National Storage Affiliates is quite a bit smaller than Public Storage. The company currently owns interests in 784 self-storage properties across 35 states and Puerto Rico that have 49.2 million square feet of rentable space. That gives it a 2.6% share of the U.S. self-storage market, making it the sixth-largest player.
One thing that sets National Storage Affiliates apart from other self-storage REITs is its Participating Regional Operators (PROs) structure. Instead of selling part or full control, a private self-storage operator can contribute their portfolio to National Storage Affiliates through a tax-efficient UPREIT structure. That allows them to benefit from National Storage Affiliates' scale, reduced cost of capital, and lower operating costs, while enabling the REIT to grow its management revenue and participate in the upside as these regional operators continue growing.
Besides growing by adding more PROs to its portfolio, National Storage Affiliates also expands by making third-party acquisitions, forming new strategic joint ventures, and buying out PROs or joint venture partners when they're ready to sell. The company has a solid financial profile to pursue this expansion, including an investment-grade credit rating. While it does have an elevated leverage ratio at 6.5 times net debt-to-EBITDA, that's due in part to the PRO structure, which adds about a full point to that number.
The REIT also pays an attractive dividend (it currently yields 4.1%), which it backs with a reasonably low payout ratio (it has averaged 83% this year). It has routinely increased that dividend (giving its investors a 6.3% raise earlier this year). That sets it apart from Public Storage, which hasn't given its investors a raise since 2016 because of the impact the industry's overcapacity issues has had on its ability to grow its FFO.