| Number of | Number of | Rentable | |||||||||||
| State | Properties | Units | Square Feet | Fair Value | |||||||||
| 2017 Acquisitions: | |||||||||||||
| Georgia | 13 | 6,836 | 934,780 | $ | 84,631 | ||||||||
| Florida | 8 | 4,774 | 520,728 | 61,955 | |||||||||
| Texas | 7 | 3,180 | 475,134 | 36,930 | |||||||||
| Nevada | 5 | 2,640 | 311,547 | 35,446 | |||||||||
| California | 4 | 2,194 | 304,504 | 36,547 | |||||||||
| Illinois | 4 | 1,992 | 270,911 | 17,252 | |||||||||
| Louisiana | 4 | 1,806 | 229,259 | 18,982 | |||||||||
| Kansas | 3 | 1,297 | 215,035 | 20,558 | |||||||||
| Missouri | 3 | 1,013 | 152,889 | 13,346 | |||||||||
| Oregon | 3 | 1,135 | 139,492 | 26,334 | |||||||||
| Indiana | 2 | 950 | 127,570 | 11,665 | |||||||||
| Maryland | 2 | 1,167 | 120,773 | 10,939 | |||||||||
Other(1) | 7 | 3,208 | 419,907 | 52,215 | |||||||||
| Total | 65 | 32,192 | 4,222,529 | $ | 426,800 | ||||||||
| Number of | Number of | Rentable | ||||||||||||||||||||||||
| State | Properties | Units | Square Feet | Fair Value | ||||||||||||||||||||||
| 2022 Acquisitions: | ||||||||||||||||||||||||||
| Georgia | 11 | 5,737 | 813,287 | $ | 158,134 | |||||||||||||||||||||
| Florida | 7 | 3,604 | 460,574 | 104,350 | ||||||||||||||||||||||
| Pennsylvania | 5 | 2,818 | 374,654 | 65,078 | ||||||||||||||||||||||
| Texas | 4 | 2,491 | 320,287 | 29,790 | ||||||||||||||||||||||
| South Carolina | 4 | 2,391 | 314,063 | 71,338 | ||||||||||||||||||||||
| New Mexico | 4 | 1,559 | 229,454 | 20,162 | ||||||||||||||||||||||
| Arkansas | 2 | 1,206 | 196,925 | 16,897 | ||||||||||||||||||||||
| Colorado | 2 | 671 | 107,328 | 14,106 | ||||||||||||||||||||||
Other(1) | 6 | 4,492 | 396,477 | 89,321 | ||||||||||||||||||||||
| Total | 45 | 24,969 | 3,213,049 | $ | 569,176 | |||||||||||||||||||||
| (1) Self storage properties in other states acquired during the year ended December 31, | |||||||||||||||||||||||
| Number of | Number of | Rentable | |||||||||||
| State | Properties | Units | Square Feet | Fair Value | |||||||||
| 2016 Acquisitions: | |||||||||||||
California(1) | 31 | 19,034 | 2,325,969 | $ | 228,656 | ||||||||
| Florida | 20 | 16,090 | 1,461,564 | 197,966 | |||||||||
| Indiana | 14 | 7,854 | 1,009,695 | 79,885 | |||||||||
| Ohio | 7 | 2,688 | 349,088 | 22,730 | |||||||||
| Louisiana | 5 | 2,250 | 315,473 | 24,485 | |||||||||
| Oregon | 5 | 2,219 | 299,162 | 34,553 | |||||||||
| New Hampshire | 5 | 1,905 | 233,175 | 28,800 | |||||||||
| Oklahoma | 4 | 1,678 | 252,690 | 20,999 | |||||||||
| Texas | 3 | 1,501 | 192,886 | 11,400 | |||||||||
| Nevada | 3 | 1,407 | 177,566 | 15,686 | |||||||||
| New Mexico | 2 | 1,161 | 156,020 | 8,450 | |||||||||
| Arizona | 2 | 1,100 | 146,400 | 17,100 | |||||||||
| Colorado | 2 | 904 | 111,430 | 12,610 | |||||||||
| Georgia | 2 | 683 | 111,929 | 8,847 | |||||||||
Other(2) | 2 | 1,226 | 173,187 | 9,204 | |||||||||
| Total | 107 | 61,700 | 7,316,234 | $ | 721,371 | ||||||||
Our Unconsolidated Real Estate VentureVentures
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.
2024 Joint Venture
Subsequent to December 31, 2023, we entered into the 2024 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest. During 2024, we contributed 56 self storage properties containing approximately 3.2 million rentable square feet, configured in over 24,000 storage units and located across seven states.
2023 Joint Venture
As of December 31, 2017,2023, our unconsolidated real estate venture (the "Joint Venture")2023 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest, did not own or operate any self storage properties. The 2023 JV Agreement allows for equity capital contributions of up to $400 million from the 2023 JV Members over a 24 month period starting in December 2023, with options to extend the investment time period by two additional six month periods.
2018 Joint Venture
As of December 31, 2023, our 2018 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest, owned and operated 104 self storage properties containing approximately 7.8 million rentable square feet, configured in over 64,000 storage units and located across 17 states.
2016 Joint Venture
As of December 31, 2023, our 2016 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest, owned and operated a portfolio of 7181 properties containing approximately 4.95.7 million rentable square feet, configured in approximately 39,00047,000 storage units and located across 13 states. A listing of, and additional information about, the Joint Venture properties is included in Item 2 of this report.
| Number of | Number of | Rentable | |||||||||||
| State | Properties | Units | Square Feet | Fair Value | |||||||||
| Florida | 21 | 11,485 | 1,331,745 | $ | 232,612 | ||||||||
| Alabama | 11 | 4,032 | 591,030 | 61,450 | |||||||||
| New Jersey | 10 | 7,520 | 925,410 | 124,849 | |||||||||
| California | 9 | 5,832 | 802,176 | 95,952 | |||||||||
Other(1) | 15 | 6,704 | 868,607 | 115,137 | |||||||||
Total(2) | 66 | 35,573 | 4,518,968 | $ | 630,000 | ||||||||
Our Competitive Strengths
We believe our property management platform combined with our unique PRO structure allows us to differentiate ourselves from other self storage operators, and the following competitive strengths enable us to effectively compete against our industry peers:
High Quality Properties in Key Growth Markets. We held ownership interests in and operated a geographically diversified portfolio of 5151,050 self storage properties located in 2942 states and Puerto Rico, comprising approximately 32.168.6 million rentable square feet, configured in approximately 255,000542,000 storage units as of December 31, 2017.2023, excluding 39 self storage properties classified as held for sale to be sold to a third party in 2024. Over 75%70% of our consolidated portfolio is located in the top 100 MSAs, based on our 20172023 net operating income ("NOI"). We believe that these properties are primarily located in high quality growth markets that have attractive supply and demand characteristics and are less sensitive to the fluctuations of the general economy. Many of these markets have multiple barriers to entry against increased supply, including zoning restrictions against new construction and new construction costs that we believe are higher than our properties' fair market value. Furthermore, we believe that our significant size and the overall geographic diversification of our portfolio reduces risks associated with specific local or regional economic downturns or natural disasters.
Integrated Platform Utilizing Advanced Technology for Enhanced Operational Performance and Best Practices. Our national platform allows us to capture cost savings through integration and centralization, thereby eliminating redundancies and utilizing economies of scale across the property management platforms of us and our PROs. As compared to a stand-alone operator, our national platform has greater access to lower-cost capital, reduced Internet marketing costs per customer lead, discounted property insurance expense, and reduced overhead costs. In addition, the Company has sufficient scale for various centralized functions, including financial reporting, the operation of two call centers, expanding cell tower leasing, a national credit card processing program, marketing, information technology, legal support, and capital market functions, to achieve substantial cost savings over smaller, individual operators.
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Our national platform utilizes advanced technology for our data warehouse program, Internet marketing, (including through GoStorageUnits.com, which is owned by the Company), our centralized call centers, financial and property analytic dashboards, revenue optimization analytics and expense management tools to enhance operational performance. These centralized programs, which are run through our Technology and Best Practices Group, are positively impacting our business performance, and we believe that they will continue to be a driver of organic growth going forward. We will continue to utilize our Technology and Best Practices Group to help us benefit from the collective sharing of key operating strategies among our PROs in areas like human resource management, local marketing and operating procedures and building tenant insurance-related arrangements.
Differentiated, Growth-Oriented Strategy Focused on Established Operators. We are a self storage REIT with a unique PRO structure that supports our differentiated external growth strategy. Our PRO structure appeals to operators who are looking for access to growth capital while maintaining an economic stake in the self storage properties that each manages on our behalf. These attributes entice operators to join the Company rather than sell their properties for cash consideration. Through our PRO structure, we seek to attract operators who are confident in the future performance of their properties and desire to participate in the growth of the Company. We have successfully recruited established operators across the United States with a history of efficient property management and a track record of successful acquisitions. Our structure and differentiated strategy have enabled us to build a substantial captive pipeline of potential acquisition opportunities (our "captive pipeline") from existing operators as well as potentially create external growth from the recruitment of additional PROs.
Aligned Incentive Structure with Shareholder Downside Protection. Our PRO structure promotes operator accountability as subordinated performance units issued to our PROs in exchange for the contribution of their properties are entitled to distributions only after those properties satisfy minimum performance thresholds. In the event of a material reduction in operating cash flow, distributions on our subordinated performance units will be reduced before or disproportionately to distributions on our common shares held by our common shareholders. In addition, we expect our PROs will generally co-invest subordinated equity in the form of subordinated performance units in each acquisition that they source from a third-party seller, and the value of these subordinated performance units will fluctuate with the performance of their managed portfolios. Therefore, our PROs are incentivized to select acquisitions that are expected to exceed minimum performance thresholds, thereby increasing the value of their subordinated equity stake. We expect that our shareholders will benefit from the higher levels of property performance that our PROs are incentivized to deliver.
Our Business and Growth Strategies
By capitalizing on our competitive strengths, we seek to increase scale, achieve optimal revenue-producing occupancy and rent levels, and increase long-term shareholder value by achieving sustainable long-term growth. Our business and growth strategies to achieve these objectives are as follows:
Maximize Property Level Cash Flow. We strive to maximize the cash flows at our properties by leveraging the economies of scale provided by our national platform, including through the implementation of new ideas derived from our Technology and Best Practices Group. We believe that our unique PRO structure,efficient national platform, centralized infrastructure and efficient national platformunique PRO structure, will enable us to achieve optimal market rents and occupancy, reduce operating expenses and increase the sale by us and our PROs of ancillary products and services, including tenant insurance, of which we receive a portion of the proceeds, truck rentals and packing supplies.
Acquire Built-in Captive Pipeline of Target Properties from Existing PROs. We have an attractive, high quality potential acquisition pipeline (our "captive pipeline") of over 100110 self storage properties valued at over $900 millionapproximately $1.7 billion that we anticipate will continue to drive our future growth. We consider a property to be in our captive pipeline if it (i) is under a management service agreement with one of our PROs, (ii) meets our property quality criteria, and (iii) is either required to be offered to us under the applicable facilities portfolio management agreement or a PRO has a reasonable basis to believe that the controlling owner of the property intends to sell the property in the next seven years.
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Our PROs have management service agreements with all of the properties in our captive pipeline and hold controlling and non-controlling ownership interests in some of these properties. With respect to each property in our captive pipeline in which a PRO holds a controlling ownership interest, such PRO has agreed that it will not transfer (or permit the transfer of, to the extent possible) any interest in such self storage property without first offering or causing to be offered (if permissible) such interest to us. In addition, upon maturity of the outstanding mortgage indebtedness encumbering such property, so long as occupancy is consistent with or exceeds average local market levels, which we determine in our sole discretion, such PRO has agreed to offer or cause to be offered (if permissible) such interest to us. With respect to captive pipeline properties in which our PROs have a non-controlling ownership interest or no ownership interest, each PRO has agreed to use commercially reasonable good faith efforts to facilitate our purchase of such property. We preserve the discretion to accept or reject any of the properties that our PROs are required to, or elect to, offer (or cause to be offered) to us.
Access Additional Off-Market Acquisition Opportunities. Our PROs and their "on-the-ground" personnel have established an extensive network of industry relationships and contacts in their respective markets. Through these local connections, our PROs are able to access acquisition opportunities that are not publicly marketed or sold through auctions. Our structure incentivizes our PROs to source acquisitions in their markets from third-party sellers and consolidate these properties into the Company. Other public self storage companies generally have acquisition teams located at their central offices, which in many instances are far removed from regional and local markets. We believe our operators'PROs' networks, their industry expertise and close familiarity with the other operators in their markets provide us with a clear competitive advantagesadvantage in identifying and selecting attractive acquisition opportunities. Ouropportunities, in many cases, before they are publicly marketed. Additionally, we have established a corporate acquisitions team that, through relationships with our PROs and other market participants, sources acquisition opportunities whereby the properties will be managed by our corporate property management team. We believe our reputation as a reliable, well-capitalized buyer, along with our use of OP units as transactional currency which offers a tax-deferred transaction to self storage owners seeking to sell their properties, gives us a competitive advantage over self storage companies that do not have sourced 199 acquisitions from third-party sellers comprising approximately 13.9 million rentable square feetthe same transactional history or currency as of December 31, 2017.us.
Recruit Additional New PROs in Target Markets. We intend to continue to execute on our external growth strategy through additional acquisitions and contributions from future PROs in key markets. We believe there is significant opportunity for growth through consolidation of the highly fragmented composition of the market. We believe that future operators will be attracted to our unique PRO structure, providing them with lower cost of capital, better economies of scale, and greater operational and overhead efficiencies while preserving their existing property management platforms. We intend to add one to three additional PROs to complement our existing geographic footprint and to achieve our goal of creating a highly diversified nationwide portfolio of properties focused in the top 100 MSAs. When considering a PRO candidate, we consider various factors, including the size of the potential PRO's portfolio, the quality and location of its properties, its market exposure, its operating expertise, its ability to grow its business, and its reputation with industry participants.
Strategic Joint Venture Arrangements. We intend to continue to opportunistically partner with institutional funds and other institutional investors to acquire attractive portfolios utilizing a promoted return structure. We believe there is significant opportunity for continued external growth by partnering with institutional investors seeking to deploy capital in the self storage industry. We intend to leverage our property management platform to provide property and asset management services for future strategic joint ventures, generating additional operating profits and third party fee income. In addition, we consider the 75% third-party interest in our unconsolidated real estate ventures, which as of December 31, 2023 owned 185 properties, to present a potential acquisition opportunity. This 75% third-party share of gross real estate assets is approximately $1.7 billion based on the historical book value of the joint ventures. Were we to pursue an acquisition of these interests, it could potentially drive our future growth. We have entered into agreements for two additional joint ventures and during 2024, we have contributed an additional 56 properties to the 2024 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8).
Our Financing Strategy
We expect to maintain a flexible approach in financing new property acquisitions. In general, we expect to fund our property acquisitions through a combination of borrowings under bank credit facilities (including term loans and revolving facilities), property-level debt, issuances of OP equity and public and private equity and debt issuances.
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As of December 31, 2017,2023, our unsecured credit facility provided for total borrowings of $895.0 million, consisting$1.955 billion (the "credit facility"). The credit facility consists of fourthe following components: (i) a revolving line of credit (the "Revolver") which providesprovided for a total borrowing commitment up to $400.0$950.0 million, wherebyunder which we maycould borrow, repay and re-borrow amounts, under the Revolver, (ii) a $235.0 million tranche A term loan facility (the "Term Loan A"), (iii) a $155.0$275.0 million tranche B term loan facility (the "Term Loan B"), and (iv)(iii) a $105.0$325.0 million tranche C term loan facility (the "Term Loan C"), (iv) a $275.0 million tranche D term loan facility (the "Term Loan D") and together with the Revolver, the Term(v) a $130.0 million tranche E term loan facility (the "Term Loan A and the Term Loan B, the "credit facility"E"). As of December 31, 2017,2023, we had the entire amounts drawn on Term Loan A,B, Term Loan BC, Term Loan D and Term Loan CE and we had $88.5$381.0 million of outstanding borrowings under the Revolver, and the capacity to borrow an additional $306.8$562.6 million under the Revolver while remaining in compliance with the credit facility's financial covenants.
As discussed in Note 15 to the consolidated financial statements in Item 8, on January 29, 2018,of December 31, 2023, we entered into an increase agreement and amendment with a syndicated group of lenders to increase the total borrowing capacity under our credit facility by adding an additional five-year tranche D term loan facility ("Term Loan D") in an aggregate outstanding principal amount of $125.0 million, for a total credit facility of over $1.0 billion. We havehad an expansion option under the credit facility, which, if exercised in full, would providehave provided for a total credit facility of $1.3$2.5 billion. References to the "credit facility" include Term Loan D for all dates as of and after January 29, 2018.
We also have a credit agreement with a syndicated group of lenderslender for a term loan facility that matures in December 2028 (the "Term"2028 Term Loan Facility") thatand is separate from the credit facility in an aggregate amount of $100.0 million, which$75.0 million. As of December 31, 2023 the entire amount is outstanding. Thewas outstanding under the 2028 Term Loan Facility matures in June 2023 and wewith 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 totalcredit agreement with a lender for a term loan facility that matures in April 2029 (the "April 2029 Term Loan Facility") and is separate from the credit facility and 2028 Term Loan Facility in an aggregate amount of $200.0$100.0 million. As of December 31, 2023 the entire amount was outstanding under the April 2029 Term Loan Facility with an effective interest rate of 4.27%.
We have a June 2029 Term Loan Facility that matures in June 2029 (the "June 2029 Term Loan Facility") and is separate from the credit facility, 2028 Term Loan Facility, and April 2029 Term Loan Facility in an aggregate amount of $285.0 million. As of December 31, 2023, the June 2029 Term Loan Facility had an effective interest rate of 5.37%. We have an expansion option under the June 2029 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount up to $300.0 million.
The credit facility, 2028 Term Loan Facility, April 2029 Term Loan Facility and the June 2029 Term Loan Facility each contain the same financial covenants and customary affirmative and negative covenants that, among other things, could limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
On August 30, 2019, our operating partnership issued $100.0 million of 3.98% senior unsecured notes due August 30, 2029 (the "2029 Notes") and $50.0 million of 4.08% senior unsecured notes due August 30, 2031 (the "August 2031 Notes") in a private placement to certain institutional investors.
On October 22, 2020, our operating partnership issued $150.0 million of 2.99% senior unsecured notes due August 5, 2030 (the "August 2030 Notes") and $100.0 million of 3.09% senior unsecured notes due August 5, 2032 (the "August 2032 Notes").
On May 26, 2021, our operating partnership issued $55.0 million of 3.10% senior unsecured notes due May 4, 2033 (the "May 2033 Notes").
On July 26, 2021, our operating partnership issued $35.0 million of 2.16% senior unsecured notes due May 4, 2026 (the "May 2026 Notes") and $90.0 million of 3.00% senior unsecured notes due May 4, 2031 (the "May 2031 Notes").
On December 14, 2021, our operating partnership issued $75.0 million of 2.72% senior unsecured notes due November 30, 2030 (the "November 2030 Notes"), $175.0 million of 2.81% senior unsecured notes due November 30, 2031 (the "November 2031 Notes") and $75.0 million of 3.06% senior unsecured notes due November 30, 2036 (the "2036 Notes").
On January 28, 2022, our operating partnership issued $125.0 million of 2.96% senior unsecured notes due November 30, 2033 (the "November 2033 Notes").
On September 28, 2022, our operating partnership issued $200.0 million of 5.06% senior unsecured notes due November 16, 2032 (the "November 2032 Notes").
On April 27, 2023, our operating partnership issued $120.0 million of 5.61% senior unsecured notes due July 5, 2028 (the "July 2028 Notes"). As of December 31, 2023, the July 2028 Notes had an effective interest rate of 5.75%.
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On October 5, 2023, our operating partnership issued $65.0 million of 6.46% senior unsecured notes due October 5, 2026 (the "October 2026 Notes"), $100.0 million of 6.55% senior unsecured notes due October 5, 2028 (the "October 2028 Notes"), $35.0 million of 6.66% senior unsecured notes due October 5, 2030 (the "October 2030 Notes") and $50.0 million of 6.73% senior unsecured notes due October 5, 2033 (the "October 2033 Notes" and together with the May 2026 Notes, October 2026 Notes, July 2028 Notes, October 2028 Notes, 2029 Notes, August 2030 Notes, October 2030 Notes, November 2030 Notes, May 2031 Notes, August 2031 Notes, November 2031 Notes, August 2032 Notes, November 2032 Notes, May 2033 Notes, November 2033 Notes and 2036 Notes, the "Senior Unsecured Notes") in a private placement to certain institutional investors.
The Senior Unsecured Notes are subject to customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
We expect to employ leverage in our capital structure in amounts determined from time to time by our board of trustees. Although our board of trustees has not adopted a policy which limits the total amount of indebtedness that we may incur, it will consider a number of factors in evaluating our level of indebtedness from time to time, as well as the amount of such indebtedness that will be either fixed and variable-rate, and in making financial decisions, including, among others, the following:
•the interest rate of the proposed financing;
•the extent to which the financing impacts our flexibility in managing our properties;
•prepayment penalties and restrictions on refinancing;
•the purchase price of properties we acquire with debt financing;
•our long-term objectives with respect to the financing;
•our target investment returns;
•the ability of particular properties, and the Company as a whole, to generate cash flow sufficient to cover expected debt service payments;
•overall level of consolidated indebtedness;
•timing of debt maturities;
•provisions that require recourse and cross-collateralization;
•corporate credit ratios including debt service coverage, debt to total market capitalization and debt to undepreciated assets; and
•the overall ratio of fixed- and variable-rate debt.
Our indebtedness may be recourse, non-recourse or cross-collateralized. If the indebtedness is non-recourse, the collateral will be limited to the particular properties to which the indebtedness relates. In addition, we may invest in properties subject to existing loans secured by mortgages or similar liens on our properties, or may refinance properties acquired on a leveraged basis. We may use the proceeds from any borrowings to refinance existing indebtedness, to refinance investments, including the redevelopment of existing properties, for general working capital or for other purposes when we believe it is advisable.
Dividend Reinvestment Plan
In the future, we may adopt a dividend reinvestment plan that will permit shareholders who elect to participate in the plan to have their cash dividends reinvested in additional common shares.
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Regulation
General
Generally, self storage properties are subject to various laws, ordinances and regulations, including those relating to lien sale rights and procedures, public accommodations, insurance, and the environment. Changes in any of these laws, ordinances or regulations could increase the potential liability existing or created by tenants or others on our properties. Laws, ordinances, or regulations affecting development, construction, operation, upkeep, safety and taxation requirements may result in significant unanticipated expenditures, loss of self storage sites or other impairments to operations, which would adversely affect our cash flows from operating activities.
Under the Americans with Disabilities Act of 1990 ("the ADA"(the "ADA"), all places of public accommodation are required to meet certain federal requirements related to access and use by disabled persons. A number of additional U.S. federal, state and local laws may also require modifications to our properties, or restrict certain further renovations of the properties, with respect to access thereto by disabled persons. The ADA or these other laws may also apply to our websites. For additional information on the ADA, see "Item 1A. Risk Factors—Risks Related to Our Business—Costs associated with complying with the ADA may result in unanticipated expenses."
Insurance activities are subject to state insurance laws and regulations as determined by the particular insurance commissioner for each state in accordance with the McCarran-Ferguson Act, as well as subject to the Gramm-Leach-Bliley Act and the privacy regulations promulgated by the Federal Trade Commission pursuant thereto.
Under various U.S. federal, state and local laws, ordinances and regulations, owners and operators of real estate may be liable for the costs of investigating and remediating certain hazardous substances or other regulated materials on or in such property. The Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended (the "CERCLA"("CERCLA"), and comparable state laws typically impose strict joint and several liabilities without regard to whether the owner or operator knew of, or was responsible for, the presence of such substances or materials. The presence of such substances or materials, or the failure to properly remediate such substances, may adversely affect the owner's or operator's ability to lease, sell or rent such property or to borrow using such property as collateral. Persons who arrange for the disposal or treatment of hazardous substances or other regulated materials may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such person. Certain environmental laws impose liability for release of asbestos-containing materials into the air and third-parties may seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials. Certain environmental laws also impose liability, without regard to knowledge or fault, for removal or remediation of hazardous substances or other regulated materials upon owners and operators of contaminated property. Moreover, the past or present owner or operator of a property from which a release emanates could be liable for any personal injuries or property damages that may result from such releases, as well as any damages to natural resources that may arise from such releases. Certain environmental laws impose compliance obligations on owners and operators of real property with respect to the management of hazardous materials and other regulated substances. For example, environmental laws govern the management of asbestos-containing materials and lead-based paint. Failure to comply with these laws can result in penalties or other sanctions. In connection with the ownership, operation and management of our current or past properties and any properties that we may acquire and/or manage in the future, we could be requiredlegally responsible for environmental liabilities or costs relating to investigate and remediatea release of hazardous substances or other regulated hazardous materials at one or moreemanating from such property. In order to assess the potential for such liability, we conduct an environmental assessment of each property prior to acquisition and manage our properties in accordance with environmental laws while we own or operate them. We have engaged qualified, reputable and adequately insured environmental consulting firms to perform environmental site assessments of all of our properties.properties prior to acquisition and are not aware of any environmental issues that are expected to materially impact the operations of any property. For additional information on environmental matters and regulation, see "Item 1A. Risk Factors—Risks Related to Our Business—Environmental compliance costs and liabilities associated with operating our properties may affect our results of operations."
Property management activities are often subject to state real estate brokerage laws and regulations as determined by the particular real estate commission for each state. We may be required to comply with various state privacy statutes in connection with the operation of our business. In addition, we may be required to comply with federal, state and local laws, rules and regulations in connection with our communications with our tenants or prospective tenants, including with respect to available units, reservations, payments due, and other matters.
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REIT Qualification
We have elected and we believe that we have qualified to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, (the "Code"), commencing with our taxable year ended on December 31, 2015. We generally will not be subject to U.S. federal income tax on our net taxable income to the extent that we distribute annually all of our net taxable income to our shareholders and maintain our qualification as a REIT. We believe that we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and we expect that our intended manner of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT. To qualify, and maintain our qualification, as a REIT, we must meet on a continuing basis, through our organization and actual investment and operating results, various requirements under the Code relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels and the diversity of ownership of our shares. If we fail to qualify as a REIT in any taxable year and do not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax at regular corporate rates and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year during which we failed to qualify as a REIT. Even if we qualify for taxation as a REIT, we still may be subject to some U.S. federal, state and
local taxes on our income or assets. In addition, subject to maintaining our qualification as a REIT, a portion of our business is conducted through, and a portion of our income is earned by, one or more taxable REIT subsidiaries ("TRSs"), which are subject to U.S. federal corporate income tax at regular rates. Distributions paid by us generally will not be eligible for taxation at the preferential U.S. federal income tax rates that currently apply to certain distributions received by individuals from taxable corporations, unless such distributions are attributable to dividends received by us from a TRS.
Competition
We compete with many other entities engaged in real estate investment activities for customers and acquisitions of self storage properties and other assets, including national, regional, and local owners, operators, and developers of self storage properties. We compete based on a number of factors including location, rental rates, security, suitability of the property's design to prospective tenants' needs, and the manner in which the property is operated and marketed. We believe that the primary competition for potential customers comes from other self storage properties within a three to five mile radius. We have positioned our properties within their respective markets as high-quality operations that emphasize tenant convenience, security, and professionalism.
We also may compete with numerous other potential buyers when pursuing a possible property for acquisition, which can increase the potential cost of a project. These competing bidders also may possess greater resources, or have a lower cost of capital, than us and therefore be in a better position to acquire a property. However, our use of OP units and subordinated performance units as transactional currency allows us to structure our acquisitions in tax-deferred transactions. As a result, potential targets who are tax-sensitive might favor us as a suitor.
Our primary national competitors in many of our markets for both tenants and acquisition opportunities include local and regional operators, institutional investors, private equity funds, as well as the other public self storage REITs, including Public Storage, Cubesmart,CubeSmart, and Extra Space Storage Inc. and Life Storage Inc. These entities also seek financing through similar channels to the Company. Therefore, we will continue to compete for institutional investors in a market where funds for real estate investment may decrease.
We seek to foster a diverse and inclusive work environment that values each individual team member’s talents and contributions, while channeling those efforts toward our common core values of integrity, accountability, humility and compassion. Our success relies on the general professionalism of our employees and our PRO's site managers and staff which are contributing factors to a site's ability to successfully secure rentals, retain tenants and maintain clean and secure self storage properties. We seek to increase employee retention and well-being and our team members enjoy a robust benefit package that includes medical, dental, vision, life insurance, 401K with matching employer contribution and a performance-based bonus incentive plan. We also seek to promote diversity among our employees and management team. As of December 31, 2023, approximately 63% of our employees were women and 32% of our senior management team (Director level and above) were women, including Tamara Fischer, our Executive Chairperson of our Board of Trustees.
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As of December 31, 2017, the Company2023, we had 2111,108 employees, which includes employees of the Company'sour property management platform but does not include persons employed by our PROs. As of December 31, 2017,2023, our PROs, collectively, had approximately 1,000600 full-time and part-time employees involved in management, operations, and reporting with respect to our self storage property portfolio.
Available Information
We file registration statements, proxy statements, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those statements and reports with the Securities and Exchange Commission (the "SEC"). Investors may obtain copies of these statements and reports by visiting the SEC's Public Reference Room at 100 F Street, NE., Washington, DC 20549, by calling the SEC at 1-800-SEC-0330, or by accessing the SEC's website at www.sec.gov. Our statements and reports and any amendments to any of those statements and reports that we file with the Securities and Exchange Commission are available free of charge as soon as reasonably practicable on our website at www.nationalstorageaffiliates.com. The information contained on our website is not incorporated into this Annual Report on Form 10-K. Our common shares are listed on the New York Stock Exchange under the symbol "NSA."
Item 1A. Risk Factors
An investment in our common shares involves a high degree of risk. Before making an investment decision, you should carefully consider the following risk factors, together with the other information contained in this Annual Report on Form 10-K. If any of the risks discussed in this Annual Report on Form 10-K occurs, our business, financial condition, liquidity and results of operations could be materially and adversely affected.
Risks Related to Ourour Business
Adverse economic or other conditions in the markets in which we do business and more broadly associated with the real estate industry could negatively affect our occupancy levels and rental rates and therefore our operating results.results and the value of our self storage properties.
Our operating results are dependent upon our ability to achieve optimal occupancy levels and rental rates at our self storage properties. Adverse economic or other conditions in the markets in which we do business, particularly in our markets in Texas, California, Oregon, Texas, Florida, North CarolinaGeorgia, and OklahomaOregon, which accounted for approximately 27%17%, 14%12%, 10%, 9%11%, 6%, and 6%, respectively, of our total rental and other property-related revenues for the year ended December 31, 2017,2023, may lower our occupancy levels and limit our ability to maintain or increase rents or require us to offer rental discounts. No single customer represented a significant concentration of our 20172023 revenues. However, our property portfolio consists solely of self storage properties and is therefore subject to risks inherent in investments in a single industry. The following adverse developments, among others, in the markets in which we do business may adversely affect the operating performance of our properties:properties or our financial results:
•business layoffs or downsizing, industry slowdowns, relocation of businesses and changing demographics;
•periods of economic slowdown, recession, high interest rates, or recession,inflationary environments, declining demand for self storage generally or in a particular area or the public perception that any of these events may occur;
•local or regional real estate market conditions, such as competing properties or products, the oversupply of self storage, or a reductionvacancies or changes in demand for self storage in a particular area; and space market rents;
•perceptions by prospective tenants of the safety, convenience and attractiveness of our properties and the neighborhoods in which they are located.located; and
Any of the above events may reduce our growthrental revenues, impair our operating results, and profitability.reduce our ability to satisfy our debt service obligations and make cash distributions to our shareholders, and the effect of the foregoing may be greater than it would be were our investments not limited to a single industry.
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We may not be successful in identifying and consummating suitable acquisitions, adding additional suitable new PROs, or integrating and operating such acquisitions, including integrating them into our financial and operational reporting infrastructure and internal control framework in a timely manner, which may impede our growth.
Our ability to expand through acquisitions is integral to our business strategy and requires us to identify suitable acquisition candidates or investment opportunities that meet our criteria and are compatible with our growth strategy. We may not be successful in identifying suitable properties or other assets that meet our acquisition criteria or in consummating acquisitions on satisfactory terms or at all. Failure to identify or consummate acquisitions will slow our growth, which could in turn adversely affect our share price.
For the potential acquisitions in our captive pipeline, we have not entered into negotiations with the respective owners of these properties and there can be no assurance as to whether we will acquire any of these properties or the actual timing of any such acquisitions. Each captive pipeline property is subject to additional due diligence and the determination by us to pursue the acquisition of the property. In addition, with respect to the captive pipeline properties in which our PROs have a non-controlling ownership interest or no ownership interest, the current owner of each property is not required to offer such property to us and there can be no assurance that we will acquire these properties.
Our ability to acquire properties on favorable terms and successfully integrate and operate them, including integrating them into our financial and operational reporting infrastructure in a timely manner, may be constrained by the following significant risks:
•we face competition from national, (e.g., large public and private self storage companies, institutional investors and private equity funds), regional and local owners, operators and developers of self storage properties, which may result in higher property acquisition prices and reduced yields;
•we may not be able to achieve satisfactory completion of due diligence investigations and other customary closing conditions;
•we may fail to finance an acquisition on favorable terms or at all;
•we may spend more time and incur more costs than budgeted to make necessary improvements or renovations to, and to integrate and operate, acquired properties; and
•we may acquire properties subject to liabilities without any recourse, or with only limited recourse, with respect to unknown liabilities such as liabilities for clean-up of undisclosed environmental contamination, tax liabilities, claims by persons dealing with the former owners of the properties and claims for indemnification by general partners, trustees, officers and others indemnified by the former owners of the properties.
The contributors of properties may make limited representations and warranties to us about the properties and may agree to indemnify us up to a specified amount for a certain period of time following the closing for breaches of those representations and warranties. However, any resulting liabilities identified may not fall within the scope or time frame covered by the indemnification, and we may be required to bear those liabilities, which may materially and adversely affect our operating results, financial condition and business.
We face competition for tenants.
We compete with many other entities engaged in real estate investment activities for tenants, including national, regional and local owners, operators and developers of self storage properties. Our primary national competitors for tenants in many of our markets are the large public and private self storage companies, institutional investors, and private equity funds. Actions by our competitors may decrease or prevent increases in the occupancy and rental rates, while increasing the operating expenses, of our properties.
Increases in taxes and regulatory compliance costs, including as a result of changes in law or property reassessments, may reduce our income and adversely impact our cash flows.
Increases in income or other taxes generally are not passed through to tenants under leases and may reduce or negatively impact our net income, funds from operations ("FFO"), core FFO, cash flows, financial condition, ability to pay or refinance our debt obligations, ability to make cash distributions to shareholders, and the trading price of our securities. Similarly, changes in laws increasingIn addition, the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures, which could result in similar adverse effects.
Similarly, in response to facing severe budgetary problems, many states and jurisdictions are considering or implementing changes in laws such as increasing sales taxes, increasing the potential liability for environmental conditions existing on properties, increasing the restrictions on discharges or other conditions, or mandating paid family leave for employees, which may result in significant unanticipated expenditures, which could be adversely affected.
result in similar adverse effects.
Our storage leases are relatively short-term in nature, which exposes us to the risk that we may have to re-lease our units and we may be unable to do so on attractive terms, on a timely basis or at all.
Our storage leases are relatively short-term in nature, typically month-to-month, which exposes us to the risk that we may have to re-lease our units frequently and we may be unable to do so on attractive terms, on a timely basis or at all. Because these leases generally permit the tenant to leave at the end of the month without penalty, our revenues and operating results may be impacted by declines in market rental rates more quickly than if our leases were for longer terms. In addition, any delay in re-leasing units as vacancies arise would reduce our revenues and harm our operating results.
We and our PROs are increasingly dependent upon automated information technology processes and Internet commerce, and somemany of our newand their tenants come from the telephone or over the Internet. Moreover, the nature of our and our PROs' business involves the receipt and retention of certain personal information about such tenants. In many cases, we and our tenants. WePROs also rely extensivelysignificantly on third-party vendors to retain data, process transactions and provide other systems services. These systemsOur networks and our systems are subject to damageoperations could be disrupted, and sensitive data could be compromised, by physical or interruption from power outages, computer and telecommunications failures, computer worms, viruses and other destructive or disruptiveelectronic security breaches, targeted against us, our PROs, our vendors or other organizations, including financial markets or institutions, including by way of or through cyber-attacks or cyber-intrusions over the Internet, malware, computer viruses, attachments to e-mails, phishing, employee theft or misuse, or inadequate security controls. Although we make efforts to protect the security and catastrophic events,integrity of our networks and systems, there can be no assurance that these efforts and measures will be effective or that attempted security breaches or disruptions would not be successful, as such as a natural disaster or a terrorist event or cyber-attack. In addition, experienced computer programmersattacks and breaches may be abledifficult to penetrate our network securitydetect (or not detected at all) and misappropriate ourare becoming more sophisticated. In such event, we may experience business interruptions; data loss, ransom, misappropriation, or corruption; theft or misuse of confidential information, create system disruptions or cause shutdowns.
PROs.
Costs associated with complying with the ADA may result in unanticipated expenses.
Under the ADA places of public accommodationand other federal, state and local laws, we are required to meet certain federal requirements related to access and use by disabled persons. These requirements became effective in 1992. A number of additional U.S. federal, state and local laws may also require modifications to our properties, or restrict certain further renovations of the properties, with respect to access thereto by disabled persons. Noncompliance with the ADA could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. If one or more of our properties or websites is not in compliance with the ADA or other legislation,similar laws, then we would be required to incur additional costs to bring the property or websites into compliance. If we incur substantialsuch costs to comply with the ADA or other legislation,and they are substantial, our financial condition, results of operations, cash flow, per share trading price of our common shares and our ability to satisfy our debt service obligations and to make cash distributions to our shareholders could be adversely affected.
Environmental compliance costs and liabilities associated with operating our properties may affect our results of operations.
Under various U.S. federal, state and local environmental laws, ordinances and regulations, owners and operators of real estate may be liable for the costs of investigating and remediating certain hazardous substances or other regulated materials on or in such property. CERCLA and comparable state laws typically impose strict joint and several liabilities without regard to whether the owner or operator knew of, or was responsible for, the presence of such substances or materials. The presence of such substances or materials, or the failure to properly remediate such substances, may adversely affect the owner's or operator's ability to lease, sell or rent such property or to borrow using such property as collateral. Persons who arrange for the disposal or treatment of hazardous substances or other regulated materials may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such person. Certain environmental laws impose liability for release of asbestos-containing materials into the air and third-parties may seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials.
No assurances can be given that existing environmental studies with respect to any of our properties reveal all environmental liabilities, that any prior owner or operator of our properties did not create any material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to any one or more of our properties. There also exists the risk that material environmental conditions, liabilities or compliance concerns may have arisen after the review was completed or may arise in the future. Finally, future laws, ordinances or regulations and future interpretations of existing laws, ordinances or regulations may impose additional material environmental liability.
We and certain of our PROs have tenant insurance- and/or tenant protection plan-related arrangements that are in some cases subject to state-specific governmental regulation, which may adversely affect our results.
We and certain of our PROs have tenant insurance- and/or tenant protection plan-related arrangements with regulated insurance companies and our tenants. Some of our PROs earn access fees and commissions in connection with these arrangements. We receive a portion of the fees and commissions from these PROs. The tenant insurance and tenant protection plan businesses, including the payments associated with these arrangements, are in some cases subject to state-specific governmental regulation. State regulatory authorities generally have broad discretion to grant, renew and revoke licenses and approvals, to promulgate, interpret and implement regulations, and to evaluate compliance with regulations through periodic examinations, audits and investigations of the affairs of insurance industry participants. Although these arrangements are managed by our property management platform and/or certain of our PROs who have developed marketing programs and management procedures to navigate the regulatory environment, asAs a result of regulatory or privatesuch action, in any jurisdiction in which we operate, we may be temporarily or permanently suspended from continuing some or all of our tenant insurance- and/or tenant protection plan-related activities, or otherwise fined or penalized or suffer an adverse judgment, which could adversely affect our business and results of operations.
Privacy concerns could result in regulatory changes that may harm our business.
Personal privacy has become a significant issue in the jurisdictions in which we operate. Many jurisdictions in which we operate have imposed or in the future may impose restrictions and requirements on the use of personal information by those collecting such information. For example, the California Consumer Privacy Act of 2018, which became effective as of January 1, 2020, together with the California Privacy Rights Act, provides consumers with expansive rights and control over personal information obtained by or shared with certain covered businesses. Changes to law or regulations or the passage of new laws affecting privacy, if applicable to our business, could impose additional costs and liability on us and could limit our use and disclosure of such information.
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We face possible risks and costs associated with the effects of climate change and severe weather.
We cannot predict the rate at which climate change will progress. However, the physical effects of climate change could have a material adverse effect on our properties, operations, and business. To the extent that climate change impacts changes in weather patterns, our markets could experience severe weather, including hurricanes, tornados, earthquakes, severe winter storms, wildfires and coastal flooding due to increases in storm intensity and rising sea levels. Over time, these conditions could result in declining demand for storage at our properties or in our inability to operate them at all. Climate change and severe weather may also have indirect effects on our business by increasing the cost of, or decreasing the availability of, property insurance, utilities or other important vendor services on terms we find acceptable, by increasing the costs of energy, maintenance, repair of fire, water and/or wind damage, and snow removal at our properties. There can be no assurance that climate change and severe weather, or the potential impacts of these events on our vendors, will not have a material adverse effect on our properties, operations, or business
Changes in federal, state, and local legislation and regulation as well as international pacts or treaties based on concerns about climate change could result in increased capital expenditures on our existing properties (for example, to improve their energy efficiency and/or resistance to severe weather) without a corresponding increase in revenue, which may result in adverse impacts to our net income. In recent years, there have been a number of new legal efforts to reduce greenhouse gas emissions and to take other similar actions to combat the effects of climate change, including at the international level and at the U.S. federal, state and local levels.
Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition, operating results and cash flow.
We maintain comprehensive liability, fire, flood, earthquake, wind (as deemed necessary or as required by our lenders), extended coverage and rental loss insurance with respect to our properties. Certain types of losses, however, may be either uninsurable or not economically insurable either in total or in part (due to location or otherwise), such as losses due to earthquakes, hurricanes, tornadoes, floods, riots, acts of war or terrorism. Should an uninsured loss occur, we could lose both our investment in and anticipated profits and cash flow from a property.property or otherwise be subject to significant liabilities. In addition, if any such loss is insured, we may be required to pay significant amounts on any claim for recovery of such a loss prior to our insurer being obligated to reimburse us for the loss, or the amount of the loss may exceed our coverage for the loss. We currently self-insure a portion of our commercial insurance deductible risk through our captive insurance company. To the extent that our captive insurance company is unable to bear that risk, we may be required to fund additional capital to our captive insurance company or we may be required to bear that loss. As a result, our operating results may be adversely affected.
Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties.
Because real estate investments are relatively illiquid and we have agreed and may in the future agree to certain transfer restrictions with respect to our properties, our ability to promptly sell one or more properties in our portfolio in response to changing economic, financial and investment conditions is limited. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates, and other factors, including supply and demand, and others, that are beyond our control. We cannot predict whether we will be able to sell any property for the price or on the terms set by us or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. In addition, we may be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot assure you that we will have funds available to correct those defects or to make those improvements.
Our business could be harmed if key personnel terminate their employment with us.
Our success depends, to a significant extent, on the continued services of Arlen D. Nordhagen, and Tamara D. Fischer, David G. Cramer, Brandon S. Togashi, William S. Cowan, Derek Bergeon and Tiffany S. Kenyon and the other members of our senior management team. At the time of our initial public offering, Mr. Nordhagen and Ms. FischerWe have entered into new employment agreements with us. These employment agreementsMr. Nordhagen, Ms. Fischer, Mr. Cramer, Mr. Togashi, Mr. Cowan, Mr. Bergeon and Ms. Kenyon, which provide for an initial three-year term of employment for these executives and automatic one-year extensions thereafter unless either party provides at least 90 days' notice of non-renewal. Notwithstanding these agreements, there can be no assurance that any of them will remain employed by us. The loss of services of one or more members of our senior management team could harm our business and our prospects. This risk may be heightened during periods of tight labor market conditions.
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We invest in strategic joint ventures that subject us to additional risks.
Some of our investments are, and in the future may be, structured as strategic joint ventures. Part of our strategy is to opportunistically partner with institutional funds and other institutional investors to acquire attractive portfolios through a promoted return structure. These arrangements are driven by the magnitude of capital required to complete the acquisitions and maintain the acquired portfolios. Such arrangements involve risks not present where a third party is not involved, including the possibility that partners or co-venturers might become bankrupt or otherwise fail to fund their share of required capital contributions. Additionally, partners or co-venturers might at any time have economic or other business interests or goals different from us and or in competition with us.
Joint ventures generally provide for a reduced level of control over an acquired project because governance rights are shared with others. Accordingly, certain major decisions relating to joint ventures, including decisions relating to, among other things, the approval of annual budgets, sales and acquisitions of properties, financings, and certain actions relating to bankruptcy, are often made by a majority vote of the investors or by separate agreements that are reached with respect to individual decisions.agreements. In addition, such decisions may be subject to the risk that the partners or co-venturers may make business, financial or managementcertain decisions with which we do not agree or take risks or otherwise act in a manner that does not serve our best interests. Because we may not have the ability to exercise control over such operations, we may not be able to realize some or all of the benefits that we believe will be created from our involvement. At times, we and our partners or co-venturers may also each have the right to trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partners' or co-venturers' interest, at a time when we otherwise would not have initiated such a transaction. If any of the foregoing were to occur, our business, financial condition and results of operations could suffer as a result.
Public health and other crisis, such as a highly infectious or contagious disease, could adversely impact or cause significant disruption to our financial condition, results of operations and cash flows.
We face various risks related to public health and other crises, such as the future outbreak of a highly infectious or contagious disease. The impact of such crises and the response of governments to combat the spread of these diseases, could, among other things, affect our tenants ability to meet their obligations to us, impact consumer discretionary spending, reduce new move-ins, compel complete or partial closures and operational changes at our properties, reduce demand for growth opportunities, such as acquiring new properties or adding new PROs, and interrupt the availability of our and our PROs' personnel. As a result, such crises could adversely impact our financial condition, results of operations and cash flows.
Terrorist attacks, active shooter incidents and other acts of violence or war may adversely impact our performance and may affect the markets on which our securities are traded.
Terrorist attacks at or against our stores, our interests, the United States or abroad, may negatively impact our operations and the value of our securities. Attacks, armed conflicts or active-shooter situations could negatively impact the demand for self-storage and increase of insurance coverage for our stores, which could reduce our profitability and cash flow. Furthermore, any terrorist attacks, armed conflicts or active-shooter situations could result in increased volatility in or damage to the United States and worldwide financial markets and economy.
Risks Related to Our Structure and Our Relationships with Our PROs
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Our ability to terminate our facilities portfolio management agreements ("FPMAs") and asset management agreements ("AMAs") with a PRO is limited, which may adversely affect our ability to execute our business plan.
We may elect to terminate our facilities portfolio management agreementsFPMAs and asset management agreementsAMAs with a PRO and transfer property management responsibilities over the properties managed by such PRO to us (or our designee), (i) upon certain defaults by a PRO as set forth in these agreements, or (ii) if the PRO's properties, on a portfolio basis, fail to meet certain pre-determinedpredetermined performance thresholds for more than two consecutive calendar years or if the operating cash flow generated by the properties of the PRO for any calendar year falls below a level that will enable us to fund minimum levels of distributions, debt service payments attributable to the properties, and fund the properties' allocable operating expenses. Consequently, to the extent a PRO complies with these covenants, standards, and minimum requirements, we may not be able to terminate the applicable facilities portfolio management agreementsFPMAs and asset management agreementsAMAs and transfer property management responsibilities over such properties to us (or our designee) even if our board of trustees believes that such PRO is not properly executing our business plan and/or is failing to operate its properties to their full potential. Moreover, transferring the management responsibilities over the properties managed by a PRO may be costly or difficult to implement or may be delayed, even if we are able to and believe that such a change in portfolio and property management would be beneficial to us and our shareholders.
We may less vigorously pursue enforcement of terms of agreements entered into with our PROs because of conflicts of interest with our PROs.
Our PROs are entities that have contributed or will contribute through contribution agreements, self storage properties, or legal entities owning self storage properties to our operating partnership or DownREIT partnershipsus in exchange for ownership interests in our operating partnership or DownREIT partnerships.us. As part of each transaction, our PROs make and have made limited representations and warranties to our operating partnershipus regarding the entities, properties and other assets to be acquired by our operating partnership or DownREIT partnershipsus in the contribution and generally agree to indemnify our operating partnershipus for 12 months after the closing of the contribution for breaches of such representations. Such indemnification is limited, however, and our operating partnership iswe are not entitled to any other indemnification in connection with the contributions. In addition, following each contribution from a PRO, the day-to-day operations of each of the managed properties will be managed by the PRO who was the principal of the applicable self storage property portfolios prior to the contribution. In addition, certain key persons of our PROs are members of our board of trustees, members ofor our PRO advisory committee, or are executive officers of the Company.committee. Consequently, we may choose not to enforce, or to enforce less vigorously, our rights under these agreements and any other agreements with our PROs due to our desire to maintain our ongoing relationship with our PROs, which could adversely affect our operating results and business.
We own self storage properties in some of the same geographic regions as our PROs and may compete for tenants with other properties managed by our PROs.
Pursuant to the facilities portfolio management agreements with our PROs,FPMAs, each PRO has agreed that, without our consent, the PRO will not, and it will cause its affiliates (other than Blue Sky's sub-manager) not to, enter into any new agreements or arrangements for the management of additional self storage properties other than the properties we are not acquiring and the properties each PRO contributes to our operating partnership.within any PRO's assigned territory. However, we have not and will not acquire all of the self storage properties of our PROs. We will therefore own self storage properties in some of the same geographic regions as our PROs, and, as a result, we and our PROs may compete for tenants with our PROs.tenants. This competition may affect our ability to attract and retain tenants and may reduce the rental rates we are able to charge, which could adversely affect our operating results and business.
Our PROs may engage in other activities, diverting their attention from the management of our properties, which could adversely affect the execution of our business plan and our operating results.
Our PROs and their employees and personnel are in the business of managing self storage properties. We have agreed that our PROs may continue to manage properties not included in our portfolio, and our PROs are not obligated to dedicate any specific employees or personnel exclusively to the management of our properties. As a result, their time and efforts may be diverted from the management of our properties, which could adversely affect the execution of our business plan and our operating results.
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When a PRO elects or is required to "retire" we may become exposed to new and additional costs and risks.
Under the facilities portfolio management agreements,our FPMAs, after a two yeartwo-year period following the later of completion of our initial public offering or the initial contribution of their properties to us, a PRO may elect, or be required, to "retire" from the self storage business. Upon a retirement event, management of the properties will be transferred to us (or our designee) in exchange for OP units with a value equal to four times the average of the normalized annual EBITDA from the management contracts related to such PRO's managed portfolio over the immediately preceding 24-month period. As a result of this transfer, we may become exposed to new and additional costs and risks. Accordingly, the retirement of a PRO may adversely affect our financial condition and operating results.
Conflicts of interest could arise with respect to certain transactions between the holders of OP units (includingand subordinated performance units),units, which include our PROs, on the one hand, and us and our shareholders, on the other.
Conflicts of interest could arise with respect to the interests of holders of OP units (includingand subordinated performance units),units, on the one hand, which include members of our senior management team, PROs, and trustees (including Arlen D. Nordhagen, our chief executive officer, president and chairman of the board of trustees) and us and our shareholders, on the other. In particular, the consummation of certainCertain business combinations, the sale, disposition or transfer of certain of our assets or the repayment of certain indebtedness that may be desirable to us and our shareholders could have adverse tax consequences to such unit holders. In addition, under Maryland law, our trustees and officers have duties to the Company under applicable Maryland law in connection with their management of the Company. At the same time,Company, however, under Delaware law, as a general partner, we have fiduciary duties as a general partner, to our operating partnership and to the limited partners under Delaware law in connection with the management of our operating partnership. Our duties as a general partner to our operating partnership and its partners may come into conflict with the duties of our trustees and officers to the Company and our shareholders. The partnership agreement of our operating partnership doesshareholders and we are not require usrequired to resolve such conflicts in favor of either the Company or the limited partners in our operating partnership. Further, there can be no assurance that any procedural protections we implement to address these or other conflicts of interest will result in optimal outcomes for us and our shareholders.
The partnership agreement of our operating partnership contains provisions that may delay, defer or prevent a change in control.
The partnership agreement of our operating partnership provides that subordinated performance unit holders holding more than 50% of the voting power of the subordinated performance units must approve certain change of control transactions involving us unless, as a result of such transactions, the holders of subordinated performance units are offered a choice (1) to allow their subordinated performance units to remain outstanding without the terms thereof being materially and adversely changed or the subordinated performance units are converted into or exchanged for equity securities of the surviving entity having terms and conditions that are substantially similar to those of the subordinated performance units (it being understood that we may not be the surviving entity and that the parent of the surviving entity or the surviving entity may not be publicly traded) or (2) to receive for each subordinated performance unit an amount of cash, securities or other property payable to a holder of OP units had such holder exercised its right to exchange its subordinated performance units for OP units without taking into consideration a specified conversion penalty associated with such an exchange. In addition, in the case of any such change of control transactions in which we have not received the consent of OP unit holders holding more than 50% of the OP units (other than those held by the Companyus or itsour subsidiaries) and of subordinated performance unit holders holding more than 50% of the voting power of the subordinated performance units (other than those held by the Companyus or itsour subsidiaries), such transaction is required to be approved by a companywidecompany-wide vote of limited partners holding more than 50% of our outstanding OP
units in which OP units (including for this purpose OP units held by us and our subsidiaries) are voted and subordinated performance units (not held by us and our subsidiaries) are voted on an applicable as converted basis and in which we will be deemed to vote the OP units held by us and our subsidiaries in proportion to the manner in which all of our outstanding common shares were voted at a shareholders meeting relating to such transaction. These approval rights could delay, deter, or prevent a transaction or a change in control that might involve a premium price for our common shares or otherwise be in the best interests of our shareholders.
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Certain provisions of the Maryland General Corporation Law (the "MGCL") applicable to a Maryland real estate investmentand of our bylaws and our declaration of trust may have the effect of inhibiting a third-party from making a proposal to acquire us or of impedingcould inhibit a change in our control under circumstances that otherwise could provideand have an adverse impact on the holdersprice of our common shares with the opportunity to realizeshares.
The MGCL, our bylaws and our declaration of trust contain provisions that may discourage, delay or make more difficult a premium over the then prevailing market price of such shares. The "business combination" provisions of the MGCL,change in our control. We are subject to limitations, prohibit certain business combinations betweenthe Maryland Business Combination Act (the "MBCA"). Our board has adopted a REIT and an "interested shareholder" (defined generally asresolution exempting from the MBCA any person who beneficially owns 10% or more of the voting power of our then outstanding voting shares or an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of our then outstanding voting shares) or an affiliate thereof for five years after the most recent date on which the shareholder becomes an interested shareholder and, thereafter, imposes special appraisal rights and special shareholder voting requirements on these combinations. These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by the board of trustees of a REIT prior to the time that the interested shareholder becomes an interested shareholder. Pursuant to the statute, our board of trustees has by resolution exempted business combinations between us and (1) any other person, provided that the business combination is first approved by our board of trustees (including a majority of trustees who are not affiliates or associates of such person)disinterested trustees), (2) Arlen D. Nordhagen and any of his affiliates and associates and (3) any person acting in concert with the foregoing, from these provisions of the MGCL.foregoing. As a result, such persons may be able to enter into business combinations with us that may not be in the best interests of our shareholders without compliance by us with the moratorium supermajority vote requirements and other provisions of the statute. This resolution, however, may be altered or repealed in whole or in part at any time. If this resolution is repealed or our board of trustees does not otherwise approve a business combination, this statutethe MBCA may discourage othersthird parties from trying to acquire control of us and increase the difficulty of consummating anysuch an offer.
The "control share" provisions of the MGCL provideMaryland Control Share Acquisition Act (the "MCSAA") provides that holders of "control shares" of a Maryland real estate investment trust (defined as voting shares which, when aggregated with all other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in the election of trustees) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding "control shares," subject to certain exceptions) have no voting rights with respect to such shares except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our officers and our trustees who are also our employees. Our bylaws contain a provision exemptingexempt from the control share acquisition statute any and allMCSAA acquisitions of our shares by any personperson. If we amend our bylaws to repeal the exemption from MCSAA, the MCSAA also may make it more difficult for a third party to obtain control of our shares. There can be no assuranceus and increase the difficulty of consummating such an offer.
We have also adopted other measures that this provision will not be amended or eliminated at any time in the future.
Restrictions on ownership and transfer of our shares may restrict change of control or business combination opportunities in which our shareholders might receive a premium for their shares.
In order for us to qualify as a REIT for each taxable year, no more than 50% in value of our outstanding shares may be owned, directly or constructively, by five or fewer individuals during the last half of any calendar year, and at least 100 persons must beneficially own our shares during at least 335 days of a taxable year of 12 months, or during a proportionate portion of a shorter taxable year. "Individuals" for this purpose include natural persons, private foundations, some employee benefit plans and trusts, and some charitable trusts. To assist us in preserving our REIT qualification, among other purposes, our declaration of trust generally prohibits, among other limitations, any person from beneficially or constructively owning more than 9.8% in value or in number of shares, whichever is more restrictive, of our aggregate outstanding shares of all classes and series, the outstanding shares of any class or series of our preferred shares or our outstanding common shares. These ownership limits and the other restrictions on ownership and transfer of our shares contained in our declaration of trust could have the effect of discouraging a takeover or other transaction in which holders of our common shares might receive a premium for their shares over the then prevailing market price or which holders might believe to be otherwise in their best interests. Our board of trustees has established exemptions from these ownership limits which permits certain of our institutional investors to hold up to 20% of our common shares and up to 25% of our preferred shares.
Risks Related to Our Debt Financings
There are risks associated with our indebtedness.
Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following:
•our cash flow may be insufficient to meet our required principal and interest payments;
obligations, we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms;
•our debt level could place us at a competitive disadvantage compared to our competitors with less debt; and
•we may experience increased vulnerability to economic and industry downturns, reducingviolate our ability to respond to changing business and economic conditions;
We depend on external sources of capital that are outside of our control, which could adversely affect our ability to acquire or develop properties, satisfy our debt obligations and/or make distributions to shareholders.
We depend on external sources of capital to acquire properties, to satisfy our debt obligations and to make distributions to our shareholders required to maintain our qualification as a REIT, and these sources of capital may not be available on favorable terms, or at all. Our access to external sources of capital depends on a number of factors, including the market's perception of our growth potential and our current and potential future earnings and our ability to continue to qualify as a REIT for U.S. federal income tax purposes. If we are unable to obtain external sources of capital, or if such capital is not available on acceptable terms, we may not be able to acquire properties when strategic opportunities exist, satisfy our debt obligations or make cash distributions to our shareholders that would permit us to qualify as a REIT or avoid paying tax on all of our net taxable income.
Increases in interest rates may increase our interest expense and adversely affect our cash flow and our ability to service our indebtedness, and make cash distributions to our shareholders, and acquire or sell properties and our decision to hedge against interest rate risk might not be effective.
As of December 31, 2017,2023, we had approximately $958.1 million$3.7 billion of debt outstanding, of which approximately $88.5$511.0 million, or 9.2%14.0%, is subject to variable interest rates (excluding variable-rate debt subject to interest rate swaps). Although the credit markets have recently experienced historic lows inIf interest rates if interest rates continue to rise, the interest ratesincrease, our debt service obligations on our variable-rate debt could be higher than current levels, which couldwill increase even though the amount borrowed remains the same, while our financing costs and decrease ournet income, cash flowflows, and our ability to pay cash distributions to our shareholders. For example, if marketshareholders correspondingly decrease. In addition, increased interest rates make the financing of interest on this variable-rate debt increased by 100 basis points (excluding variable-rate debt with interest rate swaps),any acquisition and investment activity more costly and could decrease the increase in interest expense would decrease future earnings and cash flows by approximately $0.9 million annually.amount third parties are willing to pay for any properties that we wish to sell.
Although we have historically sought, and may in the future seek, to manage our exposure to interest rate volatility by using interest rate hedging arrangements, these arrangements may not be effective. Developing an effective interest rate risk strategy is complex and no strategy can completely insulate us from risks associated with interest rate
fluctuations. Failure to hedge effectively against interest rate changes may adversely affect our financial condition, results of operations and ability to make cash distributions to our shareholders.
The terms and covenants relating to our indebtedness could adversely impact our economic performance.
Our credit facility, term loan facilities and Term Loan Facilitysenior unsecured notes contain (and any new or amended facility we may enter into from time to time will likely contain) customary affirmative and negative covenants, including financial covenants that, among other things, cap our total leverage at 60% ofand our gross asset value (as defined in our credit facility and Term Loan Facility), require us to have a minimum fixed charge coverage ratio of 1.5 to 1, and require us to have a minimum net worth (as defined in our credit facility) of at least $682.6 million plus 75% of the net proceeds of equity issuances.unsecured debt. In the event that we fail to satisfy our covenants, we would be in default under our creditdebt agreements and may be required to repay such debt with capital from other sources. Under such circumstances, other sources of debt or equity capital may not be available to us, or may be available only on unattractive terms. Moreover, the presence of such covenants could cause us to operate our business with a view toward compliance with such covenants, which might not produce optimal returns for shareholders.
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Risks Related to Our Qualification as a REIT
Our failure to qualify or remain qualified as a REIT would subject us to U.S. federal income tax and applicable state and local taxes, which would reduce the amount of operating cash flow to our shareholders.
We have elected and we believe that we have qualified to be taxed as a REIT commencing with our taxable year ended December 31, 2015. We have not requested, and do not intend to request a ruling from the Internal Revenue Service ("IRS"), that we qualify as a REIT. Qualification as a REIT involves the application of highly technical and complex Code provisions and Treasury Regulations promulgated thereunder for which there are limited judicial and administrative interpretations. The complexity of these provisions and of applicable Treasury Regulations is greater in the case of a REIT that, like us, holds its assets through partnerships, and judicial and administrative interpretations of the U.S. federal income tax laws governing REIT qualification are limited. To qualify as a REIT, we must meet, on an ongoing basis through actual operating results, various tests regarding the nature and diversification of our assets and our income, the ownership of our outstanding shares and the amount of our distributions. Our compliance with the REIT income and quarterly asset requirements also depends upon our ability to manage successfully the composition of our income and assets on an ongoing basis. Our ability to satisfy these asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. Moreover, new legislation, court decisions or administrative guidance may, in each case possibly with retroactive effect, make it more difficult or impossible for us to qualify as a REIT. Thus, while we believe that we have been organized and operated and we intend to operate so that we will continue to qualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations and the possibility of future changes in our circumstances, no assurance can be given that we have qualified or will so qualify for any particular year. These considerations also might restrict the types of assets that we can acquire or services that we can provide in the future.
We own and may in the future acquire direct or indirect interests in entities that have elected or will elect to be treated as REITs under the Code (each a "Subsidiary REIT"). If a Subsidiary REIT were to fail to qualify as a REIT, then (i) that Subsidiary REIT would become subject to U.S. federal income tax, (ii) shares in such Subsidiary REIT would cease to be qualifying assets for purposes of the asset tests applicable to REITs, and (iii) it is possible that we would fail certain of the tests applicable to REITs, in which event we would fail to qualify as a REIT unless we qualify for certain statutory relief provisions.
In addition, in order to qualify as a REIT, prior to the end of the taxable year, we must also distribute any earnings and profits of any property we acquire in certain tax-deferred transactions to the extent such earnings accrued at a time when such corporation did not qualify as a REIT. We have entered into certain transactions involving the tax-deferred acquisition of target corporations. We believe that we have distributed any earnings and profits of such target corporations attributable to any period that such corporations did not qualify as a REIT. However, no assurances can be provided in this regard, and if there is a determination that we have inherited and retained any such earnings and profits, our qualification as a REIT could be adversely impacted.
If we fail to qualify as a REIT in any taxable year, and we do not qualify for certain statutory relief provisions, we would be required to pay U.S. federal income tax on our taxable income at regular corporate rates, and distributions to our shareholders would not be deductible by us in determining our taxable income. In such a case, we might need to borrow money, sell assets, or reduce or even cease making distributions in order to pay our taxes. Our payment of income tax would reduce significantly the amount of operating cash flow to our shareholders. Furthermore, if we fail to maintain our qualification as a REIT, we no longer would be required to make distributions to our shareholders. In addition, unless we were eligible for certain statutory relief provisions, we could not re-elect to be taxed as a REIT until the fifth calendar year following the year in which we failed to qualify.
Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flow.
Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income and assets, including taxes on any undistributed income, state or local income and property and transfer taxes, including real property transfer taxes. In addition, we could, in certain circumstances, be required to pay an excise or penalty tax (which could be significant in amount) in order to utilize one or more relief provisions under the Code to maintain our qualification as a REIT. Any of these taxes would decrease operating cash flow to our shareholders.
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In order to qualify as a REIT, we must distribute to our shareholders each calendar year at least 90% of our net taxable income (excluding net capital gain). To the extent that we satisfy the 90% distribution requirement, but distribute less than 100% of our net taxable income (including net capital gain), we would be subject to U.S. federal corporate income tax on our undistributed net taxable income. In addition, we will incur a 4% non-deductible excise tax on the amount, if any, by which our distributions in any calendar year are less than a minimum amount specified under U.S. federal income tax laws. Although we intend to distribute our net taxable income to our shareholders in a manner that would avoid this 4% tax, there can be no assurance that we will be able to do so, due to timing differences between our actual receipt of cash and the inclusion of items in our income for U.S. federal income tax purposes, the effect of non-deductible capital expenditures, or the creation of reserves or required debt or amortization payments.
In addition, we will be subject to a 100% tax on any income from sales or other dispositions of property (other than property treated as foreclosure property under the Code) that is held as inventory or primarily for sale to customers in the ordinary course of a trade or business by a REIT, either directly or indirectly through certain pass-through subsidiaries (a "prohibited transaction"). In order to meet the REIT qualification requirements, or to avertavoid the imposition of a 100%the penalty tax that applies to certain gains derived by a REIT from dealer property or inventory,on prohibited transactions, we may hold some of our assets or provide certain services to our tenants through one or more TRSs, or other subsidiary corporations that will be subject to corporate-
Complying with the REIT requirements may cause us to forgo and/or liquidate otherwise attractive investments.investments, and in some situations, to maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions.
To qualify as a REIT, we must ensure that at least 75% of our gross income for each taxable year, excluding certain amounts, is derived from certain real property-related sources, and at least 95% of our gross income for each taxable year, excluding certain amounts, is derived from certain real property-related sources and passive income such as dividends and interest. In addition, we must ensure that, at the end of each calendar quarter, at least 75% of the value of our total assets consists of cash, cash items, U.S. government securities and qualified real estate assets. The remainder of our investment in securities generally cannot include more than 10% of the outstanding voting securities of any one issuer (other than U.S. government securities, securities of corporations that are treated as TRSs and qualified real estate assets) or more than 10% of the total value of the outstanding securities of any one issuer (other than government securities, securities of corporations that are treated as TRSs and qualified real estate assets). In addition, in general, no more than 5% of the value of our assets can consist of the securities of any one issuer (other than U.S. government securities, securities of corporations that are treated as TRSs and qualified real estate assets), no more than 20% (25% for taxable years beginning prior to January 1, 2018) of the value of our total assets can be represented by securities of one or more TRSs and no more than 25% of the value of our assets can consist of debt instruments issued by publicly offered REITs that are not otherwise secured by real property. If we fail to comply with these asset requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences.
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To meet these tests, we may be required to take or forgo taking actions that we would otherwise consider advantageous. For instance, in order to satisfy the gross income or asset tests applicable to REITs under the Code, we may be required to forgo investments that we otherwise would make. Furthermore,make, and we may be required to liquidate from our portfolio otherwise attractive investments. In addition, we may be required to make distributions to shareholders at disadvantageous times or when we do not have funds readily available for distribution. As a result, we may need to borrow funds to meet the REIT distribution requirements even if the then prevailing market conditions are not favorable for these borrowings. Our access to third-party sources of capital depends on a number of factors, including the market's perception of our growth potential, our current debt levels, the per share trading price of our common shares, and our current and potential future earnings. We cannot assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail our investment activities and/or to dispose of assets at inopportune times. These actions could reduce our income and amounts available for distribution to our shareholders. Thus, compliance with the REIT requirements may hinder our investment performance.
If our operating partnership is treated as a corporation for U.S. federal income tax purposes, we will cease to qualify as a REIT.
We believe our operating partnership qualifies as a partnership for U.S. federal income tax purposes. As a partnership for U.S. federal income tax purposes, our operating partnershipand accordingly generally will not be subject to U.S. federal income tax on its income. Instead, each of its partners, including us, will be required to pay tax on its allocable share of our operating partnership's income. No assurance can be provided, however, that the IRS will not challenge our operating partnership's status as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating our operating partnership as a corporation for U.S. federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs. As a result,REITs, we would cease to qualify as a REIT, and both we and our operating partnership would become subject to U.S. federal, state and local income tax. The payment by our operating partnership of income tax would reduce significantly the amount of cash available to our operating partnership to satisfy obligations to make principal and interest payments on its debt and to make distribution to its partners, including us.
Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.
The REIT provisions of the Code may limit our ability to hedge our assets and operations. Under these provisions, any income that we generate from transactions intended to hedge our interest rate risk will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if (i) the instrument (a) hedges interest rate risk on liabilities used to carry or acquire real estate assets or (b) hedges an instrument described in clause (a) for a period following the extinguishment of the liability or the disposition of the asset that was previously hedged by the hedged instrument, and (ii) the relevant instrument is properly identified under applicable Treasury regulations. Income from hedging transactions that dodoes not meet these requirements will generally constitute non-qualifying income for purposes of both the REIT 75% and 95% gross income tests. As a result of these rules, we may have to limit our use of hedging techniques that might otherwise be advantageous or implement those hedges through a TRS. This could increase the cost of our hedging activities because our TRS would be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition,bear, and we generally would not benefit from losses in our TRS, will generally not provide any tax benefit, although, subject to limitation, such losses may be carried back or forward against past orto offset future taxable income inof the TRS. Under the TCJA, net operating losses generated beginning in 2018 may not be used to offset more than 80% of our TRS's taxable income. Net operating losses generated beginning in 2018 can be carried forward indefinitely but can no longer be carried back.
The ability of our board of trustees to revoke our REIT election without shareholder approval may cause adverse consequences to our shareholders.
Our declaration of trust provides that the board of trustees may revoke or otherwise terminate our REIT election, without the approval of our shareholders, if the board determines that it is no longer in our best interest to attempt to, or continue to, qualify as a REIT. If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our net taxable income and we generally would no longer be required to distribute any of our net taxable income to our shareholders, which may have adverse consequences on our total return to our shareholders.
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Legislative or regulatory tax changes related to REITs could materially and adversely affect our business.
At any time, the U.S. federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be changed, possibly with retroactive effect. We cannot predict if or when any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective or whether any such law, regulation or interpretation may take effect retroactively. We and our shareholders could be adversely affected by any such change in, or any new, U.S. federal income tax law, regulation or administrative interpretation.
Risks Related to Our Common Shares and Preferred Shares
Common shares and preferred shares eligible for future sale may have adverse effects on our share price.
Subject to applicable law and the rules of any stock exchange on which our shares may be listed or traded, our board, of trustees, without common shareholder approval, may authorize us to issue additional authorized and unissued common shares and preferred shares on the terms and for the consideration it deems appropriate and may amend our declaration of trust to increase the total number of shares, or the number of shares of any class or series, that we are authorized to issue. In addition, our operating partnership may issue OP units, which are redeemable for cash or, at our option exchangeable on a one-for-one basis into common shares after an agreed period of time and certain other conditions, preferred units of limited partnership interest, which are redeemable for cash or, at our option exchangeable on a one-for-one basis into our 6.000% Series A cumulative redeemable preferred shares of beneficial interest ("Series A Preferred Shares") and subordinated performance units, which are only convertible into OP units beginning two years following the initial issuance of the applicable series and then (i) at the holder's election only upon the achievement of certain performance thresholds relating to the properties to which such subordinated performance units relate or (ii) at our election upon a retirement event of a PRO that holds such subordinated performance units or upon certain qualifying terminations.
Notwithstanding the two-year lock out period on conversions of subordinated performance units into OP units, if all such subordinated performance units were convertible into OP units as of December 31, 2017,2023, each subordinated performance unit would on average hypothetically convert into 1.461.55 OP units, or into an aggregate of approximately 23.318.8 million OP units. These amounts are based on historical financial information for the trailing twelve months ended December 31, 2017.2023. The hypothetical conversion is calculated by dividing the average cash available for distribution, or CAD, per subordinated performance unit by 110% of the CAD per OP unit over the same period. We anticipate that as our CAD grows over time, the conversion ratio will also grow, including to levels that may exceed this amount. The actual number of OP units into which such subordinated performance units will become convertible may vary significantly and will depend upon the applicable conversion penalty and the actual CAD to the OP units and the actual CAD to the converted subordinated performance units in the one-year period ending prior to conversion. We have also granted registration rights to those persons who will be eligible to receive common shares issuable upon exchange of OP units issued in our formation transactions and certain contribution transactions.
We cannot predict the effect, if any, of future sales of our common or preferred shares or the availability of shares for future sales, on the market price of our common or preferred shares. The market price of our common shares may decline significantly when the restrictions on resale by certain of our shareholders lapse. Sales of substantial amounts of common or preferred shares or the perception that such sales could occur may adversely affect the prevailing market price for our common shares.
We cannot assure our ability to pay dividends in the future.
Historically, we have paid quarterly common share dividends to our shareholders and quarterly distributions to our operating partnership unitholders, and we intend to continue to pay quarterlysuch dividends to our shareholders and to make quarterly distributions to our operating partnership unitholders in amounts such that all or substantially all of our net taxable income in each year is distributed, which, along with other factors, should enable us to continue to qualify for the tax benefits accorded to a REIT under the Code. We have not established a minimum dividends payment level, and all future distributions will be made at the discretion of our board of trustees.board. Our ability to pay dividends will depend upon, among other factors:
•the operational and financial performance of our properties;
•capital expenditures with respect to existing and newly acquired properties;
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•general and administrative expenses associated with our operation as a publicly-held REIT;
•maintenance of our REIT qualification;
•the amount of, and the interest rates on, our debt and the ability to refinance our debt;
•the absence of significant expenditures relating to environmental and other regulatory matters; and
•other risk factors described in this Annual Report on Form 10-K.
Certain of these matters are beyond our control and any significant difference between our expectations and actual results could have a material adverse effect on our cash flow and our ability to make distributions to shareholders.
Future offerings of debt or equity securities, which may rank senior to our common shares, may adversely affect the market price of our common shares.
If we decide to issue debt securities in the future, which would rank senior to our common shares, it is likely that they will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, any equity securities or convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common shares and may result in dilution to owners of our commonsuch shares. We and, indirectly, our shareholders will bear the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our common shares will bear the risk of our future offerings reducing the market price of our common shares and diluting the value of their common share holdings in us.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk management and strategy
We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures aligned to industry standards to safeguard our information systems and protect the confidentiality, integrity, and availability of our data.
Management of Material Risks & Integration into Overall Risk Management
We have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity awareness and risk management and have incorporated cybersecurity considerations into our decision-making processes. Our risk management team works closely with our IT department to identify, evaluate and address cybersecurity risks in alignment with our business objectives and operational needs. Our risk management team also provides regular reporting to management on our enterprise cybersecurity risk posture.
Engagement of Third-parties on Risk Management
Recognizing the complexity and evolving nature of cybersecurity threats, we engage a range of external experts, including cybersecurity assessors and consultants in evaluating and testing our risk management systems. These partnerships enable us to leverage specialized knowledge and insights, so that we can better understand the current and evolving cybersecurity risks and strategies. Our collaboration with these third-parties includes periodic audits, threat assessments, and consultation on security enhancements.
Risks from Cybersecurity Threats
We are not aware of any risks from cybersecurity threats, including as a result of any cybersecurity incidents, which have materially affected or are reasonably likely to materially affect our Company, including our business strategy, results of operations, or financial condition. Refer to “Item 1A. Risk factors” in this annual report on Form 10-K, including “Security breaches through cyber-attacks, cyber-intrusions, or other methods could disrupt our information technology networks and related systems”, for additional discussion about cybersecurity-related risks.
Governance
The board of trustees is acutely aware of the critical nature of managing risks associated with cybersecurity threats and oversees the Company's cybersecurity risk management activities.
Board of Trustees Oversight
The audit committee of our board of trustees is central to the board of trustees’s oversight of cybersecurity risks and bears the primary responsibility for this domain. The members of the audit committee have a variety of expertise, including financial, regulatory and risk management. The audit committee reviews our policies with respect to risk assessment and risk management related to cybersecurity. The audit committee and the board of trustees receive updates on the Company’s cybersecurity risks and initiatives periodically. In addition, cybersecurity matters are reported to the audit committee or board of trustees so that the board of trustees and audit committee can effectively carry out their oversight role.
Management’s Role Managing Risk
Our risk management committee is comprised of a cross section of the Company’s management team. The risk management committee has identified cybersecurity as a key risk to the Company’s operations and established a cybersecurity sub-committee, which is comprised of members of the risk management committee and other personnel, to focus on this key risk.
The cybersecurity sub-committee plays a pivotal role in informing the risk management committee on cybersecurity risks. They provide comprehensive briefings to the risk management committee on a regular basis. These briefings encompass a broad range of topics, including:
•Awareness of cybersecurity landscape, emerging threats, trends and developments;
•Status of ongoing cybersecurity initiatives and strategies;
•Incident reports and learnings from any cybersecurity events;
•Compliance with regulatory requirements and industry standards; and
•Education in cybersecurity and associated risk management frameworks.
The risk management committee actively participates in strategic decisions related to cybersecurity, offering guidance and approval for major initiatives. This involvement ensures that cybersecurity considerations are a consistent focus of the Company and that the Company's cybersecurity efforts are aligned with the overall risk management framework. We have also implemented cybersecurity training at all levels of our organization and conduct periodic phishing assessment for our employees to reinforce that training.
Risk Management Personnel
Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with the cybersecurity sub-committee. With over a combined 45 years of experience in the field of cybersecurity, the cybersecurity sub-committee brings a wealth of expertise to their role. Their in-depth knowledge and experience are instrumental in developing and executing our cybersecurity strategies. Our cybersecurity sub-committee oversees our cybersecurity strategies, tests our compliance with standards, remediates known risks, and leads our employee training program.
Monitor Cybersecurity Incidents
The cybersecurity sub-committee stays apprised about the latest developments in cybersecurity, including potential threats and innovative risk management techniques, which is important for the effective prevention, detection, mitigation, and remediation of cybersecurity incidents. The cybersecurity sub-committee implements and oversees processes for the regular monitoring of our information systems. This includes the deployment of advanced security measures and regular system audits to identify potential vulnerabilities. In the event of a cybersecurity incident, the cybersecurity sub-committee is equipped with a well-defined incident response plan, which provides a framework to mitigate the impact of cybersecurity incidents
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The cybersecurity sub-committee regularly informs the risk management committee of matters related to cybersecurity risks and incidents. This ensures that the highest levels of management are kept abreast of the cybersecurity posture and potential risks facing the Company. Furthermore, significant cybersecurity matters, and strategic risk management decisions are escalated to the board of trustees, ensuring that they have comprehensive oversight and can provide guidance on critical cybersecurity issues.
Item 2. Properties
As of December 31, 2017,2023, we held ownership interests in and operated a geographically diversified portfolio of 5151,050 self storage properties located in 2942 states and Puerto Rico, comprising approximately 32.168.6 million rentable square feet, configured in approximately 255,000542,000 storage units.units, which excludes 39 self storage properties classified as held for sale to be sold to a third party in 2024. Of these properties, we consolidated 444reported 809 wholly-owned self storage properties on a consolidated basis that contain approximately 27.251.9 million rentable square feet, which excludes an additional 56 self storage properties classified as held for sale that were contributed to the 2024 Joint Venture, and we held a 25% ownership interest in 71185 unconsolidated Joint Venturereal estate venture properties that contain approximately 4.913.5 million rentable square feet.
The following table sets forth summary information regarding our consolidated properties by state as of December 31, 2017.2023.
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| Number of | Number of | Rentable | % of Rentable | Period-end | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Number of | Number of | Number of | Rentable | % of Rentable | Period-end | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| State/Territory | State/Territory | Properties | Units | Square Feet | Occupancy | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Texas | Texas | 172 | 79,045 | 10,986,692 | 21.2 | % | 87.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
California(1) | 81 | 48,634 | 6,123,199 | 22.4 | % | 90.9 | % | California(1) | 87 | 52,410 | 52,410 | 6,629,212 | 6,629,212 | 12.8 | 12.8 | % | 84.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Florida | Florida | 76 | 43,946 | 4,975,310 | 9.6 | % | 85.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oregon | 58 | 23,541 | 2,966,129 | 10.9 | % | 85.5 | % | Oregon | 70 | 29,217 | 29,217 | 3,657,543 | 3,657,543 | 7.0 | 7.0 | % | 84.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Texas | 58 | 23,133 | 3,290,185 | 12.0 | % | 87.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Georgia | 33 | 13,554 | 1,829,965 | 6.7 | % | 86.2 | % | Georgia | 50 | 22,173 | 22,173 | 3,022,988 | 3,022,988 | 5.8 | 5.8 | % | 81.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Florida | 30 | 21,884 | 2,093,566 | 7.7 | % | 86.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Arizona | Arizona | 34 | 18,858 | 2,175,802 | 4.2 | % | 84.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| North Carolina | North Carolina | 34 | 16,758 | 2,097,487 | 4.0 | % | 85.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oklahoma | 30 | 13,905 | 1,903,079 | 7.0 | % | 83.6 | % | Oklahoma | 33 | 15,300 | 15,300 | 2,143,482 | 2,143,482 | 4.1 | 4.1 | % | 86.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| North Carolina | 29 | 13,103 | 1,599,784 | 5.9 | % | 89.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Arizona | 16 | 9,099 | 1,061,879 | 3.9 | % | 86.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Indiana | 16 | 8,790 | 1,135,022 | 4.2 | % | 82.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Louisiana(1) | Louisiana(1) | 25 | 11,450 | 1,388,385 | 2.7 | % | 83.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pennsylvania | Pennsylvania | 22 | 10,435 | 1,296,060 | 2.5 | % | 87.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Colorado | Colorado | 22 | 9,488 | 1,197,510 | 2.3 | % | 85.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Washington | 15 | 5,065 | 644,700 | 2.4 | % | 88.4 | % | Washington | 19 | 6,633 | 6,633 | 871,169 | 871,169 | 1.7 | 1.7 | % | 82.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Louisiana(1) | 14 | 6,326 | 859,307 | 3.2 | % | 82.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Colorado | 11 | 5,059 | 615,353 | 2.3 | % | 89.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Puerto Rico | Puerto Rico | 15 | 12,852 | 1,388,637 | 2.7 | % | 92.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nevada | 11 | 5,752 | 727,014 | 2.7 | % | 91.8 | % | Nevada | 15 | 7,557 | 7,557 | 962,182 | 962,182 | 1.9 | 1.9 | % | 86.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| New Hampshire | 10 | 4,190 | 509,475 | 1.9 | % | 87.8 | % | New Hampshire | 15 | 7,117 | 7,117 | 888,611 | 888,611 | 1.7 | 1.7 | % | 89.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Kansas | Kansas | 14 | 4,924 | 670,702 | 1.3 | % | 88.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Indiana | Indiana | 12 | 6,533 | 828,453 | 1.6 | % | 83.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alabama | Alabama | 11 | 6,036 | 907,914 | 1.7 | % | 77.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New Mexico | New Mexico | 10 | 5,500 | 716,307 | 1.4 | % | 86.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Maryland | Maryland | 8 | 4,564 | 493,184 | 1.0 | % | 86.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Massachusetts | Massachusetts | 7 | 5,014 | 538,005 | 1.0 | % | 82.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Illinois | Illinois | 6 | 4,227 | 425,361 | 0.8 | % | 82.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tennessee | Tennessee | 5 | 2,550 | 349,663 | 0.7 | % | 87.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Kentucky | Kentucky | 5 | 2,784 | 412,051 | 0.8 | % | 78.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New Jersey | New Jersey | 5 | 2,743 | 352,338 | 0.7 | % | 84.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Idaho | Idaho | 5 | 1,454 | 271,511 | 0.5 | % | 83.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Arkansas | Arkansas | 5 | 2,604 | 401,820 | 0.8 | % | 78.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| South Carolina | South Carolina | 4 | 2,059 | 254,853 | 0.5 | % | 83.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Minnesota | Minnesota | 4 | 1,198 | 192,770 | 0.4 | % | 83.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Missouri | Missouri | 3 | 1,244 | 153,606 | 0.3 | % | 90.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Virginia | Virginia | 3 | 1,382 | 174,915 | 0.3 | % | 83.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Iowa | Iowa | 3 | 3,100 | 414,442 | 0.8 | % | 74.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Connecticut | Connecticut | 3 | 1,182 | 141,090 | 0.3 | % | 82.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New York | New York | 2 | 1,713 | 174,591 | 0.3 | % | 81.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ohio | 7 | 2,690 | 348,838 | 1.3 | % | 86.2 | % | Ohio | 1 | 951 | 951 | 112,555 | 112,555 | 0.2 | 0.2 | % | 84.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| South Carolina | 4 | 1,211 | 147,530 | 0.5 | % | 88.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Illinois | 4 | 1,991 | 270,911 | 1.0 | % | 77.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Kansas | 3 | 1,297 | 215,035 | 0.8 | % | 80.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mississippi | 3 | 864 | 114,311 | 0.4 | % | 89.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Missouri | 3 | 1,013 | 152,889 | 0.6 | % | 72.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Maryland | 2 | 1,172 | 123,512 | 0.5 | % | 81.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New Mexico | 2 | 1,154 | 155,125 | 0.6 | % | 89.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alabama | 1 | 761 | 109,676 | 0.4 | % | 88.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Kentucky | 1 | 380 | 60,950 | 0.2 | % | 94.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Massachusetts | 1 | 284 | 42,650 | 0.2 | % | 89.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Virginia | 1 | 598 | 81,965 | 0.3 | % | 82.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total/Weighted Average | 444 | 215,450 | 27,182,049 | 100.0 | % | 87.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Montana | Montana | 1 | 438 | 60,250 | 0.1 | % | 95.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wyoming | Wyoming | 1 | 424 | 56,500 | 0.1 | % | 85.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wisconsin | Wisconsin | 1 | 378 | 59,672 | 0.1 | % | 85.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utah | Utah | 1 | 312 | 46,500 | 0.1 | % | 87.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total/Weighted Average(2) | Total/Weighted Average(2) | 809 | 406,553 | 51,890,123 | 100.0 | % | 85.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Five of the California properties and one of the Louisiana properties are subject to non-cancelable leasehold interest agreements that are classified as operating leases. See "Note 12. Commitments and Contingencies" in Item 8. "Financial Statements and Supplementary Data." | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) Six of the California properties and one of the Louisiana properties are subject to non-cancelable leasehold interest agreements that are classified as operating leases. See "Note 13. Leases" in Item 8. "Financial Statements and Supplementary Data." | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) Six of the California properties and one of the Louisiana properties are subject to non-cancelable leasehold interest agreements that are classified as operating leases. See "Note 13. Leases" in Item 8. "Financial Statements and Supplementary Data." | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) Six of the California properties and one of the Louisiana properties are subject to non-cancelable leasehold interest agreements that are classified as operating leases. See "Note 13. Leases" in Item 8. "Financial Statements and Supplementary Data." | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Excludes self storage properties classified as held for sale consisting of (i) 39 self storage properties, comprising approximately 2.4 million rentable square feet, configured in approximately 18,000 storage units to be sold to a third party in 2024 and (ii) 56 self storage properties, comprising approximately 3.2 million rentable square feet, configured in approximately 24,000 storage units that were contributed to the 2024 Joint Venture in 2024. | (2) Excludes self storage properties classified as held for sale consisting of (i) 39 self storage properties, comprising approximately 2.4 million rentable square feet, configured in approximately 18,000 storage units to be sold to a third party in 2024 and (ii) 56 self storage properties, comprising approximately 3.2 million rentable square feet, configured in approximately 24,000 storage units that were contributed to the 2024 Joint Venture in 2024. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
33
The following table sets forth summary information regarding our Joint Ventureunconsolidated real estate venture properties by state as of December 31, 2017.2023.
| Number of | Number of | Rentable | % of Rentable | Period-end | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number of | Number of | Number of | Rentable | % of Rentable | Period-end | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| State | Properties | Units | Square Feet | Square Feet | Occupancy | State | Properties | Units | Square Feet | Occupancy | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Florida | 21 | 11,482 | 1,331,230 | 26.9 | % | 86.5 | % | Florida | 27 | 15,032 | 15,032 | 1,716,479 | 1,716,479 | 12.7 | 12.7 | % | 82.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Michigan | Michigan | 25 | 15,930 | 2,017,998 | 15.0 | % | 86.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New Jersey | New Jersey | 15 | 10,789 | 1,253,588 | 9.3 | % | 84.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alabama | 11 | 4,065 | 611,002 | 12.4 | % | 85.8 | % | Alabama | 14 | 5,517 | 5,517 | 825,238 | 825,238 | 6.1 | 6.1 | % | 86.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Ohio | Ohio | 14 | 9,375 | 1,124,347 | 8.3 | % | 84.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| California | 11 | 6,921 | 942,393 | 19.1 | % | 85.4 | % | California | 12 | 6,648 | 6,648 | 779,342 | 779,342 | 5.8 | 5.8 | % | 85.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| New Jersey | 10 | 7,521 | 925,105 | 18.7 | % | 87.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Georgia | Georgia | 11 | 6,132 | 872,058 | 6.5 | % | 84.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Texas | Texas | 11 | 9,113 | 997,098 | 7.4 | % | 89.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other(1) | 18 | 9,126 | 1,130,521 | 22.9 | % | 86.0 | % | Other(1) | 56 | 32,592 | 32,592 | 3,906,901 | 3,906,901 | 28.9 | 28.9 | % | 84.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 71 | 39,115 | 4,940,251 | 100.0 | % | 86.3 | % | Total | 185 | 111,128 | 111,128 | 13,493,049 | 13,493,049 | 100.0 | 100.0 | % | 85.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) Other states in the unconsolidated real estate | |||||||||||||||||||||||
Our portfolio consists of self storage properties that are designed to offer customers convenient, affordable, and secure storage units. Generally, our properties are in highly visible locations clustered in states or markets with strong population and job growth and are specifically designed to accommodate residential and commercial tenants with features such as security systems, electronic gate entry, easy access, climate control, and pest control. Our units typically range from 25 square feet to 300 square feet, and some of our properties also offer outside storage for vehicles, boats, and equipment. We provide 24-hour access to many storage units through computer controlled access systems, as well as alarm and sprinkler systems on many of our individual storage units. Almost all of the storage units in our portfolio are leased on a month-to-month basis providing us the flexibility to increase rental rates over time as market conditions permit. Additional information on our consolidated self storage properties is contained in "Schedule III - Real Estate and Accumulated Depreciation" in this Annual Report on Form 10-K.
Item 3. Legal Proceedings
We are not currently subject to any legal proceedings that we consider to be material.
Item 4. Mine Safety Disclosures
Not applicable.
34
PART II
Item 5. Market for the Registrant's Common Equity, Related ShareholderStockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common shares have been listed and traded on the NYSE under the symbol "NSA" since April 22, 2015. Prior to that time there was no public market for our common shares. The following table sets forth the quarterly high and low sales prices of our common shares, as reported on the NYSE, and the dividends declared in the quarterly periods indicated:
| Dividends | ||||||||||||
| Declared | ||||||||||||
| High | Low | (per share) | ||||||||||
| 2017 | ||||||||||||
| December 31, 2017 | $ | 28.55 | $ | 23.72 | $ | 0.28 | ||||||
| September 30, 2017 | 24.50 | 21.17 | 0.26 | |||||||||
| June 30, 2017 | 26.15 | 21.76 | 0.26 | |||||||||
| March 31, 2017 | 24.86 | 21.51 | 0.24 | |||||||||
| 2016 | ||||||||||||
| December 31, 2016 | $ | 22.45 | $ | 18.91 | $ | 0.24 | ||||||
| September 30, 2016 | 22.86 | 18.81 | 0.22 | |||||||||
| June 30, 2016 | 22.78 | 19.11 | 0.22 | |||||||||
| March 31, 2016 | 21.70 | 15.67 | 0.20 | |||||||||
Holders
Dividends
Since our initial quarter as a publicly-traded REIT, we have made regular quarterly distributions to our shareholders. Holders of common shares are entitled to receive distributions when declared by our board of trustees out of any assets legally available for that purpose. In order to maintain our status as a REIT for U.S. federal income tax purposes, we are required to distribute at least 90% of our "REIT taxable income," which is generally equivalent to our net taxable ordinary income, determined without regard to the deduction for dividends paid and excluding net capital gains to our shareholders annually in order to maintain our REIT qualification for U.S. federal income tax purposes.annually.
Common share dividends are characterized for U.S. federal income tax purposes as ordinary income, capital gains, return of capital or a combination thereof. Each year we communicate to shareholders the tax characterization of the common share dividends paid during the preceding year. Our tax return for the year ended December 31, 20172023 has not yet been filed and consequently, the taxability information presented for our dividends paid in 20172023 is based upon management's estimate. The following table summarizes the taxability of our dividends per common share for the year ended December 31, 2017:2023:
| Year Ended | ||||
| December 31, 2017 | ||||
| Ordinary Income | $ | 0.802443 | ||
| Return of Capital | $ | 0.237557 | ||
| Year Ended | ||||||||||||||
| December 31, 2023 | ||||||||||||||
| Ordinary Income | $ | 1.653434 | 74.2 | % | ||||||||||
| Capital Gain | 0.239048 | 10.7 | % | |||||||||||
| Return of Capital | 0.337518 | 15.1 | % | |||||||||||
| Total | $ | 2.230000 | 100.0 | % | ||||||||||
Equity Compensation Plan Information
Information about our equity compensation plans is incorporated by reference to Item 12 of Part III of this Annual Report on Form 10-K.
Unregistered Sales of Equity Securities
During the three months ended December 31, 2017,2023, the Company, in its capacity as general partner of its operating partnership, caused the operating partnership to issue 219,914186,003 common shares to satisfy redemption requests from certain limited partners.
On October 3, 2017,6, 2023, the operating partnership issued 26,049 OP179,354 Series A-1 preferred units to Nordhagen LLLP, an entity for which Arlen D. Nordhagen, the Company's chairman and chief executive officer, holds voting and/or investment power, 115,918 OP units each to JM Trust and Lamb Family Trust, each an affiliateaffiliates of Guardian,Optivest, one of the Company's existing PROs, and 2,605 OP units to an unrelated third party as partial consideration for the acquisition of a self storage property. In addition, 7,600 LTIP units that were previously granted to Optivest and an affiliate of Optivest vested in connection with this transaction.
On October 16, 2017,24, 2023, the operating partnership issued 22,21435,446 Series SO subordinated performance units to SecurCare Self Storage Inc., an affiliateaffiliates of SecurCare, one of the Company's existing PROs and an affiliate of Arlen D. Nordhagen, the Company's chairman and chief executive officer and 23,121 subordinated performance units to Move It B Units, LLC, an affiliate of Move It,Southern, one of the Company's existing PROs, in exchange for cash in connection with the acquisition of onea self storage property from an unrelated third party.
35
Following a specified lock up period after the respective datesdate of issuance set forth above, the OP units and Series A-1 Preferred Units issued by the operating partnership may be redeemed from time to time by holders for a cash amount per OP unit or Series A-1 Preferred Unit, respectively, equal to the market value of an equivalent number of common shares of the Company or Series A Preferred Shares, respectively.shares. The Company has the right, but not the obligation, to assume and satisfy the redemption obligation of the operating partnership described above by issuing one common share in exchange for each OP unit tendered for redemption and one Series A Preferred Share in exchange for each Series A-1 Preferred Unit tendered for redemption, subject to adjustments. redemption.
The Company has elected to report
early the private placement of its common shares that may occur if the Company elects to assume the redemption obligation of the operating partnership as described above in the event that OP units are in the future tendered for redemption.
Following a two yeartwo-year lock-up period, holders of subordinated performance units may elect, only upon the achievement of certain performance thresholds relating to the properties to which such subordinated performance units relate, to convert all or a portion of such subordinated performance units into OP units one time each year by submitting a completed conversion notice prior to December 1 of such year. All duly submitted conversion notices will become effective on the immediately following January 1. For additional information about the conversion or exchange of subordinated performance units into OP units, see Note 10 to the consolidated financial statements9 in Item 8.8 of this report.
As of February 26, 2018,2024, other than those OP units held by the Company, 31,785,91540,514,212 OP units were outstanding (including 779,506787,284 outstanding Long-Term Incentive Plan Units ("LTIP units") and 1,834,7862,120,491 outstanding OP units in certain consolidated subsidiaries of the operating partnership ("DownREIT OP units"), which are convertible into, or exchangeable for, OP units on a one-for-basis,one-for-one basis, subject to certain conditions).
These issuances were exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
Issuer Purchases of Equity Securities
| Period | Total number of shares purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs | |||||||||||||||||||||||||
| October 1 - October 31, 2023 | — | $ | — | — | $ | 27,591,757 | |||||||||||||||||||||||
| November 1 - November 30, 2023 | 852,771 | 32.05 | 852,771 | 256,892 | |||||||||||||||||||||||||
| December 1 - December 31, 2023 | — | — | — | 275,256,892 | |||||||||||||||||||||||||
| Total/Weighted Average | 852,771 | $ | 32.05 | 852,771 | $ | 275,256,892 | |||||||||||||||||||||||
Performance Graph
| Period Ending | ||||||||||||||||
| Index | 4/23/2015 | 12/31/2015 | 12/31/2016 | 12/31/2017 | ||||||||||||
| National Storage Affiliates Trust | $ | 100 | $ | 137 | $ | 184 | $ | 238 | ||||||||
| S&P 500 | 100 | 98 | 110 | 134 | ||||||||||||
| Russell 2000 | 100 | 91 | 109 | 126 | ||||||||||||
| NAREIT All Equity REIT Index | 100 | 101 | 109 | 119 | ||||||||||||
| Period Ending | ||||||||||||||||||||||||||||||||||||||
| Index | 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | 12/31/2022 | 12/31/2023 | ||||||||||||||||||||||||||||||||
| National Storage Affiliates Trust | $ | 100 | $ | 132 | $ | 148 | $ | 293 | $ | 160 | $ | 195 | ||||||||||||||||||||||||||
| S&P 500 | 100 | 131 | 156 | 200 | 164 | 207 | ||||||||||||||||||||||||||||||||
| Russell 2000 | 100 | 126 | 151 | 173 | 138 | 161 | ||||||||||||||||||||||||||||||||
| Nareit All Equity REIT Index | 100 | 129 | 122 | 172 | 129 | 144 | ||||||||||||||||||||||||||||||||
The foregoing item assumes $100.00 invested on April 23, 2015,December 31, 2018, with dividends reinvested. The Performance Graph will not be deemed to be incorporated by reference into any filing by NSA under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that NSA specifically incorporates the same by reference.
Item 6. [Reserved]
None.
| Year Ended December 31, | |||||||||||||||||||
| NSA | Combined(1) | ||||||||||||||||||
| 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
| OPERATING DATA: | |||||||||||||||||||
| Total revenue | $ | 268,130 | $ | 199,046 | $ | 133,919 | $ | 76,970 | $ | 40,164 | |||||||||
| Total operating expenses | 189,630 | 141,390 | 102,328 | 59,887 | 28,847 | ||||||||||||||
| Income from operations | 78,500 | 57,656 | 31,591 | 17,083 | 11,317 | ||||||||||||||
| Net income (loss) | 45,998 | 24,866 | 4,796 | (16,357 | ) | (11,734 | ) | ||||||||||||
Net (income) loss attributable to noncontrolling interests(2) | (43,037 | ) | (6,901 | ) | 7,644 | 16,357 | 10,481 | ||||||||||||
| Net income (loss) attributable to the Company and our predecessor | 2,961 | 17,965 | 12,440 | — | (1,253 | ) | |||||||||||||
Earnings (loss) per share—basic(3) | $ | 0.01 | $ | 0.60 | $ | 0.80 | $ | — | $ | — | |||||||||
Earnings (loss) per share—diluted(3) | $ | 0.01 | $ | 0.31 | $ | 0.17 | $ | — | $ | — | |||||||||
Weighted average shares outstanding—basic(3) | 44,423 | 29,887 | 15,463 | 1 | 1 | ||||||||||||||
Weighted average shares outstanding—diluted(3) | 44,423 | 78,747 | 45,409 | 1 | 1 | ||||||||||||||
| Dividends declared per common share | $ | 1.04 | $ | 0.88 | $ | 0.54 | $ | — | $ | — | |||||||||
| BALANCE SHEET DATA (at end of period) | |||||||||||||||||||
| Self storage properties, net | $ | 2,104,875 | $ | 1,733,533 | $ | 1,079,101 | $ | 799,327 | $ | 346,319 | |||||||||
| Total assets | 2,266,730 | 1,892,092 | 1,099,049 | 832,746 | 368,293 | ||||||||||||||
| Debt financing | 958,097 | 878,954 | 567,795 | 597,691 | 298,748 | ||||||||||||||
| Total equity (deficit) | $ | 1,271,487 | $ | 979,068 | $ | 516,047 | $ | 214,104 | $ | 55,197 | |||||||||
| Year Ended December 31, | |||||||||||||||||||
| NSA | Combined(1) | ||||||||||||||||||
| 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
| OTHER DATA (at end of period) | |||||||||||||||||||
Number of properties(4) | 444 | 382 | 277 | 219 | 137 | ||||||||||||||
Rentable square feet (in thousands)(5) | 27,182 | 23,077 | 15,770 | 12,067 | 6,626 | ||||||||||||||
Occupancy percentage(6) | 87 | % | 88 | % | 89 | % | 85 | % | 83 | % | |||||||||
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the financial statements and notes thereto included in Item 8. "Financial Statements and Supplementary Data" as well as Item 1. "Business," Item 1A. "Risk Factors," and Item 2. "Properties," respectively, in this Annual Report on Form 10-K.
Overview
National Storage Affiliates Trust is a fully integrated, self-administered and self-managed real estate investment trust organized in the state of Maryland on May 16, 2013. We have elected and we believe that we have qualified to be taxed as a REIT commencing with our taxable year ended December 31, 2015. We serve as the sole general partner of our operating partnership, a Delaware limited partnership formed on February 13, 2013 to conduct our business, which is focused on the ownership, operation, and acquisition of self storage properties located predominantly within the top 100 MSAs throughout the United States.
Our vice chairperson of the board of trustees and former chief executive officer, Arlen D. Nordhagen, co-founded SecurCare Self Storage, Inc. in 1988 to invest in and manage self storage properties. While growing SecurCare to over 150 self storage properties, Mr. Nordhagen recognized a market opportunity for a differentiated public self storage REIT that would leverage the benefits of national scale by integrating multiple experienced regional self storage operators with local operational focus and expertise. We believe that his vision, which is the foundation of the Company, aligns the interests of our PROs, with those of our public shareholders by allowing our PROs to participate alongside our shareholders in our financial performance and the performance of our PROs' managed portfolios. Our PRO structure offers our PROs a unique opportunity to serve as regional property managers for their managed portfolios and directly participate in the potential upside of those properties while simultaneously diversifying their investment to include a broader portfolio of self storage properties. Over time, largely through our unconsolidated real estate ventures and internalization of three of our largest PROs, SecurCare, Northwest and Move It, we have developed a full service internally-staffed property management platform to complement our PRO structure.
Our Structure
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.
For properties managed by our PROs, 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.
38
Our PROs
We had eight PROs as of December 31, 2017: SecurCare, Northwest,2023: Optivest, Guardian, Move It,Southern, Blue Sky, Moove In, Hide Away, Storage Solutions Hide Away and Personal Mini. We seek to further expand our platform by continuing to recruit additional established self storage operators, while integrating our operations through the implementation of centralized initiatives, including management information systems, revenue enhancement, and cost optimization programs. Our national platform allows us to capture cost savings by eliminating redundancies and utilizing economies of scale across the property management platforms of our PROs while also providing greater access to lower-cost capital.
Our Consolidated Properties
We seek to own properties that are well located in high quality sub-markets with highly accessible street access and attractive supply and demand characteristics, providing our properties with strong and stable cash flows that are less sensitive to the fluctuations of the general economy. Many of these markets have multiple barriers to entry against increased supply, including zoning restrictions against new construction and new construction costs that we believe are higher than our properties' fair market value. We maintain an active acquisition pipeline that we expect will continue to drive our future growth.
As of December 31, 2017,2023, we owned a geographically diversified portfolio of 444809 self storage properties, located in 2638 states and Puerto Rico, comprising approximately 27.251.9 million rentable square feet, configured in approximately 215,000407,000 storage units.units, which excludes self storage properties classified as held for sale consisting of (i) 39 self storage properties located in eight states, comprising approximately 2.4 million rentable square feet, configured in approximately 18,000 storage units to be sold to a third party in 2024 and (ii) 56 self storage properties located in seven states, comprising approximately 3.2 million rentable square feet, configured in approximately 24,000 storage units that were contributed to the 2024 Joint Venture in 2024. Of these properties, 245306 were acquired by us from our PROs, and 199502 were acquired by us from third-party sellers.sellers and one was acquired by us from the 2016 Joint Venture.
Our Joint VentureUnconsolidated 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.
2024 Joint Venture
Subsequent to December 31, 2023, we entered into the 2024 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest. During 2024, we contributed 56 self storage properties containing approximately 3.2 million rentable square feet, configured in over 24,000 storage units and located across seven states to the 2024 Joint Venture.
2023 Joint Venture
As of December 31, 2017,2023, our 2023 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest, did not own or operate any self storage properties. The agreement allows for equity capital contributions of up to $400 million from the 2023 JV Members over a 24-month period starting in December 2023, with options to extend the investment time period by two additional six-month periods.
2018 Joint Venture
As of December 31, 2023, our 2018 Joint Venture, in which we have a 25% interest, owned and operated a portfolio of 104 properties containing approximately 7.8 million rentable square feet, configured in approximately 64,000 storage units and located across 17 states.
2016 Joint Venture
39
As of December 31, 2023, our 2016 Joint Venture, in which we have a 25% ownership interest, owned and operated a portfolio of 7181 properties containing approximately 4.95.7 million rentable square feet, configured in approximately 39,00047,000 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 and disposition activity. We acquired 6520 self storage properties and annexes to existing properties during the year ended December 31, 2023 and 45 self storage properties during the year ended December 31, 2017 and 1072022. We disposed of 32 self storage properties and classified self storage properties as held for sale consisting of (i) 39 self storage properties to be sold to a third party in 2024 and (ii) 56 self storage properties that were contributed to the 2024 Joint Venture in 2024, during the year ended December 31, 2016.2023. 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.
The following discussion and analysis of the results of our operations and financial condition for the year ended December 31, 2023 compared to the year ended December 31, 2022 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, 2022 compared to the year ended December 31, 2021, 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, 2022, which was filed with the SEC on February 27, 2023.
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, 20172023 compared to the Year Ended December 31, 2016
Overview
40
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||
| Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2023 | 2022 | Change | ||||||||||||||||||||||||||||||||||||||||||
| 2017 | 2016 | Change | |||||||||||||||||||||||||||||||||||||||||||
| Rental revenue | |||||||||||||||||||||||||||||||||||||||||||||
| Same store portfolio | $ | 165,858 | $ | 157,097 | $ | 8,761 | |||||||||||||||||||||||||||||||||||||||
| Non-Same store portfolio | 85,956 | 34,081 | 51,875 | ||||||||||||||||||||||||||||||||||||||||||
| Total rental revenue | 251,814 | 191,178 | 60,636 | ||||||||||||||||||||||||||||||||||||||||||
| Rental revenue | |||||||||||||||||||||||||||||||||||||||||||||
| Rental revenue | |||||||||||||||||||||||||||||||||||||||||||||
| Other property-related revenue | |||||||||||||||||||||||||||||||||||||||||||||
| Same store portfolio | 5,468 | 5,012 | 456 | ||||||||||||||||||||||||||||||||||||||||||
| Non-Same store portfolio | 2,787 | 1,047 | 1,740 | ||||||||||||||||||||||||||||||||||||||||||
| Total other property-related revenue | 8,255 | 6,059 | 2,196 | ||||||||||||||||||||||||||||||||||||||||||
| Management fees and other revenue | |||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||||||||||||||||||||||||
| Property operating expenses | |||||||||||||||||||||||||||||||||||||||||||||
| Same store portfolio | 53,045 | 52,034 | 1,011 | ||||||||||||||||||||||||||||||||||||||||||
| Non-Same store portfolio | 31,410 | 12,764 | 18,646 | ||||||||||||||||||||||||||||||||||||||||||
| Total property operating expenses | 84,455 | 64,798 | 19,657 | ||||||||||||||||||||||||||||||||||||||||||
| Net operating income | |||||||||||||||||||||||||||||||||||||||||||||
| Same store portfolio | 118,281 | 110,075 | 8,206 | ||||||||||||||||||||||||||||||||||||||||||
| Non-same store portfolio | 57,333 | 22,364 | 34,969 | ||||||||||||||||||||||||||||||||||||||||||
| Total net operating income | 175,614 | 132,439 | 43,175 | ||||||||||||||||||||||||||||||||||||||||||
| Management fees and other revenue | 8,061 | 1,809 | 6,252 | ||||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | (30,060 | ) | (21,528 | ) | (8,532 | ) | |||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (75,115 | ) | (55,064 | ) | (20,051 | ) | |||||||||||||||||||||||||||||||||||||||
| Income from operations | 78,500 | 57,656 | 20,844 | ||||||||||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||||||||||||||||||||||||
| Other (expense) income | |||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (34,068 | ) | (24,109 | ) | (9,959 | ) | |||||||||||||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||||||||||||||||||
| Loss on early extinguishment of debt | — | (136 | ) | 136 | |||||||||||||||||||||||||||||||||||||||||
| Equity in losses of unconsolidated real estate venture | (2,339 | ) | (1,484 | ) | (855 | ) | |||||||||||||||||||||||||||||||||||||||
| Equity in earnings of unconsolidated real estate ventures | |||||||||||||||||||||||||||||||||||||||||||||
| Acquisition costs | (593 | ) | (6,546 | ) | 5,953 | ||||||||||||||||||||||||||||||||||||||||
| Non-operating expense | (58 | ) | (147 | ) | 89 | ||||||||||||||||||||||||||||||||||||||||
| Gain on sale of self storage properties | 5,715 | — | 5,715 | ||||||||||||||||||||||||||||||||||||||||||
| Other expense | (31,343 | ) | (32,422 | ) | 1,079 | ||||||||||||||||||||||||||||||||||||||||
| Other expense, net | |||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 47,157 | 25,234 | 21,923 | ||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | (1,159 | ) | (368 | ) | (791 | ) | |||||||||||||||||||||||||||||||||||||||
| Net income | 45,998 | 24,866 | 21,132 | ||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (43,037 | ) | (6,901 | ) | (36,136 | ) | |||||||||||||||||||||||||||||||||||||||
| Net income attributable to National Storage Affiliates Trust | 2,961 | 17,965 | (15,004 | ) | |||||||||||||||||||||||||||||||||||||||||
| Distributions to preferred shareholders | (2,300 | ) | — | (2,300 | ) | ||||||||||||||||||||||||||||||||||||||||
| Net income attributable common shareholders | $ | 661 | $ | 17,965 | $ | (17,304 | ) | ||||||||||||||||||||||||||||||||||||||
| Net income attributable to common shareholders | |||||||||||||||||||||||||||||||||||||||||||||
Total Revenue
Our total revenue, including management fees and other revenue, increased by $69.1$56.5 million, or 34.7%7.0%, for the year ended December 31, 2017,2023, as compared to the year ended December 31, 2016.2022. This increase was primarily attributable to incremental rental revenue from 20 self storage properties acquired during 2016the year ended December 31, 2023 and 2017, regular rentalfrom 45 self storage properties acquired during 2022, that were owned during the entire year ended December 31, 2023 and increases for in-place tenants, andin management fees and other revenue earned from our Joint Venture, partially offset byunconsolidated real estate ventures. Total revenue increased despite a decrease in average total portfolio average occupancy from 89.7%91.9% for the year ended December 31, 2022 to 88.9%.88.0% for the year ended December 31, 2023. Average occupancy is calculated based on the average of the month-end occupancy immediately preceding the period presented and the month-end occupancies included in the respective period presented.
Rental Revenue
Rental revenue increased by $60.6$45.2 million, or 31.7%6.0%, for the year ended December 31, 2017,2023, as compared to the year ended December 31, 2016.2022. The increase in rental revenue was due to a $51.9 million increase in non-same store rental revenue which was primarily attributable to incremental rental revenue of $15.1$11.7 million from 6520 self storage properties acquired during 2017,2023, and $36.7$18.9 million from 10745 self storage properties acquired during 2016. Same store2022, that were owned during the entire year ended December 31, 2023. Annualized total portfolio rental revenues increased $8.8 million, or 5.6%, due to a 5.8% increase, from $11.02 to $11.66, in 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") increased from $14.83, for the year ended December 31, 2022 to $15.24, or 2.8%, for the year ended December 31, 2023, driven primarily by increased contractual lease rates and fees.for in-place tenants.
41
Other Property-Related Revenue
Other property-related revenue represents ancillary income from our self storage properties, such as tenant insurance-related access fees and commissions and sales of storage supplies. Other property-related revenue increased by $2.2$4.6 million, or 36.2%18.1%, for the year ended December 31, 2017,2023, as compared to the year ended December 31, 2016.2022. This increase primarily resulted from a $1.7 millionan increase in non-same store other property-related revenue which was primarily attributable to incremental other property-relatedtenant insurance revenue of $0.4 million from 65 self storage properties acquired during 2017, and $1.3 million from 107 self storage properties acquired during 2016.$4.4 million.
Management Fees and Other Revenue
Management fees and other revenue, which includes revenue related to managing and operating the unconsolidated real estate ventures and other revenue from our tenant insurance programs, increased by $6.3$6.8 million, or 24.6%, for the year ended December 31, 2017, as2023, compared to the year ended December 31, 2016. The2022. This increase primarily resulted from a full year's worth of management and other fees for managing and operating the Joint Venture, which began its operations on October 4, 2016. The Joint Venture pays certain customary fees to us for managing and operating the Joint Venture properties, including property management fees, call center fees, platform fees and acquisition fees.
Property Operating Expenses
Property operating expenses increased $19.7by $18.0 million, or 30.3%8.5%, for the year ended December 31, 20172023, compared to the year ended December 31, 2016. This increase resulted from a $18.6 million2022. The increase in non-same store property operating expenses was primarily attributable to incremental property operating expenses of $5.7$3.8 million from 6520 self storage properties acquired during 2017,2023, and $12.9$6.6 million from 10745 self storage properties acquired during 2016. In addition, same store portfolio property operating expenses increased $1.0 million, or 1.9%, due to increases in property taxes and repairs and maintenance expenses.2022, that were owned during the entire year ended December 31, 2023.
General and Administrative Expenses
General and administrative expenses increased $8.5 million, or 39.6%,remained relatively consistent for the year ended December 31, 2017,2023, compared to the year ended December 31, 2016.2022. This increaseresult was primarily attributable to increasesdecreases in supervisory and administrative fees charged by our PROs resulting from the decrease in the number of $3.4 million primarily as a result of incremental fees related to the self storage properties we acquiredmanaged by our PROs, partially offset by an increase in 2016 and 2017, costs related to our property management platform of $2.7 million, salaries and benefits of $1.2 million and equity-basedequity based compensation expense of $1.2 million.expense.
Depreciation and Amortization
Depreciation and amortization increased $20.1decreased $11.2 million, or 36.4%4.8%, for the year ended December 31, 2017,2023, compared to the year ended December 31, 2016.2022. This increasedecrease was primarily attributable to incremental depreciationamortization expense related to the self storage properties we acquired in 2016 and 2017. In addition, amortization offor customer in-place leases increased $1.5 milliondecreasing from $12.0$34.4 million for the year ended December 31, 20162022 to $13.5$8.3 million for the year ended December 31, 2017.2023, and partially offset by the incremental depreciation expense related to the 20 self storage properties acquired during 2023 and 45 self storage properties acquired during 2022, that were owned during the entire year ended December 31, 2023.
Other
Interest Expense
Interest expense increased $55.5 million, or 50.2%, for the year ended December 31, 2023, compared to the year ended December 31, 2022. The increase in interest expense was primarily dueattributable to higheran increase in the effective interest rates on the Revolver, the new Term Loan C borrowing during February 2017,rate under our revolving line of credit from 5.69%, as of December 31, 2022, to 6.71% as of December 31, 2023, and, to a new $84.9 million secured debt financing we entered into during August 2017 and a $0.5 million decreaselesser extent, an increase in amortization of debt premiums.overall average borrowings outstanding.
Loss Onon Early Extinguishment of Debt
Loss on early extinguishment of debt decreased $0.1was $0.8 million for the year ended December 31, 2017, compared to the year ended December 31, 2016.2023. During the year ended December 31, 2016,2023, in connection with an amendment to our credit facility, onetwo of the lenders that waswere included in the syndicated group of lenders prior to the amendment isare no longer a participating lenderlenders following the amendment, which constitutes an extinguishment of debt for accounting purposes. As a result,Additionally, in connection with the amendment we wroteretired two term loans prior to their contractual maturity. Loss on early extinguishment of debt includes costs incurred related to these extinguishments, and the write off $0.1of $0.4 million of unamortized debt issuance costs which isrelated to the amountretired term loans or attributed to the lenderentities no longer included in the lendinglender syndicate.
42
Equity In LossesEarnings Of Unconsolidated Real Estate VentureVentures
Equity in earnings 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, 2017,2023, we recorded $2.3$7.6 million of equity in lossesearnings from our Joint Ventureunconsolidated real estate ventures compared to $1.5$7.7 million for the year ended December 31, 2016. The increase of $0.9 million of equity in losses can be attributed to a full year's worth of operations at the Joint Venture. Equity in losses of unconsolidated real estate venture represents our share of earnings and losses earned through our 25% ownership interest in the Joint Venture. The Joint Venture recorded net losses of $9.4 million during the year ended December 31, 2017, primarily due to NOI of $36.3 million, offset by $29.2 million of depreciation and amortization, $11.4 million of interest expense and $5.1 million of supervisory, administrative, acquisition and other expenses. The Joint Venture recorded net losses of $5.9 million during the year ended year ended December 31, 2016, primarily due to NOI of $8.3 million, offset by $6.2 million of depreciation and amortization, $4.3 million of other expenses, primarily consisting of acquisition costs associated with the JV Portfolio, $2.8 million of interest expense and $0.9 million of supervisory, administrative and other expenses.
Gain Onon Sale of Self Storage Properties
Gain on sale of self storage properties increased $5.7$58.4 million, for the year ended December 31, 2017,2023, compared to the year ended December 31, 2016. This2022. The increase resulted fromin gain on sale of self storage properties was primarily attributable to the sale of three32 self storage properties and improved land adjacent to self storage properties during the year ended December 31, 2017 for grossnet proceeds of $17.8$261.8 million.
Net Income Attributable to Noncontrolling Interests
As discussed in Note 2 to the consolidated financial statements in Item 8, we allocate GAAPU.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 $43.0$80.3 million for the year ended December 31, 2017,2023, compared to $6.9$80.0 million for the year ended December 31, 2016.2022.
| Year Ended December 31, | |||||||||||
| 2016 | 2015 | Change | |||||||||
| Rental revenue | |||||||||||
| Same store portfolio | $ | 123,773 | $ | 114,764 | $ | 9,009 | |||||
| Non-Same store portfolio | 67,405 | 15,105 | 52,300 | ||||||||
| Total rental revenue | 191,178 | 129,869 | 61,309 | ||||||||
| Other property-related revenue | |||||||||||
| Same store portfolio | 3,777 | 3,626 | 151 | ||||||||
| Non-Same store portfolio | 2,282 | 424 | 1,858 | ||||||||
| Total other property-related revenue | 6,059 | 4,050 | 2,009 | ||||||||
| Property operating expenses | |||||||||||
| Same store portfolio | 40,929 | 39,761 | 1,168 | ||||||||
| Non-Same store portfolio | 23,869 | 5,651 | 18,218 | ||||||||
| Total property operating expenses | 64,798 | 45,412 | 19,386 | ||||||||
| Net operating income | |||||||||||
| Same store portfolio | 86,621 | 78,629 | 7,992 | ||||||||
| Non-same store portfolio | 45,818 | 9,878 | 35,940 | ||||||||
| Total net operating income | 132,439 | 88,507 | 43,932 | ||||||||
| Management fees and other revenues | 1,809 | — | 1,809 | ||||||||
| General and administrative expenses | (21,528 | ) | (16,265 | ) | (5,263 | ) | |||||
| Depreciation and amortization | (55,064 | ) | (40,651 | ) | (14,413 | ) | |||||
| Income from operations | 57,656 | 31,591 | 26,065 | ||||||||
| Other expense | |||||||||||
| Interest expense | (24,109 | ) | (20,779 | ) | (3,330 | ) | |||||
| Loss on early extinguishment of debt | (136 | ) | (914 | ) | 778 | ||||||
| Equity in losses of unconsolidated real estate venture | (1,484 | ) | — | (1,484 | ) | ||||||
| Acquisition costs | (6,546 | ) | (4,765 | ) | (1,781 | ) | |||||
| Organizational and offering expenses | — | (58 | ) | 58 | |||||||
| Non-operating expense | (147 | ) | (92 | ) | (55 | ) | |||||
| Other expense | (32,422 | ) | (26,608 | ) | (5,814 | ) | |||||
| Income before income taxes | 25,234 | 4,983 | 20,251 | ||||||||
| Income tax expense | (368 | ) | (187 | ) | (181 | ) | |||||
| Net income | 24,866 | 4,796 | 20,070 | ||||||||
| Net (income) loss attributable to noncontrolling interests | (6,901 | ) | 7,644 | (14,545 | ) | ||||||
| Net income attributable to National Storage Affiliates Trust | $ | 17,965 | $ | 12,440 | $ | 5,525 | |||||
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. Our critical accounting estimates are defined as accounting estimates or assumptions made in accordance with GAAP, which involve a significant level of estimation, uncertainty or subjectivity and have had or are reasonably likely to have a material impact on our financial condition or results of operations. 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 consolidated 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. Expenditures for ordinary repairs and maintenance are expensed as incurred. Major replacements and betterments that improve or extend the life of an asset are capitalized. Estimated depreciable lives of self storage properties are determined by considering the age and other indicators about the condition of the assets at the respective dates of acquisition, resulting in a range of estimated useful lives for assets within each category. All self storage properties are depreciated using the straight-line method. Buildings and improvements are generally depreciated over estimated useful lives between seven and 40 years. Furniture and equipment are generally depreciated over estimated useful lives between three and 10 years.
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 our customers.the leases.
Non-GAAP Financial Measures
FFO and Core FFO
Funds from operations, ("FFO"),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 April 2002 National Policy Bulletin of NAREIT,December 2018 Nareit Funds From Operations White Paper - 2018 Restatement, which we refer to as the White Paper, as amended, defines FFO as net income (loss) (as determined under GAAP), excluding gains (or losses) from sales of real estate and related impairment charges, plusexcluding: 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 adjustments foritems to record unconsolidated partnerships and joint ventures. We include amortization of customer in-place leases in real estate depreciation and amortization inventures on the calculation of FFO because we believe the amortization of customer in-place leases is analogous to real estate depreciation, as the value of such intangibles is inextricably connected to the real estate acquired.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 shares.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 expenses, gains on debt forgiveness, gains (losses) on early extinguishment of debt, casualty-related expenses, losses, and afterrelated recoveries and adjustments for unconsolidated partnerships and joint ventures.
Management uses FFO and Core FFO as a key performance indicatorindicators 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, | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| Net income | $ | 45,998 | $ | 24,866 | $ | 4,796 | |||||
| Add (subtract): | |||||||||||
| Real estate depreciation and amortization | 73,669 | 54,193 | 40,303 | ||||||||
| Company's share of unconsolidated real estate venture real estate depreciation and amortization | 7,296 | 1,559 | — | ||||||||
| Gain on sale of self storage properties | (5,715 | ) | — | — | |||||||
| Distributions to preferred shareholders | (2,300 | ) | — | — | |||||||
FFO attributable to subordinated performance unitholders(1) | (28,364 | ) | (22,842 | ) | (14,997 | ) | |||||
| FFO attributable to common shareholders, OP unitholders, and LTIP unitholders | 90,584 | 57,776 | 30,102 | ||||||||
| Add: | |||||||||||
| Acquisition costs | 593 | 6,546 | 4,765 | ||||||||
| Company's share of unconsolidated real estate venture acquisition costs | 22 | 1,006 | — | ||||||||
| Organizational and offering expenses | — | — | 58 | ||||||||
| Loss on early extinguishment of debt | — | 136 | 914 | ||||||||
| Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders | $ | 91,199 | $ | 65,464 | $ | 35,839 | |||||
Weighted average shares and units outstanding - FFO and Core FFO:(2) | |||||||||||
| Weighted average shares outstanding - basic | 44,423 | 29,887 | 15,463 | ||||||||
| Weighted average restricted common shares outstanding | 25 | 18 | 9 | ||||||||
| Weighted average OP units outstanding | 26,126 | 24,262 | 20,507 | ||||||||
| Weighted average DownREIT OP unit equivalents outstanding | 1,835 | 1,835 | 1,518 | ||||||||
Weighted average LTIP units outstanding(3) | 957 | 2,212 | 1,548 | ||||||||
| Total weighted average shares and units outstanding - FFO and Core FFO | 73,366 | 58,214 | 39,045 | ||||||||
| FFO per share and unit | $ | 1.23 | $ | 0.99 | $ | 0.77 | |||||
| Core FFO per share and unit | $ | 1.24 | $ | 1.12 | $ | 0.92 | |||||
| Year Ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Net income | $ | 236,988 | $ | 183,765 | $ | 146,935 | |||||||||||
| Add (subtract): | |||||||||||||||||
| Real estate depreciation and amortization | 220,737 | 231,870 | 156,930 | ||||||||||||||
| Company's share of unconsolidated real estate venture real estate depreciation and amortization | 17,083 | 17,072 | 15,408 | ||||||||||||||
| Gain on sale of self storage properties | (63,910) | (5,466) | — | ||||||||||||||
| Distributions to preferred shareholders and unitholders | (20,330) | (14,510) | (14,070) | ||||||||||||||
FFO attributable to subordinated performance unitholders(1) | (49,040) | (58,838) | (49,810) | ||||||||||||||
| FFO attributable to common shareholders, OP unitholders, and LTIP unitholders | 341,528 | 353,893 | 255,393 | ||||||||||||||
| Add: | |||||||||||||||||
| Acquisition costs | 1,659 | 2,745 | 1,941 | ||||||||||||||
Casualty-related (recoveries) expenses(2) | (522) | 6,388 | — | ||||||||||||||
| Loss on early extinguishment of debt | 758 | — | — | ||||||||||||||
| Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders | $ | 343,423 | $ | 363,026 | $ | 257,334 | |||||||||||
Weighted average shares and units outstanding - FFO and Core FFO:(3) | |||||||||||||||||
| Weighted average shares outstanding - basic | 86,846 | 91,239 | 81,195 | ||||||||||||||
| Weighted average restricted common shares outstanding | 25 | 27 | 33 | ||||||||||||||
Weighted average effect of outstanding forward offering agreement(4) | — | — | 100 | ||||||||||||||
| Weighted average OP units outstanding | 38,302 | 35,421 | 30,127 | ||||||||||||||
| Weighted average DownREIT OP unit equivalents outstanding | 2,120 | 1,925 | 1,925 | ||||||||||||||
| Weighted average LTIP units outstanding | 553 | 514 | 542 | ||||||||||||||
| Total weighted average shares and units outstanding - FFO and Core FFO | 127,846 | 129,126 | 113,922 | ||||||||||||||
| FFO per share and unit | $ | 2.67 | $ | 2.74 | $ | 2.24 | |||||||||||
| Core FFO per share and unit | $ | 2.69 | $ | 2.81 | $ | 2.26 | |||||||||||
| (1) Amounts represent distributions declared for subordinated performance unitholders and DownREIT subordinated performance unitholders for the periods presented. | |||||||||||||||||||||||
| (2) Casualty-related recoveries in 2023 relate to casualty-related expenses incurred in 2022 and are recorded in the line item "Other" within operating expenses in our consolidated statement of operations. | |||||||||||||||||||||||
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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, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Earnings per share - diluted | $ | 1.48 | $ | 0.99 | $ | 0.98 | |||||||||||
Impact of the difference in weighted average number of shares(1) | 0.23 | (0.28) | 0.18 | ||||||||||||||
Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method(2) | — | 0.62 | — | ||||||||||||||
| Add real estate depreciation and amortization | 1.73 | 1.79 | 1.38 | ||||||||||||||
| Add Company's share unconsolidated venture real estate depreciation and amortization | 0.13 | 0.13 | 0.14 | ||||||||||||||
| Subtract gain on sale of self storage properties | (0.52) | (0.05) | — | ||||||||||||||
| FFO attributable to subordinated performance unitholders | (0.38) | (0.46) | (0.44) | ||||||||||||||
| FFO per share and unit | 2.67 | 2.74 | 2.24 | ||||||||||||||
| Add acquisition costs and Company's share of unconsolidated real estate venture acquisition costs | 0.01 | 0.02 | 0.02 | ||||||||||||||
| Add casualty-related expenses | — | 0.05 | — | ||||||||||||||
| Add loss on early extinguishment of debt | 0.01 | — | — | ||||||||||||||
| Core FFO per share and unit | $ | 2.69 | $ | 2.81 | $ | 2.26 | |||||||||||
| (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). | |||||||||||||||||
Net Operating Income
| Year Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| Earnings (loss) per share - diluted | $ | 0.01 | $ | 0.31 | $ | 0.17 | |||||
Impact of the difference in weighted average number of shares(1) | — | 0.11 | 0.02 | ||||||||
Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method(2) | 0.59 | — | (0.07 | ) | |||||||
| Add real estate depreciation and amortization | 1.00 | 0.93 | 1.03 | ||||||||
| Add Company's share unconsolidated venture real estate depreciation and amortization | 0.10 | 0.03 | — | ||||||||
| Subtract gain on sale of self storage properties | (0.08 | ) | — | — | |||||||
| FFO attributable to subordinated performance unitholders | (0.39 | ) | (0.39 | ) | (0.38 | ) | |||||
| FFO per share and unit | 1.23 | 0.99 | 0.77 | ||||||||
| Add acquisition costs, Company's share of unconsolidated real estate venture acquisition costs, organizational and offering expenses, and loss on early extinguishment of debt | 0.01 | 0.13 | 0.15 | ||||||||
| Core FFO per share and unit | $ | 1.24 | $ | 1.12 | $ | 0.92 | |||||
| (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 distributions, and before the application of the two-class method and treasury stock method, as described in footnote (1). | |||||||||||
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
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 loss.income (loss). We compensate for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with our analysis of net income (loss). NOI should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues income from operations and net loss.income (loss).
As of December 31, 2023, our same store portfolio consisted of 724 self storage properties. 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 table illustrates the changes in rental revenue, other property-related revenue, and property operating expenses, for the year ended December 31, 2023 compared to the year ended December 31, 2022 (dollars in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2023 | 2022 | Change | |||||||||||||||
| Rental revenue | |||||||||||||||||
| Same store portfolio | $ | 646,893 | $ | 633,708 | $ | 13,185 | |||||||||||
| Non-same store portfolio | 147,073 | 115,106 | 31,967 | ||||||||||||||
| Total rental revenue | 793,966 | 748,814 | 45,152 | ||||||||||||||
| Other property-related revenue | |||||||||||||||||
| Same store portfolio | 23,634 | 20,821 | 2,813 | ||||||||||||||
| Non-same store portfolio | 6,052 | 4,310 | 1,742 | ||||||||||||||
| Total other property-related revenue | 29,686 | 25,131 | 4,555 | ||||||||||||||
| Property operating expenses | |||||||||||||||||
| Same store portfolio | 178,006 | 169,987 | 8,019 | ||||||||||||||
| Non-same store portfolio | 50,980 | 41,338 | 9,642 | ||||||||||||||
| Prior period comparability adjustment | — | (300) | 300 | ||||||||||||||
| Total property operating expenses | 228,986 | 211,025 | 17,961 | ||||||||||||||
| Net operating income | |||||||||||||||||
| Same store portfolio | 492,521 | 484,542 | 7,979 | ||||||||||||||
| Non-same store portfolio | 102,145 | 78,378 | 23,767 | ||||||||||||||
| Total net operating income | $ | 594,666 | $ | 562,920 | $ | 31,746 | |||||||||||
Rental Revenue
Same store portfolio rental revenues increased $13.2 million, or 2.1%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022. Average annualized same store rental revenue per occupied square foot increased from $14.89 to $15.80, or 6.1%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022, driven primarily by increased contractual lease rates for in-place tenants. This increase in same store portfolio rental revenue was partially offset by a decrease in average occupancy from 93.1% for the year ended December 31, 2022 to 89.1% for the year ended December 31, 2023.
Other Property-Related Revenue
Same store portfolio other property-related revenue increased $2.8 million, or 13.5%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022. This increase primarily resulted from an increase in tenant insurance revenue.
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Property Operating Expenses
Same store portfolio property operating expenses increased $8.0 million, or 4.7%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022. The increase in same store property operating expenses was a result of increases in marketing, insurance and property tax expense partially offset by a decrease in personnel costs during the year ended December 31, 2023.
The following table presents a reconciliation of net income (loss) to NOI for the periods presented (dollars in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Net income | $ | 236,988 | $ | 183,765 | $ | 146,935 | |||||||||||
| (Subtract) add: | |||||||||||||||||
| Management fees and other revenue | (34,411) | (27,624) | (24,374) | ||||||||||||||
| General and administrative expenses | 59,281 | 59,311 | 51,001 | ||||||||||||||
| Other | 11,108 | 8,537 | 2,853 | ||||||||||||||
| Depreciation and amortization | 221,993 | 233,158 | 158,312 | ||||||||||||||
| Interest expense | 166,147 | 110,599 | 72,062 | ||||||||||||||
| Equity in earnings of unconsolidated real estate ventures | (7,553) | (7,745) | (5,294) | ||||||||||||||
| Loss on early extinguishment of debt | 758 | — | — | ||||||||||||||
| Acquisition costs | 1,659 | 2,745 | 1,941 | ||||||||||||||
| Income tax expense | 1,590 | 4,689 | 1,690 | ||||||||||||||
| Gain on sale of self storage properties | (63,910) | (5,466) | — | ||||||||||||||
| Non-operating expense | 1,016 | 951 | 906 | ||||||||||||||
| Net operating income | $ | 594,666 | $ | 562,920 | $ | 406,032 | |||||||||||
| Year Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| Net income | $ | 45,998 | $ | 24,866 | $ | 4,796 | |||||
| (Subtract) add: | |||||||||||
| Management fees and other revenue | (8,061 | ) | (1,809 | ) | — | ||||||
| General and administrative expenses | 30,060 | 21,528 | 16,265 | ||||||||
| Depreciation and amortization | 75,115 | 55,064 | 40,651 | ||||||||
| Interest expense | 34,068 | 24,109 | 20,779 | ||||||||
| Equity in losses of unconsolidated real estate venture | 2,339 | 1,484 | — | ||||||||
| Loss on early extinguishment of debt | — | 136 | 914 | ||||||||
| Acquisition costs | 593 | 6,546 | 4,765 | ||||||||
| Organizational and offering expenses | — | — | 58 | ||||||||
| Income tax expense | 1,159 | 368 | 187 | ||||||||
| Gain on sale of self storage properties | (5,715 | ) | — | — | |||||||
| Non-operating expense | 58 | 147 | 92 | ||||||||
| Net Operating Income | $ | 175,614 | $ | 132,439 | $ | 88,507 | |||||
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, the Company's share of unconsolidated real estate venture acquisition costs, organizational and offering expenses, equity-based compensation expense, losses on sale of properties, and impairment of long-lived assets;assets and by subtractingcasualty-related expense, minus gains on sale of properties and debt forgiveness.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;
48
•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;
•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 itstheir usefulness as a comparative measure.measures.
We compensate for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with our analysis of net income (loss). EBITDA and Adjusted EBITDA should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues income from operations, and net income (loss).
The following table presents a reconciliation of net lossincome to EBITDA and Adjusted EBITDA for the periods presented (dollars in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Net income | $ | 236,988 | $ | 183,765 | $ | 146,935 | |||||||||||
| Add: | |||||||||||||||||
| Depreciation and amortization | 221,993 | 233,158 | 158,312 | ||||||||||||||
| Company's share of unconsolidated real estate venture depreciation and amortization | 17,083 | 17,072 | 15,408 | ||||||||||||||
| Interest expense | 166,147 | 110,599 | 72,062 | ||||||||||||||
| Income tax expense | 1,590 | 4,689 | 1,690 | ||||||||||||||
| Loss on early extinguishment of debt | 758 | — | — | ||||||||||||||
| EBITDA | 644,559 | 549,283 | 394,407 | ||||||||||||||
| Add (subtract): | |||||||||||||||||
| Acquisition costs | 1,659 | 2,745 | 1,941 | ||||||||||||||
| Gain on sale of self storage properties | (63,910) | (5,466) | — | ||||||||||||||
Casualty-related (recoveries) expenses(1) | (522) | 6,388 | — | ||||||||||||||
Equity-based compensation expense(2) | 6,679 | 6,258 | 5,462 | ||||||||||||||
| Adjusted EBITDA | $ | 588,465 | $ | 559,208 | $ | 401,810 | |||||||||||
| (1) Casualty-related recoveries in 2023 relate to casualty-related expenses incurred in 2022 and are recorded in the line item "Other" within operating expenses in our consolidated statement of operations. | |||||||||||||||||
| (2) Equity-based compensation expense is a non-cash item that is included in general and administrative expenses in our consolidated statements of operations. | |||||||||||||||||
| Year Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| Net income | $ | 45,998 | $ | 24,866 | $ | 4,796 | |||||
| Add: | |||||||||||
| Depreciation and amortization | 75,115 | 55,064 | 40,651 | ||||||||
| Company's share of unconsolidated real estate venture depreciation and amortization | 7,296 | 1,559 | — | ||||||||
| Income tax expense | 1,159 | 368 | 187 | ||||||||
| Interest expense | 34,068 | 24,109 | 20,779 | ||||||||
| Loss on early extinguishment of debt | — | 136 | 914 | ||||||||
| EBITDA | 163,636 | 106,102 | 67,327 | ||||||||
| Add: | |||||||||||
| Acquisition costs | 593 | 6,546 | 4,765 | ||||||||
| Company's share of unconsolidated real estate venture acquisition costs | 22 | 1,006 | — | ||||||||
| Organizational and offering expenses | — | — | 58 | ||||||||
| Gain on sale of self storage properties | (5,715 | ) | — | — | |||||||
Equity-based compensation expense(1) | 3,764 | 2,597 | 3,027 | ||||||||
| Adjusted EBITDA | $ | 162,300 | $ | 116,251 | $ | 75,177 | |||||
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 dispositions of self storage properties, equity and debt offerings, and debt financings including borrowingsadditional borrowing capacity under the credit facility, and expansion options available under the 2028 Term Loan Facility.Facility, the June 2029 Term Loan Facility, and our credit facility.
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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,During the last year, the Federal Reserve Board has continued to raise interest rates arefrom historically low compared to historical levels and many lenders are activepaused raising interest rates as of August 2023. Although the Federal Reserve Board has signaled an intention to reduce interest rates in 2024, there is no assurance that this will occur or that the Federal Reserve Board will not raise interest rates in the market.future. Our ability to access capital on favorable terms as well as to use cash from operations 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. 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, 2017,2023, we had $13.4$65.0 million in cash and cash equivalents and $3.0$22.7 million of restricted cash, an increase in cash and cash equivalents of $0.8$29.7 million and an increase in restricted cash of $0.3$15.8 million from December 31, 2016.2022. Restricted cash primarily consists of escrowed funds deposited with financial institutions resulting from property sales for which we elected to purchase replacement property in accordance with Section 1031 of the Code, and 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 $124.3$441.6 million for the year ended December 31, 20172023 compared to $94.6$443.8 million for the year ended December 31, 2016, an increase of $29.7 million.2022. Our operating cash flow increaseddecreased primarily due to 107higher cash payments for interest expense. The decrease was partially offset by operating cash flows from 45 self storage properties acquired during the year ended December 31, 20162022 that generated cash flow for the entire year ended December 31, 20172023 and 6520 self storage properties that were acquired during the year ended December 31, 2017. In addition, operating distributions from our Joint Venture increased by $4.4 million for the year ended December 31, 2017 comparedand annexes to the year ended December 31, 2016. These increases were partially offset by higher cash payments for general and administrative expenses and interest expense.
Investing Activities
Cash used inprovided by investing activities was $409.3$161.1 million for the year ended December 31, 20172023 compared to $642.4$584.2 million of cash used in investing activities for the year ended December 31, 2022. The primary sources of cash for the year ended December 31, 2023 were $262.3 million of proceeds from our sale of 32 self storage properties, partially offset by our acquisition of 20 self storage properties and annexes to existing properties for cash consideration of $48.7 million, capital expenditures of $34.2 million, our acquisition of management company assets and an interest in a reinsurance company from Move It of $16.9 million and expenditures for corporate furniture and equipment of $1.3 million. Cash used in investing activities was $584.2 million for the year ended December 31, 2016.2022 compared to $2.0 billion for the year ended December 31, 2021. The primary uses of cash for the year ended December 31, 20172022 were for our acquisition of 6545 self storage properties for cash consideration of $391.6 million, investments in our unconsolidated real estate venture of $15.3$496.4 million, capital expenditurescontributions of $14.7$55.0 million and deposits for potentialto fund the self storage property acquisitions of $4.9 million, partially offset by $17.5 million of proceeds from the sale of three self storage propertiesour 2016 Joint Venture and land parcels. The primary uses of cash for the year ended December 31, 2016 were for our acquisition of 107 self storage properties for cash consideration of $532.0 million, investment in our unconsolidated real estate venture of $83.0 million, acquisition of our property management platform for $19.9 million,2018 Joint Venture and capital expenditures of $11.4$42.8 million.
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Capital expenditures totaled $14.7$34.2 million, $11.4$42.8 million and $4.1$27.6 million during the years ended December 31, 2017, 20162023, 2022 and 2015 respectively,2021 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;
•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.
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, | |||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 2016 | 2015 | |||||||||||||||||||||||||||||||||||||||||||
| Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2023 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||
| Recurring capital expenditures | $ | 3,495 | $ | 2,917 | $ | 2,365 | |||||||||||||||||||||||||||||||||||||||
| Revenue enhancing capital expenditures | 2,755 | 2,641 | 703 | ||||||||||||||||||||||||||||||||||||||||||
| Value enhancing capital expenditures | |||||||||||||||||||||||||||||||||||||||||||||
| Acquisitions capital expenditures | 8,953 | 6,114 | 768 | ||||||||||||||||||||||||||||||||||||||||||
| Total capital expenditures | 15,203 | 11,672 | 3,836 | ||||||||||||||||||||||||||||||||||||||||||
| Increase in accrued capital spending | (547 | ) | (254 | ) | 236 | ||||||||||||||||||||||||||||||||||||||||
| Change in accrued capital spending | |||||||||||||||||||||||||||||||||||||||||||||
| Capital expenditures per statement of cash flows | $ | 14,656 | $ | 11,418 | $ | 4,072 | |||||||||||||||||||||||||||||||||||||||
Financing Activities
Cash provided byused in our financing activities was $286.1$557.2 million for the year ended December 31, 20172023 compared to $553.7$154.6 million of cash provided by financing activities for the year ended December 31, 2016. Our sources of financing cash flows for the year ended December 31, 2017 primarily consisted of $166.6 million of proceeds from the issuance of preferred shares, $140.3 million of proceeds from the issuance of common shares, $676.0 million of borrowings under our credit facility, an $84.9 million secured debt financing and $7.0 million of proceeds from the issuance of 300,043 subordinated performance units to an affiliate of Personal Mini.2022. Our primary uses of financing cash flows for the year ended December 31, 20172023 were for principal payments on existing debt of $679.1 million$1.2 billion (which included $664.0 million$1.1 billion of principal repayments, including constructive repayments, under the Revolver, $10.4$73.5 million ofin fixed rate mortgage principal payoffsrepayments, $50.2 million of constructive repayments of term loan borrowings within our credit facility, and $4.7$3.3 million of scheduled fixed rate mortgage principal amortization payments), distributions to noncontrolling interestscommon share repurchases of $57.3$310.2 million, distributions to common shareholders of $47.7$190.9 million, distributions to noncontrolling interests of $141.5 million and distributions to preferred shareholders of $2.3$19.0 million. Our sources of financing cash flows for the year ended December 31, 20162023 primarily consisted of $378.3$1.3 billion of borrowings (which included $898.6 million of proceedsborrowings, including constructive borrowings, under our Revolver, $370.0 million from the issuance of common shares, $712.5July 2028 Notes and October 2023 Senior Unsecured Notes (as defined in Note 8 to the consolidated financial statements in Item 8), and $50.2 million of constructive receipts of term loan borrowings within our credit facility). Our sources of financing cash flows for the year ended December 31, 2022 primarily consisted of $1.6 billion of borrowings (which included $962.0 million of borrowings under the Revolver, $285.0 million from our credit facility and $100.0 million of borrowings under ourJune 2029 Term Loan, Facility.$200.0 million from the issuance of the November 2032 Notes and $125.0 million from the issuance of the November 2033 Notes). Our primary uses of financing cash flows for the year ended December 31, 20162022 were for principal payments on existing debt of $558.6$960.4 million (which included $529.0$956.0 million of principal repayments under the Revolver $25.2 million of fixed rate mortgage principal payoffs and $4.4 million of scheduledin fixed rate mortgage principal payments), distributions to noncontrolling interests of $47.0 million, and distributions to common shareholders of $26.7 million.
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Credit Facility and Term Loan FacilityFacilities
As of December 31, 2017,2023, our credit facility provided for total borrowings of $895.0 million,$1.955 billion, consisting of fourfive components: (i) a Revolver which provides for a total borrowing commitment up to $400.0$950.0 million, whereby we may borrow, repay and re-borrow amounts under the Revolver, (ii) a $235.0 million Term Loan A, (iii) a $155.0$275.0 million Term Loan B, and (iv)(iii) a $105.0$325.0 million Term Loan C.C, (iv) a $275.0 million Term Loan D and (v) a $130.0 million Term Loan E. The Revolver maturesis set to mature in May 2020;January 2027; provided that we may elect up to two times to extend the maturity by six months each up to May 2021January 2028 by paying an extension fee for each such election of 0.15%0.0625% of the total borrowing commitment thereunder at the time of extension and meeting other customary conditions with respect to compliance. The Term Loan AB matures in May 2021,July 2024, provided that we have the option to elect to extend the maturity to January 2025, subject to certain conditions being met and payment of an extension fee of 0.0625% of the amount of the Term Loan B, matures in May 2022 and the Term Loan C matures in February 2024.January 2025, the Term Loan D matures in July 2026 and the Term Loan E matures in March 2027. The Revolver, Term Loan A,B, Term Loan BC, Term Loan D and Term Loan CE are not subject to any scheduled reduction or amortization payments prior to maturity. As of December 31, 2017,2023, we havehad an expansion option under the credit facility, which, if exercised in full, would provide for a total credit facility of $1.0$2.5 billion.
As of December 31, 2017, $235.0 million was outstanding under the Term Loan A with an effective interest rate of 2.63%, $155.02023, $275.0 million was outstanding under the Term Loan B with an effective interest rate of 3.24%3.28%, $105.0$325.0 million was outstanding under the Term Loan C with an effective interest rate of 3.71% and $88.54.07%, $275.0 million was outstanding under the RevolverTerm Loan D with an effective interest rate of 2.96%4.05% and $130.0 million was outstanding under the Term Loan E with an effective interest rate of 4.93%. As of December 31, 2017,2023, we would have had the capacity to borrow remaining Revolver commitments of $306.8$562.6 million while remaining in compliance with the credit facility's financial covenants.
We have an April 2029 Term Loan Facility that matures in April 2029 and is separate from the credit facility and 2028 Term Loan Facility in an aggregate amount of $200.0$100.0 million. As of December 31, 2023 the entire amount was outstanding under the April 2029 Term Loan Facility with an effective interest rate of 4.27%.
We have a June 2029 Term Loan Facility that matures in June 2029 and is separate from the credit facility, 2028 Term Loan Facility, and April 2029 Term Loan Facility in an aggregate amount of $285.0 million. As of December 31, 2023, the June 2029 Term Loan Facility had an effective interest rate of 5.37%. We have an expansion option under the June 2029 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount up to $300.0 million.
For a summary of our financial covenants and additional detail regarding our credit facility, 2028 Term Loan Facility, April 2029 Term Loan Facility and June 2029 Term Loan Facility, please see Note 8 to the consolidated financial statements in Item 8.
On August 30, 2019, our operating partnership issued $100.0 million of 3.98% senior unsecured notes due August 30, 2029 and $50.0 million of 4.08% senior unsecured notes due August 30, 2031 in a private placement to certain institutional investors.
August 2030 and August 2032 Senior Unsecured Notes
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.
May 2026, May 2031 and May 2033Senior Unsecured Notes
On May 26, 2021, our operating partnership issued $55.0 million of 3.10% senior unsecured notes due May 4, 2033. On July 26, 2021, our operating partnership issued $35.0 million of 2.16% senior unsecured notes due May 4, 2026 and $90.0 million of 3.00% senior unsecured notes due May 4, 2031.
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November 2030, November 2031, November 2033 and 2036Senior Unsecured Notes
On December 14, 2021, our operating partnership issued $75.0 million of 2.72% senior unsecured notes due November 30, 2030, $175.0 million of 2.81% senior unsecured notes due November 30, 2031 and $75.0 million of 3.06% senior unsecured notes due November 30, 2036. On January 28, 2022, our operating partnership issued $125.0 million of 2.96% senior unsecured notes due November 30, 2033.
November 2032 Senior Unsecured Notes
On September 28, 2022, the operating partnership issued $200.0 million of 5.06% senior unsecured notes due November 16, 2032.
July 2028 Senior Unsecured Notes
On April 27, 2023, our operating partnership issued $120.0 million of 5.61% senior unsecured notes due July 5, 2028 in a private placement to certain institutional investors. The following table summarizes information contained elsewhereJuly 2028 Notes have an effective interest rate of 5.75% after taking into account the effect of interest rate swaps.
October 2026, October 2028, October 2030 and October 2033Senior Unsecured Notes
On October 5, 2023, our operating partnership issued $65.0 million of 6.46% senior unsecured notes due October 5, 2026, $100.0 million of 6.55% senior unsecured notes due October 5, 2028, $35.0 million of 6.66% senior unsecured notes due October 5, 2030 and $50.0 million of 6.73% senior unsecured notes due October 5, 2033 in this Annual Report on Form 10-K regarding payments due under contractual obligationsa private placement to certain institutional investors.
Fixed Rate Mortgage Payable
On July 9, 2021, we entered into an agreement with a single lender for an $88.0 million debt financing secured by eight of our self storage properties. This interest-only loan matures in July 2028 and commitments on an undiscounted basishas a fixed interest rate of 2.77%.
Sources of Liquidity and Capital Resources
As of December 31, 2023, we had $65.0 million in cash and cash equivalents, compared to $35.3 million as of December 31, 2017 (dollars2022. Our cash flows from operations result primarily from the ownership and management of self-storage facilities as described in thousands):Part I, Item 1, "Business".
Our material cash requirements from contractual and other obligations primarily relate to our debt obligations. Expected timing of those payments are as follows. The information in this section should be read in conjunction with Note 8 and other information included in the accompanying consolidated financial statements included in Item 8.
| (dollars in thousands) | Next 12 Months | Beyond 12 Months | Total | |||||||||||||||||
Senior Unsecured Notes (1) | $ | — | $ | 1,600,000 | $ | 1,600,000 | ||||||||||||||
Revolving line of credit(2) | — | 381,000 | 381,000 | |||||||||||||||||
Term loan facilities (2)(3) | 275,000 | 1,190,000 | 1,465,000 | |||||||||||||||||
| Fixed rate mortgage notes payable | 19,908 | 202,849 | 222,757 | |||||||||||||||||
| Total | $ | 294,908 | $ | 3,373,849 | $ | 3,668,757 | ||||||||||||||
(1) We believe we have access to additional financing and refinancing, if needed.
(2) Under the credit facility, the Company has an expansion option which if exercised in full, would provide an additional $545 million of borrowing capacity.
(3) The Company has the ability to extend the $275 million term loan facility maturing in the next 12 months an additional six months to January 2025.
We anticipate our current cash balances, cash flows from operations and available sources of liquidity will be sufficient to fund operations and meet our short-term and long-term cash requirements, including our scheduled debt repayments, payments for contractual obligations, acquisitions, capital expenditures, working capital needs, dividends, and other prudent uses of our capital, as needed. However, we will continue to assess our liquidity needs. In the event of certain market conditions, we may require additional liquidity, which would require us to evaluate available alternatives and take appropriate actions.
| Year Ending December 31, | |||||||||||||||||||||||||||
| 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | Total | |||||||||||||||||||||
| Debt financings: | |||||||||||||||||||||||||||
Principal(1) | $ | 10,617 | $ | 4,983 | $ | 127,745 | $ | 242,509 | $ | 159,205 | $ | 409,932 | $ | 954,991 | |||||||||||||
Interest(2) | 33,140 | 32,967 | 30,377 | 23,886 | 17,832 | 32,418 | 170,620 | ||||||||||||||||||||
| Real estate leasehold interests | 1,329 | 1,334 | 1,379 | 1,404 | 1,419 | 37,498 | 44,363 | ||||||||||||||||||||
| Office lease | 184 | 188 | 112 | — | — | — | 484 | ||||||||||||||||||||
| Total | $ | 45,270 | $ | 39,472 | $ | 159,613 | $ | 267,799 | $ | 178,456 | $ | 479,848 | $ | 1,170,458 | |||||||||||||
Equity Transactions
Issuance of Series A Preferred Shares
On October 11, 2017, we completed an underwritten public offering of 6,900,000 of ourMarch 16, 2023, the Company issued 5,668,128 Series AB Preferred Shares which included 900,000for approximately $139.6 million, to shareholders of an affiliate of Personal Mini, in connection with the acquisition of a portfolio of 15 properties. As part of the acquisition transaction, the Company recorded a $26.1 million promissory note receivable from an affiliate of Personal Mini. Proceeds from the promissory note were used by the affiliate of Personal Mini to acquire $26.1 million of subordinated performance units. The promissory note bears interest at a rate equivalent to the dividends paid on 1,059,683 of the Series B Preferred Shares. As a result of these agreements, the $26.1 million promissory note receivable, interest income on the note receivable, $26.1 million of Series B Preferred Shares sold upon the exercise in full by the underwriters of their option to purchase additionalvalue, and dividends on such Series B Preferred Shares have been offset, resulting in a net amount presented as proceeds to usfrom the issuance of approximately $166.6 million, after deducting the underwriting discount and other offering expenses.Series B Preferred Shares of $113.1 million.
Issuance and Repurchase of Common Shares
On DecemberJuly 11, 2017,2022, we closedapproved a follow-on public offeringshare repurchase program authorizing, but not obligating, the repurchase of 5,750,000up to $400.0 million of ourthe Company's common shares which included 750,000from time to time. On December 1, 2023, we approved a new share repurchase program authorizing, but not obligating, the repurchase of up to $275.0 million of the Company's common shares sold uponfrom time to time. During the exercise in full by the underwriters of their option to purchase additionalyear ended December 31, 2023, we repurchased 8,836,639 common shares at a public offering price of $25.50 per share. We received aggregate net proceeds from the offering offor approximately $140.3 million after deducting the underwriting discount and additional expenses associated with the offering. $310.2 million.
During the year ended December 31, 2017,2023, after receiving notices of redemption from certain holders of OP units,unitholders, we elected to issue 1,409,7151,275,854 common shares to such holders in exchange for 1,409,7151,275,854 OP units in satisfaction of the operating partnership's redemption obligations.
Issuance of OP Equity
In connection with the 6520 properties and annexes to existing properties acquired during the year ended December 31, 2017, $31.22023, we issued $67.3 million of OP equity was issued or vested (consisting of 975,379 OP units, 271,2671,160,370 subordinated performance units, 466,691 series A-1 preferred units, 18,895 OP units, and the vesting of 36,40015,600 LTIP units previously issued).
As discussed in Note 3 to the consolidated financial statements in Item 8, during the year ended December 31, 2023, the Company also issued (i) 2,545,063 OP units upon the non-voluntary conversion of 926,623 subordinated performance units in connection with Move It's retirement, (ii) 481,811 OP units upon the voluntary conversion of 397,000 subordinated performance units and (iii) 128,487 OP units upon the conversion of an equivalent number of LTIP units.
During the year ended December 31, 2017, the Company2023, we issued 47,339195,573 DownREIT OP units toissued upon the sellersvoluntary conversion of certain acquired properties in exchange for principal payment reimbursements received related to assumed mortgages associated with self storage properties acquired during the year ended December 31, 2014.
Dividends and Distributions
During the year ended December 31, 2017,2023, the Company paid $47.7$190.9 million of distributions to common shareholders, $2.3$19.0 million of distributions to preferred shareholders and distributed $57.3$141.5 million to noncontrolling interests.
On February 22, 2018,15, 2024, our board of trustees declared a cash dividend and distribution, respectively, of $0.28$0.56 per common share and OP unit to shareholders and OP unitholders of record as of March 15, 2018.2024. On February 22, 2018,15, 2024, our board of trustees also declared cash distributions of $0.375 per Series A Preferred Share, Series B Preferred Share and Series A-1 Preferred Unitpreferred unit to shareholders and unitholders of record as of March 15, 2018.2024. In addition, we expect to declare a cash distribution in the first quarter of 20182024 to our subordinated performance unitholders of record as of March 15, 2018.2024. Such dividends and distributions are expected to be paid on March 29, 2018.2024.
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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;
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 to 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 holders of OP unitsunitholders and to the holders of series of subordinated performance units that relate to such property portfolio as follows:
First, an amount is allocated to holders of OP unitsunitholders in order to provide holders of OP unitsunitholders (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, 2017,2023, our operating partnership had an aggregate of $1,241.1$2,774.5 million of such unreturned capital contributions with respect to common shareholders and OP unitholders, andwith respect to the various property portfolios.
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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, 2017,2023, an aggregate of $193.0$211.3 million of such unreturned capital contributions has been allocated to the various series of subordinated performance units.
Thereafter, any additional operating cash flow is allocated to holders of OP unitsunitholders 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 holders of the OP unitsunitholders 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 unit holdersunitholders and subordinated performance unit holdersunitholders 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 holders of OP unitsunitholders (or paid as dividends to holders of our common shares). Any distribution of operating cash flow allocated to the holders of OP unitsunitholders 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 holders of OP unitsunitholders 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 holders of OP unitsunitholders in order to provide holders of OP unitsunitholders (together with any prior allocations of operating cash flow) with a cumulative preferred allocation on the unreturned capital contributions attributed to the holders of OP unitsunitholders 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 isare allocated to holders of OP unitsunitholders and the applicable series of subordinated performance units equally.
56
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 holders of the OP unitsunitholders 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 unit holdersunitholders and subordinated performance unit holdersunitholders 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 holders of OP unitsunitholders (or paid as dividends to holders of our common shares). Any distribution of capital transaction proceeds allocated to the holders of OP unitsunitholders 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 beginningfollowing a two years following the completion of our initial public offeringyear 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, 2017,2023, each subordinated performance unit would on average hypothetically convert into 1.461.55 OP units, or into an aggregate of approximately 23.318.8 million OP units. These amounts are based on historical financial information for the trailing twelve months ended December 31, 2017.2023. The hypothetical conversion is calculated by dividing the average cash available for distribution, or CAD, per subordinated performance unit by 110% of the CAD per OP unit over the same period. We anticipate that as our CAD grows over time, the conversion ratio will also grow, including to levels that may exceed this amount. The actual number of OP units into which such subordinated performance units will become convertible may vary significantly and will depend upon the applicable conversion penalty and the actual CAD to the OP units and the actual CAD to the converted subordinated performance units in the one-year period ending prior to conversion. We have also granted registration rights to those persons who will be eligible to receive common shares issuable upon exchange of OP units issued in our formation transactions and certain contribution transactions.
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.
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 amongstamong 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.
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. Further, we may reduce our debt subject to variable rates to decrease our exposure to interest rate risk.
As of December 31, 2017,2023, we had $88.5$511.0 million of debt subject to variable interest rates (excluding variable-rate debt subject to interest rate swaps). If the one-month London Interbank Offered Rate ("LIBOR")our reference rates (currently Daily Simple SOFR) 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 increasedecrease or decreaseincrease future earnings and cash flows by approximately $0.9$5.1 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
58
•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, 2017.2023. In making this assessment, our management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework).
Based on this assessment, our management believes that, as of December 31, 2017,2023, 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, 20172023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
During the quarter ended December 31, 2023, no trustee or officer of the Company adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information regarding our trustees, executive officers and certain other matters required by Item 401 of Regulation S-K is incorporated herein by reference to our definitive proxy statement relating to our annual meeting of shareholders (the "Proxy Statement"), to be filed with the SEC within 120 days after December 31, 2017.2023.
The information regarding compliance with Section 16(a) of the Exchange Act required by Item 405 of Regulation S-K is incorporated herein by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2017.2023.
The information regarding our Code of Business Conduct and Ethics required by Item 406 of Regulation S-K is incorporated herein by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2017.2023.
The information regarding certain matters pertaining to our corporate governance required by Item 407(c)(3), (d)(4) and (d)(5) of Regulation S-K is incorporated by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2017.2023.
Item 11. Executive Compensation
The information regarding executive compensation and other compensation related matters required by Items 402 and 407(e)(4) and (e)(5) of Regulation S-K is incorporated herein by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2017.2023.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The tables on equity compensation plan information and beneficial ownership of the Company required by Items 201(d) and 403 of Regulation S-K are incorporated herein by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2017.2023.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information regarding transactions with related persons, promoters and certain control persons and trustee independence required by Items 404 and 407(a) of Regulation S-K is incorporated herein by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2017.2023.
Item 14. Principal AccountantAccounting Fees and Services
The information concerning principal accounting fees and services and the Audit Committee's pre-approval policies and procedures required by Item 14 is incorporated herein by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2017.2023.
PART IV
Item 15. Exhibits, and Financial Statement Schedules
(a)(1) The financial statements listed in the Index to Financial Statements on Page F-1 of this report are filed as part of this report and incorporated herein by reference.
(a)(2) The financial statement schedule listed in the Index to Financial Statements on Page F-1 of this report is filed as part of this report and incorporated herein by reference.
(a)(3) The Exhibit Index is incorporated herein by reference.
| INDEX TO EXHIBITS | ||||||
| Exhibit Number | Exhibit Description | |||||
60
61
62
| XBRL | |||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema | ||||
| Inline XBRL Taxonomy Extension Calculation Linkbase | |||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase | ||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase | ||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase | ||||
| 104* | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | ||||
| * | Filed herewith. | ||||
Item 16. Form 10-K Summary
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| National Storage Affiliates Trust | |||||
| By: | /s/ DAVID G. CRAMER | ||||
| (principal executive officer) | |||||
Date: February 27, 201828, 2024
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Arlen D. NordhagenDavid G. Cramer and Tamara D. Fischer,Brandon S. Togashi, and each of them, with full power to act without the other, such person's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this Form 10-K and any and all amendments thereto, and to file the same, with exhibits and schedules thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned and in the capacities and on the dates indicated.
| Signature | Title | Date | ||||||
| National Storage Affiliates Trust | ||||||||
| /s/ DAVID G. CRAMER | trustee, chief executive officer | February 28, 2024 | ||||||
| David G. Cramer | (principal executive officer) | |||||||
| /s/ BRANDON S. TOGASHI | chief financial officer | February 28, 2024 | ||||||
| Brandon S. Togashi | (principal accounting and financial officer) | |||||||
| /s/ | February | |||||||
| Tamara D. Fischer | ||||||||
| /s/ ARLEN D. NORDHAGEN | vice chairperson of the board of trustees | February 28, 2024 | ||||||
| Arlen D. Nordhagen | ||||||||
| /s/ LISA R. COHN | trustee | February 28, 2024 | ||||||
| Lisa R. Cohn | ||||||||
| /s/ PAUL W. HYLBERT, JR. | trustee | February | ||||||
| Paul W. Hylbert, Jr. | ||||||||
| /s/ CHAD L. MEISINGER | trustee | February | ||||||
| Chad L. Meisinger | ||||||||
| /s/ STEVEN G. OSGOOD | trustee | February | ||||||
| Steven G. Osgood | ||||||||
| /s/ DOMINIC M. PALAZZO | trustee | February | ||||||
| Dominic M. Palazzo | ||||||||
| /s/ REBECCA L. STEINFORT | trustee | February 28, 2024 | ||||||
| Rebecca L. Steinfort | ||||||||
| /s/ MARK VAN MOURICK | trustee | February | ||||||
| Mark Van Mourick | ||||||||
| /s/ CHARLES F. WU | trustee | February 28, 2024 | ||||||
| Charles F. Wu | ||||||||
| NATIONAL STORAGE AFFILIATES TRUST | ||||||||||
| INDEX TO FINANCIAL STATEMENTS | ||||||||||
| Page | ||||||||||
| Financial Statements: | ||||||||||
| Consolidated Balance Sheets as of December 31, | ||||||||||
| Consolidated Statements of Operations for the Years Ended December 31, | ||||||||||
| Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, | ||||||||||
| Consolidated Statements of Changes in Equity for the Years Ended December 31, | ||||||||||
| Consolidated Statements of Cash Flows for the Years Ended December 31, | ||||||||||
| Notes to the Consolidated Financial Statements | ||||||||||
| Financial Statement Schedule: | ||||||||||
| Schedule III - Real Estate and Accumulated Depreciation | ||||||||||
| All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. | ||||||||||
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees
National Storage Affiliates Trust:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of National Storage Affiliates Trust and subsidiaries (the Company) as of December 31, 20172023 and 2016,2022, the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for each of the years in the three‑year period ended December 31, 2017,2023, and the related notes and the financial statement schedule, Schedule III -– Real Estate and Accumulated Depreciation (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20172023 and 2016,2022, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2017,2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 27, 201828, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Purchase price allocation for self storage property acquisitions
As discussed in Note 6 to the consolidated financial statements, during the year ended December 31, 2023, the Company acquired $229.5 million of self storage properties that were recorded as asset acquisitions. The purchase price in an asset acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their relative fair value. Assets acquired and liabilities assumed primarily comprise land, buildings and related improvements, customer in-place leases, furniture and equipment and assumed real estate leasehold interests.
F-2
We identified the evaluation of the estimated fair value of certain land and building assets acquired in certain property acquisitions as a critical audit matter. Specifically, subjective auditor judgment and the involvement of valuation professionals with specialized skills and knowledge was required to evaluate the assumptions used in the Company’s determination of the estimated fair value, which included comparable land sales and estimated building replacement costs.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to estimate fair value, including controls related to developing estimated fair values of land and buildings. With the assistance of valuation professionals with specialized skills and knowledge, we evaluated the estimated fair value of:
•land by comparing to market data of comparable land sales.
•buildings by comparing the building replacement costs to market data, including appraisal guides used to estimate the depreciated value of similar self storage structures.
/s/ KPMG LLP
We have served as the Company’s auditor since 2013.
Denver, Colorado
February 27, 201828, 2024
F-3
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees
National Storage Affiliates Trust:
Opinion on Internal Control Over Financial Reporting
We have audited National Storage Affiliates Trust and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 20172023, based on criteria established inInternal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control -– Integrated Framework (2013)(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 20172023 and 2016,2022, the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2017,2023, and the related notes and the financial statement schedule, Schedule III -– Real Estate and Accumulated Depreciation (collectively, the consolidated financial statements), and our report dated February 27, 201828, 2024 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Denver, Colorado
February 27, 2018
28, 2024
F-4
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| ASSETS | |||||||||||
| Real estate | |||||||||||
| Self storage properties | $ | 5,792,174 | $ | 6,391,572 | |||||||
| Less accumulated depreciation | (874,359) | (772,661) | |||||||||
| Self storage properties, net | 4,917,815 | 5,618,911 | |||||||||
| Cash and cash equivalents | 64,980 | 35,312 | |||||||||
| Restricted cash | 22,713 | 6,887 | |||||||||
| Debt issuance costs, net | 8,442 | 1,393 | |||||||||
| Investment in unconsolidated real estate ventures | 211,361 | 227,441 | |||||||||
| Other assets, net | 134,002 | 156,228 | |||||||||
| Assets held for sale, net | 550,199 | — | |||||||||
| Operating lease right-of-use assets | 22,299 | 23,835 | |||||||||
| Total assets | $ | 5,931,811 | $ | 6,070,007 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Liabilities | |||||||||||
| Debt financing | $ | 3,658,205 | $ | 3,551,179 | |||||||
| Accounts payable and accrued liabilities | 92,766 | 80,377 | |||||||||
| Interest rate swap liabilities | 3,450 | 483 | |||||||||
| Operating lease liabilities | 24,195 | 25,741 | |||||||||
| Deferred revenue | 27,354 | 23,213 | |||||||||
| Total liabilities | 3,805,970 | 3,680,993 | |||||||||
| Commitments and contingencies (Note 12) | |||||||||||
| Equity | |||||||||||
| Series A Preferred shares of beneficial interest, par value $0.01 per share. 50,000,000 authorized, 9,017,588 and 9,017,588 issued and outstanding at December 31, 2023 and 2022, at liquidation preference | 225,439 | 225,439 | |||||||||
| Series B Preferred shares of beneficial interest, par value $0.01 per share. 7,000,000 authorized, 5,668,128 issued and outstanding at December 31, 2023 (Note 3) | 115,212 | — | |||||||||
| Common shares of beneficial interest, par value $0.01 per share. 250,000,000 authorized, 82,285,995 and 89,842,145 shares issued and outstanding at December 31, 2023 and 2022, respectively | 823 | 898 | |||||||||
| Additional paid-in capital | 1,509,563 | 1,777,984 | |||||||||
| Distributions in excess of earnings | (449,907) | (396,650) | |||||||||
| Accumulated other comprehensive income | 21,058 | 40,530 | |||||||||
| Total shareholders' equity | 1,422,188 | 1,648,201 | |||||||||
| Noncontrolling interests | 703,653 | 740,813 | |||||||||
| Total equity | 2,125,841 | 2,389,014 | |||||||||
| Total liabilities and equity | $ | 5,931,811 | $ | 6,070,007 | |||||||
| December 31, | |||||||
| 2017 | 2016 | ||||||
| ASSETS | |||||||
| Real estate | |||||||
| Self storage properties | $ | 2,275,233 | $ | 1,844,336 | |||
| Less accumulated depreciation | (170,358 | ) | (110,803 | ) | |||
| Self storage properties, net | 2,104,875 | 1,733,533 | |||||
| Cash and cash equivalents | 13,366 | 12,570 | |||||
| Restricted cash | 3,041 | 2,767 | |||||
| Debt issuance costs, net | 2,185 | 3,069 | |||||
| Investment in unconsolidated real estate venture | 89,093 | 81,486 | |||||
| Other assets, net | 52,615 | 44,730 | |||||
| Assets held for sale | 1,555 | 13,937 | |||||
| Total assets | $ | 2,266,730 | $ | 1,892,092 | |||
| LIABILITIES AND EQUITY | |||||||
| Liabilities | |||||||
| Debt financing | $ | 958,097 | $ | 878,954 | |||
| Accounts payable and accrued liabilities | 24,459 | 21,616 | |||||
| Deferred revenue | 12,687 | 12,454 | |||||
| Total liabilities | 995,243 | 913,024 | |||||
| Commitments and contingencies (Note 12) | |||||||
| Equity | |||||||
| Preferred shares of beneficial interest, par value $0.01 per share. 50,000,000 authorized, 6,900,000 issued and outstanding at December 31, 2017, at liquidation preference | 172,500 | — | |||||
| Common shares of beneficial interest, par value $0.01 per share. 250,000,000 authorized, 50,284,934 and 43,110,362 shares issued and outstanding at December 31, 2017 and 2016, respectively | 503 | 431 | |||||
| Additional paid-in capital | 711,467 | 576,365 | |||||
| Distributions in excess of earnings | (55,729 | ) | (8,719 | ) | |||
| Accumulated other comprehensive income | 12,282 | 9,025 | |||||
| Total shareholders' equity | 841,023 | 577,102 | |||||
| Noncontrolling interests | 430,464 | 401,966 | |||||
| Total equity | 1,271,487 | 979,068 | |||||
| Total liabilities and equity | $ | 2,266,730 | $ | 1,892,092 | |||
See notes to consolidated financial statements.
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| Year Ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| REVENUE | |||||||||||||||||
| Rental revenue | $ | 793,966 | $ | 748,814 | $ | 541,547 | |||||||||||
| Other property-related revenue | 29,686 | 25,131 | 19,750 | ||||||||||||||
| Management fees and other revenue | 34,411 | 27,624 | 24,374 | ||||||||||||||
| Total revenue | 858,063 | 801,569 | 585,671 | ||||||||||||||
| OPERATING EXPENSES | |||||||||||||||||
| Property operating expenses | 228,986 | 211,025 | 155,265 | ||||||||||||||
| General and administrative expenses | 59,281 | 59,311 | 51,001 | ||||||||||||||
| Depreciation and amortization | 221,993 | 233,158 | 158,312 | ||||||||||||||
| Other | 11,108 | 8,537 | 2,853 | ||||||||||||||
| Total operating expenses | 521,368 | 512,031 | 367,431 | ||||||||||||||
| OTHER (EXPENSE) INCOME | |||||||||||||||||
| Interest expense | (166,147) | (110,599) | (72,062) | ||||||||||||||
| Loss on early extinguishment of debt | (758) | — | — | ||||||||||||||
| Equity in earnings of unconsolidated real estate ventures | 7,553 | 7,745 | 5,294 | ||||||||||||||
| Acquisition costs | (1,659) | (2,745) | (1,941) | ||||||||||||||
| Non-operating expense | (1,016) | (951) | (906) | ||||||||||||||
| Gain on sale of self storage properties | 63,910 | 5,466 | — | ||||||||||||||
| Other expense | (98,117) | (101,084) | (69,615) | ||||||||||||||
| Income before income taxes | 238,578 | 188,454 | 148,625 | ||||||||||||||
| Income tax expense | (1,590) | (4,689) | (1,690) | ||||||||||||||
| Net income | 236,988 | 183,765 | 146,935 | ||||||||||||||
| Net income attributable to noncontrolling interests | (80,319) | (80,028) | (41,682) | ||||||||||||||
| Net income attributable to National Storage Affiliates Trust | 156,669 | 103,737 | 105,253 | ||||||||||||||
| Distributions to preferred shareholders | (19,019) | (13,425) | (13,104) | ||||||||||||||
| Net income attributable to common shareholders | $ | 137,650 | $ | 90,312 | $ | 92,149 | |||||||||||
| Earnings per share - basic | $ | 1.58 | $ | 0.99 | $ | 1.13 | |||||||||||
| Earnings per share - diluted | $ | 1.48 | $ | 0.99 | $ | 0.98 | |||||||||||
| Weighted average shares outstanding - basic | 86,846 | 91,239 | 81,195 | ||||||||||||||
| Weighted average shares outstanding - diluted | 146,023 | 91,239 | 134,538 | ||||||||||||||
| Year Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| REVENUE | |||||||||||
| Rental revenue | $ | 251,814 | $ | 191,178 | $ | 129,869 | |||||
| Other property-related revenue | 8,255 | 6,059 | 4,050 | ||||||||
| Management fees and other revenue | 8,061 | 1,809 | — | ||||||||
| Total revenue | 268,130 | 199,046 | 133,919 | ||||||||
| OPERATING EXPENSES | |||||||||||
| Property operating expenses | 84,455 | 64,798 | 45,412 | ||||||||
| General and administrative expenses | 30,060 | 21,528 | 16,265 | ||||||||
| Depreciation and amortization | 75,115 | 55,064 | 40,651 | ||||||||
| Total operating expenses | 189,630 | 141,390 | 102,328 | ||||||||
| Income from operations | 78,500 | 57,656 | 31,591 | ||||||||
| OTHER (EXPENSE) INCOME | |||||||||||
| Interest expense | (34,068 | ) | (24,109 | ) | (20,779 | ) | |||||
| Loss on early extinguishment of debt | — | (136 | ) | (914 | ) | ||||||
| Equity in losses of unconsolidated real estate venture | (2,339 | ) | (1,484 | ) | — | ||||||
| Acquisition costs | (593 | ) | (6,546 | ) | (4,765 | ) | |||||
| Organizational and offering expenses | — | — | (58 | ) | |||||||
| Non-operating expense | (58 | ) | (147 | ) | (92 | ) | |||||
| Gain on sale of self storage properties | 5,715 | — | — | ||||||||
| Other expense | (31,343 | ) | (32,422 | ) | (26,608 | ) | |||||
| Income before income taxes | 47,157 | 25,234 | 4,983 | ||||||||
| Income tax expense | (1,159 | ) | (368 | ) | (187 | ) | |||||
| Net income | 45,998 | 24,866 | 4,796 | ||||||||
| Net (income) loss attributable to noncontrolling interests | (43,037 | ) | (6,901 | ) | 7,644 | ||||||
| Net income attributable to National Storage Affiliates Trust | 2,961 | 17,965 | 12,440 | ||||||||
| Distributions to preferred shareholders | (2,300 | ) | — | — | |||||||
| Net income attributable to common shareholders | $ | 661 | $ | 17,965 | $ | 12,440 | |||||
| Earnings (loss) per share - basic | $ | 0.01 | $ | 0.60 | $ | 0.80 | |||||
| Earnings (loss) per share - diluted | $ | 0.01 | $ | 0.31 | $ | 0.17 | |||||
| Weighted average shares outstanding - basic | 44,423 | 29,887 | 15,463 | ||||||||
| Weighted average shares outstanding - diluted | 44,423 | 78,747 | 45,409 | ||||||||
See notes to consolidated financial statements.
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(dollars in thousands)
| Year Ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Net income | $ | 236,988 | $ | 183,765 | $ | 146,935 | |||||||||||
| Other comprehensive income (loss) | |||||||||||||||||
| Unrealized gain on derivative contracts | 10,893 | 82,418 | 23,558 | ||||||||||||||
| Realized loss on derivative contracts | (1,643) | — | — | ||||||||||||||
| Reclassification of other comprehensive (income) loss to interest expense | (35,605) | 2,315 | 20,578 | ||||||||||||||
| Other comprehensive (loss) income | (26,355) | 84,733 | 44,136 | ||||||||||||||
| Comprehensive income | 210,633 | 268,498 | 191,071 | ||||||||||||||
| Comprehensive income attributable to noncontrolling interests | (71,649) | (104,826) | (54,940) | ||||||||||||||
| Comprehensive income attributable to National Storage Affiliates Trust | $ | 138,984 | $ | 163,672 | $ | 136,131 | |||||||||||
| Year Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| Net income | $ | 45,998 | $ | 24,866 | $ | 4,796 | |||||
| Other comprehensive income (loss) | |||||||||||
| Unrealized gain (loss) on derivative contracts | 1,935 | 6,434 | (1,551 | ) | |||||||
| Reclassification of other comprehensive loss to interest expense | 2,308 | 2,678 | 1,699 | ||||||||
| Other comprehensive income | 4,243 | 9,112 | 148 | ||||||||
| Comprehensive income | 50,241 | 33,978 | 4,944 | ||||||||
| Comprehensive (income) loss attributable to noncontrolling interests | (44,697 | ) | (7,272 | ) | 7,496 | ||||||
| Comprehensive income attributable to National Storage Affiliates Trust | $ | 5,544 | $ | 26,706 | $ | 12,440 | |||||
See notes to consolidated financial statements.
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN EQUITY
(dollars in thousands, except share amounts)
| Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional | Distributions | Other | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Shares | Common Shares | Paid-in | in Excess of | Comprehensive | Noncontrolling | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Capital | Earnings | (Loss) Income | Interests | Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2020 | 8,732,719 | $ | 218,318 | 71,293,117 | $ | 713 | $ | 1,050,714 | $ | (251,704) | $ | (49,084) | $ | 461,518 | $ | 1,430,475 | |||||||||||||||||||||||||||||||||||||
| OP equity issued for property acquisitions: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| OP units, subordinated performance units and Series A-1 preferred units, net of offering costs | — | — | — | — | — | — | — | 195,099 | 195,099 | ||||||||||||||||||||||||||||||||||||||||||||
| Redemptions of Series A-1 preferred units | 4,000 | 100 | — | — | — | — | — | (100) | — | ||||||||||||||||||||||||||||||||||||||||||||
| Redemptions of OP units | — | — | 700,326 | 7 | 10,283 | — | (316) | (9,974) | — | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares, net of offering costs | — | — | 19,196,216 | 192 | 900,788 | — | — | — | 900,980 | ||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interests | — | — | — | — | — | — | — | 103 | 103 | ||||||||||||||||||||||||||||||||||||||||||||
| Effect of changes in ownership for consolidated entities | — | — | — | — | (95,238) | — | (1,089) | 96,327 | — | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of OP units | — | — | — | — | — | — | — | 6,661 | 6,661 | ||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation expense | — | — | — | — | 380 | — | — | 5,082 | 5,462 | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted common shares | — | — | 29,248 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Vesting and forfeitures of restricted common shares, net | — | — | (19,978) | — | (154) | — | — | — | (154) | ||||||||||||||||||||||||||||||||||||||||||||
| Preferred share dividends | — | — | — | — | — | (13,104) | — | — | (13,104) | ||||||||||||||||||||||||||||||||||||||||||||
| Common share dividends | — | — | — | — | — | (131,708) | — | — | (131,708) | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | (102,430) | (102,430) | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | 30,878 | 13,258 | 44,136 | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 105,253 | — | 41,682 | 146,935 | ||||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2021 | 8,736,719 | $ | 218,418 | 91,198,929 | $ | 912 | $ | 1,866,773 | $ | (291,263) | $ | (19,611) | $ | 707,226 | $ | 2,482,455 | |||||||||||||||||||||||||||||||||||||
| OP equity issued for property acquisitions: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Internalization of PRO, net of offering costs | — | — | — | — | — | — | — | 3,217 | 3,217 | ||||||||||||||||||||||||||||||||||||||||||||
| Accumulated | |||||||||||||||||||||||||||||||||
| Additional | Distributions | Other | |||||||||||||||||||||||||||||||
| Preferred Shares | Common Shares | Paid-in | in Excess of | Comprehensive | Noncontrolling | Total | |||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Capital | Earnings | Income | Interests | Equity | |||||||||||||||||||||||||
| Balances, December 31, 2014 | — | $ | — | 1,000 | $ | — | $ | — | $ | — | $ | — | $ | 214,104 | $ | 214,104 | |||||||||||||||||
| Net OP equity issuances in business combinations: | |||||||||||||||||||||||||||||||||
| OP units and subordinated performance units | — | — | — | — | — | — | — | 42,113 | 42,113 | ||||||||||||||||||||||||
| LTIP units | — | — | — | — | — | — | — | 1,402 | 1,402 | ||||||||||||||||||||||||
| Noncontrolling interests in acquired subsidiaries | — | — | — | — | — | — | — | 21,137 | 21,137 | ||||||||||||||||||||||||
| Redemption of common shares | — | — | (1,000 | ) | — | — | — | — | — | — | |||||||||||||||||||||||
| Issuance of common shares, net of offering costs | — | — | 23,000,000 | 230 | 270,715 | — | — | — | 270,945 | ||||||||||||||||||||||||
| Issuance of common shares, share based compensation plans | — | — | 4,751 | — | — | — | — | — | — | ||||||||||||||||||||||||
| Effect of changes in ownership for consolidated entities | — | — | — | — | (34,376 | ) | — | — | 34,376 | — | |||||||||||||||||||||||
| Issuance of OP units | — | — | — | — | — | — | — | 1,416 | 1,416 | ||||||||||||||||||||||||
| Equity-based compensation expense | — | — | — | — | 74 | — | — | 2,953 | 3,027 | ||||||||||||||||||||||||
| Issuance of LTIP units for acquisition expenses | — | — | — | — | — | — | — | 1,020 | 1,020 | ||||||||||||||||||||||||
| Issuance of restricted common shares | — | — | 17,210 | — | — | — | — | — | — | ||||||||||||||||||||||||
| Vesting and forfeitures of restricted common shares | — | — | (6,210 | ) | — | (21 | ) | — | — | — | (21 | ) | |||||||||||||||||||||
| Reduction in receivables from partners of OP | — | — | — | — | — | — | — | 1,589 | 1,589 | ||||||||||||||||||||||||
| Common share dividends | — | — | — | — | — | (12,429 | ) | — | — | (12,429 | ) | ||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | (33,200 | ) | (33,200 | ) | ||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | — | 148 | 148 | ||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | 12,440 | — | (7,644 | ) | 4,796 | |||||||||||||||||||||||
| Balances, December 31, 2015 | — | — | 23,015,751 | 230 | 236,392 | 11 | — | 279,414 | 516,047 | ||||||||||||||||||||||||
| OP equity recorded in business combinations: | |||||||||||||||||||||||||||||||||
See notes to consolidated financial statements.
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN EQUITY (CONTINUED)
(dollars in thousands, except share amounts)
| Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional | Distributions | Other | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Shares | Common Shares | Paid-in | in Excess of | Comprehensive | Noncontrolling | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Capital | Earnings | (Loss) Income | Interests | Equity | |||||||||||||||||||||||||||||||||||||||||||||
| OP units, subordinated performance units and Series A-1 preferred units, net of offering costs | — | — | — | — | — | — | — | 68,899 | 68,899 | ||||||||||||||||||||||||||||||||||||||||||||
| Redemptions of Series A-1 preferred units | 280,869 | 7,021 | — | — | — | — | — | (7,021) | — | ||||||||||||||||||||||||||||||||||||||||||||
| Redemptions of OP units | — | — | 627,896 | 6 | 11,026 | — | 33 | (11,065) | — | ||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common shares | — | — | (1,986,175) | (20) | (90,089) | — | — | — | (90,109) | ||||||||||||||||||||||||||||||||||||||||||||
| Effect of changes in ownership for consolidated entities | — | — | — | — | (9,975) | — | 173 | 9,802 | — | ||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation expense | — | — | — | — | 410 | — | — | 5,848 | 6,258 | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted common shares | — | — | 10,405 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Vesting and forfeitures of restricted common shares, net | — | — | (8,910) | — | (161) | — | — | — | (161) | ||||||||||||||||||||||||||||||||||||||||||||
| Preferred share dividends | — | — | — | — | — | (13,425) | — | — | (13,425) | ||||||||||||||||||||||||||||||||||||||||||||
| Common share dividends | — | — | — | — | — | (195,699) | — | — | (195,699) | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | (140,919) | (140,919) | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | 59,935 | 24,798 | 84,733 | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 103,737 | — | 80,028 | 183,765 | ||||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2022 | 9,017,588 | $ | 225,439 | 89,842,145 | $ | 898 | $ | 1,777,984 | $ | (396,650) | $ | 40,530 | $ | 740,813 | $ | 2,389,014 | |||||||||||||||||||||||||||||||||||||
| Issuance of preferred shares | 5,668,128 | 115,212 | — | — | (2,083) | — | — | — | 113,129 | ||||||||||||||||||||||||||||||||||||||||||||
| OP equity issued for property acquisitions: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| OP units, LTIP units, subordinated performance units and Series A-1 preferred units, net of offering costs | — | — | — | — | — | — | — | 67,266 | 67,266 | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Series A-1 preferred units | — | — | — | — | — | — | — | 750 | 750 | ||||||||||||||||||||||||||||||||||||||||||||
| Redemptions of OP Units | — | — | 1,275,854 | 13 | 19,240 | — | 514 | (19,767) | — | ||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common shares | — | — | (8,836,639) | (88) | (310,064) | — | — | — | (310,152) | ||||||||||||||||||||||||||||||||||||||||||||
| Accumulated | |||||||||||||||||||||||||||||||||
| Additional | Distributions | Other | |||||||||||||||||||||||||||||||
| Preferred Shares | Common Shares | Paid-in | in Excess of | Comprehensive | Noncontrolling | Total | |||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Capital | Earnings | Income | Interests | Equity | |||||||||||||||||||||||||
| OP units and subordinated performance units, net of offering costs | — | — | — | — | — | — | — | 120,827 | 120,827 | ||||||||||||||||||||||||
| LTIP units | — | — | — | — | — | — | — | 814 | 814 | ||||||||||||||||||||||||
| Redemption of OP units | — | — | 1,125,503 | 11 | 13,004 | — | (4 | ) | (13,011 | ) | — | ||||||||||||||||||||||
| Issuance of common shares, net of offering costs | — | — | 18,962,209 | 190 | 376,224 | — | — | — | 376,414 | ||||||||||||||||||||||||
| Issuance of common shares, share based compensation plans | — | — | 4,309 | — | — | — | — | — | — | ||||||||||||||||||||||||
| Effect of changes in ownership for consolidated entities | — | — | — | — | (49,349 | ) | — | 288 | 49,061 | — | |||||||||||||||||||||||
| Issuance of OP units | — | — | — | — | — | — | — | 1,441 | 1,441 | ||||||||||||||||||||||||
| Equity-based compensation expense | — | — | — | — | 120 | — | — | 2,477 | 2,597 | ||||||||||||||||||||||||
| Issuance of LTIP units for acquisition expenses | — | — | — | — | — | — | — | 56 | 56 | ||||||||||||||||||||||||
| Issuance of restricted common shares | — | — | 8,090 | — | — | — | — | — | — | ||||||||||||||||||||||||
| Vesting and forfeitures of restricted common shares | — | — | (5,500 | ) | — | (26 | ) | — | — | — | (26 | ) | |||||||||||||||||||||
| Reduction in receivables from partners of OP | — | — | — | — | — | — | — | 1,375 | 1,375 | ||||||||||||||||||||||||
| Common share dividends | — | — | — | — | — | (26,695 | ) | — | — | (26,695 | ) | ||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | (47,760 | ) | (47,760 | ) | ||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | 8,741 | 371 | 9,112 | ||||||||||||||||||||||||
| Net income | — | — | — | — | — | 17,965 | — | 6,901 | 24,866 | ||||||||||||||||||||||||
| Balances, December 31, 2016 | — | — | 43,110,362 | 431 | 576,365 | (8,719 | ) | 9,025 | 401,966 | 979,068 | |||||||||||||||||||||||
| Issuance of preferred shares, net of offering costs | 6,900,000 | 172,500 | — | — | (5,934 | ) | — | — | — | 166,566 | |||||||||||||||||||||||
| OP equity recorded in connection with property acquisitions: | |||||||||||||||||||||||||||||||||
See notes to consolidated financial statements.
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN EQUITY (CONTINUED)
(dollars in thousands, except share amounts)
| Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional | Distributions | Other | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Shares | Common Shares | Paid-in | in Excess of | Comprehensive | Noncontrolling | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Capital | Earnings | (Loss) Income | Interests | Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Effect of changes in ownership for consolidated entities | — | — | — | — | 24,373 | — | (2,301) | (22,072) | — | ||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation expense | — | — | — | — | 419 | — | — | 6,260 | 6,679 | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted common shares | — | — | 12,856 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Vesting and forfeitures of restricted common shares, net | — | — | (8,221) | — | (306) | — | — | — | (306) | ||||||||||||||||||||||||||||||||||||||||||||
| Preferred share dividends | — | — | — | — | — | (19,019) | — | — | (19,019) | ||||||||||||||||||||||||||||||||||||||||||||
| Common share dividends | — | — | — | — | — | (190,907) | — | — | (190,907) | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | (141,246) | (141,246) | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | (17,685) | (8,670) | (26,355) | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 156,669 | — | 80,319 | 236,988 | ||||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2023 | 14,685,716 | $ | 340,651 | 82,285,995 | $ | 823 | $ | 1,509,563 | $ | (449,907) | $ | 21,058 | $ | 703,653 | $ | 2,125,841 | |||||||||||||||||||||||||||||||||||||
| Accumulated | |||||||||||||||||||||||||||||||||
| Additional | Distributions | Other | |||||||||||||||||||||||||||||||
| Preferred Shares | Common Shares | Paid-in | in Excess of | Comprehensive | Noncontrolling | Total | |||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Capital | Earnings | Income | Interests | Equity | |||||||||||||||||||||||||
| OP units and subordinated performance units, net of offering costs | — | — | — | — | — | — | — | 29,900 | 29,900 | ||||||||||||||||||||||||
| LTIP units | — | — | — | — | — | — | — | 854 | 854 | ||||||||||||||||||||||||
| Issuance of subordinated performance units | — | — | — | — | — | — | — | 7,000 | 7,000 | ||||||||||||||||||||||||
| Redemptions of OP units | — | — | 1,409,715 | 14 | 18,389 | — | 289 | (18,692 | ) | — | |||||||||||||||||||||||
| Issuance of common shares, net of offering costs | — | — | 5,750,000 | 58 | 140,203 | — | — | — | 140,261 | ||||||||||||||||||||||||
| Issuance of common shares, share based compensation plans | — | — | 6,862 | — | — | — | — | — | — | ||||||||||||||||||||||||
| Effect of changes in ownership for consolidated entities | — | — | — | — | (17,749 | ) | — | 385 | 17,364 | — | |||||||||||||||||||||||
| Issuance of OP units | — | — | — | — | — | — | — | 1,262 | 1,262 | ||||||||||||||||||||||||
| Equity-based compensation expense | — | — | — | — | 244 | — | — | 3,520 | 3,764 | ||||||||||||||||||||||||
| Issuance of LTIP units for acquisition expenses | — | — | — | — | — | — | — | 15 | 15 | ||||||||||||||||||||||||
| Issuance of restricted common shares | — | — | 16,525 | — | — | — | — | — | — | ||||||||||||||||||||||||
| Vesting and forfeitures of restricted common shares, net | — | — | (8,530 | ) | — | (51 | ) | — | — | — | (51 | ) | |||||||||||||||||||||
| Reduction in receivables from partners of OP | — | — | — | — | — | — | — | 812 | 812 | ||||||||||||||||||||||||
| Preferred share dividends | — | — | — | — | — | (2,300 | ) | — | — | (2,300 | ) | ||||||||||||||||||||||
| Common share dividends | — | — | — | — | — | (47,671 | ) | — | — | (47,671 | ) | ||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | (58,234 | ) | (58,234 | ) | ||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | 2,583 | 1,660 | 4,243 | ||||||||||||||||||||||||
| Net income | — | — | — | — | — | 2,961 | — | 43,037 | 45,998 | ||||||||||||||||||||||||
| Balances, December 31, 2017 | 6,900,000 | $ | 172,500 | 50,284,934 | $ | 503 | $ | 711,467 | $ | (55,729 | ) | $ | 12,282 | $ | 430,464 | $ | 1,271,487 | ||||||||||||||||
See notes to consolidated financial statements.
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
| Year Ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| OPERATING ACTIVITIES | |||||||||||||||||
| Net income | $ | 236,988 | $ | 183,765 | $ | 146,935 | |||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
| Depreciation and amortization | 221,993 | 233,158 | 158,312 | ||||||||||||||
| Amortization of debt issuance costs | 6,535 | 4,423 | 3,438 | ||||||||||||||
| Amortization of debt discount and premium, net | (561) | (698) | (708) | ||||||||||||||
| Gain on sale of self storage properties | (63,910) | (5,466) | — | ||||||||||||||
| Other | 969 | 992 | — | ||||||||||||||
| Equity-based compensation expense | 6,679 | 6,258 | 5,462 | ||||||||||||||
| Equity in (earnings) of unconsolidated real estate ventures | (7,553) | (7,745) | (5,294) | ||||||||||||||
| Distributions from unconsolidated real estate ventures | 23,635 | 23,535 | 19,640 | ||||||||||||||
| Change in assets and liabilities, net of effects of self storage property acquisitions: | |||||||||||||||||
| Other assets | 1,226 | (10,206) | (3,159) | ||||||||||||||
| Accounts payable and accrued liabilities | 12,228 | 16,519 | 8,404 | ||||||||||||||
| Deferred revenue | 3,347 | (688) | (1,681) | ||||||||||||||
| Net Cash Provided by Operating Activities | 441,576 | 443,847 | 331,349 | ||||||||||||||
| INVESTING ACTIVITIES | |||||||||||||||||
| Acquisition of self storage properties | (48,725) | (496,358) | (1,966,382) | ||||||||||||||
| Capital expenditures | (34,230) | (42,798) | (27,577) | ||||||||||||||
| Investments in and advances to unconsolidated real estate ventures | — | (55,044) | — | ||||||||||||||
| Deposits and advances for self storage property and other acquisitions | — | — | (800) | ||||||||||||||
| Expenditures for corporate furniture, equipment and other | (1,318) | (928) | (426) | ||||||||||||||
| Acquisition of management company assets and interest in reinsurance company from PRO retirement | (16,924) | — | (2,865) | ||||||||||||||
| Net proceeds from sale of self storage properties | 262,302 | 10,963 | — | ||||||||||||||
| Net Cash Provided by (Used In) Investing Activities | 161,105 | (584,165) | (1,998,050) | ||||||||||||||
| FINANCING ACTIVITIES | |||||||||||||||||
| Proceeds from issuance of common shares | — | — | 900,980 | ||||||||||||||
| Borrowings under debt financings | 1,318,815 | 1,572,000 | 2,348,500 | ||||||||||||||
| Receipts for OP unit subscriptions | — | — | 103 | ||||||||||||||
| Repurchase of common shares | (310,152) | (90,109) | — | ||||||||||||||
| Principal payments under debt financings | (1,210,630) | (960,372) | (1,322,169) | ||||||||||||||
| Payment of dividends to common shareholders | (190,907) | (195,699) | (131,708) | ||||||||||||||
| Payment of dividends to preferred shareholders | (19,019) | (13,425) | (13,104) | ||||||||||||||
| Distributions to noncontrolling interests | (141,474) | (141,000) | (102,231) | ||||||||||||||
| Debt issuance costs | (3,820) | (15,981) | (5,280) | ||||||||||||||
| Equity offering costs | — | (772) | (2,216) | ||||||||||||||
| Net Cash (Used in) Provided by Financing Activities | (557,187) | 154,642 | 1,672,875 | ||||||||||||||
| Increase in Cash, Cash Equivalents and Restricted Cash | 45,494 | 14,324 | 6,174 | ||||||||||||||
| Year Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 45,998 | $ | 24,866 | $ | 4,796 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 75,115 | 55,064 | 40,651 | ||||||||
| Amortization of debt issuance costs | 2,175 | 1,955 | 2,714 | ||||||||
| Amortization of debt discount and premium, net | (1,570 | ) | (2,051 | ) | (1,747 | ) | |||||
| Loss on debt extinguishment | — | 136 | 414 | ||||||||
| Unrealized loss on fair value of derivatives | — | — | 68 | ||||||||
| Gain on sale of self storage properties | (5,715 | ) | — | — | |||||||
| LTIP units issued for acquisition expenses | — | 56 | 1,020 | ||||||||
| Equity-based compensation expense | 3,764 | 2,597 | 3,027 | ||||||||
| Equity in losses of unconsolidated real estate venture | 2,339 | 1,484 | — | ||||||||
| Distributions from unconsolidated real estate venture | 5,093 | 730 | — | ||||||||
| Change in assets and liabilities, net of effects of self storage property acquisitions: | |||||||||||
| Other assets | (2,398 | ) | (1,994 | ) | (680 | ) | |||||
| Accounts payable and accrued liabilities | 1,200 | 8,386 | 269 | ||||||||
| Deferred revenue | (1,713 | ) | 3,417 | (198 | ) | ||||||
| Net Cash Provided by Operating Activities | 124,288 | 94,646 | 50,334 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Acquisition of self storage properties | (391,619 | ) | (532,030 | ) | (170,180 | ) | |||||
| Capital expenditures | (14,656 | ) | (11,418 | ) | (4,072 | ) | |||||
| Investments in and advances to unconsolidated real estate venture | (15,289 | ) | (82,950 | ) | — | ||||||
| Distributions from unconsolidated real estate venture | 250 | — | — | ||||||||
| Acquisition of property management platform | — | (19,933 | ) | — | |||||||
| Deposits and advances for self storage property and other acquisitions | (4,923 | ) | (345 | ) | (738 | ) | |||||
| Expenditures for corporate furniture, equipment and other | (588 | ) | (527 | ) | (418 | ) | |||||
| Net proceeds from sale of self storage properties | 17,534 | 4,823 | — | ||||||||
| Net Cash Used In Investing Activities | (409,291 | ) | (642,380 | ) | (175,408 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from issuance of common shares | 140,261 | 378,281 | 278,070 | ||||||||
| Proceeds from issuance of preferred shares | 166,566 | — | — | ||||||||
| Proceeds from issuance of subordinated performance units | 7,000 | — | — | ||||||||
| Borrowings under debt financings | 760,900 | 812,500 | 258,443 | ||||||||
| Receipts for OP unit subscriptions | 1,150 | 1,344 | 1,015 | ||||||||
| Collection of receivables from issuance of OP equity | — | 930 | 774 | ||||||||
| Principal payments under debt financings | (679,104 | ) | (558,597 | ) | (357,273 | ) | |||||
| Payment of dividends to common shareholders | (47,671 | ) | (26,695 | ) | (12,429 | ) | |||||
| Payment of dividends to preferred shareholders | (2,300 | ) | — | — | |||||||
| Distributions to noncontrolling interests | (57,314 | ) | (47,005 | ) | (37,992 | ) | |||||
See notes to consolidated financial statements.
NATIONAL STORAGE AFFILIATES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(dollars in thousands)
| Year Ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||||||||||||||||
| Beginning of year | 42,199 | 27,875 | 21,701 | ||||||||||||||
| End of year | $ | 87,693 | $ | 42,199 | $ | 27,875 | |||||||||||
| Supplemental Cash Flow Information | |||||||||||||||||
| Cash paid for interest | $ | 143,622 | $ | 99,433 | $ | 66,918 | |||||||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | |||||||||||||||||
| Consideration exchanged in property acquisitions: | |||||||||||||||||
| Issuance of Series A-1 preferred units, OP units, LTIP units, and subordinated performance units | $ | 67,266 | $ | 72,116 | $ | 195,101 | |||||||||||
| Issuance of Series B preferred shares | 113,129 | — | — | ||||||||||||||
| Deposits on acquisitions applied to purchase price | — | 800 | 1,087 | ||||||||||||||
| Other net liabilities assumed | 185 | 2,890 | 14,232 | ||||||||||||||
| Change in accrued capital spending | 1,260 | 57 | (1,846) | ||||||||||||||
| Year Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| Debt issuance costs | (2,381 | ) | (5,665 | ) | (1,848 | ) | |||||
| Equity offering costs | (1,034 | ) | (1,399 | ) | (5,438 | ) | |||||
| Net Cash Provided by Financing Activities | 286,073 | 553,694 | 123,322 | ||||||||
| Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | 1,070 | 5,960 | (1,752 | ) | |||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||||||||||
| Beginning of year | 15,337 | 9,377 | 11,129 | ||||||||
| End of year | $ | 16,407 | $ | 15,337 | $ | 9,377 | |||||
| Supplemental Cash Flow Information | |||||||||||
| Cash paid for interest | $ | 32,951 | $ | 23,313 | $ | 20,206 | |||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | |||||||||||
| Consideration exchanged in property acquisitions: | |||||||||||
| Issuance of OP units and subordinated performance units | $ | 30,327 | $ | 120,952 | $ | 42,113 | |||||
| Deposits on acquisitions applied to purchase price | 350 | 631 | 745 | ||||||||
| LTIP units vesting upon acquisition of properties | 854 | 814 | 1,402 | ||||||||
| Assumption of mortgages payable | — | 61,628 | 73,498 | ||||||||
| Note payable to related party to settle assumed mortgages | — | — | 5,342 | ||||||||
| Other net liabilities assumed | 3,616 | 4,817 | 511 | ||||||||
| Notes receivable settled upon acquisition of properties | — | — | 1,778 | ||||||||
| Fair value of noncontrolling interests in acquired subsidiaries | — | — | 21,137 | ||||||||
| Issuance of OP unit subscription liability through reduced distributions | 1,262 | 1,441 | 1,416 | ||||||||
| Settlement of acquisition receivables through reduced distributions | 812 | 445 | 1,473 | ||||||||
| Increase in OP unit subscription liability through reduced distributions | 108 | 310 | 498 | ||||||||
| Increase (decrease) in payables for offering costs | 600 | 593 | (1,379 | ) | |||||||
| Settlement of offering expenses from equity issuance proceeds | 12,299 | 11,673 | 20,930 | ||||||||
See notes to consolidated financial statements.
1. ORGANIZATION AND NATURE OF OPERATIONS
National Storage Affiliates Trust was organized in the state of Maryland on May 16, 2013 and is a fully integrated, self-administered and self-managed real estate investment trust focused on the self storage sector. As used herein, "NSA," the "Company," "we," "our," and "us" refers to National Storage Affiliates Trust and its consolidated subsidiaries, except where the context indicates otherwise. The Company completed its initial public offering on April 28, 2015 and has elected and believes that it has qualified to be taxed as a real estate investment trust for U.S. federal income tax purposes ("REIT") commencing with its taxable year ended December 31, 2015.
Through its controlling interest as the sole general partner of NSA OP, LP (its "operating partnership"), a Delaware limited partnership formed on February 13, 2013, the Company is focused on the ownership, operation, and acquisition of self storage properties predominantly located within the top 100 metropolitan statistical areas ("MSAs")MSAs in the United States. Pursuant to the Agreement of Limited Partnership (as amended, the "LP Agreement") of its operating partnership, the Company's operating partnership is authorized to issue preferred units, Class A Units ("OP units"), different series of Class B Units ("subordinated performance units"), and Long-Term Incentive Plan Units ("LTIP units"). The Company also owns certain of its self storage properties through other consolidated limited partnership subsidiaries of its operating partnership, which the Company refers to as "DownREIT partnerships." The DownREIT partnerships issue equity ownership interests that are intended to be economically equivalent to the Company's OP units ("DownREIT OP units") and subordinated performance units ("DownREIT subordinated performance units").
The Company owned 444809 consolidated self storage properties in 2638 states and Puerto Rico with approximately 27.251.9 million rentable square feet (unaudited) in approximately 215,000407,000 storage units as of December 31, 2017.2023, which excludes self storage properties classified as held for sale consisting of (i) 39 self storage properties located in eight states, comprising approximately 2.4 million rentable square feet, configured in approximately 18,000 storage units to be sold to a third party in 2024 and (ii) 56 self storage properties located in seven states, comprising approximately 3.2 million rentable square feet, configured in approximately 24,000 storage units that were contributed to the 2024 Joint Venture in 2024. These properties are managed with local operational focus and expertise by the Company and its participating regional operators ("PROs"). TheseAs of December 31, 2023, these PROs are SecurCare Self Storage, Inc. and its controlled affiliates ("SecurCare"), Kevin Howard Real Estate Inc., d/b/a Northwest Self Storage and its controlled affiliates ("Northwest"), Optivest Properties LLC and its controlled affiliates ("Optivest"), Guardian Storage Centers LLC and its controlled affiliates ("Guardian"), Move ItSouthern Storage Management Systems, Inc. d/b/a Southern Self Storage ("Southern"), Blue Sky Self Storage LLC, a strategic partnership between Argus Professional Storage Management and Uplift Development Group (formerly known as GYS Development LLC) ("Blue Sky"), affiliates of Investment Real Estate Management, LLC d/b/a Moove In Self Storage ("Moove In"), Hide-Away Storage Services, Inc. and its controlled affiliates ("Move It"Hide-Away"), Arizona Mini Storage Management Company d/b/a Storage Solutions and its controlled affiliates ("Storage Solutions"), Hide-Away Storage Services, Inc. and its controlled affiliates ("Hide-Away") and an affiliate of Shader Brothers Corporation d/b/a Personal Mini Storage ("Personal Mini").
Effective January 1, 2022, Northwest retired as one of the Company's PROs. As a result of the retirement, on January 1, 2022, management of our properties in the Northwest managed portfolio was transferred to the Company and the Northwest brand name and related intellectual property was internalized by the Company, and the Company discontinued payment of any supervisory and administrative fees or reimbursements to Northwest.
Effective January 1, 2023, one of our PROs, Move It Self Storage and its controlled affiliates, retired as one of the Company's PROs. As a result of the retirement, on January 1, 2023, management of our properties in the Move It managed portfolio was transferred to the Company and the Move It brand name and related intellectual property was internalized by the Company, and the Company discontinued payment of any supervisory and administrative fees or reimbursements to Move It.
As of December 31, 2023, 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 13.5 million rentable square feet, configured in approximately 111,000 storage units and located across 21 states. The Company owns a 25% equity interest in each of its unconsolidated real estate ventures.
As of December 31, 2023, in total, the Company operated and held ownership interests in 1,050 self storage properties located across 42 states and Puerto Rico with approximately 68.6 million rentable square feet in approximately 542,000 storage units, excluding 39 self storage properties classified as held for sale located in eight states, comprising approximately 2.4 million rentable square feet, configured in approximately 18,000 storage units to be sold to a third party in 2024.
Information with respect to the square feet and number of storage units in each of the notes is unaudited.
F-13
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles ("GAAP").
Principles of Consolidation
The Company's consolidated financial statements include the accounts of its operating partnership and its controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidation of entities.
When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if the entity is deemed a variable interest entity ("VIE"), and if the Company is deemed to be the primary beneficiary, in accordance with authoritative guidance issued on the consolidation of VIEs. When an entity is not deemed to be a VIE, the Company considers the provisions of additional guidance to determine whether the general partner controls a limited partnership or similar entity when the limited partners have certain rights. The Company consolidates all entities that are VIEs and of which the Company is deemed to be the primary beneficiary. The Company has determined that its operating partnership is a VIE. The sole significant asset of National Storage Affiliates Trust is its investment in its operating partnership, and consequently, substantially all of the Company's assets and liabilities represent those assets and liabilities of its operating partnership.
As of December 31, 2017,2023, the Company's operating partnership was the primary beneficiary of, and therefore consolidated, 2122 DownREIT partnerships that are considered VIEs, which owned 3449 self storage properties. The net book value of the real estate owned by these VIEs was $248.0$418.9 million and $256.8$412.9 million as of December 31, 20172023 and December 31, 2016,2022, respectively. For certain DownREIT partnerships which are subject to fixed rate mortgages payable, the carrying value of such fixed rate mortgages payable held by these VIEs was $140.3$188.7 million and $41.4
$188.7 million as of December 31, 20172023 and December 31, 2016,2022, respectively. The creditors of the consolidated VIEs do not have recourse to the Company's general credit.
Noncontrolling Interests
All of the limited partner equity interests ("OP equity") in its operating partnership not held by the Company are reflected as noncontrolling interests. Noncontrolling interests also include ownership interests in DownREIT partnerships held by entities other than the Company's operating partnership. In the consolidated statements of operations, the Company allocates net income (loss) attributable to noncontrolling interests to arrive at net income (loss) attributable to National Storage Affiliates Trust.
For transactions that result in changes to the Company's ownership interest in its operating partnership, the carrying amount of noncontrolling interests is adjusted to reflect such changes. The difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interests is adjusted is reflected as an adjustment to additional paid-in capital on the consolidated balance sheets.
Self Storage Properties
Self storage properties are carried at historical cost less accumulated depreciation and any impairment losses. Major replacements and betterments, which improve or extend the life of an asset, are capitalized. Expenditures for ordinary repairs and maintenance are expensed as incurred and are included in property operating expenses. Estimated depreciable lives of self storage properties are determined by considering the age and other indicators about the condition of the assets at the respective dates of acquisition, resulting in a range of estimated useful lives for assets within each category. All self storage property assets are depreciated using the straight-line method. Buildings and improvements are depreciated over estimated useful lives primarily between seven and 40 years; furniture and equipment are depreciated over estimated useful lives primarily between three and 10 years.
When a self storage property is acquired, the purchase price of the acquired self storage property is allocated to land, buildings and improvements, furniture and equipment, customer in-place leases, assumed real estate leasehold interests, and other assets acquired and liabilities assumed, based on the estimated fair value of each component. When a portfolio of self storage properties is acquired, the purchase price is allocated to the individual self storage properties based on the fair value determined using an income approach with appropriate risk-adjusted capitalization rates, which take into account the relative size, age and location of the individual self storage properties.
F-14
Cash and Cash Equivalents
The Company considers all highly-liquid investments purchased with original maturities of three months or less to be cash equivalents. From time to time, the Company maintains cash balances in financial institutions in excess of federally insured limits. The Company has never experienced a loss that resulted from exceeding federally insured limits.
Restricted Cash
The Company's restricted cash consists of escrowed funds deposited with financial institutions resulting from property sales for which we elected to purchase replacement property in accordance with Section 1031 of the Code, for real estate taxes, insurance and other reserves for capital improvements in accordance with the Company's loan agreements.
Customer In-place Leases
In allocating the purchase price for a self storage property acquisition, the Company determines whether the acquisition includes intangible assets. The Company allocates a portion of the purchase price to an intangible asset attributed to the value of customer in-place leases. This intangible asset is amortized to expense using the straight-line method over 12 months, the estimated average rental period for the Company's customers. Amortization expense for customer in-place leases amounted to $13.5 million, $12.0 million and $12.0 million for the years ended December 31, 2017, 2016 and 2015, respectively.leases. Substantially all of the leases in place at acquired properties are at market rates, as the leases are month-to-month contracts.
Impairment of Long-Lived Assets
The Company evaluates long-lived assets for impairment when events and circumstances indicate that there may be impairment. When events or changes in circumstances indicate that the Company's long-lived assets may not be recoverable, the carrying value of these long-lived assets is compared to the undiscounted future net operating cash flows, plus a terminal value attributable to the assets. If an asset's carrying value is not considered recoverable, an impairment loss is recorded to the extent the net carrying value of the asset exceeds the fair value. For the periods presented, no assets were determined to be impaired under this policy.
Long Lived Assets Held for Sale
The Company considers long-lived assets to be “held for sale” upon satisfaction of the following criteria: (a) management commits to a plan to sell an asset (or group of assets), (b) the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets, (c) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated, (d) the sale of the asset is probable and transfer of the asset is expected to be completed within one year, (e) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value and (f) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Typically these criteria are all met when the relevant asset is under contract, significant non-refundable deposits have been made by the potential buyer, the assets are immediately available for transfer, and there are no contingencies related to the sale that may prevent the transaction from closing. However, each potential transaction is evaluated based on its separate facts and circumstances. Assets classified as held for sale are reported at the lesser of carrying value or fair value less estimated costs to sell and are not depreciated. As of December 31, 2023, the Company had $550.2 million of self storage properties classified as held for sale, consisting of 39 self storage properties to be sold to a third party in 2024 and 56 self storage properties that were contributed to the 2024 Joint Venture in February 2024. The Company measured the self storage properties' fair value based on the contracted sale price and determined there was no impairment of these properties. There were no self storage properties held for sale as of December 31, 2022.
Costs of Raising Capital
Commissions, legal fees and other costs that are directly associated with equity offerings are capitalized as deferred offering costs, pending a determination of the success of the offering. Deferred offering costs related to successful offerings are charged to additional paid-in capital within equity in the period it is determined that the offering was successful.
F-15
Debt issuance costs are amortized over the estimated life of the related debt using the straight-line method, which approximates the effective interest rate method. Amortization of debt issuance costs is included in interest expense in the accompanying consolidated statements of operations.
Revenue Recognition
Rental revenue
Rental revenue consists of space rentals and related fees. Management has determined that all of the Company's leases are operating leases. Substantially all leases may be terminated on a month-to-month basis and rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term.
Other property-related revenue
Other property-related revenue primarily consists of ancillary revenues such as tenant insurance-relatedinsurance and/or tenant warranty protection-related access fees and commissions and sales of storage supplies which are recognized in the period earned.
The Company recognizes gains from disposition of facilities only upon closing in accordance with the guidance on sales of real estate. Payments received from purchasers prior to closing are recorded as deposits. Profit on real estate sold is recognized using the full accrual method upon closing when the collectabilityand certain of the sales price is reasonably assuredCompany’s PROs have tenant insurance- and/or tenant warranty protection plan-related arrangements with insurance companies and the Company’s tenants. During the years ended December 31, 2023, 2022 and 2021, the Company is not obligated to perform significant activities after the sale. Profit may be deferred in whole or part until the sale meets the requirementsrecognized $24.1 million, $19.8 million and $15.0 million, respectively, of profit recognition on sales under this guidance.tenant insurance and tenant warranty protection plan revenues.
The Company earns managementsells boxes, packing supplies, locks and other retail merchandise at its properties. During the years ended December 31, 2023, 2022 and 2021, the Company recognized retail sales of $2.3 million, $2.6 million and $2.3 million, respectively.
Management fees and other revenue
Management fees and other revenue consist of property management fees, platform fees, call center fees, acquisition fees, and a portion of tenant warranty protection or tenant insurance proceeds that the Company earns for managing and operating its unconsolidated real estate venture. Theseventures.
With respect to both the 2018 Joint Venture and the 2016 Joint Venture, the Company provides supervisory and administrative property management services, centralized call center services, and technology platform and revenue management services to the properties in the unconsolidated real estate ventures. The property management fees includeare equal to 6% of monthly gross revenues and net sales revenues from the assets of the unconsolidated real estate ventures, and the platform fees are equal to $1,250 per month per unconsolidated real estate venture property. With respect to the 2016 Joint Venture only, the call center fees are equal to 1% of each of monthly gross revenues and net sales revenues from the 2016 Joint Venture properties. During the years ended December 31, 2023, 2022 and 2021, the Company recognized property management fees, call center fees and platform fees of $16.8 million, $16.5 million and $14.8 million, respectively.
The Company also earns acquisition fees developmentfor properties acquired by the unconsolidated real estate ventures subsequent to the Initial 2016 JV Portfolio and the Initial 2018 JV Portfolio. These fees are based on a percentage of the gross capitalization of the acquired assets determined by the members of the 2016 Joint Venture and a portionthe 2018 Joint Venture, and are generally earned when the unconsolidated real estate ventures obtain title and control of an acquired property. During the years ended December 31, 2023, 2022 and 2021, the Company recognized acquisition fees of $0, $1.2 million and $0.8 million, respectively.
The Company provides or makes available tenant insurance or tenant warranty protection proceeds. The Company recognizes these fees when they are earned, fixed and determinable. The fees are reported in management fees and other revenueprograms for tenants at its properties. For certain of the properties in the Company'sCompany’s consolidated statementsportfolio and unconsolidated real estate ventures, the Company provides such tenant insurance through the Company’s wholly-owned captive insurance company and a separate reinsurance company in which the Company has a partial ownership interest. With respect to properties in both of operations.the Company’s unconsolidated real estate ventures, the Company receives 50% of all proceeds from tenant insurance and tenant warranty protection programs at each unconsolidated real estate venture property in exchange for facilitating the programs at those properties. During the years ended December 31, 2023, 2022 and 2021, the Company recognized $17.2 million, $9.5 million and $7.3 million, respectively, of revenue related to these activities.
F-16
Advertising Costs
The Company incurs advertising costs primarily attributable to internet, directory and other advertising. Advertising costs are included in property operating expenses in the accompanying consolidated statements of operations. These costs are expensed in the period in which the cost is incurred. The Company incurred advertising costs of $3.7$15.3 million, $3.1$10.0 million and $2.4$6.6 million for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively.
Acquisition Costs
The Company incurs title, legal and consulting fees, and other costs associated with the completion of acquisitions. During the year ended December 31, 2017, the Company adopted Accounting Standards Update ("ASU") 2017-01 and as a result, theThe Company's self storage property acquisitions during the year ended December 31, 2017 wereare accounted for as asset acquisitions, and accordingly, acquisition costs directly related to the self storage property acquisitions were capitalized as part of the basis of the acquired properties. Indirect acquisition costs remain included in acquisition costs in the accompanying statements of operations in the period in which they were incurred. Prior to the Company's adoption of ASU 2017-01, direct and indirect costs were included in acquisition costs in the accompanyingconsolidated statements of operations in the period in which they were incurred.
Income Taxes
The Company has elected and believes it has qualified to be taxed as a REIT under sections 856 through 860 of the U.S. Internal Revenue Code (the "Code") commencing with the taxable year ended December 31, 2015. To qualify as a REIT, among other things, the Company is required to distribute at least 90% of its REIT taxable income to its shareholders and meet certain tests regarding the nature of its income and assets. As a REIT, the Company is not subject to federal income tax on the earnings distributed currently to its shareholders that it derives from its REIT qualifying activities. If the Company fails to qualify as a REIT in any taxable year, and is unable to avail itself of certain provisions set forth in the Code, all of the Company's taxable income would be subject to federal and state income taxes at regular corporate rates.
The Company will not be required to make distributions with respect to income derived from the activities conducted through subsidiaries that the Company elects to treat as taxable REIT subsidiaries ("TRS") for federal income tax purposes. Certain activities that the Company undertakes must be conducted by a TRS, such as performing non-customary services for its customers, facilitating sales by PROs of tenant insurance and holding assets that the Company is not permitted to hold directly. A TRS is subject to federal and state income taxes.
On June 25, 2014, the Company formed NSA TRS, LLC ("NSA TRS"), a Delaware limited liability company. The Company has elected to treat NSA TRS as a TRS, and consequently, NSA TRS is subject to U.S. federal and state corporate income taxes. Deferred tax assets and liabilities are recognized to the extent of any differences between the financial reporting and tax bases of assets and liabilities. No material deferred tax assets and liabilities were recorded as of December 31, 20172023 and 2016.2022.
The Company did not have any unrecognized tax benefits related to uncertain tax positions as of December 31, 20172023 and 2016.2022. Future amounts of accrued interest and penalties, if any, related to uncertain tax positions will be recorded as a component of income tax expense. The Company does not expect that the amount of unrecognized tax benefits will change significantly in the next 12 months.
The Company's material taxing jurisdiction is the U.S. federal jurisdiction; the 20142020 tax year is the earliest period that remains open to examination by these taxing jurisdictions.
Earnings per Share
Basic earnings per share is calculated based on the weighted average number of the Company's common shares of beneficial interest, $0.01 par value per share ("common shares"), outstanding during the period. Diluted earnings per share is calculated by further adjusting for the dilutive impact using the treasury stock method for any share options and unvested share equivalents outstanding during the period and the if-converted method for any convertible securities outstanding during the period.
As more fully described below under "–Allocation of Net Income (Loss)", the Company allocates GAAP income (loss) utilizing the hypothetical liquidation at book value ("HLBV") method, which could result in net income (or net loss) attributable to National Storage Affiliates Trust during a period when the Company reports consolidated net loss (or net income), or net income (or net loss) attributable to National Storage Affiliates Trust in excess of the Company's consolidated net income (or net loss). The computations of basic and diluted earnings (loss) per share may be materially affected by these disproportionate income (loss) allocations, resulting in volatile fluctuations of basic and diluted earnings (loss) per share.
F-17
Equity-Based Awards
The measurement and recognition of compensation cost for all equity-based awards granted to officers, trustees, employees and consultants is based on estimated fair values. Compensation cost is recognized on a straight-line basis over the requisite service periods of each award with non-graded vesting. For awards granted which contain a graded vesting schedule and the only condition for vesting is a service condition, compensation cost is recognized as an expense on a straight-line basis over the requisite service period as if the award was, in substance, a single award. For awards granted for which vesting is subject to a performance condition, including awards that vested upon completion of the Company's initial public offering, compensation cost is recognized over the requisite service period if and when the Company concludes it is probable that the performance condition will be achieved.
The estimated fair value of all equity-based awards issued to PROs and their affiliates in connection with self storage property acquisitions is included in the cost of the respective acquisitions. The estimated fair value of such awards is measured at the date the self storage properties are acquired, as this date represents satisfaction of the performance condition and coincides with the award vesting.
Derivative Financial Instruments
The Company carries all derivative financial instruments on the consolidated balance sheet at fair value. Fair value of derivatives is determined by reference to observable prices that are based on inputs not quoted on active markets, but corroborated by market data. The accounting for changes in the fair value of a derivative instrument depends on whether the derivative has been designated and qualifies as part of a hedging relationship. The Company's use of derivative instruments has been limited to interest rate swap and cap agreements. The fair values of derivative instruments are included in other assets and accounts payable and accruedinterest rate swap liabilities in the accompanying consolidated balance sheets. For derivative instruments not designated as cash flow hedges, the unrealized gains and losses are included in interest expense in the accompanying consolidated statements of operations. For derivatives designated as cash flow hedges, the effective portion of the changes in the fair value of the derivatives is initially reported in accumulated other comprehensive income (loss) in the Company's consolidated balance sheets and subsequently reclassified into earnings when the hedged transaction affects earnings.
The valuation of interest rate swap and cap agreements is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate forward curves. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
Fair Value Measurements
When measuring fair value of financial instruments that are required to be recorded or disclosed at fair value, the Company uses a three-tier measurement hierarchy which prioritizes the inputs used to calculate fair value. These tiers include Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
F-18
Investments in Unconsolidated Real Estate VentureVentures
The Company’s investmentinvestments in its unconsolidated real estate venture isventures are recorded under the equity method of accounting in the accompanying consolidated financial statements.
Under the equity method, the Company’s investmentinvestments in unconsolidated real estate venture isventures are stated at cost and adjusted for the Company’s share of net earnings or losses and reduced by distributions. Equity in earnings (losses) is recognized based on the Company’s ownership interest in the earnings (losses) of the unconsolidated real estate venture.ventures. The Company follows the "look through" approach"nature of the distribution approach" for classification of distributions from jointits unconsolidated real estate ventures in its consolidated statements of cash flows. Under this approach, distributions are reported underon the basis of the nature of the activity or activities that generated the distributions as either a return on investment, which are classified as operating cash flow unless the facts and circumstances of a specific distribution clearly indicate that it isflows, or a return of capitalinvestment (e.g., proceeds from the unconsolidated real estate venture’sventures' sale of assets), in which case it isare reported as an investing activity.cash flows.
Segment Reporting
The Company manages its business as one reportable segment consisting of investments in self storage properties located in the United States. Although the Company operates in several markets, these operations have been aggregated into one reportable segment based on the similar economic characteristics amongstamong all markets.
Allocation of Net Income (Loss)
The distribution rights and priorities set forth in the operating partnership's LP Agreement differ from what is reflected by the underlying percentage ownership interests of the operating partnership's unitholders. Accordingly, the Company allocates GAAP income (loss) utilizing the HLBV method, in which the Company allocates income or loss based on the change in each unitholders’ claim on the net assets of its operating partnership at period end after adjusting for any distributions or contributions made during such period. The HLBV method is commonly applied to equity investments where cash distribution percentages vary at different points in time and are not directly linked to an equity holder’s ownership percentage.
The HLBV method is a balance sheet-focused approach to income (loss) allocation. A calculation is prepared at each balance sheet date to determine the amount that unitholders would receive if the operating partnership were to liquidate all of its assets (at GAAP net book value) and distribute the resulting proceeds to its creditors and unitholders based on the contractually defined liquidation priorities. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is used to derive each unitholder's share of the income (loss) for the period. Due to the stated liquidation priorities and because the HLBV method incorporates non-cash items such as depreciation expense, in any given period, income or loss may be allocated disproportionately to unitholders as compared to their respective ownership percentage in the operating partnership, and net income (loss) attributable to National Storage Affiliates Trust could be more or less net income than actual cash distributions received and more or less income or loss than what may be received in the event of an actual liquidation. Additionally, the HLBV method could result in net income (or net loss) attributable to National Storage Affiliates Trust during a period when the Company reports consolidated net loss (or net income), or net income (or net loss) attributable to National Storage Affiliates Trust in excess of the Company's consolidated net income (or net loss). The computations of basic and diluted earnings (loss) per share may be materially affected by these disproportionate income (loss) allocations, resulting in volatile fluctuations of basic and diluted earnings (loss) per share.
Other Comprehensive Income (Loss)
The Company has cash flow hedge derivative instruments that are measured at fair value with unrealized gains or losses recognized in other comprehensive income (loss) with a corresponding adjustment to accumulated other comprehensive income (loss) within equity, as discussed further in Note 13.14. Under the HLBV method of allocating income (loss) discussed above, a calculation is prepared at each balance sheet date by applying the HLBV method including, and excluding, the assets and liabilities resulting from the Company's cash flow hedge derivative instruments to determine comprehensive income (loss) attributable to National Storage Affiliates Trust. As a result of the distribution rights and priorities set forth in the operating partnership's LP Agreement, in any given period, other comprehensive income (loss) may be allocated disproportionately to unitholders as compared to their respective ownership percentage in the operating partnership and as compared to their respective allocation of net income (loss).
F-19
Gain on sale of self storage properties
The Company classifiesrecognizes gains from disposition of properties as held for saleonly upon closing in accordance with the guidance on sales of nonfinancial assets. Profit on real estate sold is recognized upon closing when certain criteria are met. At such time,all, or substantially all, of the properties, including significant assetspromised consideration has been received and liabilities that are expected to be transferred as part of a sale transaction, are presented separately on the consolidated balance sheet at the lower of carrying value or estimated fair value less costs to sellis nonrefundable and depreciation is no longer recognized. As of December 31, 2017 and 2016, the Company had one and two self storage properties classified as held for sale, respectively. The resultshas transferred control of operations for the self storage properties classified as held for sale are reflected within income from operations infacilities to the Company's consolidated statements of operations.purchaser.
Goodwill
Goodwill represents the costs of business acquisitions in excess of the fair value of identifiable net assets acquired. The Company evaluates goodwill for potential impairment annually, or whenever impairment indicators are present. The Company determined that there was no impairment to goodwill during the years ended December 31, 20172023 and 2016.2022.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications
Certain amounts in the consolidated financial statements and related notes have been reclassified to conform to the current year presentation. Such reclassifications do not impact the Company's previously reported financial position or net income (loss).
In May 2014,November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers, which2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within the segment measure of profit or loss, an entityamount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM. ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. Pursuant to this ASU, the footnotes to our consolidated financial statements will include incremental disclosures related to our single reportable segment, including the disclosures about our CODM’s review of our consolidated net operating income, the profit/loss measure of our single reportable segment and a reconciliation of consolidated net operating income to our consolidated net income.
In August 2023, the FASB issued ASU 2023-05, Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement ("ASU 2023-05"). ASU 2023-05 requires a joint venture, upon formation to measure its assets and liabilities at fair value in its standalone financial statements. A joint venture will recognize the amountdifference between the fair value of revenue to which it expects toits equity and the fair value of its identifiable assets and liabilities as goodwill (or an equity adjustment, if negative) using the business combination accounting guidance regardless of whether the net assets meet the definition of a business. ASU 2023-05 will be entitledapplied prospectively and is effective for the transfer of promised goodsall joint ventures formed on or services to customers.after January 1, 2025. The Company has completed its analysis ofis currently evaluating ASU 2014-092023-05 and concluded that its adoption of ASU 2014-09 willdoes not expect it to have a material effect on its consolidated financial statements and related disclosures. The Company adopted ASU 2014-09 effective January 1, 2018.
3. SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS
Shareholders' Equity
Common Share OfferingsOffering
On December 11, 2017,July 23, 2021, the Company closed a follow-on public offering of 5,750,00010,120,000 of its common shares, which included 750,0001,320,000 common shares sold upon the exercise in full by the underwriters of their option to purchase additional common shares, at a public offering price of $25.50$51.25 per share. The Company received aggregate net proceeds from the offering of approximately $140.3$497.4 million after deducting the underwriting discount and additional expenses associated with the offering.
Series A Preferred Shares
Series B Preferred Shares
On March 15, 2023, the Company classified 7,000,000 of the Company's authorized but unissued preferred shares of beneficial interest as 6.000% Series B Cumulative Redeemable Preferred Shares ("Series B Preferred Shares"). The Series B Preferred Shares rank senior to the Company’s common shares of beneficial interest, and on parity with the Company’s Series A Preferred Shares and any future equity shares that the Company may later authorize or issue and that by their terms are on parity with the Series B Preferred Shares, and junior to any other class of the Company’s shares expressly designated as ranking senior to the Series B Preferred Shares. The Series B Preferred Shares have a per share liquidation preference of $25.00 per share and receive distributions at an annual rate of 6.000%. These distributions are payable quarterly in arrears on or about the last day of March, June, September and December of each year, beginning on June 30, 2023. The first dividend was a pro rata dividend from and including March 16, 2023, to and including June 30, 2023. Generally, Series B Preferred Shares are not redeemable by the Company prior to September 15, 2043.
On March 16, 2023, the Company issued 5,668,128 Series B Preferred Shares for approximately $139.6 million, to shareholders of an affiliate of Personal Mini, in connection with the acquisition of a portfolio of 15 properties. As part of the acquisition transaction, the Company recorded a $26.1 million promissory note receivable from an affiliate of Personal Mini. Proceeds from the promissory note were used by the affiliate of Personal Mini to acquire $26.1 million of subordinated performance units. The promissory note bears interest at a rate equivalent to the dividends paid on 1,059,683 of the Series B Preferred Shares. As a result of these agreements, in accordance with GAAP, the $26.1 million promissory note receivable, interest income on the note receivable, $26.1 million of Series B Preferred Shares value, and dividends on such Series B Preferred Shares have been offset in the accompanying consolidated balance sheets, statements of operations, and statements of changes in equity, resulting in a net amount presented as proceeds from the issuance of Series B Preferred Shares of $113.1 million.
At the Market ("ATM") Program
On February 27, 2019, the Company entered into a sales agreement with certain sales agents, pursuant to which the Company may sell from time to time up to $250.0 million of the Company's common shares and 6.000% Series A Preferred Shares in sales deemed to be "at the market" offerings (the "sales agreement"). On May 19, 2021, the Company entered into an amendment to the sales agreement with certain sales agents, whereby the Company increased the aggregate gross sale price under the program to $400.0 million, which included $31.0 million of remaining available offered shares. The sales agreement contemplates that, in addition to the issuance and sale by the Company of offered shares to or through the sale agents, the Company may enter into separate forward sale agreements with any forward purchaser. Forward sale agreements, if any, will include only the Company's common shares and will not include any Series A Preferred Shares. If the Company enters into a forward sale agreement with any forward purchaser, such forward purchaser will attempt to borrow from third parties and sell, through the related agent, acting as sales agent for such forward purchaser (each, a "forward seller"), offered shares, in an amount equal to the offered shares subject to such forward sale agreement, to hedge such forward purchaser’s exposure under such forward sale agreement. The Company may offer the common shares and Series A Preferred Shares through the agents, as the Company's sales agents, or, as applicable, as forward seller, or directly to the agents or forward sellers, acting as principals, by means of, among others, ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of sale or at negotiated prices.
During the years ended December 31, 2023 and 2022, the Company did not sell any common shares through the ATM program. As of December 31, 2023, the Company had $169.1 million capacity remaining under its ATM Program.
F-21
Common Share Repurchase Program
On July 11, 2022, the Company approved a share repurchase program authorizing, but not obligating, the repurchase of up to $400.0 million of the Company's common shares of beneficial interest from time to time. On December 1, 2023, the Company approved a new share repurchase program authorizing, but not obligating, the repurchase of up to $275.0 million of the Company's common shares from time to time. The timing, manner, price and amount of any repurchase transactions will be determined by the Company in its discretion and will be subject to share price, availability, trading volume and general market conditions. During the year ended December 31, 2023, the Company repurchased 8,836,639 common shares for approximately $310.2 million.
Noncontrolling Interests
All of the limited partnerOP equity interests in the Company's operating partnership not held by the Company are reflected as noncontrolling interests. Noncontrolling interests also include ownership interests in DownREIT partnerships held by entities other than the Company's operating partnership. NSA is the general partner of its operating partnership and is authorized to cause its operating partnership to issue additional partner interests, including OP units and subordinated performance units, at such prices and on such other terms as it determines in its sole discretion.
As of December 31, 20172023 and 2016,2022, units reflecting noncontrolling interests consisted of the following:
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Series A-1 preferred units | 1,212,340 | 712,208 | |||||||||
| OP units | 37,635,683 | 35,737,281 | |||||||||
| Subordinated performance units | 7,991,271 | 8,154,524 | |||||||||
| LTIP units | 785,932 | 728,890 | |||||||||
| DownREIT units | |||||||||||
| DownREIT OP units | 2,120,491 | 1,924,918 | |||||||||
| DownREIT subordinated performance units | 4,133,474 | 4,337,111 | |||||||||
| Total | 53,879,191 | 51,594,932 | |||||||||
| December 31, | |||||
| 2017 | 2016 | ||||
| OP units | 26,719,607 | 26,125,444 | |||
| Subordinated performance units | 11,604,738 | 11,022,378 | |||
| LTIP units | 771,396 | 1,543,905 | |||
| DownREIT units | |||||
| DownREIT OP units | 1,834,786 | 1,834,786 | |||
| DownREIT subordinated performance units | 4,386,999 | 4,386,999 | |||
| Total | 45,317,526 | 44,913,512 | |||
$25.00 per unit and receive distributions at an annual rate of 6.000%. These distributions are cumulative. The Series A-1 preferred units are redeemable at the option of the holder after the first anniversary of the date of issuance, which redemption obligations may be satisfied at the Company’s option in cash in an amount equal to the market value of an equivalent number of the Company's 6.000% Series A Preferred Shares or the issuance of 6.000% Series A Preferred Shares on a one-for-one basis, subject to adjustments. Generally, the Series A-1 preferred units become redeemable by the Company beginning ten years after the initial issuance of each Series A-1 preferred unit at a stated value of $25.00 per unit, plus accrued but unpaid distributions. The increase in Series A-1 preferred units outstanding from December 31, 2022 to December 31, 2023 was due to (i) 466,691 Series A-1 preferred units issued in connection with the acquisitions of self storage properties and (ii) the issuance of 33,441 Series A-1 preferred units in connection with the termination of a lease and the contribution of the development rights for vacant land owned by the Company at one of the Company’s self storage properties.
OP Units and DownREIT OP units
OP units in the Company's operating partnership are redeemable for cash or, at the Company's option, exchangeable for common shares on a one-for-one basis, and DownREIT OP units are redeemable for cash or, at the Company's option, exchangeable for OP units in its operating partnership on a one-for-one basis, subject to certain adjustments in each case. The holders of OP units are generally not entitled to elect redemption until one year after the issuance of the OP units. The holders of DownREIT OP units are generally not entitled to elect redemption until five years after the date of the contributor's initial contribution. Accordingly, these limited partner interests are included in noncontrolling interests within equity in the accompanying balance sheets as
F-22
The increase in OP Unitsunits outstanding from December 31, 20162022 to December 31, 20172023 was due to 1,022,718(i) 2,545,063 OP units issued upon the non-voluntary conversion of 926,623 subordinated performance units (as discussed further below) in connection with Move It's retirement, (ii) 481,811 OP units issued upon the voluntary conversion of 397,000 subordinated performance units, (iii) the conversion of 128,487 LTIP units into an equivalent number of OP units, partially offset by the redemption of 1,275,854 OP units for an equal number of common shares and (iv) the issuance of 18,895 OP units in connection with the acquisition of self storage properties and 992,210 LTIP units which were converted intoproperties.
The increase in DownREIT OP units as discussed further below, partially offset by the redemption of 1,409,715outstanding from December 31, 2022 to December 31, 2023 was due to 195,573 DownREIT OP units and 11,050 OP units which were converted intoissued upon the voluntary conversion of 203,637 DownREIT subordinated performance units.
Subordinated Performance Units and DownREIT Subordinated Performance Units
Subordinated performance units may also, under certain circumstances, be convertible into OP units which are exchangeable for common shares as described above, and DownREIT subordinated performance units may, under certain circumstances, be exchangeable for subordinated performance units on a one-for-one basis. Subordinated performance units are only convertible into OP units after a two year lock-out period and then generally (i) at the holder’s election only upon the achievement of certain performance thresholds relating to the properties to which such subordinated performance units relate or (ii) at the Company's election upon a retirement event of a PRO that holds such subordinated performance units or upon certain qualifying terminations. The holders of DownREIT subordinated performance units are generally not entitled to elect redemption until at least five years after the date of the contributor's initial contribution.
Following such lock-out period, a holder of subordinated performance units in the Company's operating partnership may elect a voluntary conversion one time each year on or prior to December 1st to convert a pre-determined portion of such subordinated performance units into OP units in the Company's operating partnership, with such conversion effective January 1st of the following year, with each subordinated performance unit being converted into the number of OP units determined by dividing the average cash available for distribution, or CAD, per unit on the series of specific subordinated performance units over the one-year period prior to conversion by 110% of the CAD per unit on the OP units determined over the same period. CAD per unit on the series of specific subordinated performance units and OP units is determined by the Company based generally upon the application of the provisions of the LP Agreement applicable to the distributions of operating cash flow and capital transactions proceeds.
The increasedecrease in subordinated performance units outstanding from December 31, 20162022 to December 31, 20172023 was due to the issuanceconversion of 300,043926,623 subordinated performance units to an affiliateinto 2,545,063 OP units in connection with the retirement of Personal Mini (the Company's chairmanMove It, and chief executive officer, Arlen D. Nordhagen, has a noncontrolling minority ownership interest in this affiliatethe voluntary conversion of Personal Mini),397,000 subordinated performance units into 481,811 OP units, partially offset by the issuance of 271,2671,160,370 subordinated performance units for co-investment by the Company's PROs in connection with the acquisition of self storage properties and 11,050 OP units which were converted intoproperties.
The decrease in DownREIT subordinated performance units outstanding from December 31, 2022 to December 31, 2023 was due to the voluntary conversion of 203,637 DownREIT subordinated performance units into 195,573 DownREIT OP units.
| December 31, | |||||||
| 2017 | 2016 | ||||||
| Land | $ | 528,304 | $ | 456,135 | |||
| Buildings and improvements | 1,741,459 | 1,383,603 | |||||
| Furniture and equipment | 5,470 | 4,598 | |||||
| Total self storage properties | 2,275,233 | 1,844,336 | |||||
| Less accumulated depreciation | (170,358 | ) | (110,803 | ) | |||
| Self storage properties, net | $ | 2,104,875 | $ | 1,733,533 | |||
| December 31, 2017 | December 31, 2016 | ||||||
| ASSETS | |||||||
| Self storage properties, net | $ | 655,973 | $ | 614,754 | |||
| Other assets | 8,397 | 19,936 | |||||
| Total assets | $ | 664,370 | $ | 634,690 | |||
| LIABILITIES AND EQUITY | |||||||
| Debt financing | $ | 317,359 | $ | 317,047 | |||
| Other liabilities | 4,855 | 4,498 | |||||
| Equity | 342,156 | 313,145 | |||||
| Total liabilities and equity | $ | 664,370 | $ | 634,690 | |||
| Year Ended December 31, 2017 | Period Ended December 31, 2016 | ||||||
| Total revenue | $ | 54,747 | $ | 12,197 | |||
| Property operating expenses | 18,463 | 3,850 | |||||
| Net operating income | 36,284 | 8,347 | |||||
| Supervisory, administrative and other expenses | (3,921 | ) | (949 | ) | |||
| Depreciation and amortization | (29,192 | ) | (6,235 | ) | |||
| Interest expense | (11,389 | ) | (2,823 | ) | |||
| Acquisition and other expenses | (1,146 | ) | (4,277 | ) | |||
| Net loss | $ | (9,364 | ) | $ | (5,937 | ) | |
| Acquisitions closed during the Three Months Ended: | Summary of Investment | |||||||||||||||||||||
| Number of Properties | Cash and Acquisition Costs | Value of OP Equity(1) | Liabilities Assumed | Total | ||||||||||||||||||
Mortgages(2) | Other | |||||||||||||||||||||
| March 31, 2017 | 5 | $ | 26,780 | $ | 4,964 | $ | — | $ | 183 | $ | 31,927 | |||||||||||
| June 30, 2017 | 10 | 60,672 | 8,931 | — | 387 | 69,990 | ||||||||||||||||
| September 30, 2017 | 19 | 122,742 | 267 | — | 826 | 123,835 | ||||||||||||||||
| December 31, 2017 | 31 | 181,809 | 17,019 | — | 2,220 | 201,048 | ||||||||||||||||
| Total | 65 | $ | 392,003 | $ | 31,181 | $ | — | $ | 3,616 | $ | 426,800 | |||||||||||
| March 31, 2016 | 17 | $ | 63,300 | $ | 19,068 | $ | 5,861 | $ | 584 | $ | 88,813 | |||||||||||
| June 30, 2016 | 25 | 61,263 | 80,986 | 55,767 | 1,212 | 199,228 | ||||||||||||||||
| September 30, 2016 | 34 | 199,890 | 4,841 | — | 896 | 205,627 | ||||||||||||||||
| December 31, 2016 | 31 | 208,707 | 16,871 | — | 2,125 | 227,703 | ||||||||||||||||
| Total | 107 | $ | 533,160 | $ | 121,766 | $ | 61,628 | $ | 4,817 | $ | 721,371 | |||||||||||
| December 31, | |||||||
| 2017 | 2016 | ||||||
| Customer in-place leases, net of accumulated amortization of $3,914 and $7,831, respectively | $ | 6,590 | $ | 9,374 | |||
| Receivables: | |||||||
| Trade, net | 2,274 | 1,898 | |||||
| PROs and other affiliates | 979 | 601 | |||||
| Receivable from unconsolidated real estate venture | 1,200 | 1,093 | |||||
| Property acquisition deposits | 5,050 | 477 | |||||
| Interest rate swaps | 12,414 | 8,742 | |||||
| Prepaid expenses and other | 3,949 | 1,879 | |||||
| Corporate furniture, equipment and other, net | 1,444 | 1,243 | |||||
| Trade name | 3,200 | 3,200 | |||||
| Management contract, net of accumulated amortization of $856 and $148, respectively | 9,765 | 10,473 | |||||
| Goodwill | 5,750 | 5,750 | |||||
| Total | $ | 52,615 | $ | 44,730 | |||
| December 31, | |||||||||
Interest Rate(1) | 2017 | 2016 | |||||||
| Credit Facility: | |||||||||
| Revolving line of credit | 2.96% | $ | 88,500 | $ | 246,500 | ||||
| Term loan A | 2.63% | 235,000 | 225,000 | ||||||
| Term loan B | 3.24% | 155,000 | 100,000 | ||||||
| Term loan C | 3.71% | 105,000 | — | ||||||
| Term loan facility | 3.08% | 100,000 | 100,000 | ||||||
| Fixed rate mortgages payable | 4.15% | 271,491 | 201,694 | ||||||
| Total principal | 954,991 | 873,194 | |||||||
| Unamortized debt issuance costs and debt premium, net | 3,106 | 5,760 | |||||||
| Total debt | $ | 958,097 | $ | 878,954 | |||||
| Year Ending December 31, | Scheduled Principal and Maturity Payments | Premium Amortization and Unamortized Debt Issuance Costs | Total | |||||||||
| 2018 | $ | 10,617 | $ | 187 | $ | 10,804 | ||||||
| 2019 | 4,983 | 131 | 5,114 | |||||||||
| 2020 | 127,745 | (220 | ) | 127,525 | ||||||||
| 2021 | 242,509 | (307 | ) | 242,202 | ||||||||
| 2022 | 159,205 | (25 | ) | 159,180 | ||||||||
| After 2023 | 409,932 | 3,340 | 413,272 | |||||||||
| $ | 954,991 | $ | 3,106 | $ | 958,097 | |||||||
LTIP Units
LTIP units are a special class of partnership interest in the Company's operating partnership that allow the holder to participate in the ordinary and liquidating distributions received by holders of the OP units (subject to the achievement of specified levels of profitability by the Company's operating partnership or the achievement of certain events). LTIP units may also, under certain circumstances, be convertible into OP units on a one-for-one basis, which are then exchangeable for common shares as described above. LTIP units do not have full parity with OP units with respect to liquidating distributions and may not receive ordinary distributions until such parity is reached pursuant to the terms of the LP Agreement. If such parity is reached under the LP Agreement, upon vesting, vested LTIP units may be converted into an equal number of OP units, and thereafter have all the rights of OP units, including redemption rights. See Note 9 for additional information about the Company's LTIP Units.
The increase in LTIP units outstanding from December 31, 2022 to December 31, 2023 was due to the issuance of 185,528 compensatory LTIP units to employees, trustees and consultants, net of forfeitures, partially offset by the conversion of 128,487 LTIP units into an equivalent number of OP units.
F-23
4. SELF STORAGE PROPERTIES
Self storage properties, excluding properties classified as held for sale, are summarized as follows (dollars in thousands):
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Land | $ | 1,035,562 | $ | 1,111,326 | |||||||
| Buildings and improvements | 4,746,105 | 5,269,383 | |||||||||
| Furniture and equipment | 10,507 | 10,863 | |||||||||
| Total self storage properties | 5,792,174 | 6,391,572 | |||||||||
| Less accumulated depreciation | (874,359) | (772,661) | |||||||||
| Self storage properties, net | $ | 4,917,815 | $ | 5,618,911 | |||||||
Depreciation expense related to self storage properties amounted to $210.2 million, $195.9 million and $135.1 million for the years ended December 31, 2023, 2022 and 2021, respectively.
5. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES
2024 Joint Venture
Subsequent to December 31, 2023, a wholly owned subsidiary of the Company (the "2024 NSA Member") entered into an agreement (the "2024 JV Agreement") to form a joint venture (the "2024 Joint Venture") with an affiliate of Heitman Capital Management LLC (the "2024 JV Investor" and, together with the 2024 NSA Member, the "2024 JV Members"). The 2024 Joint Venture was capitalized with approximately $140.8 million in equity (approximately $35.2 million from the 2024 NSA Member in exchange for a 25% ownership interest and approximately $105.6 million from the 2024 JV Investor in exchange for a 75% ownership interest) and proceeds from a $210.0 million interest-only secured debt financing with an interest rate of 6.05% per annum and a term of five years.
A subsidiary of the Company is acting as the non-member manager of the 2024 Joint Venture (the "2024 NSA Manager"). The 2024 NSA Manager directs, manages and controls the day-to-day operations and affairs of the 2024 Joint Venture but may not cause the 2024 Joint Venture to make certain major decisions involving the business of the 2024 Joint Venture without the consent of both 2024 JV Members, including the approval of annual budgets, sales and acquisitions of properties, financings, and certain actions relating to bankruptcy.
As discussed in Note 15, in February 2024, pursuant to a contribution agreement executed by the 2024 JV Members on December 21, 2023, the Company contributed to the 2024 Joint Venture 56 self storage properties located across seven states, consisting of approximately 3.2 million rentable square feet configured in over 24,000 storage units.
2023 Joint Venture
During the three months ended December 31, 2023, the Company, through a newly formed subsidiary (the "2023 NSA Member"), entered into an agreement (the "2023 JV Agreement") to form a joint venture (the "2023 Joint Venture") with a state pension fund advised by Heitman Capital Management LLC (the "2023 JV Investor," together with the 2023 NSA Member, the "2023 JV Members") to acquire and operate self storage properties. The 2023 JV Agreement provides for equity capital contributions by the 2023 JV Members of up to $400.0 million over a twenty-four month investment period (subject to two six-month extension options if both of the 2023 JV Members agree) starting in December 2023, with the 2023 JV Investor holding a 75% ownership interest and the 2023 NSA Member holding a 25% ownership interest.
A subsidiary of the Company is acting as the non-member manager of the 2023 Joint Venture (the "2023 NSA Manager"). The 2023 NSA Manager directs, manages and controls the day-to-day operations and affairs of the 2023 Joint Venture but may not cause the 2023 Joint Venture to make certain major decisions involving the business of the 2023 Joint Venture without the consent of both 2023 JV Members, including the approval of annual budgets, sales and acquisitions of properties, financings, and certain actions relating to bankruptcy.
F-24
The Company's investment in the 2023 Joint Venture is accounted for using the equity method of accounting and is included in investment in unconsolidated real estate ventures in the Company’s consolidated balance sheets. The Company’s earnings from its investment in the 2023 Joint Venture are presented in equity in earnings (losses) of unconsolidated real estate ventures on the Company’s consolidated statements of operations. As of December 31, 2023, the 2023 Joint Venture had not completed any acquisition activity and had no operations.
2018 Joint Venture
As of December 31, 2023, the Company's unconsolidated real estate venture, formed in September 2018 with an affiliate of Heitman America Real Estate REIT LLC (the "2018 Joint Venture"), in which the Company has a 25% ownership interest, owned and operated a portfolio of 104 self storage properties containing approximately 7.8 million rentable square feet, configured in over 64,000 storage units and located across 17 states.
The 2018 Joint Venture acquired one self storage property for $6.6 million during the year ended December 31, 2022, which was combined and is being operated together with one of the 2018 Joint Venture's existing properties. The 2018 Joint Venture financed the acquisition with capital contributions from the 2018 Joint Venture members, of which the Company contributed $1.6 million for its 25% proportionate share.
2016 Joint Venture
As of December 31, 2023, the Company's unconsolidated real estate venture, formed in September 2016 with a state pension fund advised by Heitman Capital Management LLC (the "2016 Joint Venture"), in which the Company has a 25% ownership interest, owned and operated a portfolio of 81 properties containing approximately 5.7 million rentable square feet, configured in approximately 47,000 storage units and located across 13 states.
The 2016 Joint Venture acquired seven self storage properties for $207.6 million during the year ended December 31, 2022, which are managed together with the 2016 Joint Venture's existing properties. The 2016 Joint Venture financed the acquisitions with capital contributions from the 2016 Joint Venture members, of which the Company contributed $51.9 million for its 25% proportionate share.
The Company's investments in the 2018 Joint Venture and 2016 Joint Venture are accounted for using the equity method of accounting and are included in investment in unconsolidated real estate ventures in the Company’s consolidated balance sheets. The Company’s earnings from its investments in the 2018 Joint Venture and 2016 Joint Venture are presented in equity in earnings of unconsolidated real estate ventures on the Company’s consolidated statements of operations.
The following table presents the combined condensed financial position of the Company's unconsolidated real estate ventures as of December 31, 2023 and December 31, 2022 (dollars in thousands):
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| ASSETS | |||||||||||
| Self storage properties, net | 1,831,110 | 1,891,203 | |||||||||
| Other assets | 37,826 | 36,873 | |||||||||
| Total assets | $ | 1,868,936 | $ | 1,928,076 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Debt financing | 1,003,223 | 1,002,301 | |||||||||
| Other liabilities | 28,333 | 23,808 | |||||||||
| Equity | 837,380 | 901,967 | |||||||||
| Total liabilities and equity | $ | 1,868,936 | $ | 1,928,076 | |||||||
F-25
The following table presents the combined condensed operating information of the Company's unconsolidated real estate ventures for the years ended December 31, 2023, 2022 and 2021 (dollars in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||
| Total revenue | $ | 214,292 | $ | 212,832 | $ | 187,861 | |||||||||||
| Property operating expenses | (59,740) | (57,306) | (50,829) | ||||||||||||||
| Supervisory, administrative and other expenses | (14,146) | (13,955) | (12,288) | ||||||||||||||
| Depreciation and amortization | (68,333) | (68,289) | (61,628) | ||||||||||||||
| Interest expense | (41,665) | (41,657) | (41,658) | ||||||||||||||
| Acquisition and other expenses | (459) | (899) | (511) | ||||||||||||||
| Net income | $ | 29,949 | $ | 30,726 | $ | 20,947 | |||||||||||
6. SELF STORAGE PROPERTY ACQUISITIONS AND DISPOSITIONS
Acquisitions
The Company acquired 20 self storage properties and annexes to existing propertieswith an estimated fair value of $229.5 million during the year ended December 31, 2023 and 45 self storage properties with an estimated fair value of $569.2 million during the year ended December 31, 2022. Of these acquisitions, during the year ended December 31, 2023, 19 self storage properties with an estimated fair value of $199.3 million were acquired by the Company from its PROs. During the year ended December 31, 2022, five self storage properties with an estimated fair value of $55.7 million were acquired by the Company from its PROs.
The self storage property acquisitions were accounted for as asset acquisitions and accordingly, during the years ended December 31, 2023 and 2022, $1.6 million and $3.7 million, respectively, of transaction costs related to the acquisitions were capitalized as part of the basis of the acquired properties. The Company recognized the estimated fair value of the acquired assets and assumed liabilities on the respective dates of such acquisitions. The Company allocated a portion of the purchase price to identifiable intangible assets consisting of customer in-place leases which were recorded at estimated fair values of $4.8 million and $9.5 million during the years ended December 31, 2023 and 2022, respectively, resulting in a total fair value of $224.7 million and $559.7 million allocated to real estate during the years ended December 31, 2023 and 2022, respectively.
F-26
The following table summarizes, by calendar quarter, the investments in self storage property acquisitions completed by the Company during the years ended December 31, 2023 and 2022 (dollars in thousands):
| Acquisitions closed during the Three Months Ended: | Summary of Investment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number of Properties | Cash and Acquisition Costs | Value of Equity(1) | Other Liabilities/ (Other Assets) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2023 | 16 | $ | 9,920 | $ | 150,531 | $ | 85 | $ | 160,536 | |||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2023(2) | — | 8,167 | 5,577 | 34 | 13,778 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2023 | 2 | 13,666 | 16,370 | 78 | 30,114 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2023 | 2 | 16,972 | 8,062 | (12) | 25,022 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 20 | $ | 48,725 | $ | 180,540 | $ | 185 | $ | 229,450 | |||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2022 | 12 | $ | 76,027 | $ | 16,576 | $ | 332 | $ | 92,935 | |||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2022 | 8 | 99,954 | 13,938 | 641 | 114,533 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2022 | 23 | 313,784 | 6,244 | 1,761 | 321,789 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | 2 | 7,622 | 32,141 | 156 | 39,919 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 45 | $ | 497,387 | $ | 68,899 | $ | 2,890 | $ | 569,176 | |||||||||||||||||||||||||||||||||||||||||||||||
(1)Value of OP equity represents the fair value of Series A-1 preferred units, Series B Preferred Shares, OP units, subordinated performance units, and LTIP units.
(2)During the three months ended June 30, 2023, the Company acquired two annexes to existing properties.
The results of operations for these self storage acquisitions are included in the Company's consolidated statements of operations beginning on the respective closing date for each acquisition. The accompanying consolidated statements of operations includes aggregate revenue of $12.3 million and operating expenses of $10.9 million related to the 20 self storage properties acquired during the year ended December 31, 2023. For the year ended December 31, 2022, the accompanying consolidated statements of operations includes aggregate revenue of $18.0 million and operating expenses of $19.8 million related to the 45 self storage properties acquired during such period.
During the year ended December 31, 2023, in connection with the retirement of Move It as a PRO as discussed in Note 1 and Note 3, the Company acquired Move It's rights to its asset management agreements, the Move It brand, and other intellectual property for $4.7 million.
Dispositions
During the year ended December 31, 2023, the Company sold 32 self storage properties and an undeveloped land parcel for net proceeds of $262.3 million. The Company recorded a net gain on the dispositions of $63.9 million.
For the year ended December 31, 2022, the Company disposed of two self storage properties and an undeveloped land parcel for net proceeds of $11.0 million. The Company recorded a net gain on the dispositions of $5.5 million.
Assets Held for Sale
As of December 31, 2023, the Company classified as held for sale 39 self storage properties to be sold to a third party in 2024 and 56 self storage properties that were contributed to the 2024 Joint Venture in 2024.
F-27
7. OTHER ASSETS
Other assets consist of the following (dollars in thousands):
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Customer in-place leases, net of accumulated amortization of $3,263 and $5,004, respectively | $ | 1,609 | $ | 5,090 | |||||||
| Receivables: | |||||||||||
| Trade, net | 9,842 | 13,120 | |||||||||
| PROs and other affiliates | 7,784 | 4,175 | |||||||||
| Receivable from unconsolidated real estate ventures | 4,446 | 5,375 | |||||||||
| Interest rate swaps | 29,610 | 51,466 | |||||||||
| Prepaid expenses and other | 14,743 | 26,156 | |||||||||
| Corporate furniture, equipment and other, net | 2,659 | 1,534 | |||||||||
| Trade name | 8,851 | 7,442 | |||||||||
| Management contracts, net of accumulated amortization of $6,777 and $5,398, respectively | 14,049 | 12,113 | |||||||||
| Tenant reinsurance intangible assets, net of accumulated amortization of $3,839 and $2,466, respectively | 32,227 | 21,575 | |||||||||
| Goodwill | 8,182 | 8,182 | |||||||||
| Total | $ | 134,002 | $ | 156,228 | |||||||
Amortization expense related to customer in-place leases amounted to $8.3 million, $34.4 million and $20.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.
The Company measured the fair value of the trade name, which has an indefinite life and is not amortized, using the relief from royalty method at acquisition.
The management contract assets and tenant reinsurance intangible assets are charged to amortization expense on a straight-line basis over 15 years and 25 years, respectively, which represent the time periods over which the majority of value was attributed in the Company’s discounted cash flow models. Amortization expense related to the management contracts amounted to $1.4 million, $1.2 million and $1.0 million for the years ended December 31, 2023, 2022 and 2021 respectively. Amortization expense related to the tenant reinsurance intangible assets amounted to $1.4 million, $1.0 million and $0.6 million for the years ended December 31, 2023, 2022 and 2021 respectively.
Future Intangible Asset Amortization
As of December 31, 2023, the estimated aggregate amortization expense for the Company's customer in-place leases, management contracts and tenant reinsurance intangible assets for the succeeding five years are as follows (in thousands):
| Year Ending December 31, | Total Aggregate Estimated Amortization Expense | ||||
| 2024 | $ | 4,389 | |||
| 2025 | 2,779 | ||||
| 2026 | 2,779 | ||||
| 2027 | 2,779 | ||||
| 2028 | 2,779 | ||||
| Thereafter | 32,380 | ||||
| Total | $ | 47,885 | |||
F-28
8. DEBT FINANCING
The Company's outstanding debt as of December 31, 2023 and 2022 is summarized as follows (dollars in thousands):
| December 31, | |||||||||||||||||
Interest Rate(1) | 2023 | 2022 | |||||||||||||||
| Credit Facility: | |||||||||||||||||
| Revolving line of credit | 6.71% | $ | 381,000 | $ | 496,000 | ||||||||||||
| Term loan A | —% | — | 125,000 | ||||||||||||||
| Term loan B | 3.28% | 275,000 | 250,000 | ||||||||||||||
| Term loan C | 4.07% | 325,000 | 225,000 | ||||||||||||||
| Term loan D | 4.05% | 275,000 | 175,000 | ||||||||||||||
| Term loan E | 4.93% | 130,000 | 125,000 | ||||||||||||||
| 2023 Term loan facility | —% | — | 175,000 | ||||||||||||||
| 2028 Term loan facility | 4.62% | 75,000 | 75,000 | ||||||||||||||
| April 2029 term loan facility | 4.27% | 100,000 | 100,000 | ||||||||||||||
| June 2029 term loan facility | 5.37% | 285,000 | 285,000 | ||||||||||||||
| May 2026 Senior Unsecured Notes | 2.16% | 35,000 | 35,000 | ||||||||||||||
| October 2026 Senior Unsecured Notes | 6.46% | 65,000 | — | ||||||||||||||
| July 2028 Senior Unsecured Notes | 5.75% | 120,000 | — | ||||||||||||||
| October 2028 Senior Unsecured Notes | 6.55% | 100,000 | — | ||||||||||||||
| 2029 Senior Unsecured Notes | 3.98% | 100,000 | 100,000 | ||||||||||||||
| August 2030 Senior Unsecured Notes | 2.99% | 150,000 | 150,000 | ||||||||||||||
| October 2030 Senior Unsecured Notes | 6.66% | 35,000 | — | ||||||||||||||
| November 2030 Senior Unsecured Notes | 2.72% | 75,000 | 75,000 | ||||||||||||||
| May 2031 Senior Unsecured Notes | 3.00% | 90,000 | 90,000 | ||||||||||||||
| August 2031 Senior Unsecured Notes | 4.08% | 50,000 | 50,000 | ||||||||||||||
| November 2031 Senior Unsecured Notes | 2.81% | 175,000 | 175,000 | ||||||||||||||
| August 2032 Senior Unsecured Notes | 3.09% | 100,000 | 100,000 | ||||||||||||||
| November 2032 Senior Unsecured Notes | 5.06% | 200,000 | 200,000 | ||||||||||||||
| May 2033 Senior Unsecured Notes | 3.10% | 55,000 | 55,000 | ||||||||||||||
| October 2033 Senior Unsecured Notes | 6.73% | 50,000 | — | ||||||||||||||
| November 2033 Senior Unsecured Notes | 2.96% | 125,000 | 125,000 | ||||||||||||||
| 2036 Senior Unsecured Notes | 3.06% | 75,000 | 75,000 | ||||||||||||||
| Fixed rate mortgages payable | 3.61% | 222,757 | 299,570 | ||||||||||||||
| Total principal | 3,668,757 | 3,560,570 | |||||||||||||||
| Unamortized debt issuance costs and debt premium, net | (10,552) | (9,391) | |||||||||||||||
| Total debt | $ | 3,658,205 | $ | 3,551,179 | |||||||||||||
(1)Represents the effective interest rate as of December 31, 2023. Effective interest rate incorporates the stated rate plus the impact of interest rate cash flow hedges and discount and premium amortization, if applicable. $25.0 million of Tranche B, $100.0 million of Tranche C, and $5.0 million of Tranche E are subject to variable interest rates, which is reflected in the effective interest rate. For the revolving line of credit, the effective interest rate excludes fees for unused borrowings.
F-29
Credit Facility
On January 3, 2023, the operating partnership, as borrower, the Company, and certain of the operating partnership's subsidiaries, as subsidiary guarantors, entered into a third amended and restated credit agreement with KeyBank National Association, as administrative agent, and a syndicated group of lenders party thereto, which expanded the total borrowing capacity of its credit facility by $405.0 million to $1.955 billion with an expansion feature to expand the total borrowing capacity to $2.5 billion. The maturity date of the revolving line of credit (the "Revolver") is now January 2027, while the total borrowing capacity of the Revolver was increased to $950.0 million from $650.0 million. In connection with the credit facility recast, the $125.0 million tranche A term loan facility (the "Term Loan A") due January 2023 was repaid by the Company, tranche B term loan facility (the "Term Loan B") increased from $250.0 million to $275.0 million, tranche C term loan facility (the "Term Loan C") increased from $225.0 million to $325.0 million, tranche D term loan facility (the "Term Loan D") increased from $175.0 million to $275.0 million, tranche E term loan facility (the "Term Loan E") increased from $125.0 million to $130.0 million, and the Company repaid the $175.0 million term loan facility due in June 2023. In connection with the credit facility recast, effective January 3, 2023, all of our LIBOR-based interest rate swaps were converted into SOFR-based interest rate swaps.
The Revolver matures in January 2027; provided that the Company may elect up to two times to extend the maturity to January 2028 by paying an extension fee of 0.0625% of the total borrowing commitment thereunder at the time of extension and meeting other customary conditions with respect to compliance. The Term Loan B matures in July 2024, provided that the Company may elect to extend the maturity to January 2025 subject to certain conditions being met and payment of an extension fee of 0.0625% of the amount of the Term Loan B. The Term Loan C matures in January 2025, the Term Loan D matures in July 2026, and the Term Loan E matures in March 2027. The amended credit facility is not subject to any scheduled reduction or amortization payments prior to maturity.
Interest rates applicable to loans under the credit facility are, as elected by the Company at the beginning of any applicable interest period, determined based on (i) a 1, 3 or 6 month Term SOFR period ("Term SOFR Loans") plus an applicable margin, (ii) an adjusted daily simple SOFR rate ("Daily Simple SOFR Loans", and together with Term SOFR Loans, "SOFR Loans") plus an applicable margin, or (iii) a base rate determined by the greatest of the Key Bank prime rate, the federal funds rate plus 0.50%, one month Term SOFR plus 1.00%, and 1.00% (“base rate loans”), plus an applicable margin. The applicable margins for the credit facility are leverage based and range from 1.10% to 1.80% for SOFR Loans and 0.10% to 0.80% for base rate loans; provided that after such time as the Company achieves an investment grade rating as defined in the credit facility, the Company may elect (but is not required to elect) (a “credit rating pricing election”) that the credit facility be subject to applicable margins ranging from 0.725% to 1.65% for SOFR Loans and 0.00% to 0.65% for base rate loans. The Company is also required to pay usage based fees ranging from 0.15% to 0.20% with respect to the unused portion of the Revolver; provided that if the Company makes a credit rating pricing election, the Company will be required to pay rating based fees ranging from 0.125% to 0.300% with respect to the entire Revolver in lieu of any usage based fees.
The Company has entered into interest rate swap agreements which together with the Company's existing interest rate swap agreements, fix the interest rates through maturity for the Term Loan B, Term Loan C and Term Loan D. As of December 31, 2023, Term Loan B, Term Loan C, Term Loan D and Term Loan E had effective interest rates of 3.28%, 4.07%, 4.05% and 4.93% respectively.
As of December 31, 2023, the Company had outstanding letters of credit totaling $6.4 million and would have had the capacity to borrow remaining Revolver commitments of $562.6 million while remaining in compliance with the credit facility's financial covenants described in the following paragraph.
The Company was required to comply with the following financial covenants under the credit facility:
•Maximum total leverage ratio not to exceed 60%, provided, however, the Company is permitted to maintain a ratio of up to 65% up to two (2) consecutive fiscal quarters immediately following the quarter in which a material acquisition (as defined in the credit facility) occurs
•Minimum fixed charge coverage ratio of at least 1.5x
•Maximum secured indebtedness not to exceed 40% of gross asset value
F-30
•Maximum unsecured debt to unencumbered asset value ratio not to exceed 60%, provided, however, the Company shall be permitted to maintain a ratio of up to 65% up to two (2) consecutive fiscal quarters immediately following the quarter in which a material acquisition (as defined in the credit facility) occurs
•Unencumbered adjusted net operating income to unsecured interest expense of at least 2.0x
In addition, the terms of the credit facility contain customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions. At December 31, 2023, the Company was in compliance with all such covenants.
2028 Term Loan Facility
On December 21, 2018, the Company entered into a credit agreement with Huntington National Bank to make available a term loan facility that matures in December 2028 (the "2028 Term Loan Facility") in an aggregate amount of $75.0 million. The entire outstanding principal amount of, and all accrued but unpaid interest, is due on the maturity date. The Company has an expansion option under the 2028 Term Loan Facility, which, if exercised in full, would provide for a total 2028 Term Loan Facility in an aggregate amount of $125.0 million.
Interest rates applicable to loans under the 2028 Term Loan Facility are payable during such periods as such loans are SOFR loans, at the applicable SOFR based on a 1, 3 or 6 month Term SOFR period (as elected by the Company at the beginning of any applicable interest period) plus an applicable margin, and during the period that such loans are base rate loans, at the base rate under the 2028 Term Loan Facility in effect from time to time plus an applicable margin. The base rate under the 2028 Term Loan Facility is equal to the greatest of the Huntington National Bank prime rate, the federal funds rate plus 0.50% or one month Term SOFR plus 1.00%. The applicable margin for the 2028 Term Loan Facility is leverage-based and ranges from 1.80% to 2.35% for SOFR loans and 0.80% to 1.35% for base rate loans; provided that after such time as the Company achieves an investment grade rating from at least two rating agencies, the Company may elect (but is not required to elect) that the 2028 Term Loan Facility is subject to the rating based on applicable margins ranging from 1.40% to 2.25% for SOFR Loans and 0.40% to 1.25% for base rate loans.
On January 2, 2019, the Company also entered into an interest rate swap agreement with a notional amount of $75.0 million that matures in December 2028 fixing the interest rate of the 2028 Term Loan Facility at an effective interest rate of 4.62%.
The Company is required to comply with the same financial covenants under the 2028 Term Loan Facility as it is with the credit facility. In addition, the terms of the 2028 Term Loan Facility contain customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
April 2029 Term Loan Facility
On April 24, 2019, the Company entered into a credit agreement with BMO Harris Bank N.A. to make available an unsecured term loan facility that matures in April 2029 (the "April 2029 Term Loan Facility") in an aggregate amount of $100.0 million. The entire outstanding principal amount of, and all accrued but unpaid interest, is due on the maturity date.
Interest rates applicable to loans under the April 2029 Term Loan Facility are payable during such periods as such loans are SOFR loans, at the applicable SOFR based on a 1, 3 or 6 month Term SOFR period (as elected by the Company at the beginning of any applicable interest period) plus an applicable margin, and during the period that such loans are base rate loans, at the base rate under the April 2029 Term Loan Facility in effect from time to time plus an applicable margin. The base rate under the April 2029 Term Loan Facility is equal to the greatest of the BMO Harris Bank prime rate, the federal funds rate plus 0.50% or one month Term SOFR plus 1.00%. The applicable margin for the April 2029 Term Loan Facility is leverage-based and ranges from 1.85% to 2.30% for SOFR loans and 0.85% to 1.30% for base rate loans; provided that after such time as the Company achieves an investment grade rating from at least two rating agencies, the Company may elect (but is not required to elect) that the 2029 Term Loan Facility be subject to rating-based margins ranging from 1.40% to 2.25% for SOFR Loans and 0.40% to 1.25% for base rate loans.
On April 24, 2019, the Company also entered into an interest rate swap agreement with a notional amount of $100.0 million that matures in April 2029 fixing the interest rate of the April 2029 Term Loan Facility at an effective interest rate of 4.27%.
F-31
The Company is required to comply with the same financial covenants under the April 2029 Term Loan Facility as it is with the credit facility and the 2028 Term Loan Facility. In addition, the terms of the April 2029 Term Loan Facility contain customary affirmative and negative covenants that are consistent with those contained in the 2028 Term Loan Facility, and, among other things, limit the Company's ability to make distributions, make certain investments, incur debt, incur liens and enter into certain transactions.
June 2029 Term Loan Facility
On June 24, 2022, the Company entered into a credit agreement with a syndicated group of lenders to make available a term loan facility that matures in June 2029 in an aggregate amount of $285.0 million, the entire amount of which was drawn on June 24, 2022. The outstanding principal amount, and all accrued but unpaid interest, is due on the maturity date. The June 2029 Term Loan Facility provides for an expansion of up to $15.0 million for a total amount of up to $300.0 million.
Interest rates applicable to loans under the June 2029 Term Loan Facility are payable monthly in arrears on the first day of each month at either a base rate plus applicable margin or Term SOFR plus applicable margin. The base rate is the greater of (i) prime rate, (ii) 0.50% plus the Federal Funds Effective Rate, and (iii) 1.0% plus the adjusted term secured overnight financing rate ("SOFR"). The applicable margin for the June 2029 Term Loan Facility is leverage and credit rating-based and ranges from 0.55% to 1.2% for base rate loans and 1.55% to 2.2% for SOFR based loans; provided that after such time as the Company achieves an investment grade rating from at least two rating agencies, the Company may elect (but is not required to elect) that the June 2029 Term Loan Facility be subject to rating-based margins ranging from 0.075% to 1.2% for base rate loans and 1.075% to 2.2% for SOFR based loans.
The Company is required to comply with the same financial covenants under the June 2029 Term Loan Facility as it does with the credit facility, the April 2029 Term Loan Facility, and the 2028 Term Loan Facility. In addition, the terms of the June 2029 Term Loan Facility contain customary affirmative and negative covenants that are consistent with those contained in the credit facility, the April 2029 Term Loan Facility and the 2028 Term Loan Facility, and, among other things, limit the Company's ability to make distributions, make certain investments, incur debt, incur liens and enter into certain transactions.
On December 1, 2022, the Company entered into an interest rate swap agreement with a notional amount of $285.0 million that matures in June 2029 fixing the interest rate of the June 2029 Term Loan Facility at an effective interest rate of 5.37%.
2029 and August 2031 Senior Unsecured Notes
On August 30, 2019, the operating partnership issued $100.0 million of 3.98% senior unsecured notes due August 30, 2029 (the "2029 Notes") and $50.0 million of 4.08% senior unsecured notes due August 30, 2031 (the "August 2031 Notes") in a private placement to certain institutional accredited investors. The 2029 Notes and August 2031 Notes are governed by a Note Purchase Agreement, dated July 30, 2019 (the "2019 Note Purchase Agreement"), by and among the operating partnership as issuer, the Company, and the purchasers of senior unsecured notes.
Interest is payable semiannually, on August 30th and February 28th of each year, commencing on February 28, 2020. The 2029 Notes and August 2031 Notes are senior unsecured obligations of the Company and are jointly and severally guaranteed by certain of the Company's subsidiaries, as subsidiary guarantors. The 2029 Notes and August 2031 Notes rank pari passu with the credit facility, 2028 Term Loan Facility, April 2029 Term Loan Facility, June 2029 Term Loan Facility and the rest of the Senior Unsecured Notes (defined as the May 2026 Notes (defined below), October 2026 Notes (defined below), July 2028 Notes (defined below), October 2028 Notes (defined below), 2029 Notes, August 2030 Notes (defined below), October 2030 Notes (defined below), November 2030 Notes (defined below), May 2031 Notes (defined below), August 2031 Notes, November 2031 Notes (defined below), August 2032 Notes (defined below), November 2032 Notes (defined below), May 2033 Notes (defined below), October 2033 Notes (defined below), November 2033 Notes (defined below) and 2036 Notes (defined below)). The 2019 Note Purchase Agreement contains financial covenants that are substantially similar to those described under the heading "Credit Facility" above. In addition, the terms of the 2019 Note Purchase Agreement contain customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions. At December 31, 2023, the Company was in compliance with all such covenants.
F-32
August 2030 and August 2032 Senior Unsecured Notes
On October 22, 2020, the operating partnership issued $150.0 million of 2.99% senior unsecured notes due August 5, 2030 (the "August 2030 Notes") and $100.0 million of 3.09% senior unsecured notes due August 5, 2032 (the "August 2032 Notes") in a private placement to certain institutional investors. The August 2030 Notes and August 2032 Notes are governed by a Note Purchase Agreement dated August 4, 2020 (the "2020 Note Purchase Agreement"), by and among the operating partnership as issuer, the Company, and the purchasers of the senior unsecured notes.
Interest is payable semiannually, on August 30th and February 28th of each year, commencing on February 28, 2021. The August 2030 Notes and August 2032 Notes are senior unsecured obligations of the Company and are jointly and severally guaranteed by certain of the Company's subsidiaries, as subsidiary guarantors. The August 2030 Notes and August 2032 Notes rank pari passu with the credit facility, 2028 Term Loan Facility, April 2029 Term Loan Facility, June 2029 Term Loan Facility and the rest of the Senior Unsecured Notes. The 2020 Note Purchase Agreement contains financial covenants that are substantially similar to those of the Company's credit facility. In addition, the terms of the 2020 Note Purchase Agreement contain customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions. At December 31, 2023, the Company was in compliance with all such covenants.
May 2026, May 2031 and May 2033Senior Unsecured Notes
On May 3, 2021, the operating partnership as issuer, and the Company, entered into a Note Purchase Agreement (the "May 2021 Note Purchase Agreement") which provides for the private placement of $35.0 million of 2.16% senior unsecured notes due May 4, 2026 (the "May 2026 Notes"), $90.0 million of 3.00% senior unsecured notes due May 4, 2031 (the "May 2031 Notes") and $55.0 million of 3.10% senior unsecured notes due May 4, 2033 (the "May 2033 Notes" and together with the May 2026 Notes and May 2031 Notes, the "May 2021 Senior Unsecured Notes") to certain institutional investors. The May 2021 Senior Unsecured Notes are governed by the May 2021 Note Purchase Agreement. On May 26, 2021 the operating partnership issued the May 2033 Notes and on July 26, 2021 the operating partnership issued the May 2026 Notes and the May 2031 Notes.
Interest is paid semiannually, on May 31st and November 30th of each year, commencing on November 30, 2021. The May 2021 Senior Unsecured Notes are senior unsecured obligations of the Company and are jointly and severally guaranteed by certain of the Company's subsidiaries, as subsidiary guarantors. The May 2021 Senior Unsecured Notes rank pari passu with the credit facility, 2028 Term Loan Facility, April 2029 Term Loan Facility, June 2029 Term Loan Facility and the rest of the Senior Unsecured Notes. The May 2021 Note Purchase Agreement contains financial covenants that are substantially similar to those of the Company's credit facility. In addition, the terms of the May 2021 Note Purchase Agreement contain customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
November 2030, November 2031, November 2033 and 2036Senior Unsecured Notes
On November 9, 2021, the operating partnership as issuer, and the Company, entered into a Note Purchase Agreement (the "November 2021 Note Purchase Agreement") which provides for the private placement of $75.0 million of 2.72% senior unsecured notes due November 30, 2030 (the "November 2030 Notes"), $175.0 million of 2.81% senior unsecured notes due November 30, 2031 (the "November 2031 Notes"), $125.0 million of 2.96% senior unsecured notes due November 30, 2033 (the "November 2033 Notes") and $75.0 million of 3.06% senior unsecured notes due November 30, 2036 (the "2036 Notes" and together with the November 2030 Notes, November 2031 Notes, November 2033 Notes and the "November 2021 Senior Unsecured Notes") to certain institutional investors. The November 2021 Senior Unsecured Notes are governed by the November 2021 Note Purchase Agreement. On December 14, 2021, the operating partnership issued the November 2030 Notes, November 2031 Notes and the 2036 Notes. On January 28, 2022, the operating partnership issued the November 2033 Notes.
F-33
Interest is paid semiannually, on May 30th and November 30th of each year, commencing on May 30, 2022. The November 2021 Senior Unsecured Notes are senior unsecured obligations of the Company and are jointly and severally guaranteed by certain of the Company's subsidiaries, as subsidiary guarantors. The November 2021 Senior Unsecured Notes rank pari passu with the credit facility, 2028 Term Loan Facility, April 2029 Term Loan Facility, June 2029 Term Loan Facility and the rest of the Senior Unsecured Notes. The November 2021 Note Purchase Agreement contains financial covenants that are substantially similar to those of the Company's credit facility. In addition, the terms of the November 2021 Note Purchase Agreement contain customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
November 2032 Senior Unsecured Notes
On August 30, 2022, the operating partnership as issuer, and the Company, entered into a Note Purchase Agreement (the "August 2022 Note Purchase Agreement") which provides for the private placement of $200.0 million of 5.06% senior unsecured notes due November 16, 2032 (the "November 2032 Notes") to certain institutional investors. The November 2032 Notes are governed by the August 2022 Note Purchase Agreement. On September 28, 2022 the operating partnership issued the November 2032 Notes.
Interest is paid semiannually, on May 16th and November 16th of each year, commencing on November 16, 2022. The November 2032 Senior Unsecured Notes are senior unsecured obligations of the Company and are jointly and severally guaranteed by certain of the Company's subsidiaries, as subsidiary guarantors. The November 2032 Senior Unsecured Notes rank pari passu with the credit facility, 2028 Term Loan Facility, April 2029 Term Loan Facility, June 2029 Term Loan Facility and the rest of the Senior Unsecured Notes. The August 2022 Note Purchase Agreement contains financial covenants that are substantially similar to those of the Company's credit facility. In addition, the terms of the August 2022 Note Purchase Agreement contain customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
July 2028 Senior Unsecured Notes
On April 27, 2023, the operating partnership, as issuer, and the Company entered into a Note Purchase Agreement (the "April 2023 Note Purchase Agreement") which provides for the private placement of $120.0 million of 5.61% senior unsecured notes due July 5, 2028 (the "July 2028 Notes") to certain institutional investors. The July 2028 Notes have an effective interest rate of 5.75% after taking into account the effect of interest rate swaps. On April 27, 2023, the operating partnership issued the July 2028 Notes.
Interest is paid semiannually, on January 5th and July 5th of each year, commencing on January 5th, 2024. The July 2028 Senior Unsecured Notes are senior unsecured obligations of the Company and are jointly and severally guaranteed by certain of the Company's subsidiaries, as subsidiary guarantors. The July 2028 Senior Unsecured Notes rank pari passu with the credit facility, 2028 Term Loan Facility, April 2029 Term Loan Facility, June 2029 Term Loan Facility and the rest of the Senior Unsecured Notes. The April 2023 Note Purchase Agreement contains financial covenants that are substantially similar to those of the Company's credit facility. In addition, the terms of the April 2023 Note Purchase Agreement contain customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
October 2026, October 2028, October 2030 and October 2033 Senior Unsecured Notes
On October 5, 2023, the operating partnership as issuer, and the Company, entered into a Note Purchase Agreement (the "October 2023 Note Purchase Agreement") which provided for the private placement of $65.0 million of 6.46% senior unsecured notes due October 5, 2026 (the "October 2026 Notes"), $100.0 million of 6.55% senior unsecured notes due October 5, 2028 (the "October 2028 Notes"), $35.0 million of 6.66% senior unsecured notes due October 5, 2030 (the "October 2030 Notes") and $50.0 million of 6.73% senior unsecured notes due October 5, 2033 (the "October 2033 Notes" and together with the October 2026, October 2028 and October 2030, the "October 2023 Senior Unsecured Notes") to certain institutional investors.The October 2023 Senior Unsecured Notes are governed by the October 2023 Note Purchase Agreement. On October 5, 2023, the operating partnership issued the October 2023 Senior Unsecured Notes.
F-34
Interest is paid semiannually, on April 5th and October 5th of each year, commencing on April 5, 2024. The Senior Unsecured Notes are senior unsecured obligations of the Company and are jointly and severally guaranteed by certain of the Company's subsidiaries, as subsidiary guarantors. The October 2023 Senior Unsecured Notes rank pari passu with the credit facility, 2028 Term Loan Facility, April 2029 Term Loan Facility, June 2029 Term Loan Facility and the rest of the Senior Unsecured Notes. The October 2023 Note Purchase Agreement contains financial covenants that are substantially similar to those of the Company's credit facility. In addition, the terms of the October 2023 Note Purchase Agreement contain customary affirmative and negative covenants that, among other things, limit the Company's ability to make certain distributions or certain investments, incur debt, incur liens and enter into certain transactions.
Fixed Rate Mortgages Payable
Fixed rate mortgages have scheduled maturities at various dates through October 2031, and have effective interest rates that range from 2.77% to 4.34%. Principal and interest are generally payable monthly or in monthly interest-only payments with balloon payments due at maturity.
On July 9, 2021, the Company entered into an agreement with a single lender for an $88.0 million debt financing secured by a first lien on eight of the Company's self storage properties. This interest-only loan matures in July 2028 and has a fixed interest rate of 2.77%.
Future Debt Maturities
Based on existing debt agreements in effect as of December 31, 2023, the scheduled principal and maturity payments for the Company's outstanding borrowings are presented in the table below (dollars in thousands):
| Year Ending December 31, | Scheduled Principal and Maturity Payments | Premium Amortization and Unamortized Debt Issuance Costs | Total | |||||||||||||||||
| 2024 | $ | 296,964 | $ | (3,248) | $ | 293,716 | ||||||||||||||
| 2025 | 327,185 | (2,185) | 325,000 | |||||||||||||||||
| 2026 | 377,322 | (1,840) | 375,482 | |||||||||||||||||
| 2027 | 598,369 | (1,230) | 597,139 | |||||||||||||||||
| 2028 | 385,624 | (990) | 384,634 | |||||||||||||||||
| Thereafter | 1,683,293 | (1,059) | 1,682,234 | |||||||||||||||||
| $ | 3,668,757 | $ | (10,552) | $ | 3,658,205 | |||||||||||||||
9. EQUITY-BASED AWARDS
The Company grants awards in the form of LTIP units and restricted common shares to provide equity based incentive compensation to members of its senior management team, independent trustees, advisers, consultants, other personnel, and as consideration for self storage property acquisitions.
LTIP units were first granted under the 2013 Long-Term Incentive Plan (the "2013 Plan"), which authorized up to 2.5 million LTIP units for issuance. In connection with the Company's initial public offering, the Company terminated the 2013 Plan but the awards granted thereunder remained outstanding after its termination. Restricted common shares were first granted under the 2015 National Storage Affiliates Trust Equity Incentive Plan (the "2015 Plan"), which authorizes the Company's compensation, nominating, and corporate governance committee to grant share options, restricted common shares, phantom shares, dividend equivalent rights, LTIP units and other restricted limited partnership units issued by its operating partnership and other equity-based awards up to an aggregate of 5% of the common shares issued and outstanding from time to time on a fully diluted basis (assuming, if applicable, the exercise of all outstanding options and the conversion of all warrants and convertible securities, including OP units and LTIP units, into common shares).
As of December 31, 2023, the Company did not have outstanding under its equity compensation plan, any options, warrants or rights to purchase the Company's common shares.
F-35
LTIP Units
Through December 31, 2017,2023, an aggregate of 2,474,710 LTIP units have been issued under the 2013 Plan, 396,4711,624,137 LTIP units have been issued under the 2015 Plan, and 313,585373,353 LTIP units have been issued under the LP Agreement. Some of the granted LTIP units vested immediately or upon completion of the Company's initial public offering. Others vest upon the contribution of self storage properties or along a schedule at certain times through January 1, 2020.June 10, 2027.
Compensatory Grants
The Company grants two types of compensatory LTIP units, time-based LTIP unit awards that are subject to time-based vesting typically over a period of one to threefour years from the grant date, so long as such person remains an employee or trustee, and performance-based LTIP unit awards, which are designed to align the interests of the Company's executive officers with those of the Company's shareholders in a pay-for-performance structure. The performance-based LTIP unit awards vest contingent upon the achievement of performance criteria measured over a period of three years from the grant date, which is based on the Company's total shareholder return ("TSR") relative to the TSR of the companies in the Morgan Stanley Capital International US REIT Index and the Company's TSR relative to the three year cumulative weighted average TSR of its peers in the self storage industry. The value of the performance-based LTIP unit awards taketakes into consideration the probability that the awards will ultimately vest; therefore previously recorded compensation expense is not adjusted in the event that the performance criteria is not achieved.
Compensation expense related to compensatory LTIP units granted to members of the Company's senior management team, the Company's independent trustees, advisers, consultants and other personnel is included in general and administrative expense in the accompanying consolidated statements of operations. Total compensation cost recognized for the compensatory LTIP unit awards was $3.5$6.3 million, $2.5$5.9 million and $3.0$5.1 million for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively. At December 31, 2017,2023, total unvested compensation cost not yet recognized was $3.4$6.7 million. The Company expects to recognize this compensation cost over a period of approximately 2.03.4 years. If the grantee has a termination of service for any reason during the vesting period, the unvested LTIP units will be forfeited subject to certain limited exceptions.
Time-based LTIP unit awards are granted with a fair value equal to the closing market price of the Company's common shares on the date of grant. The following table summarizes activity for the time-based LTIP unit awards for the years ended December 31, 2017, 20162023, 2022 and 2015:
| Time-Based LTIP Unit Awards | ||||||||||||||||||||
| 2017 | 2016 | 2015 | ||||||||||||||||||
| Number of LTIP units | Weighted Average Grant-Date Fair Value | Number of LTIP units | Weighted Average Grant-Date Fair Value | Number of LTIP units | Weighted Average Grant-Date Fair Value | |||||||||||||||
| Outstanding unvested at beginning of year | 294,529 | $ | 14.74 | 236,265 | $ | 10.41 | 509,166 | $ | 10.07 | |||||||||||
| Granted | 128,051 | 22.89 | 177,546 | 17.59 | 6,000 | 13.00 | ||||||||||||||
| Vested | (194,814 | ) | 13.43 | (119,282 | ) | 10.41 | (278,901 | ) | 9.84 | |||||||||||
| Unvested at end of year | 227,766 | $ | 20.37 | 294,529 | $ | 14.74 | 236,265 | $ | 10.41 | |||||||||||
| Time-Based LTIP Unit Awards | |||||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||||||||||||||||||||
| Number of LTIP units | Weighted Average Grant-Date Fair Value | Number of LTIP units | Weighted Average Grant-Date Fair Value | Number of LTIP units | Weighted Average Grant-Date Fair Value | ||||||||||||||||||||||||||||||
| Outstanding unvested at beginning of year | 132,414 | $ | 48.35 | 158,976 | $ | 36.95 | 170,265 | $ | 28.93 | ||||||||||||||||||||||||||
| Granted | 129,933 | 39.55 | 71,673 | 58.42 | 98,376 | 41.02 | |||||||||||||||||||||||||||||
| Vested | (84,548) | 45.39 | (92,073) | 36.58 | (105,561) | 27.61 | |||||||||||||||||||||||||||||
| Forfeited | — | — | (6,162) | 47.34 | (4,104) | 41.84 | |||||||||||||||||||||||||||||
| Unvested at end of year | 177,799 | $ | 41.07 | 132,414 | $ | 48.35 | 158,976 | $ | 36.95 | ||||||||||||||||||||||||||
The aggregate fair value of the time-based LTIP unit awards that vested during the years ended December 31, 2017, 20162023, 2022 and 20152021 was $2.6$3.8 million, $1.2$3.4 million and $2.7$2.9 million, respectively.
F-36
The following table summarizes activity for the performance-based LTIP unit awards granted during the year ended December 31, 2017,2023, 2022 and 2021, including the the minimum, target and maximum number of LTIP units that may be earned upon the achievement of the performance criteria measured over the period of three years from the grant date.
| Performance-Based LTIP Unit Awards | |||||||||||||||||||||||
| Minimum | Target | Maximum | Weighted Average Grant-Date Fair Value | ||||||||||||||||||||
| Outstanding unvested at December 31, 2020 | — | 134,487 | 250,014 | $ | 30.69 | ||||||||||||||||||
| Granted | — | 49,522 | 99,041 | 41.68 | |||||||||||||||||||
| Vested | — | (37,908) | (47,206) | 24.76 | |||||||||||||||||||
| Forfeited | — | — | (9,656) | 24.21 | |||||||||||||||||||
| Outstanding unvested at December 31, 2021 | — | 146,101 | 292,193 | $ | 35.98 | ||||||||||||||||||
| Granted | — | 40,117 | 80,228 | 61.66 | |||||||||||||||||||
| Vested | — | (42,744) | (85,485) | 29.76 | |||||||||||||||||||
| Forfeited | — | — | — | — | |||||||||||||||||||
| Outstanding unvested at December 31, 2022 | — | 143,474 | 286,936 | $ | 44.99 | ||||||||||||||||||
| Granted | — | 74,162 | 148,324 | 42.28 | |||||||||||||||||||
| Vested | — | (21,916) | (43,832) | 19.27 | |||||||||||||||||||
| Forfeited | — | (31,923) | (63,835) | 16.85 | |||||||||||||||||||
| Outstanding unvested at December 31, 2023 | — | 163,797 | 327,593 | $ | 23.42 | ||||||||||||||||||
| Performance-Based LTIP Unit Awards | ||||||||||||
| Minimum | Target | Maximum | Weighted Average Grant-Date Fair Value | |||||||||
| Outstanding unvested at December 31, 2016 | — | — | — | $ | — | |||||||
| Granted | — | 40,390 | 90,874 | 27.63 | ||||||||
| Outstanding unvested at December 31, 2017 | — | 40,390 | 90,874 | $ | 27.63 | |||||||
the performance-based LTIP unit awards that vested during the year ended December 31, 2023, 2022 and 2021 was $0.5 million, $1.3 million and $0.9 million, respectively. The fair value of the performance-based LTIP unit awards, which have a market condition, is estimated on the date of grant using a Monte Carlo simulation. The simulation requires assumptions for expected volatility, risk-free rate of return, and dividend yield. The following table summarizes the assumptions used to value the performance-based LTIP unit awards granted during the yearyears ended December 31, 2017:2023, 2022 and 2021:
| 2023 | 2022 | 2021 | |||||||||||||||
| Risk-free interest rate | 4.22 | % | 1.55 | % | 0.18 | % | |||||||||||
| Dividend yield | 6.09 | % | 3.47 | % | 3.89 | % | |||||||||||
| Expected volatility | 35.39 | % | 30.96 | % | 34.17 | % | |||||||||||
Acquisition Consideration Grants
On December 31, 2013, the Company granted 1,683,560 LTIP units under the 2013 Plan to PROsand on January 23, 2020 the Company granted 28,894 LTIP units under the LP Agreement as part of the consideration for their respective self storage property acquisitions and contributions. The following table presents the number of units vested and forfeitedsummarizes activity for acquisition grants during the years ended December 31, 2017, 20162023, 2022 and 2015:2021:
F-37
| Total LTIP units | ||||||
| Total unvested units, December 31, | ||||||
| Units vested in | — | |||||
| Units forfeited in 2021 | — | |||||
| Total unvested units, December 31, 2021 | 252,894 | |||||
| Units vested in 2022 | — | |||||
| Units forfeited in 2022 | — | |||||
| Total unvested units, December 31, 2022 | 252,894 | |||||
| Units vested in 2023 related to properties contributed or sourced by PROs | ||||||
| Units forfeited in 2023 | (28,894) | |||||
| Total unvested units, December 31, | ||||||
The aggregate fair value of purchase consideration recognized during the yearsyear ended December 31, 2017, 2016 and 20152023 was $0.9 million, $0.8 million and $1.4 million, respectively.$0.5 million. As of December 31, 2017,2023, the remaining unvested LTIP units will vest as additional self storage properties are contributed or sourced by the PROs.sourced. The fair value of such LTIP units will be recorded as additional acquisition consideration based on the fair value in the period such acquisitions are completed.
Restricted Common Shares
Through December 31, 2017,2023, an aggregate of 41,825146,724 restricted common shares have been issued under the 2015 Plan. These restricted common shares vest over a weighted average period of approximately 3.03.4 years. Restricted common shares are granted with a fair value equal to the closing market price of the Company's common shares on the date of grant.
The following table summarizes activity for restricted common shares for the years ended December 31, 20172023, 2022 and 2016:2021:
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 2016 | 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number of Restricted Common Shares | Weighted Average Grant-Date Fair Value | Number of Restricted Common Shares | Weighted Average Grant-Date Fair Value | Number of Restricted Common Shares | Weighted Average Grant-Date Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2023 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number of Restricted Common Shares | Number of Restricted Common Shares | Weighted Average Grant-Date Fair Value | Number of Restricted Common Shares | Weighted Average Grant-Date Fair Value | Number of Restricted Common Shares | Weighted Average Grant-Date Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding at beginning of year | 13,590 | $ | 12.40 | 11,000 | $ | 12.40 | — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Granted | 16,525 | 24.04 | 8,090 | 17.19 | 17,210 | 12.40 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Vested | (8,530 | ) | 14.11 | (5,500 | ) | 12.40 | (6,000 | ) | 12.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forfeited | — | — | — | — | (210 | ) | 12.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unvested at end of year | 21,585 | $ | 22.43 | 13,590 | $ | 12.40 | 11,000 | $ | 12.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The aggregate fair value of restricted common shares that vested during the years ended December 31, 2017, 20162023, 2022 and 20152021 was $0.1$0.5 million, $0.1$0.4 million and $0.1$0.4 million respectively. Total compensation cost recognized for restricted common shares during the years ended December 31, 2017, 20162023, 2022 and 20152021 was $0.2$0.4 million, $0.1$0.5 million and $0.1$0.4 million, respectively. At December 31, 2017,2023, total unvested compensation cost not yet recognized was $0.3$0.6 million. The Company expects to recognize this compensation cost over a period of approximately 2.03.4 years. If the grantee has a termination of service for any reason during the vesting period, the unvested restricted common shares will be forfeited. Compensation expense related to restricted common shares is included in general and administrative expense in the accompanying consolidated statements of operations.
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10. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings (loss) per common share for the years ended December 31, 2017, 20162023, 2022 and 20152021 (in thousands, except per share amounts):
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 2016 | 2015 | |||||||||||||||||||||||||||||||||||||||||||
| Earnings (loss) per common share - basic and diluted | |||||||||||||||||||||||||||||||||||||||||||||
| Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2023 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||
| Earnings per common share - basic and diluted | |||||||||||||||||||||||||||||||||||||||||||||
| Numerator | |||||||||||||||||||||||||||||||||||||||||||||
| Numerator | |||||||||||||||||||||||||||||||||||||||||||||
| Numerator | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 45,998 | $ | 24,866 | $ | 4,796 | |||||||||||||||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | (43,037 | ) | (6,901 | ) | 7,644 | ||||||||||||||||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | |||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to National Storage Affiliates Trust | 2,961 | 17,965 | 12,440 | ||||||||||||||||||||||||||||||||||||||||||
| Distributions to preferred shareholders | (2,300 | ) | — | — | |||||||||||||||||||||||||||||||||||||||||
| Distributed and undistributed earnings allocated to participating securities | (28 | ) | (18 | ) | (9 | ) | |||||||||||||||||||||||||||||||||||||||
| Net income attributable to common shareholders - basic | 633 | 17,947 | 12,431 | ||||||||||||||||||||||||||||||||||||||||||
| Effect of assumed conversion of dilutive securities | — | 6,783 | (4,919 | ) | |||||||||||||||||||||||||||||||||||||||||
| Net income attributable to common shareholders - diluted | $ | 633 | $ | 24,730 | $ | 7,512 | |||||||||||||||||||||||||||||||||||||||
| Denominator | |||||||||||||||||||||||||||||||||||||||||||||
| Denominator | |||||||||||||||||||||||||||||||||||||||||||||
| Denominator | |||||||||||||||||||||||||||||||||||||||||||||
| Weighted average shares outstanding - basic | |||||||||||||||||||||||||||||||||||||||||||||
| Weighted average shares outstanding - basic | |||||||||||||||||||||||||||||||||||||||||||||
| Weighted average shares outstanding - basic | 44,423 | 29,887 | 15,463 | ||||||||||||||||||||||||||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||||||||||||||||||||||||
| Weighted average effect of outstanding forward offering agreement | |||||||||||||||||||||||||||||||||||||||||||||
| Weighted average effect of outstanding forward offering agreement | |||||||||||||||||||||||||||||||||||||||||||||
| Weighted average effect of outstanding forward offering agreement | |||||||||||||||||||||||||||||||||||||||||||||
| Weighted average OP units outstanding | — | 24,262 | 15,697 | ||||||||||||||||||||||||||||||||||||||||||
| Weighted average DownREIT OP unit equivalents outstanding | — | 1,835 | 1,171 | ||||||||||||||||||||||||||||||||||||||||||
| Weighted average LTIP units outstanding | — | 1,846 | 1,272 | ||||||||||||||||||||||||||||||||||||||||||
| Weighted average subordinated performance units and DownREIT subordinated performance unit equivalents | — | 20,917 | 11,806 | ||||||||||||||||||||||||||||||||||||||||||
| Weighted average shares outstanding - diluted | 44,423 | 78,747 | 45,409 | ||||||||||||||||||||||||||||||||||||||||||
| Earnings (loss) per share - basic | $ | 0.01 | $ | 0.60 | $ | 0.80 | |||||||||||||||||||||||||||||||||||||||
| Earnings (loss) per share - diluted | $ | 0.01 | $ | 0.31 | $ | 0.17 | |||||||||||||||||||||||||||||||||||||||
| Earnings per share - basic | |||||||||||||||||||||||||||||||||||||||||||||
| Earnings per share - basic | |||||||||||||||||||||||||||||||||||||||||||||
| Earnings per share - basic | |||||||||||||||||||||||||||||||||||||||||||||
| Earnings per share - diluted | |||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared per common share | $ | 1.04 | $ | 0.88 | $ | 0.54 | |||||||||||||||||||||||||||||||||||||||
As discussed in Note 2, the Company allocates GAAP income (loss) utilizing the HLBV method, in which the Company allocates income or loss based on the change in each unitholders' claim on the net assets of its operating partnership at period end after adjusting for any distributions or contributions made during such period. Due to the stated liquidation priorities and because the HLBV method incorporates non-cash items such as depreciation expense, in any given period, income or loss may be allocated disproportionately to National Storage Affiliates Trust and noncontrolling interests, resulting in volatile fluctuations of basic and diluted earnings (loss) per share. Additionally, the Company did not have an ownership interest or share in its operating partnership's profits and losses prior to the completion of the Company's initial public offering. As a result, all of the operating partnership's profits and losses for the period from January 1, 2015 to April 28, 2015 were allocated to noncontrolling interests.
Outstanding equity interests of the Company's operating partnership and DownREIT partnerships are considered potential common shares for purposes of calculating diluted earnings (loss) per share as the unitholders may, through the exercise of redemption rights, obtain common shares, subject to various restrictions. Basic earnings per share is calculated based on the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by further adjusting for the dilutive impact using the treasury stock method for unvested LTIP units subject to a service condition outstanding during the period and the if-converted method for any convertible securities outstanding during the period.
F-39
Generally, following certain lock-out periods, OP units in the Company's operating partnership are redeemable for cash or, at the Company's option, exchangeable for common shares on a one-for-one basis, subject to certain adjustments and DownREIT OP units are redeemable for cash or, at the Company's option, exchangeable for OP units in its operating partnership on a one-for-one basis, subject to certain adjustments in each case.
LTIP units may also, under certain circumstances, be convertible into OP units on a one-for-one basis, which are then exchangeable for common shares as described above. Vested LTIP units and unvested LTIP units that vest based on a service condition are allocated income or loss in a similar manner as OP units. Unvested LTIP units subject to a service or market condition are evaluated for dilution using the treasury stock method. For the year ended December 31, 2017, 318,6402023, 505,392 unvested LTIP units that vest based on a service or market condition are excluded from the calculation of diluted earnings (loss) per share as they are not dilutive to earnings (loss) per share. For the year ended December 31, 2017, 224,0002023, 208,400 unvested LTIP units that vest upon the future acquisition of properties are excluded from the calculation of diluted earnings (loss) per share because the contingency for the units to vest has not been attained as of the end of the reported periods.period.
Subordinated performance units may also, under certain circumstances, be convertible into OP units which are exchangeable for common shares as described above, and DownREIT subordinated performance units may, under certain circumstances, be exchangeable for subordinated performance units on a one-for-one basis. Subordinated performance units are only convertible into OP units, after a two year lock-out period and then generally (i) at the holder’s election only upon the achievement of certain performance thresholds relating to the properties to which such subordinated performance units relate or (ii) at the Company's election upon a retirement event of a PRO that holds such subordinated performance units or upon certain qualifying terminations. Although subordinated performance units may only be convertible after a two year lock-out period, the Company assumes a hypothetical conversion of each subordinated performance unit (including each DownREIT subordinated performance unit) into OP units (with subsequently assumed redemption into common shares) for the purposes of calculating diluted weighted average common shares. This hypothetical conversion is calculated using historical financial information, and as a result, is not necessarily indicative of the results of operations, cash flows or financial position of the Company upon expiration of the two-year lock out period on conversions.
For the year ended December 31, 2017,2022, potential common shares totaling 50.658.7 million related to OP units, DownREIT OP units, subordinated performance units, and DownREIT subordinated performance units and vested LTIP units have been excluded from the calculation of diluted earnings (loss) per share as they are not dilutive to earnings (loss) per share.
Participating securities, which consist of unvested restricted common shares, receive dividends equal to those received by common shares. The effect of participating securities for the periods presented above is calculated using the two-class method of allocating distributed and undistributed earnings.
11. RELATED PARTY TRANSACTIONS
Supervisory and Administrative Fees
Payroll Services
F-40
Due Diligence Costs
During the years ended December 31, 2017, 20162023, 2022 and 2015,2021, the Company incurred $0.7 million, $1.1$25,000, $0.4 million and $0.6$1.7 million, respectively, of expenses payable to certain PROs related to self storage property acquisitions sourced by the PROs. These expenses, which are based on the volume of transactions sourced by the PROs, are intended to reimburse the PROs for due diligence costs incurred in the sourcing and underwriting process. For the yearyears ended December 31, 2017,2023, 2022 and 2021 these due diligence costs are capitalized as part of the basis of the acquired self storage properties and for the years ended December 31, 2016 and 2015, these due diligence costs are included in acquisition costs in the accompanying statements of operations.properties.
In connection with the acquisitionretirement of 16 self storage properties from PROs duringMove It as a PRO as discussed in Note 1, Note 3, and Note 6, effective as of January 1, 2023, 926,623 Series MI subordinated performance units converted into 2,545,063 OP units as a non-voluntary conversion. Of these, (i) Mr. Nordhagen, our vice chairperson, received 448,047 OP units with a value of $9.8 million upon conversion of 163,128 Series MI subordinated performance units and (ii) Mr. Cramer, our president and chief executive officer, received 204,943 OP units with a value of $4.5 million upon the year ended December 31, 2014,conversion of 74,617 Series MI subordinated performance units.
In connection with the retirement of Northwest as a PRO, effective as of January 1, 2022, 2,078,357 Series NW subordinated performance units converted into 3,911,260 OP units as a non-voluntary conversion. Of these, (i) a company owned and controlled by J. Timothy Warren, a trustee of the Company assumed certain mortgagesat that provided for interest at above-market rates. The sellers of the self storage properties agreed to reimburse the Company for the difference between the fair value and the contractualtime, received 13,213 OP units with a value of the assumed mortgages which amounted to $5.2 million. Due to the structure$0.9 million upon conversion of the transaction, the amount owed to the Company was considered7,021 Series NW subordinated performance units and (ii) a receivable for the issuance of equity and was recorded as an offset against equity. During the years ended December 31, 2017 and 2016, the Companycompany controlled by J. Timothy Warren, but owned by Mr. Warren's adult children, received above-market interest reimbursements from the sellers totaling $1.3 million and $1.4 million, respectively.
Self Storage Property Acquisitions
During the year ended December 31, 2017,2021, the Company issued 44,917 subordinated performance units as partial consideration for the acquisition of a self storage property to SA-SCMI LLC, an affiliate of SecurCare and Move It. At the time of the issuance, SA-SCMI LLC was an affiliate of Arlen D. Nordhagen, the Company's chairman and chief executive officer. In addition, during the year ended December 31, 2017, the Company issued 26,049 OP units as partial consideration for the acquisition of a self storage property to Nordhagen LLLP, an affiliate of Mr. Nordhagen, and 22,214 subordinated performance units as partial consideration for the acquisition of a self storage property to SecurCare, an affiliate Mr. Nordhagen.
Acquisition of Interest in Reinsurance Company and Related Cash Flows
On December 31, 2021, the Company, as acquiror, and Northwest (e.g. Kevin Howard Family Limited Partnership I,Real Estate, Inc.) and KHJTW, LLC (an entity owned by an affiliate of Northwest and an affiliate of Kevin Howard,entity controlled by J. Timothy Warren, a membertrustee of the Company's board of trustees.
The consideration paid for the interest in the Reinsurance Company and the rights to access fees associated with the tenant insurance-related arrangements was $9.5 million, which consisted of $2.9 million of cash and 96,256 OP units as partialtotaling $6.6 million. Of the total consideration for the acquisition oftransferred, a self storage property to Van Mourick Diversified, LP, an affiliate of Optivestcompany controlled by Mr. Warren, but owned by Mr. Warren's adult children received 48,128 OP Units totaling approximately $3.3 million. The Contribution Agreement contains customary representations, warranties, covenants and an affiliate of Mark Van Mourick, a memberagreements of the Company's board of trustees.Company and the sellers.
12. COMMITMENTS AND CONTINGENCIES
| Year Ending December 31, | Real Estate Leasehold Interests | Office Lease | Total | |||||||||
| 2018 | $ | 1,329 | $ | 184 | $ | 1,513 | ||||||
| 2019 | 1,334 | 188 | 1,522 | |||||||||
| 2020 | 1,379 | 112 | 1,491 | |||||||||
| 2021 | 1,404 | — | 1,404 | |||||||||
| 2022 | 1,419 | — | 1,419 | |||||||||
| 2023 through 2092 | 37,498 | — | 37,498 | |||||||||
| $ | 44,363 | $ | 484 | $ | 44,847 | |||||||
Legal Proceedings
The Company is subject to litigation, claims, and assessments that may arise in the ordinary course of its business activities. Such matters include contractual matters, employment related issues, and regulatory proceedings. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters will not have a material adverse effect on the Company's financial position, results of operations, or liquidity.
F-41
13. LEASES
Real Estate Leasehold Interests
The Company has seven properties that are subject to non-cancelable leasehold interest agreements with remaining lease terms ranging from 11 to 51 years, inclusive of extension options that the Company anticipates exercising. Rent expense under these leasehold interest agreements is included in property operating expenses in the accompanying consolidated statements of operations and amounted to $1.6 million, $1.6 million and $1.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Office Leases
The Company has entered into non-cancelable lease agreements for its corporate office space with remaining lease terms ranging from 3 to 5 years. Rent expense related to these office leases is included in general and administrative expenses in the accompanying consolidated statements of operations and amounted to $0.4 million, $0.4 million and $0.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Solar Panel Leases
During year ended December 31, 2022, the Company entered into non-cancelable lease agreements for solar panels with remaining lease terms of 20 years. Rent expense related to these solar panel leases is included in general and administrative expenses in the accompanying consolidated statements of operations and amounted to $0.2 million and $0.1 million for the year ended December 31, 2023 and 2022.
The weighted-average remaining lease term and the weighted-average discount rate for the Company's operating leases as of December 31, 2023 are as follows:
| December 31, 2023 | ||||||||||||||
| Weighted-average remaining lease term | ||||||||||||||
| Real estate leasehold interests | 24 years | |||||||||||||
| Office leases | 4 years | |||||||||||||
| Solar Panels | 19 years | |||||||||||||
| Weighted-average remaining discount rate | ||||||||||||||
| Real estate leasehold interests | 4.8 | % | ||||||||||||
| Office leases | 3.8 | % | ||||||||||||
| Solar Panels | 4.3 | % | ||||||||||||
F-42
As of December 31, 2023, the future minimum lease payments under the Company's operating leases, for which the Company is a lessee, are as follows (dollars in thousands):
| Year Ending December 31, | Real Estate Leasehold Interests | Office Leases | Solar Panels | Total | ||||||||||||||||||||||
| 2024 | $ | 1,442 | $ | 450 | $ | 150 | $ | 2,042 | ||||||||||||||||||
| 2025 | 1,493 | 456 | 154 | 2,103 | ||||||||||||||||||||||
| 2026 | 1,520 | 429 | 165 | 2,114 | ||||||||||||||||||||||
| 2027 | 1,536 | 97 | 165 | 1,798 | ||||||||||||||||||||||
| 2028 | 1,542 | 97 | 170 | 1,809 | ||||||||||||||||||||||
| 2029 through 2092 | 26,613 | — | 3,008 | 29,621 | ||||||||||||||||||||||
| Total lease payments | $ | 34,146 | $ | 1,529 | $ | 3,812 | $ | 39,487 | ||||||||||||||||||
| Less imputed interest | (13,914) | (98) | (1,280) | (15,292) | ||||||||||||||||||||||
| Total | $ | 20,232 | $ | 1,431 | $ | 2,532 | $ | 24,195 | ||||||||||||||||||
14. FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
The Company sometimes limits its exposure to interest rate fluctuations by entering into interest rate swap agreements. The interest rate swap agreements moderate the Company's exposure to interest rate risk by effectively converting the interest on variable rate debt to a fixed rate. The Company measures its interest rate swap derivatives at fair value on a recurring basis. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income (loss) and are subsequently reclassified into earnings in the period that the hedged transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly into earnings.
Information regarding the Company's interest rate swaps measured at fair value, which are classified within Level 2 of the GAAP fair value hierarchy, is presented below (dollars in thousands):
| Interest Rate Swaps Designated as Cash Flow Hedges | |||
| Fair value at December 31, 2015 | $ | (972 | ) |
| Designation of interest rate swap as a cash flow hedge | 19 | ||
| Losses on interest rate swaps reclassified into interest expense from accumulated other comprehensive loss | 2,678 | ||
| Unrealized losses included in accumulated other comprehensive loss | 6,434 | ||
| Fair value at December 31, 2016 | $ | 8,159 | |
| Cash flow hedge ineffectiveness | 12 | ||
| Losses on interest rate swaps reclassified into interest expense from accumulated other comprehensive loss | 2,308 | ||
| Unrealized gains included in accumulated other comprehensive loss | 1,935 | ||
| Fair value at December 31, 2017 | $ | 12,414 | |
| Interest Rate Swaps Designated as Cash Flow Hedges | |||||
| Fair value at December 31, 2021 | $ | (33,757) | |||
| Cash flow hedge ineffectiveness included in accumulated other comprehensive income | 7 | ||||
| Losses on interest rate swaps reclassified into interest expense from accumulated other comprehensive income | 2,315 | ||||
| Unrealized gains on interest rate swaps included in accumulated other comprehensive income | 82,418 | ||||
| Fair value at December 31, 2022 | $ | 50,983 | |||
| Fair value at December 31, 2022 | $ | 50,983 | |||
| (Gains) and losses on interest rate swaps reclassified into interest expense from accumulated other comprehensive income (loss) | (35,716) | ||||
| Unrealized gains and realized (losses) on interest rate swaps and forward starting swaps included in accumulated other comprehensive income | 10,893 | ||||
| Fair value at December 31, 2023 | $ | 26,160 | |||
As of December 31, 20172023 and 2016,2022, the Company had outstanding interest rate swaps designated as cash flow hedges with aggregate notional amounts of $595.0$1,335.0 million and $425.0$1,410.0 million, respectively. As of December 31, 2017,2023, the Company's swaps had a weighted average remaining term of 3.52.9 years.
F-43
In connection with the issuance of fixed rate unsecured notes in the second quarter of 2023, we entered into $50.0 million of forward starting interest rate swaps on March 16, 2023, and a $25.0 million forward starting interest rate swap on March 24, 2023, locking the interest rate of compounded SOFR at 3.25% through April 5, 2023. These interest rate swaps have been designated as cash flow hedges. The realized loss of $1.6 million of the compounded SOFR swaps are included in unrealized and realized gains (loss) on derivative instruments in comprehensive income (loss) and will be reclassified into interest expense over 10 years, which is the term of anticipated unsecured fixed rate debt including any replacement debt thereof. Amounts reported in accumulated other comprehensive (loss) income will be reclassified into interest expense as interest payments are made on the anticipated debt.
The fair value of these swaps are presented withinincluded in other assets and accounts payable and accruedinterest rate swap liabilities in the accompanying consolidated balance sheets, and the Company recognizes any changes in the fair value as an adjustment of accumulated other comprehensive income (loss) within equity to the extent of their effectiveness. If the forward rates at December 31, 20172023 remain constant, the Company estimates that during the next 12 months, the Company would reclassify into earnings, as a reduction in interest expense, approximately $1.1$25.2 million of the unrealized lossesgains included in accumulated other comprehensive loss.income (loss). If market interest rates increaseremain above the 1.51%2.56% weighted average fixed rate under these interest rate swaps the Company will continue to benefit from net cash payments due to it from its counterpartycounterparties to the interest rate swaps.
There were no transfers between levels during the years ended December 31, 20172023 and 2016.2022. For financial assets and liabilities that utilize Level 2 inputs, the Company utilizes both direct and indirect observable price quotes, including LIBORapplicable yield curves. The Company uses valuation techniques for Level 2 financial assets and liabilities which include LIBORapplicable yield curves at the reporting date as well as assessing counterparty credit risk. Counterparties to these contracts are highly rated financial institutions. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company's derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and the counterparties. As of December 31, 20172023 and 2016,2022, the Company determined that the effect of credit valuation adjustments on the overall valuation of its derivative positions are not significant to the overall valuation of its derivatives. Therefore, the Company has determined that its derivative valuations are appropriately classified in Level 2 of the fair value hierarchy.
Fair Value Disclosures
The carrying values of cash and cash equivalents, restricted cash, trade receivables, and accounts payable and accrued liabilities reflected in the consolidated balance sheets at December 31, 20172023 and 2016,2022, approximate fair value due to the short term nature of these financial assets and liabilities. The carrying value of variable rate debt financing, comprising the Revolver, term loans under our credit facility and our term loan facilities, reflected in the consolidated balance sheets at December 31, 20172023 and 20162022, approximates fair value as the changes in their associated interest rates reflect the current market and credit risk is similar to when the loans were originally obtained.
The fair values of fixed rate private placement notes and mortgages were estimated using the discounted estimated future cash payments to be made on such debt; the discount rates used approximated current market rates for loans, or groups of loans, with similar maturities and credit quality (categorized within Level 2 of the fair value hierarchy).
The combined principal balance offollowing table presents the Company's fixed rate mortgages payable was approximately $271.5 million as of December 31, 2017 with acarrying value and estimated fair value of approximately $282.6 million. In determiningour fixed rate private placement notes and mortgages (dollars in thousands):
Carrying Value(1) | Fair Value | |||||||||||||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Private Placement Notes | $ | 1,600,000 | $ | 1,230,000 | $ | 1,417,147 | $ | 1,014,153 | ||||||||||||||||||
| Mortgage Notes | 222,757 | 299,570 | 211,480 | 282,758 | ||||||||||||||||||||||
(1) Carrying value represents the fair value, the Company estimated a weighted average market interest rate of approximately 4.04%, compared to the weighted average contractual interest rate of 4.87%. The combined principal balance of the Company's fixed rate mortgages was approximately $201.7 million as of December 31, 2016 with a fair value of approximately $214.0 million. In determining the fair value as of December 31, 2016, the Company estimated a weighted average market interest rate of approximately 3.89%, compared to the weighted average contractual interest rate of 5.25%.
F-44
| For the three months ended | |||||||||||||||
| March 31, | June 30, | September 30, | December 31, | ||||||||||||
| 2017 | 2017 | 2017 | 2017 | ||||||||||||
| Total revenues | $ | 61,563 | $ | 64,341 | $ | 68,858 | $ | 73,368 | |||||||
| Total operating expenses | 45,613 | 45,008 | 47,561 | 51,448 | |||||||||||
| Income from operations | 15,950 | 19,333 | 21,297 | 21,920 | |||||||||||
| Gain (loss) on sale of self storage properties | — | 5,637 | 106 | (28 | ) | ||||||||||
| Net income | 7,181 | 15,576 | 11,226 | 12,015 | |||||||||||
| Net income (loss) attributable to common shareholders | $ | 555 | $ | 2,367 | $ | 1,271 | $ | (3,532 | ) | ||||||
| Earnings (loss) per share - basic | $ | 0.01 | $ | 0.05 | $ | 0.03 | $ | (0.08 | ) | ||||||
| Earnings (loss) per share - diluted | $ | 0.01 | $ | 0.05 | $ | 0.03 | $ | (0.08 | ) | ||||||
| For the three months ended | |||||||||||||||
| March 31, | June 30, | September 30, | December 31, | ||||||||||||
| 2016 | 2016 | 2016 | 2016 | ||||||||||||
| Total revenues | $ | 39,649 | $ | 47,284 | $ | 52,949 | $ | 59,164 | |||||||
| Total operating expenses | 28,504 | 33,382 | 36,908 | 42,596 | |||||||||||
| Income from operations | 11,145 | 13,902 | 16,041 | 16,568 | |||||||||||
| Net income | 4,802 | 6,045 | 7,944 | 6,075 | |||||||||||
| Net income (loss) attributable to common shareholders | $ | 2,210 | $ | 7,370 | $ | (11 | ) | $ | 8,396 | ||||||
| Earnings (loss) per share - basic | $ | 0.10 | $ | 0.32 | $ | — | $ | 0.22 | |||||||
| Earnings (loss) per share - diluted | $ | 0.07 | $ | 0.08 | $ | — | $ | 0.07 | |||||||
15. SUBSEQUENT EVENTS
Disposition of Self Storage Property AcquisitionsProperties
On February 13, 2024, pursuant to a contribution agreement executed on December 21, 2023, the Company contributed $2.4 million.
Additionally, the Company as parent guarantor, entered into a third increase agreementused the proceeds to pay off the remaining balance on the Revolver and amendment (the "Increase Agreement") with a syndicated group$130 million of lenders to increase the total borrowing capacity under the Company's credit facility by adding an additional tranche D term loan facility ("Term Loan D") in an aggregate outstanding principal amount of $125.0 million, for a total credit facility of over $1.0 billion consisting of the following components: (i) a $400.0 million Revolver, (ii) Term Loan A, which provides for a total borrowing commitment of up $235.0 million, (iii) Term Loan B, which provides for a total borrowing commitment of up to $155.0 million, (iv) Term Loan C, which provides for a total borrowing commitment of up to $105.0 million and (iv) Term Loan D, which provides for a total borrowing commitment of up to $125.0 million. The Company renewed its expansion option under the credit facility to permit an additional $300.0 million of revolving commitments and/or term loans (the "Additional Expansion Option"), which was partially exercised in the amount of $20.0 million in connection with Term Loan D. If exercised in full, the Additional Expansion Option would provide for a total borrowing capacity under the credit facility of $1.3 billion.
Subordinated Performance Unit To OP Unit Conversions
Subordinated performance units are convertible into OP units after a two year lock-out period and then generally (i) at the holder’s election only upon the achievement of certain performance thresholds relating to the properties to
which such subordinated performance units relate (a "voluntary conversion") or (ii) at the Company's election upon a retirement event of a PRO that holds such subordinated performance units or upon certain qualifying terminations.
Following such lock-out period, a holder of subordinated performance units in the Company's operating partnership may elect a voluntary conversion one time each year prior to December 1st to convert a pre-determined portion of such subordinated performance units into OP units in the Company's operating partnership, with such conversion effective January 1st of the following year with each subordinated performance unit being converted into the number of OP units determined by dividing the average cash available for distribution, or CAD, per unit on the series of specific subordinated performance units over the one-year period prior to conversion by 110% of the CAD per unit on the OP units determined over the same period. CAD per unit on the series of specific subordinated performance units and OP units is determined by the Company based generally upon the application of the provisions of the operating partnership agreement applicable to the distributions of operating cash flow and capital transactions proceeds.
During the year ended December 31, 2017,2023, the Company received voluntarynotices requesting the conversion notices for 997,074of 23,690 subordinated performance units. Effective January 1, 2018,2024, the Company issued 2,024,17043,556 OP units in satisfaction of such voluntary conversions.
conversion requests.
NATIONAL STORAGE AFFILIATES TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20172023
(dollars in thousands)
| Location | Initial Cost to Company | Gross Carrying Amount at Year-End | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| State/Territory | Number of Stores | Land | Buildings and Improvements | Subsequent Additions | Land | Buildings and Improvements | Total(1) | Accumulated Depreciation | Date Acquired | |||||||||||||||||||||||||||||||||||||||||||||||
| Alabama | 11 | $ | 13,838 | $ | 79,025 | $ | 5,342 | $ | 14,696 | $ | 83,509 | $ | 98,205 | $ | 9,397 | 2016 - 2022 | ||||||||||||||||||||||||||||||||||||||||
| Arkansas | 5 | 4,302 | 31,721 | 650 | 4,302 | 32,371 | 36,673 | 2,853 | 2021 - 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Arizona | 34 | 48,477 | 162,188 | 12,772 | 48,580 | 174,857 | 223,437 | 42,636 | 2013 - 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
California(2)(3) | 87 | 153,023 | 505,640 | 37,849 | 153,125 | 543,387 | 696,512 | 160,069 | 2008 - 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
| Colorado | 22 | 23,387 | 94,957 | 7,072 | 23,386 | 102,030 | 125,416 | 18,852 | 2007 - 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Connecticut | 3 | 2,515 | 16,119 | 599 | 2,515 | 16,718 | 19,233 | 1,633 | 2020 - 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Florida(2) | 76 | 144,877 | 558,914 | 25,461 | 146,132 | 583,120 | 729,252 | 84,042 | 2015 - 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
| Georgia | 50 | 44,852 | 219,051 | 13,781 | 45,401 | 232,283 | 277,684 | 43,684 | 2007 - 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Iowa | 3 | 4,223 | 25,386 | 4,467 | 4,365 | 29,711 | 34,076 | 2,737 | 2021 - 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Idaho | 5 | 3,177 | 16,287 | 197 | 3,182 | 16,479 | 19,661 | 3,053 | 2019 - 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
| Illinois | 6 | 9,310 | 50,259 | 368 | 9,310 | 50,627 | 59,937 | 5,044 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Indiana | 12 | 9,281 | 65,506 | 809 | 8,737 | 66,859 | 75,596 | 16,255 | 2016 - 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Kansas | 14 | 10,133 | 49,697 | 7,580 | 11,116 | 56,294 | 67,410 | 11,456 | 2018 - 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Kentucky | 5 | 8,802 | 37,015 | 929 | 8,802 | 37,944 | 46,746 | 5,006 | 2015 - 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Louisiana(3) | 25 | 16,903 | 99,694 | 6,281 | 17,917 | 104,961 | 122,878 | 22,335 | 2015 - 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Massachusetts | 7 | 8,839 | 65,291 | 17,493 | 10,814 | 80,809 | 91,623 | 9,134 | 2017 - 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Maryland | 8 | 9,131 | 59,650 | 2,442 | 10,654 | 60,569 | 71,223 | 9,628 | 2017 - 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Minnesota | 4 | 4,081 | 16,382 | 181 | 4,081 | 16,563 | 20,644 | 1,855 | 2020 - 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Missouri | 3 | 2,944 | 21,645 | 323 | 2,944 | 21,968 | 24,912 | 2,308 | 2018 - 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Montana | 1 | 1,476 | 6,656 | 127 | 1,476 | 6,783 | 8,259 | 729 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
North Carolina(2) | 34 | 45,484 | 148,598 | 9,406 | 46,708 | 156,780 | 203,488 | 38,803 | 2007 - 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| New Hampshire | 15 | 20,987 | 81,629 | 7,256 | 20,991 | 88,881 | 109,872 | 17,976 | 2013 - 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| New Jersey | 5 | 4,072 | 32,873 | 1,572 | 4,072 | 34,445 | 38,517 | 6,847 | 2019 - 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| New Mexico | 10 | 11,509 | 58,424 | 4,405 | 12,553 | 61,785 | 74,338 | 8,368 | 2016 - 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Nevada | 15 | 22,877 | 68,230 | 7,780 | 23,007 | 75,880 | 98,887 | 18,093 | 2013 - 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
| New York | 2 | 3,398 | 33,882 | 342 | 3,398 | 34,224 | 37,622 | 2,313 | 2020 - 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Ohio | 1 | 2,059 | 11,660 | 84 | 2,059 | 11,744 | 13,803 | 2,618 | 2018 - 2018 | |||||||||||||||||||||||||||||||||||||||||||||||
| Oklahoma | 33 | 20,429 | 77,337 | 11,705 | 20,429 | 89,042 | 109,471 | 34,257 | 2007 - 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
| Oregon | 70 | 85,970 | 303,534 | 22,491 | 88,666 | 323,329 | 411,995 | 82,547 | 2013 - 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Pennsylvania | 22 | 26,091 | 129,941 | 5,091 | 26,242 | 134,881 | 161,123 | 17,743 | 2019 - 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Puerto Rico | 15 | 12,504 | 220,831 | 3,690 | 12,504 | 224,521 | 237,025 | 21,023 | 2018 - 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
| Initial Cost to Company | Gross Carrying Amount at Year-End | |||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | |||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | |||||||||||||||||||||||
| Mobile | AL | $ | 991 | $ | 4,874 | $ | 712 | $ | 991 | $ | 5,586 | $ | 6,577 | $ | 530 | 4/12/2016 | ||||||||||||||||
| Lake Havasu City-Kingman | AZ | 671 | 1,572 | 27 | 671 | 1,599 | 2,270 | 309 | 4/1/2014 | |||||||||||||||||||||||
| Lake Havasu City-Kingman | AZ | 722 | 2,546 | 45 | 722 | 2,591 | 3,313 | 528 | 7/1/2014 | |||||||||||||||||||||||
| Phoenix-Mesa-Glendale | AZ | 1,089 | 6,607 | 55 | 1,089 | 6,662 | 7,751 | 1,052 | 6/30/2014 | |||||||||||||||||||||||
| Phoenix-Mesa-Glendale | AZ | 3,813 | 7,831 | 59 | 3,813 | 7,890 | 11,703 | 922 | 9/30/2014 | |||||||||||||||||||||||
| Phoenix-Mesa-Glendale | AZ | 1,375 | 2,613 | 38 | 1,375 | 2,651 | 4,026 | 555 | 9/30/2014 | |||||||||||||||||||||||
| Phoenix-Mesa-Glendale | AZ | 1,653 | 7,531 | 16 | 1,653 | 7,547 | 9,200 | 759 | 10/1/2014 | |||||||||||||||||||||||
| Phoenix-Mesa-Glendale | AZ | 1,661 | 3,311 | 44 | 1,661 | 3,355 | 5,016 | 425 | 10/1/2014 | |||||||||||||||||||||||
| Phoenix-Mesa-Glendale | AZ | 1,050 | 5,359 | 21 | 1,050 | 5,380 | 6,430 | 409 | 1/1/2015 | |||||||||||||||||||||||
| Phoenix-Mesa-Glendale | AZ | 1,198 | 1,921 | 2 | 1,198 | 1,923 | 3,121 | 242 | 5/1/2015 | |||||||||||||||||||||||
| Phoenix-Mesa-Glendale | AZ | 1,324 | 3,626 | 35 | 1,324 | 3,661 | 4,985 | 375 | 5/1/2015 | |||||||||||||||||||||||
| Phoenix-Mesa-Glendale | AZ | 3,816 | 4,348 | 8 | 3,816 | 4,356 | 8,172 | 433 | 5/1/2015 | |||||||||||||||||||||||
| Phoenix-Mesa-Scottsdale | AZ | 5,576 | 6,746 | 218 | 5,576 | 6,964 | 12,540 | 581 | 5/19/2016 | |||||||||||||||||||||||
| Phoenix-Mesa-Scottsdale | AZ | 1,506 | 2,881 | 68 | 1,506 | 2,949 | 4,455 | 175 | 7/29/2016 | |||||||||||||||||||||||
| Phoenix-Mesa-Scottsdale | AZ | 2,120 | 5,442 | 17 | 2,120 | 5,459 | 7,579 | 162 | 2/13/2017 | |||||||||||||||||||||||
| Tucson | AZ | 421 | 3,855 | 74 | 421 | 3,929 | 4,350 | 484 | 8/29/2013 | |||||||||||||||||||||||
| Tucson | AZ | 716 | 1,365 | 7 | 716 | 1,372 | 2,088 | 319 | 8/29/2013 | |||||||||||||||||||||||
| Anaheim-Santa Ana-Irvine | CA | 1,530 | 5,799 | 289 | 1,530 | 6,088 | 7,618 | 241 | 8/1/2016 | |||||||||||||||||||||||
| Bakersfield | CA | 511 | 2,804 | 43 | 511 | 2,847 | 3,358 | 174 | 8/1/2016 | |||||||||||||||||||||||
| Bakersfield | CA | 1,409 | 3,907 | 38 | 1,409 | 3,945 | 5,354 | 214 | 8/1/2016 | |||||||||||||||||||||||
| Bakersfield | CA | 1,882 | 3,858 | 82 | 1,882 | 3,940 | 5,822 | 250 | 8/1/2016 | |||||||||||||||||||||||
| Bakersfield | CA | 1,355 | 4,678 | 27 | 1,355 | 4,705 | 6,060 | 277 | 8/1/2016 | |||||||||||||||||||||||
| Bakersfield | CA | 1,306 | 3,440 | 115 | 1,306 | 3,555 | 4,861 | 274 | 8/1/2016 | |||||||||||||||||||||||
| Bakersfield | CA | 1,016 | 3,638 | 34 | 1,016 | 3,672 | 4,688 | 193 | 8/1/2016 | |||||||||||||||||||||||
| Bakersfield | CA | 1,579 | 3,357 | 21 | 1,579 | 3,378 | 4,957 | 225 | 8/1/2016 | |||||||||||||||||||||||
| Bakersfield | CA | 750 | 5,802 | 95 | 750 | 5,897 | 6,647 | 322 | 8/1/2016 | |||||||||||||||||||||||
| Fresno | CA | 840 | 7,502 | 323 | 840 | 7,825 | 8,665 | 591 | 8/1/2016 | |||||||||||||||||||||||
| Los Angeles-Long Beach-Glendale | CA | 2,345 | 6,820 | 619 | 2,345 | 7,439 | 9,784 | 297 | 8/1/2016 | |||||||||||||||||||||||
| Los Angeles-Long Beach-Glendale | CA | 1,350 | 11,266 | 115 | 1,350 | 11,381 | 12,731 | 523 | 8/1/2016 | |||||||||||||||||||||||
| Los Angeles-Long Beach-Glendale | CA | 763 | 6,258 | 84 | 763 | 6,342 | 7,105 | 293 | 8/1/2016 | |||||||||||||||||||||||
| Los Angeles-Long Beach-Santa Ana | CA | 6,641 | 8,239 | 47 | 6,641 | 8,286 | 14,927 | 969 | 4/1/2014 | |||||||||||||||||||||||
| Los Angeles-Long Beach-Santa Ana | CA | 1,122 | 1,881 | 7 | 1,122 | 1,888 | 3,010 | 296 | 6/30/2014 | |||||||||||||||||||||||
| Location | Initial Cost to Company | Gross Carrying Amount at Year-End | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| State/Territory | Number of Stores | Land | Buildings and Improvements | Subsequent Additions | Land | Buildings and Improvements | Total(1) | Accumulated Depreciation | Date Acquired | |||||||||||||||||||||||||||||||||||||||||||||||
| South Carolina | 4 | 11,250 | 43,882 | 195 | 11,095 | 44,232 | 55,327 | 3,134 | 2015 - 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Tennessee | 5 | 7,425 | 38,568 | 662 | 7,425 | 39,230 | 46,655 | 3,475 | 2021 - 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Texas | 172 | 196,279 | 952,394 | 52,289 | 197,467 | 1,003,495 | 1,200,962 | 141,283 | 2007 - 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
| Utah | 1 | 1,063 | 2,468 | 156 | 1,063 | 2,624 | 3,687 | 297 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Virginia | 3 | 4,254 | 23,879 | 197 | 4,254 | 24,076 | 28,330 | 3,712 | 2017 - 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Washington | 19 | 20,409 | 78,144 | 2,049 | 20,411 | 80,191 | 100,602 | 17,908 | 2013 - 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Wisconsin | 1 | 940 | 4,385 | 65 | 940 | 4,450 | 5,390 | 602 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Wyoming | 1 | 743 | 4,881 | 79 | 743 | 4,960 | 5,703 | 654 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Total(4) | 809 | $ | 1,021,314 | $ | 4,496,623 | $ | 274,237 | $ | 1,035,562 | $ | 4,756,612 | $ | 5,792,174 | $ | 874,359 | |||||||||||||||||||||||||||||||||||||||||
| (1) The aggregate cost of land and depreciable property for federal income tax purposes was approximately $5.7 billion (unaudited) at December 31, 2023. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) As of December 31, 2023, 46 of our self storage properties were encumbered by an aggregate of $222.8 million of debt financing. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) Six of the California properties and one of the Louisiana properties are subject to long-term leasehold agreements. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (4) Excludes self storage properties classified as held for sale consisting of (i) 39 stores to be sold in 2024 to a third party and (ii) 56 stores that were contributed to the 2024 Joint Venture in 2024. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note: The Company only owns one class of real estate, which is self storage properties. The estimated useful lives of the individual assets that comprise buildings and improvements range from 3 years to 40 years. The category for buildings and improvements in the table above includes furniture and equipment. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-47
| Initial Cost to Company | Gross Carrying Amount at Year-End | |||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | |||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | |||||||||||||||||||||||
Los Angeles-Long Beach-Santa Ana(3) | CA | 7,186 | 12,771 | 24 | 7,186 | 12,795 | 19,981 | 1,717 | 9/17/2014 | |||||||||||||||||||||||
Los Angeles-Long Beach-Santa Ana(3)(4) | CA | — | 7,106 | 25 | — | 7,131 | 7,131 | 919 | 9/17/2014 | |||||||||||||||||||||||
Los Angeles-Long Beach-Santa Ana(3) | CA | 2,366 | 4,892 | 52 | 2,366 | 4,944 | 7,310 | 684 | 9/17/2014 | |||||||||||||||||||||||
Los Angeles-Long Beach-Santa Ana(3) | CA | 2,871 | 3,703 | 42 | 2,871 | 3,745 | 6,616 | 435 | 10/7/2014 | |||||||||||||||||||||||
Los Angeles-Long Beach-Santa Ana(3) | CA | 5,448 | 10,015 | 148 | 5,448 | 10,163 | 15,611 | 1,403 | 10/7/2014 | |||||||||||||||||||||||
Los Angeles-Long Beach-Santa Ana(4) | CA | — | 13,150 | 15 | — | 13,165 | 13,165 | 1,320 | 1/1/2015 | |||||||||||||||||||||||
Los Angeles-Long Beach-Santa Ana(4) | CA | — | 10,084 | 61 | — | 10,145 | 10,145 | 62 | 10/3/2017 | |||||||||||||||||||||||
| Modesto | CA | 1,526 | 12,032 | 31 | 1,526 | 12,063 | 13,589 | 540 | 11/10/2016 | |||||||||||||||||||||||
| Modesto | CA | 773 | 5,655 | 4 | 773 | 5,659 | 6,432 | 212 | 11/10/2016 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 552 | 3,010 | 109 | 552 | 3,119 | 3,671 | 788 | 5/16/2008 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 1,342 | 4,446 | 62 | 1,342 | 4,508 | 5,850 | 1,265 | 4/1/2013 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 1,672 | 2,564 | 31 | 1,672 | 2,595 | 4,267 | 400 | 4/1/2014 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 978 | 1,854 | 106 | 978 | 1,960 | 2,938 | 416 | 5/30/2014 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 1,068 | 2,609 | 98 | 1,068 | 2,707 | 3,775 | 487 | 5/30/2014 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 1,202 | 2,032 | 48 | 1,202 | 2,080 | 3,282 | 331 | 6/30/2014 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 1,803 | 2,758 | 36 | 1,803 | 2,794 | 4,597 | 587 | 6/30/2014 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 1,337 | 4,489 | 22 | 1,337 | 4,511 | 5,848 | 637 | 6/30/2014 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 846 | 2,508 | 43 | 846 | 2,551 | 3,397 | 505 | 7/1/2014 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 1,026 | 4,552 | 27 | 1,026 | 4,579 | 5,605 | 598 | 9/17/2014 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 1,878 | 5,104 | 35 | 1,878 | 5,139 | 7,017 | 597 | 9/17/2014 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 14,109 | 23,112 | 199 | 14,109 | 23,311 | 37,420 | 3,183 | 9/17/2014 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 3,974 | 6,962 | 92 | 3,974 | 7,054 | 11,028 | 1,143 | 10/1/2014 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 2,018 | 3,478 | 689 | 2,018 | 4,167 | 6,185 | 818 | 10/1/2014 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 1,842 | 3,420 | 9 | 1,842 | 3,429 | 5,271 | 356 | 1/1/2015 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 1,981 | 3,323 | 35 | 1,981 | 3,358 | 5,339 | 433 | 1/1/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 3,418 | 9,907 | 76 | 3,418 | 9,983 | 13,401 | 847 | 8/5/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 1,913 | 6,072 | 67 | 1,913 | 6,139 | 8,052 | 619 | 8/5/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 772 | 4,044 | 72 | 772 | 4,116 | 4,888 | 494 | 8/5/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 597 | 5,464 | 64 | 597 | 5,528 | 6,125 | 483 | 8/5/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 3,022 | 8,124 | 64 | 3,022 | 8,188 | 11,210 | 818 | 8/5/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 2,897 | 5,725 | 646 | 2,467 | 6,371 | 8,838 | 755 | 8/5/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 2,835 | 5,589 | 827 | 2,164 | 6,416 | 8,580 | 680 | 8/5/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 2,484 | 5,903 | 65 | 2,484 | 5,968 | 8,452 | 471 | 8/5/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 1,139 | 5,054 | 3 | 1,139 | 5,057 | 6,196 | 460 | 10/1/2015 | |||||||||||||||||||||||
| Initial Cost to Company | Gross Carrying Amount at Year-End | |||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | |||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 1,401 | 4,577 | 5 | 1,401 | 4,582 | 5,983 | 323 | 10/1/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 925 | 3,459 | 5 | 925 | 3,464 | 4,389 | 325 | 10/1/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 1,174 | 2,556 | 43 | 1,174 | 2,599 | 3,773 | 288 | 10/1/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 1,506 | 2,913 | 9 | 1,506 | 2,922 | 4,428 | 255 | 10/1/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 631 | 2,307 | 35 | 631 | 2,342 | 2,973 | 278 | 10/1/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 1,318 | 2,394 | 3 | 1,318 | 2,397 | 3,715 | 272 | 10/1/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 1,942 | 2,647 | 11 | 1,942 | 2,658 | 4,600 | 354 | 10/1/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 1,339 | 2,830 | 17 | 1,339 | 2,847 | 4,186 | 291 | 10/1/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 1,105 | 2,672 | 5 | 1,105 | 2,677 | 3,782 | 331 | 10/1/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 1,542 | 2,127 | 4 | 1,542 | 2,131 | 3,673 | 262 | 10/1/2015 | |||||||||||||||||||||||
Riverside-San Bernardino-Ontario(3) | CA | 1,478 | 4,534 | 2 | 1,478 | 4,536 | 6,014 | 329 | 10/1/2015 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 3,245 | 4,420 | 1,383 | 3,245 | 5,803 | 9,048 | 472 | 5/16/2016 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 670 | 8,613 | 435 | 670 | 9,048 | 9,718 | 416 | 8/1/2016 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 538 | 3,921 | 367 | 538 | 4,288 | 4,826 | 198 | 8/1/2016 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 382 | 3,442 | 335 | 382 | 3,777 | 4,159 | 181 | 8/1/2016 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 806 | 3,852 | 557 | 806 | 4,409 | 5,215 | 203 | 8/1/2016 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 570 | 4,238 | 314 | 570 | 4,552 | 5,122 | 211 | 8/1/2016 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 345 | 3,270 | 143 | 345 | 3,413 | 3,758 | 182 | 8/1/2016 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 252 | 4,419 | 85 | 252 | 4,504 | 4,756 | 227 | 9/1/2016 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 2,691 | 3,950 | 198 | 2,691 | 4,148 | 6,839 | 175 | 9/1/2016 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 302 | 4,169 | 68 | 302 | 4,237 | 4,539 | 113 | 5/8/2017 | |||||||||||||||||||||||
| Riverside-San Bernardino-Ontario | CA | 896 | 6,397 | 117 | 896 | 6,514 | 7,410 | 167 | 5/31/2017 | |||||||||||||||||||||||
| Sacramento-Roseville-Arden-Arcade | CA | 1,195 | 8,407 | 5 | 1,195 | 8,412 | 9,607 | 307 | 11/10/2016 | |||||||||||||||||||||||
| Sacramento-Roseville-Arden-Arcade | CA | 425 | 7,249 | 12 | 425 | 7,261 | 7,686 | 295 | 11/10/2016 | |||||||||||||||||||||||
| San Diego-Carlsbad | CA | 4,318 | 19,775 | 784 | 4,323 | 20,559 | 24,882 | 821 | 8/1/2016 | |||||||||||||||||||||||
San Diego-Carlsbad-San Marcos(3) | CA | 3,703 | 5,582 | 20 | 3,703 | 5,602 | 9,305 | 667 | 9/17/2014 | |||||||||||||||||||||||
| San Diego-Carlsbad-San Marcos | CA | 3,544 | 4,915 | 130 | 3,544 | 5,045 | 8,589 | 627 | 10/1/2014 | |||||||||||||||||||||||
San Diego-Carlsbad-San Marcos(4) | CA | — | 5,568 | 67 | — | 5,635 | 5,635 | 465 | 1/1/2015 | |||||||||||||||||||||||
San Diego-Carlsbad-San Marcos(4) | CA | — | 4,041 | 47 | — | 4,088 | 4,088 | 618 | 1/31/2015 | |||||||||||||||||||||||
| Stockton-Lodi | CA | 559 | 5,514 | 15 | 559 | 5,529 | 6,088 | 210 | 11/10/2016 | |||||||||||||||||||||||
| Stockton-Lodi | CA | 1,710 | 8,995 | 15 | 1,710 | 9,010 | 10,720 | 389 | 11/10/2016 | |||||||||||||||||||||||
| Stockton-Lodi | CA | 1,637 | 11,901 | 7 | 1,637 | 11,908 | 13,545 | 169 | 7/31/2017 | |||||||||||||||||||||||
| Colorado Springs | CO | 455 | 1,351 | 45 | 455 | 1,396 | 1,851 | 381 | 8/29/2007 | |||||||||||||||||||||||
| Colorado Springs | CO | 588 | 2,162 | 1,088 | 588 | 3,250 | 3,838 | 797 | 3/26/2008 | |||||||||||||||||||||||
| Initial Cost to Company | Gross Carrying Amount at Year-End | |||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | |||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | |||||||||||||||||||||||
| Colorado Springs | CO | 632 | 3,118 | 401 | 632 | 3,519 | 4,151 | 942 | 3/26/2008 | |||||||||||||||||||||||
| Colorado Springs | CO | 414 | 1,535 | 319 | 414 | 1,854 | 2,268 | 498 | 5/1/2008 | |||||||||||||||||||||||
Colorado Springs(3) | CO | 300 | 1,801 | 108 | 300 | 1,909 | 2,209 | 415 | 6/1/2009 | |||||||||||||||||||||||
| Colorado Springs | CO | 766 | 5,901 | 5 | 766 | 5,906 | 6,672 | 44 | 10/19/2017 | |||||||||||||||||||||||
| Denver-Aurora-Broomfield | CO | 868 | 128 | 2,301 | 868 | 2,429 | 3,297 | 467 | 6/22/2009 | |||||||||||||||||||||||
| Denver-Aurora-Lakewood | CO | 938 | 8,449 | 20 | 938 | 8,469 | 9,407 | 275 | 11/1/2016 | |||||||||||||||||||||||
| Fort Collins-Loveland | CO | 3,213 | 3,087 | 157 | 3,213 | 3,244 | 6,457 | 851 | 8/29/2007 | |||||||||||||||||||||||
| Fort Collins-Loveland | CO | 2,514 | 1,786 | 85 | 2,514 | 1,871 | 4,385 | 494 | 8/29/2007 | |||||||||||||||||||||||
| Pueblo | CO | 156 | 2,797 | 6 | 156 | 2,803 | 2,959 | 181 | 2/17/2016 | |||||||||||||||||||||||
Cape Coral-Fort Myers(3) | FL | 4,122 | 8,453 | 31 | 4,122 | 8,484 | 12,606 | 515 | 4/1/2016 | |||||||||||||||||||||||
Cape Coral-Fort Myers(3) | FL | 571 | 3,256 | 36 | 571 | 3,292 | 3,863 | 278 | 4/1/2016 | |||||||||||||||||||||||
| Jacksonville | FL | 2,087 | 19,473 | 39 | 2,087 | 19,512 | 21,599 | 643 | 11/10/2016 | |||||||||||||||||||||||
| Jacksonville | FL | 1,629 | 4,929 | 20 | 1,629 | 4,949 | 6,578 | 217 | 11/10/2016 | |||||||||||||||||||||||
| Jacksonville | FL | 527 | 2,434 | — | 527 | 2,434 | 2,961 | 6 | 12/20/2017 | |||||||||||||||||||||||
Lakeland-Winter Haven(3) | FL | 972 | 2,159 | 133 | 972 | 2,292 | 3,264 | 232 | 5/4/2015 | |||||||||||||||||||||||
Naples-Immokalee-Marco Island(3) | FL | 3,849 | 16,688 | 48 | 3,849 | 16,736 | 20,585 | 863 | 4/1/2016 | |||||||||||||||||||||||
North Port-Sarasota-Bradenton(3) | FL | 2,211 | 5,682 | 5 | 2,211 | 5,687 | 7,898 | 337 | 4/1/2016 | |||||||||||||||||||||||
North Port-Sarasota-Bradenton(3) | FL | 2,488 | 7,282 | 58 | 2,488 | 7,340 | 9,828 | 411 | 4/1/2016 | |||||||||||||||||||||||
North Port-Sarasota-Bradenton(3) | FL | 1,767 | 5,955 | 15 | 1,767 | 5,970 | 7,737 | 382 | 4/1/2016 | |||||||||||||||||||||||
| North Port-Sarasota-Bradenton | FL | 2,143 | 5,005 | 99 | 2,143 | 5,104 | 7,247 | 426 | 10/11/2016 | |||||||||||||||||||||||
North Port-Sarasota-Bradenton(3) | FL | 1,924 | 4,514 | 31 | 1,924 | 4,545 | 6,469 | 322 | 4/1/2016 | |||||||||||||||||||||||
| North Port-Sarasota-Bradenton | FL | 1,176 | 3,421 | 4 | 1,176 | 3,425 | 4,601 | 203 | 4/1/2016 | |||||||||||||||||||||||
North Port-Sarasota-Bradenton(3) | FL | 1,839 | 8,377 | 4 | 1,839 | 8,381 | 10,220 | 423 | 4/1/2016 | |||||||||||||||||||||||
North Port-Sarasota-Bradenton(3) | FL | 2,507 | 7,766 | 13 | 2,507 | 7,779 | 10,286 | 429 | 4/1/2016 | |||||||||||||||||||||||
North Port-Sarasota-Bradenton(3) | FL | 1,685 | 5,439 | 11 | 1,685 | 5,450 | 7,135 | 329 | 4/1/2016 | |||||||||||||||||||||||
North Port-Sarasota-Bradenton(3) | FL | 437 | 5,128 | 33 | 437 | 5,161 | 5,598 | 306 | 4/1/2016 | |||||||||||||||||||||||
| North Port-Sarasota-Bradenton | FL | 1,015 | 3,031 | 4 | 1,015 | 3,035 | 4,050 | 170 | 4/1/2016 | |||||||||||||||||||||||
| North Port-Sarasota-Bradenton | FL | 1,985 | 4,299 | 668 | 1,985 | 4,967 | 6,952 | 172 | 1/31/2017 | |||||||||||||||||||||||
| North Port-Sarasota-Bradenton | FL | 1,336 | 4,085 | — | 1,336 | 4,085 | 5,421 | 93 | 4/6/2017 | |||||||||||||||||||||||
| Orlando-Kissimmee-Sanford | FL | 2,426 | 9,314 | 81 | 2,426 | 9,395 | 11,821 | 362 | 11/10/2016 | |||||||||||||||||||||||
| Orlando-Kissimmee-Sanford | FL | 2,166 | 4,672 | 74 | 2,166 | 4,746 | 6,912 | 204 | 11/10/2016 | |||||||||||||||||||||||
| Orlando-Kissimmee-Sanford | FL | 4,583 | 8,752 | 74 | 4,583 | 8,826 | 13,409 | 425 | 11/10/2016 | |||||||||||||||||||||||
| Orlando-Kissimmee-Sanford | FL | 4,181 | 4,268 | 142 | 4,181 | 4,410 | 8,591 | 102 | 6/30/2017 | |||||||||||||||||||||||
| Pensacola-Ferry Pass-Brent | FL | 1,025 | 8,157 | 54 | 1,025 | 8,211 | 9,236 | 55 | 10/3/2017 | |||||||||||||||||||||||
| Initial Cost to Company | Gross Carrying Amount at Year-End | |||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | |||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | |||||||||||||||||||||||
| Punta Gorda | FL | 1,157 | 2,079 | 62 | 1,157 | 2,141 | 3,298 | 70 | 4/27/2017 | |||||||||||||||||||||||
Tampa-St. Petersburg-Clearwater(3) | FL | 5,436 | 10,092 | 20 | 5,436 | 10,112 | 15,548 | 619 | 4/1/2016 | |||||||||||||||||||||||
Tampa-St. Petersburg-Clearwater(3) | FL | 361 | 1,238 | 29 | 361 | 1,267 | 1,628 | 180 | 5/4/2015 | |||||||||||||||||||||||
| Tampa-St. Petersburg-Clearwater | FL | 3,581 | 2,612 | 22 | 3,581 | 2,634 | 6,215 | 96 | 5/1/2017 | |||||||||||||||||||||||
| Tampa-St. Petersburg-Clearwater | FL | 4,708 | 13,984 | 56 | 4,708 | 14,040 | 18,748 | 279 | 5/24/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 515 | 687 | 97 | 515 | 784 | 1,299 | 227 | 8/29/2007 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 272 | 1,357 | 275 | 272 | 1,632 | 1,904 | 443 | 8/29/2007 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 702 | 1,999 | 293 | 702 | 2,292 | 2,994 | 646 | 8/29/2007 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 1,413 | 1,590 | 159 | 1,413 | 1,749 | 3,162 | 492 | 8/29/2007 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 341 | 562 | 129 | 341 | 691 | 1,032 | 212 | 8/29/2007 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 553 | 847 | 169 | 553 | 1,016 | 1,569 | 305 | 8/29/2007 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 85 | 445 | 260 | 85 | 705 | 790 | 223 | 9/28/2007 | |||||||||||||||||||||||
Atlanta-Sandy Springs-Marietta(3) | GA | 494 | 2,215 | 235 | 494 | 2,450 | 2,944 | 653 | 9/28/2007 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 1,614 | 2,476 | 1,674 | 1,614 | 4,150 | 5,764 | 239 | 7/29/2015 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 1,595 | 2,143 | 218 | 1,595 | 2,361 | 3,956 | 250 | 7/29/2015 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 666 | 5,961 | 10 | 666 | 5,971 | 6,637 | 100 | 7/17/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 1,028 | 7,041 | 6 | 1,028 | 7,047 | 8,075 | 70 | 10/19/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 748 | 3,382 | 7 | 748 | 3,389 | 4,137 | 30 | 10/19/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 703 | 4,014 | 7 | 703 | 4,021 | 4,724 | 35 | 10/19/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 1,873 | 9,109 | 4 | 1,873 | 9,113 | 10,986 | 73 | 10/19/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 547 | 4,073 | 5 | 547 | 4,078 | 4,625 | 34 | 10/19/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 1,499 | 5,279 | — | 1,499 | 5,279 | 6,778 | 45 | 10/19/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 763 | 5,135 | 4 | 763 | 5,139 | 5,902 | 36 | 10/19/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 795 | 2,941 | — | 795 | 2,941 | 3,736 | 25 | 10/19/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 1,356 | 7,516 | 9 | 1,356 | 7,525 | 8,881 | 61 | 10/19/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 912 | 5,074 | — | 912 | 5,074 | 5,986 | 37 | 10/19/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 570 | 3,477 | 10 | 570 | 3,487 | 4,057 | 30 | 10/19/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Marietta | GA | 1,052 | 7,102 | 4 | 1,052 | 7,106 | 8,158 | 50 | 10/19/2017 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Rosewell | GA | 430 | 3,470 | 12 | 430 | 3,482 | 3,912 | 246 | 3/29/2016 | |||||||||||||||||||||||
| Atlanta-Sandy Springs-Rosewell | GA | 972 | 2,342 | 2 | 972 | 2,344 | 3,316 | 126 | 8/17/2016 | |||||||||||||||||||||||
| Augusta | GA | 84 | 539 | 147 | 84 | 686 | 770 | 210 | 8/29/2007 | |||||||||||||||||||||||
| Augusta | GA | 205 | 686 | 141 | 205 | 827 | 1,032 | 238 | 8/29/2007 | |||||||||||||||||||||||
Columbus(3) | GA | 169 | 342 | 156 | 169 | 498 | 667 | 118 | 5/1/2009 | |||||||||||||||||||||||
| Macon | GA | 180 | 840 | 41 | 180 | 881 | 1,061 | 235 | 9/28/2007 | |||||||||||||||||||||||
| Initial Cost to Company | Gross Carrying Amount at Year-End | |||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | |||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | |||||||||||||||||||||||
| Savannah | GA | 1,741 | 1,160 | 317 | 1,741 | 1,477 | 3,218 | 366 | 8/29/2007 | |||||||||||||||||||||||
Savannah(3) | GA | 597 | 762 | 164 | 597 | 926 | 1,523 | 264 | 9/28/2007 | |||||||||||||||||||||||
| Savannah | GA | 409 | 1,335 | 20 | 409 | 1,355 | 1,764 | 313 | 1/31/2014 | |||||||||||||||||||||||
| Savannah | GA | 811 | 1,181 | 132 | 811 | 1,313 | 2,124 | 301 | 6/25/2014 | |||||||||||||||||||||||
| St. Louis | IL | 225 | 4,394 | 95 | 225 | 4,489 | 4,714 | 63 | 8/28/2017 | |||||||||||||||||||||||
| St. Louis | IL | 179 | 5,154 | 57 | 179 | 5,211 | 5,390 | 74 | 8/28/2017 | |||||||||||||||||||||||
| St. Louis | IL | 226 | 3,088 | 76 | 226 | 3,164 | 3,390 | 50 | 8/28/2017 | |||||||||||||||||||||||
| St. Louis | IL | 174 | 3,338 | 72 | 174 | 3,410 | 3,584 | 39 | 9/25/2017 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 855 | 7,273 | 12 | 855 | 7,285 | 8,140 | 482 | 2/16/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 815 | 3,844 | 8 | 815 | 3,852 | 4,667 | 316 | 2/16/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 688 | 3,845 | 12 | 688 | 3,857 | 4,545 | 319 | 2/16/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 626 | 4,049 | 31 | 626 | 4,080 | 4,706 | 296 | 2/25/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 1,118 | 4,444 | 274 | 1,118 | 4,718 | 5,836 | 416 | 2/25/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 614 | 5,487 | 37 | 614 | 5,524 | 6,138 | 354 | 2/25/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 619 | 2,140 | 14 | 619 | 2,154 | 2,773 | 140 | 11/10/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 689 | 6,944 | 27 | 689 | 6,971 | 7,660 | 272 | 11/10/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 609 | 3,172 | 20 | 609 | 3,192 | 3,801 | 172 | 11/10/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 532 | 5,441 | 19 | 532 | 5,460 | 5,992 | 211 | 11/10/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 433 | 5,817 | 10 | 433 | 5,827 | 6,260 | 216 | 11/10/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 688 | 5,413 | 22 | 688 | 5,435 | 6,123 | 244 | 11/10/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 575 | 5,168 | 22 | 575 | 5,190 | 5,765 | 216 | 11/10/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 522 | 5,366 | 16 | 522 | 5,382 | 5,904 | 212 | 11/10/2016 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 528 | 2,877 | 9 | 528 | 2,886 | 3,414 | 30 | 10/19/2017 | |||||||||||||||||||||||
| Indianapolis-Carmel-Anderson | IN | 1,257 | 6,694 | — | 1,257 | 6,694 | 7,951 | 57 | 10/19/2017 | |||||||||||||||||||||||
| Kansas City | KS | 816 | 5,432 | 30 | 816 | 5,462 | 6,278 | 47 | 10/19/2017 | |||||||||||||||||||||||
| Kansas City | KS | 975 | 6,967 | 24 | 975 | 6,991 | 7,966 | 64 | 10/19/2017 | |||||||||||||||||||||||
| Kansas City | KS | 719 | 5,143 | 23 | 719 | 5,166 | 5,885 | 39 | 10/19/2017 | |||||||||||||||||||||||
Louisville/Jefferson County(3) | KY | 2,174 | 3,667 | 28 | 2,174 | 3,695 | 5,869 | 370 | 5/1/2015 | |||||||||||||||||||||||
| Baton Rouge | LA | 386 | 1,744 | 57 | 386 | 1,801 | 2,187 | 119 | 4/12/2016 | |||||||||||||||||||||||
| Baton Rouge | LA | 1,098 | 5,208 | 505 | 1,098 | 5,713 | 6,811 | 398 | 4/12/2016 | |||||||||||||||||||||||
| Baton Rouge | LA | 1,203 | 3,156 | 221 | 1,203 | 3,377 | 4,580 | 219 | 7/21/2016 | |||||||||||||||||||||||
| Baton Rouge | LA | 755 | 2,702 | 260 | 755 | 2,962 | 3,717 | 188 | 7/21/2016 | |||||||||||||||||||||||
| New Orleans-Metairie | LA | 1,287 | 6,235 | 112 | 1,287 | 6,347 | 7,634 | 394 | 4/12/2016 | |||||||||||||||||||||||
| Shreveport-Bossier City | LA | 971 | 3,474 | 52 | 1,549 | 4,936 | 6,485 | 365 | 5/5/2015 | |||||||||||||||||||||||
| Initial Cost to Company | Gross Carrying Amount at Year-End | |||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | |||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | |||||||||||||||||||||||
| Shreveport-Bossier City | LA | 964 | 3,573 | 31 | 964 | 3,604 | 4,568 | 433 | 5/5/2015 | |||||||||||||||||||||||
| Shreveport-Bossier City | LA | 772 | 2,906 | 24 | 772 | 2,930 | 3,702 | 349 | 5/5/2015 | |||||||||||||||||||||||
| Shreveport-Bossier City | LA | 479 | 1,439 | 28 | 479 | 1,467 | 1,946 | 184 | 5/5/2015 | |||||||||||||||||||||||
| Shreveport-Bossier City | LA | 475 | 854 | 42 | 475 | 896 | 1,371 | 135 | 5/5/2015 | |||||||||||||||||||||||
| Shreveport-Bossier City | LA | 645 | 2,004 | 6 | 645 | 2,010 | 2,655 | 28 | 10/19/2017 | |||||||||||||||||||||||
| Shreveport-Bossier City | LA | 654 | 3,589 | 27 | 654 | 3,616 | 4,270 | 28 | 10/19/2017 | |||||||||||||||||||||||
| Shreveport-Bossier City | LA | 906 | 3,618 | 12 | 906 | 3,630 | 4,536 | 31 | 10/19/2017 | |||||||||||||||||||||||
Shreveport-Bossier City(4) | LA | — | 5,113 | 13 | — | 5,126 | 5,126 | 33 | 10/19/2017 | |||||||||||||||||||||||
| Worchester | MA | 414 | 4,122 | 7 | 414 | 4,129 | 4,543 | 83 | 6/30/2017 | |||||||||||||||||||||||
| Nonmetropolitan Area | MD | 965 | 6,738 | 115 | 965 | 6,853 | 7,818 | 135 | 7/31/2017 | |||||||||||||||||||||||
| Nonmetropolitan Area | MD | 550 | 2,409 | 76 | 550 | 2,485 | 3,035 | 37 | 9/6/2017 | |||||||||||||||||||||||
| St. Louis | MO | 352 | 7,100 | 15 | 352 | 7,115 | 7,467 | 108 | 8/28/2017 | |||||||||||||||||||||||
| St. Louis | MO | 163 | 1,025 | 13 | 163 | 1,038 | 1,201 | 16 | 8/28/2017 | |||||||||||||||||||||||
| St. Louis | MO | 354 | 4,034 | 18 | 354 | 4,052 | 4,406 | 62 | 8/28/2017 | |||||||||||||||||||||||
| Gulfport-Biloxi-Pascagoula | MS | 645 | 2,413 | 244 | 645 | 2,657 | 3,302 | 262 | 4/12/2016 | |||||||||||||||||||||||
Meridian(3) | MS | 224 | 1,052 | 141 | 224 | 1,193 | 1,417 | 264 | 5/1/2009 | |||||||||||||||||||||||
Meridian(3) | MS | 382 | 803 | 189 | 382 | 992 | 1,374 | 224 | 5/1/2009 | |||||||||||||||||||||||
| Charlotte-Concord-Gastonia | NC | 1,871 | 4,174 | 66 | 1,871 | 4,240 | 6,111 | 422 | 5/1/2015 | |||||||||||||||||||||||
Charlotte-Concord-Gastonia(3) | NC | 1,108 | 3,935 | 42 | 1,108 | 3,977 | 5,085 | 407 | 5/4/2015 | |||||||||||||||||||||||
Charlotte-Concord-Gastonia(3) | NC | 2,301 | 4,458 | 155 | 2,301 | 4,613 | 6,914 | 505 | 5/4/2015 | |||||||||||||||||||||||
Charlotte-Concord-Gastonia(3) | NC | 1,862 | 3,297 | 83 | 1,862 | 3,380 | 5,242 | 366 | 9/2/2015 | |||||||||||||||||||||||
| Durham-Chapel Hill | NC | 390 | 1,025 | 188 | 390 | 1,213 | 1,603 | 343 | 8/29/2007 | |||||||||||||||||||||||
Durham-Chapel Hill(3) | NC | 663 | 2,743 | 225 | 663 | 2,968 | 3,631 | 805 | 9/28/2007 | |||||||||||||||||||||||
| Durham-Chapel Hill | NC | 1,024 | 1,383 | 386 | 1,024 | 1,769 | 2,793 | 466 | 9/28/2007 | |||||||||||||||||||||||
| Durham-Chapel Hill | NC | 1,711 | 4,180 | 21 | 1,711 | 4,201 | 5,912 | 382 | 5/1/2015 | |||||||||||||||||||||||
| Fayetteville | NC | 636 | 2,169 | 1,659 | 636 | 3,828 | 4,464 | 986 | 8/29/2007 | |||||||||||||||||||||||
Fayetteville(3) | NC | 151 | 5,392 | 254 | 151 | 5,646 | 5,797 | 1,454 | 9/28/2007 | |||||||||||||||||||||||
| Fayetteville | NC | 1,319 | 3,444 | 20 | 1,319 | 3,464 | 4,783 | 539 | 10/10/2013 | |||||||||||||||||||||||
| Fayetteville | NC | 772 | 3,406 | 24 | 772 | 3,430 | 4,202 | 439 | 10/10/2013 | |||||||||||||||||||||||
Fayetteville(3) | NC | 1,276 | 4,527 | 25 | 1,276 | 4,552 | 5,828 | 527 | 12/20/2013 | |||||||||||||||||||||||
Fayetteville(3) | NC | 1,195 | 2,072 | — | 1,195 | 2,072 | 3,267 | 174 | 10/1/2015 | |||||||||||||||||||||||
Fayetteville(3) | NC | 830 | 3,710 | 22 | 830 | 3,732 | 4,562 | 256 | 10/1/2015 | |||||||||||||||||||||||
| Greensboro-High Point | NC | 873 | 769 | 199 | 873 | 968 | 1,841 | 286 | 8/29/2007 | |||||||||||||||||||||||
| Jacksonville | NC | 1,265 | 2,123 | 74 | 1,265 | 2,197 | 3,462 | 324 | 5/1/2015 | |||||||||||||||||||||||
| Initial Cost to Company | Gross Carrying Amount at Year-End | |||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | |||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | |||||||||||||||||||||||
| Nonmetropolitan Area | NC | 530 | 2,394 | 5 | 530 | 2,399 | 2,929 | 280 | 12/11/2014 | |||||||||||||||||||||||
| Nonmetropolitan Area | NC | 667 | 2,066 | 12 | 667 | 2,078 | 2,745 | 257 | 12/11/2014 | |||||||||||||||||||||||
Nonmetropolitan Area(3) | NC | 689 | 3,153 | 27 | 689 | 3,180 | 3,869 | 323 | 5/6/2015 | |||||||||||||||||||||||
| Nonmetropolitan Area | NC | 2,093 | 2,045 | 5 | 2,093 | 2,050 | 4,143 | 46 | 8/4/2017 | |||||||||||||||||||||||
| Raleigh-Cary | NC | 396 | 1,700 | 167 | 396 | 1,867 | 2,263 | 534 | 8/29/2007 | |||||||||||||||||||||||
| Raleigh-Cary | NC | 393 | 1,190 | 134 | 393 | 1,324 | 1,717 | 374 | 8/29/2007 | |||||||||||||||||||||||
| Raleigh-Cary | NC | 907 | 2,913 | 105 | 907 | 3,018 | 3,925 | 804 | 8/29/2007 | |||||||||||||||||||||||
Raleigh-Cary(3) | NC | 1,578 | 4,678 | 70 | 1,578 | 4,748 | 6,326 | 422 | 5/4/2015 | |||||||||||||||||||||||
| Wilmington | NC | 1,283 | 1,747 | 94 | 1,283 | 1,841 | 3,124 | 499 | 8/29/2007 | |||||||||||||||||||||||
Wilmington(3) | NC | 860 | 828 | 71 | 860 | 899 | 1,759 | 245 | 9/28/2007 | |||||||||||||||||||||||
| Wilmington | NC | 1,881 | 4,618 | 35 | 1,881 | 4,653 | 6,534 | 438 | 5/1/2015 | |||||||||||||||||||||||
| Winston-Salem | NC | 362 | 529 | 74 | 362 | 603 | 965 | 169 | 8/29/2007 | |||||||||||||||||||||||
| Concord | NH | 632 | 1,040 | 22 | 632 | 1,062 | 1,694 | 360 | 6/24/2013 | |||||||||||||||||||||||
| Concord | NH | 197 | 901 | 19 | 197 | 920 | 1,117 | 281 | 6/24/2013 | |||||||||||||||||||||||
| Dover-Durham | NH | 1,488 | 7,300 | 44 | 1,488 | 7,344 | 8,832 | 1,025 | 7/1/2014 | |||||||||||||||||||||||
| Boston-Cambridge-Quincy | NH | 899 | 3,863 | 38 | 899 | 3,901 | 4,800 | 308 | 9/22/2015 | |||||||||||||||||||||||
| Manchester-Nashua | NH | 1,786 | 6,100 | 19 | 1,786 | 6,119 | 7,905 | 411 | 2/22/2016 | |||||||||||||||||||||||
| Manchester-Nashua | NH | 1,395 | 5,573 | 29 | 1,395 | 5,602 | 6,997 | 347 | 2/22/2016 | |||||||||||||||||||||||
| Nonmetropolitan Area | NH | 2,053 | 5,425 | 19 | 2,053 | 5,444 | 7,497 | 112 | 6/15/2017 | |||||||||||||||||||||||
| Greater New Hampshire | NH | 1,528 | 2,686 | 14 | 1,528 | 2,700 | 4,228 | 250 | 2/22/2016 | |||||||||||||||||||||||
| Rockingham County-Strafford County | NH | 1,597 | 3,138 | 66 | 1,597 | 3,204 | 4,801 | 249 | 2/22/2016 | |||||||||||||||||||||||
| Rockingham County-Strafford County | NH | 1,445 | 2,957 | 58 | 1,445 | 3,015 | 4,460 | 248 | 2/22/2016 | |||||||||||||||||||||||
| Albuquerque | NM | 1,089 | 2,845 | 157 | 1,089 | 3,002 | 4,091 | 233 | 8/31/2016 | |||||||||||||||||||||||
| Albuquerque | NM | 854 | 3,436 | 81 | 854 | 3,517 | 4,371 | 181 | 9/19/2016 | |||||||||||||||||||||||
| Las Vegas-Henderson-Paradise | NV | 1,757 | 4,223 | 54 | 1,757 | 4,277 | 6,034 | 243 | 9/20/2016 | |||||||||||||||||||||||
| Las Vegas-Henderson-Paradise | NV | 1,121 | 1,510 | 51 | 1,121 | 1,561 | 2,682 | 113 | 9/20/2016 | |||||||||||||||||||||||
| Las Vegas-Henderson-Paradise | NV | 2,160 | 4,544 | 187 | 2,160 | 4,731 | 6,891 | 179 | 11/17/2016 | |||||||||||||||||||||||
| Las Vegas-Paradise | NV | 1,169 | 3,616 | 83 | 1,169 | 3,699 | 4,868 | 1,009 | 12/23/2013 | |||||||||||||||||||||||
| Las Vegas-Paradise | NV | 389 | 2,850 | 66 | 389 | 2,916 | 3,305 | 474 | 4/1/2014 | |||||||||||||||||||||||
| Las Vegas-Paradise | NV | 794 | 1,406 | 86 | 794 | 1,492 | 2,286 | 309 | 7/1/2014 | |||||||||||||||||||||||
| Las Vegas-Paradise | NV | 2,362 | 8,445 | 60 | 2,362 | 8,505 | 10,867 | 97 | 8/15/2017 | |||||||||||||||||||||||
| Las Vegas-Paradise | NV | 2,157 | 2,753 | 13 | 2,157 | 2,766 | 4,923 | 46 | 8/15/2017 | |||||||||||||||||||||||
| Las Vegas-Paradise | NV | 1,296 | 8,039 | 82 | 1,296 | 8,121 | 9,417 | 85 | 8/15/2017 | |||||||||||||||||||||||
| Las Vegas-Paradise | NV | 828 | 2,030 | 120 | 828 | 2,150 | 2,978 | 33 | 8/29/2017 | |||||||||||||||||||||||
| Initial Cost to Company | Gross Carrying Amount at Year-End | |||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | |||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | |||||||||||||||||||||||
| Las Vegas-Paradise | NV | 3,864 | 2,870 | 125 | 3,864 | 2,995 | 6,859 | 65 | 8/29/2017 | |||||||||||||||||||||||
| Canton-Massillon | OH | 83 | 2,911 | 19 | 83 | 2,930 | 3,013 | 132 | 11/10/2016 | |||||||||||||||||||||||
| Canton-Massillon | OH | 292 | 2,107 | 32 | 292 | 2,139 | 2,431 | 199 | 11/10/2016 | |||||||||||||||||||||||
| Cleveland-Elyria | OH | 169 | 2,702 | 24 | 169 | 2,726 | 2,895 | 116 | 11/10/2016 | |||||||||||||||||||||||
| Cleveland-Elyria | OH | 193 | 3,323 | 22 | 193 | 3,345 | 3,538 | 128 | 11/10/2016 | |||||||||||||||||||||||
| Cleveland-Elyria | OH | 490 | 1,050 | 23 | 490 | 1,073 | 1,563 | 73 | 11/10/2016 | |||||||||||||||||||||||
| Cleveland-Elyria | OH | 845 | 4,916 | 29 | 845 | 4,945 | 5,790 | 223 | 11/10/2016 | |||||||||||||||||||||||
| Cleveland-Elyria | OH | 842 | 2,044 | 23 | 842 | 2,067 | 2,909 | 148 | 11/10/2016 | |||||||||||||||||||||||
| Oklahoma City | OK | 388 | 3,142 | 133 | 388 | 3,275 | 3,663 | 920 | 5/29/2007 | |||||||||||||||||||||||
| Oklahoma City | OK | 213 | 1,383 | 76 | 213 | 1,459 | 1,672 | 406 | 5/29/2007 | |||||||||||||||||||||||
| Oklahoma City | OK | 561 | 2,355 | 434 | 561 | 2,789 | 3,350 | 850 | 5/29/2007 | |||||||||||||||||||||||
| Oklahoma City | OK | 349 | 2,368 | 443 | 349 | 2,811 | 3,160 | 836 | 5/29/2007 | |||||||||||||||||||||||
| Oklahoma City | OK | 466 | 2,544 | 106 | 466 | 2,650 | 3,116 | 730 | 5/29/2007 | |||||||||||||||||||||||
| Oklahoma City | OK | 144 | 1,576 | 148 | 144 | 1,724 | 1,868 | 515 | 5/29/2007 | |||||||||||||||||||||||
| Oklahoma City | OK | 168 | 1,696 | 245 | 168 | 1,941 | 2,109 | 565 | 5/29/2007 | |||||||||||||||||||||||
| Oklahoma City | OK | 220 | 1,606 | 116 | 220 | 1,722 | 1,942 | 475 | 5/30/2007 | |||||||||||||||||||||||
| Oklahoma City | OK | 376 | 1,460 | 36 | 376 | 1,496 | 1,872 | 405 | 5/30/2007 | |||||||||||||||||||||||
| Oklahoma City | OK | 337 | 2,788 | 89 | 337 | 2,877 | 3,214 | 784 | 5/30/2007 | |||||||||||||||||||||||
| Oklahoma City | OK | 814 | 3,161 | 1,169 | 814 | 4,330 | 5,144 | 843 | 5/30/2007 | |||||||||||||||||||||||
| Oklahoma City | OK | 590 | 1,502 | 1,751 | 590 | 3,253 | 3,843 | 801 | 8/29/2007 | |||||||||||||||||||||||
| Oklahoma City | OK | 205 | 1,772 | 451 | 205 | 2,223 | 2,428 | 642 | 5/1/2009 | |||||||||||||||||||||||
| Oklahoma City | OK | 701 | 4,926 | — | 701 | 4,926 | 5,627 | 210 | 9/1/2016 | |||||||||||||||||||||||
| Oklahoma City | OK | 1,082 | 4,218 | 10 | 1,082 | 4,228 | 5,310 | 292 | 1/1/2016 | |||||||||||||||||||||||
| Oklahoma City | OK | 736 | 2,925 | 3 | 736 | 2,928 | 3,664 | 247 | 1/1/2016 | |||||||||||||||||||||||
| Oklahoma City | OK | 1,135 | 3,759 | 4 | 1,135 | 3,763 | 4,898 | 275 | 1/1/2016 | |||||||||||||||||||||||
| Tulsa | OK | 548 | 1,892 | 73 | 548 | 1,965 | 2,513 | 529 | 8/29/2007 | |||||||||||||||||||||||
| Tulsa | OK | 764 | 1,386 | 372 | 764 | 1,758 | 2,522 | 494 | 8/29/2007 | |||||||||||||||||||||||
| Tulsa | OK | 1,305 | 2,533 | 112 | 1,305 | 2,645 | 3,950 | 720 | 8/29/2007 | |||||||||||||||||||||||
| Tulsa | OK | 940 | 2,196 | 223 | 940 | 2,419 | 3,359 | 665 | 8/29/2007 | |||||||||||||||||||||||
| Tulsa | OK | 59 | 466 | 300 | 59 | 766 | 825 | 205 | 8/29/2007 | |||||||||||||||||||||||
| Tulsa | OK | 426 | 1,424 | 222 | 426 | 1,646 | 2,072 | 530 | 8/29/2007 | |||||||||||||||||||||||
| Tulsa | OK | 250 | 667 | 148 | 250 | 815 | 1,065 | 246 | 8/29/2007 | |||||||||||||||||||||||
Tulsa(3) | OK | 944 | 2,085 | 55 | 944 | 2,140 | 3,084 | 540 | 2/14/2008 | |||||||||||||||||||||||
Tulsa(3) | OK | 892 | 2,421 | 29 | 892 | 2,450 | 3,342 | 615 | 2/14/2008 | |||||||||||||||||||||||
| Initial Cost to Company | Gross Carrying Amount at Year-End | |||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | |||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | |||||||||||||||||||||||
| Tulsa | OK | 492 | 1,343 | 65 | 492 | 1,408 | 1,900 | 356 | 4/1/2008 | |||||||||||||||||||||||
| Tulsa | OK | 505 | 1,346 | 724 | 505 | 2,070 | 2,575 | 669 | 4/1/2008 | |||||||||||||||||||||||
| Tulsa | OK | 466 | 1,270 | 102 | 466 | 1,372 | 1,838 | 356 | 4/1/2008 | |||||||||||||||||||||||
Tulsa(3) | OK | 1,103 | 4,431 | 44 | 1,103 | 4,475 | 5,578 | 1,316 | 6/10/2013 | |||||||||||||||||||||||
| Bend | OR | 295 | 1,369 | 7 | 295 | 1,376 | 1,671 | 382 | 4/1/2013 | |||||||||||||||||||||||
| Bend | OR | 1,692 | 2,410 | 29 | 1,692 | 2,439 | 4,131 | 722 | 4/1/2013 | |||||||||||||||||||||||
Bend(3) | OR | 571 | 1,917 | 3 | 571 | 1,920 | 2,491 | 353 | 6/10/2013 | |||||||||||||||||||||||
Bend(3) | OR | 397 | 1,180 | 99 | 397 | 1,279 | 1,676 | 369 | 6/10/2013 | |||||||||||||||||||||||
| Bend | OR | 690 | 1,983 | 77 | 690 | 2,060 | 2,750 | 363 | 5/1/2014 | |||||||||||||||||||||||
| Bend | OR | 722 | 2,151 | 4 | 722 | 2,155 | 2,877 | 346 | 5/1/2014 | |||||||||||||||||||||||
| Bend | OR | 800 | 2,836 | 6 | 800 | 2,842 | 3,642 | 458 | 5/1/2014 | |||||||||||||||||||||||
| Bend-Redmond | OR | 2,688 | 10,731 | — | 2,688 | 10,731 | 13,419 | 684 | 4/15/2016 | |||||||||||||||||||||||
| Corvallis | OR | 382 | 1,465 | — | 382 | 1,465 | 1,847 | 310 | 12/30/2013 | |||||||||||||||||||||||
| Eugene-Springfield | OR | 710 | 1,539 | 62 | 710 | 1,601 | 2,311 | 406 | 4/1/2013 | |||||||||||||||||||||||
| Eugene-Springfield | OR | 842 | 1,674 | 32 | 842 | 1,706 | 2,548 | 456 | 4/1/2013 | |||||||||||||||||||||||
Eugene-Springfield(3) | OR | 414 | 1,990 | — | 414 | 1,990 | 2,404 | 313 | 6/10/2013 | |||||||||||||||||||||||
Eugene-Springfield(3) | OR | 1,149 | 2,061 | 37 | 1,149 | 2,098 | 3,247 | 404 | 6/10/2013 | |||||||||||||||||||||||
| Eugene-Springfield | OR | 728 | 3,230 | 105 | 728 | 3,335 | 4,063 | 458 | 12/30/2013 | |||||||||||||||||||||||
| Eugene-Springfield | OR | 1,601 | 2,686 | 87 | 1,601 | 2,773 | 4,374 | 649 | 4/1/2014 | |||||||||||||||||||||||
| Hood River | OR | 997 | 1,874 | — | 997 | 1,874 | 2,871 | 242 | 12/1/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 851 | 2,063 | 4 | 851 | 2,067 | 2,918 | 352 | 4/1/2013 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,704 | 2,313 | 99 | 1,704 | 2,412 | 4,116 | 568 | 4/1/2013 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,254 | 2,787 | 12 | 1,254 | 2,799 | 4,053 | 492 | 4/1/2013 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 2,808 | 4,437 | 19 | 2,808 | 4,456 | 7,264 | 1,022 | 4/1/2013 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,015 | 2,184 | 3 | 1,015 | 2,187 | 3,202 | 408 | 4/1/2013 | |||||||||||||||||||||||
Portland-Vancouver-Hillsboro(3) | OR | 1,077 | 3,008 | 139 | 1,077 | 3,147 | 4,224 | 468 | 6/10/2013 | |||||||||||||||||||||||
Portland-Vancouver-Hillsboro(3) | OR | 1,072 | 2,629 | 18 | 1,072 | 2,647 | 3,719 | 557 | 6/10/2013 | |||||||||||||||||||||||
Portland-Vancouver-Hillsboro(3) | OR | 2,217 | 3,766 | 15 | 2,217 | 3,781 | 5,998 | 626 | 6/10/2013 | |||||||||||||||||||||||
Portland-Vancouver-Hillsboro(3) | OR | 1,334 | 2,324 | 126 | 1,334 | 2,450 | 3,784 | 486 | 6/10/2013 | |||||||||||||||||||||||
Portland-Vancouver-Hillsboro(3) | OR | 996 | 2,525 | 89 | 996 | 2,614 | 3,610 | 500 | 6/10/2013 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,496 | 3,372 | 79 | 1,496 | 3,451 | 4,947 | 535 | 6/24/2013 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 954 | 3,026 | 41 | 954 | 3,067 | 4,021 | 436 | 6/24/2013 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,627 | 2,388 | 70 | 1,627 | 2,458 | 4,085 | 429 | 6/24/2013 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 2,509 | 4,200 | 66 | 2,509 | 4,266 | 6,775 | 704 | 12/30/2013 | |||||||||||||||||||||||
| Initial Cost to Company | Gross Carrying Amount at Year-End | |||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | |||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 787 | 1,915 | 62 | 787 | 1,977 | 2,764 | 297 | 12/30/2013 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,703 | 4,729 | 9 | 1,703 | 4,738 | 6,441 | 635 | 4/1/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 738 | 2,483 | — | 738 | 2,483 | 3,221 | 334 | 4/1/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,690 | 2,995 | 39 | 1,690 | 3,034 | 4,724 | 324 | 4/1/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,200 | 9,531 | 204 | 1,200 | 9,735 | 10,935 | 1,771 | 5/30/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 401 | 3,718 | 80 | 401 | 3,798 | 4,199 | 556 | 5/30/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,160 | 3,291 | 21 | 1,160 | 3,312 | 4,472 | 470 | 6/30/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,435 | 4,342 | — | 1,435 | 4,342 | 5,777 | 622 | 6/30/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,478 | 4,127 | 6 | 1,478 | 4,133 | 5,611 | 585 | 6/30/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,402 | 3,196 | — | 1,402 | 3,196 | 4,598 | 434 | 6/30/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 3,538 | 4,938 | 6 | 3,398 | 3,984 | 7,382 | 569 | 6/30/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,501 | 3,136 | 6 | 1,501 | 3,142 | 4,643 | 445 | 6/30/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,746 | 3,393 | 11 | 1,746 | 3,404 | 5,150 | 482 | 8/27/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,014 | 3,017 | 11 | 1,014 | 3,028 | 4,042 | 445 | 8/27/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 2,202 | 3,477 | 113 | 2,202 | 3,590 | 5,792 | 521 | 10/20/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,764 | 7,360 | — | 1,764 | 7,360 | 9,124 | 829 | 12/16/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 2,670 | 8,709 | 53 | 2,670 | 8,762 | 11,432 | 561 | 8/10/2015 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 410 | 622 | 179 | 410 | 801 | 1,211 | 48 | 7/14/2016 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 1,258 | 6,298 | 3 | 1,258 | 6,301 | 7,559 | 208 | 11/21/2016 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 2,334 | 7,726 | 33 | 2,334 | 7,759 | 10,093 | 298 | 12/6/2016 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 771 | 4,121 | — | 771 | 4,121 | 4,892 | 17 | 11/15/2017 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 2,002 | 14,445 | — | 2,002 | 14,445 | 16,447 | 24 | 12/14/2017 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | OR | 860 | 3,740 | — | 860 | 3,740 | 4,600 | 118 | 1/11/2017 | |||||||||||||||||||||||
| Prineville | OR | 427 | 1,648 | — | 427 | 1,648 | 2,075 | 227 | 8/27/2014 | |||||||||||||||||||||||
Roseburg(3) | OR | 474 | 1,789 | 79 | 474 | 1,868 | 2,342 | 371 | 6/10/2013 | |||||||||||||||||||||||
| Salem | OR | 1,405 | 2,650 | 413 | 1,405 | 3,063 | 4,468 | 607 | 4/1/2014 | |||||||||||||||||||||||
| Salem | OR | 492 | 1,248 | 18 | 492 | 1,266 | 1,758 | 112 | 4/20/2016 | |||||||||||||||||||||||
| The Dalles | OR | 1,108 | 2,100 | — | 1,108 | 2,100 | 3,208 | 293 | 12/5/2014 | |||||||||||||||||||||||
| Anderson | SC | 92 | 976 | 119 | 92 | 1,095 | 1,187 | 312 | 8/29/2007 | |||||||||||||||||||||||
Charlotte-Gastonia-Rock Hill(3) | SC | 924 | 3,086 | 32 | 924 | 3,118 | 4,042 | 303 | 5/4/2015 | |||||||||||||||||||||||
| Greenville-Mauldin-Easley | SC | 82 | 838 | 74 | 82 | 912 | 994 | 249 | 8/29/2007 | |||||||||||||||||||||||
| Spartanburg | SC | 535 | 1,934 | 23 | 535 | 1,957 | 2,492 | 185 | 11/12/2015 | |||||||||||||||||||||||
Amarillo(3) | TX | 80 | 877 | 106 | 80 | 983 | 1,063 | 227 | 5/1/2009 | |||||||||||||||||||||||
Amarillo(3) | TX | 78 | 697 | 136 | 78 | 833 | 911 | 196 | 5/1/2009 | |||||||||||||||||||||||
| Initial Cost to Company | Gross Carrying Amount at Year-End | |||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | |||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | |||||||||||||||||||||||
Amarillo(3) | TX | 147 | 810 | 145 | 147 | 955 | 1,102 | 219 | 5/1/2009 | |||||||||||||||||||||||
| Austin-Round Rock-San Marcos | TX | 937 | 5,319 | 80 | 937 | 5,399 | 6,336 | 766 | 6/24/2013 | |||||||||||||||||||||||
| Austin-Round Rock-San Marcos | TX | 1,395 | 2,790 | 20 | 1,395 | 2,810 | 4,205 | 616 | 6/24/2013 | |||||||||||||||||||||||
| Austin-Round Rock-San Marcos | TX | 768 | 1,923 | 111 | 768 | 2,034 | 2,802 | 297 | 10/29/2014 | |||||||||||||||||||||||
| Austin-Round Rock-San Marcos | TX | 936 | 6,446 | 15 | 936 | 6,461 | 7,397 | 40 | 10/19/2017 | |||||||||||||||||||||||
| Brownsville-Harlingen | TX | 845 | 2,364 | 63 | 845 | 2,427 | 3,272 | 285 | 9/4/2014 | |||||||||||||||||||||||
| Brownsville-Harlingen | TX | 639 | 1,674 | 85 | 639 | 1,759 | 2,398 | 250 | 9/4/2014 | |||||||||||||||||||||||
| Brownsville-Harlingen | TX | 386 | 2,798 | 178 | 386 | 2,976 | 3,362 | 201 | 5/2/2016 | |||||||||||||||||||||||
| College Station-Bryan | TX | 618 | 2,512 | 57 | 618 | 2,569 | 3,187 | 677 | 8/29/2007 | |||||||||||||||||||||||
| College Station-Bryan | TX | 551 | 349 | 215 | 551 | 564 | 1,115 | 139 | 8/29/2007 | |||||||||||||||||||||||
| College Station-Bryan | TX | 295 | 988 | 150 | 295 | 1,138 | 1,433 | 269 | 4/1/2008 | |||||||||||||||||||||||
| College Station-Bryan | TX | 51 | 123 | 63 | 51 | 186 | 237 | 57 | 4/1/2008 | |||||||||||||||||||||||
| College Station-Bryan | TX | 110 | 372 | 133 | 110 | 505 | 615 | 116 | 4/1/2008 | |||||||||||||||||||||||
| College Station-Bryan | TX | 62 | 208 | 13 | 62 | 221 | 283 | 56 | 4/1/2008 | |||||||||||||||||||||||
| Dallas-Fort Worth-Arlington | TX | 164 | 865 | 49 | 164 | 914 | 1,078 | 247 | 8/29/2007 | |||||||||||||||||||||||
| Dallas-Fort Worth-Arlington | TX | 155 | 105 | 53 | 155 | 158 | 313 | 52 | 9/28/2007 | |||||||||||||||||||||||
| Dallas-Fort Worth-Arlington | TX | 98 | 282 | 96 | 98 | 378 | 476 | 120 | 9/28/2007 | |||||||||||||||||||||||
| Dallas-Fort Worth-Arlington | TX | 264 | 106 | 165 | 264 | 271 | 535 | 94 | 9/28/2007 | |||||||||||||||||||||||
Dallas-Fort Worth-Arlington(3) | TX | 376 | 803 | 120 | 376 | 923 | 1,299 | 263 | 9/28/2007 | |||||||||||||||||||||||
Dallas-Fort Worth-Arlington(3) | TX | 338 | 681 | 101 | 338 | 782 | 1,120 | 214 | 9/28/2007 | |||||||||||||||||||||||
| Dallas-Fort Worth-Arlington | TX | 1,388 | 4,195 | 37 | 1,388 | 4,232 | 5,620 | 700 | 6/24/2013 | |||||||||||||||||||||||
| Dallas-Fort Worth-Arlington | TX | 1,859 | 5,293 | 122 | 1,859 | 5,415 | 7,274 | 847 | 7/25/2013 | |||||||||||||||||||||||
| Dallas-Fort Worth-Arlington | TX | 379 | 2,212 | 102 | 379 | 2,314 | 2,693 | 510 | 7/25/2013 | |||||||||||||||||||||||
| Dallas-Fort Worth-Arlington | TX | 1,397 | 5,250 | 82 | 1,397 | 5,332 | 6,729 | 782 | 7/25/2013 | |||||||||||||||||||||||
| Dallas-Fort Worth-Arlington | TX | 2,102 | 5,755 | 89 | 2,102 | 5,844 | 7,946 | 998 | 7/25/2013 | |||||||||||||||||||||||
| Dallas-Fort Worth-Arlington | TX | 649 | 1,637 | 35 | 649 | 1,672 | 2,321 | 532 | 7/25/2013 | |||||||||||||||||||||||
| Dallas-Fort Worth-Arlington | TX | 396 | 1,411 | 438 | 396 | 1,849 | 2,245 | 289 | 4/29/2015 | |||||||||||||||||||||||
| Dallas-Fort Worth-Arlington | TX | 1,263 | 3,346 | 50 | 1,263 | 3,396 | 4,659 | 396 | 10/19/2015 | |||||||||||||||||||||||
| Dallas-Plano-Irving | TX | 1,421 | 2,349 | 450 | 1,421 | 2,799 | 4,220 | 205 | 6/1/2016 | |||||||||||||||||||||||
| Dallas-Plano-Irving | TX | 710 | 3,578 | 38 | 710 | 3,616 | 4,326 | 35 | 10/19/2017 | |||||||||||||||||||||||
| Dallas-Plano-Irving | TX | 421 | 2,668 | 10 | 421 | 2,678 | 3,099 | 24 | 10/19/2017 | |||||||||||||||||||||||
| El Paso | TX | 338 | 1,275 | 42 | 338 | 1,317 | 1,655 | 353 | 8/29/2007 | |||||||||||||||||||||||
| El Paso | TX | 94 | 400 | 168 | 94 | 568 | 662 | 155 | 8/29/2007 | |||||||||||||||||||||||
| Houston-Sugar Land-Baytown | TX | 698 | 2,648 | 233 | 698 | 2,881 | 3,579 | 284 | 7/20/2015 | |||||||||||||||||||||||
| Initial Cost to Company | Gross Carrying Amount at Year-End | |||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | |||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | |||||||||||||||||||||||
| Houston-The Woodlands-Sugar Land | TX | 1,042 | 3,061 | 382 | 1,042 | 3,443 | 4,485 | 281 | 1/22/2016 | |||||||||||||||||||||||
| Houston-The Woodlands-Sugar Land | TX | 1,426 | 2,910 | 100 | 1,426 | 3,010 | 4,436 | 78 | 6/13/2017 | |||||||||||||||||||||||
| Killeen-Temple | TX | 203 | 4,065 | 190 | 203 | 4,255 | 4,458 | 125 | 2/2/2017 | |||||||||||||||||||||||
| Killeen-Temple | TX | 1,128 | 6,149 | 186 | 1,128 | 6,335 | 7,463 | 90 | 8/8/2017 | |||||||||||||||||||||||
Longview(3) | TX | 651 | 671 | 100 | 651 | 771 | 1,422 | 178 | 5/1/2009 | |||||||||||||||||||||||
Longview(3) | TX | 104 | 489 | 164 | 104 | 653 | 757 | 142 | 5/1/2009 | |||||||||||||||||||||||
Longview(3) | TX | 310 | 966 | 199 | 310 | 1,165 | 1,475 | 261 | 5/1/2009 | |||||||||||||||||||||||
| Longview | TX | 2,466 | 3,559 | 39 | 2,466 | 3,598 | 6,064 | 480 | 6/19/2014 | |||||||||||||||||||||||
| Longview | TX | 959 | 1,640 | 18 | 959 | 1,658 | 2,617 | 238 | 6/25/2014 | |||||||||||||||||||||||
| McAllen–Edinburg–Mission | TX | 1,217 | 2,738 | 262 | 1,243 | 3,000 | 4,243 | 544 | 7/31/2014 | |||||||||||||||||||||||
| McAllen–Edinburg–Mission | TX | 1,973 | 4,517 | 57 | 1,973 | 4,574 | 6,547 | 661 | 9/4/2014 | |||||||||||||||||||||||
| McAllen–Edinburg–Mission | TX | 1,295 | 3,929 | 61 | 1,295 | 3,990 | 5,285 | 565 | 9/4/2014 | |||||||||||||||||||||||
| McAllen–Edinburg–Mission | TX | 3,079 | 7,574 | 82 | 3,079 | 7,656 | 10,735 | 1,164 | 9/4/2014 | |||||||||||||||||||||||
| McAllen–Edinburg–Mission | TX | 1,017 | 3,261 | 65 | 1,017 | 3,326 | 4,343 | 462 | 9/4/2014 | |||||||||||||||||||||||
| McAllen–Edinburg–Mission | TX | 803 | 2,914 | 74 | 803 | 2,988 | 3,791 | 335 | 9/4/2014 | |||||||||||||||||||||||
| McAllen–Edinburg–Mission | TX | 2,249 | 4,966 | 51 | 2,249 | 5,017 | 7,266 | 742 | 9/4/2014 | |||||||||||||||||||||||
| McAllen–Edinburg–Mission | TX | 1,118 | 3,568 | 62 | 1,118 | 3,630 | 4,748 | 432 | 9/4/2014 | |||||||||||||||||||||||
Midland(3) | TX | 691 | 1,588 | 163 | 691 | 1,751 | 2,442 | 386 | 5/1/2009 | |||||||||||||||||||||||
Odessa(3) | TX | 168 | 561 | 103 | 168 | 664 | 832 | 156 | 5/1/2009 | |||||||||||||||||||||||
San Angelo(3) | TX | 381 | 986 | 97 | 381 | 1,083 | 1,464 | 241 | 5/1/2009 | |||||||||||||||||||||||
| San Antonio-New Braunfels | TX | 614 | 2,640 | 44 | 614 | 2,684 | 3,298 | 454 | 4/1/2014 | |||||||||||||||||||||||
| San Antonio-New Braunfels | TX | 715 | 4,566 | 35 | 715 | 4,601 | 5,316 | 38 | 10/19/2017 | |||||||||||||||||||||||
| Washington-Arlington-Alexandria | VA | 1,516 | 12,633 | 16 | 1,516 | 12,649 | 14,165 | 174 | 7/21/2017 | |||||||||||||||||||||||
Centralia(3) | WA | 810 | 1,530 | — | 810 | 1,530 | 2,340 | 459 | 6/10/2013 | |||||||||||||||||||||||
Centralia(3) | WA | 998 | 1,862 | 37 | 998 | 1,899 | 2,897 | 653 | 6/10/2013 | |||||||||||||||||||||||
| Longview | WA | 448 | 2,356 | 12 | 448 | 2,368 | 2,816 | 217 | 9/3/2015 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | WA | 421 | 2,313 | — | 421 | 2,313 | 2,734 | 390 | 4/1/2013 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | WA | 1,903 | 2,239 | — | 1,903 | 2,239 | 4,142 | 482 | 4/1/2013 | |||||||||||||||||||||||
Portland-Vancouver-Hillsboro(3) | WA | 923 | 2,821 | 6 | 923 | 2,827 | 3,750 | 467 | 6/10/2013 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | WA | 935 | 2,045 | — | 935 | 2,045 | 2,980 | 291 | 4/1/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | WA | 478 | 2,158 | 117 | 478 | 2,275 | 2,753 | 355 | 4/1/2014 | |||||||||||||||||||||||
Portland-Vancouver-Hillsboro(3) | WA | 2,023 | 3,484 | 21 | 2,023 | 3,505 | 5,528 | 556 | 8/27/2014 | |||||||||||||||||||||||
| Portland-Vancouver-Hillsboro | WA | 1,870 | 4,632 | — | 1,870 | 4,632 | 6,502 | 181 | 1/11/2017 | |||||||||||||||||||||||
| Seattle-Tacoma-Bellevue | WA | 770 | 3,203 | 48 | 770 | 3,251 | 4,021 | 529 | 4/1/2014 | |||||||||||||||||||||||
| Initial Cost to Company | Gross Carrying Amount at Year-End | ||||||||||||||||||||||||||||||||
| Location | Buildings and | Subsequent | Buildings and | Accumulated | Date | ||||||||||||||||||||||||||||
MSA(1) | State | Land | Improvements | Additions | Land | Improvements | Total(2) | Depreciation | Acquired | ||||||||||||||||||||||||
| Seattle-Tacoma-Bellevue | WA | 1,390 | 2,506 | 20 | 1,390 | 2,526 | 3,916 | 425 | 8/27/2014 | ||||||||||||||||||||||||
| Seattle-Tacoma-Bellevue | WA | 1,438 | 3,280 | 28 | 1,438 | 3,308 | 4,746 | 492 | 9/18/2014 | ||||||||||||||||||||||||
| Seattle-Tacoma-Bellevue | WA | 1,105 | 2,121 | — | 1,105 | 2,121 | 3,226 | 283 | 10/3/2014 | ||||||||||||||||||||||||
| Total | $ | 528,936 | $ | 1,696,269 | $ | 50,210 | $ | 528,304 | $ | 1,746,929 | $ | 2,275,233 | $ | 170,358 | |||||||||||||||||||
(1) Refers to metropolitan and micropolitan statistical area (MSA) as defined by the U.S. Census Bureau. | |||||||||||||||||||||||||||||||||
(2) The aggregate cost of land and depreciable property for Federal income tax purposes was approximately $1.9 billion (unaudited) at December 31, 2017. | |||||||||||||||||||||||||||||||||
(3) As of December 31, 2017, 91 of our self storage properties were encumbered by an aggregate of $271.5million of debt financing. | |||||||||||||||||||||||||||||||||
(4) Property subject to a long-term lease agreement. | |||||||||||||||||||||||||||||||||
| Note: The Company only owns one class of real estate, which is self storage properties. The estimated useful lives of the individual assets that comprise buildings and improvements range from 3 years to 40 years. The category for buildings and improvements in the table above includes furniture and equipment. | |||||||||||||||||||||||||||||||||
NATIONAL STORAGE AFFILIATES TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
For the Years Ended December 31, 2017, 20162023, 2022 and 20152021
(in thousands)
| 2023 | 2022 | 2021 | ||||||||||||||||||
| Self Storage properties: | ||||||||||||||||||||
| Balance at beginning of year | $ | 6,391,572 | $ | 5,798,188 | $ | 3,639,192 | ||||||||||||||
| Acquisitions and improvements | 258,560 | 602,082 | 2,159,856 | |||||||||||||||||
| Write-off of fully depreciated assets and other | (767) | (1,145) | (860) | |||||||||||||||||
| Dispositions | (226,379) | (7,553) | — | |||||||||||||||||
| Reclassification to assets held for sale | (630,812) | — | — | |||||||||||||||||
| Balance at end of year | $ | 5,792,174 | $ | 6,391,572 | $ | 5,798,188 | ||||||||||||||
| Accumulated depreciation: | ||||||||||||||||||||
| Balance at beginning of year | $ | 772,661 | $ | 578,717 | $ | 443,623 | ||||||||||||||
| Depreciation expense | 210,216 | 196,207 | 135,147 | |||||||||||||||||
| Write-off of fully depreciated assets and other | (124) | (371) | (53) | |||||||||||||||||
| Dispositions | (27,781) | (1,892) | — | |||||||||||||||||
| Reclassification to assets held for sale | (80,613) | — | — | |||||||||||||||||
| Balance at end of year | $ | 874,359 | $ | 772,661 | $ | 578,717 | ||||||||||||||
F-48
| 2017 | 2016 | 2015 | ||||||||||
| Self Storage properties: | ||||||||||||
| Balance at beginning of year | $ | 1,844,336 | $ | 1,147,201 | $ | 838,941 | ||||||
| Acquisitions and improvements | 431,542 | 715,509 | 308,323 | |||||||||
| Reclassification from assets held for sale | 8,607 | — | — | |||||||||
| Write-off of fully depreciated assets and other | (50 | ) | — | (63 | ) | |||||||
| Dispositions | (7,336 | ) | (4,820 | ) | — | |||||||
| Reclassification to assets held for sale | (1,866 | ) | (13,554 | ) | — | |||||||
| Balance at end of year | $ | 2,275,233 | $ | 1,844,336 | $ | 1,147,201 | ||||||
| Accumulated depreciation: | ||||||||||||
| Balance at beginning of year | $ | 110,803 | $ | 68,100 | $ | 39,614 | ||||||
| Depreciation expense | 60,522 | 42,703 | 28,549 | |||||||||
| Write-off of fully depreciated assets and other | (10 | ) | — | (63 | ) | |||||||
| Dispositions | (646 | ) | — | — | ||||||||
| Assets held for sale | $ | (311 | ) | $ | — | $ | — | |||||
| Balance at end of year | $ | 170,358 | $ | 110,803 | $ | 68,100 | ||||||