UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2020
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-37351
National Storage Affiliates Trust
(Exact name of Registrant as specified in its charter)
 
Maryland46-5053858
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)


5200 DTC Parkway
Suite 2008400 East Prentice Avenue, 9th Floor
Greenwood Village, Colorado 80111
(Address of principal executive offices) (Zip code)

(720) 630-2600
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolsName of each exchange on which registered
Common Shares of Beneficial Interest, $0.01 par value per shareNSANew York Stock Exchange
Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per shareNSA Pr ANew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes ☒  No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ☒No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer☒Accelerated Filer☐
Non-accelerated Filer☐Smaller Reporting Company☐
Large Accelerated Filer ☐
Accelerated Filer ☒
Non-accelerated Filer ☐
Smaller Reporting Company ☐
Emerging Growth Company☒
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes ☐  No ☒
As of November 6, 2017, 44,473,012May 8, 2020, 68,143,770 common shares of beneficial interest, $0.01 par value per share, were outstanding.




NATIONAL STORAGE AFFILIATES TRUST
NATIONAL STORAGE AFFILIATES TRUST
TABLE OF CONTENTS
FORM 10-Q
Page
PART I. FINANCIAL INFORMATION
ITEM 1.Financial Statements
34
Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2020 and December 31, 20162019 (Unaudited)
34
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017March 31, 2020 and 20162019 (Unaudited)
45
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2017March 31, 2020 and 20162019 (Unaudited)
56
Condensed Consolidated StatementStatements of Changes in Equity for the NineThree Months Ended September 30, 2017March 31, 2020 and 2019 (Unaudited)
67
Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended September 30, 2017March 31, 2020 and 20162019 (Unaudited)
79
Notes to the Condensed Consolidated Financial Statements (Unaudited)
811
ITEM 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
2328
ITEM 3.Quantitative and Qualitative Disclosures About Market Risk
4345
ITEM 4.Controls and Procedures
4345
PART II. OTHER INFORMATION
ITEM 1.Legal Proceedings
4446
ITEM 1A.Risk Factors
4446
ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds
4447
ITEM 3.Defaults Upon Senior Securities
4448
ITEM 4.Mine Safety Disclosures
4448
ITEM 5.Other Information
4448
ITEM 6.Exhibits
4548
Signatures
4651





23


PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements


NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
(Unaudited)


March 31,December 31,
20202019
ASSETS
Real estate
Self storage properties$3,314,849  $3,091,719  
Less accumulated depreciation(363,527) (337,822) 
Self storage properties, net2,951,322  2,753,897  
Cash and cash equivalents18,689  20,558  
Restricted cash3,997  3,718  
Debt issuance costs, net3,067  3,264  
Investment in unconsolidated real estate ventures213,497  214,061  
Other assets, net64,503  65,441  
Operating lease right-of-use assets23,798  23,306  
Total assets$3,278,873  $3,084,245  
LIABILITIES AND EQUITY
Liabilities
Debt financing$1,731,669  $1,534,047  
Accounts payable and accrued liabilities40,127  37,966  
Interest rate swap liabilities84,703  19,943  
Operating lease liabilities25,243  24,665  
Deferred revenue16,076  15,523  
Total liabilities1,897,818  1,632,144  
Commitments and contingencies (Note 11)
Equity
Preferred shares of beneficial interest, par value $0.01 per share. 50,000,000 authorized, 8,732,719 and 8,727,119 issued and outstanding at March 31, 2020 and December 31, 2019, at liquidation preference218,318  218,178  
Common shares of beneficial interest, par value $0.01 per share. 250,000,000 authorized, 68,027,212 and 59,659,108 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively680  597  
Additional paid-in capital970,786  905,763  
Distributions in excess of earnings(213,447) (197,075) 
Accumulated other comprehensive loss(52,855) (7,833) 
Total shareholders' equity923,482  919,630  
Noncontrolling interests457,573  532,471  
Total equity1,381,055  1,452,101  
Total liabilities and equity$3,278,873  $3,084,245  
 September 30, December 31,
 2017 2016
ASSETS   
Real estate   
Self storage properties$2,075,845
 $1,844,336
Less accumulated depreciation(153,783) (110,803)
Self storage properties, net1,922,062
 1,733,533
Cash and cash equivalents13,673
 12,570
Restricted cash4,683
 2,767
Debt issuance costs, net2,427
 3,069
Investment in unconsolidated real estate venture88,224
 81,486
Other assets, net41,928
 44,730
Assets held for sale—
 13,937
Total assets$2,072,997
 $1,892,092
LIABILITIES AND EQUITY   
Liabilities   
Debt financing$1,071,854
 $878,954
Accounts payable and accrued liabilities27,894
 21,616
Deferred revenue12,711
 12,454
Total liabilities1,112,459
 913,024
Commitments and contingencies (Note 11)
 
Equity   
Common shares of beneficial interest, par value $0.01 per share. 250,000,000 shares authorized, 44,316,107 and 43,110,362 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively443
 431
Additional paid-in capital595,354
 576,365
Distributions in excess of earnings(38,117) (8,719)
Accumulated other comprehensive income8,724
 9,025
Total shareholders' equity566,404
 577,102
Noncontrolling interests394,134
 401,966
Total equity960,538
 979,068
Total liabilities and equity$2,072,997
 $1,892,092



See notes to condensed consolidated financial statements.


34


NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)


Three Months Ended
March 31,
20202019
REVENUE
Rental revenue$95,402  $82,855  
Other property-related revenue3,371  2,824  
Management fees and other revenue5,449  4,893  
Total revenue104,222  90,572  
OPERATING EXPENSES
Property operating expenses30,592  26,457  
General and administrative expenses11,094  10,380  
Depreciation and amortization29,105  24,349  
Other389  386  
Total operating expenses71,180  61,572  
OTHER (EXPENSE) INCOME
Interest expense(15,628) (13,211) 
Equity in losses of unconsolidated real estate ventures(340) (2,102) 
Acquisition costs(833) (157) 
Non-operating expense(192) (98) 
Other expense(16,993) (15,568) 
Income before income taxes16,049  13,432  
Income tax expense(286) (492) 
Net income15,763  12,940  
Net income attributable to noncontrolling interests(9,115) (5,529) 
Net income attributable to National Storage Affiliates Trust6,648  7,411  
Distributions to preferred shareholders(3,273) (2,588) 
Net income attributable to common shareholders$3,375  $4,823  
Earnings (loss) per share - basic and diluted$0.06  $0.08  
Weighted average shares outstanding - basic and diluted59,798  56,655  
Dividends declared per common share$0.33  $0.30  
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
REVENUE       
Rental revenue$64,715
 $51,263
 $182,713
 $135,548
Other property-related revenue2,145
 1,686
 6,071
 4,334
Management fees and other revenue1,998
 —
 5,978
 —
Total revenue68,858
 52,949
 194,762
 139,882
OPERATING EXPENSES       
Property operating expenses21,618
 17,330
 61,170
 46,064
General and administrative expenses7,480
 5,259
 22,066
 14,431
Depreciation and amortization18,463
 14,319
 54,946
 38,299
Total operating expenses47,561
 36,908
 138,182
 98,794
Income from operations21,297
 16,041
 56,580
 41,088
OTHER (EXPENSE) INCOME       
Interest expense(9,157) (6,265) (24,788) (17,050)
Loss on early extinguishment of debt—
 —
 —
 (136)
Equity in losses of unconsolidated real estate venture(710) —
 (2,260) —
Acquisition costs(139) (1,737) (450) (4,733)
Non-operating expense(9) (15) (75) (77)
Gain on sale of self storage properties106
 —
 5,743
 —
Other expense(9,909) (8,017) (21,830) (21,996)
Income before income taxes11,388
 8,024
 34,750
 19,092
Income tax expense(162) (80) (767) (301)
Net income11,226
 7,944
 33,983
 18,791
Net income attributable to noncontrolling interests(9,955) (7,955) (29,790) (9,222)
Net income (loss) attributable to National Storage Affiliates Trust$1,271
 $(11) $4,193
 $9,569
        
Earnings (loss) per share - basic$0.03
 $—
 $0.09
 $0.35
Earnings (loss) per share - diluted$0.03
 $—
 $0.09
 $0.25
        
Weighted average shares outstanding - basic44,269
 35,080
 43,967
 27,084
Weighted average shares outstanding - diluted44,269
 35,080
 43,967
 75,492
Dividends declared per common share$0.26
 $0.22
 $0.76
 $0.64



See notes to condensed consolidated financial statements.


45


NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(dollars in thousands)
(Unaudited)


Three Months Ended
March 31,
20202019
Net income$15,763  $12,940  
Other comprehensive (loss) income
Unrealized loss on derivative contracts(66,369) (8,039) 
Reclassification of other comprehensive loss (income) to interest expense612  (1,276) 
Other comprehensive (loss) income(65,757) (9,315) 
Comprehensive (loss) income(49,994) 3,625  
Comprehensive loss (income) attributable to noncontrolling interests14,349  (2,131) 
Comprehensive (loss) income attributable to National Storage Affiliates Trust$(35,645) $1,494  
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net income$11,226
 $7,944
 $33,983
 $18,791
Other comprehensive income (loss)       
Unrealized (loss) gain on derivative contracts(476) 243
 (2,715) (8,194)
Reclassification of other comprehensive loss to interest expense428
 920
 1,958
 1,829
Other comprehensive (loss) income(48) 1,163
 (757) (6,365)
Comprehensive income11,178
 9,107
 33,226
 12,426
Comprehensive income attributable to noncontrolling interests(9,936) (8,469) (29,514) (2,901)
Comprehensive income attributable to National Storage Affiliates Trust$1,242
 $638
 $3,712
 $9,525


See notes to condensed consolidated financial statements.


56


NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN EQUITY
(dollars in thousands, except share amounts)
(Unaudited)


Accumulated
AdditionalDistributionsOther
Preferred SharesCommon SharesPaid-inIn Excess OfComprehensiveNoncontrollingTotal
NumberAmountNumberAmountCapitalEarnings(Loss) IncomeInterestsEquity
Balances, December 31, 20186,900,000  $172,500  56,654,009  $567  $844,276  $(114,122) $13,618  $485,460  $1,402,299  
OP equity issued for property acquisitions:
Series A-1 preferred units, OP units and subordinated performance units, net of offering costs—  —  —  —  —  —  —  32,856  32,856  
Redemptions of OP units—  —  29,910  —  250  —  7  (257) —  
Effect of changes in ownership for consolidated entities—  —  —  —  (5,385) —  (182) 5,567  —  
Equity-based compensation expense—  —  —  —  90  —  —  1,022  1,112  
Issuance of LTIP units for acquisition expenses—  —  —  —  —  —  —  5  5  
Issuance of restricted common shares—  —  18,218  —  —  —  —  —  —  
Vesting and forfeitures of restricted common shares, net—  —  (3,451) —  (69) —  —  —  (69) 
Reduction in receivables from partners of the operating partnership—  —  —  —  —  —  —  139  139  
Preferred share dividends—  —  —  —  —  (2,588) —  —  (2,588) 
Common share dividends—  —  —  —  —  (17,010) —  —  (17,010) 
Distributions to noncontrolling interests—  —  —  —  —  —  —  (17,181) (17,181) 
Other comprehensive income—  —  —  —  —  —  (5,917) (3,398) (9,315) 
Net income—  —  —  —  —  7,411  —  5,529  12,940  
Balances, March 31, 20196,900,000  $172,500  56,698,686  $567  $839,162  $(126,309) $7,526  $509,742  $1,403,188  
         Accumulated    
     Additional Distributions Other    
 Common Shares Paid-in In Excess Of Comprehensive Noncontrolling Total
 Number Amount Capital Earnings Income Interests Equity
Balances, December 31, 201643,110,362
 $431
 $576,365
 $(8,719) $9,025
 $401,966
 $979,068
OP equity issued for property acquisitions:             
OP units and subordinated performance units, net of offering costs—
 —
 —
 —
 —
 13,058
 13,058
LTIP units—
 —
 —
 —
 —
 854
 854
Issuance of subordinated performance units—
 —
 —
 —
 —
 7,000
 7,000
Redemptions of OP units1,189,801
 12
 15,620
 —
 245
 (15,877) —
Effect of changes in ownership for consolidated entities—
 —
 3,207
 —
 (65) (3,142) —
Equity-based compensation expense—
 —
 182
 —
 —
 2,662
 2,844
Issuance of LTIP units for acquisition expenses—
 —
 —
 —
 —
 10
 10
Issuance of restricted common shares16,525
 —
 —
 —
 —
 —
 —
Vesting and forfeitures of restricted common shares, net(581) —
 (20) —
 —
 —
 (20)
Reduction in receivables from partners of OP—
 —
 —
 —
 —
 628
 628
Other comprehensive loss—
 —
 —
 —
 (481) (276) (757)
Common share dividends—
 —
 —
 (33,591) —
 —
 (33,591)
Distributions to noncontrolling interests—
 —
 —
 —
 —
 (42,539) (42,539)
Net income—
 —
 —
 4,193
 —
 29,790
 33,983
Balances, September 30, 201744,316,107
 $443
 $595,354
 $(38,117) $8,724
 $394,134
 $960,538

See notes to condensed consolidated financial statements.


67

NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(dollars in thousands, except share amounts)
(Unaudited)
Accumulated
AdditionalDistributionsOther
Preferred SharesCommon SharesPaid-inIn Excess OfComprehensiveNoncontrollingTotal
NumberAmountNumberAmountCapitalEarnings(Loss) IncomeInterestsEquity
Balances, December 31, 20198,727,119  $218,178  59,659,108  $597  $905,763  $(197,075) $(7,833) $532,471  $1,452,101  
OP equity issued for property acquisitions:
OP units and subordinated performance units, net of offering costs—  —  —  —  —  —  —  6,206  6,206  
LTIP units—  —  —  —  —  —  —  1,011  1,011  
Redemptions of OP units—  —  118,961  1  1,437  —  (62) (1,376) —  
Issuance of common shares, net of offering costs—  —  125,000  1  4,248  —  —  —  4,249  
Merger and internalization of PRO, net of issuance costs—  —  8,105,192  81  43,499  —  (402) (33,583) 9,595  
Redemption of Series A-1 preferred units5,600  140  —  —  —  —  —  (140) —  
Effect of changes in ownership for consolidated entities—  —  —  —  15,857  —  (2,265) (13,592) —  
Equity-based compensation expense—  —  —  —  76  —  —  698  774  
Issuance of LTIP units for acquisition expenses—  —  —  —  —  —  —  40  40  
Issuance of restricted common shares—  —  21,861  —  —  —  —  —  —  
Vesting and forfeitures of restricted common shares, net—  —  (2,910) —  (94) —  —  —  (94) 
Preferred share dividends—  —  —  —  —  (3,273) —  —  (3,273) 
Common share dividends—  —  —  —  —  (19,747) —  —  (19,747) 
Distributions to noncontrolling interests—  —  —  —  —  —  —  (19,813) (19,813) 
Other comprehensive loss—  —  —  —  —  —  (42,293) (23,464) (65,757) 
Net income—  —  —  —  —  6,648  —  9,115  15,763  
Balances, March 31, 20208,732,719  $218,318  68,027,212  $680  $970,786  $(213,447) $(52,855) $457,573  $1,381,055  


See notes to condensed consolidated financial statements.

8

NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)


Three Months Ended
March 31,
20202019
OPERATING ACTIVITIES
Net income$15,763  $12,940  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization29,105  24,349  
Amortization of debt issuance costs754  693  
Amortization of debt discount and premium, net(356) (352) 
Mark-to-market changes in value on equity securities142  —  
Equity-based compensation expense774  1,112  
Equity in losses of unconsolidated real estate ventures340  2,102  
Distributions from unconsolidated real estate ventures3,325  3,400  
Change in assets and liabilities, net of effects of self storage property acquisitions:
Other assets(118) 2,008  
Accounts payable and accrued liabilities1,086  607  
Deferred revenue(130) (461) 
Net Cash Provided by Operating Activities50,685  46,398  
INVESTING ACTIVITIES
Acquisition of self storage properties(209,981) (139,579) 
Capital expenditures(4,909) (4,208) 
Investments in and advances to unconsolidated real estate ventures(3,125) —  
Distributions from unconsolidated real estate ventures—  1,017  
Deposits and advances for self storage property and other acquisitions(500) (811) 
Proceeds from sale of equity securities7,560  —  
Expenditures for corporate furniture, equipment and other(157) (125) 
Net Cash Used In Investing Activities(211,112) (143,706) 
FINANCING ACTIVITIES
Proceeds from issuance of common shares4,249  —  
Borrowings under debt financings244,000  188,500  
Receipts for OP unit subscriptions—  318  
Principal payments under debt financings(46,579) (51,778) 
Payment of dividends to common shareholders(19,747) (17,010) 
Distributions to preferred shareholders(3,273) (2,588) 
Distributions to noncontrolling interests(19,813) (17,002) 
Debt issuance costs—  (22) 
Equity offering costs—  (50) 
Net Cash Provided By Financing Activities158,837  100,368  
(Decrease) Increase in Cash, Cash Equivalents and Restricted Cash(1,590) 3,060  
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period24,276  16,363  
End of period$22,686  $19,423  
 Nine Months Ended
September 30,
 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$33,983
 $18,791
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization54,946
 38,299
Amortization of debt issuance costs1,613
 1,493
Amortization of debt discount and premium, net(1,181) (1,557)
Loss on debt extinguishment—
 136
Gain on sale of self storage properties(5,743) —
LTIP units issued for acquisition expenses—
 56
Equity-based compensation expense2,844
 1,913
Equity in losses of unconsolidated real estate venture2,260
 —
Distributions from unconsolidated real estate venture3,766
 —
Change in assets and liabilities, net of effects of self storage property acquisitions:   
Other assets(1,320) (681)
Accounts payable and accrued liabilities4,444
 9,993
Deferred revenue(740) (133)
Net Cash Provided by Operating Activities94,872
 68,310
CASH FLOWS FROM INVESTING ACTIVITIES   
Acquisition of self storage properties(209,680) (323,822)
Capital expenditures(10,011) (7,980)
Investments in and advances to unconsolidated real estate venture(12,647) (4,873)
Distributions from unconsolidated real estate venture250
 —
Deposits and advances for self storage property and other acquisitions(2,273) (5,415)
Expenditures for corporate furniture, equipment and other(294) (472)
Proceeds from sale of self storage properties17,529
 —
Net Cash Used In Investing Activities(217,126) (342,562)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from issuance of common shares—
 238,712
Proceeds from issuance of subordinated performance units7,000
 —
Borrowings under debt financings540,400
 498,500
Receipts for OP unit subscriptions848
 799
Collection of receivables from issuance of OP equity—
 570
Principal payments under debt financings(344,915) (401,204)
Payment of dividends to common shareholders(33,591) (17,593)
Distributions to noncontrolling interests(41,825) (33,392)
Debt issuance costs(2,037) (4,904)
Equity offering costs(607) (512)
Net Cash Provided By Financing Activities125,273
 280,976
Increase in Cash, Cash Equivalents and Restricted Cash3,019
 6,724
CASH, CASH EQUIVALENTS AND RESTRICTED CASH   
Beginning of period15,337
 9,377
End of period$18,356
 $16,101


Supplemental Cash Flow Information   
Cash paid for interest$23,775
 $16,501

See notes to condensed consolidated financial statements.


79

NATIONAL STORAGE AFFILIATES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
Supplemental Cash Flow and Noncash Information
Cash paid for interest$16,502  $12,142  
Operating lease right-of-use assets on balance sheet due to implementation of leases standard—  23,110  
Operating lease liabilities on balance sheet due to implementation of leases standard—  24,166  
Merger and internalization of PRO:
Redemptions and conversions of partnership interests33,583  —  
Issuance of common shares for management platform10,301  —  


See notes to condensed consolidated financial statements.

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NATIONAL STORAGE AFFILIATES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017March 31, 2020
(Unaudited)











1. ORGANIZATION AND NATURE OF OPERATIONS
National Storage Affiliates Trust was organized in the state of Maryland on May 16, 2013 and is a fully integrated, self-administered and self-managed real estate investment trust focused on the self storage sector. As used herein, "NSA," the "Company," "we," "our," and "us" refers to National Storage Affiliates Trust and its consolidated subsidiaries, except where the context indicates otherwise. The Company has elected and believes that it has qualified to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes ("REIT") commencing with its taxable year endingended December 31, 2015.
Through its controlling interest as the sole general partner of NSA OP, LP (its "operating partnership"), a Delaware limited partnership formed on February 13, 2013, the Company is focused on the ownership, operation, and acquisition of self storage properties located within the top 100 metropolitan statistical areas inthroughout the United States. Pursuant to the Agreement of Limited Partnership (as amended, the "LP Agreement") of its operating partnership, the Company's operating partnership is authorized to issue preferred units, Class A Units ("OP units"), different series of Class B Units ("subordinated performance units"), and Long-Term Incentive Plan Units ("LTIP units"). The Company also owns certain of its self storage properties through other consolidated limited partnership subsidiaries of its operating partnership, which the Company refers to as "DownREIT partnerships." The DownREIT partnerships issue equity ownership interests that are intended to be economically equivalent to the Company's OP units ("DownREIT OP units") and subordinated performance units ("DownREIT subordinated performance units").
The Company owned 413603 consolidated self storage properties in 2529 states and Puerto Rico with approximately 25.236.2 million rentable square feet in approximately 200,000288,000 storage units as of September 30, 2017.March 31, 2020. These properties are managed with local operational focus and expertise by the Company and its participating regional operators ("PROs"). These PROs are SecurCare Self Storage, Inc. and its controlled affiliates ("SecurCare"), Kevin Howard Real Estate Inc., d/b/a Northwest Self Storage and its controlled affiliates ("Northwest"), Optivest Properties LLC and its controlled affiliates ("Optivest"), Guardian Storage Centers LLC and its controlled affiliates ("Guardian"), Move It Self Storage and its controlled affiliates ("Move It"), Arizona Mini Storage Management Company d/b/a Storage Solutions and its controlled affiliates ("Storage Solutions"), Hide-Away Storage Services, Inc. and its controlled affiliates ("Hide-Away") and, an affiliate of Shader Brothers Corporation d/b/a Personal Mini Storage ("Personal Mini"), Southern Storage Management Systems, Inc. d/b/a Southern Self Storage ("Southern") and affiliates of Orlando, Florida.Investment Real Estate Management, LLC d/b/a Moove In Self Storage of York, Pennsylvania ("Moove In").
On March 31, 2020, the Company closed on the mergers of its largest PRO, SecurCare Self Storage, Inc. and its controlled affiliates ("SecurCare"), and DLAN Corporation ("DLAN") with and into wholly-owned subsidiaries of the Company. As a result of the mergers, SecurCare's property management platform and related intellectual property were internalized by the Company, and the Company no longer pays any supervisory and administrative fees or reimbursements to SecurCare. In addition, distributions on the series of subordinated performance units related to SecurCare's managed portfolio were discontinued. As part of the internalization, most of SecurCare's employees and other key persons were offered employment by the Company and continue managing SecurCare's portfolio of properties under the brand SecurCare as members of the Company's existing property management platform.
As of March 31, 2020, the Company also managed through its property management platform an additional portfolio of 177 properties owned by the Company's unconsolidated real estate ventures. These properties contain approximately 12.7 million rentable square feet, configured in approximately 104,000 storage units and located across 21 states. The Company owns a 25% equity interest in each of its unconsolidated real estate ventures.
As of March 31, 2020, in total, the Company operated and held ownership interests in 780 self storage properties located across 35 states and Puerto Rico with approximately 48.9 million rentable square feet in approximately 392,000 storage units.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles ("GAAP") and have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by GAAP for

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complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the condensed consolidated financial statements have been included. The Company's results of operations for the quarterly period ended September 30, 2017March 31, 2020 are not necessarily indicative of the results to be expected for the full year or any other future period.
Principles of Consolidation
The Company's financial statements include the accounts of its operating partnership and its controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidation of entities.
When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if the entity is deemed a variable interest entity ("VIE"), and if the Company is deemed to be the primary beneficiary, in accordance with authoritative guidance issued on the consolidation of VIEs. When an entity is not deemed to be a VIE, the Company considers 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. The Company consolidates all entities that are VIEs and of which the Company is deemed to be the primary beneficiary. The Company has determined that its operating partnership is a VIE. The sole significant asset of National Storage Affiliates Trust is its investment in its


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operating partnership, and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of its operating partnership.
As of September 30, 2017March 31, 2020 and December 31, 2016,2019, the Company's operating partnership was the primary beneficiary of, and therefore consolidated, 21 DownREIT partnerships that are considered VIEs, which owned 34 self storage properties. The net book value of the real estate owned by these VIEs was $249.9$231.1 million and $256.8$233.1 million as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively. For thecertain DownREIT partnerships which are subject to fixed rate mortgages payable, the carrying value of such fixed rate mortgages payable held by these VIEs was $140.8$135.9 million and $41.4$136.4 million as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively. The creditors of the consolidated VIEs do not have recourse to the Company's general credit.
Reclassifications
Certain amounts in the condensed consolidated financial statements and related notes have been reclassified to conform to the current year presentation. Such reclassifications do not impact the Company's previously reported financial position or net income (loss).
Revenue Recognition
Rental revenue
Rental revenue consists of space rentals and related fees. Management has determined that all of the Company's leases are operating leases. Substantially all leases may be terminated on a month-to-month basis and rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term.
Other property-related revenue
Other property-related revenue primarily consists of ancillary revenues such as tenant insurance-relatedinsurance and/or tenant warranty protection-related access fees and commissions and sales of storage supplies which are recognized in the period earned.
The Company and certain of the Company’s PROs have tenant insurance- and/or tenant warranty protection plan-related arrangements with insurance companies and the Company’s tenants. During the three months ended March 31, 2020 and 2019, the Company recognized $2.6 million and $2.1 million, respectively, of tenant insurance and tenant warranty protection plan revenues.
The Company sells boxes, packing supplies, locks and other retail merchandise at its properties. During the three months ended March 31, 2020 and 2019, the Company recognized retail sales of $0.4 million and $0.4 million, respectively.

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Management fees and other revenue
Management fees and other revenue consist of property management fees, platform fees, call center fees, acquisition fees, and a portion of tenant warranty protection or tenant insurance proceeds that the Company earns for managing and operating its unconsolidated real estate ventures.
With respect to both the 2018 Joint Venture and the 2016 Joint Venture (as each is defined in Note 5), the Company provides supervisory and administrative property management services, centralized call center services, and technology platform and revenue management services to the properties in the unconsolidated real estate ventures. The property management fees are equal to 6% of monthly gross revenues and net sales revenues from the assets of the unconsolidated real estate ventures, and the platform fees are equal to $1,250 per month per unconsolidated real estate venture property. With respect to the 2016 Joint Venture only, the call center fees are equal to 1% of each of monthly gross revenues and net sales revenues from the 2016 Joint Venture properties. During the three months ended March 31, 2020 and 2019, the Company recognized property management fees, call center fees and platform fees of $3.2 million and $3.2 million, respectively.
For acquisition fees, the Company provides sourcing, underwriting and administration services to the unconsolidated real estate ventures. The 2016 Joint Venture paid the Company a $4.1 million acquisition fee equal to 0.65% of the gross capitalization (including debt and equity) of the original 66-property 2016 Joint Venture portfolio (the "Initial 2016 JV Portfolio") in 2016, at the time of the Initial 2016 JV Portfolio acquisition. The 2018 Joint Venture paid the Company a $4.0 million acquisition fee related to the initial acquisition of properties by the 2018 Joint Venture (the "Initial 2018 JV Portfolio") in 2018, at the time of the Initial 2018 JV Portfolio acquisition. These fees are refundable to the unconsolidated real estate ventures, on a prorated basis, if the Company is removed as the managing member during the initial four year life of the unconsolidated real estate ventures and as such, the Company's performance obligation for these acquisition fees are satisfied over a four year period. As of March 31, 2020 and December 31, 2019, the Company had deferred revenue related to the acquisition fees of $2.4 million and $2.8 million, respectively.
The Company also earns acquisition fees for properties acquired by the unconsolidated real estate ventures subsequent to the Initial 2016 JV Portfolio and the Initial 2018 JV Portfolio. These fees are based on a percentage of the gross capitalization of the acquired assets determined by the members of the 2016 Joint Venture and the 2018 Joint Venture, and are generally earned when the unconsolidated real estate ventures obtain title and control of an acquired property. During the three months ended March 31, 2020 and 2019, the Company recognized acquisition fees of $0.5 million and $0.5 million, respectively.
An affiliate of the Company facilitates tenant warranty protection or tenant insurance programs for tenants of the properties in the unconsolidated real estate ventures in exchange for 50% of all proceeds from such programs at each unconsolidated real estate venture property. During the three months ended March 31, 2020 and 2019, the Company recognized $1.6 million and $1.2 million, respectively, of revenue related to these activities.
Gain on sale of self storage properties
The Company recognizes gains from disposition of facilities only upon closing in accordance with the guidance on sales of real estate. Payments received from purchasers prior to closing are recorded as deposits.nonfinancial assets. Profit on real estate sold is recognized using the full accrual method upon closing when the collectabilityall, or substantially all, of the sales pricepromised consideration has been received and is reasonably assurednonrefundable and the Company is not obligatedhas transferred control of the facilities to perform significant activities after the sale. Profit may be deferred in whole or part until the sale meets the requirements of profit recognition on sales under this guidance.
The Company earns management and other fees for managing and operating its unconsolidated real estate venture. These fees include property management fees, call center fees, platform fees, acquisition fees, development fees and a portion of tenant warranty protection proceeds. The Company recognizes these fees when they are earned, fixed and determinable. The fees are reported in management fees and other revenue in the Company's condensed consolidated statements of operations.purchaser.
Investments in Unconsolidated Real Estate VentureVentures
The Company’s investmentinvestments in its unconsolidated real estate venture isventures are recorded under the equity method of accounting in the accompanying condensed consolidated financial statements. Under the equity method, the Company’s investmentinvestments in unconsolidated real estate venture isventures are stated at cost and adjusted for the Company’s share of net earnings or losses and reduced by distributions. Equity in earnings (losses) is recognized based on the Company’s ownership interest in the earnings (losses) of the unconsolidated real estate venture.ventures. The Company follows the "look through" approach"nature of the distribution approach" for classification of distributions from its unconsolidated real estate ventureventures in its condensed consolidated statements of cash flows. Under this approach, distributions are reported underon the basis of the nature of the activity or activities that generated the distributions as either a return on investment, which are classified as operating cash flow unless the facts and circumstances of a specific distribution clearly indicate that it isflows, or a return of capitalinvestment (e.g., proceeds from the unconsolidated real estate venture’sventures' sale of assets), in which case it isare reported as an investing activity.cash flows.

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Noncontrolling Interests
All of the limited partner equity interests ("OP equity") in the operating partnership not held by the Company are reflected as noncontrolling interests. Noncontrolling interests also include ownership interests in DownREIT partnerships held by entities other than the operating partnership or its subsidiaries. In the condensed consolidated statements of operations, the Company allocates net income (loss) attributable to noncontrolling interests to arrive at net income (loss) attributable to National Storage Affiliates Trust.
For transactions that result in changes to the Company's ownership interest in its operating partnership, the carrying amount of noncontrolling interests is adjusted to reflect such changes. The difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted is reflected as an adjustment to additional paid-in capital on the condensed consolidated balance sheets.


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Allocation of Net Income (Loss)
The distribution rights and priorities set forth in the operating partnership's LP Agreement differ from what is reflected by the underlying percentage ownership interests of the unitholders. Accordingly, the Company allocates GAAP income (loss) utilizing the hypothetical liquidation at book value ("HLBV") method, in which the Company allocates income or loss based on the change in each unitholders’ claim on the net assets of its operating partnership at period end after adjusting for any distributions or contributions made during such period. The HLBV method is commonly applied to equity investments where cash distribution percentages vary at different points in time and are not directly linked to an equity holder’s ownership percentage.
The HLBV method is a balance sheet-focused approach to income (loss) allocation. A calculation is prepared at each balance sheet date to determine the amount that unitholders would receive if the operating partnership were to liquidate all of its assets (at GAAP net book value) and distribute the resulting proceeds to its creditors and unitholders based on the contractually defined liquidation priorities. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is used to derive each unitholder's share of the income (loss) for the period. Due to the stated liquidation priorities and because the HLBV method incorporates non-cash items such as depreciation expense, in any given period, income or loss may be allocated disproportionately to unitholders as compared to their respective ownership percentage in the operating partnership, and net income (loss) attributable to National Storage Affiliates Trust could be more or less net income than actual cash distributions received and more or less income or loss than what may be received in the event of an actual liquidation. Additionally, the HLBV method could result in net income (or net loss) attributable to National Storage Affiliates Trust during a period when the Company reports consolidated net loss (or net income), or net income (or net loss) attributable to National Storage Affiliates Trust in excess of the Company's consolidated net income (or net loss). The computations of basic and diluted earnings (loss) per share may be materially affected by these disproportionate income (loss) allocations, resulting in volatile fluctuations of basic and diluted earnings (loss) per share.
Other Comprehensive Income (Loss)
The Company has cash flow hedge derivative instruments that are measured at fair value with unrealized gains or losses recognized in other comprehensive income (loss) with a corresponding adjustment to accumulated other comprehensive income (loss) within equity, as discussed further in Note 12. Under the HLBV method of allocating income (loss) discussed above, a calculation is prepared at each balance sheet date by applying the HLBV method including, and excluding, the assets and liabilities resulting from the Company's cash flow hedge derivative instruments to determine comprehensive income (loss) attributable to National Storage Affiliates Trust. As a result of the distribution rights and priorities set forth in the operating partnership's LP Agreement, in any given period, other comprehensive income (loss) may be allocated disproportionately to unitholders as compared to their respective ownership percentage in the operating partnership and as compared to their respective allocation of net income (loss).
Restricted Cash
The Company's restricted cash consists of escrowed funds deposited with financial institutions for real estate taxes, insurance and other reserves for capital improvements in accordance with the Company's loan agreements.
Assets held for sale

The Company classifies properties as held for sale when certain criteria are met. At such time, the properties, including significant assets and liabilities that are expected to be transferred as part of a sale transaction, are presented separately on the condensed consolidated balance sheet at the lower of carrying value or estimated fair value less costs to sell and depreciation is no longer recognized. As of December 31, 2016 the Company had two self storage properties classified as held for sale. The results of operations for the self storage properties classified as held for sale are reflected within income from operations in the Company's condensed consolidated statements of operations.14

Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


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Recent Accounting Pronouncements
In May 2014,March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognitionreference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in GAAP when it becomes effective. The Company plans to adopt ASU 2014-09 on its effective date, January 1, 2018, using the cumulative effect transition method. The Company2020-04 is evaluating the effect that ASU 2014-09 will have on its condensed consolidated financial statementsoptional and related disclosures. As ASU 2014-09 does not impact lessor accounting,may be elected over time as reference rate reform activities occur. During three months ended March 31, 2020, the Company does not believeelected to apply the adoptionhedge accounting expedients related to probability and the assessments of ASU 2014-09 will significantly impact its accountingeffectiveness for rental revenue. The Company expectsfuture LIBOR-indexed cash flows to assume that certain property-related ancillary revenues and management and other feesthe index upon which future hedged transactions will be inbased matches the scopeindex on the corresponding derivatives. Application of the new guidance but does not anticipate material changes to its recognition of revenue as a result of adopting ASU 2014-09.
In February 2016, the FASB issued ASU 2016-02, Leases, which amends the existing guidance for accounting for leases, including requiring lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases and lessees to recognize most leases on-balance sheet as lease liabilities with corresponding right-of-use assets. The Company will adopt ASU 2016-02 effective January 1, 2019. ASU 2016-02 requires a modified retrospective approach, with entities applying the new guidance at the beginning of the earliest period presented in the financial statements in which they first apply the new standard, with certain elective transition relief. The Company is evaluating the effect that ASU 2016-02 will have on its operating leases, condensed consolidated financial statements and related disclosures.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows, which clarifies the classification of certain cash receipts and cash payments in the statement of cash flows, including debt prepayment or extinguishment costs, settlement of contingent consideration arising from a business combination, insurance settlement proceeds, and distributions from certain equity method investees. The Company adopted ASU 2016-15 effective January 1, 2017, which did not result in any changes tothese expedients preserves the presentation of amounts shownderivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. See Note 12 for additional detail about the Company's derivatives.
3. SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS
Shareholders' Equity
Internalization and Acquisition of PRO
As discussed in Note 1 and further below, on March 31, 2020, the Company closed on the previously announced mergers of SecurCare and DLAN with and into wholly-owned subsidiaries of the Company. In connection with the mergers, the Company issued 8,105,192 common shares to the owners of SecurCare and DLAN, which represented a 1% discount to an aggregate of 8,187,052 OP units that each of SecurCare and DLAN owned or was entitled to receive immediately prior to the mergers (after rounding up to the next whole number of common shares). Of the total number of common shares issued to the owners of SecurCare, 4,063,571 common shares were issued to Arlen Nordhagen, the Company's condensed consolidated statementsexecutive chairman and former chief executive officer, who owned approximately 53% of cash flows forSecurCare's outstanding shares, and 1,858,737 common shares were issued to David Cramer, the nine months ended September 30, 2017Company's chief operating officer, who owned approximately 24% of SecurCare's outstanding shares. In connection with the mergers and 2016.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows - Restricted Cash, that requires the inclusion of restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted ASU 2016-18 effective January 1, 2017, which resulted in the inclusionissuance of the Company's restricted cash balances along with cashcommon shares to Mr. Nordhagen and cash equivalentsMr. Cramer, the Company formed a special committee of independent and disinterested trustees (the "Special Committee") to evaluate the merits and terms of the proposed transaction. In analyzing the proposed transaction, the Special Committee engaged an independent third party financial advisor to assist the Special Committee in analyzing and assessing the transaction, and to opine on the fairness to the Company of the consideration to be paid by the Company in the Company's condensed consolidated statement of cash flowsmergers. The Special Committee approved and separate line items showing changes in restricted cash balances were eliminated fromrecommended that the Company's condensed consolidated statementsboard of cash flows. ASU 2016-18trustees approve the proposed transaction. The transaction was applied retrospectivelyapproved unanimously by the disinterested trustees of the Company's board of trustees on February 19, 2020.
At the Market ("ATM") Program
On February 27, 2019, the Company entered into a sales agreement with certain sales agents, pursuant to all periods presented.
In January 2017,which the FASB issued ASU 2017-01, ClarifyingCompany may sell from time to time up to $250.0 million of the DefinitionCompany's common of beneficial interest, $0.01 par value per share ("common shares") and 6.000% Series A cumulative redeemable preferred shares of beneficial interest ("Series A preferred shares") in sales deemed to be "at the market" offerings. The sales agreement contemplates that, in addition to the issuance and sale by the Company of offered shares to or through the sale agents, the Company may enter into separate forward sale agreements with any forward purchaser. Forward sale agreements, if any, will include only the Company's common shares and will not include any Series A preferred shares. If the Company enters into a Business, which narrowsforward sale agreement with any forward purchaser, such forward purchaser will attempt to borrow from third parties and sell, through the definition ofrelated agent, acting as sales agent for such forward purchaser (each, a business and provides"forward seller"), offered shares, in an amended framework for determining whether a transaction involves an asset or a business.amount equal to the offered shares subject to such forward sale agreement, to hedge such forward purchaser’s exposure under such forward sale agreement. The Company adopted ASU 2017-01 effective January 1, 2017. As further discussed in Note 6,may offer the common shares and Series A preferred shares through the agents, as a result of the adoption of ASU 2017-01, the Company's self storage property acquisitions duringsales agents, or, as applicable, as forward seller, or directly to the nineagents or forward sellers, acting as principals, by means of, among

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others, ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of sale or at negotiated prices.
During the three months ended September 30, 2017 were accounted for as asset acquisitions, and accordingly,March 31, 2020, the acquisition costs relatedCompany sold 125,000 of its common shares through the ATM program at an average offering price of $36.18 per share, resulting in net proceeds to the self storage property acquisitions were capitalized as partCompany of the basis of the acquired properties.
In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, which amends the existing GAAP hedge accounting recognition and presentation requirements. ASU 2017-02 is effective forapproximately $4.2 million, after deducting compensation payable by the Company on January 1, 2019, with early adoption permitted. The Company is currently evaluating the effect that ASU 2017-12 will have on its derivative instruments designated as hedgesto such agents and does not anticipate material changes to its condensed consolidated financial statements and related disclosures.



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3. NONCONTROLLING INTERESTSoffering expenses.
Noncontrolling Interests
All of the limited partnerOP equity interests in the Company's operating partnership not held by the Company are reflected as noncontrolling interests. Noncontrolling interests also include ownership interests in DownREIT partnerships held by entities other than the Company's operating partnership. NSA is the general partner of its operating partnership and is authorized to cause its operating partnership to issue additional partner interests, including OP units and subordinated performance units, at such prices and on such other terms as it determines in its sole discretion.
As of September 30, 2017March 31, 2020 and December 31, 2016,2019, units reflecting noncontrolling interests consisted of the following:
March 31, 2020December 31, 2019
Series A-1 preferred units637,382  642,982  
OP units29,751,701  30,188,305  
Subordinated performance units8,693,121  11,014,195  
LTIP units764,735  743,566  
DownREIT units
DownREIT OP units1,924,918  1,848,261  
DownREIT subordinated performance units4,337,111  4,371,622  
Total46,108,968  48,808,931  
 September 30, 2017 December 31, 2016
OP units26,401,386
 26,125,444
Subordinated performance units11,418,815
 11,022,378
LTIP units771,396
 1,543,905
DownREIT units   
DownREIT OP units1,834,786
 1,834,786
DownREIT subordinated performance units4,386,999
 4,386,999
Total44,813,382
 44,913,512
Series A-1 Preferred Units
The 6.000% Series A-1 Cumulative Redeemable Preferred Units ("Series A-1 preferred units") rank senior to OP units and subordinated performance units in the Company's operating partnership with respect to distributions and liquidation. The Series A-1 preferred units have a stated value of $25.00 per unit and receive distributions at an annual rate of 6.000%. These distributions are cumulative. The Series A-1 preferred units are redeemable at the option of the holder after the first anniversary of the date of issuance, which redemption obligations may be satisfied at the Company’s option in cash in an amount equal to the market value of an equivalent number of the Series A preferred shares or the issuance of Series A preferred shares on a 1-for-one basis, subject to adjustments. The Series A preferred shares are redeemable by the Company for a cash redemption price of $25.00 per share, plus accrued but unpaid dividends. The decrease in Series A-1 preferred units outstanding from December 31, 2019 to March 31, 2020 was due to the redemption of 5,600 Series A-1 preferred units for Series A preferred shares.
OP Units and DownREIT OP units
OP units in the Company's operating partnership are redeemable for cash or, at the Company's option, exchangeable for the Company's common shares of beneficial interest, $0.01 par value per share ("common shares") on a one-for-one1-for-one basis, and DownREIT OP units are redeemable for cash or, at the Company's option, exchangeable for OP units in its operating partnership on a one-for-one1-for-one basis, subject to certain adjustments in each case. The holders of OP units are generally not entitled to elect redemption until one year after the later of the closing of the Company's initial public offering or the issuance of the OP units. The holders of DownREIT OP units are generally not entitled to elect redemption until five years after the date of the contributor's initial contribution. Accordingly, these limited partner interests are included in noncontrolling interests within equity in the accompanying condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016.
The increasedecrease in OP Unitsunits outstanding from December 31, 20162019 to September 30, 2017March 31, 2020 was due to the redemption of 118,961 OP units for common shares and the exchange of 368,500 DownREIT OP units in redemption of an equivalent number of outstanding OP units, which were subsequently retired by the operating partnership, offset by the following: 445,701 OP units issued upon the conversion of 992,210 LTIP332,738 subordinated performance units into(as discussed further below), 181,981 OP units and the issuance of 473,533 OP unitsissued in connection with the acquisition of self storage properties and 133,637 LTIP units which were converted into an equivalent number of OP units. In addition, in connection with the completion of the SecurCare and DLAN mergers, the Company's operating partnership retired 710,462 OP Units.

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The increase in DownREIT OP units outstanding from December 31, 2019 to March 31, 2020 was due to the exchange of 368,500 DownREIT OP units held by the operating partnership in redemption of an equivalent number of outstanding OP Units, which were subsequently retired by the operating partnership, and the issuance of 115,888 DownREIT OP units related to the conversion of 34,511 DownREIT subordinated performance units (as discussed further below) partially offset by the redemptioncontribution of 1,189,801407,731 DownREIT OP units for common shares.(which were previously included in the above table because they were not held by the Company) to the operating partnership in connection with the SecurCare and DLAN mergers.
Subordinated Performance Units and DownREIT Subordinated Performance Units
Subordinated performance units may also, under certain circumstances, be convertible into OP units which are exchangeable for common shares as described above, and DownREIT subordinated performance units may, under certain circumstances, be exchangeable for subordinated performance units on a one-for-one1-for-one basis. Subordinated performance units are only convertible into OP units after a two year lock-out period and then generally (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 the Company's election upon a retirement event of a PRO that holds such subordinated performance units or upon certain qualifying terminations. The holders of DownREIT subordinated performance units are generally not entitled to elect redemption until at least five years after the date of the contributor's initial contribution.
Following such lock-out period, a holder of subordinated performance units in the Company's operating partnership may elect a voluntary conversion one time each year on or prior to December 1st to convert a pre-determined portion of such subordinated performance units into OP units in the Company's operating partnership, with such conversion effective January 1st of the following year, with each subordinated performance unit being converted into the number of OP units determined by dividing the average cash available for distribution, or CAD, per unit on the series of specific subordinated performance units over the one-year period prior to conversion by 110% of the CAD per unit on the OP units determined over the same period. CAD per unit on the series of specific subordinated performance units and OP units is determined by the Company based generally upon the application of the provisions of the LP Agreement applicable to the distributions of operating cash flow and capital transactions proceeds.
The increasedecrease in subordinated performance units outstanding from December 31, 20162019 to September 30, 2017March 31, 2020 was due to the issuanceretirement of 300,043 subordinated performance units to an affiliate of Personal Mini (the Company's chairman and chief executive officer, Arlen D. Nordhagen, has a noncontrolling minority ownership interest in this affiliate of Personal Mini) and the issuance of 96,3942,001,441 subordinated performance units in connection with the SecurCare merger and the voluntary conversion of 332,738 subordinated performance units into 445,701 OP units, partially offset by the issuance of 13,105 subordinated performance units for co-investment by one of the Company's PROs in connection with the acquisition of a self storage properties.property.


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The decrease in DownREIT subordinated performance units outstanding from December 31, 2019 to March 31, 2020 was due to the conversion of 34,511 DownREIT subordinated performance units into 115,888 DownREIT OP units.
LTIP Units
LTIP units are a special class of partnership interest in the Company's operating partnership that allow the holder to participate in the ordinary and liquidating distributions received by holders of the OP units (subject to the achievement of specified levels of profitability by the Company's operating partnership or the achievement of certain events). LTIP units may also, under certain circumstances, be convertible into OP units on a one-for-one1-for-one basis, which are then exchangeable for common shares as described above.
LTIP units were first granted under the 2013 Long-Term Incentive Plan (the "2013 Plan"). Some of the granted LTIP units vested immediately or upon completion of the Company's initial public offering. Others vest upon the contribution of self storage properties or along a schedule at certain times through January 1, 2020. LTIP units do not have full parity with OP units with respect to liquidating distributions and may not receive ordinary distributions until such parity is reached pursuant to the terms of the LP Agreement. If such parity is reached under the LP Agreement, upon vesting, vested LTIP units may be converted into an equal number of OP units, and thereafter have all the rights of OP units, including redemption rights.
The decreaseincrease in LTIP units outstanding from December 31, 20162019 to September 30, 2017March 31, 2020 was due to the conversion of 992,210133,637 LTIP units into 992,210an equivalent number of OP units partially offset by the issuance of 219,701 new154,806 compensatory LTIP units to employees, trustees and consultants, and trustees.net of forfeitures.

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4. SELF STORAGE PROPERTIES
Self storage properties are summarized as follows (dollars in thousands):
September 30, 2017 December 31, 2016March 31, 2020December 31, 2019
Land$502,503
 $456,135
Land$680,035  $649,938  
Buildings and improvements1,568,308
 1,383,603
Buildings and improvements2,627,812  2,435,171  
Furniture and equipment5,034
 4,598
Furniture and equipment7,002  6,610  
Total self storage properties2,075,845
 1,844,336
Total self storage properties3,314,849  3,091,719  
Less accumulated depreciation(153,783) (110,803)Less accumulated depreciation(363,527) (337,822) 
Self storage properties, net$1,922,062
 $1,733,533
Self storage properties, net$2,951,322  $2,753,897  
Depreciation expense related to self storage properties amounted to $15.2$25.7 million and $11.1$21.5 million during the three months ended September 30, 2017March 31, 2020 and 2016, respectively, and $43.6 million and $29.9 million during the nine months ended September 30, 2017 and 2016,2019, respectively.


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5. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTUREVENTURES
2018 Joint Venture
As of September 30, 2017,March 31, 2020, the Company's unconsolidated real estate venture, formed in September 2018 with an affiliate of Heitman America Real Estate REIT LLC (the "2018 Joint Venture"), owned and operated a portfolio of 70103 self storage properties containing approximately 7.8 million rentable square feet, configured in approximately 64,000 storage units and located across 17 states.
2016 Joint Venture
As of March 31, 2020, the Company's unconsolidated real estate venture, formed in September 2016 with a state pension fund advised by Heitman Capital Management LLC (the "2016 Joint Venture"), owned and operated a portfolio of 74 properties containing approximately 4.9 million rentable square feet, configured in approximately 39,00040,000 storage units and located across 13 states.
The 2016 Joint Venture acquired 2 self storage properties for $12.1 million during the three months ended March 31, 2020. The 2016 Joint Venture financed these acquisitions with capital contributions from the 2016 Joint Venture members, of which the Company contributed $3.1 million for its 25% proportionate share.
The following table presents the combined condensed financial position of the Company's unconsolidated real estate ventureventures as of March 31, 2020 and December 31, 2019 (in thousands):
March 31, 2020December 31, 2019
ASSETS
Self storage properties, net$1,833,094  $1,835,235  
Other assets24,202  22,413  
Total assets$1,857,296  $1,857,648  
LIABILITIES AND EQUITY
Debt financing$989,382  $989,182  
Other liabilities22,144  20,487  
Equity845,770  847,979  
Total liabilities and equity$1,857,296  $1,857,648  


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The following tables present the combined condensed operating information of the Company's unconsolidated real estate ventures for the three months ended March 31, 2020 and 2019 (in thousands):
Three Months Ended March 31,
20202019
Total revenue$40,238  $39,795  
Property operating expenses13,178  12,544  
Net operating income27,060  27,251  
Supervisory, administrative and other expenses(2,669) (2,653) 
Depreciation and amortization(15,146) (21,826) 
Interest expense(10,264) (10,020) 
Loss on sale of self storage properties—  (806) 
Acquisition and other expenses(399) (408) 
Net loss$(1,418) $(8,462) 

6. ACQUISITIONS
Self Storage Property Acquisitions
The Company acquired four36 self storage properties with an estimated fair value of $49.8$222.8 million during the ninethree months ended September 30, 2017. The unconsolidated real estate venture financed theMarch 31, 2020. Of these acquisitions, 1 self storage property acquisitions with capital contributions from the unconsolidated real estate venture members, of which the Company contributed $12.5 million for its 25% proportionate share in the unconsolidated real estate venture.
The following table presents the condensed financial position of the unconsolidated real estate venture as of September 30, 2017 and December 31, 2016 (in thousands):
 September 30, 2017 December 31, 2016
ASSETS   
Self storage properties, net$651,024
 $614,754
Other assets10,314
 19,936
Total assets$661,338
 $634,690
LIABILITIES AND EQUITY   
Debt financing$317,277
 $317,047
Other liabilities5,880
 4,498
Equity338,181
 313,145
Total liabilities and equity$661,338
 $634,690
    

The following table presents the condensed operating information of the unconsolidated real estate venture for the three and nine months ended September 30, 2017 (in thousands):
 Three Months Ended September 30, 2017 Nine Months Ended
September 30, 2017
Total revenue$14,494
 $40,060
Property operating expenses4,989
 13,489
Net operating income9,505
 26,571
Supervisory, administrative and other expenses(1,034) (2,873)
Depreciation and amortization(8,168) (23,333)
Interest expense(2,880) (8,508)
Acquisition and other expenses(269) (902)
Net loss$(2,846) $(9,045)
    


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6. SELF STORAGE PROPERTY ACQUISITIONS AND DISPOSITIONS
Acquisitions
The Company acquired 34 self storage properties with an estimated fair value of $225.8$7.7 million during the nine months ended September 30, 2017. Of these acquisitions, seven self storage properties with an estimated fair value of $40.9 million werewas acquired by the Company from its PROs. As a result of the Company's adoption of ASU 2017-01 during the nine months ended September 30, 2017, the 34PRO. The 36 self storage property acquisitions were accounted for as asset acquisitions and accordingly, $2.5$2.9 million of acquisitiontransaction costs related to the acquisitions were capitalized as part of the basis of the acquired properties. The Company recognized the estimated fair value of the acquired assets and assumed liabilities on the respective dates of such acquisitions. The Company allocated the total purchase price to the estimated fair value of tangible and intangible assets acquired, and liabilities assumed. The Company allocated a portion of the purchase price to identifiable intangible assets consisting of customer in-place leases which were recorded at estimated fair value of $5.5$4.6 million, resulting in a total fair value of $220.3$218.2 million allocated to real estate.
The following table summarizes the investment in self storage property acquisitions completed by the Company during the ninethree months ended September 30, 2017March 31, 2020 (dollars in thousands):
Acquisitions Closed During the Three Months Ended:Number of PropertiesSummary of Investment
Cash and Acquisition Costs
Value of OP Equity(1)
Other LiabilitiesTotal
March 31, 202036$214,584  $7,217  $972  $222,773  
Acquisitions Closed During the Three Months Ended: Number of Properties Summary of Investment
  Cash and Acquisition Costs 
Value of OP Equity(1)
 Other Liabilities Total
    
March 31, 2017 5 $26,780
 $4,964
 $183
 $31,927
June 30, 2017 10 60,672
 8,931
 387
 69,990
September 30, 2017 19 122,742
 267
 826
 123,835
Total 34 $210,194
 $14,162
 $1,396
 $225,752
(1)
Value of OP equity represents the fair value of LTIP units, OP units and subordinated performance units and LTIP units.
Pro Forma Financial Information For 2016 Business Combinations
Acquisition of PRO Management Company
As discussed in Note 1 and Note 3, on March 31, 2020, the Company closed on the previously announced mergers of SecurCare and DLAN with and into wholly-owned subsidiaries of the Company. The Company acquired 107 self storage properties during the year ended December 31, 2016 thatmergers were accounted for as a business combinations. Oncombination whereby the Company acquired additional interests in its operating partnership and DownREIT partnerships. Accordingly, this portion of the transaction was accounted for as a pro forma basis, after giving effectchange in ownership of a consolidated subsidiary, resulting in a reduction to noncontrolling interests equal to the acquisition of 100net book value of the 107 self storage properties as if theyacquired subsidiary interests.
In connection with the mergers, SecurCare's property management platform and related intellectual property were acquired on January 1, 2015 (pro forma financial information is not presented for seveninternalized by the Company. Under the terms of the self storage properties acquired during the year ended December 31, 2016 since the information required is not availableCompany's facilities portfolio management agreement with SecurCare, in connection with a retirement event leading to the Company),internalization of SecurCare's property management platform, SecurCare was entitled to receive OP units in exchange for its property management platform and related intellectual property based on a contractual formula. Using this formula, the Company would have recorded incremental additional revenuedetermined that SecurCare was entitled to receive an equivalent of 348,020 OP units totaling $10.3 million, based on the acquisition date closing price of the Company's common shares. The Company allocated the total purchase price to the estimated fair value of tangible and net income of $6.2 millionintangible assets acquired, and $1.7 million, respectively, for the three months ended September 30, 2016 and $31.7 million and $6.6 million for the nine months ended September 30, 2016, respectively. This pro forma information was prepared using the following significant assumptions: (i) for the cash liabilities assumed. The Company allocated a

19

portion of the purchase price the Company assumed borrowings under the Company's revolving lineto tangible fixed assets of credit with interest computed based on the effective interest rate of 1.93% as of September 30, 2016; (ii) for assumed debt financing directly associated with the acquisition of specific self storage properties, interest was computed for the entirety of the periods presented using the effective interest rates under such financings; and (iii) for acquisition costs of $1.7$0.1 million and $4.7 million incurred during the three and nine months ended September 30, 2016, pro forma adjustments give effect to these costs as if they were incurred on January 1, 2015.
The pro forma information presented in the paragraph above does not purport to represent what the actual resultsintangible assets consisting of operations would have been for the periods indicated, nor does it purport to represent the Company's future resultsa management contract with an estimated fair value of operations. As described in greater detail above, given that certain information with respect to the business combinations is not available to the Company, readers of this Form 10-Q and investors are cautioned not to place undue reliance on the Company's pro forma financial information.
Dispositions
During the nine months ended September 30, 2017, the Company sold to unrelated third parties three self storage properties and excess land parcels adjacent to its self storage properties. The gross sales price was $17.8$4.6 million and the SecurCare trade name with an estimated fair value of $3.2 million. The excess of the aggregate consideration paid over the identified assets acquired and liabilities assumed, equal to $2.4 million, was allocated to goodwill. The tangible and intangible assets related to the internalization are reported in other assets, net in the Company's condensed consolidated balance sheets.
The Company’s fair value measurements were based, in part, on valuations prepared by an independent valuation firm and the allocation of the purchase price required a significant amount of judgment. The Company recognized $5.7 millionmeasured the fair value of gainthe management contract asset based on discounted future cash flows expected under the sales.management contract from a market participant perspective. The management contract asset will be charged to amortization expense on a straight-line basis over 15 years, which represents the time period over which the majority of value was attributed in the Company’s discounted cash flow model. The Company measured the fair value of the trade name, which has an indefinite life and is not amortized, using the relief from royalty method.

The allocation of the purchase price requires judgment and was based on our valuations, estimates and assumptions of the acquisition date fair value of the tangible and intangible assets acquired and liabilities assumed. While the preliminary allocation of the purchase price is substantially complete the valuation of intangibles is still being finalized.

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7. OTHER ASSETS
Other assets consist of the following (dollars in thousands):
March 31, 2020December 31, 2019
Customer in-place leases, net of accumulated amortization of $5,538 and $7,267, respectively$5,352  $3,704  
Receivables:
Trade, net2,816  2,809  
PROs and other affiliates1,256  2,773  
Receivables from unconsolidated real estate ventures4,868  4,765  
Property acquisition and other deposits500  4,438  
Interest rate swaps—  980  
Equity securities—  7,703  
Prepaid expenses and other6,237  4,762  
Corporate furniture, equipment and other, net2,015  1,925  
Trade names6,380  3,200  
Management contracts, net of accumulated amortization of $2,460 and $2,274, respectively12,760  8,349  
Tenant reinsurance intangible, net of accumulated amortization of $464 and $317, respectively14,137  14,283  
Goodwill8,182  5,750  
Total$64,503  $65,441  
Amortization expense related to customer in-place leases amounted to $2.9 million and $2.5 million for the three months ended March 31, 2020 and 2019, respectively. Amortization expense related to management contracts amounted to $0.2 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively. Amortization expense related to the tenant reinsurance intangible amounted to $0.1 million for the three months ended March 31, 2020.

20
 September 30, 2017 December 31, 2016
Customer in-place leases, net of accumulated amortization of $6,171 and $7,831, respectively$4,637
 $9,374
Receivables:   
Trade, net2,007
 1,898
PROs and other affiliates790
 601
Receivable from unconsolidated real estate venture802
 1,093
Property acquisition and other deposits2,400
 477
Interest rate swaps7,462
 8,742
Prepaid expenses and other3,693
 1,879
Corporate furniture, equipment and other, net1,245
 1,243
Trade name3,200
 3,200
Management contract, net of accumulated amortization of $679 and $148, respectively9,942
 10,473
Goodwill5,750
 5,750
Total$41,928
 $44,730

8. DEBT FINANCING
The Company's outstanding debt as of September 30, 2017March 31, 2020 and December 31, 20162019 is summarized as follows (dollars in thousands):
Interest Rate(1)
March 31, 2020December 31, 2019
Credit Facility:
Revolving line of credit2.29%$200,000  $—  
Term loan A3.74%125,000  125,000  
Term loan B2.91%250,000  250,000  
Term loan C2.80%225,000  225,000  
Term loan D3.57%175,000  175,000  
2023 Term loan facility2.83%175,000  175,000  
2028 Term loan facility4.62%75,000  75,000  
2029 Term loan facility4.27%100,000  100,000  
2029 Senior Unsecured Notes3.98%100,000  100,000  
2031 Senior Unsecured Notes4.08%50,000  50,000  
Fixed rate mortgages payable4.18%261,680  264,260  
Total principal1,736,680  1,539,260  
Unamortized debt issuance costs and debt premium, net(5,011) (5,213) 
Total debt$1,731,669  $1,534,047  
      
 
Interest Rate(1)
 September 30, 2017 December 31, 2016
Credit Facility:     
Revolving line of credit2.63% $201,000
 $246,500
Term loan A2.63% 235,000
 225,000
Term loan B3.24% 155,000
 100,000
Term loan C3.71% 105,000
 —
Term loan facility3.08% 100,000
 100,000
Fixed rate mortgages payable4.15% 272,678
 201,694
Total principal  1,068,678
 873,194
Unamortized debt issuance costs and debt premium, net  3,176
 5,760
Total debt  $1,071,854
 $878,954


(1)
Represents the effective interest rate as of September 30, 2017.(1)Represents the effective interest rate as of March 31, 2020. Effective interest rate incorporates the stated rate plus the impact of interest rate cash flow hedges and discount and premium amortization, if applicable. For the revolving line of credit, the effective interest rate excludes fees for unused borrowings.
Credit Facility Increase
 On February 8, 2017, pursuant to a partial exercise byAs of March 31, 2020, the Company's operating partnershipunsecured credit facility provided for total borrowings of its expansion option$1.275 billion (the "credit facility"). The credit facility consists of the following components: (i) a revolving line of credit (the "Revolver") which provides for a total borrowing commitment up to $500.0 million, under its amended and restated credit agreement dated as of May 6, 2016, the Company's operating partnership, as borrower, certain of its subsidiaries that are party to the amended and restated credit agreement, as subsidiary guarantors, andwhich the Company as parent guarantor, entered intomay borrow, repay and re-borrow amounts, (ii) a second increase agreement and amendment (the "Increase Agreement") with a syndicated group of lenders to increase the total borrowing capacity under the$125.0 million tranche A term loan facility (the "Term Loan A") and the, (iii) a $250.0 million tranche B term loan facility (the "Term Loan B") by $10.0, (iv) a $225.0 million and $55.0


16

million, respectively, and to provide a new tranche C term loan facility ("Term(the "Term Loan C") in an aggregate outstanding principal amount, and (v) a $175.0 million tranche D term loan facility (the "Term Loan D"). As of $105.0 million, which, inMarch 31, 2020, the aggregate, increased the total borrowing capacity by $170.0 million for a total unsecured credit facility of $895.0 million consisting of the following components: (i) a $400.0 million revolving line of credit (the "Revolver" and together with the Term Loan A, Term Loan B and Term Loan C, the "credit facility"), (ii) Term Loan A, which now provides for a total borrowing commitment of up to $235.0 million, (iii) Term Loan B, which now provides for a total borrowing commitment of up to $155.0 million and (iv) Term Loan C, which provides for a total borrowing commitment of up to $105.0 million. The Company continues to havehad an expansion option under the credit facility, which, if exercised in full, would provide for a total credit facility of $1.0$1.750 billion.
The Term Loan C matures on February 8, 2024. It is not subject to any scheduled reduction or amortization payment prior to maturity. Interest rates applicable to loans under Term Loan C are determined based on a 1, 2, 3 or 6 month London Interbank Offered Rate ("LIBOR") period (as elected by the Company at the beginning of any applicable interest period) plus an applicable margin or a base rate, determined by the greatest of the Key Bank prime rate, the federal funds rate plus 0.50% or one month LIBOR plus 1.00%, plus an applicable margin. The applicable margins for Term Loan C are leverage based and range from 1.70% to 2.25% for LIBOR loans and 0.70% to 1.25% for base rate loans; provided that after such time as the Company achieves an investment grade rating from at least two rating agencies, the Company may elect (but is not required to elect) that Term Loan C is subject to the rating based on applicable margins ranging from 1.50% to 2.45% for LIBOR Loans and 0.50% to 1.45% for base rate loans. Prepayments of any loans under Term Loan C are subject to prepayment premiums of 2.00% from the date of the Increase Agreement through and including the first anniversary of the Increase Agreement and 1.00% from the first anniversary of the Increase Agreement through and including the second anniversary of the Increase Agreement. There is no prepayment penalty thereafter. Other than the increases and amendments related to Term Loan C described above, the Increase Agreement did not impact or amend the amended and restated credit agreement's previously disclosed terms, including its covenants, events of default, or terms of payment.
As of September 30, 2017,March 31, 2020, the Company had outstanding letters of credit totaling $4.7$5.7 million and would have had the capacity to borrow remaining Revolver commitments of $194.3$294.3 million while remaining in compliance with the credit facility's financial covenants. At September 30, 2017,March 31, 2020, the Company was in compliance with all such covenants.
For a summary of the Company's financial covenants and additional detail regarding the Company's credit facility, term loan facility,2023 Term Loan Facility, 2028 Term Loan Facility, 2029 Term Loan Facility, 2029 Senior Unsecured Notes, 2031 Senior Unsecured Notes and fixed rate mortgage payables,mortgages payable, please see Note 8 to the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission.SEC.
Fixed Rate Mortgages Payable

In August 2017, the Company entered into an agreement with a single lender for an $84.9 million debt financing secured by 22 of the Company's self storage properties. This interest-only loan matures in August 2027 and has a fixed interest rate of 4.14%.21

Future Debt Obligations
Based on existing debt agreements in effect as of September 30, 2017,March 31, 2020, the scheduled principal and maturity payments for the Company's outstanding borrowings are presented in the table below (in thousands):
Year Ending December 31,Scheduled Principal and Maturity PaymentsAmortization of Premium and Unamortized Debt Issuance CostsTotal
Remainder of 2020$38,067  $(955) $37,112  
20217,603  (1,510) 6,093  
20224,205  (1,512) 2,693  
2023377,049  (1,159) 375,890  
2024471,964  (790) 471,174  
2025227,185  (218) 226,967  
Thereafter610,607  1,133  611,740  
$1,736,680  $(5,011) $1,731,669  
Year Ending December 31, Scheduled Principal and Maturity Payments Amortization of Premium and Unamortized Debt Issuance Costs Total
Remainder of 2017 $1,188
 $70
 $1,258
2018 10,617
 187
 10,804
2019 4,983
 131
 5,114
2020 240,245
 (220) 240,025
2021 242,509
 (307) 242,202
2022 159,205
 (25) 159,180
Thereafter 409,931
 3,340
 413,271
  $1,068,678
 $3,176
 $1,071,854



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9. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings (loss) per common share for the three and nine months ended September 30, 2017March 31, 2020 and 2016, respectively2019 (in thousands, except per share amounts):
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Earnings (loss) per common share - basic and diluted       
Numerator       
Net income$11,226
 $7,944
 $33,983
 $18,791
Net income attributable to noncontrolling interests(9,955) (7,955) (29,790) (9,222)
Net income (loss) attributable to National Storage Affiliates Trust1,271
 (11) 4,193
 9,569
Distributed and undistributed earnings allocated to participating securities(7) (4) (20) (13)
Net income (loss) attributable to common shareholders - basic1,264
 (15) 4,173
 9,556
Effect of assumed conversion of dilutive securities—
 —
 —
 9,135
Net income (loss) attributable to common shareholders - diluted$1,264
 $(15) $4,173
 $18,691
        
Denominator       
Weighted average shares outstanding - basic44,269
 35,080
 43,967
 27,084
Effect of dilutive securities:       
Weighted average OP units outstanding—
 —
 —
 23,761
Weighted average DownREIT OP unit equivalents outstanding—
 —
 —
 1,835
Weighted average LTIP units outstanding—
 —
 —
 2,162
Weighted average subordinated performance units and DownREIT subordinated performance unit equivalents—
 —
 —
 20,650
Weighted average shares outstanding - diluted44,269
 35,080
 43,967
 75,492
        
Earnings (loss) per share - basic$0.03
 $—
 $0.09
 $0.35
Earnings (loss) per share - diluted$0.03
 $—
 $0.09
 $0.25
        
Three Months Ended
March 31,
20202019
Earnings (loss) per common share - basic and diluted
Numerator
Net income$15,763  $12,940  
Net income attributable to noncontrolling interests(9,115) (5,529) 
Net income attributable to National Storage Affiliates Trust6,648  7,411  
Distributions to preferred shareholders(3,273) (2,588) 
Distributed and undistributed earnings allocated to participating securities(12) (9) 
Net income attributable to common shareholders - basic and diluted$3,363  $4,814  
Denominator
Weighted average shares outstanding - basic and diluted59,798  56,655  
Earnings (loss) per share - basic and diluted$0.06  $0.08  
As discussed in Note 2, the Company allocates GAAP income (loss) utilizing the HLBV method, in which the Company allocates income or loss based on the change in each unitholders' claim on the net assets of its operating partnership at period end after adjusting for any distributions or contributions made during such period. Due to the stated liquidation priorities and because the HLBV method incorporates non-cash items such as depreciation expense, in any given period, income or loss may be allocated disproportionately to National Storage Affiliates Trust and noncontrolling interests, resulting in volatile fluctuations of basic and diluted earnings (loss) per share.
Outstanding equity interests of the Company's operating partnership and DownREIT partnerships are considered potential common shares for purposes of calculating diluted earnings (loss) per share as the unitholders may, through the exercise of redemption rights, obtain common shares, subject to various restrictions. Basic earnings per share is calculated based on the weighted average number of common shares outstanding during the

22

period. Diluted earnings per share is calculated by further adjusting for the dilutive impact using the treasury stock method for unvested LTIP units subject


18

to a service condition outstanding during the period and the if-converted method for any convertible securities outstanding during the period.
Generally, following certain lock-out periods, OP units in the Company's operating partnership are redeemable for cash or, at the Company's option, exchangeable for common shares on a one-for-one1-for-one basis, subject to certain adjustments and DownREIT OP units are redeemable for cash or, at the Company's option, exchangeable for OP units in theits operating partnership on a one-for-one1-for-one basis, subject to certain adjustments in each case.
LTIP units may also, under certain circumstances, be convertible into OP units on a one-for-one1-for-one basis, which are then exchangeable for common shares as described above. Certain LTIP units vested prior to or upon the completion of the Company's initial public offering and certain LTIP units have vested upon the satisfaction of a service condition or will vest upon the satisfaction of future service and market conditions. Vested LTIP units and unvested LTIP units that vest based on a service or market condition are allocated income or loss in a similar manner as OP units. Unvested LTIP units subject to a service or market condition are evaluated for dilution using the treasury stock method. For the three and nine months ended September 30, 2017, 410,825March 31, 2020, 380,943 unvested LTIP units that vest based on a service or market condition are excluded from the calculation of diluted earnings (loss) per share as they are not dilutive to earnings (loss) per share. In addition, certain LTIP units vest upon the future acquisition of properties sourced by PROs.PROs or the completion of expansion projects. For the three and nine months ended September 30, 2017, 224,000March 31, 2020, 252,894 unvested LTIP units that vest upon the future acquisition of properties, or the completion of expansion projects, are excluded from the calculation of diluted earnings (loss) per share because the contingency for the units to vest has not been attained as of the end of the reported periods.
Subordinated performance units may also, under certain circumstances, be convertible into OP units which are exchangeable for common shares as described above, and DownREIT subordinated performance units may, under certain circumstances, be exchangeable for subordinated performance units on a one-for-one1-for-one basis. Subordinated performance units are only convertible into OP units, after a two year lock-out period and then generally (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 the Company's election upon a retirement event of a PRO that holds such subordinated performance units or upon certain qualifying terminations. Although subordinated performance units may only be convertible after a two year lock-out period, the Company assumes a hypothetical conversion of each subordinated performance unit (including each DownREIT subordinated performance unit) into OP units (with subsequently assumed redemption into common shares) for the purposes of calculating diluted weighted average common shares. This hypothetical conversion is calculated using historical financial information, and as a result, is not necessarily indicative of the results of operations, cash flows or financial position of the Company upon expiration of the two-yeartwo-year lock out period on conversions.
For the three and nine months ended September 30, 2017,March 31, 2020 and 2019, potential common shares totaling 51.351.1 million and 50.654.6 million, respectively, related to OP units, DownREIT OP units, subordinated performance units, and DownREIT subordinated performance units and vested LTIP units have been excluded from the calculation of diluted earnings (loss) per share as they are not dilutive to earnings (loss) per share.
Participating securities, which consist of unvested restricted common shares, receive dividends equal to those received by common shares. The effect of participating securities for the periods presented above is calculated using the two-class method of allocating distributed and undistributed earnings.
10. RELATED PARTY TRANSACTIONS
Supervisory and Administrative Fees
TheFor the self storage properties that are managed by the PROs, the Company has entered into asset management agreements with the PROs to provide leasing, operating, supervisory and administrative services related to the Company's self storage properties.services. The asset management agreements generally provide for fees ranging from 5% to 6% of gross revenue for the managed self storage properties. During the three months ended September 30, 2017March 31, 2020 and 2016,2019, the Company incurred $3.7$5.3 million and $3.0 million, respectively, for supervisory and administrative fees to the PROs and during the nine months ended September 30, 2017 and 2016, the Company incurred $10.5 million and $7.8$4.7 million, respectively, for supervisory and administrative fees to the PROs. Such fees are included in general and administrative expenses in the accompanying condensed consolidated statements of operations.



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Payroll Services
The employees responsible for operation ofFor the self storage properties that are generallymanaged by the PROs, the employees responsible for operations are employees of the PROs who charge the Company for the costs associated with the respective employees. For the three months ended September 30, 2017March 31, 2020 and 2016,2019, the Company incurred $6.1$8.8 million and $5.1 million, respectively, for payroll and related costs reimbursable to these PROs, and for the nine months ended September 30, 2017 and 2016, the Company incurred $17.8 million and $13.8$7.8 million, respectively, for payroll and related costs reimbursable to these PROs. Such costs are included in property operating expenses in the accompanying condensed consolidated statements of operations.
Due Diligence Costs
During the three months ended September 30, 2017March 31, 2020 and 2016,2019, the Company incurred $0.2 million and $0.4 million, respectively, of expenses payable to certain PROs related to self storage property acquisitions sourced by the PROs, and during the nine months ended September 30, 2017 and 2016, the Company incurred $0.5 million and $0.7$0.3 million, respectively, of expenses payable to certain PROs related to self storage property acquisitions sourced by the PROs. These expenses, which are based on the volume of transactions sourced by the PROs, are intended to reimburse the PROs for due diligence costs incurred in the sourcing and underwriting process. For the three and nine months ended September 30, 2017, theseThese due diligence costs are capitalized as part of the basis of the acquired self storage properties and for the three and nine months ended September 30, 2016, these due diligence costs are included in acquisition costs in the accompanying condensed consolidated statements of operations.
Management Fees and Other Revenue
The unconsolidated real estate venture pays certain customary fees to the Company for managing and operating the unconsolidated real estate venture properties, including property management fees, call center fees, platform fees, acquisition fees and development management fees. During the three and nine months ended September 30, 2017, the Company earned $2.0 million and $6.0 million, respectively, of management fees and other revenue for managing and operating the unconsolidated real estate venture. The fees are reported in management fees and other revenue in the accompanying condensed consolidated statements of operations.properties.
Self Storage Property Acquisitions
During the ninethree months ended September 30, 2017,March 31, 2020, the Company issued 44,917 subordinated performance units as partial consideration for the acquisition of aacquired 1 self storage property to SA-SCMI LLC,for $7.5 million from an affiliate of Securcare and Move It. At the time of the issuance, SA-SCMI LLCentity that was an affiliate ofpartially owned by Arlen D. Nordhagen, the Company's executive chairman and former chief executive officer.
During the nine months ended September 30, 2017, the Company issued 75,147 OP unitsofficer, and 23,666 subordinated performance units as partial consideration for the acquisition of self storage properties to Howard Family Limited Partnership I, an affiliate of Northwest and an affiliate of Kevin Howard, a member ofDavid Cramer, the Company's boardchief operating officer. Of the total consideration paid, Mr. Nordhagen's and Mr. Cramer's interest was approximately 58,376 OP Units with a value of trustees.$1.5 million and 29,689 OP Units with a value $0.7 million, respectively.
During the nine months ended September 30, 2017, the Company issued 10,766 OP units as partial consideration for the acquisition of a self storage property to Van Mourick Diversified, LP, an affiliate of Optivest and an affiliate of Mark Van Mourick, a member of the Company's board of trustees.
11. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company is subject to litigation, claims, and assessments that may arise in the ordinary course of its business activities. Such matters include contractual matters, employment related issues, and regulatory proceedings. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters will not have a material adverse effect on the Company's financial position, results of operations, or liquidity.




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12. FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
The Company sometimes limits its exposure to interest rate fluctuations by entering into interest rate swap agreements. The interest rate swap agreements moderate the Company's exposure to interest rate risk by effectively converting the interest on variable rate debt to a fixed rate. The Company measures its interest rate swap derivatives at fair value on a recurring basis. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income (loss) and are subsequently reclassified into earnings in the period that the hedged transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly into earnings.
Information regarding the Company's interest rate swaps measured at fair value, which are classified within Level 2 of the GAAP fair value hierarchy, is presented below (dollars in thousands):
Fair value at December 31, 2015$(972)
Swap ineffectiveness11
Losses on interest rate swaps reclassified into interest expense from accumulated other comprehensive loss1,829
Unrealized losses on interest rate swaps included in accumulated other comprehensive loss(8,194)
Fair value at September 30, 2016$(7,326)
  
Fair value at December 31, 2016$8,159
Swap ineffectiveness9
Losses on interest rate swaps reclassified into interest expense from accumulated other comprehensive loss1,958
Unrealized losses on interest rate swaps included in accumulated other comprehensive loss(2,715)
Fair value at September 30, 2017$7,411
Fair value at December 31, 2018$14,195 
Gains on interest rate swaps reclassified into interest expense from accumulated other comprehensive (loss) income(1,276)
Unrealized losses on interest rate swaps included in accumulated other comprehensive (loss) income(8,039)
Fair value at March 31, 2019$4,880 
Fair value at December 31, 2019$(19,083)
Losses on interest rate swaps reclassified into interest expense from accumulated other comprehensive (loss) income612 
Unrealized losses on interest rate swaps included in accumulated other comprehensive (loss) income(66,369)
Fair value at March 31, 2020$(84,840)
As of September 30, 2017March 31, 2020 and December 31, 2016,2019, the Company had outstanding interest rate swaps with aggregate notional amounts of $595.0$1,125.0 million and $425.0$1,125.0 million, respectively, designated as cash flow hedges. As of September 30, 2017,March 31, 2020, the Company's swaps had a weighted average remaining term of approximately 3.84.0 years. The fair value of these swaps are presented within accounts payable and accruedas interest rate swap liabilities and other assets in the Company's balance sheets, and the Company recognizes any changes in the fair value as an adjustment of accumulated other comprehensive income (loss) within equity to the extent of their effectiveness.equity. If the forward rates at September 30, 2017March 31, 2020 remain constant, the Company estimates that during the next 12 months, the Company would reclassify into earnings approximately $0.6$17.5 million of the unrealized losses included in accumulated other comprehensive income (loss). If market interest rates increase above the 1.51%1.90% weighted average fixed rate under these interest rate swaps, the Company will benefit from net cash payments due to it from the counterpartyits counterparties to the interest rate swaps.
There were no transfers between levels of the three-tier fair value measurement hierarchy during the ninethree months ended September 30, 2017March 31, 2020 and 2016.2019. For financial assets and liabilities that utilize Level 2 inputs, the Company utilizes both direct and indirect observable price quotes, including LIBOR yield curves. The Company uses valuation techniques for Level 2 financial assets and liabilities which include LIBOR yield curves at the reporting date as well as assessing counterparty credit risk. Counterparties to these contracts are highly rated financial institutions. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company's derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and the counterparties. As of September 30, 2017,March 31, 2020, the Company determined that the effect of credit valuation adjustments on the overall valuation of its derivative positions are not significant to the overall valuation of its derivatives. Therefore, the Company has determined that its derivative valuations are appropriately classified in Level 2 of the fair value hierarchy.


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Fair Value Disclosures
The carrying values of cash and cash equivalents, restricted cash, trade receivables, and accounts payable and accrued liabilities reflected in the balance sheets at September 30, 2017March 31, 2020 and December 31, 2016,2019, approximate fair value due to the short term nature of these financial assets and liabilities. The carrying value of variable rate debt financing reflected in the balance sheets at September 30, 2017March 31, 2020 and December 31, 20162019 approximates fair value as the changes in

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their associated interest rates reflect the current market and credit risk is similar to when the loans were originally obtained.
The fair values of fixed rate mortgages were estimated using the discounted estimated future cash payments to be made on such debt; the discount rates used approximated current market rates for loans, or groups of loans, with similar maturities and credit quality (categorized within Level 2 of the fair value hierarchy). The combined principal balance of the Company's fixed rate mortgages payable was approximately $272.7$261.7 million as of September 30, 2017March 31, 2020 with a fair value of approximately $285.0 million.$287.3 million (categorized within Level 2 of the fair value hierarchy). In determining the fair value, the Company estimated a weighted average market interest rate of approximately 3.94%2.51%, compared to the weighted average contractual interest rate of 4.87%4.83%. The combined principal balance of the Company's fixed rate mortgages was approximately $201.7$264.3 million as of December 31, 20162019 with a fair value of approximately $214.0$280.9 million. In determining the fair value as of December 31, 2016,2019, the Company estimated a weighted average market interest rate of approximately 3.89%3.28%, compared to the weighted average contractual interest rate of 5.25%4.81%.
13. LEASES
The Company determines if a contractual arrangement is a lease at inception. As a lessee, the Company has non-cancelable lease agreements for real estate and its corporate office space that are classified as operating leases. The Company's operating leases are included in operating lease right-of-use ("ROU") assets and operating lease liabilities in its condensed consolidated balance sheets. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company's operating leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available at commencement date in determining the discount rate for the present value of the lease payments. To the extent that the lease agreements provide for fixed increases throughout the term of the lease, the Company recognizes lease expense on a straight-line basis over the expected lease terms.
Real Estate Leasehold Interests
The Company has 8 properties that are subject to non-cancelable leasehold interest agreements with remaining lease terms ranging from 14 to 72 years, inclusive of extension options that the Company anticipates exercising. Rent expense under these leasehold interest agreements is included in property operating expenses in the accompanying condensed consolidated statements of operations and amounted to $0.4 million and $0.4 million for the three months ended March 31, 2020 and 2019, respectively.
Office Leases
The Company has entered into non-cancelable lease agreements for its corporate office space with remaining lease terms ranging from three to nine years. Rent expense related to these office leases is included in general and administrative expenses in the accompanying condensed consolidated statements of operations and amounted to $0.1 million and $0.1 million for the three months ended March 31, 2020 and 2019, respectively.
The weighted-average remaining lease term and the weighted-average discount rate for the Company's operating leases as of March 31, 2020 are as follows:
March 31, 2020
Weighted-average remaining lease term
Real estate leasehold interests28 years
Office leases7 years
Weighted-average remaining discount rate
Real estate leasehold interests4.9 %
Office leases3.8 %

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As of March 31, 2020, the future minimum lease payments under the Company's operating leases, for which the Company is a lessee, are as follows (in thousands):
Year Ending December 31,Real Estate Leasehold InterestsOffice LeasesTotal
Remainder of 2020$1,071  $291  $1,362  
20211,444  471  1,915  
20221,459  465  1,924  
20231,464  430  1,894  
20241,470  450  1,920  
2025 through 209236,728  1,080  37,808  
Total lease payments$43,636  $3,187  $46,823  
Less imputed interest(21,173) (407) (21,580) 
Total$22,463  $2,780  $25,243  
As of December 31, 2019, the future minimum lease payments under the Company's operating leases, for which the Company is a lessee, are as follows (in thousands):
Year Ending December 31,Real Estate Leasehold InterestsOffice LeasesTotal
2020$1,419  $286  $1,705  
20211,444  387  1,831  
20221,459  381  1,840  
20231,464  346  1,810  
20241,470  353  1,823  
2025 through 209236,728  691  37,419  
Total lease payments$43,984  $2,444  $46,428  
Less imputed interest(21,440) (323) (21,763) 
Total$22,544  $2,121  $24,665  

14. SUBSEQUENT EVENTS
Self Storage Property Acquisitions
Since September 30, 2017,During the Company acquired 28 self storage properties for approximately $174.5 million. Consideration for these 28 self storage properties included approximately $165.0 million of net cash and OP equity of $7.4 million (consisting of the issuance of 260,490 OP Units and 45,335 subordinated performance units, including 26,049 OP units issued to Nordhagen LLLP, an entity for which Arlen D. Nordhagen, the Company's chairman and chief executive officer, holds voting and/or investment power and 22,214 subordinated performance units to SecurCare Self Storage Inc., an affiliate of SecurCare and an affiliate of Arlen D. Nordhagen), and the assumption of approximately $2.1 million of other working capital liabilities. Such amounts incorporate the effect of $1.1 million of subordinated equity issued in exchange for cash co-invested by SecurCare and Move It. In connection with these acquisitions, the Company incurred $0.3 million of expenses, payable to certain PROs, for due diligence coststhree months ended March 31, 2020, a pandemic related to the self storage properties sourced byoutbreak of the PROs.
Since September 30, 2017,novel coronavirus, or COVID-19, was declared. While the unconsolidated real estateCompany’s operating results were not significantly impacted during the three months ended March 31, 2020, the Company has experienced a slowdown in overall business activity through the date of this report, as compared to the same period in the prior year, and therefore expects its operating results to be adversely impacted during the second quarter of 2020, and possibly thereafter. For example, customer move-in and move-out volume has declined compared to the same period in the prior year, and the Company has temporarily suspended rental increases for in-place tenants. The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including how it will impact its tenants, employees, vendors, lenders and joint venture acquired one self storage property with an estimated fair value of $9.3 million.partners. The venture financed the acquisition with capital contributions from the venture members, ofextent to which the Company contributed $2.4 million.
Preferred Share Offering
On October 11, 2017,COVID-19 pandemic impacts the Company completed an underwritten public offeringwill depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of 6,900,000the outbreak of the pandemic, the actions taken to contain the pandemic or mitigate its 6.000% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest ("Preferred Shares"), which included 900,000 Preferred Shares sold upon the exercise in full by the underwriters of their option to purchase additional Preferred Shares, resulting in net proceeds to the Company of approximately $166.6 million, after deducting the underwriting discountimpact, and the Company's other offering expenses. Generally, the Preferred Shares become redeemable by the Company beginning in October 2022 for a cash redemption price of $25.00 per share, plus accrued but unpaid dividends. The Preferred Shares are convertible at the optiondirect and indirect economic effects of the holders upon certain changes of control. The Company used the net proceeds from the offering to repay amounts outstanding under its Revolver,pandemic and subsequently redrew under its Revolver to fund the self storage property acquisitions described above.containment measures, among others.




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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
We make forward-looking statements in this report that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. When we use the words "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "may," or similar expressions, we intend to identify forward-looking statements.
The forward-looking statements contained in this report reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions, and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. One of the most significant factors is the ongoing and potential impact of the current outbreak of COVID-19 on the economy, the self storage industry and the broader financial markets, which may have a significant negative impact on the Company's financial condition, results of operations and cash flows. The Company is unable to predict whether the continuing effects of the COVID-19 pandemic will trigger a further economic slowdown or a recession and to what extent the Company will experience disruptions related to the COVID-19 pandemic in the second quarter or thereafter. The current outbreak of COVID-19 has also impacted, and is likely to continue to impact, directly or indirectly, many of the other important factors below and the risks described in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 26, 2020 (the "Annual Report"), the risk factor set forth in this quarterly report under Item 1A below, and the Company's subsequent filings under the Exchange Act.
Statements regarding the following subjects, among others, may be forward-looking:
•market trends in our industry, interest rates, the debt and lending markets or the general economy;
•our business and investment strategy;
•the acquisition of properties, including those under contract, and the ability of our acquisitions to achieve underwritten capitalization rates and our ability to execute on our acquisition pipeline;
•the timing of acquisitions;
•the internalization of retiring PROs into the Company;
•our relationships with, and our ability and timing to attract additional, PROs;
•our ability to effectively align the interests of our PROs with us and our shareholders;
•the integration of our PROs and their managed portfolios into the Company, including into our financial and operational reporting infrastructure and internal control framework;
•our operating performance and projected operating results, including our ability to achieve market rents and occupancy levels, reduce operating expenditures and increase the sale of ancillary products and services;
•our ability to access additional off-market acquisitions;
•actions and initiatives of the U.S. federal, state and local government and changes to U.S. federal, state and local government policies and the execution and impact of these actions, initiatives and policies;
•the state of the U.S. economy generally or in specific geographic regions, states, territories or municipalities;
•economic trends and economic recoveries;
•our ability to obtain and maintain financing arrangements on favorable terms;
•general volatility of the securities markets in which we participate;
•the negative impacts from the continued spread of COVID-19 on the economy, the self storage industry, the broader financial markets, the Company's financial condition, results of operations and cash flows and the ability of the Company's tenants to pay rent;
•changes in the value of our assets;
•projected capital expenditures;

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•the impact of technology on our products, operations, and business;
•the implementation of our technology and best practices programs (including our ability to effectively implement our integrated Internet marketing strategy);
•changes in interest rates and the degree to which our hedging strategies may or may not protect us from interest rate volatility;
•impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar matters;
•our ability to continue to qualify and maintain our qualification as a REIT for U.S. federal income tax purposes;
•availability of qualified personnel;


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•the timing of conversions of subordinated performance units in our operating partnership and subsidiaries of our operating partnership into OP units in our operating partnership, the conversion ratio in effect at such time and the impact of such convertibility on our diluted earnings (loss) per share;
•the risks of investing through joint ventures, including whether the anticipated benefits from a joint venture are realized or may take longer to realize than expected;
•estimates relating to our ability to make distributions to our shareholders in the future; and
•our understanding of our competition.
The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Forward-looking statements are not predictions of future events. These beliefs, assumptions, and expectations can change as a result of many possible events or factors, not all of which are known to us. Readers should carefully review our financial statements and the notes thereto, as well as the sections entitled "Business," "Risk Factors," "Properties," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," described in the Company's Annual Report on Form 10-K filed with the SEC on February 28, 2017 (the "Annual Report"), and the other documents we file from time to time with the Securities and Exchange Commission.SEC. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Overview
National Storage Affiliates Trust is a fully integrated, self-administered and self-managed real estate investment trust organized in the state of Maryland on May 16, 2013. We have elected and we believe that we have qualified to be taxed as a REIT commencing with our taxable year ended December 31, 2015. We serve as the sole general partner of our operating partnership, a Delaware limited partnership formed on February 13, 2013 to conduct our business, which is focused on the ownership, operation, and acquisition of self storage properties located within the top 100 metropolitan statistical areas throughout the United States.
Our executive chairman 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. 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 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. This 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.

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COVID-19
We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business. The outbreak of COVID-19 in many countries, including the United States, has adversely impacted economic activity. The effect of the outbreak has been rapidly evolving and, as cases of COVID-19 have continued to be identified, most states and municipalities have reacted by instituting quarantines, mandating business and school closures, requiring restrictions on travel, "shelter-in-place" and/or "stay-at-home" orders, and imposing restrictions on the types of businesses that may continue to operate. These containment measures generally do not apply to businesses, like ours, which are designated as "essential," but may apply to certain of our tenants, employees, vendors, lenders and joint venture partners.
As of the date of this report, our stores continue to operate and we are in compliance with federal, state and local COVID-19 guidelines and mandates. In response to the pandemic, we have increased the level and frequency of cleaning and sanitation of our self storage facilities and enacted recommended social distancing guidelines. Our stores have operated, and some stores continue to operate, with a locked office, and on-site customer interaction is handled through a window, over the telephone, or in other ways intended to minimize physical contact. Many of our stores feature online rental capabilities whereby a customer can complete the entire rental process online and receive an access code to the storage facility. For the remainder of our stores that do not yet benefit from the online rental feature, the combination of call center and email communication eliminates the need for any physical contact between customers and employees.
While our results of operations were not significantly impacted by the pandemic during the three months ended March 31, 2020, we have experienced a slowdown in overall business activity, including lower move-in and move-out volume. There are state and local restrictions on price increases, auctions and late fee assessments, and we have temporarily suspended rental increases for in-place tenants. Specifically, our April 2020 same store portfolio (as defined below) operations were affected as follows:
•Same store move-in volume decreased approximately 28%, compared to the same period in 2019;
•Same store move-out volume decreased approximately 28%, compared to the same period in 2019.
•Same store period-end occupancy was 87.1% as of April 30, 2020, which was unchanged compared to March 31, 2020 and a decrease of approximately 140 basis points compared to April 30, 2019.
We have taken proactive measures to maintain the strength of our business and manage the impact of COVID-19 on our operations and liquidity, including the following:
•We have closely monitored our liquidity position. As of April 30, 2020, we had the capacity to borrow remaining Revolver commitments of approximately $300 million with less than $40 million of debt maturing through 2022, and we have determined that it is not necessary to enhance our liquidity position through further borrowings at this time;
•We are being diligent to manage operating expenses, including store-level personnel costs, marketing and repairs and maintenance expenses. We have also incurred lower corporate travel costs compared to expectations at the beginning of the year.
•We remain committed to acquiring properties at appropriate risk-adjusted returns. We expect in the near-term there may be a lower volume of acquisition transactions in the self storage sector generally due to uncertainty from the pandemic. We believe our acquisition opportunities through our captive pipeline and relationship-based third-party deals sourced by our PROs will continue to be a differentiating factor for us to prudently deploy capital, including through the issuance of OP equity.
The above discussion is intended to provide shareholders with certain information regarding the impacts of the COVID-19 pandemic on our business and management’s efforts to respond to those impacts. We are unable to predict the impact of the COVID-19 pandemic on our business for the balance of the second quarter of 2020 and thereafter. We will continue to monitor its effects and will adjust our operations as necessary. As a result of the rapid development, fluidity and uncertainty surrounding this situation, we expect that such information will change, potentially significantly, going forward and may not be indicative of the actual impact of the COVID-19 pandemic on our financial condition, results of operations and cash flows for the second quarter of 2020 and future periods. See "Risk Factors" under Item 1A.

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Our Structure
Our structure promotes operator accountability as subordinated performance units issued to our PROs in exchange for the contribution of their properties are entitled to distributions only after those properties satisfy minimum performance thresholds. In the event of a material reduction in operating cash flow, distributions on our subordinated performance units will be reduced before or disproportionately to distributions on our common shares held by our common shareholders. In addition, we expect our PROs will generally co-invest subordinated equity in the form of subordinated performance units in each acquisition that they source, and the value of these subordinated performance units will fluctuate with the performance of their managed portfolios. Therefore, our PROs are incentivized to select acquisitions that are expected to exceed minimum performance thresholds, thereby increasing the value of their subordinated equity stake. We expect that our shareholders will benefit from the higher levels of property performance that our PROs are incentivized to deliver.
Our PROs
The Company had eightnine PROs as of September 30, 2017: SecurCare,March 31, 2020: Northwest, Optivest, Guardian, Move It, Storage Solutions, Hide Away, Personal Mini, Southern and Personal Mini. Moove In. As discussed in Note 1 in Item 1, on March 31, 2020, we closed on the merger and internalization of the management platform of SecurCare, which prior to the merger and internalization was our largest PRO. As part of the internalization, we offered employment to most of SecurCare's employees, including its key persons, to continue managing SecurCare's managed portfolio under the brand SecurCare as members of our existing property management platform. As a result of the merger, we will no longer pay any fees or reimbursements to SecurCare and distributions on the series of subordinated performance units related to SecurCare's managed portfolio were discontinued.
We seek to further expand our platform by continuing to recruit


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additional established self storage operators, while integrating our operations through the implementation of centralized initiatives, including management information systems, revenue enhancement, and cost optimization programs. Our national platform allows us to capture cost savings by eliminating redundancies and utilizing economies of scale across the property management platforms of our PROs while also providing greater access to lower-cost capital.
On July 1, 2017, SecurCare and Move It terminated SecurCare's sub-management relationship with Move It. In connection with this transaction, the Company, SecurCare and Move It completed a series of transactions modifying Move It's relationship with the Company to permit Move It to hold OP units and a new series of subordinated performance units directly.
Our Consolidated Properties
We seek to own properties that are well located in high quality sub-markets with highly accessible street access and attractive supply and demand characteristics, providing our properties with strong and stable cash flows that are less sensitive to the fluctuations of the general economy. 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.
As of September 30, 2017,March 31, 2020, we owned a geographically diversified portfolio of 413603 self storage properties, located in 2529 states and Puerto Rico, comprising approximately 25.236.2 million rentable square feet, configured in approximately 200,000288,000 storage units. Of these properties, 242266 were acquired by us from our PROs, and 171336 were acquired by us from third-party sellers.sellers and one was acquired from the 2016 Joint Venture.
During the ninethree months ended September 30, 2017,March 31, 2020, we acquired 3436 self storage properties with an aggregate fair value of $225.8 million, comprising approximately 2.3 million rentable square feet, configured in approximately 17,300 storage units. Of these acquisitions, seven were acquired by us from our PROs and 27 were acquired by us from third-party sellers.
During the nine months ended September 30, 2017, the Company sold three self storage properties to unrelated third parties for $15.6 million. These self storage properties comprised approximately 0.2 million rentable square feet configured in approximately 1,200 storage units.
Subsequent to September 30, 2017, we acquired 28 self storage properties with an aggregate fair value of approximately $174.5$222.8 million, comprising approximately 1.8 million rentable square feet, configured in approximately 13,70013,600 storage units. Of these acquisitions, one was acquired from a PRO and 35 were acquired from third-party sellers.
Our Unconsolidated Real Estate VentureVentures
We seek to opportunistically partner with institutional funds and other institutional investors to acquire attractive portfolios utilizing a promoted return structure. We believe there is significant opportunity for continued external growth by partnering with institutional investors seeking to deploy capital in the self storage industry.
2018 Joint Venture
As of September 30, 2017,March 31, 2020, our unconsolidated real estate venture,2018 Joint Venture, in which we have a 25% interest, owned and operated a portfolio of 103 properties containing approximately 7.8 million rentable square feet, configured in approximately 64,000 storage units and located across 17 states.

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2016 Joint Venture
As of March 31, 2020, our 2016 Joint Venture, in which we have a 25% ownership interest, owned and operated a portfolio of 7074 properties containing approximately 4.9 million rentable square feet, configured in approximately 39,00040,000 storage units and located across 13 states.
During the ninethree months ended September 30, 2017,March 31, 2020, our unconsolidated real estate venture2016 Joint Venture acquired fourtwo self storage properties with an aggregate fair value of $49.8 million, comprising approximately 0.3 million rentable square feet, configured in approximately 3,100 storage units.
Since September 30, 2017, our unconsolidated real estate venture acquired one self storage property with an estimated fair value of $9.3 million, comprising approximatelycontaining less than 0.1 million rentable square feet, configured in approximately 430500 storage units.units and located in one state.
Our Property Management Platform
Through our property management platform, we direct, manage and control the day-to-day operations and affairs of thecertain consolidated properties and our unconsolidated real estate ventures. As of March 31, 2020, our property management platform managed and controlled 265 of our consolidated properties and 177 of our unconsolidated real estate venture andproperties.
We earn certain customary fees for managing and operating the properties. In addition, we provide tenant warranty protection to tenants atproperties in the unconsolidated real estate ventureventures and we facilitate tenant insurance and/or tenant warranty protection programs for tenants at these properties in exchange for half of all proceeds from the tenant warranty protection program at each unconsolidated real estate venture property.such programs.


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Results of Operations
When reviewing our results of operations it is important to consider the timing of acquisition activity. We acquired 3436 self storage properties during the ninethree months ended September 30, 2017March 31, 2020 and 10769 self storage properties during the year ended December 31, 2016.2019. As a result of these and other factors, we do not believe that our historical results of operations discussed and analyzed below are comparable or necessarily indicative of our future results of operations or cash flows.
To help analyze the operating performance of our self storage properties, we also discuss and analyze operating results relating to our same store portfolio. Our same store portfolio is defined as those properties owned and operated forsince the entiretyfirst day of the applicable periodsearliest year presented, excluding any properties sold, or expected to be sold or where we completed a storage space expansionsubject to significant changes such as expansions or casualty events which causedcause the property'sportfolio's year-over-year operating results to no longer be comparable. As of September 30, 2017,March 31, 2020, our same store portfolio consisted of 277500 consolidated self storage properties which consists of only those properties that were included in our condensed consolidated financial statements since January 1, 2016.properties.
The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the accompanying condensed consolidated financial statements in Item 1. Certain figures, such as interest rates and other percentages, included in this section have been rounded for ease of presentation. Percentage figures included in this section have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior 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 condensed consolidated financial statements or in the associated text. Certain other amounts that appear in this section may similarly not sum due to rounding.
Three Months Ended September 30, 2017March 31, 2020 compared to the Three Months Ended September 30, 2016March 31, 2019
Net income was $11.2$15.8 million for the three months ended September 30, 2017,March 31, 2020, compared to $7.9$12.9 million for the three months ended September 30, 2016,March 31, 2019, an increase of $3.3$2.9 million. The increase was primarily due to an increase in net operating income ("NOI") resulting from an additional 6573 self storage properties acquired between OctoberApril 1, 20162019 and September 30, 2017March 31, 2020 and same store NOI growth partially offset by increases in depreciation and amortization and interest expense and general and administrative expenses.expense. For a description of NOI, see "Non-GAAP Financial measuresMeasures – NOI".
The following table illustrates the changes in rental revenue, other property-related revenue, management fees and other revenue, property operating expenses, and other expenses for the three months ended September 30, 2017March 31, 2020 compared to the three months ended September 30, 2016March 31, 2019 (dollars in thousands):

 Three Months Ended September 30,
 2017 2016 Change
Rental revenue     
Same store portfolio$42,700
 $40,540
 $2,160
Non-same store portfolio22,015
 10,723
 11,292
Total rental revenue64,715
 51,263
 13,452
Other property-related revenue     
Same store portfolio1,417
 1,335
 82
Non-same store portfolio728
 351
 377
Total other property-related revenue2,145
 1,686
 459
Property operating expenses     
Same store portfolio13,595
 13,275
 320
Non-same store portfolio8,023
 4,055
 3,968
Total property operating expenses21,618
 17,330
 4,288
Net operating income     
Same store portfolio30,522
 28,600
 1,922
Non-same store portfolio14,720
 7,019
 7,701
Total net operating income45,242
 35,619
 9,623
Management fees and other revenue1,998
 —
 1,998
General and administrative expenses(7,480) (5,259) (2,221)
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Three Months Ended March 31,
Three Months Ended September 30,20202019Change
2017 2016 Change
Rental revenueRental revenue
Same store portfolioSame store portfolio$81,609  $79,338  $2,271  
Non-same store portfolioNon-same store portfolio13,793  3,517  10,276  
Total rental revenueTotal rental revenue95,402  82,855  12,547  
Other property-related revenueOther property-related revenue
Same store portfolioSame store portfolio2,907  2,680  227  
Non-same store portfolioNon-same store portfolio464  144  320  
Total other property-related revenueTotal other property-related revenue3,371  2,824  547  
Property operating expensesProperty operating expenses
Same store portfolioSame store portfolio25,738  25,219  519  
Non-same store portfolioNon-same store portfolio4,854  1,238  3,616  
Total property operating expensesTotal property operating expenses30,592  26,457  4,135  
Net operating incomeNet operating income
Same store portfolioSame store portfolio58,778  56,799  1,979  
Non-same store portfolioNon-same store portfolio9,403  2,423  6,980  
Total net operating incomeTotal net operating income68,181  59,222  8,959  
Management fees and other revenueManagement fees and other revenue5,449  4,893  556  
General and administrative expensesGeneral and administrative expenses(11,094) (10,380) (714) 
Depreciation and amortization(18,463) (14,319) (4,144)Depreciation and amortization(29,105) (24,349) (4,756) 
Income from operations21,297
 16,041
 5,256
OtherOther(389) (386) (3) 
Other (expense) income     Other (expense) income
Interest expense(9,157) (6,265) (2,892)Interest expense(15,628) (13,211) (2,417) 
Equity in losses of unconsolidated real estate venture(710) —
 (710)
Equity in losses of unconsolidated real estate venturesEquity in losses of unconsolidated real estate ventures(340) (2,102) 1,762  
Acquisition costs(139) (1,737) 1,598
Acquisition costs(833) (157) (676) 
Non-operating expense(9) (15) 6
Non-operating expense(192) (98) (94) 
Gain on sale of self storage properties106
 —
 106
Other expense(9,909) (8,017) (1,892)Other expense(16,993) (15,568) (1,425) 
Income before income taxes11,388
 8,024
 3,364
Income before income taxes16,049  13,432  2,617  
Income tax expense(162) (80) (82)Income tax expense(286) (492) 206  
Net income11,226
 7,944
 3,282
Net income15,763  12,940  2,823  
Net income attributable to noncontrolling interests(9,955) (7,955) (2,000)Net income attributable to noncontrolling interests(9,115) (5,529) (3,586) 
Net income (loss) attributable to National Storage Affiliates Trust$1,271
 $(11) $1,282
Net income attributable to National Storage Affiliates TrustNet income attributable to National Storage Affiliates Trust6,648  7,411  (763) 
Distributions to preferred shareholdersDistributions to preferred shareholders(3,273) (2,588) (685) 
Net income attributable to common shareholdersNet income attributable to common shareholders$3,375  $4,823  $(1,448) 
Total Revenue
Our total revenue increased by $15.9$13.7 million, or 30.0%15.1%, for the three months ended September 30, 2017,March 31, 2020, as compared to the three months ended September 30, 2016.March 31, 2019. This increase was primarily attributable to incremental revenue from 6573 self storage properties we acquired between OctoberApril 1, 20162019 and September 30, 2017,March 31, 2020, regular rental increases for in-place tenants, and management fees and other revenue earned from our unconsolidated real estate venture, partially offset by a decrease in total portfolio average occupancy from 91.0%87.2% for the three months ended March 31, 2019 to 90.4%.86.7% for the three months ended March 31, 2020. 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.

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Rental Revenue
Rental revenue increased by $13.5$12.5 million, or 26.2%15.1%, for the three months ended September 30, 2017,March 31, 2020, as compared to the three months ended September 30, 2016.March 31, 2019. The increase in rental revenue was due to a $11.3$10.3 million increase in non-same store rental revenue which was primarily attributable to incremental rental revenue of $7.8$6.1 million from 4637 self storage properties acquired between OctoberApril 1, 20162019 and June 30, 2017,December 31, 2019, and $1.6$3.2 million from 1936 self storage properties acquired during the three months ended September 30, 2017.March 31, 2020. Same store portfolio rental revenues increased $2.2$2.3 million, or 5.3%2.9%, due to a 5.7%3.0% increase, from $11.19$11.98 to $11.83,$12.34, in annualized same store rental revenue (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"), driven primarily by increased contractual lease rates for in-place tenants and fees.fees partially offset by a decrease in average occupancy from 87.5% for the three months ended March 31, 2019 to 87.2% for the three months ended March 31, 2020.
Other Property-Related Revenue
Other property-related revenue represents ancillary income from our self storage properties, such as tenant insurance-related access fees and commissions and sales of storage supplies. Other property-related revenue increased by $0.5 million, or 27.2%19.4%, for the three months ended September 30, 2017,March 31, 2020, as compared to the three months ended September 30, 2016.March 31, 2019. This increase primarily resulted from a $0.4$0.3 million increase in non-same store other property-related revenue which was primarily attributable to $0.2 million incremental other property-related revenue of $0.2 million from 4637 self storage properties acquired between OctoberApril 1, 20162019 and June 30, 2017,December 31, 2019, and less than $0.1 million from 1936 self storage properties acquired during the three months ended September 30, 2017.March 31, 2020.
Management Fees and Other Revenue
During the three months ended September 30, 2017, we earned $2.0 million of managementManagement fees and other fees forrevenue, which are primarily related to managing and operating the unconsolidated real estate venture. The unconsolidated real estate venture pays certain customary fees to us for managing and operating the unconsolidated real estate venture properties, including property management fees, call center fees, platform fees and acquisition fees.


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Total Operating Expenses
Total operating expenses for the three months ended September 30, 2017ventures, were $47.6 million compared to $36.9$5.4 million for the three months ended September 30, 2016,March 31, 2020, compared to $4.9 million for the three months ended March 31, 2019, an increase of $10.7 million, or 28.9%. As discussed below, this change$0.5 million. This increase was primarily dueattributable to incremental tenant insurance fees and dividends from an increase of $4.3 millioninvestment in property operating expenses (which included less than $0.1 million of clean-up costs from hurricanes Harvey and Irma), $2.2 million in general and administrative expenses, and $4.1 million in depreciation and amortization.a tenant reinsurance company made during the three months ended June 30, 2019.
Property Operating Expenses
Property operating expenses were $21.6$30.6 million for the three months ended September 30, 2017March 31, 2020 compared to $17.3$26.5 million for the three months ended September 30, 2016,March 31, 2019, an increase of $4.3$4.1 million, or 24.7%15.6%. ThisThe increase in property operating expenses primarily resulted from a $4.0$3.6 million increase in non-same store property operating expenses that was primarily attributable to incremental property operating expenses of $2.8$2.0 million from 4637 self storage properties acquired between OctoberApril 1, 20162019 and June 30, 2017December 31, 2019, and $0.5$1.3 million from 1936 self storage properties acquired during the three months ended September 30, 2017. In addition, same store portfolio property operating expenses increased $0.3 million, or 2.4%, primarily due to increases in property taxes.March 31, 2020.
General and Administrative Expenses
General and administrative expenses increased $2.2$0.7 million, or 42.2%6.9%, for the three months ended September 30, 2017,March 31, 2020, compared to the three months ended September 30, 2016.March 31, 2019. This increase was primarily attributable to increases in supervisory and administrative fees charged by our PROs of $0.7 million primarily as a result ofresulting from incremental fees related to the 6573 self storage properties we acquired from Octoberbetween April 1, 2016 to September 30, 2017, costs related to our property management platform of $0.9 million, salaries2019 and benefits of $0.2 million and equity-based compensation expense of $0.2 million.March 31, 2020.
Depreciation and Amortization
Depreciation and amortization increased $4.1$4.8 million, or 28.9%19.5%, for the three months ended September 30, 2017,March 31, 2020, compared to the three months ended September 30, 2016.March 31, 2019. This increase was primarily attributable to incremental depreciation expense of $2.5 million from 46related to the 73 self storage properties we acquired between OctoberApril 1, 20162019 and June 30, 2017,March 31, 2020 and $0.5 million from 19 self storage properties acquired during the three months ended September 30, 2017. In addition,an increase in amortization of customer in-place leases decreased $0.2 million from $3.2$2.5 million for the three months ended September 30, 2016March 31, 2019 to $3.0$2.9 million for the three months ended September 30, 2017. Customer in-place leases are amortized over the 12-month period following the respective acquisition dates of our self storage properties. As of September 30, 2017, the unamortized balance of customer in-place leases totaled $4.6 million.March 31, 2020.
Interest Expense
Interest expense increased $2.9$2.4 million, or 46.2%18.3%, for the three months ended September 30, 2017,March 31, 2020, compared to the three months ended September 30, 2016.March 31, 2019. The increase in interest expense was primarily attributable to increasesadditional borrowings consisting of $155.0 million of additional term loan borrowings under the Company's credit facility in July 2019, $100.0 million of borrowings under the 2029 Term Loan Facility in April 2019 and the issuance of the $150.0 million Senior Unsecured Notes in a private placement to certain accredited investors in August 2019. The

34

increase in interest expense from these additional borrowings was partially offset by lower outstanding borrowings under our credit facility and higher interest rates on the Revolver, a new $84.9 million secured debt financing we entered into during August 2017 and a $0.1 million decrease in amortization of debt premiums.Revolver.
Equity In Losses(Losses) Earnings Of Unconsolidated Real Estate VentureVentures
Equity in (losses) earnings of unconsolidated real estate ventures represents our share of losses and earnings incurred through our 25% ownership interests in the 2018 Joint Venture and the 2016 Joint Venture. During the three months ended September 30, 2017,March 31, 2020, we recorded $0.7$0.3 million of equity in losses from our unconsolidated real estate venture. Equity inventures compared to $2.1 million of losses for the three months ended March 31, 2019. This was primarily the result of unconsolidated real estate venture representsincremental losses from our share of earnings and losses earned through our 25% ownership interest in the unconsolidated real estate venture. The unconsolidated real estate venture recorded a net loss of $2.8 million2018 Joint Venture during the three months ended September 30, 2017, primarily due to NOI of $9.5 million, offsetMarch 31, 2019 driven by $8.2 million of depreciation and amortization, $2.9 million of interest expense, and $1.3 million of supervisory, administrative, acquisition and other expenses.
Acquisition Costs
Acquisition costs decreased $1.6 million, or 92.0%, for the three months ended September 30, 2017, compared to the three months ended September 30, 2016. This decrease was due to a reduction in the number of properties acquired and the adoption of ASU 2017-01 during the nine months ended September 30, 2017. As a result of the adoption of ASU 2017-01, the self storage properties acquired during the three months ended September 30, 2017 were accounted for as asset acquisitions, and accordingly, $1.7 million of acquisition costs related to the self storage property acquisitions during the three months ended September 30, 2017 were capitalized as part of the basis of the acquired properties.


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Gain On Sale of Self Storage Properties
Gain on sale of self storage properties increased $0.1 million for the three months ended September 30, 2017, compared to the three months ended September 30, 2016. This increase resulted from the sale of improved land adjacent to self storage properties for gross proceeds of $1.1 million during the three months ended September 30, 2017.
Income Tax Expense
Income tax expense increased $0.1 million, or 102.5%, for the three months ended September 30, 2017, compared to the three months ended September 30, 2016. The increase in income tax expense was primarily related to growth in the Company's portfolio contributing to increases in certain state and local taxes that are considered income-based taxes and increases in the Company's tax provision for its taxable REIT subsidiary, through which the Company provides management and other services to the unconsolidated real estate venture as well as other activities.
Net Income Attributable to Noncontrolling Interests
As discussed in Note 2 in Item 1, we allocate GAAP income (loss) utilizing the hypothetical liquidation at book value ("HLBV") method, in which we allocate income or loss based on the change in each unitholders' claim on the net assets of our operating partnership at period end after adjusting for any distributions or contributions made during such period.
Due to the stated liquidation priorities and because the HLBV method incorporates non-cash items such as depreciation expense, in any given period, income or loss may be allocated disproportionately to noncontrolling interests. Net income attributable to noncontrolling interests was $10.0 million for the three months ended September 30, 2017, compared to $8.0 million for the three months ended September 30, 2016.
Nine Months Ended September 30, 2017 compared to the Nine Months Ended September 30, 2016
Net income was $34.0 million for the nine months ended September 30, 2017, compared to $18.8 million for the nine months ended September 30, 2016, an increase of $15.2 million. The increase was primarily due to an increase in NOI resulting from an additional 65 self storage properties we acquired between October 1, 2016 and September 30, 2017, gains from the sale of two self storage properties and same store NOI growth, partially offset by increases in depreciation and amortization, interest expense and general and administrative expenses.
The following table illustrates the changes in rental revenue, other property-related revenue, management fees and other revenue, property operating expenses, and other expenses for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 (dollars in thousands):
 Nine Months Ended September 30,
 2017 2016 Change
Rental revenue     
Same store portfolio$123,866
 $117,078
 $6,788
Non-Same store portfolio58,847
 18,470
 40,377
Total rental revenue182,713
 135,548
 47,165
Other property-related revenue     
Same store portfolio4,121
 3,762
 359
Non-Same store portfolio1,950
 572
 1,378
Total other property-related revenue6,071
 4,334
 1,737
Property operating expenses     
Same store portfolio39,713
 39,134
 579
Non-Same store portfolio21,457
 6,930
 14,527
Total property operating expenses61,170
 46,064
 15,106
Net operating income     
Same store portfolio88,274
 81,706
 6,568
Non-same store portfolio39,340
 12,112
 27,228
Total net operating income127,614
 93,818
 33,796
Management fees and other revenue5,978
 —
 5,978


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 Nine Months Ended September 30,
 2017 2016 Change
General and administrative expenses(22,066) (14,431) (7,635)
Depreciation and amortization(54,946) (38,299) (16,647)
Income from operations56,580
 41,088
 15,492
Other (expense) income     
Interest expense(24,788) (17,050) (7,738)
Loss on early extinguishment of debt—
 (136) 136
Equity in losses of unconsolidated real estate venture(2,260) —
 (2,260)
Acquisition costs(450) (4,733) 4,283
Non-operating expense(75) (77) 2
Gain on sale of self storage properties5,743
 —
 5,743
Other expense(21,830) (21,996) 166
Income before income taxes34,750
 19,092
 15,658
Income tax expense(767) (301) (466)
Net income33,983
 18,791
 15,192
Net income attributable to noncontrolling interests(29,790) (9,222) (20,568)
Net income attributable to National Storage Affiliates Trust$4,193
 $9,569
 $(5,376)
      
Total Revenue
Our total revenue increased by $54.9 million, or 39.2%, for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016. This increase was primarily attributable to incremental rental revenue from 65 self storage properties we acquired between October 1, 2016 and September 30, 2017, regular rental increases for in-place tenants, and management fees and other revenue earned from our unconsolidated real estate venture, partially offset by a decrease in average total portfolio occupancy from 90.0% to 89.3%.
Rental Revenue
Rental revenue increased by $47.2 million, or 34.8%, for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016. The increase in rental revenue was primarily due to a $40.4 million increase in non-same store rental revenue which was attributable to incremental rental revenue of $19.0 million from 76 self storage properties acquired during the nine months ended September 30, 2016, $15.5 million from 31 self storage properties acquired between October 1, 2016 and December 31, 2016, and $5.9 million from 34 self storage properties acquired during the nine months ended September 30, 2017. Same store portfolio rental revenues increased $6.8 million, or 5.8%, due to a 6.0% increase, from $10.92 to $11.58, in same store rental revenue per occupied square foot, driven primarily by a combination of increased contractual lease rates and fees.
Other Property-Related Revenue
Other property-related revenue represents ancillary income from our self storage properties, such as tenant insurance-related access fees and commissions and sales of storage supplies. Other property-related revenue increased by $1.7 million, or 40.1%, for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016. This increase primarily resulted from a $1.4 million increase in non-same store other property-related revenue which was attributable to incremental other property-related revenue of $0.8 million from 76 self storage properties acquired during the nine months ended September 30, 2016, $0.4 million from 31 self storage properties acquired between October 1, 2016 and December 31, 2016, and $0.1 million from 34 self storage properties acquired during the nine months ended September 30, 2017.
Management Fees and Other Revenue
During the nine months ended September 30, 2017, we earned $6.0 million of management and other fees for managing and operating the unconsolidated real estate venture properties. The unconsolidated real estate venture pays certain customary fees to us for managing and operating the unconsolidated real estate venture properties, including property management fees, call center fees, platform fees and acquisition fees.


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Total Operating Expenses
Total operating expenses increased $39.4 million, or 39.9%, for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. As discussed below, this change was primarily due to an increase of $15.1 million in property operating expenses (which included less than $0.1 million of clean-up costs from hurricanes Harvey and Irma), $7.6 million in general and administrative expenses, and $16.6 million in depreciation and amortization.
Property Operating Expenses
Property operating expenses increased $15.1 million, or 32.8%, for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. This increase resulted from a $14.5 million increase in non-same store property operating expenses attributable to incremental property operating expenses of $6.8 million from 76 self storage properties acquired during the nine months ended September 30, 2016, $5.6 million from 31 self storage properties acquired between October 1, 2016 and December 31, 2016, and $2.1 million from 34 self storage properties acquired during the nine months ended September 30, 2017. In addition, same store portfolio property operating expenses increased $0.6 million, or 1.5%, due to increases in property taxes, administrative expenses, repairs and maintenance and bad debt expense, partially offset by decreases in insurance and advertising costs.
General and Administrative Expenses
General and administrative expenses increased $7.6 million, or 52.9%, for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. This increase was attributable to increases in supervisory and administrative fees charged by our PROs of $2.7 million primarily as a result of incremental fees related to the self storage properties we acquired in 2016 and 2017, costs related to our property management platform of $2.6 million, salaries and benefits of $1.1 million and equity-based compensation expense of $0.9 million.
Depreciation and Amortization
Depreciation and amortization increased $16.6 million, or 43.5%, for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. This increase was attributable to incremental depreciation expense related to the self storage properties we acquired in 2016 and 2017. In addition, amortization of customer in-place leases increased $2.2 million from $8.3 million forfollowing the nine months ended September 30, 2016 to $10.5 million for the nine months ended September 30, 2017.
Interest Expense
Interest expense increased $7.7 million, or 45.4%, for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. The increase in interest expense was primarily due to increases in outstanding borrowings under our credit facility and higher interest rates on the Revolver, a new term loan facility borrowing during 2016, a new $84.9 million secured debt financing we entered into during August 2017, the assumption of fixed rate mortgages in connection with self storage property acquisitions and a $0.4 million decrease in amortization of debt premiums.
Loss On Early Extinguishment of Debt
Loss on early extinguishment of debt decreased $0.1 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. During the nine months ended September 30, 2016, in connection with an amendment to our credit facility, oneacquisition of the lenders that was includedInitial 2018 Joint Venture portfolio in the syndicated group of lenders prior to the amendment is no longer a participating lender following the amendment, which constitutes an extinguishment of debt for accounting purposes. As a result, we wrote off $0.1 million of unamortized debt issuance costs, which is the amount attributed to the lender no longer included in the lending syndicate.
Equity In Losses Of Unconsolidated Real Estate Venture
During the nine months ended September 30, 2017, we recorded $2.3 million of equity in losses from our unconsolidated real estate venture. Equity in losses of unconsolidated real estate venture represents our share of earnings and losses earned through our 25% ownership interest in the unconsolidated real estate venture. The unconsolidated real estate venture recorded net losses of $9.0 million during the nine months ended September 30, 2017, primarily due to NOI of $26.6 million, offset by $23.3 million of depreciation and amortization, $8.5 million of interest expense and $3.8 million of supervisory, administrative, acquisition and other expenses.


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Acquisition Costs
Acquisition costs decreased $4.3 million, or 90.5%, for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. This decrease was due to a reduction in the number of properties acquired and the adoption of ASU 2017-01 during the nine months ended September 30, 2017. As a result of the adoption of ASU 2017-01, the self storage properties acquired during the nine months ended September 30, 2017 were accounted for as asset acquisitions, and accordingly, $2.5 million of acquisition costs related to the self storage property acquisitions during the nine months ended September 30, 2017 were capitalized as part of the basis of the acquired properties.
Gain On Sale of Self Storage Properties
Gain on sale of self storage properties increased $5.7 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. This increase resulted from the sale of two self storage properties and improved land adjacent to self storage properties during the nine months ended September 30, 2017 for gross proceeds of $11.4 million.
Income Tax Expense
Income tax expense increased $0.5 million, or 154.8%, for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. The increase in income tax expense was primarily related to growth in the Company's portfolio contributing to increases in certain state and local taxes that are considered income-based taxes and increases in the Company's tax provision for its taxable REIT subsidiary, through which the Company provides management and other services to the unconsolidated real estate venture as well as other activities.2018.
Net Income Attributable to Noncontrolling Interests
As discussed in Note 2 in Item 1, we allocate GAAP income (loss) utilizing the HLBV method, in which we allocate income or loss based on the change in each unitholders' claim on the net assets of our operating partnership at period end after adjusting for any distributions or contributions made during such period.
Due to the stated liquidation priorities and because the HLBV method incorporates non-cash items such as depreciation expense, in any given period, income or loss may be allocated disproportionately to noncontrolling interests. Net income attributable to noncontrolling interests was $29.8$9.1 million for the ninethree months ended September 30, 2017,March 31, 2020, compared to $9.2$5.5 million for the ninethree months ended September 30, 2016.March 31, 2019.


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Non-GAAP Financial Measures
FFO and Core FFO
Funds from operations, or FFO, is a widely used performance measure for real estate companies and is provided here as a supplemental measure of our operating performance. The April 2002 National Policy Bulletin of NAREIT,December 2018 Nareit Funds From Operations White Paper - 2018 Restatement, which we refer to as the White Paper, as amended, defines FFO as net income (loss) (as determined under GAAP), excluding gains (or losses) from sales of real estate and related impairment charges, plusexcluding: 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 adjustments foritems to record unconsolidated partnerships and joint ventures. We include amortization of customer in-place leases in real estate depreciation and amortization inventures on the calculation of FFO because we believe the amortization of customer in-place leases is analogous to real estate depreciation, as the value of such intangibles is inextricably connected to the real estate acquired.same basis. Distributions declared on subordinated performance units and DownREIT subordinated performance units represent our allocation of FFO to noncontrolling interests held by subordinated performance unitholders and DownREIT subordinated performance unitholders for the purposeunitholders. For purposes of calculating FFO attributable to common shareholders, OP unitholders, and LTIP unitholders.unitholders, we exclude distributions declared on subordinated performance units, DownREIT subordinated performance units, preferred shares and preferred units. We define Core FFO as FFO, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our core operating performance. These further adjustments consist of acquisition costs, organizational and offering costs, gains on debt forgiveness, gains (losses) on early extinguishment of debt, and after adjustments for unconsolidated partnerships and joint ventures.
Management uses FFO and Core FFO as key performance indicators in evaluating the operations of our properties. Given the nature of our business as a real estate owner and operator, we consider FFO and Core FFO as key supplemental measures of our operating performance that are not specifically defined by GAAP. We believe that FFO and Core FFO are useful to management and investors as a starting point in measuring our operational performance because FFO and Core FFO exclude various items included in net income (loss) that do not relate to or are not indicative of our operating performance such as gains (or losses) from sales of self storage properties and depreciation, which can make periodic and peer analyses of operating performance more difficult. Our computation of FFO and Core FFO may not be comparable to FFO reported by other REITs or real estate companies.
FFO and Core FFO should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, operating income and net income (loss). FFO and Core FFO do not represent cash generated from operating activities determined in accordance with GAAP and are not a measure of liquidity or an indicator of our ability to make cash distributions. We believe that to further understand our performance, FFO and Core FFO should be compared with our reported net income (loss) and considered in addition to cash flows computed in accordance with GAAP, as presented in our condensed consolidated financial statements.



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The following table presents a reconciliation of net income (loss) to FFO and Core FFO for the three and nine months ended September 30, 2017March 31, 2020 and 20162019 (in thousands, except per share and unit amounts):
Three Months Ended
March 31,
20202019
Net income$15,763  $12,940  
Add (subtract):
Real estate depreciation and amortization28,764  24,027  
Company's share of unconsolidated real estate venture real estate depreciation and amortization3,787  5,457  
Mark-to-market changes in value on equity securities142  —  
Company's share of unconsolidated real estate venture loss on sale of properties—  202  
Distributions to preferred shareholders and unitholders(3,514) (2,753) 
FFO attributable to subordinated performance unitholders(1)
(8,664) (7,293) 
FFO attributable to common shareholders, OP unitholders, and LTIP unitholders36,278  32,580  
Add:
Acquisition costs833  157  
Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders$37,111  $32,737  
Weighted average shares and units outstanding - FFO and Core FFO:(2)
Weighted average shares outstanding - basic59,798  56,655  
Weighted average restricted common shares outstanding23  30  
Weighted average OP units outstanding30,709  29,948  
Weighted average DownREIT OP unit equivalents outstanding1,849  1,848  
Weighted average LTIP units outstanding617  747  
Total weighted average shares and units outstanding - FFO and Core FFO92,996  89,228  
FFO per share and unit$0.39  $0.37  
Core FFO per share and unit$0.40  $0.37  
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net income$11,226
 $7,944
 $33,983
 $18,791
Add (subtract):       
Real estate depreciation and amortization18,187
 14,117
 53,773
 37,831
Company's share of unconsolidated real estate venture real estate depreciation and amortization2,042
 —
 5,832
 —
Gain on sale of self storage properties(106) —
 (5,743) —
FFO attributable to subordinated performance unitholders(1)
(7,699) (5,551) (20,743) (16,044)
FFO attributable to common shareholders, OP unitholders, and LTIP unitholders23,650
 16,510
 67,102
 40,578
Add:       
Acquisition costs139
 1,737
 450
 4,733
Company's share of unconsolidated real estate venture acquisition costs1
 —
 22
 —
Loss on early extinguishment of debt—
 —
 —
 136
Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders$23,790
 $18,247
 $67,574
 $45,447
        
Weighted average shares and units outstanding - FFO and Core FFO:(2)
Weighted average shares outstanding - basic44,269
 35,080
 43,967
 27,084
Weighted average restricted common shares outstanding27
 19
 24
 18
Weighted average OP units outstanding26,361
 24,310
 25,984
 23,761
Weighted average DownREIT OP unit equivalents outstanding1,835
 1,835
 1,835
 1,835
Weighted average LTIP units outstanding603
 2,556
 1,095
 2,523
Total weighted average shares and units outstanding - FFO and Core FFO73,095
 63,800
 72,905
 55,221
        
FFO per share and unit$0.32
 $0.26
 $0.92
 $0.73
Core FFO per share and unit$0.33
 $0.29
 $0.93
 $0.82

(1) Amounts represent distributions declared for subordinated performance unitholders and DownREIT subordinated performance unitholders for the periods presented.
(2) NSA combines OP units and DownREIT OP units with common shares because, after the applicable lock-out periods, OP units in the Company's operating partnership are redeemable for cash or, at NSA's option, exchangeable for common shares on a one-for-one basis and DownREIT OP units are also redeemable for cash or, at NSA's option, exchangeable for OP units in our operating partnership on a one-for-one basis, subject to certain adjustments in each case. Subordinated performance units, DownREIT subordinated performance units, and LTIP units may also, under certain circumstances, be convertible into or exchangeable for common shares (or other units that are convertible into or exchangeable for common shares). See footnote(1) in 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.



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The following table presents a reconciliation of earnings (loss) per share - diluted to FFO and Core FFO per share and unit for the three and nine months ended September 30, 2017March 31, 2020 and 2016:2019:
Three Months Ended
March 31,
20202019
Earnings (loss) per share - diluted$0.06  $0.08  
Impact of the difference in weighted average number of shares(1)
(0.02) (0.03) 
Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method(2)
0.09  0.07  
Add real estate depreciation and amortization0.31  0.27  
Add Company's share of unconsolidated venture real estate depreciation and amortization0.04  0.06  
FFO attributable to subordinated performance unitholders(0.09) (0.08) 
FFO per share and unit0.39  0.37  
Add acquisition costs0.01  —  
Core FFO per share and unit$0.40  $0.37  
        
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Earnings (loss) per share - diluted$0.03
 $—
 $0.09
 $0.25
Impact of the difference in weighted average number of shares(1)
(0.02) —
 (0.04) 0.09
Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method(2)
0.14
 0.13
 0.41
 —
Add real estate depreciation and amortization0.25
 0.22
 0.74
 0.68
Add Company's share of unconsolidated venture real estate depreciation and amortization0.03
 —
 0.08
 —
Subtract gain on sale of self storage properties—
 —
 (0.08) —
FFO attributable to subordinated performance unitholders(0.11) (0.09) (0.28) (0.29)
FFO per share and unit0.32
 0.26
 0.92
 0.73
Add acquisition costs, Company's share of unconsolidated real estate venture acquisition costs, and loss on early extinguishment of debt0.01
 0.03
 0.01
 0.09
Core FFO per share and unit$0.33
 $0.29
 $0.93
 $0.82
        

(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. 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 includesassumes the assumptionconversion 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, even though such units may only be convertible into OP units (i) after a lock-out period and (ii) upon certain events or conditions. For additional information about the conversion of subordinated performance units, DownREIT subordinated performance units and LTIP units into OP units, see Note 9 in Item 1. The computation of weighted average shares and units for FFO and Core FFO per share and unit includes all restricted common shares and LTIP units that participate in distributions and excludes all subordinated performance units and DownREIT subordinated performance units because their effect has been accounted for through the allocation of FFO to the related unitholders based on distributions declared.
(2) Represents the effect of adjusting the numerator to consolidated net income (loss) prior to GAAP allocations for noncontrolling interests, after deducting preferred share and unit distributions, and before the application of the two-class method and treasury stock method, as described in footnote(1).
NOI
We defineNet operating income, or NOI, as net income (loss), as determined under GAAP,represents rental revenue plus general and administrative expenses, depreciation and amortization, interest expense, loss on early extinguishment of debt, equity in earnings (losses) of unconsolidated real estate ventures, acquisition costs, organizational and offering expenses, income tax expense, impairment of long-lived assets, losses on the sale of properties and non-operating expense and by subtracting management fees and other property-related revenue gains on sale of properties, debt forgiveness, and non-operating income.less property operating expenses. NOI is not a measure of performance calculated in accordance with GAAP.
We believe NOI is useful to investors in evaluating our operating performance because:
•NOI is one of the primary measures used by our management and our PROs to evaluate the economic productivity of our properties, including our ability to lease our properties, increase pricing and occupancy and control our property operating expenses;
•NOI is widely used in the real estate industry and the self storage industry to measure the performance and value of real estate assets without regard to various items included in net income that do not relate to or are not indicative of operating performance, such as depreciation and amortization, which can vary depending upon accounting methods, the book value of assets, and the impact of our capital structure; and


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•We believe NOI helps our investors to meaningfully compare the results of our operating performance from period to period by removing the impact of our capital structure (primarily interest expense on our outstanding indebtedness) and depreciation of the cost basis of our assets from our operating results.
There are material limitations to using a non-GAAP measure such as NOI, including the difficulty associated with comparing results among more than one company and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect our net income (loss). We compensate for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with our analysis of net income (loss). NOI should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues income from operations and net loss.income (loss).

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The following table presents a reconciliation of net income (loss) to NOI for the three and nine months ended September 30, 2017March 31, 2020 and 20162019 (dollars in thousands):
Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
March 31,
2017 2016 2017 201620202019
Net income$11,226
 $7,944
 $33,983
 $18,791
Net income$15,763  $12,940  
(Subtract) Add:       (Subtract) Add:
Management fees and other revenue(1,998) —
 (5,978) —
Management fees and other revenue(5,449) (4,893) 
General and administrative expenses7,480
 5,259
 22,066
 14,431
General and administrative expenses11,094  10,380  
OtherOther389  386  
Depreciation and amortization18,463
 14,319
 54,946
 38,299
Depreciation and amortization29,105  24,349  
Interest expense9,157
 6,265
 24,788
 17,050
Interest expense15,628  13,211  
Equity in losses of unconsolidated real estate venture710
 —
 2,260
 —
Loss on early extinguishment of debt—
 —
 —
 136
Equity in losses of unconsolidated real estate venturesEquity in losses of unconsolidated real estate ventures340  2,102  
Acquisition costs139
 1,737
 450
 4,733
Acquisition costs833  157  
Income tax expense162
 80
 767
 301
Income tax expense286  492  
Gain on sale of self storage properties(106) —
 (5,743) —
Non-operating expense9
 15
 75
 77
Non-operating expense192  98  
Net Operating Income$45,242
 $35,619
 $127,614
 $93,818
Net Operating Income$68,181  $59,222  
Our consolidated NOI shown in the table above does not include our proportionate share of theNOI for our unconsolidated real estate venture's net operating income.ventures. For additional information about our unconsolidated real estate venture2018 Joint Venture and 2016 Joint Venture see Note 5 to the condensed consolidated financial statements in Item 1.
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss), as determined under GAAP, plus interest expense, loss on early extinguishment of debt, income taxes, depreciation and amortization expense and the Company's share of unconsolidated real estate venture depreciation and amortization. We define Adjusted EBITDA as EBITDA plus acquisition costs, the Company's share of unconsolidated real estate venture acquisition costs, organizational and offering expenses, equity-based compensation expense, losses on sale of properties and impairment of long-lived assets; and by subtractingassets, minus gains on sale of properties and debt forgiveness.forgiveness, and after adjustments for unconsolidated partnerships and joint ventures. These further adjustments eliminate the impact of items that we do not consider indicative of our core operating performance. In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
We present EBITDA and Adjusted EBITDA because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. EBITDA and Adjusted EBITDA have limitations as an analytical tool. Some of these limitations are:
•EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements, for capital expenditures, contractual commitments or working capital needs;


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•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;
•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

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•other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting itstheir usefulness as a comparative measure.measures.
We compensate for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with our analysis of net income (loss). EBITDA and Adjusted EBITDA should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues income from operations, and net income (loss).
The following table presents a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2017March 31, 2020 and 20162019 (dollars in thousands):
Three Months Ended
March 31,
20202019
Net income$15,763  $12,940  
Add:
Depreciation and amortization29,105  24,349  
Company's share of unconsolidated real estate venture depreciation and amortization3,787  5,457  
Interest expense15,628  13,211  
Income tax expense286  492  
EBITDA64,569  56,449  
Add:
Acquisition costs833  157  
Company's share of unconsolidated real estate venture loss on sale of properties—  202  
Equity-based compensation expense774  1,112  
Adjusted EBITDA$66,176  $57,920  
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net income$11,226
 $7,944
 $33,983
 $18,791
Add:       
Depreciation and amortization18,463
 14,319
 54,946
 38,299
Company's share of unconsolidated real estate venture depreciation and amortization2,042
 —
 5,832
 —
Interest expense9,157
 6,265
 24,788
 17,050
Income tax expense162
 80
 767
 301
Loss on early extinguishment of debt—
 —
 —
 136
EBITDA41,050
 28,608
 120,316
 74,577
Add:       
Acquisition costs139
 1,737
 450
 4,733
Company's share of unconsolidated real estate venture acquisition costs1
 —
 22
 —
Gain on sale of self storage properties(106) —
 (5,743) —
Equity-based compensation expense(1)
921
 685
 2,844
 1,913
Adjusted EBITDA$42,005
 $31,030
 $117,889
 $81,223
        
(1) Equity-based compensation expense is a non-cash item that is included in general and administrative expenses in our consolidated statements of operations.



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Liquidity and Capital Resources
Liquidity Overview
Liquidity is the ability to meet present and future financial obligations. Our primary source of liquidity is cash flow from our operations. Additional sources are proceeds from equity and debt offerings, and debt financings including borrowings under ourthe credit facility, and2023 Term Loan Facility, (as defined below).2028 Term Loan Facility and 2029 Term Loan Facility.
Our short-term liquidity requirements consist primarily of property operating expenses, property acquisitions, capital expenditures, general and administrative expenses acquisition pursuit costs 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, subordinated performance 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.
As discussed in Note 8 in Item 1, on February 8, 2017, we entered into an Increase Agreement with a syndicated group of lenders to increase the total borrowing capacity under the credit facility by $170.0 million for a total credit facility of $895.0 million, which included entry into a new $105.0 million Term Loan C. We continue to have an expansion option under the credit facility, which, if exercised in full, would provide for a total credit facility of $1.0 billion.
As of September 30, 2017, $235.0 million was outstanding under the Term Loan A with an effective interest rate of 2.63%, $155.0 million was outstanding under the Term Loan B with an effective interest rate of 3.24%, $105.0 million was outstanding under the Term Loan C with an effective interest rate of 3.71% and $201.0 million was outstanding under the Revolver with an effective interest rate of 2.63%. As of September 30, 2017, we would have had the capacity to borrow remaining Revolver commitments of $194.3 million while remaining in compliance with the credit facility's financial covenants.
For a summary of our financial covenants and additional detail regarding our credit facility, Term Loan Facility (as defined below), and fixed rate mortgage payables, please see Note 8 to the Company's most recent Annual Report on Form10-K filed with the Securities and Exchange Commission.
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 meet our long-term liquidity requirements with operating cash flow, cash on hand, secured and unsecured indebtedness, and the issuance of equity and debt securities.
We have aThe availability of credit agreement with a syndicated groupand its related effect on the overall economy may affect our liquidity and future financing activities, both through changes in interest rates and access to financing. Currently, interest rates are low compared to historical levels. Our ability to access capital on favorable terms as well as to use cash from operations to continue to meet our liquidity needs, all of lenders for a term loan facility (the "Term Loan Facility") in an aggregate amountwhich are highly uncertain and cannot be predicted, could be affected by various risks and uncertainties, including, but not limited to, the effects of $100.0 million, which amount is outstanding, with an effective interest rate of 3.08% as of September 30, 2017. We have an expansion option under the Term Loan Facility, which, if exercised in full, would provide for a total Term Loan Facility in an aggregate amount of $200.0 million.
COVID-19 pandemic. We believe that, as a publicly-traded REIT, we will have access to multiple sources of capital to fund our long-term liquidity

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requirements, including the incurrence of additional debt and the issuance of debt and additional equity securities. However, we cannot assure you that this will be the case.
Cash Flows
At September 30, 2017,March 31, 2020, we had $13.7$18.7 million in cash and cash equivalents and $4.7$4.0 million of restricted cash, an increasea decrease in cash and cash equivalents of $1.1$1.9 million and an increase in restricted cash of $1.9$0.3 million from December 31, 2016.2019. 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 condensed consolidated statements of cash flows included in Item 1 of this report.


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Cash Flows From Operating Activities
Cash provided by our operating activities was $94.9$50.7 million for the ninethree months ended September 30, 2017March 31, 2020 compared to $68.3$46.4 million for the ninethree months ended September 30, 2016,March 31, 2019, an increase of $26.6$4.3 million. Our operating cash flow increased primarily due to the 3137 self storage properties that were acquired between OctoberApril 1, 20162019 and December 31, 20162019 that generated cash flow for the entire ninethree months ended September 30, 2017,March 31, 2020, and an additional 3436 self storage properties acquired during the ninethree months ended September 30, 2017.March 31, 2020. Because these 6573 self storage properties were acquired after September 30, 2016,March 31, 2019, our operating results for the ninethree months ended September 30, 2016March 31, 2019 were not impacted by them. In addition, we received $3.8 million of operating distributions from our unconsolidated real estate venture during the nine months ended September 30, 2017. The increase in our operating cash flows from these activities was partially offset by higher cash payments for general and administrative expenses and interest expense.
Cash Flows From Investing Activities
Cash used in investing activities was $217.1$211.1 million for the ninethree months ended September 30, 2017March 31, 2020 compared to $342.6$143.7 million for the ninethree months ended September 30, 2016.March 31, 2019. The primary uses of cash for the ninethree months ended September 30, 2017March 31, 2020 were for our acquisition of 3436 self storage properties for cash consideration of $209.7$210.0 million, capital expenditures of $10.0$4.9 million, investments in our unconsolidated real estate venture2016 Joint Venture of $12.6$3.1 million, expenditures for corporate furniture, equipment and other of $0.2 million and deposits for potential acquisitions of $2.3$0.5 million partially offset by $17.5$7.6 million of proceeds from the sale of three self storage properties and land parcels.equity securities. The primary uses of cash for the ninethree months ended September 30, 2016March 31, 2019 were for our acquisition of 7632 self storage properties for cash consideration of $323.8$139.6 million, capital expenditures of $8.0$4.2 million and deposits for potential acquisitions of $5.4$0.8 million, partially offset by distributions received from our 2016 Joint Venture of $1.0 million.
Capital expenditures totaled $10.0$4.9 million and $8.0$4.2 million during the ninethree months ended September 30, 2017March 31, 2020 and 2016,2019, respectively. We generally fund post-acquisition capital additions from cash provided by operating activities.
We categorize our capital expenditures broadly into three primary categories:
•recurring capital expenditures, which represent the portion of capital expenditures that are deemed to replace the consumed portion of acquired capital assets and extend their useful life;
revenue•value enhancing capital expenditures, which represent the portion of capital expenditures that are made to enhance the revenue and value of an asset from its original purchase condition; and
•acquisitions capital expenditures, which represent the portion of capital expenditures capitalized during the current period that were identified and underwritten prior to a property's acquisition.

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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 condensed consolidated statements of cash flows for the ninethree months ended September 30, 2017March 31, 2020 and 2016,2019, are presented below (dollars in thousands):
Three Months Ended
March 31,
20202019
Recurring capital expenditures$1,677  $2,159  
Value enhancing capital expenditures897  945  
Acquisitions capital expenditures2,331  1,993  
Total capital expenditures4,905  5,097  
Change in accrued capital spending4  (889) 
Capital expenditures per statement of cash flows$4,909  $4,208  
 Nine Months Ended
September 30,
 2017 2016
Recurring capital expenditures$2,589
 $2,442
Revenue enhancing capital expenditures1,271
 2,315
Acquisitions capital expenditures6,149
 3,982
Total capital expenditures10,009
 8,739
Change in accrued capital spending2
 (759)
Capital expenditures per statement of cash flows$10,011
 $7,980
    


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Cash Flows From Financing Activities
Cash provided by our financing activities was $125.3$158.8 million for the ninethree months ended September 30, 2017March 31, 2020 compared to cash provided by our financing activities of $281.0$100.4 million for the ninethree months ended September 30, 2016.March 31, 2019. Our sources of financing cash flows for the ninethree months ended September 30, 2017March 31, 2020 primarily consisted of $455.5$244.0 million of borrowings under our credit facility, an $84.9 million secured debt financingRevolver and $7.0$4.2 million of proceeds from the issuance of 300,043 subordinated performance units to an affiliate of Personal Mini.common shares. Our primary uses of financing cash flows for the ninethree months ended September 30, 2017March 31, 2020 were for principal payments on existing debt of $344.9$46.6 million (which included $331.0$44.0 million of principal repayments under the Revolver $10.4and $2.6 million of fixed rate mortgage principal payoffspayments), distributions to noncontrolling interests of $19.8 million, distributions to common shareholders of $19.7 million and $3.5distributions to preferred shareholders of $3.3 million. Our sources of financing cash flows for the three months ended March 31, 2019 primarily consisted of $188.5 million of borrowings under our credit facility. Our primary uses of financing cash flows for the three months ended March 31, 2019 were for principal payments on existing debt of $51.8 million (which included $50.5 million of principal repayments under the Revolver and $1.3 million of scheduled fixed rate mortgage principal payments), distributions to noncontrolling interests of $41.8$17.0 million, and distributions to common shareholders of $33.6 million. Our sources of financing cash flows for the nine months ended September 30, 2016 primarily consisted of $237.5 million of proceeds from the completion of our follow-on common share offering, $398.5 million of borrowings under our credit facility and $100.0 million of borrowings under our Term loan facility. Our primary uses of financing cash flows for the nine months ended September 30, 2016 were for principal payments on existing debt of $401.2 million (which included $376.0 million of principal repayments under the Revolver, $22.0 million of fixed rate mortgage principal payoffs and $3.2 million of scheduled fixed rate mortgage principal payments), distributions to noncontrolling interests of $33.4$17.0 million and distributions to commonpreferred shareholders of $17.6$2.6 million.
Credit Facility and Term Loan Facilities
As of March 31, 2020, our credit facility provided for total borrowings of $1.275 billion, consisting of five components: (i) a Revolver which provides for a total borrowing commitment up to $500.0 million, whereby we may borrow, repay and re-borrow amounts under the Revolver, (ii) a $125.0 million Term Loan A, (iii) a $250.0 million Term Loan B, (iv) a $225.0 million Term Loan C and (v) a $175.0 million Term Loan D. The Revolver matures in January 2024; provided that we may elect to extend the maturity to July 2024 by paying an extension fee of 0.075% of the total borrowing commitment thereunder at the time of extension and meeting other customary conditions with respect to compliance. The Term Loan A matures in January 2023, the Term Loan B matures in July 2024, the Term Loan C matures in January 2025 and the Term Loan D matures in July 2026. The Revolver, Term Loan A, Term Loan B, Term Loan C and Term Loan D are not subject to any scheduled reduction or amortization payments prior to maturity. As of March 31, 2020, we have an expansion option under the credit facility, which, if exercised in full, would provide for a total credit facility of $1.750 billion. As of March 31, 2020, we would have had the capacity to borrow remaining Revolver commitments of $294.3 million while remaining in compliance with the credit facility's financial covenants.
We have a 2023 Term Loan Facility that matures in June 2023 and is separate from the credit facility in an aggregate amount of $175.0 million. As of March 31, 2020 the entire amount was outstanding under the 2023 Term Loan Facility with an effective interest rate of 2.83%. We have an expansion option under the 2023 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount of $400.0 million.
We have a 2028 Term Loan Facility that matures in December 2028 and is separate from the credit facility and 2023 Term Loan Facility in an aggregate amount of $75.0 million. As of March 31, 2020 the entire amount was outstanding under the 2028 Term Loan Facility with an effective interest rate of 4.62%. We have an expansion

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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.
We have a 2029 Term Loan Facility that matures in April 2029 and is separate from the credit facility, 2023 Term Loan Facility and 2028 Term Loan Facility in an aggregate amount of $100.0 million. As of March 31, 2020 the entire amount was outstanding under the 2029 Term Loan Facility with an effective interest rate of 4.27%.
2029 And 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 accredited investors.
Equity Transactions
Issuance of Common Shares and Series A Preferred Shares
As discussed in Note 3 in Item 1, on March 31, 2020, we closed on the mergers of SecurCare and DLAN with and into wholly-owned subsidiaries of the Company. In connection with the mergers, we issued 8,105,192 common shares to the former owners of SecurCare and DLAN.
During the three months ended March 31, 2020, we sold 125,000 of our common shares through at the market offerings. The common shares were sold at an average offering price of $36.18 per share, resulting in net proceeds to us of approximately $4.2 million after deducting compensation payable by us to such agents and offering expenses.
During the three months ended March 31, 2020, after receiving notices of redemption from certain OP unitholders, we elected to issue 118,961 common shares to such holders in exchange for 118,961 OP units in satisfaction of the operating partnership's redemption obligations.
During the three months ended March 31, 2020, after receiving notices of redemption from certain Series A-1 preferred unitholders, we elected to issue 5,600 Series A preferred shares to such holders in exchange for 5,600 Series A-1 preferred units in satisfaction of the operating partnership's redemption obligations.
Issuance of OP Equity
In connection with the 3436 properties acquired during the ninethree months ended September 30, 2017,March 31, 2020, we issued $7.2 million of OP equity of $14.2 million (consisting of 473,533181,981 OP units, 96,39428,892 LTIP units and 13,105 subordinated performance units). In addition, we issued 28,894 LTIP units to consultants that will vest upon the completion of expansion projects.
As discussed in Note 3 in Item 1, during the three months ended March 31, 2020, the Company issued 445,701 OP units issued upon the conversion of 332,738 subordinated performance units and 133,637 OP units upon the vestingconversion of 36,400an equivalent number of LTIP units previously issued)units.
Dividends and paid cash of $209.7 million.Distributions
On August 24, 2017,February 20, 2020 our board of trustees declared a cash dividend and distribution, respectively, of $0.26$0.33 per common share and OP unit. Such distributions were paid on September 29, 2017unit to shareholders and OP unitholders of record as of September 15, 2017.March 13, 2020. On SeptemberFebruary 20, 2020, our board of trustees also declared cash distributions of $0.375 per Series A Preferred Share and Series A-1 Preferred Unit to shareholders and unitholders of record as of March 13, 2017,2020. On March 12, 2020, our board of trustees declared cash distributions of $7.7$8.7 million, in the aggregate, to subordinated performance unitholders of record as of September 15, 2017.March 13, 2020. Such dividends and distributions were paid on September 29, 2017.
During the nine months ended September 30, 2017, after receiving notices of redemption from certain holders of OP units, we elected to issue 1,189,801 common shares to such holders in exchange for 1,189,801 OP units in satisfaction of the operating partnership's redemption obligations.
As discussed in Note 13 in Item 1, on October 11, 2017, we completed an underwritten public offering of 6,900,000 of our Preferred Shares, which included 900,000 Preferred Shares sold upon the exercise in full by the underwriters of their option to purchase additional Preferred Shares, resulting in net proceeds to us of approximately $166.6 million, after deducting the underwriting discount and our other offering expenses. We used the net proceeds from the offering to repay amounts outstanding under our Revolver, and subsequently redrew under our Revolver to fund self storage property acquisitions.March 31, 2020.
Cash Distributions from our Operating Partnership
Under the LP Agreement of our operating partnership, to the extent that we, as the general partner of our operating partnership, determine to make distributions to the partners of our operating partnership out of the operating cash flow or capital transaction proceeds generated by a real property portfolio managed by one of our PROs, the holders of the series of subordinated performance units that relate to such portfolio are entitled to share in such distributions. Under the LP Agreement of our operating partnership, operating cash flow with respect to a portfolio of properties managed by one of our PROs is generally an amount determined by us, as general partner of our operating partnership, equal to the excess of property revenues over property related expenses from that portfolio. In general, property revenue from the portfolio includes:
(i)all receipts, including rents and other operating revenues;
(ii)any incentive, financing, break-up and other fees paid to us by third parties;
(iii)amounts released from previously set aside reserves; and
(iv)any other amounts received by us, which we allocate to the particular portfolio of properties.

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(i)all receipts, including rents and other operating revenues;
(ii)any incentive, financing, break-up and other fees paid to us by third parties;
(iii)amounts released from previously set aside reserves; and
(iv)any other amounts received by us, which we allocate to the particular portfolio of properties.
In general, property-related expenses include all direct expenses related to the operation of the properties in that portfolio, including real property taxes, insurance, property-level general and administrative expenses, employee costs, utilities, property marketing expense, property maintenance and property reserves and other expenses incurred at the


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property level. In addition, other expenses incurred by our operating partnership maywill also be allocated by us, as general partner, to the property portfolio and will be included in the property-related expenses of that portfolio. Examples of such other expenses include:
(i)corporate-level general and administrative expenses;
(ii)out-of-pocket costs, expenses and fees of our operating partnership, whether or not capitalized;
(iii)the costs and expenses of organizing and operating our operating partnership;
(iv)amounts paid or due in respect of any loan or other indebtedness of our operating partnership during such period;
(v)extraordinary expenses of our operating partnership not previously or otherwise deducted under item (ii) above;
(vi)any third-party costs and expenses associated with identifying, analyzing, and presenting a proposed property to us and/or our operating partnership; and
(vii)reserves to meet anticipated operating expenditures, debt service or other liabilities, as determined by us.
(i)corporate-level general and administrative expenses;
(ii)out-of-pocket costs, expenses and fees of our operating partnership, whether or not capitalized;
(iii)the costs and expenses of organizing and operating our operating partnership;
(iv)amounts paid or due in respect of any loan or other indebtedness of our operating partnership during such period;
(v)extraordinary expenses of our operating partnership not previously or otherwise deducted under item (ii) above;
(vi)any third-party costs and expenses associated with identifying, analyzing, and presenting a proposed property to us and/or our operating partnership; and
(vii)reserves to meet anticipated operating expenditures, debt service or other liabilities, as determined by us.
To the extent that we, as the general partner of our operating partnership, determine to make distributions to the partners of our operating partnership out of the operating cash flow of a real property portfolio managed by one of our PROs, operating cash flow from a property portfolio is required to be allocated to holders of OP unitsunitholders and to the holders of series of subordinated performance units that relate to such property portfolio as follows:
First, an amount is allocated to holders of OP unitsunitholders in order to provide holders of OP unitsunitholders (together with any prior allocations of capital transaction proceeds) with a cumulative preferred allocation on the unreturned capital contributions attributed to the OP units in respect of such property portfolio. The preferred allocation for all of our existing portfolios is 6%. As of September 30, 2017,March 31, 2020, our operating partnership had an aggregate of $1,081.0$1,711.6 million of such unreturned capital contributions with respect to common shareholders and OP unitholders, andwith respect to the various property portfolios.
Second, an amount is allocated to the holders of the series of subordinated performance units relating to such property portfolio in order to provide such holders with an allocation (together with prior distributions of capital transaction proceeds) on their unreturned capital contributions. Although the subordinated allocation for the subordinated performance units is non-cumulative from period to period, if the operating cash flow from a property portfolio related to a series of subordinated performance units is sufficient, in the judgment of the general partner (with the approval of a majority of our independent trustees), to fund distributions to the holders of such series of subordinated performance units, but we, as the general partner of our operating partnership, decline to make distributions to such holders, the amount available but not paid as distributions will be added to the capital contributionssubordinated allocation corresponding to such series of subordinated performance units. The subordinated allocation for the outstanding subordinated performance units is 6%. As of September 30, 2017,March 31, 2020, an aggregate of $188.3$116.9 million of unreturned capital contributions has been allocated to the various series of subordinated performance units.
Thereafter, any additional operating cash flow is allocated to holders of OP unitsunitholders and the applicable series of subordinated performance units equally.
Following the allocation described above, we as the general partner of our operating partnership, will generally cause our operating partnership to distribute the amounts allocated to the relevant series of subordinated performance units to the holders of such series of subordinated performance units. We, as the general partner, may cause our operating partnership to distribute the amounts allocated to holders of the OP unitsunitholders or may cause our operating partnership to retain such amounts to be used by our operating partnership for any purpose. Any operating cash flow

43

that is attributable to amounts retained by our operating partnership pursuant to the preceding sentence will generally be available to be allocated as an additional capital contribution to the various property portfolios.
The foregoing description of the allocation of operating cash flow between the OP unit holdersunitholders and subordinated performance unit holdersunitholders is used for purposes of determining distributions to holders of subordinated performance units but does not necessarily represent the operating cash flow that will be distributed to holders of OP unitsunitholders (or paid as dividends to holders of our common shares). Any distribution of operating cash flow allocated to the holders of OP unitsunitholders will be made at our discretion (and paid as dividends to holders of our common shares at the discretion of our board of trustees).
Under the LP Agreement of our operating partnership, capital transactions are transactions that are outside the ordinary course of our operating partnership's business, involve the sale, exchange, other disposition, or refinancing


41

of any property, and are designated as capital transactions by us, as the general partner. To the extent the general partner determines to distribute capital transaction proceeds, the proceeds from capital transactions involving a particular property portfolio are required to be allocated to holders of OP unitsunitholders and to the series of subordinated performance units that relate to such property portfolio as follows:
First, an amount determined by us, as the general partner, of such capital transaction proceeds is allocated to holders of OP unitsunitholders in order to provide holders of OP unitsunitholders (together with any prior allocations of operating cash flow) with a cumulative preferred allocation on the unreturned capital contributions attributed to the holders of OP unitsunitholders in respect of such property portfolio that relate to such capital transaction plus an additional amount equal to such unreturned capital contributions.
Second, an amount determined by us, as the general partner, is allocated to the holders of the series of subordinated performance units relating to such property portfolio in order to provide such holders with a non-cumulative subordinated allocation on the unreturned capital contributions made by such holders in respect of such property portfolio that relatesrelate to such capital transaction plus an additional amount equal to such unreturned capital contributions.
The preferred allocation and subordinated allocation with respect to capital transaction proceeds for each portfolio is equal to the preferred allocation and subordinated allocation for distributions of operating cash flow with respect to that portfolio.
Thereafter, any additional capital transaction proceeds are equally allocated to holders of OP unitsunitholders and the applicable series of subordinated performance units.units equally.
Following the allocation described above, we, as the general partner of our operating partnership, will generally cause our operating partnership to distribute the amounts allocated to the relevant series of subordinated performance units to the holders of such series of subordinated performance units. We, as general partner of our operating partnership, may cause our operating partnership to distribute the amounts allocated to holders of the OP unitsunitholders or may cause our operating partnership to retain such amounts to be used by our operating partnership for any purpose, including additional acquisitions through the use of 1031 exchanges.purpose. Any capital transaction proceeds that are attributable to amounts retained by our operating partnership pursuant to the preceding sentence will generally be available to be allocated as an additional capital contribution to the various property portfolios.
The foregoing allocation of capital transaction proceeds between the OP unit holdersunitholders and subordinated performance unit holdersunitholders is used for purposes of determining distributions to holders of subordinated performance units but does not necessarily represent the capital transaction proceeds that will be distributed to holders of OP unitsunitholders (or paid as dividends to holders of our common shares). Any distribution of capital transaction proceeds allocated to the holders of OP unitsunitholders will be made at our discretion (and paid as dividends to holders of our common shares at the discretion of our board of trustees).

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Allocation of Capital Contributions
We, as the general partner of our operating partnership, in our discretion, have the right to increase or decrease, as appropriate, the amount of capital contributions allocated to our operating partnership in general and to each series of subordinated performance units to reflect capital expenditures made by our operating partnership in respect of each portfolio, the sale or refinancing of all or a portion of the properties comprising the portfolio, the distribution of capital transaction proceeds by our operating partnership, the retention by our operating partnership of cash for working capital purposes and other events impacting the amount of capital contributions allocated to the holders. In addition, to avoid conflicts of interests, any decision by us to increase or decrease allocations of capital contributions must also be approved by a majority of our independent trustees.
Off-Balance Sheet Arrangements
Except as disclosed in the notes to our financial statements, as of September 30, 2017,March 31, 2020, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purposes entities, which typically are established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Further, except as disclosed in the notes to our financial statements, as of September 30, 2017,March 31, 2020, we have not guaranteed any obligations of unconsolidated entities, nor do we havemade any commitments or intent to provide funding to any such entities. Accordingly, we are not materially exposedentities, that creates any material exposure to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.


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risk.
Seasonality
The self storage business is subject to minor seasonal fluctuations. 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.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk refers to the risk of loss from adverse changes in market prices and interest rates. Our future income, cash flows, and fair values of financial instruments are dependent upon prevailing market interest rates. The primary market risk to which we believe we are exposed is interest rate risk. Interest rate risk is highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations, and other factors beyond our control. We use interest rate swaps to moderate our exposure to interest rate risk by effectively converting the interest on variable rate debt to a fixed rate. We make limited use of other derivative financial instruments and we do not use them for trading or other speculative purposes.
As of September 30, 2017,March 31, 2020, we had $201.0$200.0 million of debt subject to variable interest rates (excluding variable-rate debt subject to interest rate swaps). If one-month LIBOR 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 increasedecrease or decreaseincrease future earnings and cash flows by approximately $2.0 million annually.
Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.
ITEM 4. Controls and Procedures
Disclosure Controls and Procedures
The Company's management, with the participation of the Company's chief executive officer and chief financial officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the chief executive officer and chief financial officer concluded that the Company's disclosure controls and procedures, as of the end of the period covered by this report, are effective.

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Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, 2017March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in our periodic reports.


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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
We are not currently subject to any legal proceedings that we consider to be material.
ITEM 1A. Risk Factors
For a discussion of ourthe Company's potential risks and uncertainties, see the information below and in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 28, 2017 under the heading Item 1A. "Risk Factors" beginning on page 14,15, which is accessible on the SEC's website at www.sec.gov. During
The current outbreak of COVID-19 or the nine months ended September 30, 2017, therefuture outbreak of any other highly infectious or contagious diseases, could adversely impact or cause significant disruption to our financial condition, results of operations and cash flows. The spread of the COVID-19 outbreak has disrupted, and is likely to further cause severe disruptions in, the economy and financial markets and create widespread business continuity and viability issues.
The potential impact and duration of COVID-19 or another pandemic could have significant repercussions across the economy and financial markets, and could trigger a period of economic slowdown or recessions. The outbreak of COVID-19 in many countries continues to adversely impact economic activity and has contributed to significant volatility and negative pressure in financial markets. The impact of the outbreak has been no material changesrapidly evolving and, as cases of the virus have continued to increase around the world, many countries, including the United States, have reacted by instituting, among other things, quarantines and restrictions on travel.
Most states and municipalities, including where we have our headquarters (Colorado) and in regions of the United States where our properties and tenants are located, have also reacted by instituting quarantines, mandating business and school closures, requiring restrictions on travel, "shelter in place" or "stay-at-home" orders, and imposing restrictions on the types of business that may continue to operate. Although many of these jurisdictions, including Colorado, are gradually relaxing a number of these restrictions, many of these restrictions are still in place in regions where our properties are located.
As a result, the COVID-19 pandemic, or a future pandemic, could adversely impact our financial condition, results of operations and cash flows due to, among other factors:
•reduced economic activity that may severely impact the Company's tenants and may cause a portion of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such riskobligations, which could increase uncollectible receivables and cause subsequent reductions in revenue;
•reduced economic activity could result in a prolonged recession, which could negatively impact consumer discretionary spending, which could reduce move-in volumes at our stores or limit our ability to minimize exposure to uncollectible receivables;
•governmental or health and safety requirements or recommendations could compel a complete or partial closure of, or other operational issues at, one or more of our properties or prohibit us from charging late fees, conducting auctions and increasing prices;
•any of the above factors, disclosedor a combination thereof, could cause the Company to recognize impairment in value of its tangible or intangible assets;
•a general decline in business activity and demand for property acquisitions, expansions, and the addition of new PROs and/or joint venture partners could adversely affect our ability or desire to grow our portfolio of properties;

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•interrupted availability of personnel, including our executive officers, other employees and the employees of our PROs, and an inability of us or our PROs to recruit, attract and retain additional skilled personnel to manage our business and/or properties;
•the potential negative impact on the health of our or our PROs' personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during this disruption;
•the inability of other third-party vendors we rely on to conduct our business to operate effectively and continue to support our business and operations, including vendors that provide IT services, legal and accounting services, or other operational support services;
•difficulty accessing debt and equity capital on attractive terms, or at all, and severe disruption or instability in the financial markets or a deterioration in credit and financing conditions may affect our access to capital necessary to fund business operations, potential acquisitions, or other growth opportunities or address maturing liabilities on a timely basis; and
•the financial impact of the COVID-19 pandemic, including potential decreases in cash from operations resulting therefrom, could negatively impact our future compliance with the financial covenants in our credit facility and other debt agreements and result in a default and potential acceleration of indebtedness, which could negatively impact our ability to make additional borrowings under our revolving credit facility and pay dividends.
The rapid development and fluidity of the circumstances resulting from this pandemic preclude any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 and the current financial, economic and capital markets environment, and future developments in these and other areas present material uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows and our tenant's ability to pay rent.
The factors described above, as well as additional factors that the Company may not currently be aware of, could materially negatively impact the Company’s ability to collect rent and could lead to termination of leases by tenants, tenant bankruptcies, decreases in demand for storage space at the Company’s properties, difficulties in accessing capital, impairment of the Company’s tangible or intangible assets and other impacts that could materially and adversely affect the Company’s financial condition, results of operations and cash flows.
To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in the Risk Factors section in the Annual Report, such as those relating to economic or other conditions in the markets in which we do business, changes in interest rates, demand for self storage space generally, illiquidity of real estate investments, our ability to obtain debt financing, our dependence on Form 10-K filed with the SEC on February 28, 2017.external sources of capital and our ability to pay dividends.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
During the three months ended September 30, 2017,March 31, 2020, the Company, in its capacity as general partner of its operating partnership, caused the operating partnership to issue 36,283118,961 common shares to satisfy redemption requests from certain limited partners.
On October 3, 2017,January 23, 2020, the operating partnership issued 26,049 OP57,786 LTIP units to Nordhagen LLLP, an entity for which Arlen D. Nordhagen, the Company's chairmanunrelated third parties and chief executive officer, holds voting and/or investment power, 115,918 OP units each to JM Trust and Lamb Family Trust, each an affiliateaffiliates of Guardian,Southern Storage Management Systems, Inc. d/b/a Southern Self Storage, one of the Company's existing PROs, and 2,605 OP units to an unrelated third party as partial consideration for the acquisition, expansion, and ongoing management of a portfolio of 29 self storage properties.
On April 24, 2020, the operating partnership issued 54,111 OP units to NWSS Silverton Road Storage LLC, an affiliate of J. Timothy Warren, a trustee of the Company, as consideration for the acquisition of one self storage property.
On October 16, 2017,The LTIP units issued by the operating partnership, issued 22,214 subordinated performanceafter achieving parity with OP Units, are eligible to be converted into OP Units on a one-for-one basis upon the satisfaction of conditions set forth in the LP Agreement and in the LTIP award agreements pursuant to which the LTIP units to SecurCare Self Storage Inc., an affiliate of SecurCare, one of the Company's existing PROs and an affiliate of Arlen D. Nordhagen, the Company's chairman and chief executive officer and 23,121 subordinated performance units to Move It B Units, LLC, an affiliate of Move It, one of the Company's existing PROs.were issued.


Following a specified lock up period after the respective datesdate 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 of the Company.shares. The Company has the right, but not the obligation, to assume and satisfy the redemption obligation of itsthe operating partnership described above by issuing one common share in exchange for each OP unit tendered for redemption.
The 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 itsthe operating partnership as described above in the event that OP units are in the future tendered for redemption.
As of November 6, 2017,May 8, 2020, other than those OP units held by the Company, after reflecting the transactions described herein, 29,111,15332,411,982 OP units of its operating partnership were outstanding (including 771,396797,810 outstanding LTIP units in the operating partnership and 1,834,7861,924,918 outstanding OP units ("DownREIT OP units") in certain consolidated subsidiaries of the operating partnership, which are convertible into, or exchangeable for, OP units on a one-for-basis, subject to certain conditions).
These issuances were exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
Use of Proceeds
Not applicable.
Issuer Purchases of Equity Securities
Not applicable.During the three months ended March 31, 2020, certain of our employees surrendered common shares owned by them to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted shares issued to them. The table below summarizes all of our repurchases of common shares during the quarter ended March 31, 2020:
PeriodTotal number of shares purchased-Total number of shares purchased as part of publicly announced plans or programsMaximum numbers of shares that may yet be purchased under the plans or programs
January 1 - January 31, 20202,766 
(1)
n/an/a
February 1 - February 29, 2020—n/an/a
March 1 - March 31, 2020—n/an/a

(1) The number of shares purchased represents restricted common shares surrendered by certain of our employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common shares issued to them. The price paid per share was $33.62 and is based on the closing price of our common shares as of January 1, 2020, the date of withholding.

ITEM 3. Defaults Upon Senior Securities
Not applicable.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information
Not applicable.




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ITEM 6. Exhibits
The following exhibits are filed with this report:
Exhibit NumberExhibit Description
Exhibit NumberExhibit Description
3.1
3.2
3.3
4.13.4
3.5
4.1
10.1*4.2
10.2*10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8

49

31.1*
31.2*
32.1**
101*101.INS*XBRL (Extensible Business Reporting Language). The following materials from NSA's Quarterly Report on Form 10-Q forInstance Document - the quarterly period ended September 30, 2017, taggedinstance document does not appear in XBRL: ((i) condensed consolidated balance sheets; (ii) condensed consolidated statements of operations; (iii) condensed consolidated statements of comprehensive income (loss); (iv) condensed consolidated statement of changes in equity; (v) condensed consolidated statements of cash flows; and (vi) notes to condensed consolidated financial statements.the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*Inline XBRL Taxonomy Extension Schema
*101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase
104*Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*Filed herewith.
**Furnished herewith.




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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


National Storage Affiliates Trust
By:/s/ TAMARA D. FISCHER
Tamara D. Fischer
president and chief executive officer
(principal executive officer)
By:National Storage Affiliates Trust/s/ BRANDON S. TOGASHI
Brandon S. Togashi
By:/s/ ARLEN D. NORDHAGEN
Arlen D. Nordhagen
chairman of the board of trustees
and chief executive officer
(principal executive officer)
By:/s/ TAMARA D. FISCHER
Tamara D. Fischer
chief financial officer
(principal accounting and financial officer)
Date: November 7, 2017

May 11, 2020


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