IPO Report: National Storage Affiliates Trust (NSA)

Francis Gaskins |

National_Storage_Affiliates.jpg

National Storage Affiliates Trust (NSA) is a Maryland real estate investment trust focused on the ownership, operation, and acquisition of self-storage properties located within the top 100 MSAs throughout the United States.

Two other companies are scheduled for the week of April 20. The full IPO calendar is available at IPO Premium.

NSA is based in Greenwood Village, CO. The company scheduled a $320 million IPO on the NYSE. The market capitalization is $674 million, at a price range midpoint of $16.  The IPO is scheduled for Thursday, April 23, 2015, and priced at $13, 19% below mid-range. The conclusion is the same.

SEC filings

Manager, Joint-managers: Jefferies/ Morgan Stanley/ Wells Fargo Securities
Co-managers: KeyBanc Capital: Baird; RBC Capital; SunTrust Robinson; Capital One Securities

National Storage Affiliates Trust Overview

According to the 2014 Self-Storage Almanac, NSA is the sixth largest owner and operator of self-storage properties and the largest privately-owned operator of self-storage properties in the United States based on number of properties, self-storage units, and rentable square footage.

National Storage Affiliates Trust Conclusion

Neutral

Has a more attractive FFO (funds from operations) ratio to market cap than public competitors: 6.1%. See report below for comparison

Price-to-book is 1.2, but that's at current market prices

Selling 48% on the IPO

National Storage Affiliates Trust Valuation

Glossary
Pre-IPO grade-score summary
Many IPOs in today’s environment are graded C+ and scored 7.
If the pre-IPO grade is below C+ or the score is below 7,
then our analysts may have some concerns about the company’s
outlook and/or its market segment.
If the pre-ipo grade is above C+ or the score is above 7,
then our analysts believe the company’s overall business outlook is very favorable.
C = unprofitable, C+ = profitable

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

National Storage Affiliates Trust (NSA)

$672

5.6

163.9

1.2

1.3

48%

             

Compare

           

Other self-storage REITS

% owned

     

Sorted by marketcap

FFO/Market cap

 by institutions

Price /BkVlue

Price /TanBV

Dividend yield

   

Funds from Operations

       

Public Storage (PSA)

$33,060

4.5%

78%

3.4

3.4

2.85%

ExtraSpace (EXR)

$7,110

3.9%

97%

4.1

4.1

2.80%

CubeSmart (CUBE)

$3,790

4.5%

104%

2.6

2.6

2.68%

Sovran Self Storage (SSS)

$3,220

2.4%

87%

3.3

3.3

2.68%

National Storage Affiliates Trust (NSA)

$672

6.1%

 

1.2

1.3

not indicated

Note: NSA is a roll-up of storage facilities so the current price to book is not a meaningful comparison.

National Storage Affiliates Trust Business

NSA is a Maryland real estate investment trust focused on the ownership, operation, and acquisition of self-storage properties located within the top 100 MSAs throughout the United States.

National Storage Affiliates Trust 6th largest

According to the 2014 Self-Storage Almanac, NSA is the sixth largest owner and operator of self-storage properties and the largest privately-owned operator of self-storage properties in the United States based on number of properties, self-storage units, and rentable square footage.

National Storage Affiliates Trust CEO

NSA's 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. 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.

NSA believes that his vision, which is the foundation of our company, aligns the interests of regional self-storage operators with those of public shareholders by allowing the operators to participate alongside shareholders in our financial performance and their contributed portfolios.

National Storage Affiliates Trust Formation

NSA operates business through, and is the sole general partner of the operating partnership, NSA OP,  LP, a Delaware limited partnership.

The  operating partnership commenced its substantive operations on April 1, 2013 following the contribution of 12 properties from the initial PROs to the operating partnership.

National Storage Affiliates Trust In-place portfolio

Upon the completion of the IPO the formation transactions, NSA's in-place portfolio will consist of 246 self-storage properties, located in 16 states, comprising approximately 13.7 million rentable square feet, configured in over 100,000 storage units.

Of these properties, 199 were or will be acquired by from NSA's PROs and 47 will have been acquired by NSA from third-party sellers.

In addition, NSA has a pipeline of 114 properties, comprising approximately 7.3 million rentable square feet.

National Storage Affiliates Trust Competition

NSA operates in competitive markets, often where tenants have multiple self-storage properties from which to choose.

Actions by competitors, such as increased development, may decrease or prevent increases in  occupancy and rental rates, while increasing the operating expenses of properties.

These competitors may also drive up the price we pay for self-storage properties or other assets we seek to acquire or may succeed in acquiring those properties or assets themselves.

Publicly held competitors include

National Storage Affiliates Trust 5% shareholders pre-IPO

Kevin M. Howard 16%
Arlen D. Nordhagen 11%
Mark Van Mourick 2.6%

National Storage Affiliates Trust Dividends

U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains.

NSA didn't specify a target payout.

National Storage Affiliates Trust Use of proceeds

NSA expects to receive $292 million from its IPO.  Proceeds are allocated as follows:

•  $41.9 million to acquire 21 self-storage properties within the in-place portfolio;

•  $134.0 million to repay in full our US Bank senior term loans, our unsecured term loan, and our mezzanine loan (including prepayment penalties); and

•  $116.3 million to pay down our revolving line of credit.

The net proceeds remaining after the uses described above will be used for general corporate and working capital purposes.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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