It can happen that asking one particular AI a question, one may not get an answer.
Therefore it is an idea to pose the same question to other AI's.
I asked GROK the question, "PROVIDE A DCF STOCK EVALUATION FOR NSA".
I received this answer ------>
DCF Valuation for National Storage Affiliates Trust (NSA) National Storage Affiliates Trust (NSA) is a self-storage REIT. For the DCF analysis, I used core Funds From Operations (FFO) per share/unit as a proxy for free cash flow to equity (FCFE), as it's a common metric for REIT valuations given their high payout ratios and depreciation adjustments. Core FFO represents adjusted operating cash flow after interest but before major non-recurring items. This approach discounts projected core FFO at the cost of equity to estimate intrinsic value per share.
Key Assumptions - Historical Core FFO per Share: Based on company reports:
- 2021: $2.26
- 2022: $2.81
- 2023: $2.69
- 2024: $2.44
- Projections: 5-year forecast drawing from company guidance (2025 core FFO midpoint of $2.20), analyst revenue growth estimates (negative near-term then recovery), and conservative assumptions for stabilization.
- 2025: $2.20 (per company guidance, -9.8% from 2024)
- 2026: $2.26 (+2.7%, aligned with analyst revenue growth)
- 2027: $2.33 (+3.0%)
- 2028: $2.40 (+3.0%)
- 2029: $2.47 (+3.0%)
- Terminal Growth Rate: 2.5% (long-term inflation plus modest REIT sector growth from acquisitions and rent increases).
- Cost of Equity (Discount Rate): 9.6%
- Risk-free rate: 4.05% (current 10-year US Treasury yield).
- Beta: 1.11 (5-year monthly).
- Market risk premium: 5.0% (based on recent Kroll estimates).
- Calculation: 4.05% + (1.11 × 5.0%) = 9.6%.
- Shares/Units Outstanding (Diluted): Approximately 128.56 million (includes common shares ~76.74 million and OP units ~52 million, as REITs report per share/unit on a fully diluted basis).
- Other Notes: WACC not used here as this is an equity DCF (core FFO is after interest). Tax rate assumed near 0% for REIT structure. No major adjustments for AFFO, as core FFO is close and capex is embedded in projections. Current price as of September 12, 2025: $31.91.
DCF Calculation
The intrinsic value is the present value of projected core FFO plus the present value of the terminal value.
Year ... Period ........Projected Core FFO per Share ...... Discount Factor (at 9.6%) ................ Present Value
2025 .....1 .............................. $2.20 .................................................... 0.912 ................................... $2.01
2026 .... 2 .............................. $2.26 .................................................... 0.832 ................................... $1.88
2027 .... 3 .............................. $2.33 .................................................... 0.759 ................................... $1.77
2028 .... 4 .............................. $2.40 .................................................... 0.693 ................................... $1.66
2029 .... 5 .............................. $2.47 .................................................... 0.632 ................................... $1.56
Terminal Value - $35.66 (calculated as $2.47×1.025/(0.096 - 0.025)) 0.632 .................................. $22.54
(at end of 2029)
| Total Intrinsic Value per Share | = $31.42 |
How to Arrive at the Terminal Value: The terminal value uses the Gordon Growth Model: Next-year FFO / (Cost of Equity - Terminal Growth Rate). Here, 2029 FFO of $2.47 grows at 2.5% to get $2.53 for 2030, then divided by (9.6% - 2.5%) = 7.1%, yielding $35.66.
Valuation Summary - Intrinsic Value per Share: $31.42
- Current Price: $31.91
- Implied Upside/Downside: -1.6% (slightly overvalued, suggesting fair pricing given near-term headwinds like declining same-store NOI).
- Sensitivity: If terminal growth is 3.0%, intrinsic value rises to ~$34.50. If cost of equity is 9.0%, value rises to ~$33.80. Negative growth persistence could lower it to ~$28.
- Comparison: Analyst 1-year target: $34.57. Forward dividend yield: 7.1% (attractive for income). Recent trends show revenue and FFO declines due to softer demand, but potential for recovery via acquisitions.
This DCF assumes moderate recovery post-2025; actual results depend on self-storage market dynamics, interest rates, and execution. For closed-ended math, the discount factors are calculated as 1 / (1 + 0.096)^n, where n is the year. Present values are simply projected FFO × discount factor, summed with the discounted terminal. |
