National Storage Affiliates(NSA) - 2025 Q2 - Quarterly Results

Earnings Release Overview of NSA's Q2 2025 performance, financial highlights, management commentary, and revised guidance Second Quarter 2025 Highlights and Management Commentary Q2 2025 declines in net income, Core FFO, and same-store NOI, driven by soft demand and concessions Key Financial Metrics | Metric | Q2 2025 | Change vs Q2 2024 | | :--- | :--- | :--- | | Net Income | $31.0 million | -4.1% | | Core FFO per Share | $0.55 | -11.3% | | Same Store NOI | - | -6.1% | | Same Store Period-End Occupancy | 85.0% | -220 bps | - Management commentary indicates that positive sequential trends in contract rates and occupancy were outweighed by persistent softness in storage demand, driven by low existing home sales and supply pressure in Sunbelt markets[6] - The elevated use of concessions during the quarter, while driving rental volume, had a near-term negative impact on revenues, contributing to the downward revision of full-year guidance[6] - Subsequent to the quarter-end, an unconsolidated real estate venture acquired one self storage property for approximately $21.8 million in July 2025[6] Financial Results Q2 2025 net income decreased 4.1% to $31.0 million, Core FFO per share fell 11.3% due to lower NOI and higher interest expense Financial Performance Summary (in thousands, except per share) | Metric | Three Months Ended June 30, 2025 | Change vs 2024 | Six Months Ended June 30, 2025 | Change vs 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $30,958 | (4.1)% | $50,477 | (60.4)% | | FFO per share and unit | $0.54 | (11.5)% | $1.06 | (11.7)% | | Core FFO per share and unit | $0.55 | (11.3)% | $1.09 | (10.7)% | - The substantial year-to-date decrease in net income was primarily attributed to larger gains on the sale of self storage properties recognized in the first quarter of 2024[10] - The decrease in FFO and Core FFO per share was driven by a decline in same-store NOI and an increase in interest expense[11] Same Store Operating Results (771 Stores) Same-store NOI for 771 stores declined 6.1% in Q2 2025 due to 3.0% revenue drop and 4.6% expense increase Same Store Operating Results (in thousands) | Metric | Three Months Ended June 30, 2025 | Change vs 2024 | | :--- | :--- | :--- | | Total revenues | $168,975 | (3.0)% | | Property operating expenses | $52,720 | 4.6% | | Net Operating Income (NOI) | $116,255 | (6.1)% | | Average Occupancy | 84.2% | (2.4)% | - The decrease in Q2 same-store revenue was driven by a 240 basis point drop in average occupancy and a 0.3% decline in average annualized rental revenue per occupied square foot[13] - Markets with above-average same-store revenue growth included Portland, Houston, and San Juan, PR, while Riverside-San Bernardino, Atlanta, and Phoenix were below average[13] - The increase in same-store property operating expenses was primarily driven by higher costs for marketing, repairs and maintenance, and property taxes[14] Investment and Disposition Activity NSA invested $11.4 million in acquisitions, contributed $4.5 million to a JV, and agreed to sell ten properties for $66.5 million - Acquired one wholly-owned property and one annex for approximately $11.4 million[16] - A joint venture acquired one property for $18.0 million, with NSA contributing $4.5 million[15] - Agreed to sell ten wholly-owned properties for approximately $66.5 million, with eight closing in Q2 for $60.0 million, and proceeds used to pay down the revolving line of credit[17] Balance Sheet and Dividends NSA maintained $544.1 million in credit capacity and declared a $0.57 quarterly cash dividend - The company has approximately $544.1 million of available capacity on its revolving line of credit as of June 30, 2025[18] - A quarterly cash dividend of $0.57 per common share was declared and paid during the second quarter of 2025[19] 2025 Guidance NSA revised 2025 guidance downwards, lowering Core FFO per share and same-store revenue growth Revised 2025 Guidance | Guidance Metric | Current 2025 Range | Prior 2025 Range | | :--- | :--- | :--- | | Core FFO per share | $2.17 - $2.23 | $2.30 - $2.38 | | Same store total revenue growth | (3.0)% - (2.0)% | (1.25)% - 1.25% | | Same store NOI growth | (5.75)% - (4.25)% | (2.8)% - 0.0% | | Acquisitions (in millions) | $50.0 - $100.0 | $100.0 - $300.0 | - The primary driver for the revised guidance is lower same-store growth assumptions[20] Consolidated Financial Statements Presents consolidated statements of operations and balance sheets, detailing revenue, expenses, assets, and liabilities Consolidated Statements of Operations Q2 2025 total revenues $188.8 million, net income $31.0 million, YTD net income significantly lower at $50.5 million Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenue | $188,842 | $190,448 | | Total operating expenses | $120,543 | $118,475 | | Interest expense | ($41,269) | ($37,228) | | Gain on sale of self storage properties | $9,571 | $2,668 | | Net income | $30,958 | $32,280 | Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $5.18 billion, liabilities to $3.54 billion, and equity to $1.64 billion Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Self storage properties, net | $4,695,617 | $4,812,496 | | Total assets | $5,181,285 | $5,354,462 | | Debt financing | $3,402,659 | $3,449,087 | | Total liabilities | $3,543,603 | $3,591,115 | | Total equity | $1,637,682 | $1,763,347 | Supplemental Schedules Provides detailed reconciliations and additional financial/operational data, including non-GAAP measures and portfolio summaries Schedule 1 - Funds From Operations and Core Funds From Operations Reconciles Q2 2025 GAAP Net Income of $31.0 million to FFO of $72.3 million and Core FFO of $74.4 million Funds From Operations and Core Funds From Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income | $30,958 | $32,280 | | FFO attributable to common shareholders | $72,341 | $70,118 | | Core FFO attributable to common shareholders | $74,381 | $71,224 | | FFO per share and unit | $0.54 | $0.61 | | Core FFO per share and unit | $0.55 | $0.62 | Schedule 2 - Other Non-GAAP Financial Measurements Reconciles Q2 2025 NOI to $121.0 million, EBITDA to $125.2 million, and Adjusted EBITDA to $123.8 million Other Non-GAAP Financial Measurements (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income | $30,958 | $32,280 | | Net Operating Income | $120,985 | $128,725 | | EBITDA | $125,176 | $121,900 | | Adjusted EBITDA | $123,825 | $127,751 | Schedule 3 - Portfolio Summary NSA operated 1,067 properties (69.7 million sq ft) with YTD investments of $42.9 million and dispositions of $67.1 million - The total operated portfolio consists of 1,067 properties with approximately 550,000 units and 69.7 million rentable square feet, with an overall occupancy of 84.8%[45] Top 5 States by Number of Stores | Top 5 States (Total Operated) | Number of Stores | | :--- | :--- | | Texas | 203 | | Florida | 105 | | California | 98 | | Georgia | 72 | | Oregon | 70 | 2025 Year-to-Date Activity | 2025 YTD Activity | Stores | Total Investment / Net Proceeds | | :--- | :--- | :--- | | Total Investments | 5 | $42.9 million | | Total Dispositions | 10 | $67.1 million | Schedule 4 - Debt and Equity Capitalization NSA's total debt was $3.4 billion with a 4.52% weighted average interest rate and 135.3 million common shares/units Debt Metrics | Debt Metric | Value | | :--- | :--- | | Total Debt | ~$3.4 billion | | Weighted Average Effective Interest Rate | 4.52% | | Net Debt to Annualized Current Quarter Adjusted EBITDA | 6.8x | | Total Leverage Ratio | 45.8% | - Total common shares and units outstanding were 135,290,513 as of June 30, 2025[58] Schedule 5 - Summarized Information for Unconsolidated Real Estate Ventures NSA's unconsolidated ventures own 260 properties with $2.72 billion assets, $1.21 billion debt, and $61.7 million Q2 2025 revenue Unconsolidated Ventures Summary (at 100%) | Unconsolidated Ventures (at 100%) | As of June 30, 2025 | | :--- | :--- | | Number of Stores | 260 | | Gross Book Value of Real Estate Assets | $2.72 billion | | Outstanding Debt | $1.21 billion | | NSA's Investment Carrying Value | $231.4 million | Combined Operating Information (at 100%) | Combined Operating Info (at 100%) | Three Months Ended June 30, 2025 | | :--- | :--- | | Total revenue | $61.7 million | | Net operating income | $40.3 million | | FFO and Core FFO | $23.2 million | Schedule 6 - Same Store Performance Summary By MSA Q2 2025 same-store NOI varied by MSA, with Houston up 4.1% and North Port-Sarasota down 21.6% Q2 2025 Same Store NOI Change by MSA | MSA | Q2 2025 Same Store NOI Change | | :--- | :--- | | Top Performers | | | Houston-Pasadena-The Woodlands, TX | 4.1% | | San Juan-Bayamón-Caguas, PR | 2.2% | | Bottom Performers | | | North Port-Bradenton-Sarasota, FL | (21.6)% | | Atlanta-Sandy Springs-Roswell, GA | (16.4)% | | Shreveport-Bossier City, LA | (13.2)% | Schedule 7 - Same Store Operating Data - Trailing Five Quarters Same-store NOI for 771 stores declined from $123.8 million in Q2 2024 to $116.3 million in Q2 2025, with occupancy decreasing Same Store Operating Data - Trailing Five Quarters | Metric | 2Q 2024 | 3Q 2024 | 4Q 2024 | 1Q 2025 | 2Q 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net operating income ($M) | $123.8 | $124.5 | $120.9 | $116.4 | $116.3 | | Occupancy at period end | 87.2% | 85.9% | 84.7% | 83.6% | 85.0% | Schedule 8 - Reconciliation of Same Store Data and Net Operating Income to Net Income Reconciles Q2 2025 total rental revenue of $169.8 million and NOI of $121.0 million to consolidated Net Income of $31.0 million Q2 2025 Revenue Breakdown (in thousands) | Q2 2025 Revenue Breakdown ($ in thousands) | Amount | | :--- | :--- | | Same store portfolio rental revenue | $162,570 | | Non-same store portfolio rental revenue | $7,268 | | Total rental revenue | $169,838 | - The schedule reconciles from a total Net Operating Income of $121.0 million down to a Net Income of $31.0 million for Q2 2025 by accounting for items such as G&A, depreciation, and interest expense[72] Schedule 9 - Selected Financial Information Q2 2025 total capital expenditures increased to $6.2 million, G&A expenses decreased to $12.8 million due to lower supervisory costs Capital Expenditures (in thousands) | Capital Expenditures ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Recurring capital expenditures | $3,429 | $3,025 | | Value enhancing capital expenditures | $1,927 | $346 | | Total consolidated portfolio capital expenditures | $6,199 | $4,016 | - General and administrative expenses for Q2 2025 were $12.8 million, a decrease from $16.2 million in Q2 2024, mainly due to lower supervisory and administrative costs[73] Glossary Defines key non-GAAP financial measures and operational terms like FFO, Core FFO, NOI, and Same Store Portfolio - Defines Funds From Operations (FFO) as net income excluding real estate depreciation, gains/losses from property sales, and other specific items, providing a measure of a REIT's operating performance[81] - Defines Core FFO as FFO further adjusted to remove items not considered indicative of core operating performance, such as acquisition costs, integration costs, and casualty-related expenses[81] - Defines Net Operating Income (NOI) as rental revenue plus other property-related revenue less property operating expenses, serving as a primary measure to evaluate property economic productivity[85][94] - The Same Store Portfolio is defined as properties owned and operated on a stabilized basis since the first day of the earliest year presented, allowing for comparable year-over-year analysis[92]