National Storage Affiliates Trust (NSA) Q3 2024 Earnings Call Highlights: Navigating Challenges ...

In This Article:

  • Core FFO per Share: $0.62 for Q3 2024, a decrease of 7.5% year-over-year.

  • Same-Store Revenue Decline: 3.5% decrease driven by a 290 basis point decline in average occupancy and a 90 basis point decline in rent revenue per square foot.

  • Expense Growth: 1.2% increase, mainly due to property taxes and insurance.

  • Private Placement Notes: $350 million issued with a 5.6% weighted average coupon and 7.6 years weighted average maturity.

  • Debt Paid Off: $470 million in Q3 2024, including $325 million tranche C term loan and $145 million tranche B term loan.

  • Leverage: 6.4 times net debt to EBITDA at quarter end.

  • Guidance for 2024: Reaffirmed midpoints for same-store NOI growth of negative 5.5% and core FFO per share of $2.40.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • National Storage Affiliates Trust (NYSE:NSA) experienced an uplift in occupancy on the West Coast of Florida, particularly in Tampa and Sarasota Bradenton, with a 600 basis point increase.

  • The company is making significant progress in the internalization of its PRO structure, with 85% of the transition completed ahead of schedule.

  • NSA successfully closed on two portfolio transactions, enhancing its portfolio quality and operational efficiencies.

  • The company reported a strong balance sheet, having issued $350 million of private placement notes and paid off $470 million in debt during the third quarter.

  • NSA's existing customer base remains healthy, with stable payment activity and length of stay, supporting the company's revenue management strategies.

Negative Points

  • Core FFO per share decreased by 7.5% over the prior year period, primarily due to a decline in same-store NOI.

  • Revenues declined 3.5% on a same-store basis, driven by a 290 basis point year-over-year decline in average occupancy.

  • Fee rates during the third quarter were down 17% from the prior year, with expectations of further decline in the near term.

  • The operating environment remains competitive, particularly in Sunbelt markets with elevated new supply.

  • The company faces challenges with elevated supply in certain markets, such as Atlanta, Phoenix, and Las Vegas, impacting performance.

Q & A Highlights

Q: The full year FFO guidance implies a sequential drop-off versus what was reported in the third quarter. Can you clarify if the midpoint is a good base to work from and if a $0.04 to $0.05 sequential deceleration is expected? A: Yes, the midpoint of the guidance implies Q4 would be around $0.56, a sequential decline from Q3. The third quarter had some one-time benefits, including $800,000 in fees from joint venture deals, with $650,000 being one-time acquisition fees. Additionally, there were some property tax benefits that are more one-time in nature. When normalized, the third quarter might be around $0.60 or $0.61. The rest of the sequential decline is due to seasonality in the business. - Brandon Togashi, CFO