Self-storage REIT National Storage Affiliates Trust — with six independent operators already under its umbrella and more waiting in the wings — filed Feb. 13 for a $100 million IPO.

If the planned IPO comes to fruition, National Storage Affiliates’ size eventually could come close to rivaling that of the four publicly traded REITs in self-storage: Public Storage, Extra Space Storage, CubeSmart and Sovran Self Storage (Uncle Bob’s).

The company’s filing with the U.S. Securities and Exchange Commission (SEC) doesn’t provide the number of shares of stock to be offered to the public or the proposed price per share.

National Storage Affiliates became a non-traded REIT in 2013. That year, it posted $112.6 million in pro forma revenue, the filing says.

Regional approach

National Storage Affiliates
National Storage Affiliates says its “in-place portfolio” contains nearly 250 facilities.

The six regional operators involved in National Storage Affiliates, based in Greenwood Village, CO, are:

  • SecurCare Self Storage, based in Lone Tree, CO.
  • Northwest Self Storage, based in Clackamas, OR.
  • Optivest Properties (Store More!), based in Dana Point, CA.
  • Guardian Storage, based in Irvine, CA.
  • Move It Self Storage, based in Addison, TX.
  • Storage Solutions, based in Chandler, AZ.

In the SEC filing, National Storage Affiliates says it’s in “preliminary discussions” to recruit several other independent operators to come aboard over the next two to three years. Those operators weren’t identified.

“These additional operators will enhance our existing geographic footprint and allow us to enter regional markets in which we currently have limited or no market share,” the REIT says in the filing.

Tamara Fischer, chief financial officer of National Storage Affiliates, said in 2013 that the REIT envisioned having 10 to 12 storage operators in the alliance.

Big and getting bigger

Northwest Self Storage
Northwest Self Storage is one of the three co-founders of National Storage Affiliates.

National Storage Affiliates says its “in-place portfolio” consists of 246 self-storage facilities: 225 it already owns and 21 it expects to buy. The 246 properties encompass over 13.7 million rentable square feet, with more than 107,000 units scattered across 16 states.

According to the 2015 Self-Storage Almanac, National Storage Affiliates ranks as the sixth largest operator of self-storage facilities in the U.S., based on square footage, and as the largest independent operator.

National Storage Affiliates says that outside its “in-place portfolio,” its acquisition pipeline comprises 115 facilities, with about 7.5 million rentable square feet. The REIT says some of the IPO proceeds would go toward buying those facilities.

Lumping together the “in-place portfolio” and the acquisition pipeline would bring the REIT to 361 facilities.

“Our strategy is to attract operators who are confident in the performance of their properties and desire to participate in the future growth of our company,” National Storage Affiliates says in the IPO filing.

National platform

Store More!
Optivest Properties, which operates the Store More! brand, has added over 25 facilities to the REIT.

National Storage Affiliates launched in April 2013 with three founding operators: SecurCare, Northwest and Optivest. Arlen Nordhagen, co-founder of SecurCare, is CEO of National Storage Affiliates. Guardian and Move It joined the REIT in 2014, while Storage Solutions is set to join once the IPO is completed.

“We believe that our national platform has significant potential for external and internal growth,” National Storage Affiliates says in the filing.

In the filing, the REIT explains the value of several regional operators teaming up.

“Before joining us, our [regional operators] faced challenges in securing low cost capital and had to manage multiple investors and lending relationships, making it difficult to compete with larger competitors, including public REITs, for acquisition and investment opportunities,” National Storage Affiliates says.

“Our [regional operators] were also limited in their ability to raise growth capital through the sale of assets, a portfolio refinancing or capital contributions from new equity partners,” the REIT adds. “Serving as our on-the-ground acquisition teams, our [regional operators] now have access to our broader financing sources and lower cost of capital while our national platform allows them to benefit from our economies of scale to drive operating efficiencies in a rapidly evolving, technology driven industry.”

Pieces of the pie

According to the filing, SecurCare contributes the most facilities (116) to National Storage Affiliates, followed by Northwest (63), Optivest (27), Guardian (26), Move It (11) and Storage Solutions (three). The total of 246 facilities includes 204 that had been purchased as of Sept. 30, 2014, another 21 that had been purchased between then and Feb. 13, 2014, and still another 21 that are going to be purchased. SecurCare owns most of the 21 facilities set to be acquired.

The bulk of those facilities are in Oregon, Texas, California, North Carolina and Oklahoma.

As for the 115 facilities in the acquisition pipeline, 30 belong to Storage Solutions, 25 to SecurCare, 24 to Optivest, 21 to Move It, eight to Guardian and seven to Northwest. Most of those acquisitions are planned for 2015 and 2016.

The majority of the pipeline facilities are in Arizona, California and Texas.

Under the structure of National Storage Affiliates, each participating operator is assigned rights to various metro areas. For instance, SecurCare holds exclusive rights to 18 metro areas in Colorado, Georgia, Louisiana, North Carolina, Oklahoma, South Carolina and Texas, the SEC filing shows.