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Table of Contents
Page
 
 
 
Earnings Release
 
 
Consolidated Statements of Operations
 
 
Consolidated Balance Sheets
 
 
Schedule 1 - Funds From Operations and Core Funds From Operations
 
 
Schedule 2 - Other Non-GAAP Financial Measurements
 
 
Schedule 3 - Portfolio Summary
 
 
Schedule 4 - Debt and Equity Capitalization
 
 
Schedule 5 - Summarized Information for Unconsolidated Real Estate Venture
 
 
Schedule 6 - Same Store Performance Summary
 
 
Schedule 7 - Reconciliation of Same Store Data and Net Operating Income to Income from Operations
 
 
Schedule 8 - Selected Financial Information
 
 
Glossary
 
 
 
 
 
 
 
 



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February 27, 2017

National Storage Affiliates Trust Reports Fourth Quarter and Full Year 2016 Results; Full Year Net Income Increases $20.1 Million; Core FFO per Share Increases 21.7%; Same Store NOI Increases 10.2%; Acquired 107 Self Storage Properties; Provides Full-Year 2017 Guidance
GREENWOOD VILLAGE, Colo. - (BUSINESS WIRE) - National Storage Affiliates Trust (“NSA” or the "Company") (NYSE: NSA) today reported the Company’s fourth quarter and full year 2016 results.
Fourth Quarter 2016 Highlights
Net income was $6.1 million for the fourth quarter of 2016, an increase of $0.7 million compared to $5.4 million for the fourth quarter of 2015.
Core funds from operations ("Core FFO") was $20.0 million, or $0.30 per share, for the fourth quarter of 2016, an increase of 25.0% per share compared to $11.6 million, or $0.24 per share, for the fourth quarter of 2015.
Same store total revenues were $32.3 million for the fourth quarter of 2016, an increase of 6.3% compared to $30.4 million for the fourth quarter of 2015.
Same store NOI was $22.2 million for the fourth quarter of 2016, an increase of 9.2% compared to $20.3 million for the fourth quarter of 2015.
Acquired 31 self storage properties during the fourth quarter of 2016 for approximately $228 million.
Formed a joint venture ("JV") with a major state pension fund; JV acquired the 66-property iStorage portfolio for $630 million.
Received approximately $139 million of net proceeds from the sale of 6.9 million common shares of beneficial interest ("common shares") during the fourth quarter of 2016.
Full Year 2016 Highlights
Net income was $24.9 million for full year 2016, an increase of $20.1 million compared to $4.8 million for full year 2015.
Core FFO was $65.5 million, or $1.12 per share, for full year 2016, an increase of 21.7% per share compared to $35.8 million, or $0.92 per share, for full year 2015.
Same store total revenues were $127.6 million for full year 2016, an increase of 7.7% compared to $118.4 million for full year 2015.
Same store NOI was $86.6 million for full year 2016, an increase of 10.2% compared to $78.6 million for full year 2015.
Acquired 107 self storage properties and formed new JV, investing a total of over $1.3 billion in consolidated and unconsolidated self storage property acquisitions during full year 2016.
Issued over $500 million of equity during 2016, including over $120 million of OP equity for the acquisition of self storage properties and $389 million of gross proceeds from the sale of common shares.

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Arlen Nordhagen, Chief Executive Officer and Chairman, commented, "2016 was an exceptional year on all fronts for NSA, reflecting the continued execution of our strategic internal and external growth initiatives. We achieved a 10.2% increase in same store NOI and a 21.7% per share increase in Core FFO. Operationally, we drove same store revenue and NOI growth of 7.7% and 10.2%, respectively, while on the external growth front we continue to identify and close high-quality self storage acquisitions in our core growth markets. During 2016, we acquired and made investments in properties totaling over $1.3 billion in value, which included 107 consolidated properties and our entrance into a new joint venture with a portfolio of 66 properties."
Mr. Nordhagen, continued, "As importantly, during the fourth quarter we raised approximately $105 million of common equity through a well-received follow-on offering, and approximately $34 million under the company's ATM program, ending the year with a strong balance sheet and ample flexibility to support our growth objectives. Finally, we are extremely pleased to announce that we have entered into agreements to add our eighth Participating Regional Operator ("PRO"), Personal Mini Storage of Orlando, Florida. Marc Smith, President of Personal Mini, brings over twenty years of self storage industry experience, is a highly respected leader within the industry and served as the Chairman of the National Self Storage Association in 2016. The mark of adding our eighth PRO combined with our recently completed iStorage joint venture enhances NSA’s competitive advantage in the public self storage space. As we move forward into 2017, we look to further expand our platform, drive strong core FFO growth and create value for our shareholders over the long-term."
Financial Results
($ in thousands, except per share and unit data)
Three Months Ended December 31,
 
Year Ended December 31,
 
2016
 
2015
 
Growth
 
2016
 
2015
 
Growth
Net income
$
6,075

 
$
5,365

 
13.2
 %
 
$
24,866

 
$
4,796

 
418.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
Funds From Operations ("FFO")(1)
$
17,198

 
$
11,045

 
55.7
 %
 
$
57,776

 
$
30,102

 
91.9
 %
Add back acquisition costs and NSA's share of unconsolidated venture acquisition costs
2,819

 
573

 
392.0
 %
 
7,688

 
5,737

 
34.0
 %
Core FFO(1)
$
20,017

 
$
11,618

 
72.3
 %
 
$
65,464

 
$
35,839

 
82.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per share - basic
$
0.22

 
$
0.20

 
10.0
 %
 
$
0.60

 
$
0.80

 
(25.0
)%
Earnings (loss) per share - diluted
$
0.07

 
$
0.08

 
(12.5
)%
 
$
0.31

 
$
0.17

 
82.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
FFO per share and unit(1)
$
0.26

 
$
0.23

 
13.0
 %
 
$
0.99

 
$
0.77

 
28.6
 %
Core FFO per share and unit(1)
$
0.30

 
$
0.24

 
25.0
 %
 
$
1.12

 
$
0.92

 
21.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
(1) Non-GAAP financial measures, including FFO, Core FFO and NOI, are reconciled to their most directly comparable GAAP measure and defined (together with other words and phrases used herein) in the Schedules to this press release and in the supplemental financial information. 
Fourth Quarter 2016
Fourth quarter 2016 net income increased $0.7 million, driven primarily by incremental NOI generated from 107 self storage properties acquired during 2016 and same store NOI growth, partially offset by increases

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in depreciation and amortization, interest expense, general and administrative expenses, and acquisition costs.
Fourth quarter 2016 basic earnings per share increased $0.02 per share and diluted earnings per share decreased $0.01 per share. In addition to the items affecting net income described above, the comparison of earnings per share amounts between periods is affected by the allocation of net income to noncontrolling interests pursuant to GAAP. Additional information on NSA's allocation of net income (loss) can be found in the Glossary to the supplemental financial information under "Hypothetical Liquidation at Book Value Method."
Fourth quarter 2016 FFO per share increased 13.0% and Core FFO per share increased 25.0%. The increases in FFO and Core FFO were primarily the result of $10.3 million of incremental NOI from 107 self storage properties acquired during 2016 and same store NOI growth of $1.9 million, partially offset by increases of $2.3 million of interest expense, $2.7 million of general and administrative expenses and $2.1 million of distributions to subordinated performance unitholders.
Full Year 2016
Full year 2016 net income increased $20.1 million, driven primarily by additional NOI generated from non-same store self storage properties acquired during 2016 and 2015 and same store NOI growth, partially offset by increases in depreciation and amortization, general and administrative expenses, interest expense, and acquisition costs.
Full year 2016 basic earnings per share decreased $0.20 per share and diluted earnings per share increased $0.14 per share. In addition to the items affecting net income described above, the comparison of earnings per share amounts between periods is affected by the allocation of net income to noncontrolling interests pursuant to GAAP.
Full year 2016 FFO per share increased 28.6% and Core FFO per share increased 21.7%. The increases in FFO and Core FFO were primarily the result of $35.9 million of incremental NOI from non-same store properties acquired in 2016 and 2015, same store NOI growth of $8.0 million, partially offset by increases of $3.3 million of interest expense, $5.3 million of general and administrative expenses and $7.8 million of distributions to subordinated performance unitholders.
Non-GAAP financial measures, including FFO, Core FFO and NOI, are defined and reconciled to their most directly comparable GAAP measure in the Schedules to this press release and in the supplemental financial information.
Total Consolidated Portfolio Operating Results
($ in thousands, except per square foot data)
Three Months Ended December 31,
 
Year Ended December 31,
 
2016
 
2015
 
Growth
 
2016
 
2015
 
Growth
Total rental and other property-related revenue
$
57,355

 
$
38,300

 
49.8
%
 
$
197,237

 
$
133,919

 
47.3
%
Property operating expenses
18,734

 
12,744

 
47.0
%
 
64,798

 
45,412

 
42.7
%
Net Operating Income (NOI)
$
38,621

 
$
25,556

 
51.1
%
 
$
132,439

 
$
88,507

 
49.6
%
 
 
 
 
 
 
 
 
 
 
 
 
Average Occupancy
89.1
%
 
88.8
%
 
0.3
%
 
89.7
%
 
87.9
%
 
1.8
%
Average Annualized Rental Revenue Per Occupied Square Foot
$
11.28

 
$
10.65

 
5.9
%
 
$
11.00

 
$
10.62

 
3.6
%

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Fourth Quarter 2016
Year-over-year, fourth quarter 2016 total rental and other property-related revenue increased 49.8%, driven by $16.2 million of incremental revenues from 107 self storage properties acquired during 2016 and a $1.9 million increase in same store total revenues.
Fourth quarter 2016 total property operating expenses increased 47.0% year-over-year, resulting from $5.9 million of incremental property operating expenses generated by 107 self storage properties acquired during 2016, and an increase of less than $0.1 million in same store property operating expenses.
Total portfolio NOI was $38.6 million for the fourth quarter of 2016, an increase of 51.1% compared to NOI of $25.6 million for the fourth quarter of 2015.
Full Year 2016
Total rental and other property-related revenue was $197.2 million for full year 2016, an increase of 47.3% compared to total rental and other property-related revenue of $133.9 million for full year 2015. The increase resulted from incremental revenues of $35.6 million from 107 self storage properties acquired during 2016 and $18.5 million from 53 self storage properties acquired from January 2, 2015 to December 31, 2015, and a $9.2 million increase in same store total revenues.
Total property operating expenses were $64.8 million for full year 2016, and increase of 42.7% compared to total property operating expenses of $45.4 million for full year 2015. The increase resulted from incremental expenses of $13.0 million from 107 self storage properties acquired during 2016, and $5.2 million from 53 self storage properties acquired from January 2, 2015 to December 31, 2015, and a $1.2 million increase in same store property operating expenses.
Total portfolio NOI was $132.4 million for full year 2016, an increase of 49.6% compared to NOI of $88.5 million for full year 2015.
NSA's total consolidated portfolio included 382 self storage properties, approximately 23.1 million rentable square feet, with period-end occupancy of 88.4% as of December 31, 2016.
Same Store Operating Results
($ in thousands, except per square foot data)
Three Months Ended December 31,
 
Year Ended December 31,
 
2016
 
2015
 
Growth
 
2016
 
2015
 
Growth
Total rental and other property-related revenue
$
32,299

 
$
30,380

 
6.3
 %
 
$
127,550

 
$
118,390

 
7.7
%
Property operating expenses
10,137

 
10,087

 
0.5
 %
 
40,929

 
39,761

 
2.9
%
Net Operating Income (NOI)
$
22,162

 
$
20,293

 
9.2
 %
 
$
86,621

 
$
78,629

 
10.2
%
NOI Margin
68.6
%
 
66.8
%
 
1.8
 %
 
67.9
%
 
66.4
%
 
1.5
%
 
 
 
 
 
 
 
 
 
 
 
 
Average Occupancy
89.1
%
 
89.4
%
 
(0.3
)%
 
90.0
%
 
87.9
%
 
2.1
%
Average Annualized Rental Revenue Per Occupied Square Foot
$
11.46

 
$
10.74

 
6.7
 %
 
$
11.18

 
$
10.62

 
5.3
%
Fourth Quarter 2016
Year-over-year, fourth quarter 2016 same store total rental and other property-related revenue increased 6.3%. Fourth quarter 2016 increases were driven by a 6.7% increase in average annualized rental revenue

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per occupied square foot partially offset by a 30 basis point decrease in average occupancy. Same store property operating expenses increased less than $0.1 million for the fourth quarter of 2016 compared to the fourth quarter of 2015.
Full Year 2016
Year-over-year, full year 2016 same store total rental and other property-related revenue increased 7.7%. Full year 2016 increases were driven by a 5.3% increase in average annualized rental revenue per occupied square foot and a 210 basis point increase in average occupancy. Same store property operating expenses increased $1.2 million for full year 2016 compared to full year 2015.
NSA's same store portfolio included 222 self storage properties, approximately 12.3 million rentable square feet, with period-end occupancy of 88.4% as of December 31, 2016.
Investment Activity
During the fourth quarter of 2016, NSA invested approximately $228 million in the acquisition of 31 self storage properties located throughout eight states. These fourth quarter acquisitions encompass approximately 2.1 million rentable square feet configured in over 16,600 storage units. Subsequent to December 31, 2016, NSA acquired five additional self storage properties for a total investment of approximately $32 million encompassing approximately 0.3 million rentable square feet configured in over 2,200 storage units.
In addition, during the fourth quarter of 2016, NSA's JV with a major state pension fund (the “JV Investor”) completed its acquisition of the 66 property iStorage portfolio for aggregate consideration of approximately $630 million. The JV financed the acquisition with approximately $320 million in equity (approximately $80 million from NSA in exchange for a 25% ownership interest and approximately $240 million from the JV Investor in exchange for a 75% ownership interest) with the balance of the consideration funded with proceeds from JV debt financing. The Company also completed its acquisition of the iStorage property management platform for approximately $20 million, including a property management company, a captive insurance company, and the iStorage brand.
Capital Transactions
NSA received approximately $139 million of net proceeds from the sale of 6.9 million common shares during the fourth quarter of 2016. This included an offering of 5,175,000 of common shares, including 675,000 common shares sold upon the exercise in full by the underwriters of their option to purchase additional common shares. The shares were issued at $20.48 per share, resulting in net proceeds to NSA of approximately $105 million. In addition, NSA issued 1,740,949 of its common shares under the Company's at the market (“ATM”) program for net proceeds of approximately $34 million after deducting the underwriting discount. NSA used the net proceeds from these offerings for general corporate purposes, including the repayment of outstanding amounts under its revolving line of credit and the acquisition of additional self storage properties. Finally, NSA issued $16.7 million of OP equity in connection with the acquisition of five self storage properties during the fourth quarter of 2016.
During December 2016 and February 2017, NSA entered into agreements with a syndicated group of lenders to partially exercise its expansion option under its credit facility, increasing total capacity by $220 million for a total credit facility of $895 million. This expansion increased the total borrowing capacity under NSA's revolving line of credit by $50 million, and increased the outstanding balances of NSA's five and six-year term loan tranches by $10 million and $55 million, respectively, along with a new $105 million seven-year term loan tranche.


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Dividends
On February 23, 2017, NSA's Board of Trustees declared a quarterly cash dividend of $0.24 per common share, which will be paid on March 30, 2017 to holders of record on March 15, 2017. This dividend represents an annualized dividend rate of $0.96, a 20% increase over the first quarter 2016 annualized dividend rate of $0.80 per share.

2017 Guidance
The following table outlines NSA's guidance estimates for the year ended December 31, 2017:
 
 
Ranges for Full Year 2017
 
 
Low
 
High
Same store operations (277 stores)
 
 
Total rental and other property-related revenue growth
 
5.0%
 
7.0%
Property operating expenses growth
 
3.0%
 
4.0%
NOI growth
 
6.0%
 
8.0%
 
 
 
 
 
General and administrative expenses (as a percent of revenue)
 
10.5%
 
12.0%
General and administrative expenses (excluding equity-based compensation)
 
9.5%
 
10.5%
Equity-based compensation
 
1.0%
 
1.5%
 
 
 
 
 
Management fees and other revenue, in millions
 
$7.0
 
$8.0
Core FFO from unconsolidated real estate venture, in millions
 
$4.0
 
$4.5
 
 
 
 
 
Subordinated performance unit distributions, in millions
 
$28.0
 
$32.0
 
 
 
 
 
Acquisitions, in millions
 
$200.0
 
$500.0
 
 
 
 
 
Core FFO per share(1)
 
$1.22
 
$1.29
(1) The following table provides a reconciliation of the range of estimated earnings (loss) per share - diluted to estimated Core FFO per share and unit:
 
 
Ranges for Full Year 2017
 
 
Low
 
High
Earnings (loss) per share - diluted
 
$
0.23

 
$
0.40

Impact of the difference in weighted average number of shares and GAAP accounting for noncontrolling interests, two-class method and treasury stock method
 
0.38

 
0.24

Add real estate depreciation and amortization, including NSA's share of unconsolidated venture real estate depreciation and amortization
 
0.99

 
1.09

FFO attributable to subordinated performance unitholders
 
(0.38
)
 
(0.44
)
Core FFO per share and unit
 
$
1.22

 
$
1.29

Supplemental Financial Information
The full text of this earnings release and supplemental financial information, including certain financial information referenced in this release, are available on NSA's website at http://ir.nationalstorageaffiliates.com/quarterly-reporting and as exhibit 99.1 to the Company's Form 8-K furnished to the SEC on February 27, 2017.

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Non-GAAP Financial Measures & Glossary
This press release contains certain non-GAAP financial measures. These non-GAAP measures are presented because NSA's management believes these measures help investors understand NSA's business, performance and ability to earn and distribute cash to its shareholders by providing perspectives not immediately apparent from net income (loss). These measures are also frequently used by securities analysts, investors and other interested parties. The presentation of FFO, Core FFO and NOI in this press release are not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, NSA's method of calculating these measures may be different from methods used by other companies, and, accordingly, may not be comparable to similar measures as calculated by other companies that do not use the same methodology as NSA. These measures, and other words and phrases used herein, are defined in the Glossary in the supplemental financial information and, where appropriate, reconciliations of these measures and other non-GAAP financial measures to their most directly comparable GAAP measures are included in the Schedules to this press release and in the supplemental financial information.
Quarterly Teleconference and Webcast
The Company will host a conference call at 1:00pm Eastern Time on Tuesday, February 28, 2017 to discuss its financial results. At the conclusion of the call, management will accept questions from certified financial analysts. All other participants are encouraged to listen to a webcast of the call by accessing the link found on the Company's website at www.nationalstorageaffiliates.com.
Conference Call and Webcast:
Date/Time: Tuesday, February 28, 2017, 1:00pm ET
Webcast available at: www.nationalstorageaffiliates.com
Domestic (Toll Free US & Canada): 877.407.9711
International: 412.902.1014
Replay:
Domestic (Toll Free US & Canada): 877.660.6853
International: 201.612.7415
Conference ID: 13646795
A replay of the call will be available for one week through Tuesday, March 7, 2017. A replay of the webcast will be available for 30 days on NSA's website at www.nationalstorageaffiliates.com.
Upcoming Industry Conference
NSA management is scheduled to participate in the upcoming Wells Fargo 20th Annual Real Estate Securities Conference in New York, New York on March 1-2, 2017.
About National Storage Affiliates Trust
National Storage Affiliates Trust is a Maryland real estate investment trust focused on the ownership, operation and acquisition of self storage properties located within the top 100 metropolitan statistical areas throughout the United States. The Company currently holds ownership interests in and operates 453 self storage properties located in 23 states with approximately 28 million rentable square feet. NSA is the sixth largest owner and operator of self storage properties among public and private companies in the U.S. For more information, please visit the Company’s website at www.nationalstorageaffiliates.com. NSA is included in the MSCI US REIT Index (RMS/RMZ) and the Russell 2000 Index of Companies.

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NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements contained in this press release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company's control. These forward-looking statements include information about possible or assumed future results of the Company's business, financial condition, liquidity, results of operations, plans and objectives. Changes in any circumstances may cause the Company's actual results to differ significantly from those expressed in any forward-looking statement. When used in this release, the words "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "may" or similar expressions are intended to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: market trends in the Company's industry, interest rates, the debt and lending markets or the general economy; the Company's business and investment strategy; and the acquisition of properties, including the timing of acquisitions. For a further list and description of such risks and uncertainties, see the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, and the other documents filed by the Company with the Securities and Exchange Commission. The forward-looking statements, and other risks, uncertainties and factors are based on the Company's beliefs, assumptions and expectations of its future performance, taking into account all information currently available to the Company. Forward-looking statements are not predictions of future events. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
CONTACT:
National Storage Affiliates Trust
Investor/Media Relations
Marti Dowling
Director - Investor Relations
720.630.2624
mdowling@nsareit.net

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National Storage Affiliates Trust
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

 
Three Months Ended
December 31,
 
Year Ended
December 31,
 
2016
 
2015
 
2016
 
2015
REVENUE
 
 
 
 
 
 
 
Rental revenue
$
55,630

 
$
37,219

 
$
191,178

 
$
129,869

Other property-related revenue
1,725

 
1,081

 
6,059

 
4,050

Management fees and other revenue
1,809

 

 
1,809

 

Total revenue
59,164

 
38,300

 
199,046

 
133,919

OPERATING EXPENSES
 
 
 
 
 
 
 
Property operating expenses
18,734

 
12,744

 
64,798

 
45,412

General and administrative expenses
7,097

 
4,409

 
21,528

 
16,265

Depreciation and amortization
16,765

 
10,459

 
55,064

 
40,651

Total operating expenses
42,596

 
27,612

 
141,390

 
102,328

Income from operations
16,568

 
10,688

 
57,656

 
31,591

OTHER INCOME (EXPENSE)

 

 

 

Interest expense
(7,059
)
 
(4,727
)
 
(24,109
)
 
(20,779
)
Loss on early extinguishment of debt

 

 
(136
)
 
(914
)
Equity in losses of unconsolidated real estate venture
(1,484
)
 

 
(1,484
)
 

Acquisition costs
(1,813
)
 
(573
)
 
(6,546
)
 
(4,765
)
Organizational and offering expenses

 

 

 
(58
)
Non-operating expense
(137
)
 
(23
)
 
(515
)
 
(279
)
Other income (expense)
(10,493
)
 
(5,323
)
 
(32,790
)
 
(26,795
)
Net income
6,075

 
5,365

 
24,866

 
4,796

Net loss (income) attributable to noncontrolling interests
2,321

 
(761
)
 
(6,901
)
 
7,644

Net income attributable to National Storage Affiliates Trust
$
8,396

 
$
4,604

 
$
17,965

 
$
12,440

 
 
 
 
 
 
 
 
Earnings (loss) per share - basic
$
0.22

 
$
0.20

 
$
0.60

 
$
0.80

Earnings (loss) per share - diluted
$
0.07

 
$
0.08

 
$
0.31

 
$
0.17

 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
38,235

 
23,000

 
29,887

 
15,463

Weighted average shares outstanding - diluted
88,460

 
65,280

 
78,747

 
45,409



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National Storage Affiliates Trust
Consolidated Balance Sheets
(dollars in thousands, except per share amounts)
(unaudited)

 
December 31,
 
2016
 
2015
ASSETS
 
 
 
Real estate
 
 
 
Self storage properties
$
1,844,336

 
$
1,147,201

Less accumulated depreciation
(110,803
)
 
(68,100
)
Self storage properties, net
1,733,533

 
1,079,101

Cash and cash equivalents
12,570

 
6,665

Restricted cash
2,767

 
2,712

Debt issuance costs, net
3,069

 
1,923

Investment in unconsolidated real estate venture
81,486

 

Other assets, net
44,730

 
8,648

Assets held for sale
13,937

 

Total assets
$
1,892,092

 
$
1,099,049

LIABILITIES AND EQUITY
 
 
 
Liabilities
 
 
 
Debt financing
$
878,954

 
$
567,795

Accounts payable and accrued liabilities
21,616

 
9,694

Deferred revenue
12,454

 
5,513

Total liabilities
913,024

 
583,002

Equity
 
 
 
Common shares of beneficial interest, par value $0.01 per share. 250,000,000 shares authorized, 43,110,362 and 23,015,751 shares issued and outstanding at December 31, 2016 and 2015, respectively
431

 
230

Additional paid-in capital
576,365

 
236,392

Retained (deficit) earnings
(8,719
)
 
11

Accumulated other comprehensive income
9,025

 

Total shareholders' equity
577,102

 
236,633

Noncontrolling interests
401,966

 
279,414

Total equity
979,068

 
516,047

Total liabilities and equity
$
1,892,092

 
$
1,099,049





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Supplemental Schedule 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funds From Operations and Core Funds From Operations
(in thousands, except per share and unit amounts) (unaudited)
 
 
 
 
 
 
 
 
Reconciliation of Net Income (Loss) to FFO and Core FFO
 
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
Year Ended
December 31,
 
2016
 
2015
 
2016
 
2015
Net income
$
6,075

 
$
5,365

 
$
24,866

 
$
4,796

Add (subtract):
 
 
 
 
 
 
 
Real estate depreciation and amortization
16,362

 
10,360

 
54,193

 
40,303

Company's share of unconsolidated real estate venture real estate depreciation and amortization
1,559

 

 
1,559

 

FFO attributable to subordinated performance unitholders (1)
(6,798
)
 
(4,680
)
 
(22,842
)
 
(14,997
)
FFO attributable to common shareholders, OP unitholders, and LTIP unitholders
17,198

 
11,045

 
57,776

 
30,102

Add:
 
 
 
 
 
 
 
Acquisition costs
1,813

 
573

 
6,546

 
4,765

Company's share of unconsolidated real estate venture acquisition costs
1,006

 

 
1,006

 

Organizational and offering expenses

 

 

 
58

Loss on early extinguishment of debt

 

 
136

 
914

Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders
$
20,017

 
$
11,618

 
$
65,464

 
$
35,839

 
 
 
 
 
 
 
 
Weighted average shares and units outstanding - FFO and Core FFO:(2)
Weighted average shares outstanding - basic
38,235

 
23,000

 
29,887

 
15,463

Weighted average restricted common shares outstanding
19

 
17

 
18

 
9

Weighted average OP units outstanding
25,771

 
21,472

 
24,262

 
20,507

Weighted average DownREIT OP unit equivalents outstanding
1,835

 
1,835

 
1,835

 
1,518

Weighted average LTIP units outstanding(3)
1,286

 
2,361

 
2,212

 
1,548

Total weighted average shares and units outstanding - FFO and Core FFO
67,146

 
48,685

 
58,214

 
39,045

 
 
 
 
 
 
 
 
FFO per share and unit
$
0.26

 
$
0.23

 
$
0.99

 
$
0.77

Core FFO per share and unit
$
0.30

 
$
0.24

 
$
1.12

 
$
0.92

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Amounts represent distributions declared for subordinated performance unitholders and DownREIT subordinated performance unitholders for the periods presented.
(2) NSA combines OP units and DownREIT OP units with common shares because, after the applicable lock-out periods, OP units in the Company's operating partnership are redeemable for cash or, at NSA's option, exchangeable for common shares on a one-for-one basis and DownREIT OP units are also redeemable for cash or, at NSA's option, exchangeable for OP units in our operating partnership on a one-for-one basis, subject to certain adjustments in each case. Subordinated performance units, DownREIT subordinated performance units, and LTIP units may also, under certain circumstances, be convertible into or exchangeable for common shares (or other units that are convertible into or exchangeable for common shares). See footnote(4) for additional discussion of subordinated performance units, DownREIT subordinated performance units, and LTIP units in the calculation of FFO and Core FFO per share and unit.
(3) LTIP units have been excluded from the calculations of weighted average shares and units outstanding prior to April 28, 2015 because such units did not participate in distributions prior to the Company’s initial public offering.

11

nsalogoa02a09.jpg


Supplemental Schedule 1 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funds From Operations and Core Funds From Operations
(in thousands, except per share and unit amounts) (unaudited)
 
 
 
 
 
 
 
 
Reconciliation of Earnings (Loss) Per Share - Diluted to FFO and Core FFO Per Share and Unit
 
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
Year Ended
December 31,
 
2016
 
2015
 
2016
 
2015
Earnings (loss) per share - diluted
$
0.07

 
$
0.08

 
$
0.31

 
$
0.17

Impact of the difference in weighted average number of shares(4)
0.03

 
0.03

 
0.11

 
0.02

Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method(5)

 

 

 
(0.07
)
Add real estate depreciation and amortization
0.24

 
0.21

 
0.93

 
1.03

Add Company's share of unconsolidated venture real estate depreciation and amortization
0.02

 

 
0.03

 

FFO attributable to subordinated performance unitholders
(0.10
)
 
(0.09
)
 
(0.39
)
 
(0.38
)
FFO per share and unit
0.26

 
0.23

 
0.99

 
0.77

Add acquisition costs, Company's share of unconsolidated real estate venture acquisition costs, organizational and offering expenses, and loss on early extinguishment of debt
0.04

 
0.01

 
0.13

 
0.15

Core FFO per share and unit
$
0.30

 
$
0.24

 
$
1.12

 
$
0.92

 
 
 
 
 
 
 
 
(4) Adjustment accounts for the difference between the weighted average number of shares used to calculate diluted earnings per share and the weighted average number of shares used to calculate FFO and Core FFO per share and unit. Diluted earnings per share is calculated using the two-class method for the company's restricted common shares, the treasury stock method for certain unvested LTIP units, and includes the assumption of a hypothetical conversion of subordinated performance units, DownREIT subordinated performance units and LTIP units into OP units, even though such units may only be convertible into OP units (i) after a lock-out period and (ii) upon certain events or conditions. For additional information about the conversion of subordinated performance units and DownREIT subordinated performance units into OP units, see Note 8 in Item 1 to the Company's most recent Quarterly Report on Form 10-Q or, if more recent, Note 10 to the Company's most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission. The computation of weighted average shares and units for FFO and Core FFO per share and unit includes all restricted common shares and LTIP units that participate in distributions and excludes all subordinated performance units and DownREIT subordinated performance units because their effect has been accounted for through the allocation of FFO to the related unitholders based on distributions declared.
(5) Represents the effect of adjusting the numerator to consolidated net income (loss) prior to GAAP allocations for noncontrolling interests and the application of the two-class method and treasury stock method, as described in footnote (4).

12

nsalogoa02a09.jpg

Supplemental Schedule 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Non-GAAP Financial Measurements
 
 
 
 
 
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Operating Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
Year Ended
December 31,
 
2016
 
2015
 
2016
 
2015
Net income
$
6,075

 
$
5,365

 
$
24,866

 
$
4,796

(Subtract) add:
 
 
 
 
 
 
 
Management fees and other revenue
(1,809
)
 

 
(1,809
)
 

General and administrative expenses
7,097

 
4,409

 
21,528

 
16,265

Depreciation and amortization
16,765

 
10,459

 
55,064

 
40,651

Interest expense
7,059

 
4,727

 
24,109

 
20,779

Equity in losses of unconsolidated real estate venture
1,484

 

 
1,484

 

Loss on early extinguishment of debt

 

 
136

 
914

Acquisition costs
1,813

 
573

 
6,546

 
4,765

Organizational and offering expenses

 

 

 
58

Non-operating expense
137

 
23

 
515

 
279

Net Operating Income
$
38,621

 
$
25,556

 
$
132,439

 
$
88,507

 
 
 
 
 
 
 
 
EBITDA and Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
Year Ended
December 31,
 
2016
 
2015
 
2016
 
2015
Net income
$
6,075

 
$
5,365

 
$
24,866

 
$
4,796

Add:
 
 
 
 
 
 
 
Depreciation and amortization
16,765

 
10,459

 
55,064

 
40,651

Company's share of unconsolidated real estate venture depreciation and amortization
1,559

 

 
1,559

 

Interest expense
7,059

 
4,727

 
24,109

 
20,779

Loss on early extinguishment of debt

 

 
136

 
914

EBITDA
31,458

 
20,551

 
105,734

 
67,140

Add:
 
 
 
 
 
 
 
Acquisition costs
1,813

 
573

 
6,546

 
4,765

Company's share of unconsolidated real estate venture acquisition costs
1,006

 

 
1,006

 

Organizational and offering expenses

 

 

 
58

Equity-based compensation expense(1)
684

 
652

 
2,597

 
3,027

Adjusted EBITDA
$
34,961

 
$
21,776

 
$
115,883

 
$
74,990

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Equity-based compensation expense is a non-cash item that is included in general and administrative expenses in our consolidated statements of operations.

13

nsalogoa02a09.jpg

Supplemental Schedule 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Summary
 
 
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Consolidated and Unconsolidated Property Portfolio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stores at Period End December 31,
 
Units at Period End December 31,
 
Rentable Square Feet at Period End December 31,
 
Occupancy at Period End December 31,
State
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
 
Growth
California
 
78

 
48

 
46,821

 
27,914

 
5,879,575

 
3,549,960

 
90.8
%
 
89.0
%
 
1.8
 %
Oregon
 
55

 
50

 
22,458

 
20,211

 
2,825,159

 
2,523,336

 
88.2
%
 
91.4
%
 
(3.2
)%
Texas
 
51

 
48

 
20,003

 
18,526

 
2,818,858

 
2,627,111

 
87.4
%
 
87.7
%
 
(0.3
)%
Oklahoma
 
30

 
26

 
13,990

 
12,308

 
1,902,965

 
1,648,537

 
84.7
%
 
87.6
%
 
(2.9
)%
North Carolina
 
30

 
30

 
13,436

 
13,452

 
1,655,191

 
1,654,711

 
89.2
%
 
84.3
%
 
4.9
 %
Florida
 
22

 
2

 
16,786

 
696

 
1,542,685

 
80,556

 
84.7
%
 
79.1
%
 
5.6
 %
Georgia
 
20

 
18

 
6,565

 
5,893

 
880,100

 
772,649

 
92.6
%
 
94.1
%
 
(1.5
)%
Arizona
 
15

 
13

 
8,401

 
7,313

 
981,427

 
835,867

 
89.0
%
 
83.2
%
 
5.8
 %
Indiana
 
14

 

 
7,849

 

 
1,008,695

 

 
84.2
%
 

 

Washington
 
14

 
14

 
4,788

 
4,825

 
601,840

 
611,150

 
88.0
%
 
91.5
%
 
(3.5
)%
Colorado
 
10

 
8

 
4,641

 
3,740

 
564,646

 
453,166

 
89.3
%
 
92.2
%
 
(2.9
)%
Louisiana
 
10

 
5

 
4,443

 
2,192

 
614,183

 
298,710

 
85.0
%
 
82.6
%
 
2.4
 %
New Hampshire
 
9

 
4

 
3,668

 
1,772

 
444,225

 
211,150

 
94.0
%
 
88.7
%
 
5.3
 %
Ohio
 
7

 

 
2,688

 

 
349,088

 

 
87.7
%
 

 

Nevada
 
6

 
3

 
3,135

 
1,777

 
419,467

 
241,551

 
92.9
%
 
86.5
%
 
6.4
 %
South Carolina
 
4

 
4

 
1,210

 
1,211

 
147,530

 
147,530

 
91.7
%
 
91.8
%
 
(0.1
)%
Other(1)
 
7

 
3

 
3,166

 
782

 
441,007

 
113,962

 
83.7
%
 
91.5
%
 
(7.8
)%
Total Consolidated/Weighted Average
 
382

 
276

 
184,048

 
122,612

 
23,076,641

 
15,769,946

 
88.4
%
 
88.5
%
 
(0.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Unconsolidated/Weighted Average(2)
 
66

 

 
35,573

 

 
4,518,968

 

 
86.9
%
 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Consolidated and Unconsolidated/Weighted Average
 
448

 
276

 
219,621

 
122,612

 
27,595,609

 
15,769,946

 
88.2
%
 
88.5
%
 
(0.3
)%




(1) Other states in NSA's consolidated portfolio as of December 31, 2016 include Alabama, Kentucky, Mississippi and New Mexico.
(2) Refer to Supplemental Schedule 5 for additional information about NSA's unconsolidated real estate venture.

14

nsalogoa02a09.jpg

Supplemental Schedule 3 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Summary
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016 Acquisition & Investment Activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Self storage properties
acquired during the
quarter ended:
 
 
 
 
 
 
 
Summary of Consideration
 
 
 
Stores
 
Units
 
Rentable Square Feet
 
 
 
Value of OP Equity
 
Liabilities Assumed(3)
 
Other Liabilities
 
Total Investment
 
 
Cash
 
 
 
 
March 31, 2016
 
17
 
7,633
 
1,070,540

 
$
63,300

 
$
19,068

 
$
5,861

 
$
584

 
$
88,813

June 30, 2016
 
25
 
19,022
 
1,906,703

 
61,263

 
80,986

 
55,767

 
1,212

 
199,228

September 30, 2016
 
34
 
18,425
 
2,267,573

 
199,890

 
4,841

 

 
896

 
205,627

December 31, 2016
 
31
 
16,620
 
2,071,418

 
208,707

 
16,871

 

 
2,125

 
227,703

Total 2016(4)
 
107
 
61,700
 
7,316,234

 
$
533,160

 
$
121,766

 
$
61,628

 
$
4,817

 
$
721,371

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated real estate venture (venture at 100%)(5)
 
66
 
35,573
 
4,518,968

 
$
627,261

 

 

 
$
2,739

 
$
630,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total 2016 Investments(5)
 
173
 
97,273
 
11,835,202

 
$
1,160,421

 
$
121,766

 
$
61,628

 
$
7,556

 
$
1,351,371


 
2016 Disposition Activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dispositions Closed During the Quarter Ended:
 
Stores
 
Units
 
Rentable Square Feet
 
Gross Proceeds
 
 
December 31, 2016(6)
 
1
 
324
 
28,924

 
$
4,910







(3) $12.2 million of the mortgages assumed in connection with the self storage property acquisitions were subsequently repaid during the year ended December 31, 2016.
(4) NSA acquired self storage properties located in Alabama, Arizona, California, Colorado, Florida, Georgia, Indiana, Louisiana, Mississippi, New Hampshire, New Mexico, Nevada, Ohio, Oklahoma, Oregon and Texas during 2016.
(5) Values represent entire unconsolidated real estate venture at 100%, not NSA's proportionate share. NSA's ownership in the unconsolidated real estate venture is 25%. Refer to Supplemental Schedule 5 for additional information about NSA's unconsolidated real estate venture.
(6) NSA disposed of a self storage property located in California during 2016.

15

nsalogoa02a09.jpg

Supplemental Schedule 4
 
 
 
 
 
 
 
 
 
 
 
Debt and Equity Capitalization
 
 
 
 
 
As of December 31, 2016
 
 
 
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Balances and Characteristics
 
 
 
 
 
 
 
 
 
 
 
Effective Interest Rate(1)
 
Weighted Average Maturity (In Years)
 
Balance
Credit Facility:
 
 
 
 
 
Revolving line of credit
2.17%
 
3.35
 
$
246,500

Term loan - 5 year tranche
2.61%
 
4.35
 
225,000

Term loan - 6 year tranche
3.15%
 
5.35
 
100,000

Term loan - 7 year
3.08%
 
6.50
 
100,000

Fixed rate mortgages payable
4.07%
 
7.41
 
201,694

Total Principal/Weighted Average
2.95%
 
5.16
 
873,194

Unamortized debt issuance costs and debt premium, net
 
 
 
 
5,760

Total Debt
 
 
 
 
$
878,954

Debt Maturities
 
 
 
 
 
 
 
 
 
 
 
 
Average Effective Interest Rate on Maturing Debt(1)
 
Maturities as a Percent of Total Principal
 
Maturities
2017 1Q
2.56%
 
1.0%
 
$
8,588

2017 2Q
 
 

2017 3Q
2.55%
 
0.2%
 
1,877

2017 4Q
 
 

Total 2017
2.56%
 
1.2%
 
10,465

 
 
 

 
 
2018 1Q
 
 

2018 2Q
2.97%
 
0.4%
 
3,245

2018 3Q
 
 

2018 4Q
2.88%
 
0.3%
 
2,819

Total 2018
2.93%
 
0.7%
 
6,064

 
 
 
 
 
 
2019
 
 

2020
2.38%
 
32.7%
 
285,447

2021
2.65%
 
26.2%
 
229,002

2022
3.15%
 
11.5%
 
100,000

2023
3.69%
 
20.7%
 
180,384

2024
4.22%
 
2.4%
 
20,527

Thereafter
4.10%
 
4.6%
 
41,305

Total Principal/Weighted Average
2.95%
 
100.0%
 
873,194

Unamortized debt issuance costs and debt premium, net
 
 
 
 
5,760

Total Debt
 
 
 
 
$
878,954

 
 
 
 
 
 
Debt Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Covenant
 
Amount
Net Debt to Annualized Current Quarter Adjusted EBITDA
 
n/a
 
6.2x
Trailing Twelve Month Fixed Charge Coverage Ratio
 
> 1.5x
 
3.8x
Total Leverage Ratio
 
 
< 60.0%
 
39.3%
 
 
 
 
 
 
(1) Effective interest rate incorporates the stated rate plus the impact of interest rate cash flow hedges and discount and premium amortization, if applicable. For the revolving line of credit, the effective interest rate excludes fees which range from 0.15% to 0.25% for unused borrowings.

16

nsalogoa02a09.jpg

Supplemental Schedule 4 (continued)
 
 
 
 
 
 
 
Debt and Equity Capitalization
 
 
 
As of December 31, 2016
 
 
 
(unaudited)
 
 
 
 
 
 
 
Equity Interests
 
 
 
 
 
 
 
Outstanding
 
If Converted
Common shares of beneficial interest
43,096,772

 
43,096,772

Restricted common shares
13,590

 
13,590

Total shares outstanding
43,110,362

 
43,110,362

Operating partnership units
26,125,444

 
26,125,444

DownREIT operating partnership unit equivalents
1,834,786

 
1,834,786

Total operating partnership units
27,960,230

 
27,960,230

Long-term incentive plan units(2)
1,283,505

 
1,283,505

Total shares and Class A equivalents outstanding
72,354,097

 
72,354,097

Subordinated performance units(3)
11,022,378

 
15,541,553

DownREIT subordinated performance unit equivalents(3)
4,386,999

 
6,185,669

Total subordinated partnership units
15,409,377

 
21,727,222

Total shares and units outstanding
87,763,474

 
94,081,319

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2) Balances exclude 260,400 long-term incentive plan ("LTIP") units which only vest and participate in dividend distributions upon the future contribution of properties from the PROs.
(3) If converted balance assumes that each subordinated performance unit (including each DownREIT subordinated performance unit) is convertible into OP units, notwithstanding the two-year lock-out period on conversions, and that each subordinated performance unit would on average convert on a hypothetical basis into an estimated 1.41 OP units based on historical financial information for the trailing twelve months ended December 31, 2016. The hypothetical conversions are calculated by dividing the average cash available for distribution, or CAD, per subordinated performance unit by 110% of the CAD per OP unit over the same period. The Company anticipates that as CAD grows over time, the conversion ratio will also grow, including to levels that may exceed these amounts.

17

nsalogoa02a09.jpg

Supplemental Schedule 5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summarized Information for Unconsolidated Real Estate Venture
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated Real Estate Venture Properties as of December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
State
 
Stores at Period End
 
Units at Period End
 
Rentable Square Feet at Period End
 
Occupancy at Period End
 
4Q 2016 Average Occupancy
Florida
 
21

 
11,485

 
1,331,745

 
86.3
%
 
87.4
%
Alabama
 
11

 
4,032

 
591,030

 
83.7
%
 
85.5
%
New Jersey
 
10

 
7,520

 
925,410

 
88.3
%
 
89.0
%
California
 
9

 
5,832

 
802,176

 
87.6
%
 
86.4
%
Other(1)
 
15

 
6,704

 
868,607

 
88.0
%
 
88.2
%
Total/Weighted Average
 
66

 
35,573

 
4,518,968

 
86.9
%
 
87.4
%

Balance Sheet Information as of December 31, 2016
 
 
 
 Total Venture at 100%(2)
ASSETS
 
Self storage properties, net
$
614,754

Other assets
19,936

Total assets
$
634,690

LIABILITIES AND EQUITY
 
Debt financing
$
317,047

Other liabilities
4,498

Equity
313,145

Total liabilities and equity
$
634,690

 
 
Operating Information for the Three Months Ended December 31, 2016
 
 
 
 
 
 Total Venture at 100%(2)
 
NSA Proportionate Share (Venture at 25%)
Total revenue
$
12,197

 
$
3,049

Property operating expenses
3,850

 
963

Net operating income
8,347

 
2,086

Supervisory, administrative and other expenses
(949
)
 
(237
)
Depreciation and amortization
(6,235
)
 
(1,559
)
Interest expense
(2,823
)
 
(706
)
Acquisition and other expenses
(4,277
)
 
(1,068
)
Net loss
$
(5,937
)
 
$
(1,484
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Other states in the unconsolidated real estate venture include Arizona, Georgia, New Mexico, Nevada, Pennsylvania, Ohio, Texas and Virginia.
(2) Values represent entire unconsolidated real estate venture at 100%, not NSA's proportionate share. NSA's ownership in the unconsolidated real estate venture is 25%.

18

nsalogoa02a09.jpg

Supplemental Schedule 6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2016 compared to Three Months Ended December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
Operating Expenses
 
Net Operating Income
 
Net Operating Income Margin
State
Stores
4Q 2016
 
4Q 2015
 
Growth
 
4Q 2016
 
4Q 2015
 
Growth
 
4Q 2016
 
4Q 2015
 
Growth
 
4Q 2016
 
4Q 2015
 
Growth
Oregon
49

 
$
7,839

 
$
7,214

 
8.7
 %
 
$
2,100

 
$
2,071

 
1.4
 %
 
$
5,739

 
$
5,143

 
11.6
 %
 
73.2
%
 
71.3
%
 
1.9
 %
Texas
45

 
5,219

 
5,070

 
2.9
 %
 
1,943

 
1,990

 
(2.4
)%
 
3,276

 
3,080

 
6.4
 %
 
62.8
%
 
60.7
%
 
2.1
 %
California
27

 
6,796

 
6,152

 
10.5
 %
 
2,053

 
1,998

 
2.8
 %
 
4,743

 
4,154

 
14.2
 %
 
69.8
%
 
67.5
%
 
2.3
 %
Oklahoma
25

 
2,965

 
2,996

 
(1.0
)%
 
968

 
960

 
0.8
 %
 
1,997

 
2,036

 
(1.9
)%
 
67.4
%
 
68.0
%
 
(0.6
)%
North Carolina
19

 
2,143

 
2,008

 
6.7
 %
 
675

 
665

 
1.5
 %
 
1,468

 
1,343

 
9.3
 %
 
68.5
%
 
66.9
%
 
1.6
 %
Georgia
16

 
1,415

 
1,355

 
4.4
 %
 
544

 
537

 
1.3
 %
 
871

 
818

 
6.5
 %
 
61.6
%
 
60.4
%
 
1.2
 %
Washington
13

 
1,620

 
1,541

 
5.1
 %
 
499

 
467

 
6.9
 %
 
1,121

 
1,074

 
4.4
 %
 
69.2
%
 
69.7
%
 
(0.5
)%
Arizona
10

 
1,872

 
1,744

 
7.3
 %
 
578

 
575

 
0.5
 %
 
1,294

 
1,169

 
10.7
 %
 
69.1
%
 
67.0
%
 
2.1
 %
Colorado
8

 
1,256

 
1,219

 
3.0
 %
 
336

 
354

 
(5.1
)%
 
920

 
865

 
6.4
 %
 
73.2
%
 
71.0
%
 
2.2
 %
Other(1)
10

 
1,174

 
1,081

 
8.6
 %
 
441

 
470

 
(6.2
)%
 
733

 
611

 
20.0
 %
 
62.4
%
 
56.5
%
 
5.9
 %
Total/Weighted Average
222

 
$
32,299

 
$
30,380

 
6.3
 %
 
$
10,137

 
$
10,087

 
0.5
 %
 
$
22,162

 
$
20,293

 
9.2
 %
 
68.6
%
 
66.8
%
 
1.8
 %
 
 
Rentable Square Feet
 
Occupancy at Period End
 
Average Occupancy
 
Average Annualized Rental Revenue per Occupied Square Foot
State
Units
 
4Q 2016
 
4Q 2015
 
Growth
 
4Q 2016
 
4Q 2015
 
Growth
 
4Q 2016
 
4Q 2015
 
Growth
Oregon
19,679

2,470,634

 
87.9
%
 
91.8
%
 
(3.9
)%
 
89.7
%
 
93.3
%
 
(3.6
)%
 
$
13.97

 
$
12.39

 
12.8
 %
Texas
17,458

2,471,213

 
87.9
%
 
87.6
%
 
0.3
 %
 
87.9
%
 
87.5
%
 
0.4
 %
 
9.37

 
9.06

 
3.4
 %
California
15,971

1,936,251

 
89.6
%
 
90.2
%
 
(0.6
)%
 
90.6
%
 
89.9
%
 
0.7
 %
 
14.64

 
13.39

 
9.3
 %
Oklahoma
11,808

1,573,796

 
84.7
%
 
88.5
%
 
(3.8
)%
 
85.3
%
 
88.4
%
 
(3.1
)%
 
8.59

 
8.42

 
2.0
 %
North Carolina
8,164

973,418

 
87.6
%
 
82.3
%
 
5.3
 %
 
86.9
%
 
82.8
%
 
4.1
 %
 
9.81

 
9.66

 
1.6
 %
Georgia
5,268

675,982

 
92.6
%
 
93.7
%
 
(1.1
)%
 
92.8
%
 
93.9
%
 
(1.1
)%
 
8.70

 
8.23

 
5.7
 %
Washington
4,476

559,275

 
88.0
%
 
91.5
%
 
(3.5
)%
 
89.2
%
 
92.4
%
 
(3.2
)%
 
12.81

 
11.56

 
10.8
 %
Arizona
5,940

657,815

 
89.4
%
 
82.7
%
 
6.7
 %
 
89.9
%
 
83.1
%
 
6.8
 %
 
12.11

 
12.22

 
(0.9
)%
Colorado
3,738

453,216

 
91.6
%
 
92.2
%
 
(0.6
)%
 
92.9
%
 
93.1
%
 
(0.2
)%
 
11.65

 
11.33

 
2.8
 %
Other(1)
3,947

511,561

 
92.2
%
 
89.1
%
 
3.1
 %
 
92.4
%
 
88.3
%
 
4.1
 %
 
9.69

 
9.39

 
3.2
 %
Total/Weighted Average
96,449

12,283,161

 
88.4
%
 
89.0
%
 
(0.6
)%
 
89.1
%
 
89.4
%
 
(0.3
)%
 
$
11.46

 
$
10.74

 
6.7
 %


(1) Other states in NSA's same store portfolio include Mississippi, New Hampshire, Nevada and South Carolina.

19

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Supplemental Schedule 6 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Store Performance Summary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2016 compared to Year Ended December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
Operating Expenses
 
Net Operating Income
 
Net Operating Income Margin
State
Stores
YTD 2016
 
YTD 2015
 
Growth
 
YTD 2016
 
YTD 2015
 
Growth
 
YTD 2016
 
YTD 2015
 
Growth
 
YTD 2016
 
YTD 2015
 
Growth
Oregon
49

 
$
30,976

 
$
27,872

 
11.1
%
 
$
8,174

 
$
7,954

 
2.8
 %
 
$
22,802

 
$
19,918

 
14.5
%
 
73.6
%
 
71.5
%
 
2.1
%
Texas
45

 
20,794

 
20,029

 
3.8
%
 
8,115

 
7,837

 
3.5
 %
 
12,679

 
12,192

 
4.0
%
 
61.0
%
 
60.9
%
 
0.1
%
California
27

 
26,418

 
23,698

 
11.5
%
 
8,128

 
7,719

 
5.3
 %
 
18,290

 
15,979

 
14.5
%
 
69.2
%
 
67.4
%
 
1.8
%
Oklahoma
25

 
12,033

 
11,879

 
1.3
%
 
4,010

 
3,961

 
1.2
 %
 
8,023

 
7,918

 
1.3
%
 
66.7
%
 
66.7
%
 

North Carolina
19

 
8,393

 
8,050

 
4.3
%
 
2,753

 
2,737

 
0.6
 %
 
5,640

 
5,313

 
6.2
%
 
67.2
%
 
66.0
%
 
1.2
%
Georgia
16

 
5,565

 
5,157

 
7.9
%
 
2,193

 
2,185

 
0.4
 %
 
3,372

 
2,972

 
13.5
%
 
60.6
%
 
57.6
%
 
3.0
%
Washington
13

 
6,439

 
5,948

 
8.3
%
 
1,961

 
1,837

 
6.8
 %
 
4,478

 
4,111

 
8.9
%
 
69.5
%
 
69.1
%
 
0.4
%
Arizona
10

 
7,307

 
6,746

 
8.3
%
 
2,336

 
2,266

 
3.1
 %
 
4,971

 
4,480

 
11.0
%
 
68.0
%
 
66.4
%
 
1.6
%
Colorado
8

 
5,061

 
4,843

 
4.5
%
 
1,452

 
1,448

 
0.3
 %
 
3,609

 
3,395

 
6.3
%
 
71.3
%
 
70.1
%
 
1.2
%
Other(1)
10

 
4,564

 
4,168

 
9.5
%
 
1,807

 
1,817

 
(0.6
)%
 
2,757

 
2,351

 
17.3
%
 
60.4
%
 
56.4
%
 
4.0
%
Total/Weighted Average
222

 
$
127,550

 
$
118,390

 
7.7
%
 
$
40,929

 
$
39,761

 
2.9
 %
 
$
86,621

 
$
78,629

 
10.2
%
 
67.9
%
 
66.4
%
 
1.5
%
 
 
Rentable Square Feet
 
Average Occupancy
 
Average Annualized Rental Revenue per Occupied Square Foot
State
Units
 
YTD 2016
 
YTD 2015
 
Growth
 
YTD 2016
 
YTD 2015
 
Growth
Oregon
19,679

2,470,634

 
92.4
%
 
92.8
%
 
(0.4
)%
 
$
13.40

 
$
12.02

 
11.5
%
Texas
17,458

2,471,213

 
88.5
%
 
85.6
%
 
2.9
 %
 
9.23

 
9.12

 
1.2
%
California
15,971

1,936,251

 
91.4
%
 
87.2
%
 
4.2
 %
 
14.11

 
13.29

 
6.2
%
Oklahoma
11,808

1,573,796

 
87.1
%
 
88.0
%
 
(0.9
)%
 
8.56

 
8.38

 
2.1
%
North Carolina
8,164

973,418

 
85.4
%
 
83.1
%
 
2.3
 %
 
9.76

 
9.66

 
1.0
%
Georgia
5,268

675,982

 
93.7
%
 
91.0
%
 
2.7
 %
 
8.46

 
8.09

 
4.6
%
Washington
4,476

559,275

 
91.1
%
 
91.4
%
 
(0.3
)%
 
12.37

 
11.24

 
10.1
%
Arizona
5,940

657,815

 
87.2
%
 
80.6
%
 
6.6
 %
 
12.15

 
12.08

 
0.6
%
Colorado
3,738

453,216

 
94.5
%
 
92.0
%
 
2.5
 %
 
11.55

 
11.35

 
1.8
%
Other(1)
3,947

511,561

 
91.7
%
 
83.8
%
 
7.9
 %
 
9.49

 
9.47

 
0.2
%
Total/Weighted Average
96,449

12,283,161

 
90.0
%
 
87.9
%
 
2.1
 %
 
$
11.18

 
$
10.62

 
5.3
%


(1) Other states in NSA's same store portfolio include Mississippi, New Hampshire, Nevada and South Carolina.

20

nsalogoa02a09.jpg

Supplemental Schedule 7
 
 
 
 
 
Reconciliation of Same Store Data and Net Operating Income to Income from Operations
(dollars in thousands) (unaudited)
 


 
 
 
 

 


Three Months Ended
December 31,
 
Year Ended
December 31,

2016
 
2015
 
2016
 
2015
Rental revenue
 
 
 
 
 
 
 
Same store portfolio
$
31,373

 
$
29,505

 
$
123,773

 
$
114,764

Non-same store portfolio
24,257

 
7,714

 
67,405

 
15,105

Total rental revenue on our statements of operations
55,630

 
37,219

 
191,178

 
129,869

 
 
 
 
 
 
 
 
Other property-related revenue
 
 
 
 
 
 
 
Same store portfolio
926

 
875

 
3,777

 
3,626

Non-same store portfolio
799

 
206

 
2,282

 
424

Total other property-related revenue on our statements of operations
1,725


1,081


6,059


4,050

 
 
 
 
 
 
 
 
Property operating expenses
 
 
 
 
 
 
 
Same store portfolio
10,137

 
10,087

 
40,929

 
39,761

Non-same store portfolio
8,597

 
2,657

 
23,869

 
5,651

Total property operating expenses on our statements of operations
18,734


12,744


64,798


45,412

 
 
 
 
 
 
 
 
Net operating income for:
 
 
 
 
 
 
 
Same store properties
22,162

 
20,293

 
86,621

 
78,629

Non-same store properties
16,459

 
5,263

 
45,818

 
9,878

Net operating income
38,621


25,556


132,439


88,507


 
 
 
 
 
 
 
Management fees and other revenue
(1,809
)
 

 
(1,809
)
 

General and administrative expenses
7,097

 
4,409

 
21,528

 
16,265

Depreciation and amortization
16,765

 
10,459

 
55,064

 
40,651

Income from operations on our statements of operations
$
16,568

 
$
10,688

 
$
57,656

 
$
31,591



21

nsalogoa02a09.jpg

Supplemental Schedule 8
 
 
 
Selected Financial Information
(in thousands, except per square foot data) (unaudited)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
Year Ended
December 31,
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
Average Annualized Rental Revenue Per Occupied Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
Same store
$
11.46

 
$
10.74

 
$
11.18

 
$
10.62

Total consolidated portfolio
$
11.28

 
$
10.65

 
$
11.00

 
$
10.62

 
 
 
 
 
 
 
 
Total Consolidated Portfolio Capital Expenditures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recurring capital expenditures
$
475

 
$
716

 
$
2,917

 
$
2,365

Revenue enhancing capital expenditures
326

 

 
2,641

 
703

Acquisitions capital expenditures
2,132

 
224

 
6,114

 
768

Total Consolidated Portfolio Capital Expenditures
$
2,933

 
$
940

 
$
11,672

 
$
3,836

 
 
 
 
 
 
 
 
Total consolidated portfolio square feet
23,077

 
15,770

 
23,077

 
15,770

Recurring Capital Expenditures Per Square Foot
$
0.02

 
$
0.05

 
$
0.13

 
$
0.15

 
 
 
 
 
 
 
 
Property Operating Expenses Detail
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Store payroll and related costs
$
5,586

 
$
3,856

 
$
19,418

 
$
13,425

Property tax expense
4,285

 
2,774

 
14,489

 
9,833

Other property operating expenses
8,863

 
6,114

 
30,891

 
22,154

Property operating expenses on our statements of operations
$
18,734

 
$
12,744

 
$
64,798

 
$
45,412

 
 
 
 
 
 
 
 
General and Administrative Expenses Detail
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supervisory and administrative expenses
$
3,199

 
$
2,170

 
$
11,038

 
$
7,584

Equity-based compensation expense
684

 
652

 
2,597

 
3,027

Other general and administrative expenses
3,214

 
1,587

 
7,893

 
5,654

General and administrative expenses on our statements of operations
$
7,097

 
$
4,409

 
$
21,528

 
$
16,265

 
 
 
 
 
 
 
 




22

nsalogoa02a09.jpg

Glossary
 
 
 
 
 
This Earnings Release and Supplemental Information include certain financial and operating measures used by NSA management that are not calculated in accordance with accounting principles generally accepted in the United States, or GAAP. NSA's definitions and calculations of these non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other real estate companies and, accordingly, may not be comparable. These non-GAAP financial and operating measures should not be considered an alternative to GAAP net income or any other GAAP measurement of performance and should not be considered an alternative measure of liquidity.
 
 
 
 
 
AVERAGE ANNUALIZED RENTAL REVENUE PER OCCUPIED SQUARE FOOT: Average annualized rental revenue per occupied square foot is computed by dividing annualized rental revenue per our statements of operations (which includes fees and is net of any discounts) by average occupied square feet.
AVERAGE OCCUPANCY: Average occupancy is calculated based on the average of the month-end occupancy immediately preceding the period presented and the month-end occupancies included in the respective period presented.
CAPITAL EXPENDITURES DEFINITIONS
ACQUISITIONS CAPITAL EXPENDITURES: Acquisitions capital expenditures represents the portion of capital expenditures capitalized during the current period that were identified and underwritten prior to a property's acquisition.
RECURRING CAPITAL EXPENDITURES: Recurring capital expenditures represents the portion of capital expenditures that are deemed to replace the consumed portion of acquired capital assets and extend their useful lives.
REVENUE ENHANCING CAPITAL EXPENDITURES: Revenue enhancing capital expenditures represents the portion of capital expenditures that are made to enhance the revenue and value of an asset from its original purchase condition.
EBITDA: We define EBITDA as net income (loss), as determined under GAAP, plus interest expense, loss on early extinguishment of debt, income taxes, depreciation and amortization expense and the Company's share of unconsolidated real estate venture depreciation and amortization. We define ADJUSTED EBITDA as EBITDA plus acquisition costs, the Company's share of unconsolidated real estate venture acquisition costs, organizational and offering expenses, equity-based compensation expense, losses on sale of properties, and impairment of long-lived assets; and by subtracting gains on sale of properties and debt forgiveness. These further adjustments eliminate the impact of items that we do not consider indicative of our core operating performance. In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
We present EBITDA and Adjusted EBITDA because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. EBITDA and Adjusted EBITDA have limitations as an analytical tool. Some of these limitations are:
EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements, for capital expenditures, contractual commitments or working capital needs;
EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;

23

nsalogoa02a09.jpg

Adjusted EBITDA excludes equity-based compensation expense, which is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;
EBITDA and Adjusted EBITDA do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and
other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
We compensate for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with our analysis of net income (loss). EBITDA and Adjusted EBITDA should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, income from operations, and net income (loss).
FUNDS FROM OPERATIONS: Funds from operations, or FFO, is a widely used performance measure for real estate companies and is provided here as a supplemental measure of our operating performance. The April 2002 National Policy Bulletin of NAREIT, which we refer to as the White Paper, as amended, defines FFO as net income (as determined under GAAP), excluding gains (or losses) from sales of real estate and related impairment charges, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We include amortization of customer in-place leases in real estate depreciation and amortization in the calculation of FFO because we believe the amortization of customer in-place leases is analogous to real estate depreciation, as the value of such intangibles is inextricably connected to the real estate acquired. Distributions declared on subordinated performance units and DownREIT subordinated performance units represent our allocation of FFO to noncontrolling interests held by subordinated performance unitholders and DownREIT subordinated performance unitholders for the purpose of calculating FFO attributable to common shareholders, OP unitholders, and LTIP unitholders. We define CORE FFO as FFO, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our core operating performance. These further adjustments consist of acquisition costs, organizational and offering costs, gains on debt forgiveness, gains (losses) on early extinguishment of debt, and after adjustments for unconsolidated partnerships and joint ventures.
Management uses FFO and Core FFO as key performance indicators in evaluating the operations of our properties. Given the nature of our business as a real estate owner and operator, we consider FFO and Core FFO as key supplemental measures of our operating performance that are not specifically defined by GAAP. We believe that FFO and Core FFO are useful to management and investors as a starting point in measuring our operational performance because FFO and Core FFO exclude various items included in net income (loss) that do not relate to or are not indicative of our operating performance such as gains (or losses) from sales of self storage properties and depreciation, which can make periodic and peer analyses of operating performance more difficult. Our computation of FFO and Core FFO may not be comparable to FFO reported by other REITs or real estate companies.
FFO and Core FFO should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, operating income and net income (loss). FFO and Core FFO do not represent cash generated from operating activities determined in accordance with GAAP and are not a measure of liquidity or an indicator of our ability to make cash distributions. We believe that to further understand our performance, FFO and Core FFO should be compared with our reported net income (loss) and considered in addition to cash flows computed in accordance with GAAP, as presented in our consolidated financial statements.
HYPOTHETICAL LIQUIDATION AT BOOK VALUE METHOD: In accordance with GAAP, the Company allocates income (loss) utilizing the hypothetical liquidation at book value ("HLBV") method, in which the Company allocates income or loss based on the change in each unitholders’ claim on the net assets of its operating partnership at period end after adjusting for any distributions or contributions made during such period. The Company uses this method because of the difference between the distribution rights and priorities set forth in the operating partnership's Agreement of Limited Partnership and what is reflected by the underlying percentage ownership interests of the unitholders.
The HLBV method is a balance sheet-focused approach to income (loss) allocation. A calculation is prepared at each balance sheet date to determine the amount that unitholders would receive if the operating partnership

24

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were to liquidate all of its assets (at GAAP net book value) and distribute the resulting proceeds to its creditors and unitholders based on the contractually defined liquidation priorities. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is used to derive each unitholder's share of the income (loss) for the period. Due to the stated liquidation priorities and because the HLBV method incorporates non-cash items such as depreciation expense, in any given period, income or loss may be allocated disproportionately to unitholders as compared to their respective ownership percentage in the operating partnership, and net income (loss) attributable to National Storage Affiliates Trust could be more or less net income than actual cash distributions received and more or less income or loss than what may be received in the event of an actual liquidation. Additionally, the HLBV method could result in net income (or net loss) attributable to National Storage Affiliates Trust during a period when the Company reports consolidated net loss (or net income), or net income (or net loss) attributable to National Storage Affiliates Trust in excess of the Company's consolidated net income (or net loss). The computations of basic and diluted earnings (loss) per share may be materially affected by these disproportionate income (loss) allocations, resulting in volatile fluctuations of basic and diluted earnings (loss) per share. Readers and investors are cautioned not to place undue reliance on NSA's income (loss) allocations or earnings (loss) per share without considering the effects described above, including the effect that depreciation and amortization have on income (loss), net book value and the application of the HLBV method.
LONG-TERM INCENTIVE PLAN UNITS: Long-term incentive plan units, or LTIP units, are a special class of partnership interest in our operating partnership that allow the holder to participate in the ordinary and liquidating distributions received by holders of the operating partnership units (subject to the achievement of specified levels of profitability by our operating partnership or the achievement of certain events). Upon vesting, and after achieving parity with operating partnership units, vested LTIP units may be converted into an equal number of operating partnership units, and thereafter have all the rights of operating partnership units, including redemption rights.
NET DEBT TO ANNUALIZED CURRENT QUARTER ADJUSTED EBITDA: We calculate net debt to Adjusted EBITDA as total debt (inclusive of $10.9 million of fair value of debt adjustments and $5.1 million of debt issuance costs) less cash and cash equivalents, divided by annualized current quarter Adjusted EBITDA.
NET OPERATING INCOME:  We define net operating income, or NOI, as net income (loss), as determined under GAAP, plus general and administrative expenses, depreciation and amortization, interest expense, loss on early extinguishment of debt, equity in earnings (losses) of unconsolidated real estate ventures, acquisition costs, organizational and offering expenses, impairment of long-lived assets, losses on the sale of properties and non-operating expense and by subtracting management fees and other revenue, gains on sale of properties, debt forgiveness, and non-operating income. NOI is not a measure of performance calculated in accordance with GAAP.
We believe NOI is useful to investors in evaluating our operating performance because:
NOI is one of the primary measures used by our management and our PROs to evaluate the economic productivity of our properties, including our ability to lease our properties, increase pricing and occupancy and control our property operating expenses;
NOI is widely used in the real estate industry and the self storage industry to measure the performance and value of real estate assets without regard to various items included in net income that do not relate to or are not indicative of operating performance, such as depreciation and amortization, which can vary depending upon accounting methods, the book value of assets, and the impact of our capital structure; and
We believe NOI helps our investors to meaningfully compare the results of our operating performance from period to period by removing the impact of our capital structure (primarily interest expense on our outstanding indebtedness) and depreciation of the cost basis of our assets from our operating results.
There are material limitations to using a non-GAAP measure such as NOI, including the difficulty associated with comparing results among more than one company and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect our net income (loss). We compensate for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with our analysis of net income (loss). NOI should be considered in addition to, but not as a substitute

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for, other measures of financial performance reported in accordance with GAAP, such as total revenues, income from operations and net loss.
NET OPERATING INCOME MARGIN: The ratio of NOI divided by total rental and other property-related revenue.
NON-SAME STORE PORTFOLIO: Non-same store portfolio comprises those properties that do not meet the Same Store portfolio property definition. 
OCCUPANCY AT PERIOD END:  Represents total occupied rentable square feet divided by total rentable square feet at period end.
OPERATING PARTNERSHIP UNITS:  Operating partnership units, or OP Units, are Class A common units of limited partner interest in our operating partnership which are economically equivalent to our common shares. We also own certain of our self storage properties through other consolidated limited partnership subsidiaries of our operating partnership, which we refer to as "DownREIT partnerships." The DownREIT partnerships issue certain units of limited partner or limited liability company interest that are intended to be economically equivalent to our OP units, which we define as DOWNREIT OPERATING PARTNERSHIP UNIT EQUIVALENTS, or DownREIT OP units.
PROs: Participating regional operators, or "PROs", are our experienced regional self storage operators with local operational focus and expertise. As of December 31, 2016, our Company had seven PROs, SecurCare Self Storage, Northwest Self Storage, Optivest Properties, Guardian Storage Centers, Move It Self Storage, Storage Solutions, and Hide-Away.
RENTABLE SQUARE FEET: Rentable square feet includes all enclosed self storage units but excludes commercial, residential, and covered parking space.
RESTRICTED COMMON SHARES: Restricted common shares are common shares that are subject to restrictions on transferability subject to vesting and such other restrictions. Generally, a participant granted restricted common shares has all of the rights of a shareholder, including, without limitation, the right to vote and the right to receive dividends on the restricted common shares. Holders of restricted common shares are prohibited from selling such shares until they vest.
SAME STORE PORTFOLIO: Our same store portfolio is defined as those properties owned and operated for the entirety of the applicable periods presented, excluding any properties we sold or where we completed a storage space expansion which caused the property's year-over-year operating results to no longer be comparable. Our 2016 same store portfolio consists of only those properties that were included in the Company's consolidated results since January 1, 2015, excluding one property where the Company completed a storage space expansion during the year ended December 31, 2015.
SUBORDINATED PERFORMANCE UNITS:  Subordinated performance units, or SP Units, are Class B common units of limited partner interest in our operating partnership. SP units, which are linked to the performance of specific contributed portfolios, are intended to incentivize our PROs to drive operating performance and support the sustainability of the operating cash flow generated by the contributed self storage properties that they continue to manage on our behalf. Because subordinated performance unit holders receive distributions only after portfolio-specific minimum performance thresholds are satisfied, we believe SP units play a key role in aligning the interests of our PROs with us and our shareholders. The DownREIT partnerships also issue units of limited partner interest that are intended to be economically equivalent to our SP units, which we define as DOWNREIT SUBORDINATED PERFORMANCE UNIT EQUIVALENTS, or DownREIT SP units.

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