National Storage Affiliates(US:NSA)2024-05-02 20:05PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2024, highlighting a decrease in total assets to $5.37 billion and a significant increase in net income to $95.1 million, driven by property dispositions Condensed Consolidated Balance Sheets Total assets decreased to $5.37 billion as of March 31, 2024, from $5.93 billion, primarily due to property dispositions, resulting in reduced liabilities and equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $5,366,865 | $5,931,811 | | Self storage properties, net | $4,877,930 | $4,917,815 | | Assets held for sale, net | $— | $550,199 | | Total Liabilities | $3,419,793 | $3,805,970 | | Debt financing | $3,285,547 | $3,658,205 | | Total Equity | $1,947,072 | $2,125,841 | Condensed Consolidated Statements of Operations Total revenue decreased by 5.7% to $196.1 million for Q1 2024, primarily due to property sales, while net income surged to $95.1 million, driven by a $61.2 million gain on property dispositions Q1 2024 vs. Q1 2023 Statement of Operations (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total Revenue | $196,148 | $207,993 | | Total Operating Expenses | $121,191 | $127,935 | | Gain on sale of self storage properties | $61,173 | $— | | Net Income | $95,088 | $40,392 | | Net Income Attributable to Common Shareholders | $53,917 | $24,997 | | Earnings per share - diluted | $0.65 | $0.24 | | Dividends declared per common share | $0.56 | $0.55 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities decreased to $94.0 million in Q1 2024, while investing activities generated $567.4 million from property sales, and financing activities used $660.0 million for debt repayments and share repurchases Cash Flow Summary for the Three Months Ended March 31 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $94,001 | $109,753 | | Net Cash Provided by (Used In) Investing Activities | $567,399 | $(36,172) | | Net Cash Used In Financing Activities | $(660,013) | $(63,944) | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies and financial activities, including property ownership, the formation of a new joint venture, disposition of 95 properties, significant share repurchases, and the use of interest rate swaps to manage debt risk - As of March 31, 2024, the company owned 809 consolidated self storage properties and managed an additional 241 properties through unconsolidated real estate ventures in which it holds a 25% equity interest3233 - In Q1 2024, the company formed a new joint venture (the "2024 Joint Venture") and contributed 56 self storage properties to it7376 - During Q1 2024, the company sold 39 properties for net proceeds of $265.1 million and contributed 56 properties to the 2024 Joint Venture for net proceeds of $343.7 million, recording a total net gain of $61.2 million85 - The company repurchased 5,491,925 common shares for approximately $203.5 million during Q1 202460 - As of March 31, 2024, the company had $1.23 billion in notional amount of interest rate swaps designated as cash flow hedges to manage interest rate risk on its variable-rate debt104 Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Q1 2024 financial performance, attributing a 5.7% revenue decrease to property dispositions and lower occupancy, while net income rose due to property sales, and non-GAAP metrics like Core FFO per share declined Results of Operations Total revenue decreased by $11.8 million (5.7%) in Q1 2024 due to property sales and lower occupancy, while net income increased significantly to $95.1 million, driven by a $61.2 million gain on property dispositions Q1 2024 vs. Q1 2023 Operating Results (in thousands) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $196,148 | $207,993 | $(11,845) | | Property Operating Expenses | $54,694 | $56,483 | $(1,789) | | Gain on sale of self storage properties | $61,173 | $— | $61,173 | | Net Income | $95,088 | $40,392 | $54,696 | - The decrease in total revenue was primarily driven by the disposition of 39 properties sold to a third party and 56 properties contributed to the 2024 Joint Venture, as well as a decrease in total portfolio average occupancy from 88.6% to 85.2% YoY131 Non-GAAP Financial Measures Non-GAAP metrics for Q1 2024 show Core FFO per share decreased to $0.60, same-store NOI declined by 3.7% to $124.2 million due to lower rental revenue and higher expenses, and Adjusted EBITDA also decreased to $129.9 million Non-GAAP Performance Metrics (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Core FFO per share & unit | $0.60 | $0.66 | | Same Store NOI (in thousands) | $124,216 | $128,998 | | Adjusted EBITDA (in thousands) | $129,927 | $142,716 | - Same-store NOI decreased by 3.7% YoY. This was caused by a 1.7% decrease in same-store rental revenue (due to lower occupancy) and a 4.5% increase in same-store property operating expenses (due to higher insurance and marketing costs)153154156 Liquidity and Capital Resources As of March 31, 2024, the company had $64.2 million in cash, using proceeds from property sales to repay $613.4 million in debt and repurchase $203.5 million in shares, while maintaining a $1.825 billion credit facility - Primary uses of cash in Q1 2024 were principal payments on debt of $613.4 million and common share repurchases of $203.5 million173 - Primary sources of cash in Q1 2024 were $94.0 million from operations and $608.8 million from the sale and contribution of properties169170 - As of March 31, 2024, the company had $805.6 million of available borrowing capacity under its revolving line of credit91175 - On February 15, 2024, the board declared a quarterly dividend of $0.56 per common share190 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuations, with $138.0 million of unhedged variable-rate debt, where a 100 basis point change would impact annual earnings and cash flows by approximately $1.4 million - The company's main market risk exposure is to interest rate fluctuations206 - As of March 31, 2024, the company had $138.0 million of unhedged variable-rate debt207 - A hypothetical 100 basis point (1%) change in interest rates would affect annual earnings and cash flows by approximately $1.4 million207 Controls and Procedures The company's disclosure controls and procedures were deemed effective as of March 31, 2024, with no material changes to internal control over financial reporting reported during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period209 - No material changes to internal control over financial reporting occurred during the first quarter of 2024210 PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings considered material - As of the filing date, the company is not subject to any material legal proceedings213 Risk Factors This section refers investors to the company's 2023 Annual Report on Form 10-K for a comprehensive discussion of potential risks and uncertainties - For a detailed discussion of risk factors, the company refers to its 2023 Annual Report on Form 10-K214 Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2024, the company issued 72,802 common shares to satisfy redemption requests under a registration exemption and repurchased 5,491,925 common shares for approximately $203.5 million - During Q1 2024, the company issued 72,802 common shares to satisfy redemption requests from certain limited partners under a registration exemption215 Issuer Purchases of Equity Securities (Q1 2024) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 1 - Jan 31, 2024 | 856,036 | $38.35 | | Feb 1 - Feb 29, 2024 | 1,817,617 | $36.63 | | Mar 1 - Mar 31, 2024 | 2,818,272 | $36.91 | | Total | 5,491,925 | $37.04 | Defaults Upon Senior Securities Not applicable, as the company reports no defaults upon senior securities - Not applicable220 Mine Safety Disclosures Not applicable, as the company has no mine safety disclosures to report - Not applicable221 Other Information Not applicable, as the company reports no other information - Not applicable222 Exhibits This section lists the exhibits filed with the Form 10-Q, including articles of incorporation, bylaws, officer certifications, and XBRL data files - The report includes standard exhibits such as CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and interactive data files (XBRL)223225