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The growth needle is once again shifting into high gear at National Storage Affiliates (NYSE: NSA).

Source: image - 123RF

The newest publicly traded self-storage REIT continues to demonstrate that its unique business model resonates with large private self-storage operators.

This is especially true when it comes to family-run businesses, where management is looking to stay active and continue building upon a life's work.

After the bell, on Feb. 23, 2017, NSA announced the latest PRO to join its ranks, Personal Mini Storage of Orlando, a brand the Shader family has used to grow its self-storage business in Central Florida for several decades. NSA typically targets top industry operators with 20 or more properties located in larger US markets.

The Shader Brothers Corp. owned and operated portfolio contains 36 properties in a high-growth region of Florida. In the case of Personal Mini Storage, the Shader family has been an industry leader in Central Florida since the early 1980s. This acquisition will bring a portfolio of 36 well-seasoned self-storage properties to the table for NSA.

While the terms of the deal were not announced, (NSA reports Q4/FY'16 results on February 28th), NSA has the flexibility to issue OP/SP units in addition to cash for acquisitions. The OP units eventually convert 1:1 to NSA common shares. However, the SP units incentivize the new PRO with a formula that rewards strong performance, and protects existing shareholders in the event operating results are below par.

This optionality can give NSA a leg up versus its larger and better-known peer group, which includes: REIT blue-chip Public Storage (NYSE: PSA), Extra Space Storage (NYSE: EXR), CubeSmart (NYSE: CUBE) and Life Storage (NYSE: LSI).

The chart shows that National Storage delivered solid results compared with its peer group and the broader equity REIT sector.

Read more: Why Self-Storage REIT NSA's $630 Million iStorage JV Is A Big Deal

If you are not familiar with NSA, the article above provides background and links to previous articles.

Self-Storage - Bigger Picture

The recent self-storage sector underperformance is an anomaly. However, self-storage REITs had become a victim of their own success over the past few years. After piling up a couple of years of record high occupancy and blistering same-store NOI growth each quarter, same period result comparisons get tougher.

After the Great Recession, there were about five or so years of muted new supply, which contributed to the strong industry fundamentals and record performance. Notably, during the past few quarters, some local markets have seen notable increases in new supply. This can create a headwind for both street rates and occupancy. Since new self-storage properties open 100% vacant, operators typically use incentives to attract customers until occupancy becomes stabilized.

By late January, the pendulum of pessimism appeared to have swung too far, which I pointed out last month for SA readers in Self-Storage REITs In Full Retreat - Time To Buy?

Mr. Market's relentless selloff created an opportunity for investors to once again initiate positions in the desirable self-storage REIT sector.

During the past month, the sector has slowly begun to come out of its funk. Recent results by CubeSmart seemed to trigger a bit of optimism and helped bring buyers back. Extra Space Storage also has led the February upswing.

Adding PROs Pays Dividends

CEO Arlen Nordhagen has assured analysts and investors that NSA will only bring a new PRO aboard if it makes sense strategically, culturally, and adds to the bottom line. This discipline may have slowed the growth a bit, but it has resulted in a steadily rising dividend since the NSA IPO in 2015.

It is in both the NSA shareholders' and OP unit holders' (NSA PROs) interest that any major acquisition is immediately accretive to earnings. Management incentives are clearly aligned with shareholders.

Source: NSA irwebsite - Feb. 23, 2017

Once a new PRO joins National Storage, implementing a revenue management program, the national call center, and an advertising program, can help drive better operating results. It is also a given that NSA as a publicly traded REIT has a much lower cost of capital.

New PROs are a source of local market knowledge, and they can sharpshoot one-off "bolt-on" acquisitions for NSA. PROs can also be instrumental in convincing other privately owned self-storage operators to take a long look at the NSA value proposition. The industry profile of Marc Smith of Personal Mini Storage, is a perfect example:

"Marc M. Smith, President of Personal Mini, is currently completing a six-year term on the national Self Storage Association ("SSA") board, where he has served in various executive roles, including Board Chairman for the 2016 term. Marc has also served as past President and National Board Member of the Southeast Region of the SSA. He is a licensed Florida real estate broker and a licensed Florida building contractor. Marc has a B.S. in real estate and finance from The University of Texas, a M.S. in building construction from The University of Florida and is a graduate of the Owner President Management Program at Harvard Business School."

NSA will be able to leverage the relationships of a veteran self-storage industry team, Marc Smith and his wife Laurie Shader Smith, who grew up with the business in Orlando. On a personal note, I was privileged to get to know Laurie and her family back in the mid-1980s, and they are top-notch folks.

FAST Graph - Valuation Analysis

It's time to use the F.A.S.T. Graphs tool to check under the hood. The black line is price. It is a visual comparison relative to the blue line, which is "normal" P/FFO for the selected number of years. The red line corresponds to the dividend yield on the far right of the chart.

The NSA double-digit FFO growth potential can support the current valuation. In fact, the lack of consensus 2019 estimates for this relatively young REIT actually understates the growth. Meanwhile, investors are being paid an attractive 4% yield, backed by a solid history of dividend increases since the National Storage IPO.

Investor Takeaway

National Storage has been one of my top picks since the end of 2015. Last year, NSA shares returned over 30% to shareholders.

Read more: My REIT Small-Cap Gems 2016 Performance Update: 30%-Plus Returns

Notably, NSA shares are trading near their all-time high. However, that is not unusual for this top performer.

During the past 52 weeks, NSA shares have traded in a range of $17.10-$24.32 per share.

The challenge with most REITs which are fully valued is to find a catalyst to send the shares on the next leg up. However, the unique NSA business model has accretive portfolio acquisitions baked into the cake. Self-storage operators can cash in on high current valuations for their stabilized storage properties and remain active running the business. It is a way for them to diversify and obtain liquidity, to essentially have their cake and eat it too.

I fully expect management to raise FY 2017 guidance metrics to reflect the latest PRO acquisition. Additionally, NSA has been rolling out its revenue management program across the portfolio and this should bode well for same-store NOI results.

These "PROs," or preferred regional operators, can diversify and achieve some liquidity while still being able to participate in the upside of their life's work. NSA gives shareholders the opportunity to invest side by side with entrepreneurs who have a vested interest in the continued success of their legacy businesses.

If NSA does a secondary share offering in conjunction with the acquisition of the Central Florida portfolio, it could provide an opportunity for investors to initiate a position. I previously have suggested ~$20.00 as an acquisition target price. I think bumping that up closer to $22.00 per share would now be reasonable for new investors looking for an entry point.

I am contemplating whether to launch a Seeking Alpha Marketplace Premium subscription service. I would appreciate any feedback from readers who may be interested. Feel free to share them in the comment thread below, or send me an Inbox message.

I relentlessly hunt for diamonds in the rough and rising stars, in addition to closely following data centers, covering REIT blue-chips, and breaking news. Please consider following me as a Seeking Alpha author if you would like to be notified when my future articles are published.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in NSA, EXR, CUBE, LSI, PSA over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Members of my household are long NSA.

Read more:
Self-Storage REIT: National Storage Announces 8th 'PRO' Prior To Earnings - Seeking Alpha

The Pentagon is beginning to assess whether its time to split up the leadership of the National Security Agency and U.S. Cyber Command.

Right now, the two organizations share a leader Adm. Mike Rogers, who is director of the NSA and also the commander of the cyber unit.

But lawmakers have debated ending that dual-hat arrangement as the United States moves into a new era of expanded cyber warfare.

Separating the leadership of the NSA and Cyber Command would create a new vacancy for President Trump to fill.

Were looking at the issue, Pentagon spokesman Capt. Jeff Davis told The Hillon Wednesday, pointing to a newmemoissued by Defense Secretary James Mattis asking for an initial plan to better support information management and cyber operations.

Congress in December passed a bill that elevated Cyber Command to a unified combatant command. That change made Cyber Command its own war fighting unit, spinning it out from under Strategic Command.

But that legislation also pumped the breaks on splitting the NSA from Cyber Command, requiring the Pentagon to conduct a full assessment first.

Experts and former security officials regard it as inevitable that the NSA and Cyber Command will someday be separated but fear that split could be damaging if done too quickly.

Thats because Cyber Command wasnt established at NSA headquarters until 2009 and remains dependent on the agency to function.

If you split them off and give them separate bosses, you run the risk of potential personality conflicts between those two that might then cause a lessoning of the sharing and cooperation as it is occurring now, said Steve Bucci, a former Army Special Forces officer and Pentagon official who is now a visiting fellow at the conservative Heritage Foundation. Thats probably the biggest danger that I see.

Tensions already exist between NSA and Cybercom over professional overlap, and if duties and boundaries arent very clearly delineated in any split, these matters will worsen as they both fight for mission and resources, said John Schindler, a former NSA analyst and counterintelligence officer.

Alexandra Sander, a research associate at the Center for a New American Security, feared that the split could produce stove piping of intelligence information a term used to describe information that gets bottled up in agencies rather than shared in the government.

Elevating Cyber Command to its own unified command, and then if you had a split with the NSA on top of that, especially in a domain like cyber which should be integrated across the board with other functional and geographic commands and military operations if you had increased stove piping, I think that would have a negative effect on our capabilities, Sander said.

Under the law passed by Congress last year, Mattis and Joint Chiefs of Staff Chairman Gen. Joseph Dunford have to conduct a joint assessment into what would happen if the NSA and Cyber Command were separated.

They must ensure that the termination of the dual-hat arrangement will not pose risks to the military effectiveness of the United States Cyber Command that are unacceptable to the national security interests of the United States, the law states.

The military leaders are required to evaluate the dependence of Cyber Command on the NSA and how well the organizations could carry out their duties independently.

The legislation also prevents the split from happening until Cyber Command has achieved full operational capability, which isntexpectedto happen until the end of fiscal 2018.

The nonpartisan Government Accountability Office is also studying the dual-hat leadership of the two organizations; the office expects to complete that review in June, according to a spokesman.

Sen. John McCainJohn McCainHannity apologizes for sharing 'inaccurate' story about McCain McCain spokeswoman: Hannity should 'correct the record' after 'fake news' tweet CNN to host town hall featuring John McCain, Lindsey Graham MORE (R-Ariz.), who chairs the Senate Armed Services Committee, has staunchly opposed a premature separation of the two organizations. Other lawmakers have been less vocal, adopting a wait-and-see approach pending assessments by the Pentagon and GAO.

We want to make the right decision. Im undecided, Sen. Mike Rounds (R-S.D.), who chairs the newly formed Armed Services Subcommittee on Cybersecurity.

When you separate that out, you have to make sure that you have really good lines of communication, coordination and so forth. There are positives to either way, and we know right know that we have something we think is working; the question is at what point does it become so big that it needs to be changed? Rounds said.

President Obamaspokein favor of ending the dual-hat nature of the role late last year after he was reportedlypressedto do so by his Defense secretary and director of national intelligence.

Go here to see the original:
Pentagon mulling split of NSA, Cyber Command | TheHill - The Hill

Not what this might look like. Public Domain image adapted by Eric Grundhauser

A versionof this storyoriginally appearedonMuckrock.com.

A classified government document opens with an odd sequence of events relating to parapsychology has occurred within the last month and concluded with an alarming question about psychics nuking cities so that they became lost in time and space. If this sounds like a plot out of science fiction, it is - but its also a NSA memo from 1977.

The first event raised by the NSA note is a CIA report which mentioned KGB research into parapsychology. According to this, the KGB used hobbyists and non-governmental researchers to talk to western scientists. This allowed the KGB to collect useful information without putting themselves into a position to accidentally leak confidential information to westerners. According to the NSA note, this tactic yielded high grade western scientific data.

The next event described by the NSA note was what appeared to be a Russian provocation, though exactly what sort was a matter of some debate. In June 1977, an American journalist was detained in Russia for receiving a Soviet paper on parapsychology. The paper allegedly documented PSI (i.e. psychic) particles within the living cell, allegedly providing a physical basis for parapsychology.

This struck American intelligence as being a form of entrapment, though the goal was uncertain. Some thought it was an effort to provoke radio chatter which the Soviets could trace to get a better idea of the U.S.s interest and activities. Another theory was that it was simply a warning to the West to stay away from sensitive Soviet research. A third theory was that it was a double-think ploy to pretend interest in a clumsy manner to make us think that this was really just a deception to trick the West into believing there was interest when there really was none. While this last theory might sound paranoid, this is how denial and deception operate - and its something that Russian counterintelligence has long excelled at.

The section concluded with a note that there had supposedly been a successful demonstration of telekinetic power in a Soviet military sponsored research lab, and the alleged discovery of a new type of energy perhaps even more important than that of Atomic energy.

The third event was the apparent postulation by some physicists along with the famous evolutionist, Teilhard de Chardin that the universe was more of a great thought than a great machine. According to this view, the unified field on ground of reality is awareness. The note cited telekinetic experiments and postulated that awareness focusing could produce a new form of energy that moves or perhaps alters matter.

The report cited British scientists experiencing poltergeist phenomena after testing Uri Geller. Objects allegedly left the room, some of which apparently reappeared later. Supposedly, this didnt surprise unnamed scientists who found it no harder to believe that objects could disappear and reappear than it was to believe in the detected particles emerging from energy and dissolving or disappearing back into energy.

From these premises, two types of telekinetic weapons were hypothesized: a telekinetic time bomb and the equivalent of a psychic nuke that could dislodge a city in time and space.

The first involved a member of the command and control staff being kidnapped and subjected to trauma that would allow him to be suggestively programmed to develop telekinetic effects under stress at work. The theory was that when an emergency situation arose and the officer was subjected to stress, objects would begin to move and disappear independently and communications would become impossible.

The second hypothetical weapon was even more elaborate and potentially terrifying. Citing a prediction of a massive change which will alter the direction, time, space and energy-matter relationship of our world, the note wondered what would happen if a group of psychics were brought together. If ten people who were evidencing disruptive telekinetic phenomena were brought into one area, would it cause a chain reaction, causing much matter to reverse direction and sink back into a sea of energy or be displaced in time and space? The memo concluded by wondering if such an event reach a critical mass and affect an entire city.

By an interesting coincidence, the Philadelphia Experiment hoax bears some superficial resemblance to the theorized weapon in the NSA note. According various versions of the hoax, the USS Eldridge was temporarily rendered invisible or transported through time and space. The incident is even listed on NSAs webpage of paranormal topics that they dont have records on. However, there were other papers prepared on the perceived potential of weaponizing psychic abilities, some of which will be explored later. For now, you can read the NSA note here.

Read the original:
When the NSA Feared Psychics Could Make Cities Lost in Time and Space - Atlas Obscura

News 12 NBC 26 @ 6:00 / Wednesday, Feb. 22, 2017

AUGUSTA, Ga. (WRDW/WAGT) -- Augusta University's Cyber Institute is getting a big boost. A week after Governor Deal signed the Cyber Center's budget, now the school is seeing a grant from the NSA.

If it wasn't clear already Augusta University is becoming the place to be for cyber.

"So what' I'm telling you is the institute is working, what we're doing is working," Augusta University Cyber Institute Director Joanne Sexton said.

They've already expanded their reach into downtown Augusta and now they're reaching further, globally.

"We're in the right place at the right time, making things happen so we're very very fortunate," Sexton said.

Last week the NSA gave the school nearly a grant for nearly 300,000 dollars. The money could help students take a trip to see NATO's cyber security headquarters, but it's also helping add more cyber courses here.

"One thing is if you look at our name, it's the Cyber Institute, we didn't call it Cyber Security. And that was on purpose because cyber touches all of us. It's across all of the curriculum," she said.

That means cyber security, cyber terrorism, cyber in health care, and more. There's something to learn for every student.

"Federal to private to state, whatever, everyone needs this kind of work," Augusta University Cyber student Matthew Tennis said.

It's making students like Matthew ideal job candidates.

"I'm looking at either going into federal work in the intelligence industry or into private work in intelligence," he said.

"When you talk about cyber security, it's zero unemployment as long as you have the skills," Sexton said.

They're adding to the skills by adding graduate programs in intelligence analysis and security studies. And the cyber school has already doubled in size, more than 300 Augusta University students are in cyber programs. This is another way the school and the city area are virtually growing.

"Augusta University has a piece, our local community has been really supportive, but really it's about the whole team working together," she said.

Visit link:
NSA gives grant to Augusta University Cyber Institute - WRDW-TV

This article first appeared on the Just Security site.

On Monday, Lieutenant General H.R. McMaster agreed to serve as national security advisor to the president.

McMaster has written and spoken extensively on a range of topics, from grand strategy to ground force maneuver. McMaster also appears to have strong views about military ethics that may influence the advice that he provides on matters of war and peace.

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While I have not found a systematic presentation of his moral worldview, there are a number of striking and potentially revealing statements that readers may find of great interest.

Indeed, McMasters statements over the years suggest a moral outlook that may positively influence national security policy, or lead to conflict with others in the administration who do not share his values.

First, I should note that, while commanding the U.S. Armys 3rd Armored Cavalry Regiment in Iraq, McMaster reportedly

forbade his soldiers from using dehumanizing and derogatory language when referring to Iraqis: both because such behavior is inconsistent with the shared values that define a soldiers moral identity, and because such behavior is potentially a verbal foot in the door leading to more serious forms of abuse.

As commander of the regiment, McMaster also reportedly ordered detainees be treated humanely, and even polled detainees on how well the regiment followed through. Such reports suggest that McMaster may be a practitioner of military ethics, not simply a theorist.

Speaking at the Carnegie Council for Ethics in International Affairs in 2014, McMaster offered the following remarks:

If you see, for example, what ISIL [ISIS] is doing today, you would think, Okay, how do you deal with an enemy like this, an enemy that operates in this way, and then is intermingled with civilian populations? Maybe to defeat this kind of enemy you have to be equally brutal. Maybe you have to lower your standards, but I would say that exactly the opposite is the case.

. . . We have to defeat them in a way thats consistent with our values that reflect our society and whats expected of our military, for our Army forces, and of course whats been expected since at least the time of St. Thomas Aquinas and St. Augustine, taking it back even further.

So what does that mean? It means that we have to fight them applying the principles of just war theory, which means distinction. We distinguish between our enemies and civilian populations.

Every day in Afghanistan today, every day across the wars in Iraq, our soldiers and Marines place themselves at a higher level of risk to protect innocents. I think thats something thats very important to understand about these kind of conflicts. Our soldiers are warriors, but our soldiers are also humanitarians.

National Security Advisor H.R. McMaster at the Trump Mar-a-Lago estate in Palm Beach, Florida, February 20. Adil Ahmad Haque writes that McMaster's distinguishing between civilians and combatants and accepting higher risk to avoid harming civilians seem incompatible with targeting the families of our enemies or simply bomb[ing] the shit out of them, in the words of President Trump. Kevin Lamarque/reuters

Needless to say, distinguishing between civilians and combatants and accepting higher risk to avoid harming civilians seem quite incompatible with targeting the families of our enemies or simply bomb[ing] the shit out of them, in the words of President Trump.

McMaster sounded the same theme years earlier, in a 2010 speech, Moral, Ethical, and Psychological Preparation of Soldiers and Units for Combat:

Because our enemy is unscrupulous, some argue for a relaxation of ethical and moral standards and the use of force with less discrimination because the endsthe defeat of the enemyjustifies the means employed. To think this way would be a grave mistake. The war in which we are engaged demands that we retain the moral high ground despite the depravity of our enemies.

McMaster then made the following observation:

Ensuring ethical conduct goes beyond the law of war and must include a consideration of our valuesour ethos. The Law of War codifies the principal tenets of just war theory, especially jus in bello principles of discrimination and proportionality. However, individual and institutional values are more important than legal constraints on immoral behavior; legal contracts are often observed only as long as others honor them or as long as they are enforced.

In this passage, McMaster suggests that principles that protect civilians during the conduct of hostilitiesdiscrimination and proportionalityare, fundamentally, moral principles codified into law. Accordingly, they bind soldiers categorically, irrespective of any expectation of reciprocity or fear of punishment.

The relationship between the law of war and the morality of war may be particularly relevant today, as a recentpresidential memorandum directs the secretary of defense to recommend changes to any United States rules of engagement and other United States policy restrictions that exceed the requirements of international law.

If the morality of war prohibits what the law of waras understood by the U.S. governmentdoes not, then it may prove quite fortuitous that the incoming national security advisor seems committed to the former as well as to the latter.

In a 2014 Veterans Day speech at Georgetown University entitled, The Warrior Ethos at Risk, McMaster offered the following thoughts:

I thought that we might consider two ways of honoring our veterans. First, to study war as the best means of preventing it; and second, to help the American military preserve our warrior ethos while remaining connected to those in whose name we fight.

It was Aristotle who first said that it is only worth discussing what is in our power. So we might discuss how to prevent particular conflicts rather than eliminate all conflict, and when conflict is necessary, how to win. And in the pursuit of victory, how to preserve our values and make war less inhumane.

Similarly, in a 2016 speech at Norwich University, McMaster warned against the tendency in our country to confuse military studies with militarism, arguing instead that the study of war is important to the preservation of peace.

These statements suggest that we should aim, above all, to prevent and avoid war. When we fail, we should fight the wars we cannot avoid as effectively and ethically as possible. This view seems consistent with the just war tradition, which seeks a middle path between realism and pacifism.

In a 2013 interview with McKinsey, McMaster volunteered the following (Ill let these passages speak for themselves):

The human dimension of war is immensely important for the Army as well; we need leaders who are morally, ethically, and psychologically prepared for combat and who understand why breakdowns in morals and ethics occur. I think there are usually four causes of breakdowns in moral characterignorance, uncertainty, fear, or combat trauma.

It is important to understand the effects of those four factors on an organization and then educate soldiers about what we expect of them. We need leaders who have physical and mental courage on the battlefield, of course, but also the courage to speak their minds and offer respectful and candid feedback to their superiors. Our leaders cant feel compelled to tell their bosses what they want to hear.

In addition to the fundamentals of combat, our soldiers really have to live the Armys professional ethics and values. They must be committed to selfless service, to their fellow soldiers, to their mission, and to our nation. That also involves, obviously, respect for and protection of our Constitution and understanding their role in that context.

Finally, McMaster seems to view the wars we are currently waging through a moral lens that differs quite dramatically from that of his immediate predecessor and of some of his new colleagues in the administration.

In his speech at Norwich University, McMaster called for soldiers and civilians alike to understand and develop empathy, empathy for the cultures and historical experience of the peoples among whom wars are fought and to promote moral conduct by generating empathy for others in an effort to prevent war or at least make war less inhumane.

In his Carnegie Council remarks, McMaster repeatedly describes ISIS, the Taliban and similar groups as irreligious groups seeking to impose a political order on local populations who are their primary victims:

This is an irreligious ideology in which you have these so-called imans who have third and fourth grade educations. Theyre thugs and criminals. Theyre misogynistic. They are wanting to impose on a huge population and territory an order that is medieval and rejects humanity, I think.

Theyre criminals. We ought to make sure we criminalize their behavior. What religious standard justifies this? No religious standard. These are irreligious people.

What we must do is we must defeat these enemies, who are enemies of all civilized people, along with our partners and allies in the region, the people who are suffering the most, who are in these regions in Afghanistan and Iraq and so forth.

Similarly, at Georgetown, McMaster said:

we will defeat these enemies who cynically use a perverted interpretation of religion to incite hatred and violence. . . .

Enemy organizations like Al Qaeda and ISIL [ISIS] seek to perpetuate ignorance, foment hatred and use that hatred as justification for the murder of innocents. They entice masses of undereducated, disaffected young men with a sophisticated campaign of propaganda, disinformation and brainwashing.

McMaster made similar remarks last May at the Center for Strategic & International Studies.

McMaster seems to understand that groups like ISIS and the Taliban do not represent Islam or the worlds Muslims. They seek to rule by violence and terror precisely because they cannot rule by consent. Accordingly, the United States should fight alongside Muslim communities against a common enemy rather than treat all Muslims as the enemy.

Will McMasters views prevail in the National Security Council, and shape the administrations foreign policy? Time will tell.

Adil Ahmad Haque is Professor of Law and Judge Jon O. Newman Scholar at Rutgers Law School.

Read more:
Can NSA Pick McMaster Bring Ethics to the White House? - Newsweek