EQUITY-BASED AWARDS

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement [Abstract]

The Company grants awards in the form of LTIP units and restricted common shares to provide equity based incentive compensation to members of its senior management team, independent trustees, advisers, consultants, other personnel, and, previously, as consideration for self storage property acquisitions.

LTIP units were first granted under the 2013 Long-Term Incentive Plan (the "2013 Plan"), which authorized up to 2.5 million LTIP units for issuance. In connection with the Company's initial public offering, the Company terminated the 2013 Plan but the awards granted thereunder remained outstanding after its termination. Restricted common shares were first granted under the 2015 National Storage Affiliates Trust Equity Incentive Plan (the "2015 Plan"), which authorized the Company's compensation, nominating, and corporate governance committee to grant share options, restricted common shares, phantom shares, dividend equivalent rights, LTIP units and other restricted limited partnership units issued by its operating partnership and other equity-based awards up to an aggregate of 5% of the common shares issued and outstanding from time to time on a fully diluted basis (assuming, if applicable, the exercise of all outstanding options and the conversion of all warrants and convertible securities, including OP units and LTIP units, into common shares). The Company terminated the 2015 Plan but the awards granted thereunder remain outstanding after its termination.

On May 13, 2024, the National Storage Affiliates Trust 2024 Equity Incentive Plan (the “2024 Plan”) was approved by the shareholders, which authorizes the Company's compensation, nominating, and corporate governance committee to grant options, share appreciation rights, restricted shares, restricted share units, phantom shares, dividend equivalent rights, restricted long-term incentive plan units, cash-based awards, other restricted limited partnership units issued by its operating partnership and other equity-based compensation. A total of 3,250,000 Company common shares are reserved for grant under the 2024 Plan and a maximum of 3,250,000 Common Shares may be issued (or deemed issued) under the 2024 Plan. The 2024 Plan will expire on May 13, 2034, provided, however, that the Board may terminate the 2024 Plan at any time prior to that date.

As of December 31, 2024, the Company did not have outstanding under its equity compensation plan, any options, warrants or rights to purchase the Company's common shares.

LTIP Units

Through December 31, 2024, an aggregate of 2,474,710 LTIP units have been issued under the 2013 Plan, 1,830,474 LTIP units have been issued under the 2015 Plan, 178,968 LTIP units have been issued under the 2024 Plan, and 373,353 LTIP units have been issued under the LP Agreement. Some of the granted LTIP units vested immediately or upon completion of the Company's initial public offering. Others vest along a schedule at certain times through November 7, 2027.

Compensatory Grants

The Company grants two types of compensatory LTIP units, time-based LTIP unit awards that are subject to time-based vesting typically over a period of one to four years from the grant date, so long as such person remains an employee or trustee, and performance-based LTIP unit awards, which are designed to align the interests of the Company's executive officers with those of the Company's shareholders in a pay-for-performance structure. The performance-based LTIP unit awards vest contingent upon the achievement of performance criteria measured over a period of three years from the grant date, which is based on the Company's total shareholder return ("TSR") relative to the TSR of the companies in the Morgan Stanley Capital International US REIT Index and the Company's TSR relative to the three year cumulative weighted average TSR of its peers in the self storage industry. The value of the performance-based LTIP unit awards takes into consideration the probability that the awards will ultimately vest; therefore previously recorded compensation expense is not adjusted in the event that the performance criteria is not achieved.

Compensation expense related to compensatory LTIP units granted to members of the Company's senior management team, the Company's independent trustees, advisers, consultants and other personnel is included in general and administrative expense in the accompanying consolidated statements of operations. Total compensation cost recognized for the compensatory LTIP unit awards was $7.9 million, $6.3 million and $5.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. At December 31, 2024, total unvested compensation cost not yet recognized was $12.3 million. The Company expects to recognize this compensation cost over a period of approximately 2.9 years. If the grantee has a termination of service for any reason during the vesting period, the unvested LTIP units will be forfeited subject to certain limited exceptions.

Time-based LTIP unit awards are granted with a fair value equal to the closing market price of the Company's common shares on the date of grant. The following table summarizes activity for the time-based LTIP unit awards, including the time-based portion of the special one-time transaction LTIP Units issued in connection with the completion of the Company’s previously disclosed internalization of its PRO structure, as described below, for the years ended December 31, 2024, 2023 and 2022:


	Time-Based LTIP Unit Awards
	2024			2023			2022
	Number of LTIP units	Weighted Average Grant-Date Fair Value		Number of LTIP units	Weighted Average Grant-Date Fair Value		Number of LTIP units	Weighted Average Grant-Date Fair Value
Outstanding unvested at beginning of year	177,799	$	41.07	132,414	$	48.35	158,976	$	36.95
Granted	166,526	40.80		129,933	39.55		71,673	58.42
Vested	(97,482)	41.21		(84,548)	45.39		(92,073)	36.58
Forfeited	(4,581)	37.61		—	—		(6,162)	47.34
Unvested at end of year	242,262	$	37.39	177,799	$	41.07	132,414	$	48.35

The aggregate weighted average grant-date fair value of the time-based LTIP unit awards that vested during the years ended December 31, 2024, 2023 and 2022 was $4.0 million, $3.8 million and $3.4 million, respectively.

The following table summarizes activity for the performance-based LTIP unit awards granted during the year ended December 31, 2024, 2023 and 2022, including the minimum, target and maximum number of LTIP units that may be earned upon the achievement of the performance criteria measured over the period of three years from the grant date.


	Performance-Based LTIP Unit Awards
	Minimum	Target	Maximum	Weighted Average Grant-Date Fair Value
Outstanding unvested at December 31, 2021	—	146,101	292,193	$	35.98
Granted	—	40,117	80,228	61.66
Vested	—	(42,744)	(85,485)	29.76
Forfeited	—	—	—	—
Outstanding unvested at December 31, 2022	—	143,474	286,936	$	44.99
Granted	—	74,162	148,324	42.28
Vested	—	(21,916)	(43,832)	19.27
Forfeited	—	(31,923)	(63,835)	16.85
Outstanding unvested at December 31, 2023	—	163,797	327,593	$	23.42
Granted	—	70,183	140,365	48.80
Vested	—	(29,664)	(44,134)	22.93
Forfeited	—	(27,982)	(71,156)	19.98
Outstanding unvested at December 31, 2024	—	176,334	352,668	$	24.57

The aggregate weighted average grant-date fair value of the performance-based LTIP unit awards that vested during the year ended December 31, 2024, 2023 and 2022 was $1.0 million, $0.5 million and $1.3 million, respectively. The fair value of the performance-based LTIP unit awards, which have a market condition, is estimated on the date of grant using a Monte Carlo simulation. The simulation requires assumptions for expected volatility, risk-free rate of return, and dividend yield. The following table summarizes the assumptions used to value the performance-based LTIP unit awards granted during the years ended December 31, 2024, 2023 and 2022:


	2024		2023		2022
Risk-free interest rate	4.15	%	4.22	%	1.55	%
Dividend yield	5.40	%	6.09	%	3.47	%
Expected volatility	27.91	%	35.39	%	30.96	%

Internalization Award Grants

On December 2, 2024, the Company granted 130,703 special one-time transaction LTIP Units to certain officers in connection with the completion of the Company’s previously disclosed internalization of its PRO structure. Compensation expense related to these awards is included in acquisition and integration costs in the accompanying consolidated statements of operations. Total compensation cost recognized for these LTIP unit awards was $0.4 million for the year ended December 31, 2024. These LTIP Units had a weighted average grant-date fair value of $43.13 based on the closing share price of the Company's common shares on November 15, 2024. 60% of each award is comprised of performance-based LTIP units, which are set to vest on December 2, 2025, upon the satisfaction of the following metrics, with one-third of the performance-based LTIP Units associated with each metric: (1) achievement of certain predetermined annualized recurring general and administrative expenses savings, (2) migration of certain properties managed by the Company's former PROs onto the Company's management platforms by no later than June 30, 2025, and (3) successful completion of the internalization, subject to the conditions set forth in the LTIP unit award agreements for each officer. 40% of each award is comprised of time-based LTIP units, which will vest on December 2, 2026, subject to the conditions set forth in the LTIP unit award agreements for each officer. These time-based LTIP units are included in the table summarizing activity for the time-based LTIP unit awards above. As of December 31, 2024, all LTIP units associated with these awards were unvested and outstanding.

Acquisition Consideration Grants

On December 31, 2013, the Company granted 1,683,560 LTIP units under the 2013 Plan and on January 23, 2020 the Company granted 28,894 LTIP units under the LP Agreement as part of the consideration for self storage property acquisitions and contributions. The following table summarizes activity for acquisition grants during the years ended December 31, 2024, 2023 and 2022:


			Total LTIP units
Total unvested units, December 31, 2021			252,894
Units vested in 2022			—
Units forfeited in 2022			—
Total unvested units, December 31, 2022			252,894
Units vested in 2023 related to properties contributed or sourced by PROs			(15,600)
Units forfeited in 2023			(28,894)
Total unvested units, December 31, 2023			208,400
Units vested in 2024			—
Units forfeited in 2024			(208,400)
Total unvested units, December 31, 2024			—

As of December 31, 2024, no unvested LTIP units remain that are tied to the contribution or sourcing of additional self storage properties.

Restricted Common Shares

Through December 31, 2024, an aggregate of 155,610 restricted common shares have been issued under the 2015 Plan and 527 restricted common shares have been issued under the 2024 Plan. These restricted common shares vest over a period of approximately 2.8 years. Restricted common shares are granted with a fair value equal to the closing market price of the Company's common shares on the date of grant.

The following table summarizes activity for restricted common shares for the years ended December 31, 2024, 2023 and 2022:


	Year Ended December 31,
	2024			2023			2022
	Number of Restricted Common Shares	Weighted Average Grant-Date Fair Value		Number of Restricted Common Shares	Weighted Average Grant-Date Fair Value		Number of Restricted Common Shares	Weighted Average Grant-Date Fair Value
Outstanding at beginning of year	21,402	$	46.65	25,435	$	48.90	30,659	$	40.41
Granted	9,413	37.11		12,856	42.46		10,405	57.97
Vested	(10,001)	46.68		(12,011)	45.44		(10,208)	34.83
Forfeited	(1,949)	43.10		(4,878)	47.41		(5,421)	45.21
Unvested at end of year	18,865	$	42.30	21,402	$	46.65	25,435	$	48.90

The aggregate weighted average grant-date fair value of restricted common shares that vested during the years ended December 31, 2024, 2023 and 2022 was $0.5 million, $0.5 million and $0.4 million respectively. Total compensation cost recognized for restricted common shares during the years ended December 31, 2024, 2023 and 2022 was $0.4 million, $0.4 million and $0.5 million, respectively. At December 31, 2024, total unvested compensation cost not yet recognized was $0.5 million. The Company expects to recognize this compensation cost over a period of approximately 2.8 years. If the grantee has a termination of service for any reason during the vesting period, the unvested restricted common shares will be forfeited. Compensation expense related to restricted common shares is included in general and administrative expense in the accompanying consolidated statements of operations.