDENT AUDITORS
KPMG LLP
Denver, Colorado
ADDITIONAL COPIES OF THE NATIONAL STORAGE
AFFILIATES TRUST (THE “COMPANY”) ANNUAL REPORT
on Form 10-K for the year ended December 31, 2019,
as filed with the U.S. Securities and Exchange Commission, may
be obtained by writing to the Company’s corporate headquarters,
Attention: Investor Relations Department.
Electronic copies are also available on the Company’s website at
www.nationalstorageaffiliates.com.
THE ANNUAL MEETING OF SHAREHOLDERS
will be held May 19, 2020 Mountain Time (MT),
beginning at12:00 p.m. local time. The meeting will be held
via a virtual meeting live webcast at:
www.virtualshareholdermeeting.com/NSA2020
THE CODE OF BUSINESS CONDUCT AND ETHICS
OF NATIONAL STORAGE AFFILIATES TRUST
is available on its website at
www.nationalstorageaffiliates.com.
A printed copy may be obtained by writing to the Company’s
corporate headquarters, Attention: Investor Relations Department.
FORWARD LOOKING STATEMENTS
Certain statements contained in this 2019 Annual Report constitute
forward-looking statements as such term is defined in Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and such statements
are intended to be covered by the safe harbor provided by the
same. Forward-looking statements are subject to substantial risks
and uncertainties, many of which are difficult to predict and are
generally beyond the Company’s control. These forward-looking
statements include information about possible or assumed future
results of the Company’s business, financial condition, liquidity, results
of operations, plans and objectives. Changes in any circumstances may
cause the Company’s actual results to differ significantly from those
expressed in any forward-looking statement. When used in this release,
the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,”
“intend,” “should,” “may” or similar expressions are intended to identify
forward-looking statements. Statements regarding the following subjects,
among others, may be forward-looking: market trends in the Company’s
industry, interest rates, the debt and lending markets or the general
economy; the Company’s business and investment strategy; and the
acquisition of properties, including the timing of acquisitions. For a
further list and description of such risks and uncertainties, see the
Company’s Annual Report on Form 10-K filed with the Securities and
Exchange Commission on February 26, 2020 and the other reports
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.
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NSA’S GROWTH PROFORMANCE
TOTAL RETURN PERFORMANCE†
OVER 215% TOTAL RETURN
l
e
u
a
V
x
e
d
n
I
$350
$300
$250
$200
$150
$100
$50
4/23/15
12/31/15
12/31/16
12/31/17
12/31/18
12/31/19
National Storage
Affiliates Trust
S&P 500
NAREIT All Equity
REIT Index
Russell 2000
† Assumes $100.00 invested on April 23, 2015, with dividends reinvested. The Performance Graph will not be deemed
to be incorporated by reference into any filing by NSA under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that NSA specifically incorporates the same by reference.
NSA DELIVERS ROBUST
PORTFOLIO GROWTH
742(1)
675
)
1
F O R M A T I O N (
515
448
s
e
i
t
r
e
p
o
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P
f
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e
b
m
u
N
800
700
600
500
400
300
200
100
S I N C E
H
277
4
6
R
E
O V
0 % G R O W T
219
100
137
At Formation
2013
2014
2015
2016
2017
2018
2019
Captive Pipeline
3rd Party Acquisitions
New PROs
Strategic Joint Ventures
(1) As of December 31, 2019, NSA’s por tfolio consisted of 567 wholly-owned proper ties and 175 JV-owned proper ties.
DEBT MATURITY SCHEDULE(1)
($ IN MILLIONS)
Available RLOC
$5 0 0
$800
$700
$600
$500
$400
$300
$200
$100
$0
2020
2021
2022
2023
2024
2025
Thereafter
Term Loans
Mortgage
Private Placement
(1) Principal debt outstanding as of December 31, 2019.
5.9 YEARS
WEIGHTED AVERAGE MATURITY
3.5%
EFFECTIVE INTEREST RATE
4.5X
INTEREST COVERAGE
5.7X
NET DEBT/ADJUSTED EBITDA
N AT I O N A L S TO R AG E A F F I L I AT E S .C O M