National Storage Affiliates Trust

NSA

US6378701063

Specialized REITs

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Apr. 02	Morgan Stanley Trims National Storage Affiliates Trust Price Target to $39 From $40, Maintains Equal Weight Rating	MT
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NATIONAL STORAGE AFFILIATES TRUST : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

February 26, 2021 at 04:23 pm EST

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.
COVID-19
We continue to closely monitor the impact of the COVID-19 pandemic on all
aspects of our business. The outbreak of COVID-19 in many countries, including
the United States, has adversely impacted economic activity. As cases of
COVID-19 have continued to increase, most states and municipalities have reacted
by instituting, extending or reinstating quarantines, mandating business and
school closures, requiring restrictions on travel, "shelter-in-place" and/or
"stay-at-home" orders, and imposing restrictions on the types of businesses that
may continue to operate. These containment measures generally do not apply to
businesses, like ours, which are designated as "essential," but may apply to
certain of our tenants, employees, vendors, lenders and joint venture partners.
As of the date of this report, our stores continue to operate and we are in
compliance with federal, state and local COVID-19 guidelines and mandates. In
response to the pandemic, we have increased the level and frequency of cleaning
and sanitation of our self storage facilities and enacted recommended social
distancing guidelines. Many of our stores feature online rental capabilities
whereby a customer can complete the entire rental process online and receive an
access code to the storage facility. For the remainder of our stores that do not
yet benefit from the online rental feature, the combination of call center and
email communication eliminates the need for any physical contact between
customers and employees.
Due to the pandemic, we experienced a moderate slowdown in overall business
activity during the second quarter of 2020. However, we observed sustained
improvement in our property operating results during the third and fourth
quarters of 2020. We continue to take proactive measures to maintain the
strength of our business and manage the impact of COVID-19 on our operations and
liquidity, including the following:
•We resumed rental rate increases for in-place tenants at the vast majority of
our stores during the third quarter of 2020;
•We are continuing to diligently manage operating expenses, including
store-level personnel costs, marketing and repairs and maintenance expenses. We
also incurred lower corporate travel costs during the year ended December 31,
2020 compared to expectations at the beginning of the year;
•We continue to closely monitor our liquidity position. As of December 31, 2020,
we had the capacity to borrow remaining revolving line of credit commitments of
$320.3 million with less than $5 million of debt maturing through 2022;
•On October 22, 2020, we issued $150.0 million of 2.99% senior unsecured notes
due August 5, 2030 and $100.0 million of 3.09% senior unsecured notes due
August 5, 2032 in a private placement;
•We completed an underwritten public offering of 4,900,000 common shares of
beneficial interest under forward sale agreements at a public offering price of
$33.15 per share (the "forward offering"). On December 30, 2020 we settled a
portion of the forward offering by physically delivering 1,850,510 common shares
to the forward purchasers for net proceeds of approximately $60.0 million;
•We remain committed to acquiring properties at appropriate risk-adjusted
returns. We believe our acquisition opportunities through our captive pipeline
and relationship-based third-party deals sourced by our PROs will

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continue to be a differentiating factor for us to prudently deploy capital,
including through the issuance of OP equity.
The above discussion is intended to provide shareholders with certain
information regarding the impacts of the COVID-19 pandemic on our business and
management's efforts to respond to those impacts. We are unable to predict the
impact of the COVID-19 pandemic on our business for the year ended December 31,
2021 and thereafter. We will continue to monitor its effects and will adjust our
operations as necessary. As a result of the rapid development, fluidity and
uncertainty surrounding this situation, we expect that such information will
change, potentially significantly, going forward and may not be indicative of
the actual impact of the COVID-19 pandemic on our financial condition, results
of operations and cash flows for the year ended December 31, 2021 and future
periods. See "Risk Factors" under Item 1A.
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, 2020: Northwest, Optivest, Guardian, Move It,
Storage Solutions, Hide Away, Personal Mini, Southern, Moove In and Blue Sky. 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 Property Management Platform
Through our property management platform, we direct, manage and control the
day-to-day operations and affairs of certain consolidated properties and our
unconsolidated real estate ventures under our iStorage and SecurCare brands. As
of December 31, 2020, our property management platform managed and controlled
282 of our consolidated properties and 177 of our unconsolidated real estate
venture properties.
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.
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, 2020, we owned a geographically diversified portfolio of 644
self storage properties, located in 33 states and Puerto Rico, comprising
approximately 39.3 million rentable square feet, configured in approximately
309,000 storage units. Of these properties, 276 were acquired by us from our
PROs, 367 were acquired by us from third-party sellers and one was acquired by
us from the 2016 Joint Venture.

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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, 2020, our 2018 Joint Venture, in which we have a 25%
interest, owned and operated a portfolio of 103 properties containing
approximately 7.8 million rentable square feet, configured in approximately
64,000 storage units and located across 17 states.
2016 Joint Venture
As of December 31, 2020, our 2016 Joint Venture, in which we have a 25%
ownership interest, owned and operated a portfolio of 74 properties containing
approximately 4.9 million rentable square feet, configured in approximately
40,000 storage units and located across 13 states.
Results of Operations
When reviewing our results of operations it is important to consider the timing
of acquisition activity. We acquired 77 self storage properties during the year
ended December 31, 2020 and 69 self storage properties during the year ended
December 31, 2019. 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, 2020 compared to the year
ended December 31, 2019 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, 2019 compared to the year ended December 31, 2018, 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, 2019, which was filed with the SEC on February 26, 2020.
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.
Year Ended December 31, 2020 compared to the Year Ended December 31, 2019
Net income was $79.5 million for the year ended December 31, 2020, compared to
$66.0 million for the year ended December 31, 2019, an increase of $13.5
million. The increase was primarily due to an increase in net operating income
("NOI") resulting from self storage properties acquired during 2019 and 2020 and
a decrease in GAAP losses from the Company's unconsolidated real estate ventures
partially offset by increases in depreciation and amortization, interest
expense, non-operating expense, acquisition costs and a decrease in gains from
the sale of self storage properties. For a description of NOI, see "Non-GAAP
Financial measures - NOI".
Overview
As of December 31, 2020, our same store portfolio consisted of 500 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

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Table of Contents expenses for the year ended December 31, 2020 compared to the year ended December 31, 2019 (dollars in thousands):


                                                                    Year Ended December 31,
                                                         2020                 2019                Change
Rental revenue
Same store portfolio                                $   330,583          $   325,755          $     4,828
Non-same store portfolio                                 64,077               29,104               34,973
Total rental revenue                                    394,660              354,859               39,801
Other property-related revenue
Same store portfolio                                     12,137               11,316                  821
Non-same store portfolio                                  2,387                  986                1,401
Total other property-related revenue                     14,524               12,302                2,222
Property operating expenses
Same store portfolio                                    101,134              100,588                  546
Non-same store portfolio                                 22,352                9,759               12,593
Total property operating expenses                       123,486              110,347               13,139
Net operating income
Same store portfolio                                    241,586              236,483                5,103
Non-same store portfolio                                 44,112               20,331               23,781
Total net operating income                              285,698              256,814               28,884
Management fees and other revenue                        23,038               20,735                2,303
General and administrative expenses                     (43,640)             (44,030)                 390
Depreciation and amortization                          (117,174)            (105,119)             (12,055)
Other                                                      (808)              (1,551)                 743
Other (expense) income
Interest expense                                        (62,595)             (56,464)              (6,131)

Equity in earnings (losses) of unconsolidated real estate ventures

                                             265               (4,970)               5,235
Acquisition costs                                        (2,424)              (1,317)              (1,107)
Non-operating (expense) income                           (1,211)                 452               (1,663)
Gain on sale of self storage properties                       -                2,814               (2,814)
Other expense                                           (65,965)             (59,485)              (6,480)
Income before income taxes                               81,149               67,364               13,785
Income tax expense                                       (1,671)              (1,351)                (320)
Net income                                               79,478               66,013               13,465
Net income attributable to noncontrolling interests     (30,869)             (62,030)              31,161
Net income attributable to National Storage
Affiliates Trust                                         48,609                3,983               44,626
Distributions to preferred shareholders                 (13,097)             (12,390)                (707)
Net income (loss) attributable to common
shareholders                                        $    35,512          $    (8,407)         $    43,919


Total Revenue
Our total revenue increased by $44.3 million, or 11.4%, for the year ended
December 31, 2020, as compared to the year ended December 31, 2019. This
increase was primarily attributable to incremental revenue from 77 self storage
properties acquired during the year ended December 31, 2020, increases in
management fees and other revenue from our unconsolidated real estate ventures
and an increase in total portfolio average occupancy from 88.4% for the year
ended December 31, 2019 to 89.3% for the year ended December 31, 2020. Average
occupancy

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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.
Rental Revenue
Rental revenue increased by $39.8 million, or 11.2%, for the year ended December
31, 2020, as compared to the year ended December 31, 2019. The increase in
rental revenue was due to a $35.0 million increase in non-same store rental
revenue which was primarily attributable to incremental rental revenue of $20.4
million from 77 self storage properties acquired during 2020, and $15.3 million
from 69 self storage properties acquired during 2019. Same store portfolio
rental revenues increased $4.8 million, or 1.5%, due to a 0.2% increase, from
$12.12 to $12.15, 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 an increase in average occupancy from 88.6% for the year ended
December 31, 2019 to 89.6% for the year ended December 31, 2020.
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 $2.2 million, or 18.1%,
for the year ended December 31, 2020, as compared to the year ended December 31,
2019. This increase primarily resulted from a $1.4 million increase in non-same
store other property-related revenue which was primarily attributable
to incremental other property-related revenue of $0.9 million from 77 self
storage properties acquired during 2020, and $0.6 million from 69 self storage
properties acquired during 2019.
Management Fees and Other Revenue
Management fees and other revenue, which are primarily related to managing and
operating the unconsolidated real estate ventures, were $23.0 million for the
year ended December 31, 2020, compared to $20.7 million for the year ended
December 31, 2019, an increase of $2.3 million or 11.1%. This increase was
primarily attributable to incremental tenant insurance fees and dividends from
an investment in a tenant reinsurance company made during 2019.
Property Operating Expenses
Property operating expenses were $123.5 million for the year ended December 31,
2020 compared to $110.3 million for the year ended December 31, 2019, an
increase of $13.2 million, or 11.9%. The increase in property operating expenses
resulted from a $12.6 million increase in non-same store property operating
expenses that was primarily attributable to incremental property operating
expenses of $7.8 million from 77 self storage properties acquired during 2020,
and $4.9 million from 69 self storage properties acquired during 2019.
General and Administrative Expenses
General and administrative expenses decreased $0.4 million, or 0.9%, for the
year ended December 31, 2020, compared to the year ended December 31, 2019. This
decrease was attributable to decreases in supervisory and administrative fees
charged by our PROs of $3.6 million primarily as a result of the cessation of
payments to SecurCare following the merger and internalization of the management
platform of SecurCare, partially offset by increases in costs related to our
property management platform of $2.6 million due to the internalization of the
management platform of SecurCare and an increase in store count.
Depreciation and Amortization
Depreciation and amortization increased $12.1 million, or 11.5%, for the year
ended December 31, 2020, compared to the year ended December 31, 2019. This
increase was primarily attributable to incremental depreciation expense related
to the 77 self storage properties acquired during 2020, partially offset by a
decrease in amortization of customer in-place leases from $11.3 million for the
year ended December 31, 2019 to $9.0 million for the year ended December 31,
2020.
Interest Expense
Interest expense increased $6.1 million, or 10.9%, for the year ended December
31, 2020, compared to the year ended December 31, 2019. 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
in July 2019, $100.0 million of borrowings under the 2029 Term Loan Facility in
April 2019, the issuance of the $150.0 million

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senior unsecured notes in a private placement in August 2019 and higher
outstanding borrowings under the Revolver.
Equity In Earnings (Losses) Of Unconsolidated Real Estate Ventures
Equity in earnings (losses) of unconsolidated real estate ventures represents
our share of earnings and losses incurred through our 25% ownership interests in
the 2018 Joint Venture and the 2016 Joint Venture. During the year ended
December 31, 2020, we recorded $0.3 million of equity in earnings from our
unconsolidated real estate ventures compared to $5.0 million of losses for the
year ended December 31, 2019. This was primarily the result of incremental
losses from our 2018 Joint Venture during the year ended December 31, 2019
driven by real estate depreciation and amortization of customer in-place leases
following the acquisition of the Initial 2018 Joint Venture 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. 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.
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 $30.9 million for the
year ended December 31, 2020, compared to $62.0 million for the year ended
December 31, 2019.
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.

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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.
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 our 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):
                                                                   Year Ended December 31,
                                                        2020                2019                2018
Net income                                          $   79,478          $   66,013          $   56,326
Add (subtract):
Real estate depreciation and amortization              115,757             103,835              87,938
Company's share of unconsolidated real estate
venture real estate depreciation and amortization       15,297              19,889              10,233
Gain on sale of self storage properties                      -              (2,814)               (391)
Mark-to-market changes in value on equity
securities                                                 142                (610)                  -
Company's share of unconsolidated real estate
venture loss on sale of properties                           -                 202                 205
Distributions to preferred shareholders and
unitholders                                            (14,055)            (13,243)            (10,822)
FFO attributable to subordinated performance
unitholders(1)                                         (29,708)            (34,121)            (27,111)
FFO attributable to common shareholders, OP
unitholders, and LTIP unitholders                      166,911             139,151             116,378
Add:
Acquisition costs                                        2,424               1,317                 663

Core FFO attributable to common shareholders, OP
unitholders, and LTIP unitholders                   $  169,335          $

140,468 $ 117,041

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

             66,547              58,208              53,293
Weighted average restricted common shares
outstanding                                                 30                  28                  29
Weighted average effect of outstanding forward
offering agreement(3)                                       60                   -                   -
Weighted average OP units outstanding                   29,863              30,277              28,977
Weighted average DownREIT OP unit equivalents
outstanding                                              1,906               1,848               1,835
Weighted average LTIP units outstanding                    543                 585                 694
Total weighted average shares and units outstanding
- FFO and Core FFO                                      98,949              90,946              84,828

FFO per share and unit                              $     1.69          $     1.53          $     1.37
Core FFO per share and unit                         $     1.71          $     1.54          $     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.
(3) Represents the dilutive effect of the forward offering from the application of the treasury stock
method.



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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,


                                                        2020                2019                2018
Earnings (loss) per share - diluted                 $     0.53          $

(0.15) $ 0.07 Impact of the difference in weighted average number of shares(1)

                                             (0.16)               0.05               (0.03)
Impact of GAAP accounting for noncontrolling
interests, two-class method and treasury stock
method(2)                                                 0.30                0.69                0.49
Add real estate depreciation and amortization             1.17                1.14                1.04
Add Company's share unconsolidated venture real
estate depreciation and amortization                      0.15                0.22                0.12
Subtract gain on sale of self storage properties             -               (0.03)                  -
Mark-to-market changes in value recognized on
equity securities                                            -               (0.01)                  -
FFO attributable to subordinated performance
unitholders                                              (0.30)              (0.38)              (0.32)
FFO per share and unit                                    1.69                1.53                1.37
Add acquisition costs and Company's share of
unconsolidated real estate venture acquisition
costs                                                     0.02                0.01                0.01
Core FFO per share and unit                         $     1.71          $     1.54          $     1.38

(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


Net operating income, or NOI, represents rental revenue plus other
property-related revenue less property operating expenses. 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.
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

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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 and net income (loss).
The following table presents a reconciliation of net income (loss) to NOI for
the periods presented (dollars in thousands):
                                                                  Year Ended December 31,
                                                       2020                2019                2018
Net income                                         $   79,478          $   66,013          $   56,326
(Subtract) add:
Management fees and other revenue                     (23,038)            (20,735)            (12,310)
General and administrative expenses                    43,640              44,030              35,924
Other                                                     808               1,551                 296
Depreciation and amortization                         117,174             105,119              89,147
Interest expense                                       62,595              56,464              42,724
Equity in (earnings) losses of unconsolidated real
estate ventures                                          (265)              4,970               1,423

Acquisition costs                                       2,424               1,317                 663

Income tax expense                                      1,671               1,351                 818
Gain on sale of self storage properties                     -              (2,814)               (391)

Non-operating expense (income)                          1,211                (452)                 91
Net operating income                               $  285,698          $  256,814          $  214,711


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;
•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;

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•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 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):
                                                                   Year Ended December 31,
                                                        2020                2019                2018
Net income                                          $   79,478          $   66,013          $   56,326
Add:
Depreciation and amortization                          117,174             105,119              89,147
Company's share of unconsolidated real estate
venture depreciation and amortization                   15,297              19,889              10,233
Income tax expense                                       1,671               1,351                 818
Interest expense                                        62,595              56,464              42,724

EBITDA                                                 276,215             248,836             199,248
Add:
Acquisition costs                                        2,424               1,317                 663

Gain on sale of self storage properties                      -              (2,814)               (391)
Company's share of unconsolidated real estate
venture loss on sale of properties                           -                 202                 205
Equity-based compensation expense                        4,278               4,527               3,837
Adjusted EBITDA                                     $  282,917          $  252,068          $  203,562



Liquidity and Capital Resources
Liquidity Overview
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, LTIP 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 units in
our operating partnership or DownREIT partnerships. We expect to meet our
long-term liquidity 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. Our ability to access capital on favorable terms
as well as to use cash from operations

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to continue to meet our liquidity needs, all of which are highly uncertain and
cannot be predicted, could be affected by various risks and uncertainties,
including, but not limited to, the effects of the COVID-19 pandemic. 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, 2020, we had $18.7 million in cash and cash equivalents and $3.0
million of restricted cash, a decrease in cash and cash equivalents of $1.8
million and a decrease in restricted cash of $0.7 million from December 31,
2019. 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 $220.7 million for the year ended
December 31, 2020 compared to $196.7 million for the year ended December 31,
2019, an increase of $24.0 million. Our operating cash flow increased primarily
due to 69 self storage properties acquired during the year ended December 31,
2019 that generated cash flow for the entire year ended December 31, 2020 and 77
self storage properties that were acquired during the year ended December 31,
2020. These increases were partially offset by higher cash payments for interest
expense.
Investing Activities
Cash used in investing activities was $509.7 million for the year ended
December 31, 2020 compared to $393.0 million for the year ended December 31,
2019. The primary uses of cash for the year ended December 31, 2020 were for our
acquisition of 77 self storage properties for cash consideration of $496.5
million, deposits for potential acquisitions of $1.1 million, capital
expenditures of $16.4 million and contributions to unconsolidated real estate
ventures of $4.4 million partially offset by $7.6 million of proceeds from the
sale of equity securities and $1.5 million of distributions from unconsolidated
real estate ventures. 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.
Capital expenditures totaled $16.4 million, $20.6 million and $19.0 million
during the years ended December 31, 2020, 2019 and 2018 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):
                                                              Year Ended

December 31,

2019 2018


    Recurring capital expenditures                     $  6,057      $

8,708 $ 6,001


    Value enhancing capital expenditures                  4,026

4,420 3,563


    Acquisitions capital expenditures                     6,064

8,305 9,356


    Total capital expenditures                           16,147

21,433 18,920


    Change in accrued capital spending                      248          (839)           94

Capital expenditures per statement of cash flows $ 16,395 $ 20,594 $ 19,014




Financing Activities
Cash provided by our financing activities was $286.5 million for the year ended
December 31, 2020 compared to $204.3 million for the year ended December 31,
2019. Our sources of financing cash flows for the year ended December 31, 2020
primarily consisted of $680.0 million of borrowings under the Revolver and
$250.0 million of borrowings under our 2030 Notes and 2032 Notes and $82.9
million of proceeds from the issuance of common shares. Our primary uses of
financing cash flows for the year ended December 31, 2020 were for principal
payments on existing debt of $546.1 million (which included $505.5 million of
principal repayments under the Revolver and $40.6 million of scheduled fixed
rate mortgage principal payments), distributions to noncontrolling interests of
$73.8 million, distributions to common shareholders of $90.1 million and
distributions to preferred shareholders of $13.1 million. 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.
Credit Facility and Term Loan Facilities
As of December 31, 2020, 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, 2020, 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, 2020, $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% and
$175.0 million was outstanding under the Term Loan D with an effective interest
rate of 3.57%. As of December 31, 2020, we would have had the capacity to borrow
remaining Revolver commitments of $320.3 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,
2020 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

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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, 2020 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.
We have a 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, 2020 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
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
institutional investors.
2030 And 2032 Senior Unsecured Notes
As discussed in Note 8 to the consolidated financial statements in Item 8, on
October 22, 2020, our operating partnership issued $150.0 million of 2.99%
senior unsecured notes due August 5, 2030 and $100.0 million of 3.09% senior
unsecured notes due August 5, 2032 in a private placement to certain
institutional 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, 2020 (dollars in
thousands):
                                                       Year Ending December 31,
                           2021              2022               2023               2024               2025             Thereafter             Total
Debt financings:
Principal(1)            $  7,670          $  4,374          $ 376,813          $ 445,964          $ 227,185          $   860,608          $ 1,922,614
Interest(2)               63,692            63,502             54,589             44,251             32,807              105,809              364,650
Real estate leasehold
interests                  1,444             1,459              1,464              1,470              1,521               35,206               42,564
Office leases                471               465                430                450                456                  624                2,896
Total                   $ 73,277          $ 69,800          $ 433,296          $ 492,135          $ 261,969          $ 1,002,247          $ 2,332,724


(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, 2020.
Equity Transactions
Issuance of Common Shares and Series A Preferred Shares
As discussed in Note 3 to the consolidated financial statements in Item 8, on
March 31, 2020, we closed on the mergers of SecurCare and DLAN with and into
wholly-owned subsidiaries of the Company. In connection with the mergers, we
issued 8,105,192 common shares to the former owners of SecurCare and DLAN.
During the year ended December 31, 2020, we sold 743,915 of our common shares
through at the market offerings. The common shares were sold at an average
offering price of $33.01 per share, resulting in net proceeds to us of
approximately $22.9 million after deducting compensation payable by us to the
agents and offering expenses.

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During September 2020, we completed an underwritten public offering of 4,500,000
common shares under forward sale agreements at a public offering price of $33.15
per share. The underwriters were granted a 30-day option to purchase up to an
additional 675,000 common shares at the same price, which they partially
exercised for an additional 400,000 common shares on October 6, 2020. On
December 30, 2020, the Company settled a portion of the forward offering by
physically delivering 1,850,510 common shares to the forward purchasers for net
proceeds of approximately $60.0 million. As of December 31, 2020, 3,049,490
shares remained outstanding under the forward sale agreements.
During the year ended December 31, 2020, after receiving notices of redemption
from certain OP unitholders, we elected to issue 892,070 common shares to such
holders in exchange for 892,070 OP units in satisfaction of the operating
partnership's redemption obligations.
During the year ended December 31, 2020, the Company issued 28,467 common shares
in exchange for $1.0 million of principal payment reimbursements received during
the year ended December 31, 2020 related to mortgages assumed in connection with
the acquisition of self storage properties from PROs during the year ended
December 31, 2014.
During the year ended December 31, 2020, after receiving notices of redemption
from certain Series A-1 preferred unitholders, we elected to issue 5,600 Series
A preferred shares to such holders in exchange for 5,600 Series A-1 preferred
units in satisfaction of the operating partnership's redemption obligations.
Issuance of OP Equity
In connection with the 77 properties acquired during the year ended December 31,
2020, we issued $37.2 million of OP equity (consisting of 755,007 OP units,
28,894 LTIP units and 303,528 subordinated performance units). In addition, we
issued 28,892 LTIP units to consultants that will vest upon the completion of
expansion projects.
As discussed in Note 3 to the consolidated financial statements in Item 8,
during the year ended December 31, 2020, the Company issued 445,701 OP units
upon the conversion of 332,738 subordinated performance units and 246,156 OP
units upon the conversion of an equivalent number of LTIP units.
Dividends and Distributions
During the year ended December 31, 2020, the Company paid $90.1 million of
distributions to common shareholders, $13.1 million of distributions to
preferred shareholders and distributed $73.8 million to noncontrolling
interests.
On February 25, 2021, our board of trustees declared a cash dividend and
distribution, respectively, of $0.35 per common share and OP unit to
shareholders and OP unitholders of record as of March 15, 2021. On February 25,
2021, 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 15, 2021. In addition, we expect to declare a
cash distribution in the first quarter of 2021 to our subordinated performance
unitholders of record as of March 15, 2021. Such dividends and distributions are
expected to be paid on March 31, 2021.
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)all receipts, including rents and other operating revenues;
(ii)any incentive, financing, break-up and other fees paid to us by third
parties;
(iii)amounts released from previously set aside reserves; and
(iv)any other amounts received by us, which we allocate to the particular
portfolio of properties.

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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)corporate-level general and administrative expenses;
(ii)out-of-pocket costs, expenses and fees of our operating partnership, whether
or not capitalized;
(iii)the costs and expenses of organizing and operating our operating
partnership;
(iv)amounts paid or due in respect of any loan or other indebtedness of our
operating partnership during such period;
(v)extraordinary expenses of our operating partnership not previously or
otherwise deducted under item (ii) above;
(vi)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, 2020, our operating partnership had an aggregate of $1,811.6
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, 2020, an aggregate of $129.6 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

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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 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, 2020, each subordinated performance
unit would on average hypothetically convert into 1.23 OP units, or into an
aggregate of approximately 16.4 million OP units. These amounts are based on
historical financial information for the trailing twelve months ended
December 31, 2020. 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

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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.
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,
2020, 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, 2020, 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, 2020, 2019 and 2018. 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.

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As of December 31, 2020, we had $174.0 million of debt subject to variable
interest rates (excluding variable-rate debt subject to interest rate swaps). If
one-month LIBOR were to increase or decrease by 100 basis points, the increase
or decrease in interest expense on the variable-rate debt (excluding
variable-rate debt subject to interest rate swaps) would decrease or increase
future earnings and cash flows by approximately $1.7 million annually.
Interest rate risk amounts were determined 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 of that magnitude, 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 assume no changes in our financial structure.
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 Annual 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 limitations, 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.
Our management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2020. 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).

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Based on this assessment, our management believes that, as of December 31, 2020,
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, 2020 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
Item 9B. Other Information
None.

Latest news about National Storage Affiliates Trust

Morgan Stanley Trims National Storage Affiliates Trust Price Target to $39 From $40, Maintains Equal Weight Rating	Apr. 02	MT
National Storage Affiliates Trust Announces Promotion of Melissa Cameron to Chief Marketing Officer, Effective April 1, 2024	Mar. 28	CI
Barclays Initiates National Storage Affiliates Trust With Equalweight Rating, $39 Price Target	Mar. 27	MT
National Storage Affiliates Trust Files Mixed Securities Shelf	Mar. 07	MT
Transcript : National Storage Affiliates Trust, Q4 2023 Earnings Call, Feb 29, 2024	Feb. 29
National Storage Affiliates Trust Q4 Core Funds From Operations Down, Revenue Rises	Feb. 29	MT
Tranche Update on National Storage Affiliates Trust's Equity Buyback Plan announced on August 3, 2022.	Feb. 28	CI
Earnings Flash (NSA) NATIONAL STORAGE AFFILIATES TRUST Posts Q4 Revenue $215.4M	Feb. 28	MT
Tranche Update on National Storage Affiliates Trust's Equity Buyback Plan announced on August 3, 2022.	Feb. 28	CI
Tranche Update on National Storage Affiliates Trust's Equity Buyback Plan announced on December 1, 2023.	Feb. 28	CI
National Storage Affiliates Trust Reports Earnings Results for the Fourth Quarter and Full Year Ended December 31, 2023	Feb. 28	CI
National Storage Affiliates Trust's Equity Buyback announced on August 3, 2022, has closed with 10,830,104 shares, representing 12.20% for $400 million.	Feb. 22	CI
National Storage Affiliates Trust Keeps Quarterly Cash Dividend at $0.56 a Share, Payable March 29 to Holders March 15	Feb. 15	MT
National Storage Affiliates Trust Announces the Appointment of Lisa R. Cohn to the Board of Trustees and on its Compensation, Nominating and Corporate Governance Committee	Feb. 15	CI
National Storage Affiliates Trust Declares Regular Cash Dividend for the First Quarter 2024, Payable on March 29, 2024	Feb. 15	CI
Deutsche Bank Initiates Coverage on National Storage Affiliates Trust With Sell Rating, $33 Price Target	Jan. 30	MT
UBS Adjusts Price Target on National Storage Affiliates Trust to $40 From $36, Maintains Neutral Rating	Jan. 05	MT
KeyBanc Upgrades National Storage Affiliates Trust to Overweight From Sector Weight, Sets Price Target at $45 Amid 'Improving Outlook for Fundamentals'	Jan. 05	MT
Truist Adjusts National Storage Affiliates Trust's Price Target to $37 From $35, Keeps Hold Rating	Dec. 28	MT
Morgan Stanley Lifts Price Target on National Storage Affiliates Trust to $40 From $32, Keeps Equalweight Rating	Dec. 21	MT
Wells Fargo Adjusts Price Target on National Storage Affiliates Trust to $36 From $32, Maintains Underweight Rating	Dec. 12	MT
Evercore ISI Downgrades National Storage Affiliates to Underperform From In-Line, Adjusts Price Target to $35 From $32	Dec. 11	MT
National Storage Affiliates Trust Approves $275 Million Share Repurchase Program	Dec. 04	MT
National Storage Affiliates Trust announces an Equity Buyback for $275 million worth of its shares.	Dec. 01	CI
National Storage Affiliates Trust authorizes a Buyback Plan.	Nov. 30	CI

Chart National Storage Affiliates Trust

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National Storage Affiliates Trust is an integrated, self-administered, and self-managed real estate investment trust. The Company is focused on the ownership, operation and acquisition of self-storage properties located within various metropolitan statistical areas across the United States. The Company owns approximately 1,050 self-storage properties, located in 42 states and Puerto Rico, comprising approximately 68.6 million rentable square feet in approximately 5,42,000 storage units. The properties are managed with a local operational focus of the Company and its participating regional operators (PROs). The Company also managed through its property management platform an additional portfolio of 185 properties owned by the Company's unconsolidated real estate ventures. These properties contain approximately 51.9 million rentable square feet, in approximately 4,07,000 storage units. The Companyâs operating partnership subsidiary is NSA OP, LP.

Sector

Specialized REITs

Calendar

2024-04-30 - Q1 2024 Earnings Release

More about the company

Income Statement Evolution

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Ratings for National Storage Affiliates Trust

Trading Rating

Investor Rating

ESG Refinitiv

C+

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Analysts' Consensus

Sell

Buy

Mean consensus

HOLD

Number of Analysts

Last Close Price

35.26 USD

Average target price

37.57 USD

Spread / Average Target

+6.56%

Consensus

EPS Revisions

Estimates Revisions

Quarterly earnings - Rate of surprise

Company calendar

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