National Storage Affiliates: The REIT IPO Decision

In 2015, two years after founding National Storage Affiliates (NSA), Arlen Nordhagen and Tamara Fischer had an important decision to make. Should they proceed with NSA’s IPO? Although they had targeted to receive $15–17 a share, it was now apparent that the figure was unlikely to be more than $13. Applying a novel solution to bringing private operators together, NSA had so far acquired or contracted 246 properties across the USA. NSA would bring in private operators (PROs) by offering equity in the total company and allowing them to keep most operational control. To increase the pace of growth and be able to compete with the public self-storage companies, NSA needed to raise more capital, hence the IPO. However, potential investors saw some problems with the business model and were unwilling to pay the envisioned target price per share. They identified three options going forward: proceed with the IPO at $13, remain private, or unwind the companies, letting the PROs regain individual ownership of the properties. What should they do?