KBRA Downgrades NSA OP, LP Issuer and Senior Note Ratings to BBB
17 Mar 2025 | New York
KBRA has downgraded its issuer and senior note ratings for NSA OP, LP, the operating partnership subsidiary of National Storage Affiliates Trust ("NSA"), to BBB and revised the Outlook to Stable. Concurrently, the ratings for NSA's outstanding cumulative redeemable preferred shares are downgraded to BBB-. The downgrade and revised Outlook primarily reflect increased leverage based on current market capitalization rates and prior stock repurchases, and somewhat tighter interest coverage metrics.
The revised ratings also consider the effect of subdued levels of U.S. housing market activity on demand for self-storage, which has resulted in pressure on "street" rental rates, occupancy, and property-level NOI. Though industry fundamentals may be in the early stages of improvement, KBRA has factored into its analysis NSA's expectation for modestly negative 2025 same-store NOI results.
The KBRA ratings continue to be supported by NSA's strong asset and market diversification as the industry's fourth-largest owner/operator of self-storage rental properties, an established and now integrated management platform covering substantially all of the company's 1,047 total managed properties, access to capital markets, moderate overall leverage and limited use of secured debt, and a well-laddered debt maturity schedule. Net debt /EBITDA levels are expected to remain at the high end of NSA's stated 5.5x - 6.5x range, but consistent with current ratings. Capital markets needs are currently modest reflecting no 2025 debt maturities and guidance that 2025 acquisitions ($200 million at the midpoint) will be balanced with an equal amount of property sales. Capital recycling activity to promote densification within current markets is viewed favorably by KBRA.
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