National Storage Affiliates Trust · NYSE:NSA
National Storage Affiliates Trust — Q3 2023 Earnings Presentation
44 slides from National Storage Affiliates Trust's earnings presentation, Nov 2, 2023
Slide 1: People. Process. Platform. Driving Growth – Company Update November 2023
PEOPLE PROCESS PLATFORM P EO P L E . P RO C ES S . P L AT FO R M . D R I V I N G G ROW T H Company Update November 2023
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES FORWARD-LOOKING STATEMENTS: We make forward-looking statements in this presentation that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, f
Slide 3: Table of Contents
SELF STORAGE INDUSTRY OVERVIEW TABLE OF CONTENTS COMPANY OVERVIEW TRACK RECORD OF PERFORMANCE MULTI-FACETED GROWTH STRATEGY FLEXIBLE CAPITAL STRUCTURE SUPPORTS FUTURE GROWTH ESG OVERVIEW APPENDIX (including Definitions and Methodology) 3
Slide 4: Self Storage Industry Overview
SELF STORAGE INDUSTRY OVERVIEW 4 1
Slide 5: Highly Fragmented Industry: Consolidation Opportunity
HIGHLY FRAGMENTED INDUSTRY: Market Share by # of Facilities(1) (Approximately 51,000 self storage facilities in the U.S.) CONSOLIDATION OPPORTUNITY Self Storage Top Operator Market Share All Other NSA Public 17% TOP 5 2% Operators 32% 19%(3) 28% TOP 25 48% 31% TOP 50 53% Large All Other 33% Private
Slide 6: Self Storage: Higher Returns, Lower Volatility
SELF STORAGE: HIGHER RETURNS, LOWER VOLATILITY SELF STORAGE HAS OUTPERFORMED OVER THE PAST 29 YEARS NAREIT Equity REIT Sectors: 29 Yrs. Avg. Return vs. Volatility(1) Even in the worst five-year period, self storage delivered >4.5% total shareholder return per year(1) 18.0% 20.0% Lower Volatility Avg
Slide 7: Company Overview
COMPANY OVERVIEW 7 2
Slide 8: Q3 2023 Update
Q3 2023 UPDATE WELL-DIVERSIFIED ACROSS $8.7B 1,119 42 TOTAL ENTERPRISE VALUE(1) PROPERTIES STATES + PUERTO RICO 1.1% -0.1% 89.5% Y-O-Y SAME STORE REVENUE Y-O-Y SAME STORE NOI SAME STORE AVG. OCCUPANCY GROWTH GROWTH -6.9% $30M 1.8% Y-O-Y CORE FFO/SHARE Y-O-Y GROWTH IN WHOLLY-OWNED ACQUISITIONS GROWTH
Slide 9: Portfolio Metrics Update – 2023 Same Store Pool
PORTFOLIO METRICS UPDATE – 2023 SAME STORE POOL Year-over-year comparisons are challenging as fundamentals moderate from unsustainable levels METRIC Q3 2023 OCTOBER 2023 Period-End Occupancy 88.5% 87.4% Year-Over-Year Change in Period-End Occupancy -360 bps -360 bps Year-Over-Year Change in Street R
Slide 10: NSA Family of Brands
TOTAL PORTFOLIO NSA FAMILY OF BRANDS BY PROPERTY COUNT Corporate Brands 70% PRO Brands 30% CORPORATE BRANDS (788 properties; 185 of which are in joint ventures) CORPORATE BRAND STORES PRO BRANDS (331 properties) Wholly-Owned 77% Joint Venture 23% SELF STORAGE INDUSTRY OVERVIEW | COMPANY OVERVIEW | T
Slide 11: Strategic Focus in Sun Belt Markets
STRATEGIC FOCUS IN SUN BELT MARKETS Sun Belt(1) 66% BY STORE COUNT Largest MSA (Riverside-San Bernardino-Ontario, CA) 7.5% OF SAME STORE REVENUE IN Q3 2023 % of NSA properties = 0% < 2% 2 - 5% 5 - 10% >10% (1) NSA defines the Sun Belt as the following states: AL, AR, AZ, CA, FL, GA, LA, MS, NC, NM,
Slide 12: Secondary Market Outperformance
SECONDARY MARKET OUTPERFORMANCE NSA properties outside of the top 25 MSAs have outperformed over the past five years and we have increased our exposure to these markets(1) Annual Average Same Store Growth % of Same Store Revenues % of Same Store NOI 2018 - 2022 8.1% 23% 23% MSA 101+ MSA 101+ MSA 101
Slide 13: Sun Belt Outperformance
SUN BELT OUTPERFORMANCE NSA’s properties in Sun Belt Markets have outperformed over the past five years and given domestic migration, employment and housing trends - we expect this outperformance to continue(1) Annual Average Same Store Growth Same Store Revenue Composition Same Store NOI Compositio
Slide 14: NSA's Markets Are Well Positioned vs Peers
NSA’S MARKETS ARE WELL POSITIONED VS PEERS Population growth in NSA’s markets is expected to outpace the peers(1) Projected Population Growth 2023 - 2028 2.9% CUBE EXR NSA 2.5% PSA 2.4% 2.2% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% (1) Source: Evercore ISI 2Q 2023 Storage Demographic Update (August 2
Slide 15: NSA's Top Markets – Supply Outlook Favorable
NSA’S TOP 15 MARKETS – SUPPLY OUTLOOK FAVORABLE 4.0 North Port-Sarasota- 3.5 Bradenton, FL Brownsville-Harlingen, TX 3.0 Est Supply Growth / Est Demand Growth McAllen-Edinburg- Mission, TX 2.5 2.0 Atlanta-Sandy Springs- Supply 1.5 Alpharetta, GA Outpacing Demand Orlando-Kissimmee- Phoenix-Mesa- Sanf
Slide 16: Affordability Analysis – NSA Well Positioned
AFFORDABILITY ANALYSIS – NSA WELL POSITIONED Storage Rent in NSA’s Markets is More Affordable on Average Relative to Peers Typical 10x10 Unit Annual Rent as a % of Median HH Income(1) 2.0% 2.2% CUBE EXR 2.2% NSA 2.4% PSA 2.4% 2.5% 2.4% 2.5% 2.6% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% (1) Based on utiliz
Slide 17: Occupancy Trends
OCCUPANCY TRENDS Core Pool of 430 Stores Owned Since Jan 1, 2018 100% 98% 96% 2019 94% 2020 92% 2021 90% 2022 88% 86% 2023 84% 82% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec SELF STORAGE INDUSTRY OVERVIEW | COMPANY OVERVIEW | TRACK RECORD OF PERFORMANCE | MULTI-FACETED GROWTH STRATEGY | FLEXIBL
Slide 18: Timeline of Key Milestones
TIMELINE OF KEY MILESTONES 2013 2020 Internalization NSA formed by three of largest PRO, SecurCare founding PROs, SecurCare 2019 New PRO: Blue Sky Self Storage Northwest and Optivest 9th PRO: Southern Self Storage 10th PRO: Moove In Self Storage $150M Inaugural DPP 2014 2021 4th PRO: Guardian Record
Slide 19: Why Invest in NSA?
WHY INVEST IN NSA? The self storage sector has proven recession resilient and has been the best performing REIT sub-sector over Attractive dividend growth - NSA’s dividend rate has the long term(1) grown 93% over the past five years (Q3 2023 vs Q3 2018), and has a current yield of 7.2%(2) NSA has ou
Slide 20: Track Record of Performance
TRACK RECORD OF PERFORMANCE 20 3
Slide 21: Trailing Five Years of Performance (Q4 2018 – Q3 2023)
TRAILING FIVE YEARS OF PERFORMANCE (Q4 2018 – Q3 2023) $0.80 $0.80 1,200 90.0 84.0 $0.70 $0.70 78.0 1,000 72.0 $0.60 $0.60 66.0 800 60.0 $0.50 $0.50 54.0 $0.40 $0.40 600 48.0 42.0 $0.30 $0.30 36.0 400 30.0 $0.20 $0.20 24.0 200 $0.10 $0.10 18.0 12.0 $- $- 0 6.0 Q4-18 Q4-19 Q4-20 Q4-21 Q4-22 Q4-18 Q4-
Slide 22: Trailing Five Years: Core FFO Growth and Total Shareholder Return
TRAILING FIVE YEARS OF PERFORMANCE (Q4 2018 – Q3 2023) Average Quarterly Core FFO Total Shareholder Return Per Share Growth 16.0% 66.5% CUBE EXR NSA 13.2% 63.3% PSA 10.6% 60.4% 10.5% 54.6% 0% 5% 10% 15% 20% 0% 10% 20% 30% 40% 50% 60% 70% 80% SELF STORAGE INDUSTRY OVERVIEW | COMPANY OVERVIEW | TRACK
Slide 23: Trailing Five Years: Same Store Revenue and NOI Growth
TRAILING FIVE YEARS OF PERFORMANCE (Q4 2018 – Q3 2023) Average Quarterly Same Store Average Quarterly Same Store Revenue Growth NOI Growth 7.7% 9.4% CUBE EXR NSA 7.3% 9.1% PSA 6.6% 7.9% 6.2% 7.0% 0% 2% 4% 6% 8% 0% 2% 4% 6% 8% 10% SELF STORAGE INDUSTRY OVERVIEW | COMPANY OVERVIEW | TRACK RECORD OF PE
Slide 24: Multi-Faceted Growth Strategy
MULTI-FACETED GROWTH STRATEGY 24 4
Slide 25: People, Process & Platform: Driving Internal Growth
PEOPLE, PROCESS & PLATFORM: DRIVING INTERNAL GROWTH SEAMLESS & ENHANCED CUSTOMER EXPERIENCE • Streamlining the unit selection process • Online lease • Remote site management OPERATIONAL EXCELLENCE • Continuous improvements to Web and Mobile experience • NSA-Built Call Center Solution DELIVERING NOI
Slide 26: Sector-Leading Margin Improvement
SECTOR-LEADING MARGIN IMPROVEMENT Same-Store NOI Margin Expansion Since Beginning Same-Store NOI Margin of 2017 through 2022(1) Full-Year 2022 6.4% 80.2% CUBE EXR NSA 3.3% 76.5% PSA 1.9% 74.4% 1.0% 73.4% 0% 1% 2% 3% 4% 5% 6% 7% 0% 20% 40% 60% 80% (1) Based on reported full-year same-store NOI margin
Slide 27: Multi-Faceted Acquisition Strategy
MULTI-FACETED ACQUISITION STRATEGY 1,200 1,000 Cumulative Number Of Properties 800 600 400 200 0 At Formation 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Captive Pipeline 3rd Party Acquisitions New PROs Strategic Joint Ventures SELF STORAGE INDUSTRY OVERVIEW | COMPANY OVERVIEW | TRACK REC
Slide 28: Extraordinary Portfolio Growth
EXTRAORDINARY PORTFOLIO GROWTH 3-Year Portfolio Growth: Increase in NRSF 3-Year Portfolio Growth: NRSF in Millions 2020 – 2022(1) 2020 – 2022(1) 69.1% 35.3 CUBE EXR NSA 20.9% 23.8 PSA 20.5% 11.8 16.6% 7.5 0% 10% 20% 30% 40% 50% 60% 70% 0 10 20 30 40 (1) Based on reported consolidated square footage
Slide 29: Relationship-Driven Transactions Fuel Growth
RELATIONSHIP-DRIVEN TRANSACTIONS FUEL GROWTH Annual Acquisition Volume Since IPO(1) 2020 – 2022 Acquisition Volume by Source 2023 YTD $204.4 2022 $783.4 2021 $2,175.0 2020 $565.2 Captive Pipeline / New PRO 15% 2019 $447.8 2018 $1,651.5 Off-Market 38% 2017 $486.1 Marketed 2016 $1,351.4 47% 2015 $313.
Slide 30: Robust Long-Term Acquisition Pipeline
ROBUST LONG-TERM ACQUISITION PIPELINE CAPTIVE ACQUISITION PIPELINE TOTAL ACQUISITION • 115 Properties PIPELINE • Estimated value $1.8 billion 300 $3.4 PROPERTIES BILLION POTENTIAL BUYOUT OF JV PARTNER INTEREST • 185 Properties • JV Partner ownership interest 75% • Current estimated value of JV partn
Slide 31: Flexible Capital Structure Supports Future Growth
FLEXIBLE CAPITAL STRUCTURE SUPPORTS FUTURE GROWTH 31 5
Slide 32: Flexible Capital Structure: Capital for Growth and Credit Metrics
FLEXIBLE CAPITAL STRUCTURE BBB+ CAPITAL FOR GROWTH KEY CREDIT METRICS(1) RATED $950M MULTIPLE SOURCES UNSECURED JOINT VENTURE 6.3x 3.5x By Kroll Bond Unsecured Revolving & SECURED Net Debt/ Interest OF EQUITY Line of Credit Adjusted Coverage Rating Agency DEBT EBITDA Ratio (1) See Appendix for calcu
Slide 33: Flexible Capital Structure: Total Enterprise Value
FLEXIBLE CAPITAL STRUCTURE Total Enterprise Value - $8.7 Billion(1) Debt Equity 44% 56% (1) See appendix for definition. SELF STORAGE INDUSTRY OVERVIEW | COMPANY OVERVIEW | TRACK RECORD OF PERFORMANCE | MULTI-FACETED GROWTH STRATEGY | FLEXIBLE CAPITAL STRUCTURE SUPPORTS FUTURE GROWTH | ESG OVERVIEW
Slide 34: Equity Capitalization
FLEXIBLE CAPITAL STRUCTURE Equity Capitalization – Large Investment by Management and PROs OP Equity SP Equity Preferred Equity Common Equity 27% 12% 7% 54% SELF STORAGE INDUSTRY OVERVIEW | COMPANY OVERVIEW | TRACK RECORD OF PERFORMANCE | MULTI-FACETED GROWTH STRATEGY | FLEXIBLE CAPITAL STRUCTURE SU
Slide 35: Investment Grade Balance Sheet Provides Strength and Flexibility
INVESTMENT GRADE BALANCE SHEET PROVIDES Total Principal Debt STRENGTH AND FLEXIBILITY TO FINANCE GROWTH Outstanding Moderate Variable Rate Exposure(1) Minimal Secured Debt $3.9B Variable Secured Weighted Average 18% 6% Maturity(1)(2) 5.3 YEARS Fixed Unsecured Swapped 82% 94% Effective Interest Rate(
Slide 36: Well-Laddered Debt Maturity Schedule
WELL-LADDERED DEBT MATURITY SCHEDULE Debt Maturity Schedule ($ in millions)(1) 1,000 800 600 400 200 - 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Thereafter RLOC Term Loans Private Placement Mortgage (1) Pro forma the $250 million of senior unsecured notes issued October 5, 2023, and correspo
Slide 37: ESG Overview
ESG OVERVIEW 37 6
Slide 38: Environmental
• Over 900 of our properties have LED lighting ENVIRONMENTAL • Vast majority of properties have motion- sensor- controlled lighting • All HVAC replacements completed with energy efficient models • Approximately 20 of our properties have solar arrays installed • Expect to add solar on up to an additi
Slide 39: Social
SOCIAL • National Storage Affiliates has partnered with Feeding America to provide 1.5 million meals annually to individuals facing food insecurity. • Our SecurCare brand was recognized by Newsweek Media as one of America’s Best Customer Service Brands for 2022 • 62% of our employees are women(1) •
Slide 40: Governance
GOVERNANCE Corporate Governance Highlights GRESB – participated in the 2023 assessment Opted out of MUTA Vendor code of conduct No “poison pill” plan 7 of 10 trustees are independent Annual election of all trustees Separate chairman and CEO roles Risk Management Committee formed a Cybersecurity subc
Slide 41: Appendix (including Definitions and Methodology)
APPENDIX (including Definitions and Methodology) 41 7
Slide 42: Definitions and Methodology
DEFINITIONS AND METHODOLOGY Total Enterprise Value: The sum of the Company’s debt principal outstanding plus the perpetual preferred series A and common equity (on a fully diluted basis) valued at the closing price per share, as of September 30, 2023, of $22.45 and $31.74, respectively, and the Comp
Slide 43: Contact Us
CONTACT US INVESTOR RELATIONS George Hoglund, CFA Vice President – Investor Relations 720-630-2160 ghoglund@nsareit.net Marti Dowling Senior Director – Investor Relations 720-630-2624 mdowling@nsareit.net CORPORATE HEADQUARTERS National Storage Affiliates Trust 8400 East Prentice Avenue 9th Floor Gr
Slide 44: National Storage Affiliates
SA NATIONAL STORAGE AFFILIATES
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