GREENWOOD VILLAGE, CO - National Storage Affiliates (NYSE:NSA) Trust, a Maryland-based real estate investment trust (REIT), announced today the completion of its previously disclosed internalization process, which was initiated on July 1, 2024. The internalization involved the acquisition of assets from its participating regional operators (PROs), including management contracts, intellectual property, and tenant insurance assets.
As part of the internalization, the company terminated its PRO structure, which included asset management and property management contracts. This move also resulted in the termination of non-compete, non-solicitation, and captive pipeline obligations between the company and the PROs, as well as the company's obligations to pay supervisory and administrative fees or reimbursements to the PROs.
In exchange for these assets, National Storage Affiliates Trust paid $32.6 million in cash and issued 1,548,866 Class A OP Units to the PROs. The valuation of the assets was determined based on a multiple of normalized annual EBITDA from the management contracts over the 12-month period ending December 31, 2023, and a valuation methodology for tenant insurance assets consistent with prior internalizations.
Following the closure of the transaction, the company reported that 11,906,167 outstanding subordinated performance units converted into an aggregate of 17,984,787 Class A OP Units and DownREIT OP Units. Additionally, the company repurchased 194,888 subordinated performance units for cash on June 28, 2024.
The newly issued Class A OP Units may be redeemed for cash after a specified lock-up period, with the company retaining the right to satisfy this redemption obligation by issuing one Common Share per unit tendered. The company has chosen to report early the potential private placement of its Common Shares that may result from this redemption option.
National Storage Affiliates Trust has planned for a phased transition of the majority of operations over the next 12 months and has entered into new asset management and property management agreements with several PROs for all or part of this transition period at newly negotiated management fees.
This move is seen as a strategic step in streamlining the company's operations and is based on information from a press release statement.
In other recent news, National Storage Affiliates Trust has been making significant strides. The company recently elected Michael Schall to its Board of Trustees, an addition that is expected to bring valuable leadership and industry expertise to the team. Schall's tenure at Essex Property Trust (NYSE:ESS), where he served in several key roles, and his current board membership at Pebblebrook Hotel (NYSE:PEB) Trust, underscore his qualifications for this role.
In the company's first quarter 2024 earnings report, it was noted that strategic initiatives aimed at strengthening the balance sheet and enhancing earnings per share were completed. Despite a decline in move-in rates and same-store net operating income, National Storage Affiliates Trust is actively pursuing acquisitions and reaffirmed its 2024 outlook.
The company also completed a $200 million share buyback and maintains $750 million available on its revolving credit facility. It is negotiating approximately $200 million in acquisitions, with $25 million already under contract. These are recent developments that investors should keep an eye on as the company continues to navigate the market and execute its strategy.
InvestingPro Insights
In light of National Storage Affiliates Trust's recent internalization process, current and prospective investors might find the following insights from InvestingPro particularly relevant. The company's management has demonstrated confidence in its strategy through aggressive share buybacks, signaling a bullish outlook. The firm boasts a high shareholder yield and has shown a commitment to returning value to investors by raising its dividend for nine consecutive years.
From a financial perspective, National Storage Affiliates Trust is trading at a P/E ratio of 20.76, which is attractive relative to its near-term earnings growth. Moreover, analysts predict the company will be profitable this year, supported by a solid track record of profitability over the last twelve months. While analysts anticipate a sales decline in the current year, the company's dividend yield stands at an appealing 5.5%, with a dividend growth of 1.82% as of the last twelve months ending Q1 2024.
For those considering an investment in National Storage Affiliates Trust, it may be worth noting that the company is trading near its 52-week high, with a price of 94.95% of this peak. For a deeper dive into the company's financials and strategic analysis, explore additional InvestingPro Tips. Remember, using the coupon code PRONEWS24 can get you up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing access to valuable insights that could further inform your investment decisions.
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