National Storage Affiliates(US:NSA)2022-02-25 22:09Portfolio and Acquisitions - As of December 31, 2021, the company operated a portfolio of 1,050 self-storage properties across 42 states and Puerto Rico, comprising approximately 67.8 million rentable square feet[20]. - The company acquired 229 consolidated self-storage properties during the year ended December 31, 2021, with 22 acquired from its PROs and 207 from third-party sellers[34]. - The company managed 415 consolidated properties and 177 unconsolidated real estate venture properties as of December 31, 2021[25]. - In 2021, the company acquired 229 self-storage properties, totaling approximately 16 million rentable square feet with a fair value of $2.175 billion[35]. - The 2020 acquisitions included 77 properties, amounting to 4.7 million rentable square feet and a total fair value of $543.3 million[37]. - The company has a captive pipeline of over 130 self-storage properties valued at approximately $1.4 billion, which will drive future growth[48]. - The company operates a total of 873 properties with 428,723 units, offering 55,118,704 square feet of rentable space and achieving an overall occupancy rate of 92.6%[164]. - As of December 31, 2021, the company owned 873 self-storage properties across 39 states and Puerto Rico, comprising approximately 55.1 million rentable square feet[200]. Financial Performance - Net income for the year ended December 31, 2021, was $146.9 million, an increase of $67.4 million from $79.5 million in 2020, primarily due to increased net operating income from newly acquired self-storage properties[211]. - Total revenue increased by $153.4 million, or 35.5%, for the year ended December 31, 2021, compared to 2020, driven by revenue from 229 self-storage properties acquired during the year and increased management fees[214]. - The same store portfolio rental revenue increased to $423.974 million in 2021 from $368.185 million in 2020, a change of $55.789 million[212]. - Total net operating income rose to $406.032 million in 2021, up from $285.698 million in 2020, reflecting a $120.334 million increase[212]. - Rental revenue increased by $146.9 million, or 37.2%, for the year ended December 31, 2021, compared to the previous year, driven by acquisitions and increased occupancy rates[215]. - Other property-related revenue increased by $5.2 million, or 36.0%, for the year ended December 31, 2021, primarily due to increases from newly acquired properties[216]. - Management fees and other revenue rose to $24.4 million, an increase of $1.3 million or 5.8%, attributed to growth in unconsolidated real estate venture revenue[217]. Operational Strategy - The company aims to recruit one to three additional established self-storage operators to enhance its geographic footprint and enter new regional markets[23]. - The company internalized the management of properties previously managed by Northwest Self Storage, which included 93 properties in Idaho, Oregon, and Washington[24]. - The company’s property management platform allows for centralized initiatives, including revenue enhancement and cost optimization programs[23]. - The company aims to maximize property-level cash flow by leveraging economies of scale and implementing new ideas from its Technology and Best Practices Group[47]. - The company plans to recruit additional PROs in key markets to enhance its growth strategy and diversify its portfolio[51]. Market Position and Competition - The company believes its national platform provides a competitive growth advantage over self-storage companies that do not offer property owners participation in performance[22]. - The company’s properties are located in high-quality sub-markets with strong cash flows, less sensitive to economic fluctuations[33]. - The company competes with other self-storage properties within a three to five mile radius based on location, rental rates, and security[74]. - The company faces competition from national, regional, and local owners, operators, and developers of self-storage properties, which may impact occupancy and rental rates[89]. Financing and Debt - As of December 31, 2021, the company's unsecured credit facility allowed for total borrowings of $1.550 billion, with $490 million drawn under the revolving line of credit[54]. - The company has a total credit facility of $1.750 billion, with an expansion option under the credit facility[55]. - The company has approximately $2.9 billion of debt outstanding, with about $615.0 million (20.9%) subject to variable interest rates[132]. - The company expects to maintain a flexible financing strategy for property acquisitions, utilizing a mix of bank borrowings and equity issuances[53]. - The company may face difficulties accessing capital necessary to fund its business due to financial market instability and the impact of the COVID-19 pandemic[115]. Regulatory and Compliance Risks - The company has elected to be taxed as a REIT under the Internal Revenue Code, which allows it to avoid U.S. federal income tax on net taxable income if it distributes all of its net taxable income to shareholders[73]. - To qualify as a REIT, the company must distribute at least 90% of its net taxable income to shareholders, which may limit its ability to make advantageous investments[145]. - The company is subject to a 4% non-deductible excise tax if distributions fall below a minimum amount specified under U.S. federal income tax laws[143]. - Legislative or regulatory tax changes related to REITs could materially and adversely affect the company's business and shareholder returns[151]. Employee and Management Structure - As of December 31, 2021, the company had 1,175 employees, excluding those employed by its PROs[79]. - Approximately 59% of the company's employees were women as of December 31, 2021, and 32% of the senior management team were women[78]. - Key personnel retention is critical for the company's success, with employment agreements in place for senior management, but no assurance of their continued employment[105]. Risks and Challenges - The COVID-19 pandemic poses various risks, including tenant defaults and reduced economic activity, which could adversely impact financial condition and cash flows[109][110]. - The company is dependent on automated information technology processes, making it vulnerable to cyber-attacks that could disrupt operations and compromise sensitive data[94]. - The company may incur significant costs to comply with the Americans with Disabilities Act (ADA), which could adversely affect financial condition and cash flow[96]. - Environmental compliance costs and liabilities may arise from operating properties, potentially impacting results of operations[97]. - The illiquidity of real estate investments may significantly hinder the company's ability to respond to adverse changes in property performance[104].