BMO Capital Markets analyst Juan C. Sanabria reiterated a Market Perform rating on National Storage Affiliates Trust (NYSE:NSA) with a price target of $35.

NSA has a differentiated PRO structure and a smaller asset base to grow focused on secondary markets that, to date, have seen limited supply, notes the analyst.

Although NSA's operating results have lagged peers, management doesn't believe it's due to greater exposure to secondary/tertiary markets. As per NSA, secondary markets have outperformed, with NSA having better overall affordability vs. peers.

With rising interest rates, cap rates may expand more than peers, given its secondary market focus, Sanabria adds.

NSA has a solid balance sheet but more floating rate exposure and higher leverage than peers, according to the analyst.

The analyst adds that NSA regional PROs with 8 PROs/brands (NSA overall 12 brands) representing 35% of NSA's assets may be a source of future efficiencies.

Sanabria believes efficiencies may be harnessed from bringing brands/ operations under one umbrella.

According to the analyst, in an upside scenario, better-than-expected operating results or supply outlook, especially in secondary markets and acceleration from the acquisition pipeline.

For FY23, the analyst estimates revenues of $786.91 million, with EBITDA of $561.31 million.

For FY24, the analyst expects revenues of $794.07 million, with EBITDA of $569.45 million.

Price Action: NSA shares are trading lower by 0.77% to $33.71 on the last check Tuesday.