NSA completes merger with Public Storage; shareholders receive 0.14 PSA shares per NSA share

Item 1.02 Termination of a Material Definitive Agreement.

In connection with the consummation of the Mergers on the Closing Date, NSA caused the repayment in full of all indebtedness, liabilities and other obligations outstanding under, and terminated (except for contingent obligations and provisions that expressly survive such termination), that certain Third Amended and Restated Credit Agreement, dated as of January 3, 2023 (as amended from time to time), by and among NSA OP, as borrower, NSA, certain of NSA’s subsidiaries, as subsidiary guarantors, KeyBank National Association, as administrative agent, and a syndicated group of lenders party thereto from time to time. NSA did not incur any material early termination penalties as a result of such termination.

In connection with the consummation of the Mergers on the Closing Date, NSA caused the repayment in full of all indebtedness, liabilities and other obligations outstanding under, and terminated (except for contingent obligations and provisions that expressly survive such termination), that certain Credit Agreement, dated as of June 24, 2022 (as amended from time to time), by and among NSA OP, as borrower, NSA, certain of NSA’s subsidiaries, as subsidiary guarantors, the lenders from time to time party thereto, and Capital One, National Association, as administrative agent. NSA did not incur any material early termination penalties as a result of such termination.

In connection with the consummation of the Mergers on the Closing Date, NSA caused the repayment in full of all indebtedness, liabilities and other obligations outstanding under, and terminated (except for contingent obligations and provisions that expressly survive such termination), that certain Credit Agreement, dated as of April 24, 2019 (as amended from time to time), by and among NSA OP, as borrower, NSA, certain of NSA’s subsidiaries, as subsidiary guarantors, the lenders from time to time party thereto, and BMO Bank N.A., as administrative agent. NSA did not incur any material early termination penalties as a result of such termination.

In connection with the consummation of the Mergers on the Closing Date, NSA caused the repayment in full of all indebtedness, liabilities and other obligations outstanding under, and terminated (except for contingent obligations and provisions that expressly survive such termination), that certain Credit Agreement, dated as of December 21, 2018 (as amended from time to time), by and among NSA OP, as borrower, NSA, certain of NSA’s subsidiaries, as subsidiary guarantors, the lenders from time to time party thereto, and The Huntington National Bank, as administrative agent. NSA did not incur any material early termination penalties as a result of such termination.

On the Closing Date, at the effective time of the Company Merger (the “Company Merger Effective Time”), (i) each common share of beneficial interest, par value $0.01 per share, of NSA (each, an “NSA Common Share”) issued and outstanding immediately prior to the Company Merger Effective Time was converted into the right to receive 0.1400 (the “Exchange Ratio”) newly issued common shares of beneficial interest, par value $0.10 per share, of Public Storage (“Public Storage Common Shares”) and cash in lieu of fractional shares

(ii) each 6.000% Series A cumulative redeemable preferred share of beneficial interest, par value $0.01 per share, of NSA (each, an “NSA Series A Preferred Share”) issued and outstanding immediately prior to the Company Merger Effective Time was converted into the right to receive one newly issued 6.000% Cumulative Preferred Share, Series T, par value $0.01 per share, of Public Storage (each, a “Public Storage Series T Preferred Share”), having rights, preferences, privileges and voting powers that are materially unchanged from those of the NSA Series A Preferred Shares, (iii) each 6.000% Series B cumulative redeemable preferred share of beneficial interest, par value $0.01 per share, of NSA (each, an “NSA Series B Preferred Share”) issued and outstanding immediately prior to the Company Merger Effective Time was converted into the right to receive one newly issued 6.000% Cumulative Preferred Share, Series U, par value $0.01 per share, of Public Storage (each, a “Public Storage Series U Preferred Share”), having rights, preferences, privileges and voting powers that are materially unchanged from those of the NSA Series B Preferred Shares

(iv) subject to the Special Redemption (as described below), each NSA OP Unit issued and outstanding immediately prior to the Partnership Merger Effective Time was automatically converted into a number of newly issued common units in PSA OP (“Public Storage OP Units”) equal to the Exchange Ratio

On the Closing Date, as a result of the Mergers, Public Storage issued approximately (i) 11,200,000 Public Storage Common Shares to former holders of NSA Common Shares and NSA’s outstanding equity awards, (ii) 9,569,557 Public Storage Series T Preferred Shares to former holders of NSA Series A Preferred Shares, and (iii) 5,668,128 Public Storage Series U Preferred Shares to former holders of NSA Series B Preferred Shares.

On the Closing Date, in connection with the consummation of the Mergers, pursuant to the terms and conditions of the Merger Agreement, a subsidiary of Public Storage entered into a joint venture (the “Dropdown JV”) with certain holders of NSA OP Units as of immediately prior to the Special Redemption. The Dropdown JV holds 313 real estate assets contributed by NSA OP prior to the consummation of the Company Merger, valued at approximately $3.2 billion.

Immediately following the consummation of the Company Merger, the Dropdown JV incurred approximately $2.2 billion of indebtedness, consisting of approximately $2.0 billion in secured mortgage financing from Goldman Sachs Bank USA and Wells Fargo Bank, National Association and approximately $237 million in mezzanine financing from a subsidiary of Public Storage.

Pursuant to the Special Redemption, which was consummated in accordance with the NSA OP Agreement and the Merger Agreement, certain electing holders of NSA OP Units (each, a “Dropdown JV Investor”) redeemed NSA OP Units in exchange for units in a Delaware limited liability company (the “Aggregator”) that holds an 80% equity interest in the Dropdown JV. An aggregate of 19,193,490 NSA OP Units held by electing limited partners in NSA OP were redeemed pursuant to the Special Redemption.

NSA notified the New York Stock Exchange (the “NYSE”) on the Closing Date that articles of merger were filed with the State Department of Assessments and Taxation of Maryland and that, at the Company Merger Effective Time, each outstanding NSA Common Share, NSA Series A Preferred Share, and NSA Series B Preferred Share was converted into the right to receive the applicable consideration pursuant to the Merger Agreement

NSA requested that the NYSE delist NSA Common Shares, NSA Series A Preferred Shares, and NSA Series B Preferred Shares and, as a result, trading of NSA Common Shares, NSA Series A Preferred Shares, and NSA Series B Preferred Shares was suspended prior to the opening of the NYSE on the Closing Date.

Following the effectiveness of the Form 25, NSA intends to file with the SEC a certification on Form 15 regarding the termination of registration of NSA Common Shares, NSA Series A Preferred Shares, and NSA Series B Preferred Shares under the Exchange Act and the suspension of NSA’s reporting obligations with respect to NSA Common Shares, NSA Series A Preferred Shares, and NSA Series B Preferred Shares.

As a result of the completion of the Company Merger, a change in control of NSA occurred, and NSA is now an indirect subsidiary of Public Storage.

In connection with the consummation of the Mergers on the Closing Date, holders of NSA Common Shares, NSA Series A Preferred Shares, and NSA Series B Preferred Shares ceased to have any rights as shareholders of NSA, other than the right to receive Public Storage Common Shares (and cash in lieu of fractional shares), Public Storage Series T Preferred Shares, and Public Storage Series U Preferred Shares as set forth under Item 2.01 in accordance with the terms of the Merger Agreement.

In connection with the consummation of the Mergers on the Closing Date, (i) each member of NSA’s board of trustees (the “Board”) ceased to be a member of the Board and ceased to be a member of any committee of the Board on which such trustees served, and (ii) all of NSA’s officers ceased to be officers of NSA, effective as of the Company Merger Effective Time by operation of the Company Merger.

On the Closing Date, following the consummation of the Mergers, the employment of each of NSA’s named executive officers terminated. Pursuant to the terms of their previously disclosed employment agreements, such terminations constituted terminations by NSA without “cause” (as defined in each named executive officer’s employment agreement). As a result, the named executive officers became entitled to receive the severance payments and benefits provided under their respective employment agreements, subject to compliance with the applicable terms and conditions thereof, including the execution and non-revocation of releases of claims and compliance with applicable restrictive covenants.

In connection with the transactions contemplated by the Merger Agreement, each outstanding award of time-based NSA OP LTIP Units granted in 2026 was converted on a one-for-one basis into an NSA Restricted Share Award covering an equal number of NSA Common Shares. Consistent with the treatment of other NSA Restricted Share Awards under the Merger Agreement, the converted awards vested in full immediately prior to the Company Merger Effective Time and were thereafter converted into the right to receive Public Storage Common Shares pursuant to the terms of the Merger Agreement applicable to NSA Common Shares.

In connection with the consummation of the Company Merger on the Closing Date, the articles of incorporation and bylaws of NSA ceased to be in effect and the articles of organization and limited liability company operating agreement of Merger Sub I became the articles of organization and limited liability company operating agreement of the surviving company, in accordance with the terms of the Merger Agreement.

Pelican Merger Sub I, LLC, as successor by merger to National Storage Affiliates Trust