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What changed in National Storage Affiliates Trust's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of National Storage Affiliates Trust's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+291 added−424 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-28)

Top changes in National Storage Affiliates Trust's 2024 10-K

291 paragraphs added · 424 removed · 225 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

55 edited+18 added−81 removed26 unchanged
Biggest changeThe 2023 JV Agreement allows for equity capital contributions of up to $400 million from the 2023 JV Members over a 24 month period starting in December 2023, with options to extend the investment time period by two additional six month periods. 2018 Joint Venture As of December 31, 2023, our 2018 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest, owned and operated 104 self storage properties containing approximately 7.8 million rentable square feet, configured in over 64,000 storage units and located across 17 states. 2016 Joint Venture As of December 31, 2023, our 2016 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest, owned and operated a portfolio of 81 properties containing approximately 5.7 million rentable square feet, configured in approximately 47,000 storage units and located across 13 states.
Biggest changeWe believe there is significant opportunity for continued external growth by partnering with institutional investors seeking to deploy capital in the self storage industry. 2024 Joint Venture As of December 31, 2024, our 2024 Joint Venture, in which we have a 25% ownership interest, owned and operated 56 self storage properties containing approximately 3.2 million rentable square feet, configured in approximately 24,000 storage units and located across seven states. 6 Table of Contents 2023 Joint Venture As of December 31, 2024, our 2023 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest, owned and operated 18 self storage properties, all of which were acquired by the 2023 Joint Venture in 2024, containing approximately 1.2 million rentable square feet, configured in approximately 8,000 storage units and located across two states. 2018 Joint Venture As of December 31, 2024, our 2018 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest, owned and operated 104 self storage properties containing approximately 7.9 million rentable square feet, configured in approximately 65,000 storage units and located across 17 states. 2016 Joint Venture As of December 31, 2024, our 2016 Joint Venture, in which we have a 25% ownership interest, owned and operated 81 properties containing approximately 5.7 million rentable square feet, configured in approximately 47,000 storage units and located across 13 states.
Many of these markets have multiple barriers to entry against increased supply, including zoning restrictions against new construction and new construction costs that we believe are higher than our properties' fair market value.
Many of these markets have multiple barriers to entry against increased supply, including zoning restrictions against new construction and new construction costs that we believe are higher than our properties' fair market value.
Our indebtedness may be recourse, non-recourse or cross-collateralized. If the indebtedness is non-recourse, the collateral will be limited to the particular properties to which the indebtedness relates. In addition, we may invest in properties subject to existing loans secured by mortgages or similar liens on our properties, or may refinance properties acquired on a leveraged basis.
Our indebtedness may be recourse, non-recourse or cross-collateralized. If the indebtedness is non-recourse, the collateral will be limited to the particular properties to which the indebtedness relates. In addition, we may invest in properties subject to existing loans secured by mortgages or similar liens, or may refinance properties acquired on a leveraged basis.
The presence of such substances or materials, or the failure to properly remediate such substances, may adversely affect the owner's or operator's ability to lease, sell or rent such property or to borrow using such property as collateral.
The presence of such substances or materials, or the failure to properly remediate such substances, may adversely affect the property owner's or operator's ability to lease, sell or rent such property or to borrow using such property as collateral.
The following is a summary of our 2023 consolidated acquisition activity (dollars in thousands): 7 Table of Contents Number of Number of Rentable State/Territory Properties Units Square Feet Fair Value 2023 Acquisitions: Florida 15 7,388 905,157 $ 144,355 California (1) 1 1,038 140,947 28,291 Texas 1 502 67,000 8,406 Arizona 1 489 54,885 16,181 Nevada 1 460 61,856 12,213 Puerto Rico 1 443 46,069 16,180 Georgia (1) — 159 22,950 3,237 Louisiana (2) — — — 436 Pennsylvania (2) — — — 151 Total 20 10,479 1,298,864 $ 229,450 (1) Includes annexes to existing properties.
The following is a summary of our 2023 consolidated acquisition activity (dollars in thousands): Number of Number of Rentable State/Territory Properties Units Square Feet Fair Value 2023 Acquisitions: Florida 15 7,388 905,157 $ 144,355 California (1) 1 1,038 140,947 28,291 Texas 1 502 67,000 8,406 Arizona 1 489 54,885 16,181 Nevada 1 460 61,856 12,213 Puerto Rico 1 443 46,069 16,180 Georgia (1) — 159 22,950 3,237 Louisiana (2) — — — 436 Pennsylvania (2) — — — 151 Total 20 10,479 1,298,864 $ 229,450 (1) Includes annexes to existing properties.
In addition, we may be required to comply with federal, state and local laws, rules and regulations in connection with our communications with our tenants or prospective tenants, including with respect to available units, reservations, payments due, and other matters. 14 Table of Contents REIT Qualification We have elected and we believe that we have qualified to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, (the "Code"), commencing with our taxable year ended on December 31, 2015.
In addition, we may be required to comply with federal, state and local laws, rules and regulations in connection with our communications with our tenants or prospective tenants, including with respect to available units, reservations, payments due, and other matters. 10 Table of Contents REIT Qualification We have elected and we believe that we have qualified to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, (the "Code"), commencing with our taxable year ended on December 31, 2015.
We may use the proceeds from any borrowings to refinance existing indebtedness, to refinance investments, including the redevelopment of existing properties, for general working capital or for other purposes when we believe it is advisable.
We may use the proceeds from any borrowings to refinance existing indebtedness, to refinance investments, including the redevelopment of existing properties, for general working capital or for other purposes when we believe it is advisable. Equity.
Dividend Reinvestment Plan In the future, we may adopt a dividend reinvestment plan that will permit shareholders who elect to participate in the plan to have their cash dividends reinvested in additional common shares. 13 Table of Contents Regulation General Generally, self storage properties are subject to various laws, ordinances and regulations, including those relating to lien sale rights and procedures, public accommodations, insurance, and the environment.
Dividend Reinvestment Plan In the future, we may adopt a dividend reinvestment plan that will permit shareholders who elect to participate in the plan to have their cash dividends reinvested in additional common shares. 9 Table of Contents Regulation General Generally, self storage properties are subject to various laws, ordinances and regulations, including those relating to lien sale rights and procedures, public accommodations, insurance, and the environment.
Over 70% of our consolidated portfolio is located in the top 100 MSAs, based on our 2023 net operating income ("NOI"). We believe that these properties are primarily located in high quality growth markets that have attractive supply and demand characteristics and are less sensitive to the fluctuations of the general economy.
Over 70% of our consolidated portfolio is located in the top 100 MSAs, based on our 2024 net operating income ("NOI"). We believe that these properties are primarily located in high quality growth markets that have attractive supply and demand characteristics and are less sensitive to the fluctuations of the general economy.
A number of additional U.S. federal, state and local laws may also require modifications to our properties, or restrict certain further renovations of the properties, with respect to access thereto by disabled persons. The ADA or these other laws may also apply to our websites. For additional information on the ADA, see "Item 1A.
A number of additional U.S. federal, state and local laws may also require modifications to our properties, or restrict certain further renovations of the properties, with respect to access thereto by disabled persons. The ADA or these other laws may also apply to our website. For additional information on the ADA, see "Item 1A.
Although our board of trustees has not adopted a policy which limits the total amount of indebtedness that we may incur, it will consider a number of factors in evaluating our level of indebtedness from time to time, as well as the amount of such indebtedness that will be either fixed and variable-rate, and in making financial decisions, including, among others, the following: • the interest rate of the proposed financing; • the extent to which the financing impacts our flexibility in managing our properties; • prepayment penalties and restrictions on refinancing; • the purchase price of properties we acquire with debt financing; • our long-term objectives with respect to the financing; • our target investment returns; • the ability of particular properties, and the Company as a whole, to generate cash flow sufficient to cover expected debt service payments; • overall level of consolidated indebtedness; • timing of debt maturities; • provisions that require recourse and cross-collateralization; • corporate credit ratios including debt service coverage, debt to total market capitalization and debt to undepreciated assets; and • the overall ratio of fixed- and variable-rate debt.
Although our board of trustees has not adopted a policy which limits the total amount of indebtedness that we may incur, it will consider a number of factors in evaluating our level of indebtedness from time to time, as well as the amount of such indebtedness that will be either fixed and variable-rate, and in making financial decisions, including, among others, the following: • the interest rate of the proposed financing; • the extent to which the financing impacts our flexibility in managing our properties; 8 Table of Contents • prepayment penalties and restrictions on refinancing; • the purchase price of properties or other assets we acquire with debt financing; • our long-term objectives with respect to the financing; • our target investment returns; • the ability of particular properties, and the Company as a whole, to generate cash flow sufficient to cover expected debt service payments; • overall level of consolidated indebtedness; • timing of debt maturities; • provisions that require recourse and cross-collateralization; • corporate credit ratios including debt service coverage, debt to total market capitalization and debt to undepreciated assets; and • the overall ratio of fixed- and variable-rate debt.
Certain environmental laws impose compliance obligations on owners and operators of real property with respect to the management of hazardous materials and other regulated substances. For example, environmental laws govern the management of asbestos-containing materials and lead-based paint. Failure to comply with these laws can result in penalties or other sanctions.
Additionally, certain environmental laws impose compliance obligations on owners and operators of real property with respect to the management of hazardous materials and other regulated substances onsite. For example, environmental laws govern the management of asbestos-containing materials and lead-based paint. Failure to comply with these laws can result in penalties or other sanctions.
We seek to increase employee retention and well-being and our team members enjoy a robust benefit package that includes medical, dental, vision, life insurance, 401K with matching employer contribution and a performance-based bonus incentive plan. We also seek to promote diversity among our employees and management team.
We seek to increase employee retention and well-being and our team members enjoy a robust benefit package that includes medical, dental, vision, life insurance, 401K with matching employer contribution and, for our corporate employees, a performance-based bonus incentive plan. We also seek to promote diversity among our employees and management team.
Persons who arrange for the disposal or treatment of hazardous substances or other regulated materials may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such person.
Persons who transport, dispose, or arrange for the transport, disposal or treatment of hazardous substances or other regulated materials may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such person.
In order to assess the potential for such liability, we conduct an environmental assessment of each property prior to acquisition and manage our properties in accordance with environmental laws while we own or operate them.
In order to assess the potential for such liability, we conduct an environmental, health and safety assessment of each property prior to acquisition and manage our properties in accordance with environmental laws while we own or operate them.
Certain environmental laws impose liability for release of asbestos-containing materials into the air and third-parties may seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials.
Certain environmental laws impose liability for release of asbestos-containing materials into the air and third-parties may seek recovery from owners or operators of real properties for personal injury (including exposure) associated with asbestos-containing materials.
("SecurCare"), in 1988 to invest in and manage self storage properties. While growing SecurCare to over 150 self storage properties, Mr. Nordhagen recognized a market opportunity for a differentiated public self storage REIT that would leverage the benefits of national scale by integrating multiple experienced regional self storage operators with local operational focus and expertise.
Nordhagen, co-founded SecurCare Self Storage, Inc. in 1988 to invest in and manage self storage properties. While growing SecurCare to over 150 self storage properties, Mr. Nordhagen recognized a market opportunity for a differentiated public self storage REIT that would leverage the benefits of national scale by integrating multiple experienced regional self storage operators with local operational focus and expertise.
We intend to leverage our property management platform to provide property and asset management services for future strategic joint ventures, generating additional operating profits and third party fee income. In addition, we consider the 75% third-party interest in our unconsolidated real estate ventures, which as of December 31, 2023 owned 185 properties, to present a potential acquisition opportunity.
We intend to leverage our property management platform to provide property and asset management services for future strategic joint ventures, generating additional operating profits and third party fee income. In addition, we consider the 75% third-party interest in our unconsolidated real estate ventures, which as of December 31, 2024 owned 259 properties, to present a potential acquisition opportunity.
In connection with the ownership, operation and management of our current or past properties and any properties that we may acquire and/or manage in the future, we could be legally responsible for environmental liabilities or costs relating to a release of hazardous substances or other regulated materials at or emanating from such property.
In connection with the ownership, operation and management of our current or past properties and any properties that we may acquire and/or manage in the future, we could be legally responsible for environmental, health or safety liabilities or costs, including those relating to a release of hazardous substances or other regulated materials at or emanating from such property.
Of these properties, 306 were acquired by us from our PROs, 502 were acquired by us from third-party sellers and one was acquired by us from the 2016 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8).
Of these properties, 306 were acquired by us from our former PROs, 508 were acquired by us from third-party sellers and one was acquired by us from the 2016 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8).
The Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended ("CERCLA") and comparable state laws typically impose strict joint and several liabilities without regard to whether the owner or operator knew of, or was responsible for, the presence of such substances or materials.
The Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended ("CERCLA") and comparable state laws typically impose strict joint and several liabilities without regard to legality of conduct or whether the past or present owner or operator knew of, or was responsible for, the presence of such substances or materials.
The credit facility consists of the following components: (i) a revolving line of credit (the "Revolver") which provided for a total borrowing commitment up to $950.0 million, under which we could borrow, repay and re-borrow amounts, (ii) a $275.0 million tranche B term loan facility (the "Term Loan B"), (iii) a $325.0 million tranche C term loan facility (the "Term Loan C"), (iv) a $275.0 million tranche D term loan facility (the "Term Loan D") and (v) a $130.0 million tranche E term loan facility (the "Term Loan E").
The credit facility consists of the following components: (i) a revolving line of credit (the "Revolver") which provided for a total borrowing commitment up to $950.0 million, under which we could borrow, repay and re-borrow amounts, (ii) a $275.0 million tranche D term loan facility (the "Term Loan D") and (iii) a $130.0 million tranche E term loan facility (the "Term Loan E").
Our PRO structure thus offers PROs a unique opportunity to serve as regional property managers for their managed portfolios and directly participate in the potential upside of those properties while simultaneously diversifying their investment to include a broader portfolio of self storage properties.
Our former structure offered our former PROs a unique opportunity to serve as regional property managers for their managed portfolios and directly participate in the potential upside of those properties while simultaneously diversifying their investment to include a broader portfolio of self storage properties.
Our success relies on the general professionalism of our employees and our PRO's site managers and staff which are contributing factors to a site's ability to successfully secure rentals, retain tenants and maintain clean and secure self storage properties.
Our success relies on the general professionalism of our employees which are contributing factors to a site's ability to successfully secure rentals, retain tenants and maintain clean and secure self storage properties.
We completed our initial public offering in 2015 and our common shares of beneficial interest, $0.01 par value per share ("common shares"), are listed on the New York Stock Exchange under the symbol "NSA." 4 Table of Contents Our vice chairperson of the board of trustees and former chief executive officer, Arlen D. Nordhagen, co-founded SecurCare Self Storage, Inc.
We completed our initial public offering in 2015 and our common shares of beneficial interest, $0.01 par value per share ("common shares"), are listed on the New York Stock Exchange under the symbol "NSA." 4 Table of Contents Our vice chairperson of the board of trustees and former chairperson of the board of trustees and chief executive officer, Arlen D.
In general, we expect to fund our property acquisitions through a combination of borrowings under bank credit facilities (including term loans and revolving facilities), property-level debt, issuances of OP equity and public and private equity and debt issuances. 11 Table of Contents As of December 31, 2023, our unsecured credit facility provided for total borrowings of $1.955 billion (the "credit facility").
In general, we expect to fund our property acquisitions through a combination of borrowings under bank credit facilities (including term loans and revolving facilities), property-level debt, issuances of OP equity and public and private equity and debt issuances. Credit Facility. As of December 31, 2024, our unsecured credit facility provided for total borrowings of $1.355 billion (the "credit facility").
We believe our reputation as a reliable, well-capitalized buyer, along with our use of OP units as transactional currency which offers a tax-deferred transaction to self storage owners seeking to sell their properties, gives us a competitive advantage over self storage companies that do not have the same transactional history or currency as us.
We also believe our reputation as a reliable, well-capitalized buyer, along with our willingness to use OP units as transactional currency for a tax-deferred transaction to self storage owners seeking to sell their properties, gives us a competitive advantage over self storage companies that do not have the same transactional history or tax-deferred alternatives. Strategic Joint Venture Arrangements.
These competing bidders also may possess greater resources, or have a lower cost of capital, than us and therefore be in a better position to acquire a property. However, our use of OP units and subordinated performance units as transactional currency allows us to structure our acquisitions in tax-deferred transactions.
These competing bidders also may possess greater resources, or have a lower cost of capital, than us and therefore be in a better position to acquire a property. However, our use of OP units as transactional currency allows us to structure our acquisitions in tax-deferred transactions. As a result, potential targets who are tax-sensitive might favor us as a suitor.
As of December 31, 2023, we had the entire amounts drawn on Term Loan B, Term Loan C, Term Loan D and Term Loan E and we had $381.0 million of outstanding borrowings under the Revolver, and the capacity to borrow an additional $562.6 million under the Revolver while remaining in compliance with the credit facility's financial covenants.
As of December 31, 2024, we had the entire amounts drawn on Term Loan D and Term Loan E and we had approximately $443.3 million of outstanding borrowings under the Revolver, and the capacity to borrow an additional $500.0 million under the Revolver while remaining in compliance with the credit facility's financial covenants.
We believe that our efficient national platform, centralized infrastructure and unique PRO structure, will enable us to achieve optimal market rents and occupancy, reduce operating expenses and increase the sale by us and our PROs of ancillary products and services, including tenant insurance, of which we receive a portion of the proceeds, truck rentals and packing supplies.
We believe that our efficient national platform and centralized infrastructure will enable us to achieve optimal market rents and occupancy, reduce operating expenses and increase the sale by us of ancillary products and services, including tenant insurance, of which we receive a portion of the proceeds, truck rentals and packing supplies. 7 Table of Contents Participate in Industry Consolidation Through Acquisitions.
A complete listing of, and additional information about, our self storage properties is included in Item 2 of this report. During the year ended December 31, 2023, we acquired 20 consolidated self storage properties and annexes to existing properties, of which 19 were acquired by us from our PROs and one was acquired by us from a third-party seller.
A complete listing of, and additional information about, our self storage properties is included in Item 2 of this report. During the year ended December 31, 2024, we acquired seven consolidated self storage properties and annexes to existing properties, all of which were acquired by us from unaffiliated third-party sellers.
We seek to further expand our national platform by continuing to recruit additional established self storage operators to act as future PROs, pursuing strategic off-market acquisitions, as well as opportunistically partnering with institutional funds and other institutional investors in strategic joint venture arrangements while integrating our operations through the implementation of centralized initiatives, including management information systems, revenue enhancement, and cost optimization programs.
We seek to further expand our national platform by continuing to pursue strategic acquisitions, as well as to opportunistically partner with institutional funds and other institutional investors in strategic joint venture arrangements while integrating our operations through the implementation of centralized initiatives, including management information systems, revenue enhancement, and cost optimization programs.
This 75% third-party share of gross real estate assets is approximately $1.7 billion based on the historical book value of the joint ventures. Were we to pursue an acquisition of these interests, it could potentially drive our future growth.
This 75% third-party share of gross real estate assets is approximately $2.0 billion based on the historical book value of the joint ventures. Were we to pursue an acquisition of these interests, it could potentially drive our future growth. Our Financing Strategy We expect to maintain a flexible approach in financing new property acquisitions.
Human Capital We seek to foster a diverse and inclusive work environment that values each individual team member’s talents and contributions, while channeling those efforts toward our common core values of integrity, accountability, humility and compassion.
Therefore, we will continue to compete with these entities for financing opportunities as well as prospective joint venture relationships. Human Capital We seek to foster a diverse and inclusive work environment that values each individual team member's talents and contributions, while channeling those efforts toward our common core values of integrity, accountability, humility and compassion.
Furthermore, we believe that our significant size and the overall geographic diversification of our portfolio reduces risks associated with specific local or regional economic downturns or natural disasters. Integrated Platform Utilizing Advanced Technology for Enhanced Operational Performance and Best Practices.
Furthermore, we believe that our significant size and the overall geographic diversification of our portfolio reduces risks associated with specific local or regional economic downturns or natural disasters. Integrated Platform Utilizing Advanced Technology for Enhanced Operational Performance. Our national platform allows us to capture cost savings through integration and centralization, thereby eliminating redundancies and utilizing economies of scale.
We held ownership interests in and operated a geographically diversified portfolio of 1,050 self storage properties located in 42 states and Puerto Rico, comprising approximately 68.6 million rentable square feet, configured in approximately 542,000 storage units as of December 31, 2023, excluding 39 self storage properties classified as held for sale to be sold to a third party in 2024.
As of December 31, 2024, we held ownership interests in and operated a geographically diversified portfolio of 1,074 self storage properties located in 42 states and Puerto Rico, comprising approximately 70.2 million rentable square feet, configured in approximately 552,000 storage units.
In addition, the Company has sufficient scale for various centralized functions, including financial reporting, the operation of call centers, expanding cell tower leasing, a national credit card processing program, marketing, information technology, legal support, and capital market functions, to achieve substantial cost savings over smaller, individual operators. 9 Table of Contents Our national platform utilizes advanced technology for our data warehouse program, Internet marketing, our centralized call centers, financial and property analytic dashboards, revenue optimization analytics and expense management tools to enhance operational performance.
In addition, we have has sufficient scale for various centralized functions, including financial reporting, the operation of call centers, expanding cell tower leasing, a national credit card processing program, marketing, information technology, legal support, and capital market functions, to achieve substantial cost savings over smaller, individual operators.
As of December 31, 2023, we held ownership interests in and operated a geographically diversified portfolio of 1,050 self storage properties located in 42 states and Puerto Rico, comprising approximately 68.6 million rentable square feet, configured in approximately 542,000 storage units, which excludes 39 self storage properties classified as held for sale to be sold to a third party in 2024.
We held ownership interests in and operated a geographically diversified portfolio of 1,074 self storage properties located in 42 states and Puerto Rico, comprising approximately 70.2 million rentable square feet, configured in approximately 552,000 storage units as of December 31, 2024.
As a result, potential targets who are tax-sensitive might favor us as a suitor. Our primary national competitors in many of our markets for both tenants and acquisition opportunities include local and regional operators, institutional investors, private equity funds, as well as the other public self storage REITs, including Public Storage, CubeSmart, and Extra Space Storage Inc.
Our primary competitors in many of our markets for both tenants and acquisition opportunities include local, regional, and national operators, institutional investors, private equity funds, as well as the other public self storage REITs, including Public Storage, CubeSmart, and Extra Space Storage Inc. These entities also seek financing through similar channels to the Company.
The Senior Unsecured Notes are subject to customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions. We expect to employ leverage in our capital structure in amounts determined from time to time by our board of trustees.
Our outstanding term loan facilities and senior unsecured notes are subject to customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
As of December 31, 2023, we had an expansion option under the credit facility, which, if exercised in full, would have provided for a total credit facility of $2.5 billion.
As of December 31, 2024, we had an expansion option under the credit facility, which, if exercised in full, would have provided for a total credit facility of $1.900 billion. Term Loan Facilities, Senior Unsecured Notes and Fixed Rate Mortgages.
(2) Land acquisitions with no incremental storage. During the year ended December 31, 2023, we entered into an agreement to sell, to an unrelated third party, 71 wholly-owned self storage properties consisting of approximately 4.4 million rentable square feet configured in approximately 34,000 storage units for approximately $530.0 million.
(2) Land acquisitions with no incremental storage. During the year ended December 31, 2023, we sold 32 self storage properties and an undeveloped land parcel to unaffiliated third parties consisting of approximately 2.0 million rentable square feet configured in approximately 16,000 storage units for approximately $262.3 million.
During the year ended December 31, 2022, we acquired 45 consolidated self storage properties, of which five were acquired by us from our PROs and 40 were acquired by us from third-party sellers.
During the year ended December 31, 2023, we acquired 20 consolidated self storage properties and annexes to existing properties, of which 19 were acquired by us from our former PROs and one was acquired by us from an unaffiliated third-party seller.
Our Business and Growth Strategies By capitalizing on our competitive strengths, we seek to increase scale, achieve optimal revenue-producing occupancy and rent levels, and increase long-term shareholder value by achieving sustainable long-term growth. Our business and growth strategies to achieve these objectives are as follows: Maximize Property Level Cash Flow.
Our Long-Term Business and Growth Strategies With our diversified national portfolio of self storage properties, we seek to increase scale, achieve optimal revenue-producing occupancy and rent levels, and increase long-term shareholder value by achieving sustainable long-term growth. Our business and growth strategies to achieve these objectives are as follows: High Quality Properties in Key Growth Markets.
Available Information We file registration statements, proxy statements, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those statements and reports with the Securities and Exchange Commission (the "SEC"). Investors may obtain copies of these statements and reports by accessing the SEC's website at www.sec.gov.
Investors may obtain copies of these statements and reports by accessing the SEC's website at www.sec.gov. Our statements and reports and any amendments to any of those statements and reports that we file with the Securities and Exchange Commission are available free of charge as soon as reasonably practicable on our website at www.nsastorage.com.
We strive to maximize the cash flows at our properties by leveraging the economies of scale provided by our national platform, including through the implementation of new ideas derived from our Technology and Best Practices Group.
Maximize Property Level Cash Flow. We strive to maximize the cash flows at our properties by leveraging the economies of scale provided by our national platform.
Our common shares are listed on the New York Stock Exchange under the symbol "NSA."
The information contained on our website is not incorporated into this Annual Report on Form 10-K. Our common shares are listed on the New York Stock Exchange under the symbol "NSA."
During 2024, we contributed 56 self storage properties containing approximately 3.2 million rentable square feet, configured in over 24,000 storage units and located across seven states. 2023 Joint Venture As of December 31, 2023, our 2023 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest, did not own or operate any self storage properties.
During the year ended December 31, 2024, we sold, to unaffiliated third parties, 40 self storage properties consisting of approximately 2.6 million rentable square feet configured in approximately 19,000 storage units for approximately $273.1 million and we contributed, to the 2024 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), 56 self storage properties consisting of approximately 3.2 million rentable square feet configured in approximately 24,000 storage units for approximately $343.7 million.
We believe our PROs' networks, their industry expertise and close familiarity with the other operators in their markets provide us with a clear competitive advantage in identifying and selecting attractive acquisition opportunities, in many cases, before they are publicly marketed.
Through these regional and local connections, we are able to access acquisition opportunities, including some opportunities that are not publicly marketed or sold through auctions. We believe our industry networks and underwriting expertise provide us with a competitive advantage in identifying and selecting attractive acquisition opportunities, in many cases, before they are publicly marketed.
As of December 31, 2023, approximately 63% of our employees were women and 32% of our senior management team (Director level and above) were women, including Tamara Fischer, our Executive Chairperson of our Board of Trustees. 15 Table of Contents As of December 31, 2023, we had 1,108 employees, which includes employees of our property management platform but does not include persons employed by our PROs.
As of December 31, 2024, approximately 52% of our employees were women and 33% of our senior management team (Director level and above) were women, including Tamara Fischer, our Executive Chairperson of our Board of Trustees.
These centralized programs, which are run through our Technology and Best Practices Group, are positively impacting our business performance, and we believe that they will continue to be a driver of organic growth going forward.
Our national platform utilizes advanced technology for our data warehouse program, Internet marketing, our centralized call centers, financial and property analytic dashboards, revenue optimization analytics and expense management tools to enhance operational performance. These centralized programs are positively impacting our business performance, and we believe that they will continue to be a driver of organic growth going forward.
As of December 31, 2023, we owned a geographically diversified portfolio of 809 self storage properties located in 38 states and Puerto Rico, comprising approximately 51.9 million rentable square feet, configured in approximately 407,000 storage units, which excludes self storage properties classified as held for sale consisting of (i) 39 self storage properties located in eight states, comprising approximately 2.4 million rentable square feet, configured in approximately 18,000 storage units to be sold to a third party in 2024 and (ii) 56 self storage properties located in seven states, comprising approximately 3.2 million rentable square feet, configured in approximately 24,000 storage units that were contributed to the 2024 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8) in 2024.
As of December 31, 2024, we owned a geographically diversified portfolio of 815 self storage properties located in 38 states and Puerto Rico, comprising approximately 52.2 million rentable square feet, configured in approximately 409,000 storage units.
As of December 31, 2023, our property management platform managed and controlled 532 of our consolidated properties, which excludes 39 properties classified as held for sale to be sold to a third party in 2024, and 185 of our unconsolidated real estate venture properties.
Our Property Management Platform Through our property management platform, we direct, manage and control the day-to-day operations and affairs of our consolidated properties and our unconsolidated real estate ventures. As of December 31, 2024, our property management platform managed and controlled the majority of our 815 consolidated properties and all 259 of our unconsolidated real estate venture properties.
Our statements and reports and any amendments to any of those statements and reports that we file with the Securities and Exchange Commission are available free of charge as soon as reasonably practicable on our website at www.nationalstorageaffiliates.com. The information contained on our website is not incorporated into this Annual Report on Form 10-K.
As of December 31, 2024, we had 1,466 employees, which includes employees of our property management platform. 11 Table of Contents Available Information We file registration statements, proxy statements, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those statements and reports with the Securities and Exchange Commission (the "SEC").
We believe that our national platform, which includes our PRO structure and property management platform, has significant potential for continued external and internal growth.
In connection with the internalization of the PRO structure, on the Closing Date, all 11,906,167 outstanding subordinated performance units and DownREIT subordinated performance units were converted into an aggregate of 17,984,787 OP units and DownREIT OP units. We believe that our national platform has significant potential for continued external and internal growth.
Removed
We believe that his vision, which is the foundation of the Company, aligns the interests of our participating regional operators ("PROs"), with those of our public shareholders by allowing our PROs to participate alongside our shareholders in our financial performance and the performance of our PROs' "managed portfolios", which means, with respect to each PRO, the portfolio of properties that such PRO manages on our behalf.
Added
Although the PRO structure contributed significantly to our growth over the last decade, the internalization of the PRO structure has always been a part of our long term vision.
Removed
A key component of this strategy is to capitalize on the local market expertise and knowledge of regional self storage operators by maintaining the continuity of their roles as property managers. As of December 31, 2023, our PROs managed 333 of our properties.
Added
Over time, largely through our unconsolidated real estate ventures, retirement of PROs and the internalization of our PRO structure, effective July 1, 2024 (the "Closing Date"), we have developed a full service internally-staffed property management platform.
Removed
We believe that our PRO structure creates the right financial incentives to align the interest of our PROs with those of our public shareholders.
Added
As a result of the internalization of the PRO structure, we purchased each of the PROs' asset management and property management contracts (collectively, the "management contracts"), certain of the PROs' intellectual property and brands ("PRO IP"), and certain rights with respect to the PROs' tenant insurance programs (together with the management contracts and PRO IP, the "PROs' intangible assets").
Removed
We require our PROs to exchange the self storage properties they contribute to the Company for a combination of OP units and subordinated performance units in our operating partnership or subsidiaries of our operating partnership that issue units intended to be economically equivalent to the OP units and subordinated performance units issued by our operating partnership ("DownREIT partnerships").
Added
We have transitioned the majority of operations in a phased approach, which is expected to continue over the 12 month period following the Closing Date, and we have executed new asset management and property management agreements with a number of our former PROs for all or a part of this transitionary period at newly negotiated management fees.
Removed
OP units, which are economically equivalent to our common shares, create alignment with the performance of the Company as a whole.
Added
The properties are primarily managed by us under the brands of iStorage, Move It, Moove In, Northwest, RightSpace, SecurCare and Southern.
Removed
Subordinated performance units, which are linked to the performance of specific managed portfolios, incentivize our PROs to drive operating performance and support the sustainability of the operating cash flow generated by the self storage properties that they manage on our behalf.
Added
The following is a summary of our 2024 consolidated acquisition activity (dollars in thousands): 5 Table of Contents Number of Number of Rentable State/Territory Properties Units Square Feet Fair Value 2024 Acquisitions: Florida (1) 3 1,615 184,299 $ 29,753 Texas (2) 3 1,291 215,393 27,572 North Carolina 1 514 63,250 7,548 Total 7 3,420 462,942 $ 64,873 (1) Includes land acquisition with no incremental storage.
Removed
Because subordinated performance unit holders receive distributions only after portfolio-specific minimum performance thresholds are satisfied, subordinated performance units play a key role in aligning the interests of our PROs with us and our shareholders.
Added
Our Unconsolidated Real Estate Ventures We seek to opportunistically partner with institutional funds and other institutional investors to acquire attractive portfolios utilizing a promoted return structure.
Removed
We believe our PRO structure provides us with a competitive growth advantage over self storage companies that do not offer property owners the ability to participate in the performance and potential future growth of their managed portfolios.
Added
The self storage industry is highly fragmented, with the majority of self storage properties in the United States owned by private companies and owners, representing a significant consolidation opportunity. We have established an extensive network of industry relationships and contacts in our respective markets.
Removed
We are currently engaged in preliminary discussions with additional self storage operators and believe that we could add one to three more PROs in addition to the PROs we have currently, which will enhance our existing geographic footprint and allow us to enter regional markets in which we currently have limited or no market share.
Added
We will continue to utilize a combination of borrowings, including term loans, senior unsecured notes and fixed rate mortgages, for future acquisitions and to refinance existing debt. As of December 31, 2024, we had $460.0 million of term loan facilities, $1.950 billion of senior unsecured notes and $200.8 million of fixed rate mortgages outstanding.
Removed
At the time of our formation, we contemplated that PROs would seek to retire over time, allowing us to internalize the management of such PROs' managed portfolios into our full service internally staffed property management platform, which was initially developed to manage the properties owned by our unconsolidated real estate ventures.
Added
For additional detail regarding our Credit Facility, Term Loan Facilities and Senior Unsecured Notes, please see Part II, Item 7, "Liquidity and Capital Resources".
Removed
Internalization allows us to grow this platform by hiring former PRO employees to continue managing the same portfolios under the same local brands. With each retirement event, we acquire the PRO brand name and related intellectual property and discontinue paying the PRO supervisory and administrative fees and reimbursements.
Added
We expect to employ leverage in our capital structure in amounts determined from time to time by our board of trustees.
Removed
As of December 31, 2023, we have completed three retirement events: SecurCare effective March 31, 2020, Kevin Howard Real Estate, Inc., d/b/a Northwest Self Storage and its controlled affiliates ("Northwest") effective January 1, 2022 and Move It Self Storage and its controlled affiliates ("Move It") effective January 1, 2023.
Added
We may issue common shares or preferred shares in public offerings or private placements, or OP units in our Operating Partnership in connection with property acquisitions. On November 19, 2024, we entered into a new At the Market ("ATM") program authorizing, but not obligating, the sale of up to $400.0 million of common shares from time to time.
Removed
As a result of Move It's retirement, effective January 1, 2023, management of our properties in the Move It managed portfolio was transferred to us and the Move It brand name and related intellectual property was internalized by us, and we discontinued payment of any supervisory and administrative fees and reimbursements to Move It. 5 Table of Contents Our Property Management Platform Through our property management platform, we direct, manage and control the day-to-day operations and affairs of certain consolidated properties and our unconsolidated real estate ventures under our iStorage, SecurCare, Northwest and Move It brands.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

49 edited+13 added−37 removed126 unchanged
Biggest changeThe following adverse developments, among others, in the markets in which we do business may adversely affect the operating performance of our properties or our financial results: • business layoffs or downsizing, industry slowdowns, relocation of businesses and changing demographics; • periods of economic slowdown, recession, high interest rates, or inflationary environments, declining demand for self storage generally or in a particular area or the public perception that any of these events may occur; • local or regional real estate market conditions, such as competing properties or products, the oversupply of self storage, or vacancies or changes in self storage space market rents; • perceptions by prospective tenants of the safety, convenience and attractiveness of our properties and the neighborhoods in which they are located; and • other events affecting or shifting consumer discretionary spending.
Biggest changeThe following adverse developments, among others, in the markets in which we do business may adversely affect the operating performance of our properties or our financial results: • business layoffs or downsizing, industry slowdowns, relocation of businesses and changing demographics; • periods of economic slowdown, recession, high interest rates, or inflationary environments, declining demand for self storage generally or in a particular area, decreases in the volume of housing market transactions or the public perception that any of these events may occur; • local or regional real estate market conditions, such as competing properties or products, the oversupply of self storage, or vacancies or changes in self storage space market rents; • perceptions by prospective tenants of the safety, convenience and attractiveness of our properties and the neighborhoods in which they are located; • regulatory requirements that increase our operating expenses or limit or prohibit our ability to increase rents; • actions and initiatives of the U.S. federal, state and local government and changes to U.S. federal, state and local government policies (including tariff policy), regulations, tax laws and rates (and related accounting guidance), and the execution and impact of these actions, initiatives, policies, regulations and laws; and • other events affecting or shifting consumer discretionary spending.
Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition, operating results and cash flow. We maintain comprehensive liability, fire, flood, earthquake, wind (as deemed necessary or as required by our lenders), extended coverage and rental loss insurance with respect to our properties.
Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition, operating results and cash flow. We maintain comprehensive liability, fire, flood, earthquake and wind (as deemed necessary or as required by our lenders), extended coverage and rental loss insurance with respect to our properties.
Our ability to acquire properties on favorable terms and successfully integrate and operate them, including integrating them into our financial and operational reporting infrastructure in a timely manner, may be constrained by the following significant risks: • we face competition from national, regional and local owners, operators and developers of self storage properties, which may result in higher property acquisition prices and reduced yields; • we may not be able to achieve satisfactory completion of due diligence investigations and other customary closing conditions; • we may fail to finance an acquisition on favorable terms or at all; • we may spend more time and incur more costs than budgeted to make necessary improvements or renovations to, and to integrate and operate, acquired properties; and • we may acquire properties subject to liabilities without any recourse, or with only limited recourse, with respect to unknown liabilities such as liabilities for clean-up of undisclosed environmental contamination, tax liabilities, claims by persons dealing with the former owners of the properties and claims for indemnification by general partners, trustees, officers and others indemnified by the former owners of the properties.
Our ability to acquire properties on favorable terms and successfully integrate and operate them, including integrating them into our financial and operational reporting infrastructure in a timely manner, may be constrained by the following significant risks: • we face competition from national, regional and local owners, operators and developers of self storage properties, which may result in higher property acquisition prices and reduced yields; • we may not be able to achieve satisfactory completion of due diligence investigations and other customary closing conditions; • we may fail to finance an acquisition on favorable terms or at all; • we may spend more time and incur more costs than budgeted to make necessary improvements or renovations to, and to integrate and operate, acquired properties; and • we may acquire properties subject to liabilities without any recourse, or with only limited recourse, with respect to unknown liabilities such as liabilities for clean-up of environmental contamination, tax liabilities, claims by persons dealing with the former owners or operators of the properties and claims for indemnification by general partners, trustees, officers and others indemnified by the former owners or operators of the properties.
Terrorist attacks at or against our stores, our interests, the United States or abroad, may negatively impact our operations and the value of our securities. Attacks, armed conflicts or active-shooter situations could negatively impact the demand for self-storage and increase of insurance coverage for our stores, which could reduce our profitability and cash flow.
Terrorist attacks at or against our stores, our interests, the United States or abroad, may negatively impact our operations and the value of our securities. Attacks, armed conflicts or active-shooter situations could negatively impact the demand for self storage and increase the cost of insurance coverage for our stores, which could reduce our profitability and cash flow.
If we fail to comply with these asset requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. 27 Table of Contents To meet these tests, we may be required to take or forgo taking actions that we would otherwise consider advantageous.
If we fail to comply with these asset requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. 22 Table of Contents To meet these tests, we may be required to take or forgo taking actions that we would otherwise consider advantageous.
Moreover, the presence of such covenants could cause us to operate our business with a view toward compliance with such covenants, which might not produce optimal returns for shareholders. 25 Table of Contents Risks Related to Our Qualification as a REIT Our failure to remain qualified as a REIT would subject us to U.S. federal income tax and applicable state and local taxes, which would reduce the amount of operating cash flow to our shareholders.
Moreover, the presence of such covenants could cause us to operate our business with a view toward compliance with such covenants, which might not produce optimal returns for shareholders. 20 Table of Contents Risks Related to Our Qualification as a REIT Our failure to remain qualified as a REIT would subject us to U.S. federal income tax and applicable state and local taxes, which would reduce the amount of operating cash flow to our shareholders.
If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our net taxable income and we generally would no longer be required to distribute any of our net taxable income to our shareholders, which may have adverse consequences on our total return to our shareholders. 28 Table of Contents Legislative or regulatory tax changes related to REITs could materially and adversely affect our business.
If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our net taxable income and we generally would no longer be required to distribute any of our net taxable income to our shareholders, which may have adverse consequences on our total return to our shareholders. 23 Table of Contents Legislative or regulatory tax changes related to REITs could materially and adversely affect our business.
Our networks and operations could be disrupted, and sensitive data could be compromised, by physical or electronic security breaches, targeted against us, our PROs, our vendors or other organizations, including financial markets or institutions, including by way of or through cyber-attacks or cyber-intrusions over the Internet, malware, computer viruses, attachments to e-mails, phishing, employee theft or misuse, or inadequate security controls.
Our networks and operations could be disrupted, and sensitive data could be compromised, by physical or electronic security breaches, targeted against us, our vendors or other organizations, including financial markets or institutions, including by way of or through cyber-attacks or cyber-intrusions over the Internet, malware, ransomware, computer viruses, attachments to e-mails, phishing, employee theft or misuse, or inadequate security controls.
Security breaches through cyber-attacks, cyber-intrusions, or other methods could disrupt our information technology networks and related systems. We and our PROs are increasingly dependent upon automated information technology processes and Internet commerce, and many of our and their tenants come from the telephone or over the Internet.
Security breaches through cyber-attacks, cyber-intrusions, or other methods could disrupt our information technology networks and related systems. We are increasingly dependent upon automated information technology processes and Internet commerce, and many of our tenants come from the telephone or over the Internet.
Any of these taxes would decrease operating cash flow to our shareholders. 26 Table of Contents In order to qualify as a REIT, we must distribute to our shareholders each calendar year at least 90% of our net taxable income (excluding net capital gain).
Any of these taxes would decrease operating cash flow to our shareholders. 21 Table of Contents In order to qualify as a REIT, we must distribute to our shareholders each calendar year at least 90% of our net taxable income (excluding net capital gain).
There also exists the risk that material environmental conditions, liabilities or compliance concerns may have arisen after the review was completed or may arise in the future. Finally, future laws, ordinances or regulations and future interpretations of existing laws, ordinances or regulations may impose additional material environmental liability.
There also exists the risk that material environmental conditions, liabilities or compliance concerns may have arisen after the review was completed or may arise in the future. Finally, future laws, ordinances or regulations and future interpretations of existing laws, ordinances or regulations may impose additional material environmental, health or safety liability.
As a result of such action, we may be temporarily or permanently suspended from continuing some or all of our tenant insurance- and/or tenant protection plan-related activities, or otherwise fined or penalized or suffer an adverse judgment, which could adversely affect our business and results of operations. Privacy concerns could result in regulatory changes that may harm our business.
As a result of such action, we may be temporarily or permanently suspended from continuing some or all of our tenant insurance- and/or tenant protection plan-related activities, or otherwise fined or penalized or suffer an adverse judgment, which could adversely affect our business and results of operations. 15 Table of Contents Privacy concerns could result in regulatory changes that may harm our business.
From time to time, proposals have been made to remove certain limits on annual real estate tax increases of assessed value of real property in California, where we currently have 87 consolidated properties and 12 unconsolidated properties.
From time to time, proposals have been made to remove certain limits on annual real estate tax increases of assessed value of real property in California, where we currently have 86 consolidated properties and 12 unconsolidated properties.
No single customer represented a significant concentration of our 2023 revenues. However, our property portfolio consists solely of self storage properties and is therefore subject to risks inherent in investments in a single industry.
No single customer represented a significant concentration of our 2024 revenues. However, our property portfolio consists solely of self storage properties and is therefore subject to risks inherent in investments in a single industry.
No assurances can be given that existing environmental studies with respect to any of our properties reveal all environmental liabilities, that any prior owner or operator of our properties did not create any material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to any one or more of our properties.
No assurances can be given that existing assessments or environmental studies with respect to any of our properties reveal all environmental, health or safety liabilities, that any prior owner or operator of our properties did not create any material environmental, health or safety condition not known to us, or that a material environmental, health or safety condition does not otherwise exist as to any one or more of our properties.
In recent years, there have been a number of new legal efforts to reduce greenhouse gas emissions and to take other similar actions to combat the effects of climate change, including at the international level and at the U.S. federal, state and local levels.
In recent years, there have been, and in the future there may be, a number of new legal efforts to reduce greenhouse gas emissions and to take other similar actions to combat the effects of climate change, including at the international level and at the U.S. federal, state and local levels.
As a result, such crises could adversely impact our financial condition, results of operations and cash flows. Terrorist attacks, active shooter incidents and other acts of violence or war may adversely impact our performance and may affect the markets on which our securities are traded.
As a result, such crises could adversely impact our financial condition, results of operations and cash flows. 17 Table of Contents Terrorist attacks, active shooter incidents and other acts of violence or war may adversely impact our performance and may affect the markets on which our securities are traded.
Any of the above events may reduce our rental revenues, impair our operating results, and reduce our ability to satisfy our debt service obligations and make cash distributions to our shareholders, and the effect of the foregoing may be greater than it would be were our investments not limited to a single industry. 16 Table of Contents We may not be successful in identifying and consummating suitable acquisitions, adding additional suitable new PROs, or integrating and operating such acquisitions, including integrating them into our financial and operational reporting infrastructure and internal control framework in a timely manner, which may impede our growth.
Any of the above events may reduce our rental revenues, impair our operating results, and reduce our ability to satisfy our debt service obligations and make cash distributions to our shareholders, and the effect of the foregoing may be greater than it would be were our investments not limited to a single industry. 12 Table of Contents We may not be successful in identifying and consummating suitable acquisitions or integrating and operating such acquisitions, including integrating them into our financial and operational reporting infrastructure and internal control framework in a timely manner, which may impede our growth.
We and certain of our PROs have tenant insurance- and/or tenant protection plan-related arrangements that are in some cases subject to state-specific governmental regulation, which may adversely affect our results. We and certain of our PROs have tenant insurance- and/or tenant protection plan-related arrangements with regulated insurance companies and our tenants.
We have tenant insurance- and/or tenant protection plan-related arrangements that are in some cases subject to state-specific governmental regulation, which may adversely affect our results. We have tenant insurance- and/or tenant protection plan-related arrangements with regulated insurance companies and our tenants.
Over time, these conditions could result in declining demand for storage at our properties or in our inability to operate them at all.
Over time, these conditions could result in physical damage to, or declining demand, for storage at our properties or in our inability to operate them at all.
The impact of such crises and the response of governments to combat the spread of these diseases, could, among other things, affect our tenants ability to meet their obligations to us, impact consumer discretionary spending, reduce new move-ins, compel complete or partial closures and operational changes at our properties, reduce demand for growth opportunities, such as acquiring new properties or adding new PROs, and interrupt the availability of our and our PROs' personnel.
The impact of such crises and the response of governments to combat the spread of these diseases, could, among other things, affect our tenants' ability to meet their obligations to us, impact consumer discretionary spending, reduce new move-ins, compel complete or partial closures and operational changes at our properties, reduce demand for growth opportunities, such as acquiring new properties and interrupt the availability of our personnel.
Our ability to pay dividends will depend upon, among other factors: • the operational and financial performance of our properties; • capital expenditures with respect to existing and newly acquired properties; 29 Table of Contents • general and administrative expenses associated with our operation as a publicly-held REIT; • maintenance of our REIT qualification; • the amount of, and the interest rates on, our debt and the ability to refinance our debt; • the absence of significant expenditures relating to environmental and other regulatory matters; and • other risk factors described in this Annual Report on Form 10-K.
Our ability to pay dividends will depend upon, among other factors: • the operational and financial performance of our properties; • capital expenditures with respect to existing and newly acquired properties; • general and administrative expenses associated with our operation as a publicly-held REIT; • maintenance of our REIT qualification; • the amount of, and the interest rates on, our debt and the ability to refinance our debt; • the absence of significant expenditures relating to environmental, health or safety, or other regulatory matters; and • other risk factors described in this Annual Report on Form 10-K.
Conflicts of interest could arise with respect to the interests of holders of OP units and subordinated performance units, on the one hand, which include members of our senior management team, PROs, and trustees and us and our shareholders, on the other.
Conflicts of interest could arise with respect to the interests of holders of OP units, on the one hand, which include members of our senior management team and trustees and us and our shareholders, on the other.
As a result, our operating results may be adversely affected. Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties.
As a result, our operating results may be adversely affected. 16 Table of Contents Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties.
Adverse economic or other conditions in the markets in which we do business, particularly in our markets in Texas, California, Florida, Georgia, and Oregon, which accounted for approximately 17%, 12%, 11%, 6%, and 6%, respectively, of our total rental and other property-related revenues for the year ended December 31, 2023, may lower our occupancy levels and limit our ability to maintain or increase rents or require us to offer rental discounts.
Adverse economic or other conditions in the markets in which we do business, particularly in our markets in Texas, California, Florida, Oregon, and Georgia, which accounted for approximately 19%, 14%, 11%, 8%, and 5%, respectively, of our total rental and other property-related revenues for the year ended December 31, 2024, may lower our occupancy levels and limit our ability to maintain or increase rents or require us to offer rental discounts.
Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following: • our cash flow may be insufficient to meet our required principal and interest payments; 24 Table of Contents • to satisfy our debt obligations, we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms; • our debt level could place us at a competitive disadvantage compared to our competitors with less debt; and • we may violate our restrictive covenants or otherwise default on our obligations, which may entitle our creditors to accelerate our debt obligations, foreclose on our properties securing our debt, enforce our guarantees and/or trigger default on our other indebtedness.
Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following: • our cash flow may be insufficient to meet our required principal and interest payments; • to satisfy our debt obligations, we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms; • our debt level could place us at a competitive disadvantage compared to our competitors with less debt; and • we may violate our restrictive covenants or otherwise default on our obligations, which may entitle our creditors to accelerate our debt obligations, foreclose on our properties securing our debt, enforce our guarantees and/or trigger default on our other indebtedness. 19 Table of Contents We depend on external sources of capital that are outside of our control, which could adversely affect our ability to acquire or develop properties, satisfy our debt obligations and/or make distributions to shareholders.
In addition, in the case of any such change of control transactions in which we have not received the consent of OP unit holders holding more than 50% of the OP units (other than those held by us or our subsidiaries) and of subordinated performance unit holders holding more than 50% of the voting power of the subordinated performance units (other than those held by us or our subsidiaries), such transaction is required to be approved by a company-wide vote of limited partners holding more than 50% of our outstanding OP units in which OP units (including for this purpose OP units held by us and our subsidiaries) are voted and subordinated performance units (not held by us and our subsidiaries) are voted on an applicable as converted basis and in which we will be deemed to vote the OP units held by us and our subsidiaries in proportion to the manner in which all of our outstanding common shares were voted at a shareholders meeting relating to such transaction.
The partnership agreement of our operating partnership provides that in the case of certain change of control transactions in which we have not received the consent of OP unit holders holding more than 50% of the OP units (other than those held by us or our subsidiaries), such transaction is required to be approved by a company-wide vote of limited partners holding more than 50% of our outstanding OP units in which OP units (including for this purpose OP units held by us and our subsidiaries) are voted and in which we will be deemed to vote the OP units held by us and our subsidiaries in proportion to the manner in which all of our outstanding common shares were voted at a shareholders meeting relating to such transaction.
To the extent that climate change impacts changes in weather patterns, our markets could experience severe weather, including hurricanes, tornados, earthquakes, severe winter storms, wildfires and coastal flooding due to increases in storm intensity and rising sea levels.
However, the physical effects of climate change could have a material adverse effect on our properties, operations, and business. To the extent that climate change impacts changes in weather patterns, our markets could experience severe weather, including hurricanes, tornados, earthquakes, severe winter storms, wildfires and coastal flooding due to increases in storm intensity and rising sea levels.
Under the ADA and other federal, state and local laws, we are required to meet certain requirements related to access and use by disabled persons.
Costs associated with complying with the ADA may result in unanticipated expenses. Under the ADA and other federal, state and local laws, we are required to meet certain requirements related to access and use by disabled persons.
Environmental compliance costs and liabilities associated with operating our properties may affect our results of operations. Under various U.S. federal, state and local environmental laws, ordinances and regulations, owners and operators of real estate may be liable for the costs of investigating and remediating certain hazardous substances or other regulated materials on or in such property.
Under certain U.S. federal, state and local environmental laws, ordinances and regulations, past or present owners and operators of real estate may be liable for, among other things, the costs of investigating and remediating certain hazardous substances or other regulated materials on or in such property.
As of December 31, 2023, we had approximately $3.7 billion of debt outstanding, of which approximately $511.0 million, or 14.0%, is subject to variable interest rates (excluding variable-rate debt subject to interest rate swaps).
As of December 31, 2024, we had approximately $3.4 billion of debt outstanding, of which approximately $223.3 million, or 6.5%, is subject to variable interest rates (excluding variable-rate debt subject to interest rate swaps).
Changes to law or regulations or the passage of new laws affecting privacy, if applicable to our business, could impose additional costs and liability on us and could limit our use and disclosure of such information. 19 Table of Contents We face possible risks and costs associated with the effects of climate change and severe weather.
Changes to law or regulations or the passage of new laws affecting privacy, if applicable to our business, could impose additional costs and liability on us and could limit our use and disclosure of such information.
Some of our PROs earn access fees in connection with these arrangements. We receive a portion of the fees from these PROs. The tenant insurance and tenant protection plan businesses, including the payments associated with these arrangements, are in some cases subject to state-specific governmental regulation.
The tenant insurance and tenant protection plan businesses, including the payments associated with these arrangements, are in some cases subject to state-specific governmental regulation.
The Maryland Control Share Acquisition Act (the "MCSAA") provides that holders of "control shares" of a Maryland real estate investment trust acquired in a "control share acquisition" have no voting rights with respect to such shares except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our officers and our trustees who are also our employees.
If this resolution is repealed or our board does not approve a business combination, the MBCA may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer. 18 Table of Contents The Maryland Control Share Acquisition Act (the "MCSAA") provides that holders of "control shares" of a Maryland real estate investment trust acquired in a "control share acquisition" have no voting rights with respect to such shares except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our officers and our trustees who are also our employees.
Some of our investments are, and in the future may be, structured as strategic joint ventures. Part of our strategy is to opportunistically partner with institutional funds and other institutional investors to acquire attractive portfolios through a promoted return structure. These arrangements are driven by the magnitude of capital required to complete the acquisitions and maintain the acquired portfolios.
We invest in strategic joint ventures that subject us to additional risks. Some of our investments are, and in the future may be, structured as strategic joint ventures. Part of our strategy is to opportunistically partner with institutional funds and other institutional investors or third parties to acquire attractive portfolios which may be through a promoted return structure.
We compete with many other entities engaged in real estate investment activities for tenants, including national, regional and local owners, operators and developers of self storage properties.
We compete with many other entities engaged in real estate investment activities for tenants, including national, regional and local owners, operators and developers of self storage properties. Actions by our competitors may decrease or prevent increases in the occupancy and rental rates, while increasing the operating expenses, of our properties.
For example, the California Consumer Privacy Act of 2018, which became effective as of January 1, 2020, together with the California Privacy Rights Act, provides consumers with expansive rights and control over personal information obtained by or shared with certain covered businesses.
For example, U.S. state laws such as the California Consumer Privacy Act provide consumers with expansive rights and control over personal information obtained by or shared with certain covered businesses.
Certain of these matters are beyond our control and any significant difference between our expectations and actual results could have a material adverse effect on our cash flow and our ability to make distributions to shareholders.
Certain of these matters are beyond our control and any significant difference between our expectations and actual results could have a material adverse effect on our cash flow and our ability to make distributions to shareholders. 24 Table of Contents Future offerings of debt or equity securities, which may rank senior to our common shares, may adversely affect the market price of our common shares.
Actions by our competitors may decrease or prevent increases in the occupancy and rental rates, while increasing the operating expenses, of our properties. 17 Table of Contents Increases in taxes and regulatory compliance costs, including as a result of changes in law or property reassessments, may reduce our income and adversely impact our cash flows.
Increases in taxes and regulatory compliance costs, including as a result of changes in law or property reassessments, may reduce our income and adversely impact our cash flows.
These approval rights could delay, deter, or prevent a transaction or a change in control that might involve a premium price for our common shares or otherwise be in the best interests of our shareholders. 23 Table of Contents Certain provisions of the Maryland General Corporation Law (the "MGCL") and of our bylaws and our declaration of trust could inhibit a change in our control and have an adverse impact on the price of our shares.
These approval rights could delay, deter, or prevent a transaction or a change in control that might involve a premium price for our common shares or otherwise be in the best interests of our shareholders.
Similarly, in response to facing severe budgetary problems, many states and jurisdictions are considering or implementing changes in laws such as increasing sales taxes, increasing the potential liability for environmental conditions existing on properties, increasing the restrictions on discharges or other conditions, or mandating paid family leave for employees, which may result in significant unanticipated expenditures, which could result in similar adverse effects.
While no such initiative has yet been successful, to the extent a similar future initiative is successful, our property tax expense could increase substantially, which could adversely impact our operating results, cash flow, and our ability to pay any expected dividends to our shareholders. 13 Table of Contents Similarly, in response to facing severe budgetary problems, many states and jurisdictions are considering or implementing changes in laws such as increasing sales taxes or other types of taxes, increasing the potential liability for environmental, health or safety conditions existing on properties, increasing the restrictions on discharges or other conditions, or mandating paid family leave for employees, which may result in significant unanticipated expenditures, which could result in similar adverse effects.
Such arrangements involve risks not present where a third party is not involved, including the possibility that partners or co-venturers might become bankrupt or otherwise fail to fund their share of required capital contributions. Additionally, partners or co-venturers might at any time have economic or other business interests or goals different from us and or in competition with us.
These arrangements are driven by the magnitude of capital required to complete the acquisitions and maintain the acquired portfolios. Such arrangements involve risks not present where a third party is not involved, including the possibility that partners or co-venturers might become bankrupt or otherwise fail to fund their share of required capital contributions.
In addition, our operating partnership may issue OP units, which are redeemable for cash or, at our option exchangeable on a one-for-one basis into common shares after an agreed period of time and certain other conditions, preferred units of limited partnership interest, which are redeemable for cash or, at our option exchangeable on a one-for-one basis into our 6.000% Series A cumulative redeemable preferred shares of beneficial interest ("Series A Preferred Shares") and subordinated performance units, which are only convertible into OP units beginning two years following the initial issuance of the applicable series and then (i) at the holder's election only upon the achievement of certain performance thresholds relating to the properties to which such subordinated performance units relate or (ii) at our election upon a retirement event of a PRO that holds such subordinated performance units or upon certain qualifying terminations.
In addition, our operating partnership may issue OP units, which are redeemable for cash or, at our option exchangeable on a one-for-one basis into common shares after an agreed period of time and certain other conditions, preferred units of limited partnership interest, which are redeemable for cash or, at our option exchangeable on a one-for-one basis into our 6.000% Series A cumulative redeemable preferred shares of beneficial interest ("Series A Preferred Shares") or other types of partnership units that may be exchanged for cash or other securities of our Company.
The loss of services of one or more members of our senior management team could harm our business and our prospects. This risk may be heightened during periods of tight labor market conditions. 20 Table of Contents We invest in strategic joint ventures that subject us to additional risks.
Notwithstanding these agreements, there can be no assurance that any of them will remain employed by us. The loss of services of one or more members of our senior management team could harm our business and our prospects. This risk may be heightened during periods of tight labor market conditions.
Cowan, Derek Bergeon and Tiffany S. Kenyon and the other members of our senior management team. We have entered into employment agreements with Mr. Nordhagen, Ms. Fischer, Mr. Cramer, Mr. Togashi, Mr. Cowan, Mr. Bergeon and Ms.
Cowan and Tiffany S. Kenyon and the other members of our senior management team. We have entered into employment agreements with Mr. Nordhagen, Ms. Fischer, Mr. Cramer, Mr. Togashi, Mr. Cowan and Ms. Kenyon, which provide for an initial term of employment and automatic one-year extensions thereafter unless either party provides at least 90 days' notice of non-renewal.
Moreover, the nature of our and our PROs' business involves the receipt and retention of certain personal information about such tenants. In many cases, we and our PROs also rely significantly on third-party vendors to retain data, process transactions and provide other systems services.
We centrally manage significant components of our operations with our computer systems, including our financial information and in many cases, we also rely significantly on third-party vendors to retain data, process transactions and provide other systems services.
As a result, such events could have a material adverse effect on our financial condition, results of operations and cash flows and harm our business reputation or have such effects on our PROs. 18 Table of Contents Costs associated with complying with the ADA may result in unanticipated expenses.
As a result, such events could have a material adverse effect on our financial condition, results of operations and cash flows and harm our business reputation. 14 Table of Contents Our use of or failure to adopt advancements in information technology may hinder or prevent us from achieving strategic objectives or otherwise harm our business.
Joint ventures generally provide for a reduced level of control over an acquired project because governance rights are shared with others.
Additionally, partners or co-venturers might at any time have economic or other business interests or goals different from us and or in competition with us. Joint ventures generally provide for a reduced level of control over an acquired project because governance rights are shared with others.
Furthermore, any terrorist attacks, armed conflicts or active-shooter situations could result in increased volatility in or damage to the United States and worldwide financial markets and economy. Risks Related to Our Structure and Our Relationships with Our PROs We may not be able to achieve the desired outcomes that the PRO structure is intended to produce.
Furthermore, any terrorist attacks, armed conflicts or active-shooter situations could result in increased volatility in or damage to the United States and worldwide financial markets and economy. Risks Related to Our Structure Conflicts of interest could arise with respect to certain transactions between the holders of OP units, on the one hand, and us and our shareholders, on the other.
Removed
For the potential acquisitions in our captive pipeline, we have not entered into negotiations with the respective owners of these properties and there can be no assurance as to whether we will acquire any of these properties or the actual timing of any such acquisitions.
Added
Additionally, significantly lower logistics costs could introduce new competitors, such as valet-style storage services, which may reduce the demand for traditional self storage. Customer preferences and/or needs for self storage could change, decline, or shift to other product types, thereby impacting our business model and ability to grow and/or generate revenues.
Removed
Each captive pipeline property is subject to additional due diligence and the determination by us to pursue the acquisition of the property.
Added
Moreover, the nature of our business involves the receipt and retention of certain personal information about such tenants, including personally identifiable information of our prospective and current customers and our employees.
Removed
In addition, with respect to the captive pipeline properties in which our PROs have a non-controlling ownership interest or no ownership interest, the current owner of each property is not required to offer such property to us and there can be no assurance that we will acquire these properties.
Added
Such incidents could also result in significant costs to repair or replace such networks or information systems or to comply with notification obligations, as well as actual monetary losses in case of a cybersecurity incident that resulted in fraudulent payments or other cash transactions.
Removed
While no such initiative has yet been successful, to the extent a similar future initiative is successful, our property tax expense could increase substantially, which could adversely impact our operating results, cash flow, and our ability to pay any expected dividends to our shareholders.
Added
Our operations could be severely impacted by a natural disaster, terrorist attack, attack by hackers, acts of vandalism, data theft, misplaced or lost data, programming or human error, or other circumstances that result in a significant outage of our systems or those of our third party providers, despite our use of back up and redundancy measures.
Removed
We cannot predict the rate at which climate change will progress. However, the physical effects of climate change could have a material adverse effect on our properties, operations, and business.
Added
While we may be entitled to damages if our third-party providers fail to satisfy their security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award.
Removed
Kenyon, which provide for an initial term of employment and automatic one-year extensions thereafter unless either party provides at least 90 days' notice of non-renewal. Notwithstanding these agreements, there can be no assurance that any of them will remain employed by us.
Added
Our use of or inability to adopt and deliver new technological capabilities and enhancements in line with strategic objectives, including artificial intelligence and machine learning, may put us at a competitive disadvantage; cause us to miss opportunities to innovate, achieve efficiencies, or improve the customer experience; or adversely impact our business, reputation, results of operations, and financial condition.
Removed
As a means of incentivizing our PROs to drive operating performance and support the sustainability of the operating cash flow from the properties they manage on our behalf, we issued each PRO subordinated performance units aimed at aligning the interests of our PROs with our interests and those of our shareholders.
Added
Legislative activity in the privacy area may also result in new laws that are applicable to us and that may hinder our business, including by restricting our use of customer data or otherwise regulating the use of algorithms and automated processing in ways that could materially affect our ability to generate revenues or lead to significant increases in the cost of compliance.
Removed
The subordinated performance units are entitled to distributions exclusively tied to the performance of each PRO's managed portfolios but only after minimum performance thresholds are satisfied.
Added
In addition, the use of emerging technologies entails risks including risks relating to the possibility of intellectual property infringement or misappropriation; data privacy; new or enhanced governmental or regulatory scrutiny, requirements, litigation, or other liability; ethical concerns; negative consumer perceptions as to automation and artificial intelligence; or other complications or liabilities that could adversely affect our business, reputation, results of operations, or financial results.
Removed
Our issuance of such units, however, may have been and could be based on inaccurate valuations and thus misallocated, which would limit or eliminate the effectiveness of our intended incentive-based program. 21 Table of Contents Our ability to terminate our facilities portfolio management agreements ("FPMAs") and asset management agreements ("AMAs") with a PRO is limited, which may adversely affect our ability to execute our business plan.
Added
Environmental compliance costs and liabilities associated with operating our properties may affect our results of operations.
Removed
We may elect to terminate our FPMAs and AMAs with a PRO and transfer property management responsibilities over the properties managed by such PRO to us (or our designee), (i) upon certain defaults by a PRO as set forth in these agreements, or (ii) if the PRO's properties, on a portfolio basis, fail to meet certain predetermined performance thresholds for more than two consecutive calendar years or if the operating cash flow generated by the properties of the PRO for any calendar year falls below a level that will enable us to fund minimum levels of distributions, debt service payments attributable to the properties, and fund the properties' allocable operating expenses.
Added
We face possible risks and costs associated with the effects of climate change and severe weather, as well as the transition to a low-carbon economy and other steps taken to prevent or mitigate climate change. We cannot predict the rate at which climate change will progress.
Removed
Consequently, to the extent a PRO complies with these covenants, standards, and minimum requirements, we may not be able to terminate the applicable FPMAs and AMAs and transfer property management responsibilities over such properties to us (or our designee) even if our board believes that such PRO is not properly executing our business plan and/or is failing to operate its properties to their full potential.
Added
Potential social pressure related to climate change and actions to mitigate climate change could also in the future result in consumers reducing their individual carbon footprints by owning fewer durable material consumer goods, collectibles, and other such items requiring storage, resulting in a reduced demand for our self storage space.
Removed
Moreover, transferring the management responsibilities over the properties managed by a PRO may be costly or difficult to implement or may be delayed, even if we are able to and believe that such a change in portfolio and property management would be beneficial to us and our shareholders.
Added
In addition, our reputation and investor relationships could be damaged as a result of our involvement with activities perceived to be causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.
Removed
We may less vigorously pursue enforcement of terms of agreements entered into with our PROs because of conflicts of interest with our PROs. Our PROs are entities that have contributed self storage properties to us in exchange for ownership interests in us.
Added
Certain provisions of the Maryland General Corporation Law (the "MGCL") and of our bylaws and our declaration of trust could inhibit a change in our control and have an adverse impact on the price of our shares.
Removed
As part of each transaction, our PROs make limited representations to us regarding the entities, properties and other assets to be acquired by us in the contribution and generally agree to indemnify us for 12 months after the closing of the contribution for breaches of such representations.
Removed
Such indemnification is limited, however, and we are not entitled to any other indemnification in connection with the contributions. In addition, following each contribution from a PRO, the day-to-day operations of each of the managed properties will be managed by the PRO who was the principal of the applicable property portfolios prior to the contribution.
Removed
In addition, certain key persons of our PROs are members of our board or our PRO advisory committee.
Removed
Consequently, we may choose not to enforce, or to enforce less vigorously, our rights under these agreements and any other agreements with our PROs due to our desire to maintain our ongoing relationship with our PROs, which could adversely affect our operating results and business.
Removed
We own self storage properties in some of the same geographic regions as our PROs and may compete for tenants with other properties managed by our PROs.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeBoard of Trustees Oversight The audit committee of our board of trustees is central to the board of trustees’s oversight of cybersecurity risks and bears the primary responsibility for this domain. The members of the audit committee have a variety of expertise, including financial, regulatory and risk management.
Biggest changeGovernance The board of trustees is acutely aware of the critical nature of managing risks associated with cybersecurity threats and oversees the Company's cybersecurity risk management activities. Board of Trustees Oversight The audit committee of our board of trustees is central to the board of trustees’s oversight of cybersecurity risks and bears the primary responsibility for this domain.
In addition, cybersecurity matters are reported to the audit committee or board of trustees so that the board of trustees and audit committee can effectively carry out their oversight role. Management’s Role Managing Risk Our risk management committee is comprised of a cross section of the Company’s management team.
In addition, cybersecurity matters are reported to the audit committee or board of trustees so that the board of trustees and audit committee can effectively carry out their oversight role. 25 Management’s Role Managing Risk Our risk management committee is comprised of a cross section of the Company’s management team.
With over a combined 45 years of experience in the field of cybersecurity, the cybersecurity sub-committee brings a wealth of expertise to their role. Their in-depth knowledge and experience are instrumental in developing and executing our cybersecurity strategies. Our cybersecurity sub-committee oversees our cybersecurity strategies, tests our compliance with standards, remediates known risks, and leads our employee training program.
With over a combined 50 years of experience in the field of cybersecurity, the cybersecurity sub-committee brings a wealth of expertise to their role. Their in-depth knowledge and experience are instrumental in developing and executing our cybersecurity strategies. Our cybersecurity sub-committee oversees our cybersecurity strategies, tests our compliance with standards, remediates known risks, and leads our employee training program.
The audit committee reviews our policies with respect to risk assessment and risk management related to cybersecurity. The audit committee and the board of trustees receive updates on the Company’s cybersecurity risks and initiatives periodically.
The members of the audit committee have a variety of expertise, including financial, regulatory and risk management. The audit committee reviews our policies with respect to risk assessment and risk management related to cybersecurity. The audit committee and the board of trustees receive updates on the Company’s cybersecurity risks and initiatives periodically.
This ensures that the highest levels of management are kept abreast of the cybersecurity posture and potential risks facing the Company. Furthermore, significant cybersecurity matters, and strategic risk management decisions are escalated to the board of trustees, ensuring that they have comprehensive oversight and can provide guidance on critical cybersecurity issues.
Furthermore, significant cybersecurity matters and strategic risk management decisions are escalated to the audit committee and board of trustees, ensuring that they have comprehensive oversight and can provide guidance on critical cybersecurity issues.
Risk factors” in this annual report on Form 10-K, including “Security breaches through cyber-attacks, cyber-intrusions, or other methods could disrupt our information technology networks and related systems”, for additional discussion about cybersecurity-related risks. 30 Governance The board of trustees is acutely aware of the critical nature of managing risks associated with cybersecurity threats and oversees the Company's cybersecurity risk management activities.
Refer to “Item 1A. Risk factors” in this annual report on Form 10-K, including “Security breaches through cyber-attacks, cyber-intrusions, or other methods could disrupt our information technology networks and related systems”, for additional discussion about cybersecurity-related risks.
In the event of a cybersecurity incident, the cybersecurity sub-committee is equipped with a well-defined incident response plan, which provides a framework to mitigate the impact of cybersecurity incidents 31 The cybersecurity sub-committee regularly informs the risk management committee of matters related to cybersecurity risks and incidents.
This includes the deployment of advanced security measures and regular system audits to identify potential vulnerabilities. In the event of a cybersecurity incident, the cybersecurity sub-committee is equipped with a well-defined incident response plan, which provides a framework to mitigate the impact of cybersecurity incidents.
Removed
This includes the deployment of advanced security measures and regular system audits to identify potential vulnerabilities.
Added
The cybersecurity sub-committee regularly informs the risk management committee of matters related to cybersecurity risks and incidents. This ensures that the highest levels of management are kept abreast of the cybersecurity posture and potential risks facing the Company.

Item 2. Properties

Properties — owned and leased real estate

6 edited+0 added−0 removed3 unchanged
Biggest changeThe following table sets forth summary information regarding our consolidated properties by state as of December 31, 2023. 32 Number of Number of Rentable % of Rentable Period-end State/Territory Properties Units Square Feet Square Feet Occupancy Texas 172 79,045 10,986,692 21.2 % 87.3 % California (1) 87 52,410 6,629,212 12.8 % 84.8 % Florida 76 43,946 4,975,310 9.6 % 85.7 % Oregon 70 29,217 3,657,543 7.0 % 84.0 % Georgia 50 22,173 3,022,988 5.8 % 81.8 % Arizona 34 18,858 2,175,802 4.2 % 84.2 % North Carolina 34 16,758 2,097,487 4.0 % 85.6 % Oklahoma 33 15,300 2,143,482 4.1 % 86.2 % Louisiana (1) 25 11,450 1,388,385 2.7 % 83.7 % Pennsylvania 22 10,435 1,296,060 2.5 % 87.1 % Colorado 22 9,488 1,197,510 2.3 % 85.3 % Washington 19 6,633 871,169 1.7 % 82.7 % Puerto Rico 15 12,852 1,388,637 2.7 % 92.9 % Nevada 15 7,557 962,182 1.9 % 86.8 % New Hampshire 15 7,117 888,611 1.7 % 89.7 % Kansas 14 4,924 670,702 1.3 % 88.0 % Indiana 12 6,533 828,453 1.6 % 83.6 % Alabama 11 6,036 907,914 1.7 % 77.8 % New Mexico 10 5,500 716,307 1.4 % 86.8 % Maryland 8 4,564 493,184 1.0 % 86.6 % Massachusetts 7 5,014 538,005 1.0 % 82.1 % Illinois 6 4,227 425,361 0.8 % 82.2 % Tennessee 5 2,550 349,663 0.7 % 87.4 % Kentucky 5 2,784 412,051 0.8 % 78.7 % New Jersey 5 2,743 352,338 0.7 % 84.5 % Idaho 5 1,454 271,511 0.5 % 83.8 % Arkansas 5 2,604 401,820 0.8 % 78.4 % South Carolina 4 2,059 254,853 0.5 % 83.9 % Minnesota 4 1,198 192,770 0.4 % 83.7 % Missouri 3 1,244 153,606 0.3 % 90.0 % Virginia 3 1,382 174,915 0.3 % 83.8 % Iowa 3 3,100 414,442 0.8 % 74.6 % Connecticut 3 1,182 141,090 0.3 % 82.1 % New York 2 1,713 174,591 0.3 % 81.3 % Ohio 1 951 112,555 0.2 % 84.8 % Montana 1 438 60,250 0.1 % 95.5 % Wyoming 1 424 56,500 0.1 % 85.7 % Wisconsin 1 378 59,672 0.1 % 85.1 % Utah 1 312 46,500 0.1 % 87.7 % Total/Weighted Average (2) 809 406,553 51,890,123 100.0 % 85.3 % (1) Six of the California properties and one of the Louisiana properties are subject to non-cancelable leasehold interest agreements that are classified as operating leases.
Biggest changeNumber of Number of Rentable % of Rentable Period-end State/Territory Properties Units Square Feet Square Feet Occupancy Texas 175 80,783 11,256,079 21.6 % 84.3 % California (1) 86 51,356 6,466,128 12.4 % 84.8 % Florida 79 45,400 5,117,405 9.8 % 85.5 % Oregon 70 29,262 3,660,314 7.0 % 86.6 % Georgia 50 21,982 3,021,617 5.8 % 79.7 % North Carolina 35 17,271 2,160,187 4.1 % 88.5 % Arizona 34 18,882 2,174,625 4.2 % 81.6 % Oklahoma 33 15,297 2,136,981 4.1 % 83.4 % Louisiana (1) 25 11,453 1,388,585 2.7 % 79.4 % Pennsylvania 22 10,439 1,296,020 2.5 % 82.2 % Colorado 22 9,480 1,195,764 2.3 % 83.0 % Washington 19 6,637 871,889 1.7 % 85.5 % Puerto Rico 15 12,848 1,379,097 2.6 % 90.9 % Nevada 15 7,570 963,297 1.8 % 86.6 % New Hampshire 15 7,160 890,295 1.7 % 88.4 % Kansas 14 4,925 669,676 1.3 % 84.7 % Indiana 12 6,530 827,524 1.6 % 81.5 % Alabama 11 6,034 909,280 1.7 % 74.8 % New Mexico 10 5,510 713,507 1.4 % 84.9 % Maryland 8 4,564 493,129 0.9 % 90.3 % Massachusetts 7 5,015 537,665 1.0 % 81.8 % Illinois 6 4,223 424,081 0.8 % 82.5 % Tennessee 5 2,550 350,063 0.7 % 83.5 % Kentucky 5 2,783 410,451 0.8 % 76.6 % New Jersey 5 2,765 353,418 0.7 % 78.0 % Idaho 5 1,437 262,331 0.5 % 86.0 % Arkansas 5 2,605 401,770 0.8 % 83.5 % South Carolina 4 2,063 255,603 0.5 % 89.3 % Minnesota 4 1,196 192,620 0.4 % 86.5 % Missouri 3 1,242 153,304 0.3 % 89.6 % Virginia 3 1,382 174,915 0.3 % 86.9 % Iowa 3 3,087 414,647 0.8 % 70.5 % Connecticut 3 1,181 141,229 0.3 % 82.1 % New York 2 1,710 174,262 0.3 % 88.2 % Ohio 1 951 112,555 0.2 % 85.2 % Montana 1 436 60,050 0.1 % 90.5 % Wyoming 1 424 56,500 0.1 % 79.2 % Wisconsin 1 379 60,672 0.1 % 80.1 % Utah 1 313 46,500 0.1 % 84.8 % Total/Weighted Average 815 409,125 52,174,035 100.0 % 84.2 % (1) Six of the California properties and one of the Louisiana properties are subject to non-cancelable leasehold interest agreements that are classified as operating leases.
Our units typically range from 25 square feet to 300 square feet, and some of our properties also offer outside storage for vehicles, boats, and equipment. We provide 24-hour access to many storage units through computer controlled access systems, as well as alarm and sprinkler systems on many of our individual storage units.
Our units typically range from 25 square feet to 300 square feet, and some of our properties also offer outside storage for vehicles, boats, and equipment. We provide 24-hour access to many storage units through computer controlled access systems. Many of our properties are equipped with security cameras, and many individual storage units feature sprinkler systems.
Properties As of December 31, 2023, we held ownership interests in and operated a geographically diversified portfolio of 1,050 self storage properties located in 42 states and Puerto Rico, comprising approximately 68.6 million rentable square feet, configured in approximately 542,000 storage units, which excludes 39 self storage properties classified as held for sale to be sold to a third party in 2024.
Item 2. Properties As of December 31, 2024, we held ownership interests in and operated a geographically diversified portfolio of 1,074 self storage properties located in 42 states and Puerto Rico, comprising approximately 70.2 million rentable square feet, configured in approximately 552,000 storage units.
Of these properties, we reported 809 wholly-owned self storage properties on a consolidated basis that contain approximately 51.9 million rentable square feet, which excludes an additional 56 self storage properties classified as held for sale that were contributed to the 2024 Joint Venture, and we held a 25% ownership interest in 185 unconsolidated real estate venture properties that contain approximately 13.5 million rentable square feet.
Of these properties, we reported 815 wholly-owned self storage properties on a consolidated basis that contain approximately 52.2 million rentable square feet and we held a 25% ownership interest in 259 unconsolidated real estate venture properties that contain approximately 18.0 million rentable square feet. 26 The following table sets forth summary information regarding our consolidated properties by state as of December 31, 2024.
Number of Number of Rentable % of Rentable Period-end State Properties Units Square Feet Square Feet Occupancy Florida 27 15,032 1,716,479 12.7 % 82.4 % Michigan 25 15,930 2,017,998 15.0 % 86.7 % New Jersey 15 10,789 1,253,588 9.3 % 84.7 % Alabama 14 5,517 825,238 6.1 % 86.4 % Ohio 14 9,375 1,124,347 8.3 % 84.7 % California 12 6,648 779,342 5.8 % 85.5 % Georgia 11 6,132 872,058 6.5 % 84.2 % Texas 11 9,113 997,098 7.4 % 89.4 % Other (1) 56 32,592 3,906,901 28.9 % 84.9 % Total 185 111,128 13,493,049 100.0 % 85.2 % (1) Other states in the unconsolidated real estate ventures include Arizona, Delaware, Illinois, Massachusetts, Minnesota, Mississippi, Nevada, New York, Oklahoma, Pennsylvania, Rhode Island, Tennessee and Virginia.
Number of Number of Rentable % of Rentable Period-end State Properties Units Square Feet Square Feet Occupancy Texas 27 17,103 2,111,858 11.7 % 85.7 % Florida 27 15,036 1,716,384 9.5 % 87.5 % Ohio 26 13,932 1,740,234 9.7 % 84.6 % Michigan 25 15,940 2,018,798 11.2 % 88.3 % Georgia 22 11,580 1,587,237 8.8 % 82.9 % Oklahoma 19 7,111 1,129,728 6.3 % 75.6 % New Jersey 15 10,750 1,249,879 6.9 % 87.7 % Tennessee 15 7,698 960,241 5.3 % 85.6 % Alabama 14 5,787 849,664 4.7 % 82.8 % California 12 6,647 779,034 4.3 % 85.7 % Other (1) 57 31,783 3,865,397 21.6 % 85.1 % Total 259 143,367 18,008,454 100.0 % 85.1 % (1) Other states in the unconsolidated real estate ventures include Arizona, Delaware, Illinois, Indiana, Kansas, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New York, Pennsylvania, Rhode Island and Virginia.
"Financial Statements and Supplementary Data." (2) Excludes self storage properties classified as held for sale consisting of (i) 39 self storage properties, comprising approximately 2.4 million rentable square feet, configured in approximately 18,000 storage units to be sold to a third party in 2024 and (ii) 56 self storage properties, comprising approximately 3.2 million rentable square feet, configured in approximately 24,000 storage units that were contributed to the 2024 Joint Venture in 2024. 33 The following table sets forth summary information regarding our unconsolidated real estate venture properties by state as of December 31, 2023.
See "Note 13. Leases" in Item 8. "Financial Statements and Supplementary Data." 27 The following table sets forth summary information regarding our unconsolidated real estate venture properties by state as of December 31, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+1 added−4 removed6 unchanged
Biggest changeThe Company has elected to report early the private placement of its common shares that may occur if the Company elects to assume the redemption obligation of the operating partnership as described above in the event that OP units are in the future tendered for redemption.
Biggest changeThe Company may elect to report early the private placement of its common shares that may occur if the Company elects to assume the redemption obligation of the operating partnership as described above in the event that OP units are in the future tendered for redemption. 29 Table of Contents As of February 24, 2025, other than those OP units held by the Company, after reflecting the transactions described herein, 58,600,003 OP units were outstanding (including 714,698 outstanding LTIP units in the operating partnership and 5,769,214 outstanding DownREIT OP units, which are convertible into, or exchangeable for, OP units on a one-for-one basis, subject to certain conditions).
These issuances were exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. Issuer Purchases of Equity Securities On July 11, 2022, the Company approved a share repurchase program authorizing the repurchase of up to $400.0 million of the Company's common shares, under which $256,892 of commons shares remain available for repurchase.
These issuances were exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. Issuer Purchases of Equity Securities On July 11, 2022, the Company approved a share repurchase program authorizing the repurchase of up to $400.0 million of the Company's common shares, under which $256,892 of common shares remain available for repurchase.
Our tax return for the year ended December 31, 2023 has not yet been filed and consequently, the taxability information presented for our dividends paid in 2023 is based upon management's estimate.
Our tax return for the year ended December 31, 2024 has not yet been filed and consequently, the taxability information presented for our dividends paid in 2024 is based upon management's estimate.
Holders As of February 26, 2024, the Company had 83 record holders of its common shares. The 83 holders of record do not include the beneficial owners of common shares whose shares are held by a broker or bank. Such information was obtained from our transfer agent and registrar.
Holders As of February 24, 2025, the Company had 71 record holders of its common shares. The 71 holders of record do not include the beneficial owners of common shares whose shares are held by a broker or bank. Such information was obtained from our transfer agent and registrar.
Unregistered Sales of Equity Securities During the three months ended December 31, 2023, the Company, in its capacity as general partner of its operating partnership, caused the operating partnership to issue 186,003 common shares to satisfy redemption requests from certain limited partners.
Unregistered Sales of Equity Securities During the three months ended December 31, 2024, the Company, in its capacity as general partner of its operating partnership, caused the operating partnership to issue 127,923 common shares to satisfy redemption requests from certain limited partners.
On December 1, 2023, the Company approved a new share repurchase program authorizing, but not obligating, the repurchase of up to $275.0 million of the Company's common shares.
On December 1, 2023, the Company approved a new share repurchase program authorizing, but not obligating, the repurchase of up to $275.0 million of the Company's common shares, under which no common shares remain available for repurchase.
The table below summarizes all of our repurchases of common shares during three months ended December 31, 2023: Period Total number of shares purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs October 1 - October 31, 2023 — $ — — $ 27,591,757 November 1 - November 30, 2023 852,771 32.05 852,771 256,892 December 1 - December 31, 2023 — — — 275,256,892 Total/Weighted Average 852,771 $ 32.05 852,771 $ 275,256,892 36 Table of Contents Performance Graph The following chart compares the yearly cumulative total shareholder return for our common shares with the cumulative shareholder return of companies on (i) the S&P 500 Index, (ii) the Russell 2000 and (iii) the Nareit All Equity REIT Index as provided by Nareit for the period beginning December 31, 2018 and ending December 31, 2023.
We did not repurchase any common shares during three months ended December 31, 2024, as summarized below: Period Total number of shares purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs October 1 - October 31, 2024 — $ — — $ 256,892 November 1 - November 30, 2024 — — — 350,256,892 December 1 - December 31, 2024 — — — 350,256,892 Total/Weighted Average — $ — — $ 350,256,892 30 Table of Contents Performance Graph The following chart compares the yearly cumulative total shareholder return for our common shares with the cumulative shareholder return of companies on (i) the S&P 500 Index, (ii) the Russell 2000 and (iii) the Nareit All Equity REIT Index as provided by Nareit for the period beginning December 31, 2019 and ending December 31, 2024.
The following table summarizes the taxability of our dividends per common share for the year ended December 31, 2023: Year Ended December 31, 2023 Ordinary Income $ 1.653434 74.2 % Capital Gain 0.239048 10.7 % Return of Capital 0.337518 15.1 % Total $ 2.230000 100.0 % Equity Compensation Plan Information Information about our equity compensation plans is incorporated by reference to Item 12 of Part III of this Annual Report on Form 10-K.
The following table summarizes the estimated taxability of our dividends per common share for the year ended December 31, 2024: Year Ended December 31, 2024 Ordinary Income $ 1.272584 56.6 % Return of Capital 0.977416 43.4 % Total $ 2.250000 100.0 % Equity Compensation Plan Information Information about our equity compensation plans is incorporated by reference to Item 12 of Part III of this Annual Report on Form 10-K.
On October 24, 2023, the operating partnership issued 35,446 Series SO subordinated performance units to affiliates of Southern, one of the Company's existing PROs, in exchange for cash in connection with the acquisition of a self storage property from an unrelated third party. 35 Table of Contents Following a specified lock up period after the date of issuance set forth above, the OP units issued by the operating partnership may be redeemed from time to time by holders for a cash amount per OP unit equal to the market value of an equivalent number of common shares.
Following a specified lock up period after the date of issuance, the OP units issued by the operating partnership may be redeemed from time to time by holders for a cash amount per OP unit equal to the market value of an equivalent number of common shares.
Period Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 National Storage Affiliates Trust $ 100 $ 132 $ 148 $ 293 $ 160 $ 195 S&P 500 100 131 156 200 164 207 Russell 2000 100 126 151 173 138 161 Nareit All Equity REIT Index 100 129 122 172 129 144 The foregoing item assumes $100.00 invested on December 31, 2018, with dividends reinvested.
Period Ending Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 National Storage Affiliates Trust $ 100 $ 112 $ 221 $ 121 $ 147 $ 142 S&P 500 100 118 152 125 158 197 Russell 2000 100 120 138 110 128 143 Nareit All Equity REIT Index 100 95 134 101 112 118 The foregoing item assumes $100.00 invested on December 31, 2019, with dividends reinvested.
Removed
On October 6, 2023, the operating partnership issued 179,354 Series A-1 preferred units to affiliates of Optivest, one of the Company's existing PROs, as partial consideration for the acquisition of a self storage property. In addition, 7,600 LTIP units that were previously granted to Optivest and an affiliate of Optivest vested in connection with this transaction.
Added
On November 14, 2024, the Company approved a new share repurchase program authorizing, but not obligating, the repurchase of up to $350.0 million of the Company's common shares.
Removed
Following a two-year lock-up period, holders of subordinated performance units may elect, only upon the achievement of certain performance thresholds relating to the properties to which such subordinated performance units relate, to convert all or a portion of such subordinated performance units into OP units one time each year by submitting a completed conversion notice prior to December 1 of such year.
Removed
All duly submitted conversion notices will become effective on the immediately following January 1. For additional information about the conversion or exchange of subordinated performance units into OP units, see Note 9 in Item 8 of this report.
Removed
As of February 26, 2024, other than those OP units held by the Company, 40,514,212 OP units were outstanding (including 787,284 outstanding Long-Term Incentive Plan Units ("LTIP units") and 2,120,491 outstanding OP units in certain consolidated subsidiaries of the operating partnership ("DownREIT OP units"), which are convertible into, or exchangeable for, OP units on a one-for-one basis, subject to certain conditions).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

96 edited+33 added−76 removed38 unchanged
Biggest changeThe agreement allows for equity capital contributions of up to $400 million from the 2023 JV Members over a 24-month period starting in December 2023, with options to extend the investment time period by two additional six-month periods. 2018 Joint Venture As of December 31, 2023, our 2018 Joint Venture, in which we have a 25% interest, owned and operated a portfolio of 104 properties containing approximately 7.8 million rentable square feet, configured in approximately 64,000 storage units and located across 17 states. 2016 Joint Venture 39 Table of Contents As of December 31, 2023, our 2016 Joint Venture, in which we have a 25% ownership interest, owned and operated a portfolio of 81 properties containing approximately 5.7 million rentable square feet, configured in approximately 47,000 storage units and located across 13 states.
Biggest changeWe believe there is significant opportunity for continued external growth by partnering with institutional investors or other third parties seeking to deploy capital in the self storage industry. 2024 Joint Venture As of December 31, 2024, our 2024 Joint Venture, in which we have a 25% ownership interest, owned and operated 56 self storage properties containing approximately 3.2 million rentable square feet, configured in approximately 24,000 storage units and located across seven states. 2023 Joint Venture As of December 31, 2024, our 2023 Joint Venture, in which we have a 25% ownership interest, owned and operated 18 self storage properties, all of which were acquired by the 2023 Joint Venture in 2024, containing approximately 1.2 million rentable square feet, configured in approximately 8,000 storage units and located across two states. 2018 Joint Venture As of December 31, 2024, our 2018 Joint Venture, in which we have a 25% ownership interest, owned and operated 104 self storage properties containing approximately 7.9 million rentable square feet, configured in approximately 65,000 storage units and located across 17 states. 2016 Joint Venture As of December 31, 2024, our 2016 Joint Venture, in which we have a 25% ownership interest, owned and operated 81 properties containing approximately 5.7 million rentable square feet, configured in approximately 47,000 storage units and located across 13 states.
Our vice chairperson of the board of trustees and former chief executive officer, Arlen D. Nordhagen, co-founded SecurCare Self Storage, Inc. in 1988 to invest in and manage self storage properties. While growing SecurCare to over 150 self storage properties, Mr.
Our vice chairperson of the board of trustees and former chairperson of the board of trustees and chief executive officer, Arlen D. Nordhagen, co-founded SecurCare Self Storage, Inc. in 1988 to invest in and manage self storage properties. While growing SecurCare to over 150 self storage properties, Mr.
On January 28, 2022, our operating partnership issued $125.0 million of 2.96% senior unsecured notes due November 30, 2033. November 2032 Senior Unsecured Notes On September 28, 2022, the operating partnership issued $200.0 million of 5.06% senior unsecured notes due November 16, 2032.
On January 28, 2022, our operating partnership issued $125.0 million of 2.96% senior unsecured notes due November 30, 2033 (the "November 2033 Notes"). November 2032 Senior Unsecured Notes On September 28, 2022, the operating partnership issued $200.0 million of 5.06% senior unsecured notes due November 16, 2032 (the "November 2032 Notes").
July 2028 Senior Unsecured Notes On April 27, 2023, our operating partnership issued $120.0 million of 5.61% senior unsecured notes due July 5, 2028 in a private placement to certain institutional investors. The July 2028 Notes have an effective interest rate of 5.75% after taking into account the effect of interest rate swaps.
July 2028 Senior Unsecured Notes On April 27, 2023, our operating partnership issued $120.0 million of 5.61% senior unsecured notes due July 5, 2028 (the "July 2028 Notes") in a private placement to certain institutional investors. The July 2028 Notes have an effective interest rate of 5.75% after taking into account the effect of interest rate swaps.
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; 48 Table of Contents • 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; • 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 their usefulness as comparative measures.
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; 42 Table of Contents • 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 their usefulness as comparative measures.
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. 46 Table of Contents 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 believe NOI is useful to investors in evaluating our operating performance because: • NOI is one of the primary measures used by our management 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. 40 Table of Contents 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).
October 2026, October 2028, October 2030 and October 2033 Senior Unsecured Notes On October 5, 2023, our operating partnership issued $65.0 million of 6.46% senior unsecured notes due October 5, 2026, $100.0 million of 6.55% senior unsecured notes due October 5, 2028, $35.0 million of 6.66% senior unsecured notes due October 5, 2030 and $50.0 million of 6.73% senior unsecured notes due October 5, 2033 in a private placement to certain institutional investors.
October 2026, October 2028, October 2030 and October 2033 Senior Unsecured Notes On October 5, 2023, our operating partnership issued $65.0 million of 6.46% senior unsecured notes due October 5, 2026 (the "October 2026 Notes"), $100.0 million of 6.55% senior unsecured notes due October 5, 2028 (the "October 2028 Notes"), $35.0 million of 6.66% senior unsecured notes due October 5, 2030 (the "October 2030 Notes") and $50.0 million of 6.73% senior unsecured notes due October 5, 2033 (the "October 2033 Notes") in a private placement to certain institutional investors.
May 2026, May 2031 and May 2033 Senior Unsecured Notes On May 26, 2021, our operating partnership issued $55.0 million of 3.10% senior unsecured notes due May 4, 2033.
May 2026, May 2031 and May 2033 Senior Unsecured Notes On May 26, 2021, our operating partnership issued $55.0 million of 3.10% senior unsecured notes due May 4, 2033 (the "May 2033 Notes").
(3) 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.
(4) 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.
The following discussion and analysis of the results of our operations and financial condition for the year ended December 31, 2023 compared to the year ended December 31, 2022 should be read in conjunction with the accompanying consolidated financial statements included in Item 8.
The following discussion and analysis of the results of our operations and financial condition for the year ended December 31, 2024 compared to the year ended December 31, 2023 should be read in conjunction with the accompanying consolidated financial statements included in Item 8.
The discussion and analysis of the results of our operations and financial condition for the year ended December 31, 2022 compared to the year ended December 31, 2021, can be found in Part II, "Item 7.
The discussion and analysis of the results of our operations and financial condition for the year ended December 31, 2023 compared to the year ended December 31, 2022, can be found in Part II, "Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 27, 2023. Certain figures, such as interest rates and other percentages, included in this section have been rounded for ease of presentation.
Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 28, 2024. Certain figures, such as interest rates and other percentages, included in this section have been rounded for ease of presentation.
The primary sources of cash for the year ended December 31, 2023 were $262.3 million of proceeds from our sale of 32 self storage properties, partially offset by our acquisition of 20 self storage properties and annexes to existing properties for cash consideration of $48.7 million, capital expenditures of $34.2 million, our acquisition of management company assets and an interest in a reinsurance company from Move It of $16.9 million and expenditures for corporate furniture and equipment of $1.3 million.
The primary sources of cash for the year ended December 31, 2023 were $262.3 million of proceeds from our sale of 32 self storage properties to an unaffiliated third party, partially offset by our acquisition of 20 self storage properties and annexes to existing properties for cash consideration of $48.7 million, capital expenditures of $34.2 million, our acquisition of management company assets and an interest in a reinsurance company of $16.9 million and expenditures for corporate furniture and equipment of $1.3 million.
For additional information about our 2018 Joint Venture and 2016 Joint Venture see Note 5 to the consolidated financial statements in Item 8.
For additional information about our 2016 Joint Venture, 2018 Joint Venture, 2023 Joint Venture and 2024 Joint Venture see Note 5 to the consolidated financial statements in Item 8.
Our PRO structure offers our PROs a unique opportunity to serve as regional property managers for their managed portfolios and directly participate in the potential upside of those properties while simultaneously diversifying their investment to include a broader portfolio of self storage properties.
Our former structure offered our former PROs a unique opportunity to serve as regional property managers for their managed portfolios and directly participate in the potential upside of those properties while simultaneously diversifying their investment to include a broader portfolio of self storage properties.
Management Fees and Other Revenue Management fees and other revenue, which includes revenue related to managing and operating the unconsolidated real estate ventures and other revenue from our tenant insurance programs, increased $6.8 million, or 24.6%, for the year ended December 31, 2023, compared to the year ended December 31, 2022.
Management Fees and Other Revenue Management fees and other revenue, which includes revenue related to managing and operating the unconsolidated real estate ventures and other revenue from our tenant insurance programs, increased $8.3 million, or 24.2%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Although the Federal Reserve Board has signaled an intention to reduce interest rates in 2024, there is no assurance that this will occur or that the Federal Reserve Board will not raise interest rates in the future.
Although the Federal Reserve Board has signaled an intention to continue to reduce interest rates in 2025, there is no assurance that this will occur or that the Federal Reserve Board will not maintain or raise interest rates in the future.
Sources of Liquidity and Capital Resources As of December 31, 2023, we had $65.0 million in cash and cash equivalents, compared to $35.3 million as of December 31, 2022. Our cash flows from operations result primarily from the ownership and management of self-storage facilities as described in Part I, Item 1, "Business".
Sources of Liquidity and Capital Resources As of December 31, 2024, we had $50.4 million in cash and cash equivalents, compared to $65.0 million as of December 31, 2023. Our cash flows from operations result primarily from the ownership and management of self storage facilities as described in Part I, Item 1, "Business".
During the year ended December 31, 2023, after receiving notices of redemption from certain OP unitholders, we elected to issue 1,275,854 common shares to such holders in exchange for 1,275,854 OP units in satisfaction of the operating partnership's redemption obligations.
During the year ended December 31, 2024, after receiving notices of redemption from certain OP unitholders, we elected to issue 1,454,837 common shares to such holders in exchange for 1,454,837 OP units in satisfaction of the operating partnership's redemption obligations.
We have an expansion option under the June 2029 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount up to $300.0 million.
We have an expansion option under the 2028 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount up to $125.0 million.
During the year ended December 31, 2023, we recorded $7.6 million of equity in earnings from our unconsolidated real estate ventures compared to $7.7 million for the year ended December 31, 2022.
During the year ended December 31, 2024, we recorded $16.1 million of equity in losses from our unconsolidated real estate ventures compared to $7.6 million of earnings for the year ended December 31, 2023.
The December 2018 Nareit Funds From Operations White Paper - 2018 Restatement, which we refer to as the White Paper, defines FFO as net income (as determined under GAAP), excluding: real estate depreciation and amortization, gains and losses from the sale of certain real estate assets, gains and losses from change in control, mark-to-market changes in value recognized on equity securities, impairment write-downs of certain real estate assets and impairment of investments in entities when it is directly attributable to decreases in the value of depreciable real estate held by the entity and after items to record unconsolidated partnerships and joint ventures on the same basis.
The December 2018 Nareit Funds From Operations White Paper - 2018 Restatement defines FFO as net income (as determined under GAAP), excluding: real estate depreciation and amortization, gains and losses from the sale of certain real estate assets, gains and losses from change in control, mark-to-market changes in value recognized on equity securities, impairment write-downs of certain real estate assets and impairment of investments in entities when it is directly attributable to decreases in the value of depreciable real estate held by the entity, and after adjusting equity in earnings (losses) to reflect our share of FFO in unconsolidated real estate ventures.
For a summary of our financial covenants and additional detail regarding our credit facility, 2028 Term Loan Facility, April 2029 Term Loan Facility and June 2029 Term Loan Facility, please see Note 8 to the consolidated financial statements in Item 8. 2029 and August 2031 Senior Unsecured Notes On August 30, 2019, our operating partnership issued $100.0 million of 3.98% senior unsecured notes due August 30, 2029 and $50.0 million of 4.08% senior unsecured notes due August 30, 2031 in a private placement to certain institutional investors.
For a summary of our financial covenants and additional detail regarding our credit facility, 2028 Term Loan Facility, April 2029 Term Loan Facility and June 2029 Term Loan Facility, please see Note 8 to the consolidated financial statements in Item 8. 2029 and August 2031 Senior Unsecured Notes On August 30, 2019, our operating partnership issued $100.0 million of 3.98% senior unsecured notes due August 30, 2029 (the "2029 Notes") and $50.0 million of 4.08% senior unsecured notes due August 30, 2031 (the "August 2031 Notes") in a private placement to certain institutional investors. 46 Table of Contents August 2030 and August 2032 Senior Unsecured Notes On October 22, 2020, our operating partnership issued $150.0 million of 2.99% senior unsecured notes due August 5, 2030 (the "August 2030 Notes") and $100.0 million of 3.09% senior unsecured notes due August 5, 2032 (the "August 2032 Notes") in a private placement to certain institutional investors.
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.
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.
(2) Casualty-related recoveries in 2023 relate to casualty-related expenses incurred in 2022 and are recorded in the line item "Other" within operating expenses in our consolidated statement of operations.
(3) Casualty-related recoveries in 2023 relate to casualty-related expenses incurred during 2022 and are recorded in the line item "Other" within operating expenses in our condensed consolidated statements of operations.
On February 15, 2024, our board of trustees declared a cash dividend and distribution, respectively, of $0.56 per common share and OP unit to shareholders and OP unitholders of record as of March 15, 2024.
On February 13, 2025, our board of trustees declared a cash dividend and distribution, respectively, of $0.57 per common share and OP unit to shareholders and OP unitholders of record as of March 14, 2025.
The following table presents a summary of the capital expenditures for these categories, along with a reconciliation of the total for these categories to the capital expenditures reported in the accompanying consolidated statements of cash flows for the periods presented (dollars in thousands): Year Ended December 31, 2023 2022 2021 Recurring capital expenditures $ 16,957 $ 11,794 $ 9,500 Value enhancing capital expenditures 6,364 11,732 8,738 Acquisitions capital expenditures 9,649 19,215 11,185 Total capital expenditures 32,970 42,741 29,423 Change in accrued capital spending 1,260 57 (1,846) Capital expenditures per statement of cash flows $ 34,230 $ 42,798 $ 27,577 Financing Activities Cash used in our financing activities was $557.2 million for the year ended December 31, 2023 compared to $154.6 million of cash provided by financing activities for the year ended December 31, 2022.
The following table presents a summary of the capital expenditures for these categories, along with a reconciliation of the total for these categories to the capital expenditures reported in the accompanying consolidated statements of cash flows for the periods presented (dollars in thousands): Year Ended December 31, 2024 2023 2022 Recurring capital expenditures $ 12,989 $ 16,957 $ 11,794 Value enhancing capital expenditures 2,861 6,364 11,732 Acquisitions capital expenditures 1,844 9,649 19,215 Total capital expenditures 17,694 32,970 42,741 Change in accrued capital spending 957 1,260 57 Capital expenditures per statement of cash flows $ 18,651 $ 34,230 $ 42,798 Financing Activities Cash used in our financing activities was $825.4 million for the year ended December 31, 2024 compared to $557.2 million of cash used in financing activities for the year ended December 31, 2023.
As of December 31, 2023, our same store portfolio consisted of 724 self storage properties.
As of December 31, 2024, our same store portfolio consisted of 776 self storage properties.
As of December 31, 2023, our PROs managed the day-to-day operations of 333 of our consolidated properties. We earn certain customary fees for managing and operating the properties in the unconsolidated real estate ventures and we facilitate tenant insurance and/or tenant warranty protection programs for tenants at these properties in exchange for half of all proceeds from such programs.
We earn certain customary fees for managing and operating the properties in the unconsolidated real estate ventures and we facilitate tenant insurance and/or tenant warranty protection programs for tenants at these properties in exchange for half of all proceeds from such programs.
Many of these markets have multiple barriers to entry against increased supply, including zoning restrictions against new construction and new construction costs that we believe are higher than our properties' fair market value. We maintain an active acquisition pipeline that we expect will continue to drive our future growth.
Many of these markets have multiple barriers to entry against increased supply, including zoning restrictions against new construction and new construction costs that we believe are higher than our properties' fair market value.
When an entity is not deemed to be a VIE, we consider the provisions of additional guidance to determine whether the general partner controls a limited partnership or similar entity when the limited partners have certain rights.
When an entity is not deemed to be a VIE, we consider the provisions of additional guidance to determine whether the general partner controls a limited partnership or similar entity when the limited partners have certain rights. We consolidate all entities that are VIEs and of which the Company is deemed to be the primary beneficiary.
For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in our consolidated financial statements or in the associated text. Certain other amounts that appear in this section may similarly not sum due to rounding.
For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in our consolidated financial statements or in the associated text.
We believe the following are our most critical accounting policies. Principles of Consolidation and Presentation of Noncontrolling Interests Our consolidated financial statements include the accounts of our operating partnership and its controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidation of entities.
We believe the following are our most critical accounting policies. Principles of Consolidation and Presentation of Noncontrolling Interests Our consolidated financial statements include the accounts of our operating partnership and its controlled subsidiaries.
We have a June 2029 Term Loan Facility that matures in June 2029 and is separate from the credit facility, 2028 Term Loan Facility, and April 2029 Term Loan Facility in an aggregate amount of $285.0 million. As of December 31, 2023, the June 2029 Term Loan Facility had an effective interest rate of 5.37%.
We have a June 2029 Term Loan Facility that matures in June 2029 (the "June 2029 Term Loan Facility") and is separate from the credit facility, 2028 Term Loan Facility, and April 2029 Term Loan Facility in an aggregate amount of $285.0 million.
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. 44 Table of Contents The following table presents a reconciliation of net income to FFO and Core FFO for the periods presented (in thousands, except per share and unit amounts): Year Ended December 31, 2023 2022 2021 Net income $ 236,988 $ 183,765 $ 146,935 Add (subtract): Real estate depreciation and amortization 220,737 231,870 156,930 Company's share of unconsolidated real estate venture real estate depreciation and amortization 17,083 17,072 15,408 Gain on sale of self storage properties (63,910) (5,466) — Distributions to preferred shareholders and unitholders (20,330) (14,510) (14,070) FFO attributable to subordinated performance unitholders (1) (49,040) (58,838) (49,810) FFO attributable to common shareholders, OP unitholders, and LTIP unitholders 341,528 353,893 255,393 Add: Acquisition costs 1,659 2,745 1,941 Casualty-related (recoveries) expenses (2) (522) 6,388 — Loss on early extinguishment of debt 758 — — Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders $ 343,423 $ 363,026 $ 257,334 Weighted average shares and units outstanding - FFO and Core FFO: (3) Weighted average shares outstanding - basic 86,846 91,239 81,195 Weighted average restricted common shares outstanding 25 27 33 Weighted average effect of outstanding forward offering agreement (4) — — 100 Weighted average OP units outstanding 38,302 35,421 30,127 Weighted average DownREIT OP unit equivalents outstanding 2,120 1,925 1,925 Weighted average LTIP units outstanding 553 514 542 Total weighted average shares and units outstanding - FFO and Core FFO 127,846 129,126 113,922 FFO per share and unit $ 2.67 $ 2.74 $ 2.24 Core FFO per share and unit $ 2.69 $ 2.81 $ 2.26 (1) Amounts represent distributions declared for subordinated performance unitholders and DownREIT subordinated performance unitholders for the periods presented.
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. 38 Table of Contents The following table presents a reconciliation of net income to FFO and Core FFO for the periods presented (in thousands, except per share and unit amounts): Year Ended December 31, 2024 2023 2022 Net income $ 183,270 $ 236,988 $ 183,765 Add (subtract): Real estate depreciation and amortization 188,358 220,737 231,870 Equity in losses (earnings) of unconsolidated real estate ventures 16,075 (7,553) (7,745) Company's share of FFO in unconsolidated real estate ventures 24,156 24,636 24,817 Gain on sale of self storage properties (63,841) (63,910) (5,466) Distributions to preferred shareholders and unitholders (22,273) (20,330) (14,510) FFO attributable to subordinated performance unitholders (1) (21,622) (49,040) (58,838) FFO attributable to common shareholders, OP unitholders, and LTIP unitholders 304,123 341,528 353,893 Add (subtract): Acquisition costs 1,602 1,659 2,745 Integration and executive severance costs (2) 2,671 — — Casualty-related (recoveries) expenses (3) — (522) 6,388 Loss on early extinguishment of debt 323 758 — Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders $ 308,719 $ 343,423 $ 363,026 Weighted average shares and units outstanding - FFO and Core FFO: (4) Weighted average shares outstanding - basic 76,844 86,846 91,239 Weighted average restricted common shares outstanding 20 25 27 Weighted average OP units outstanding 45,110 38,302 35,421 Weighted average DownREIT OP unit equivalents outstanding 3,955 2,120 1,925 Weighted average LTIP units outstanding 684 553 514 Total weighted average shares and units outstanding - FFO and Core FFO 126,613 127,846 129,126 FFO per share and unit $ 2.40 $ 2.67 $ 2.74 Core FFO per share and unit $ 2.44 $ 2.69 $ 2.81 (1) Amounts represent distributions declared for subordinated performance unitholders and DownREIT subordinated performance unitholders for the periods presented.
We have an April 2029 Term Loan Facility that matures in April 2029 and is separate from the credit facility and 2028 Term Loan Facility in an aggregate amount of $100.0 million. As of December 31, 2023 the entire amount was outstanding under the April 2029 Term Loan Facility with an effective interest rate of 4.27%.
We have a credit agreement with a lender for a term loan facility that matures in December 2028 (the "2028 Term Loan Facility") and is separate from the credit facility in an aggregate amount of $75.0 million. As of December 31, 2024, $75.0 million was outstanding under the 2028 Term Loan Facility with an effective interest rate of 4.62%.
Our primary uses of financing cash flows for the year ended December 31, 2023 were for principal payments on existing debt of $1.2 billion (which included $1.1 billion of principal repayments, including constructive repayments, under the Revolver, $73.5 million in fixed rate mortgage repayments, $50.2 million of constructive repayments of term loan borrowings within our credit facility, and $3.3 million of scheduled fixed rate mortgage principal amortization payments), common share repurchases of $310.2 million, distributions to common shareholders of $190.9 million, distributions to noncontrolling interests of $141.5 million and distributions to preferred shareholders of $19.0 million.
Our sources of financing cash flows for the year ended December 31, 2024 primarily consisted of $1.3 billion of borrowings (which included $920.0 million of borrowings under our Revolver, $150.0 million from the issuance of the 2034 Notes (as defined in Note 8 to the consolidated financial statements in Item 8), $125.0 million from the issuance of the September 2031 Notes (as defined in Note 8 to the consolidated financial statements in Item 8) and $75.0 million from the issuance of the September 2028 Notes (as defined in Note 8 to the consolidated financial statements in Item 8)). 45 Table of Contents Our primary uses of financing cash flows for the year ended December 31, 2023 were for principal payments on existing debt of $1.2 billion (which included $1.1 billion of principal repayments, including constructive repayments, under the Revolver, $73.5 million in fixed rate mortgage repayments, $50.2 million of constructive repayments of term loan borrowings within our credit facility, and $3.3 million of scheduled fixed rate mortgage principal amortization payments), common share repurchases of $310.2 million, distributions to common shareholders of $190.9 million, distributions to noncontrolling interests of $141.5 million and distributions to preferred shareholders of $19.0 million.
(4) Represents the dilutive effect of the forward offering from the application of the treasury stock method. 45 Table of Contents The following table presents a reconciliation of earnings per share - diluted to FFO and Core FFO per share and unit for the periods presented: Year Ended December 31, 2023 2022 2021 Earnings per share - diluted $ 1.48 $ 0.99 $ 0.98 Impact of the difference in weighted average number of shares (1) 0.23 (0.28) 0.18 Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method (2) — 0.62 — Add real estate depreciation and amortization 1.73 1.79 1.38 Add Company's share unconsolidated venture real estate depreciation and amortization 0.13 0.13 0.14 Subtract gain on sale of self storage properties (0.52) (0.05) — FFO attributable to subordinated performance unitholders (0.38) (0.46) (0.44) FFO per share and unit 2.67 2.74 2.24 Add acquisition costs and Company's share of unconsolidated real estate venture acquisition costs 0.01 0.02 0.02 Add casualty-related expenses — 0.05 — Add loss on early extinguishment of debt 0.01 — — Core FFO per share and unit $ 2.69 $ 2.81 $ 2.26 (1) 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.
See footnote 1 to the following table 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. 39 Table of Contents The following table presents a reconciliation of earnings per share - diluted to FFO and Core FFO per share and unit for the periods presented: Year Ended December 31, 2024 2023 2022 Earnings per share - diluted $ 1.18 $ 1.48 $ 0.99 Impact of the difference in weighted average number of shares (1) (0.46) 0.23 (0.28) Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method (2) 0.55 — 0.62 Add real estate depreciation and amortization 1.49 1.73 1.79 Add (subtract) equity in losses (earnings) of unconsolidated real estate ventures 0.12 (0.06) (0.06) Add Company's share of FFO in unconsolidated real estate ventures 0.19 0.19 0.19 Subtract gain on sale of self storage properties (0.50) (0.52) (0.05) FFO attributable to subordinated performance unitholders (0.17) (0.38) (0.46) FFO per share and unit 2.40 2.67 2.74 Add acquisition costs 0.02 0.01 0.02 Add integration and executive severance costs 0.02 — — Add casualty-related expenses — — 0.05 Add loss on early extinguishment of debt — 0.01 — Core FFO per share and unit $ 2.44 $ 2.69 $ 2.81 (1) 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.
Investing Activities Cash provided by investing activities was $161.1 million for the year ended December 31, 2023 compared to $584.2 million of cash used in investing activities for the year ended December 31, 2022.
Investing Activities Cash provided by investing activities was $425.4 million for the year ended December 31, 2024 compared to $161.1 million of cash provided by investing activities for the year ended December 31, 2023.
On December 1, 2023, we approved a new share repurchase program authorizing, but not obligating, the repurchase of up to $275.0 million of the Company's common shares from time to time. During the year ended December 31, 2023, we repurchased 8,836,639 common shares for approximately $310.2 million.
Equity Transactions Issuance and Repurchase of Common Shares On December 1, 2023, we approved a new share repurchase program authorizing, but not obligating, the repurchase of up to $275.0 million of the Company's common shares from time to time. During the year ended December 31, 2024, we repurchased 7,400,322 common shares for approximately $275.2 million (inclusive of commissions and fees).
Historically, our highest level of occupancy has typically been in July, while our lowest level of occupancy has typically been in February. Results for any quarter may not be indicative of the results that may be achieved for the full fiscal year. 57
A greater portion of revenues and profits are realized from May through September. Historically, our highest level of occupancy has typically been in July, while our lowest level of occupancy has typically been in February. Results for any quarter may not be indicative of the results that may be achieved for the full fiscal year.
On July 26, 2021, our operating partnership issued $35.0 million of 2.16% senior unsecured notes due May 4, 2026 and $90.0 million of 3.00% senior unsecured notes due May 4, 2031. 52 Table of Contents November 2030, November 2031, November 2033 and 2036 Senior Unsecured Notes On December 14, 2021, our operating partnership issued $75.0 million of 2.72% senior unsecured notes due November 30, 2030, $175.0 million of 2.81% senior unsecured notes due November 30, 2031 and $75.0 million of 3.06% senior unsecured notes due November 30, 2036.
November 2030, November 2031, November 2033 and 2036 Senior Unsecured Notes On December 14, 2021, our operating partnership issued $75.0 million of 2.72% senior unsecured notes due November 30, 2030 (the "November 2030 Notes"), $175.0 million of 2.81% senior unsecured notes due November 30, 2031 (the "November 2031 Notes") and $75.0 million of 3.06% senior unsecured notes due November 30, 2036 (the "2036 Notes").
As of December 31, 2023, $275.0 million was outstanding under the Term Loan B with an effective interest rate of 3.28%, $325.0 million was outstanding under the Term Loan C with an effective interest rate of 4.07%, $275.0 million was outstanding under the Term Loan D with an effective interest rate of 4.05% and $130.0 million was outstanding under the Term Loan E with an effective interest rate of 4.93%.
As of December 31, 2024, $275.0 million was outstanding under the Term Loan D with an effective interest rate of 3.96% and $130.0 million was outstanding under the Term Loan E with an effective interest rate of 4.89%.
Other property-related revenue increased by $4.6 million, or 18.1%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022. This increase primarily resulted from an increase in tenant insurance revenue of $4.4 million.
Other Property-Related Revenue Same store portfolio other property-related revenue increased $0.6 million, or 2.5%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023. This increase primarily resulted from an increase in tenant insurance revenue.
Our long-term liquidity needs consist primarily of the repayment of debt, property acquisitions, and capital expenditures. We acquire properties through the use of cash, preferred units, OP units and subordinated performance units in our operating partnership or DownREIT partnerships.
We expect to fund short-term liquidity requirements from our operating cash flow, cash on hand and borrowings under our credit facility. Our long-term liquidity needs consist primarily of the repayment of debt, property acquisitions, and capital expenditures. We acquire properties through the use of cash, preferred units, and OP units in our operating partnership or DownREIT partnerships.
As of December 31, 2023, $75.0 million was outstanding under the 2028 Term Loan Facility with an effective interest rate of 4.62%. We have an expansion option under the 2028 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount up to $125.0 million.
As of December 31, 2024, the June 2029 Term Loan Facility had an effective interest rate of 5.37%. We have an expansion option under the June 2029 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount up to $300.0 million.
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 purposes of calculating FFO attributable to common shareholders, OP unitholders, and LTIP unitholders, we exclude distributions declared on subordinated performance units, DownREIT subordinated performance units, preferred shares and preferred units.
For purposes of calculating FFO attributable to common shareholders, OP unitholders, and LTIP unitholders, we exclude distributions declared on preferred shares and preferred units, and, prior to the internalization of the PRO structure, subordinated performance units and DownREIT subordinated performance units.
Over time, largely through our unconsolidated real estate ventures and internalization of three of our largest PROs, SecurCare, Northwest and Move It, we have developed a full service internally-staffed property management platform to complement our PRO structure.
Over time, largely through our unconsolidated real estate ventures, retirement of PROs and internalization of the PRO structure, effective as of the Closing Date, we have developed a full service internally-staffed property management platform.
The following table presents a reconciliation of net income to NOI for the periods presented (dollars in thousands): Year Ended December 31, 2023 2022 2021 Net income $ 236,988 $ 183,765 $ 146,935 (Subtract) add: Management fees and other revenue (34,411) (27,624) (24,374) General and administrative expenses 59,281 59,311 51,001 Other 11,108 8,537 2,853 Depreciation and amortization 221,993 233,158 158,312 Interest expense 166,147 110,599 72,062 Equity in earnings of unconsolidated real estate ventures (7,553) (7,745) (5,294) Loss on early extinguishment of debt 758 — — Acquisition costs 1,659 2,745 1,941 Income tax expense 1,590 4,689 1,690 Gain on sale of self storage properties (63,910) (5,466) — Non-operating expense 1,016 951 906 Net operating income $ 594,666 $ 562,920 $ 406,032 Our consolidated NOI shown in the table above does not include our proportionate share of NOI for our unconsolidated real estate ventures.
The increase in same store property operating expenses was a result of increases in marketing, insurance and property tax expense, partially offset by decreases in personnel costs and repairs and maintenance expenses during the year ended December 31, 2024. 41 Table of Contents The following table presents a reconciliation of net income to NOI for the periods presented (dollars in thousands): Year Ended December 31, 2024 2023 2022 Net income $ 183,270 $ 236,988 $ 183,765 (Subtract) add: Management fees and other revenue (42,726) (34,411) (27,624) General and administrative expenses 57,606 59,281 59,311 Other 13,866 11,108 8,537 Depreciation and amortization 189,855 221,993 233,158 Interest expense 154,260 166,147 110,599 Equity in losses (earnings) of unconsolidated real estate ventures 16,075 (7,553) (7,745) Loss on early extinguishment of debt 323 758 — Acquisition and integration costs 3,616 1,659 2,745 Income tax expense 3,767 1,590 4,689 Gain on sale of self storage properties (63,841) (63,910) (5,466) Non-operating (income) expense (314) 1,016 951 Net operating income $ 515,757 $ 594,666 $ 562,920 Our consolidated NOI shown in the table above does not include our proportionate share of NOI for our unconsolidated real estate ventures.
Annualized total portfolio rental revenues (including fees and net of any discounts and uncollectible customer amounts) divided by average occupied square feet ("average annualized rental revenue per occupied square foot") increased from $14.83, for the year ended December 31, 2022 to $15.24, or 2.8%, for the year ended December 31, 2023, driven primarily by increased contractual lease rates for in-place tenants. 41 Table of Contents Other Property-Related Revenue Other property-related revenue represents ancillary income from our self storage properties, such as tenant insurance-related access fees and sales of storage supplies.
Annualized total portfolio rental revenues (including fees and net of any discounts and uncollectible customer amounts) divided by average occupied square feet ("average annualized rental revenue per occupied square foot") increased from $15.24, for the year ended December 31, 2023 to $15.61, or 2.4%, for the year ended December 31, 2024, driven primarily by increased contractual lease rates for in-place tenants.
We define Adjusted EBITDA as EBITDA plus acquisition costs, equity-based compensation expense, losses on sale of properties, impairment of long-lived assets and casualty-related expense, minus gains on sale of properties and debt forgiveness, and after adjustments for unconsolidated partnerships and joint ventures.
We define Adjusted EBITDA as EBITDA plus acquisition costs, integration costs, executive severance costs, equity-based compensation expense, losses on sale of properties, impairment of long-lived assets and casualty-related expenses, losses and recoveries, minus gains on sale of properties and debt forgiveness, and after adjustments for unconsolidated partnerships and joint ventures, including the removal of the non-cash effect of applying HLBV for purposes of allocating GAAP net income (loss) for the 2024 Joint Venture.
When self storage properties are acquired, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values.
Self Storage Properties and Customer In-Place Leases Self storage properties are carried at historical cost less accumulated depreciation and any impairment losses. When self storage properties are acquired, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values.
Issuance and Repurchase of Common Shares On July 11, 2022, we approved a share repurchase program authorizing, but not obligating, the repurchase of up to $400.0 million of the Company's common shares from time to time.
On November 14, 2024, the Company approved a new share repurchase program authorizing, but not obligating, the repurchase of up to $350.0 million of the Company's common shares from time to time.
This increase in same store portfolio rental revenue was partially offset by a decrease in average occupancy from 93.1% for the year ended December 31, 2022 to 89.1% for the year ended December 31, 2023.
This decrease in same store portfolio rental revenue was driven primarily by a decrease in average occupancy from 88.7% for the year ended December 31, 2023 to 85.8% for the year ended December 31, 2024.
Depreciation and Amortization Depreciation and amortization decreased $11.2 million, or 4.8%, for the year ended December 31, 2023, compared to the year ended December 31, 2022.
Depreciation and Amortization Depreciation and amortization decreased $32.1 million, or 14.5%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Other Property-Related Revenue Same store portfolio other property-related revenue increased $2.8 million, or 13.5%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Property Operating Expenses Same store portfolio property operating expenses increased $7.2 million, or 3.7%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
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).
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). All subordinated performance units and DownREIT subordinated performance units were converted into OP units on July 1, 2024, in connection with the internalization of the PRO structure.
Although we operate in several markets, these operations have been aggregated into one reportable segment based on the similar economic characteristics among all markets. Seasonality The self storage business is subject to minor seasonal fluctuations. A greater portion of revenues and profits are realized from May through September.
Although we operate in several markets, these operations have been aggregated into one reportable segment based on the similar economic characteristics among all markets (see Note 15 to the consolidated financial statements in Item 8 for more information). Seasonality The self storage business is subject to minor seasonal fluctuations.
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 and DownREIT subordinated performance 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.
Diluted earnings per share is calculated using the two-class method for the company's restricted common shares and the treasury stock method for certain unvested LTIP units, and assumes the conversion of vested LTIP units into OP units on a one-for-one basis and the hypothetical conversion of subordinated performance units, and DownREIT subordinated performance units into OP units.
Average annualized same store rental revenue per occupied square foot increased from $14.89 to $15.80, or 6.1%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022, driven primarily by increased contractual lease rates for in-place tenants.
Average annualized same store rental revenue per occupied square foot decreased from $15.71 to $15.68, or 0.2%, for the year ended December 31, 2024, driven primarily by decreased lease rates for new tenants.
The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods presented (dollars in thousands): Year Ended December 31, 2023 2022 2021 Net income $ 236,988 $ 183,765 $ 146,935 Add: Depreciation and amortization 221,993 233,158 158,312 Company's share of unconsolidated real estate venture depreciation and amortization 17,083 17,072 15,408 Interest expense 166,147 110,599 72,062 Income tax expense 1,590 4,689 1,690 Loss on early extinguishment of debt 758 — — EBITDA 644,559 549,283 394,407 Add (subtract): Acquisition costs 1,659 2,745 1,941 Gain on sale of self storage properties (63,910) (5,466) — Casualty-related (recoveries) expenses (1) (522) 6,388 — Equity-based compensation expense (2) 6,679 6,258 5,462 Adjusted EBITDA $ 588,465 $ 559,208 $ 401,810 (1) Casualty-related recoveries in 2023 relate to casualty-related expenses incurred in 2022 and are recorded in the line item "Other" within operating expenses in our consolidated statement of operations.
The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods presented (dollars in thousands): Year Ended December 31, 2024 2023 2022 Net income $ 183,270 $ 236,988 $ 183,765 Add: Depreciation and amortization 189,855 221,993 233,158 Company's share of unconsolidated real estate venture depreciation and amortization 20,719 17,083 17,072 Interest expense 154,260 166,147 110,599 Income tax expense 3,767 1,590 4,689 Loss on early extinguishment of debt 323 758 — EBITDA 552,194 644,559 549,283 Add (subtract): Acquisition costs 1,602 1,659 2,745 Effect of hypothetical liquidation at book value (HLBV) accounting for unconsolidated 2024 Joint Venture (1) 19,511 — — Gain on sale of self storage properties (63,841) (63,910) (5,466) Integration and executive severance costs, excluding equity-based compensation (2) 1,879 — — Casualty-related (recoveries) expenses (3) — (522) 6,388 Equity-based compensation expense (4) 8,310 6,679 6,258 Adjusted EBITDA $ 519,655 $ 588,465 $ 559,208 (1) Reflects the non-cash impact of applying HLBV to the 2024 Joint Venture, which allocates GAAP income (loss) on a hypothetical liquidation of the underlying joint venture at book value as of the reporting date.
Gain on Sale of Self Storage Properties Gain on sale of self storage properties increased $58.4 million, for the year ended December 31, 2023, compared to the year ended December 31, 2022. The increase in gain on sale of self storage properties was primarily attributable to the sale of 32 self storage properties for net proceeds of $261.8 million.
Gain on Sale of Self Storage Properties Gain on sale of self storage properties was $63.8 million, for the year ended December 31, 2024, compared to $63.9 million for the year ended December 31, 2023.
As of December 31, 2023, we would have had the capacity to borrow remaining Revolver commitments of $562.6 million while remaining in compliance with the credit facility's financial covenants. We have a 2028 Term Loan Facility that matures in December 2028 and is separate from the credit facility in an aggregate amount of $75.0 million.
As of December 31, 2024, we would have had the capacity to borrow remaining Revolver commitments of $500.0 million while remaining in compliance with the credit facility's financial covenants.
Additional sources are proceeds from dispositions of self storage properties, equity and debt offerings, debt financings including additional borrowing capacity under the credit facility, and expansion options available under the 2028 Term Loan Facility, the June 2029 Term Loan Facility, and our credit facility. 49 Table of Contents Our short-term liquidity requirements consist primarily of property operating expenses, property acquisitions, capital expenditures, general and administrative expenses and principal and interest on our outstanding indebtedness.
Additional sources are proceeds from dispositions of self storage properties (including contributions to our joint ventures), equity and debt offerings, debt financings including additional borrowing capacity under the credit facility, and expansion options available under the 2028 Term Loan Facility, the June 2029 Term Loan Facility, and our credit facility.
Results of Operations When reviewing our results of operations it is important to consider the timing of acquisition and disposition activity. We acquired 20 self storage properties and annexes to existing properties during the year ended December 31, 2023 and 45 self storage properties during the year ended December 31, 2022.
Results of Operations When reviewing our results of operations it is important to consider the timing of acquisition and disposition activity and the internalization of our PRO structure. We contributed 56 self storage properties to the 2024 Joint Venture and sold an additional 40 self storage properties to unaffiliated third parties during the year ended December 31, 2024.
Interest Expense Interest expense increased $55.5 million, or 50.2%, for the year ended December 31, 2023, compared to the year ended December 31, 2022.
Other Other expenses increased $2.8 million, or 24.8%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
The limited partner ownership interests in our operating partnership that are held by owners other than us are referred to as noncontrolling interests. Noncontrolling interests also include ownership interests in DownREIT partnerships held by entities other than our operating partnership. Noncontrolling interests in a subsidiary are generally reported as a separate component of equity in our consolidated balance sheets.
All significant intercompany balances and transactions have been eliminated in the consolidation of entities. 36 Table of Contents The limited partner ownership interests in our operating partnership that are held by owners other than us are referred to as noncontrolling interests. Noncontrolling interests also include ownership interests in DownREIT partnerships held by entities other than our operating partnership.
Our material cash requirements from contractual and other obligations primarily relate to our debt obligations. Expected timing of those payments are as follows. The information in this section should be read in conjunction with Note 8 and other information included in the accompanying consolidated financial statements included in Item 8.
Our material cash requirements from contractual and other obligations primarily relate to our debt obligations. Expected timing of those payments are as follows.
Loss on early extinguishment of debt includes costs incurred related to these extinguishments, and the write off of $0.4 million of unamortized debt issuance costs related to the retired term loans or attributed to the entities no longer included in the lender syndicate. 42 Table of Contents Equity In Earnings Of Unconsolidated Real Estate Ventures Equity in earnings of unconsolidated real estate ventures represents our share of earnings and losses incurred through our 25% ownership interests in the 2018 Joint Venture and the 2016 Joint Venture.
Additionally, in connection with the amendment we retired two term loans prior to their contractual maturity. Loss on early extinguishment of debt includes costs incurred related to these extinguishments, and the write off of $0.4 million of unamortized debt issuance costs related to the retired term loans or attributed to the entities no longer included in the lender syndicate.
On February 15, 2024, our board of trustees also declared cash distributions of $0.375 per Series A Preferred Share, Series B Preferred Share and Series A-1 preferred unit to shareholders and unitholders of record as of March 15, 2024.
On February 13, 2025, our board of trustees also declared cash distributions of $0.375 per Series A Preferred Share, Series B Preferred Share and Series A-1 preferred unit to shareholders and unitholders of record as of March 14, 2025. 48 Table of Contents Segment We manage our business as one reportable segment consisting of owning and managing self storage properties located in the United States.
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, gains on debt forgiveness, gains (losses) on early extinguishment of debt, casualty-related expenses, losses, and related recoveries and adjustments for unconsolidated partnerships and joint ventures.
These further adjustments consist of acquisition costs, integration costs, executive severance costs, gains on debt forgiveness, gains (losses) on early extinguishment of debt, casualty-related expenses, losses, and related recoveries and adjustments for unconsolidated partnerships and joint ventures. 37 Table of Contents Management uses FFO and Core FFO as key performance indicators in evaluating the operations of our properties.
Cash Flows At December 31, 2023, we had $65.0 million in cash and cash equivalents and $22.7 million of restricted cash, an increase in cash and cash equivalents of $29.7 million and an increase in restricted cash of $15.8 million from December 31, 2022.
Cash Flows At December 31, 2024, we had $50.4 million in cash and cash equivalents and $0.3 million of restricted cash, a decrease in cash and cash equivalents of $14.6 million and a decrease in restricted cash of $22.4 million from December 31, 2023.
Critical Accounting Policies and Use of Estimates Our financial statements have been prepared on the accrual basis of accounting in accordance with GAAP.
Net Income Attributable to Noncontrolling Interests Net income attributable to noncontrolling interests was $71.8 million for the year ended December 31, 2024, compared to $80.3 million for the year ended December 31, 2023. Critical Accounting Policies and Use of Estimates Our financial statements have been prepared on the accrual basis of accounting in accordance with GAAP.
August 2030 and August 2032 Senior Unsecured Notes On October 22, 2020, our operating partnership issued $150.0 million of 2.99% senior unsecured notes due August 5, 2030 and $100.0 million of 3.09% senior unsecured notes due August 5, 2032 in a private placement to certain institutional investors.
September 2028, September 2031 and 2034 Senior Unsecured Notes On September 5, 2024, our operating partnership issued $75.0 million of 5.40% senior unsecured notes due September 5, 2028 (the "September 2028 Notes"), $125.0 million of 5.55% senior unsecured notes due September 5, 2031 (the "September 2031 Notes"), and $150.0 million of 5.74% senior unsecured notes due September 5, 2034 ("September 2034 Notes") in a private placement to certain institutional investors.
Of these properties, 306 were acquired by us from our PROs, 502 were acquired by us from third-party sellers and one was acquired by us from the 2016 Joint Venture. Our Unconsolidated Real Estate Ventures We seek to opportunistically partner with institutional funds and other institutional investors to acquire attractive portfolios utilizing a promoted return structure.
Our Unconsolidated Real Estate Ventures We seek to opportunistically partner with institutional funds and other institutional investors and other third parties to acquire attractive portfolios which may utilize a promoted return structure.
Total revenue increased despite a decrease in total portfolio average occupancy from 91.9% for the year ended December 31, 2022 to 88.0% for the year ended December 31, 2023. 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.
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. 34 Table of Contents Rental Revenue Rental revenue decreased by $93.7 million, or 11.8%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Our primary uses of financing cash flows for the year ended December 31, 2022 were for principal payments on existing debt of $960.4 million (which included $956.0 million of principal repayments under the Revolver and $4.4 million in fixed rate mortgage principal payments), distributions to common shareholders of $195.7 million, distributions to noncontrolling interests of $141.0 million, and distributions to preferred shareholders of $13.4 million. 51 Table of Contents Credit Facility and Term Loan Facilities As of December 31, 2023, our credit facility provided for total borrowings of $1.955 billion, consisting of five components: (i) a Revolver which provides for a total borrowing commitment up to $950.0 million, whereby we may borrow, repay and re-borrow amounts under the Revolver, (ii) a $275.0 million Term Loan B, (iii) a $325.0 million Term Loan C, (iv) a $275.0 million Term Loan D and (v) a $130.0 million Term Loan E.
Credit Facility and Term Loan Facilities As of December 31, 2024, our credit facility provided for total borrowings of $1.355 billion, consisting of the following components: (i) a Revolver which provides for a total borrowing commitment up to $950.0 million, whereby we may borrow, repay and re-borrow amounts under the Revolver, (ii) a $275.0 million Term Loan D and (iii) a $130.0 million Term Loan E.
Restricted cash primarily consists of escrowed funds deposited with financial institutions resulting from property sales for which we elected to purchase replacement property in accordance with Section 1031 of the Code, and for real estate taxes, insurance, and other reserves for capital improvements in accordance with our loan agreements.
Restricted cash primarily consists of escrowed funds deposited with financial institutions for real estate taxes, insurance, and other reserves for capital improvements in accordance with our loan agreements. The following discussion relates to changes in cash due to operating, investing, and financing activities, which are presented in our consolidated statements of cash flows included in Item 8 of this report.
The Revolver, Term Loan B, Term Loan C, Term Loan D and Term Loan E are not subject to any scheduled reduction or amortization payments prior to maturity. As of December 31, 2023, we had an expansion option under the credit facility, which, if exercised in full, would provide for a total credit facility of $2.5 billion.
As of December 31, 2024, we had an expansion option under the credit facility, which, if exercised in full, would provide for a total credit facility of $1.900 billion.
A further short-term liquidity requirement relates to distributions to our common and preferred shareholders and holders of preferred units, OP units, subordinated performance units, LTIP units, DownREIT OP units and DownREIT subordinated performance units. We expect to fund short-term liquidity requirements from our operating cash flow, cash on hand and borrowings under our credit facility.
Our short-term liquidity requirements consist primarily of property operating expenses, property acquisitions, capital expenditures, general and administrative expenses and principal and interest on our outstanding indebtedness. A further short-term liquidity requirement relates to distributions to our common and preferred shareholders and holders of preferred units, OP units, LTIP units and DownREIT OP units.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIf our reference rates (currently Daily Simple SOFR) were to increase or decrease by 100 basis points, the increase or decrease in interest expense on the variable-rate debt (excluding variable-rate debt subject to interest rate swaps) would decrease or increase future earnings and cash flows by approximately $5.1 million annually.
Biggest changeIf our reference rates (SOFR) were to increase or decrease by 100 basis points, the increase or decrease in interest expense on the variable-rate debt (excluding variable-rate debt subject to interest rate swaps) would decrease or increase future earnings and cash flows by approximately $2.2 million annually.
As of December 31, 2023, we had $511.0 million of debt subject to variable interest rates (excluding variable-rate debt subject to interest rate swaps).
As of December 31, 2024, we had $223.3 million of debt subject to variable interest rates (excluding variable-rate debt subject to interest rate swaps).

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