National Storage Affiliates(NSA) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Presents unaudited condensed consolidated financial statements for Q1 2020 and 2019, covering balance sheets, operations, comprehensive income, equity, cash flows, and accounting notes Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Summary | ASSETS (in thousands) | March 31, 2020 | December 31, 2019 | | :---------------------- | :------------- | :---------------- | | Self storage properties, net | $2,951,322 | $2,753,897 | | Cash and cash equivalents | $18,689 | $20,558 | | Total assets | $3,278,873 | $3,084,245 | | LIABILITIES AND EQUITY (in thousands) | March 31, 2020 | December 31, 2019 | | :---------------------- | :------------- | :---------------- | | Debt financing | $1,731,669 | $1,534,047 | | Interest rate swap liabilities | $84,703 | $19,943 | | Total liabilities | $1,897,818 | $1,632,144 | | Total equity | $1,381,055 | $1,452,101 | | Total liabilities and equity | $3,278,873 | $3,084,245 | - Total assets increased by $194.6 million from December 31, 2019, to March 31, 2020, primarily driven by an increase in net self-storage properties[11] - Total liabilities increased significantly by $265.7 million, largely due to an increase in debt financing and interest rate swap liabilities[11] Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations Summary | (in thousands, except per share amounts) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenue | $104,222 | $90,572 | | Total operating expenses | $71,180 | $61,572 | | Net income | $15,763 | $12,940 | | Net income attributable to common shareholders | $3,375 | $4,823 | | Earnings per share - basic and diluted | $0.06 | $0.08 | | Dividends declared per common share | $0.33 | $0.30 | - Total revenue increased by $13.65 million (15.1%) year-over-year, primarily from rental revenue[13] - Net income attributable to common shareholders decreased by $1.45 million (30.0%) despite higher total revenue, due to increased operating expenses, depreciation, and interest expense[13] Condensed Consolidated Statements of Comprehensive Income (Loss) Condensed Consolidated Statements of Comprehensive Income (Loss) Summary | (dollars in thousands) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--------------------- | :-------------------------------- | :-------------------------------- | | Net income | $15,763 | $12,940 | | Other comprehensive (loss) income | $(65,757) | $(9,315) | | Comprehensive (loss) income attributable to National Storage Affiliates Trust | $(35,645) | $1,494 | - The company reported a comprehensive loss of $35.65 million for Q1 2020, a significant decline from a comprehensive income of $1.49 million in Q1 2019, primarily due to a substantial unrealized loss on derivative contracts[14] Condensed Consolidated Statements of Changes in Equity - Total equity decreased from $1,452.1 million at December 31, 2019, to $1,381.1 million at March 31, 2020, primarily due to other comprehensive loss and distributions[20] - Key changes in equity include the issuance of common shares for the merger and internalization of PRO ($9.6 million), and significant distributions to common shareholders ($19.7 million) and noncontrolling interests ($19.8 million)[20] - Accumulated other comprehensive loss increased substantially from $(7.8) million to $(52.9) million, reflecting unrealized losses on derivative contracts[20] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows Summary | (dollars in thousands) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--------------------- | :-------------------------------- | :-------------------------------- | | Net Cash Provided by Operating Activities | $50,685 | $46,398 | | Net Cash Used In Investing Activities | $(211,112) | $(143,706) | | Net Cash Provided By Financing Activities | $158,837 | $100,368 | | (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash | $(1,590) | $3,060 | - Operating cash flow increased by $4.29 million (9.2%) year-over-year, driven by acquisitions[22] - Investing activities used significantly more cash, increasing by $67.41 million (46.9%) due to higher self-storage property acquisitions[22] - Financing activities provided $58.47 million (58.2%) more cash, primarily from increased borrowings under debt financings[22] Notes to Condensed Consolidated Financial Statements 1. Organization and Nature of Operations - National Storage Affiliates Trust (NSA) is a self-administered and self-managed REIT focused on self-storage properties in the top 100 metropolitan statistical areas in the U.S[27] - As of March 31, 2020, NSA owned 603 consolidated self-storage properties across 29 states and Puerto Rico, totaling approximately 36.2 million rentable square feet[29] - On March 31, 2020, NSA internalized its largest PRO, SecurCare Self Storage, Inc., merging it into wholly-owned subsidiaries, discontinuing supervisory/administrative fees and related subordinated performance unit distributions[30] 2. Summary of Significant Accounting Policies - The financial statements are prepared in accordance with GAAP and SEC interim financial reporting rules, with certain information condensed or omitted[33][34] - The Company consolidates its operating partnership and controlled subsidiaries, including 21 DownREIT partnerships identified as Variable Interest Entities (VIEs)[35][36][37] - Revenue recognition policies include straight-line recognition for rental income from month-to-month operating leases and recognition of other property-related revenue (e.g., tenant insurance, retail sales) in the period earned[39][40][41][42] - Net income (loss) is allocated using the hypothetical liquidation at book value (HLBV) method, which can result in disproportionate allocations to unitholders due to liquidation priorities and non-cash items[52][53] - The Company elected to apply hedge accounting expedients under ASU 2020-04 for LIBOR-indexed cash flow derivatives, assuming future hedged transactions match derivative indices to preserve presentation consistency[57] 3. Shareholders' Equity and Noncontrolling Interests - On March 31, 2020, the Company issued 8,105,192 common shares in connection with the mergers and internalization of SecurCare and DLAN[58][190] - During Q1 2020, the Company sold 125,000 common shares through its ATM program at an average price of $36.18 per share, generating $4.2 million in net proceeds[60][191](index=19