National Storage Affiliates Trust (“NSA” or the "Company") (NYSE: NSA)
today reported the Company’s first quarter 2015 results. These results
are for the period prior to the successful completion of the initial
public offering ("IPO") on April 28, 2015.
Key Highlights
-
Completed an IPO of its common shares of beneficial interest on April
28, 2015.
-
Achieved core funds from operations ("Core FFO") of $4.4 million, or
$0.21 per operating partnership ("OP") unit for the first quarter of
2015.
-
Increased net operating income ("NOI") to $18.4 million for the first
quarter of 2015 compared to $8.2 million in the first quarter of 2014.
-
Increased same store NOI by 9.4%, driven by an average occupancy gain
of 260 basis points and an average annualized rental revenue per
occupied square foot increase of 4.5% for the first quarter of 2015
compared to the first quarter of 2014.
-
Acquired six self storage properties during the first quarter of 2015
for approximately $41 million.
-
Invested approximately $93 million in the acquisition of 21 properties
in connection with the completion of the Company's IPO and formation
transactions during the second quarter of 2015.
Arlen Nordhagen, Chief Executive Officer, commented, “We are very
pleased with the Company's 2015 performance to date. We strengthened our
portfolio in the first quarter leading into our initial public offering
with the acquisition of six self storage properties and completed an
additional 21 self storage acquisitions in connection with the
completion of our IPO. We are also pleased by the improvement in our
same store property operations with excellent growth in net operating
income, occupancy and average revenue per occupied square foot."
Financial Results
|
|
|
($ in thousands, except per share and unit data)
|
|
First Quarter
|
|
|
2015
|
|
|
2014
|
Net loss
|
|
$
|
(2,771
|
)
|
|
|
$
|
(2,803
|
)
|
Funds From Operations (FFO)
|
|
3,760
|
|
|
|
372
|
|
Add back acquisition, organizational and offering expenses
|
|
657
|
|
|
|
417
|
|
Core Funds From Operations (Core FFO)
|
|
$
|
4,417
|
|
|
|
$
|
789
|
|
|
|
|
|
|
|
FFO per share and unit
|
|
$
|
0.18
|
|
|
|
$
|
0.04
|
|
Core FFO per share and unit
|
|
$
|
0.21
|
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
First quarter 2015 funds from operations ("FFO") and Core FFO increased
$3.4 million and $3.6 million year-over-year from first quarter of 2014,
respectively, primarily a result of an additional $9.4 million of NOI
from the acquisition of 88 self storage properties acquired between
April 1, 2014 and March 31, 2015, partially offset by increases in
interest and general and administrative expenses.
Net loss decreased by less than $0.1 million year-over-year from first
quarter of 2014. The decrease in net loss was primarily due to an
increase in NOI resulting from additional self storage properties we
acquired during 2014 and 2015, offset by increases in depreciation and
amortization, interest expense, and general and administrative expenses.
Total Portfolio Operating Results
|
|
|
($ in thousands, except per square foot data)
|
|
First Quarter
|
|
|
2015
|
|
|
2014
|
Total revenue
|
|
$
|
28,291
|
|
|
|
$
|
13,161
|
Property operating expenses
|
|
9,842
|
|
|
|
4,922
|
Net Operating Income (NOI)
|
|
$
|
18,449
|
|
|
|
$
|
8,239
|
|
|
|
|
|
|
Average annualized rental revenue per occupied square foot
|
|
$
|
10.41
|
|
|
|
$
|
9.32
|
Average annualized contractual rent per occupied square foot
|
|
$
|
10.40
|
|
|
|
$
|
9.36
|
|
|
|
|
|
|
|
|
|
Total portfolio revenues increased 115.0% in the first quarter of 2015
compared to the first quarter of 2014. Revenue increases were driven by
a 180 basis point increase in average occupancy for the first quarter of
2015 compared to the first quarter of 2014, combined with an 11.7%
increase in average annualized rental revenue per occupied square foot
compared to the prior year.
Total portfolio NOI in the first quarter increased 123.9% to over $18.4
million in 2015 from $8.2 million in 2014.
Same Store Operating Results
|
|
|
($ in thousands, except per square foot data)
|
|
First Quarter
|
|
|
2015
|
|
|
2014
|
Total revenue
|
|
$
|
14,055
|
|
|
|
$
|
13,027
|
Property operating expenses
|
|
5,028
|
|
|
|
4,777
|
Net Operating Income (NOI)
|
|
$
|
9,027
|
|
|
|
$
|
8,250
|
|
|
|
|
|
|
Average annualized rental revenue per occupied square foot
|
|
$
|
9.74
|
|
|
|
$
|
9.32
|
Average annualized contractual rent per occupied square foot
|
|
$
|
9.64
|
|
|
|
$
|
9.39
|
|
|
|
|
|
|
|
|
|
Same store revenues increased 7.9% in the first quarter of 2015 compared
to the first quarter of 2014. Revenue increases were driven by a 260
basis point increase in average occupancy for the first quarter of 2015
compared to the first quarter of 2014, combined with a 4.5% increase in
average annualized rental revenue per occupied square foot compared to
the prior year.
Same store NOI in the first quarter increased 9.4% to over $9.0 million
in 2015 from $8.3 million in 2014.
Investment Activity
NSA acquired six properties during the first quarter of 2015 with an
estimated fair value of approximately $41 million, comprising
approximately 0.4 million rentable square feet configured in over 3,400
storage units. All six of these properties were acquired by the Company
from its participating regional operators ("PROs").
In connection with the completion of NSA's IPO during the second quarter
of 2015, the Company completed the acquisition of an additional 21 self
storage properties located in seven states for an investment of
approximately $93 million, comprising approximately 1.3 million rentable
square feet configured in approximately 9,300 storage units. Of these
acquisitions, four were acquired by NSA from its PROs and 17 were
acquired from third-party sellers.
These acquisitions increase NSA's total portfolio to 246 self storage
properties located in 16 states with approximately 14 million net
rentable square feet in over 100,000 storage units.
Debt and Credit Facility Activity
Following the completion of the Company's IPO during the second quarter
of 2015, NSA repaid $229.8 million of outstanding indebtedness as shown
in the table below ($ in thousands):
|
|
|
|
|
|
|
|
Effective Rate as of
|
|
|
|
|
|
March 31, 2015
|
|
|
Principal
|
Unsecured Term Loan
|
|
5.18
|
%
|
|
|
$
|
50,000
|
Variable rate mortgages payable
|
|
4.69
|
%
|
|
|
83,500
|
Revolving line of credit
|
|
2.78
|
%
|
|
|
96,300
|
Total/Weighted Average
|
|
4.00
|
%
|
|
|
$
|
229,800
|
|
|
|
|
|
|
|
As a result of the overall reduction in NSA's outstanding indebtedness,
pricing grids for the Company's revolving line of credit and term loan
were reduced by 100 basis points to interest rates equal to one-month
LIBOR plus 1.60% and one-month LIBOR plus 1.50%, respectively.
Distributions and Dividends
On April 30, 2015, NSA paid an ordinary distribution of $0.19 per OP
unit to unitholders of record as of March 31, 2015 as well as an
ordinary distribution of $0.04 per OP unit to unitholders of record as
of April 20, 2015.
In addition, the Company's Board of Trustees declared a dividend of
$0.15 per common share and a distribution of $0.15 per OP unit for the
remainder of the second quarter of 2015 following the Company's IPO, for
common shareholders of record as of June 30, 2015.
Supplemental Financial Information
The full text of this earnings release and supplemental financial
information, including certain financial information referenced in this
release are available on NSA's website at http://ir.nationalstorageaffiliates.com/sec-filings
and as exhibit 99.1 to the Company's Form 8-K furnished to the SEC on
June 5, 2015.
Non-GAAP Financial Measures & Glossary
This press release contains certain non-GAAP financial measures. These
non-GAAP measures are presented because NSA's management believes these
measures help investors understand NSA's business, performance and
ability to earn and distribute cash to its shareholders by providing
perspectives not immediately apparent from net income (loss). These
measures are also frequently used by securities analysts, investors and
other interested parties. The presentation of FFO, Core FFO and NOI in
this press release are not intended to be considered in isolation or as
a substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP. In addition, NSA's method of
calculating these measures may be different from methods used by other
companies, and, accordingly, may not be comparable to similar measures
as calculated by other companies that do not use the same methodology as
NSA. These measures, and other words and phrases used herein, are
defined in the Glossary in the supplemental financial information and,
where appropriate, reconciliations of these measures and other non-GAAP
financial measures to their most directly comparable GAAP measures are
included in the Schedules to this press release and in the supplemental
financial information.
Quarterly Teleconference and Webcast
NSA does not plan to conduct a teleconference and webcast related to the
Company's first quarter 2015 earnings announcement. Going forward, NSA
intends to conduct quarterly earnings calls following the issuance of
the Company's quarterly earnings releases.
Upcoming Industry Conferences
The Company’s executive management team plans to attend the National
Association of Real Estate Investment Trust's upcoming REITWeek
conference in New York, New York, June 9 - June 11, 2015. The Company's
related presentation materials will be available on NSA's website at www.nationalstorageaffiliates.com
at the start of the conference.
About National Storage Affiliates Trust
National Storage Affiliates Trust is a Maryland real estate investment
trust focused on the ownership, operation and acquisition of self
storage properties located within the top 100 metropolitan statistical
areas throughout the United States. The Company currently owns and
operates 246 self storage properties located in 16 states with
approximately 14 million rentable square feet. NSA is the sixth largest
owner and operator of self storage properties among public and private
companies. For more information, please visit the Company’s website at www.nationalstorageaffiliates.com.
NOTE REGARDING FORWARD LOOKING STATEMENTS
NSA makes forward-looking statements in this press release that are
subject to risks and uncertainties. These forward-looking statements
include information about possible or assumed future results of our
business, financial condition, liquidity, results of operations, plans
and objectives. When NSA uses the words "believe," "expect,"
"anticipate," "estimate," "plan," "continue," "intend," "should," "may,"
or similar expressions, the Company intends to identify forward-looking
statements.
The forward-looking statements contained in this press release
reflect NSA's current views about future events and are subject to
numerous known and unknown risks, uncertainties, assumptions, and
changes in circumstances that may cause the Company's actual results to
differ significantly from those expressed in any forward-looking
statement.
Statements regarding the following subjects, among others, may be
forward-looking:
-
market trends in the Company's industry, interest rates, the debt
and lending markets or the general economy;
-
the Company's business and investment strategy;
-
the acquisition of properties, including the timing of acquisitions;
-
the Company's relationships with, and its ability to attract
additional, PROs;
-
NSA's ability to effectively align the interests of its PROs with
the Company and its shareholders;
-
the integration of the Company's PROs and their contributed
portfolios into the Company, including into its financial and
operational reporting infrastructure and internal control framework;
-
NSA's operating performance and projected operating results,
including its ability to achieve market rents and occupancy levels,
reduce operating expenditures and increase the sale of ancillary
products and services;
-
the Company's ability to access additional off-market acquisitions;
-
actions and initiatives of the U.S. federal, state and local
government and changes to U.S. federal, state and local government
policies and the execution and impact of these actions, initiatives
and policies;
-
the state of the U.S. economy generally or in specific geographic
regions, states or municipalities;
-
economic trends and economic recoveries;
-
NSA's ability to obtain and maintain financing arrangements on
favorable terms;
-
general volatility of the securities markets in which we
participate;
-
changes in the value of the Company's assets;
-
projected capital expenditures;
-
the impact of technology on NSA's products, operations, and
business;
-
the implementation of the Company's technology and best practices
programs (including NSA's ability to effectively implement its
integrated Internet marketing strategy);
-
changes in interest rates and the degree to which the Company's
hedging strategies may or may not protect NSA from interest rate
volatility;
-
impact of and changes in governmental regulations, tax law and
rates, accounting guidance and similar matters;
-
the Company's ability to qualify, and maintain its qualification,
as a REIT for U.S. federal income tax purposes;
-
NSA's ability to successfully remediate the material weakness in
its internal control over financial reporting;
-
availability of qualified personnel;
-
the timing of conversions of subordinated performance units into OP
units and the conversion ratio in effect at such time;
-
estimates relating to the Company's ability to make distributions
to its shareholders in the future; and
-
NSA's understanding of its competition.
The forward-looking statements are based on NSA's beliefs,
assumptions and expectations of the Company's future performance, taking
into account all information currently available to NSA. Forward-looking
statements are not predictions of future events. These beliefs,
assumptions, and expectations can change as a result of many possible
events or factors, not all of which are known to the Company. Readers
should carefully review NSA's financial statements and the notes
thereto, as well as the section entitled "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," and "Business and Properties" described in the Company's
Prospectus filed with the SEC pursuant to Rule 424(b) under the
Securities Act of 1933, as amended, on April 24, 2015 (the
"Prospectus"), and the other documents NSA files from time to time with
the Securities and Exchange Commission. If a change occurs, the
Company's business, financial condition, liquidity and results of
operations may vary materially from those expressed in NSA's
forward-looking statements. Any forward-looking statement speaks only
as of the date on which it is made. New risks and uncertainties arise
over time, and it is not possible for the Company to predict those
events or how they may affect NSA. Except as required by law, the
Company is not obligated to, and does not intend to, update or revise
any forward-looking statements, whether as a result of new information,
future events or otherwise.
|
National Storage Affiliates Trust
|
Consolidated Statements of Operations
|
(dollars in thousands, except per share amounts)
|
(unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2015
|
|
|
2014
|
REVENUE
|
|
|
|
|
|
Rental revenue
|
|
$
|
27,418
|
|
|
|
$
|
12,856
|
|
Other property-related revenue
|
|
873
|
|
|
|
305
|
|
Total revenue
|
|
28,291
|
|
|
|
13,161
|
|
OPERATING EXPENSES
|
|
|
|
|
|
Property operating expenses
|
|
9,842
|
|
|
|
4,922
|
|
General and administrative expenses
|
|
3,613
|
|
|
|
1,338
|
|
Depreciation and amortization
|
|
9,877
|
|
|
|
3,837
|
|
Total operating expenses
|
|
23,332
|
|
|
|
10,097
|
|
Income from operations
|
|
4,959
|
|
|
|
3,064
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
Interest expense
|
|
(6,982
|
)
|
|
|
(5,446
|
)
|
Acquisition costs
|
|
(599
|
)
|
|
|
(182
|
)
|
Organizational and offering expenses
|
|
(58
|
)
|
|
|
(235
|
)
|
Non-operating expense
|
|
(91
|
)
|
|
|
(4
|
)
|
Other income (expense)
|
|
(7,730
|
)
|
|
|
(5,867
|
)
|
Net loss
|
|
(2,771
|
)
|
|
|
(2,803
|
)
|
Net loss attributable to noncontrolling interests
|
|
2,771
|
|
|
|
2,803
|
|
Net loss attributable to National Storage Affiliates Trust
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
Earnings (loss) per share (basic and diluted)
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
Weighted average shares outstanding (basic and diluted)
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
National Storage Affiliates Trust
|
Consolidated Balance Sheets
|
(dollars in thousands, except per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
2015
|
|
|
2014
|
ASSETS
|
|
|
|
|
|
Real estate
|
|
|
|
|
|
Self storage properties
|
|
$
|
879,631
|
|
|
|
$
|
838,941
|
|
Less accumulated depreciation
|
|
(45,961
|
)
|
|
|
(39,614
|
)
|
Self storage properties, net
|
|
833,670
|
|
|
|
799,327
|
|
Cash and cash equivalents
|
|
8,328
|
|
|
|
9,009
|
|
Restricted cash
|
|
2,446
|
|
|
|
2,120
|
|
Debt issuance costs, net
|
|
5,755
|
|
|
|
6,346
|
|
Other assets, net
|
|
14,239
|
|
|
|
15,944
|
|
Total assets
|
|
$
|
864,438
|
|
|
|
$
|
832,746
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Debt financing
|
|
$
|
618,290
|
|
|
|
$
|
597,691
|
|
Accounts payable and accrued liabilities
|
|
13,752
|
|
|
|
10,012
|
|
Distributions payable
|
|
—
|
|
|
|
6,763
|
|
Deferred revenue
|
|
4,606
|
|
|
|
4,176
|
|
Total liabilities
|
|
636,648
|
|
|
|
618,642
|
|
Equity
|
|
|
|
|
|
Common shares of beneficial interest, par value $0.01 per share.
1,000 shares authorized; 1,000 shares issued and outstanding
|
|
—
|
|
|
|
—
|
|
Retained earnings
|
|
—
|
|
|
|
—
|
|
Total shareholder's equity
|
|
—
|
|
|
|
—
|
|
Noncontrolling interests
|
|
227,790
|
|
|
|
214,104
|
|
Total equity
|
|
227,790
|
|
|
|
214,104
|
|
Total liabilities and equity
|
|
$
|
864,438
|
|
|
|
$
|
832,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds From Operations and Core Funds From Operations
|
|
|
|
|
|
(in thousands, except per share and unit amounts) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2015
|
|
|
2014
|
Net loss
|
|
$
|
(2,771
|
)
|
|
|
$
|
(2,803
|
)
|
Add (subtract):
|
|
|
|
|
|
Real estate depreciation and amortization
|
|
9,806
|
|
|
|
3,801
|
|
Distributions on subordinated performance units (1)
|
|
(3,275
|
)
|
|
|
(626
|
)
|
FFO attributable to common shareholders and OP unitholders
|
|
3,760
|
|
|
|
372
|
|
Add:
|
|
|
|
|
|
Acquisition costs
|
|
599
|
|
|
|
182
|
|
Organizational and offering expenses
|
|
58
|
|
|
|
235
|
|
Core FFO attributable to common shareholders and OP unitholders
|
|
$
|
4,417
|
|
|
|
$
|
789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares and units outstanding - FFO and Core FFO:
(2)
|
|
|
|
|
|
Weighted average shares outstanding - basic
|
|
1
|
|
|
|
1
|
|
Weighted average operating partnership units outstanding (3)
|
|
19,205
|
|
|
|
9,263
|
|
Weighted average DownREIT operating partnership unit equivalents
outstanding
|
|
1,386
|
|
|
|
—
|
|
Total weighted average shares and units outstanding - FFO and
Core FFO
|
|
20,592
|
|
|
|
9,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per share and unit
|
|
$
|
0.18
|
|
|
|
$
|
0.04
|
|
Core FFO per share and unit
|
|
$
|
0.21
|
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Distributions to subordinated performance unitholders classified
as noncontrolling interests are included as an adjustment to
eliminate the noncontrolling interests’ share of FFO for purposes
of calculating FFO attributable to common shareholders and OP and
DownREIT OP unitholders. Amounts represent distributions declared
for subordinated performance unitholders and DownREIT subordinated
performance unitholders for the periods presented. These
distributions were declared and paid to unitholders of record as
of March 31, 2015 and 2014 during the periods subsequent to March
31, 2015 and 2014, respectively, and therefore the amounts are not
reflected in the historical financial statements for the periods
presented.
|
|
|
|
(2)
|
|
We combine OP units and DownREIT OP units with common shares
because, after the applicable lock-out periods, OP units in our
operating partnership are redeemable for cash or, at our option,
exchangeable for common shares on a one-for-one basis and DownREIT
OP units are also redeemable for cash or, at our 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).
Subordinated performance units and DownREIT subordinated units
have been excluded from the calculations of FFO and Core FFO per
share and unit as their effect is anti-dilutive. LTIP units have
been excluded from the calculations of FFO and Core FFO per share
and unit because such units did not participate in distributions
prior to our Company’s initial public offering.
|
|
|
|
(3)
|
|
Amount for the three months March 31, 2014 includes 2,060,711 OP
units issued in connection with the contribution of 65 self
storage properties on April 1, 2014 by SecurCare Portfolio
Holdings, LLC and SecurCare Value Properties, Ltd. (collectively,
"NSA Predecessor"), entities whose principal owner is the
Company's chief executive officer. For financial reporting
purposes, NSA Predecessor contributions are reported as a
reorganization of entities under common control whereby the
contributed self storage properties are included in the Company's
results of operations for the three months March 31, 2014 and have
been recorded in the Company's financial statements at NSA
Predecessor's depreciated historical cost basis.
|
|
|
|
|
|
|
|
|
|
Other Non-GAAP Financial Measurements
|
|
|
|
|
|
(dollars in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2015
|
|
|
2014
|
Net loss
|
|
$
|
(2,771
|
)
|
|
|
$
|
(2,803
|
)
|
Add:
|
|
|
|
|
|
General and administrative expenses
|
|
3,613
|
|
|
|
1,338
|
|
Depreciation and amortization
|
|
9,877
|
|
|
|
3,837
|
|
Interest expense
|
|
6,982
|
|
|
|
5,446
|
|
Acquisition costs
|
|
599
|
|
|
|
182
|
|
Organizational and offering expenses
|
|
58
|
|
|
|
235
|
|
Non-operating expense
|
|
91
|
|
|
|
4
|
|
Net Operating Income
|
|
$
|
18,449
|
|
|
|
$
|
8,239
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Same Store Data and Net Operating Income to
Income from Operations
|
(dollars in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2015
|
|
|
2014
|
Total revenue for:
|
|
|
|
|
|
Same Store Properties
|
|
$
|
14,055
|
|
|
|
$
|
13,027
|
|
Non-Same Store Properties
|
|
14,236
|
|
|
|
134
|
|
Total revenue
|
|
28,291
|
|
|
|
13,161
|
|
|
|
|
|
|
|
Operating expenses for:
|
|
|
|
|
|
Same Store Properties
|
|
5,028
|
|
|
|
4,777
|
|
Non-Same Store Properties
|
|
4,814
|
|
|
|
145
|
|
Total operating expenses
|
|
9,842
|
|
|
|
4,922
|
|
|
|
|
|
|
|
Net operating income for:
|
|
|
|
|
|
Same Store Properties
|
|
9,027
|
|
|
|
8,250
|
|
Non-Same Store Properties
|
|
9,422
|
|
|
|
(11
|
)
|
Net operating income
|
|
18,449
|
|
|
|
8,239
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
(3,613
|
)
|
|
|
(1,338
|
)
|
Depreciation and amortization
|
|
(9,877
|
)
|
|
|
(3,837
|
)
|
Income from operations on our statements of operations
|
|
$
|
4,959
|
|
|
|
$
|
3,064
|
|
|
|
|
|
|
|
|
|
|
|
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