Life Storage, Inc. Reports Fourth Quarter and Full Year 2016 Results

BUFFALO, N.Y.–(BUSINESS WIRE)–$LSI #FFO–Life Storage, Inc. (NYSE:LSI) (formerly Sovran Self Storage, Inc.), a
self storage real estate investment trust (REIT), reported operating
results for the quarter and year ended December 31, 2016.

The Company had earnings in the fourth quarter of 2016 of $18.2 million
or $0.39 per fully diluted common share. This compares to earnings of
$30.0 million in the fourth quarter of 2015, or $0.83 per fully diluted
common share.

Highlights for the 4th
Quarter Included
:

  • Increased same store revenue by 4.0% and net operating income (“NOI”)(1)
    by 3.7% as compared to the fourth quarter of 2015.
  • Grew same store average occupancy for the quarter by 50 basis points
    to 90.9% compared to the same period in 2015 and quarter-end occupancy
    by 40 basis points to 90.4% at December 31, 2016.
  • Achieved adjusted funds from operations (“FFO”)(2) per
    fully diluted common share of $1.31.
  • Paid a quarterly dividend of $0.95 per share of common stock.

Highlights for the Full Year Included:

  • Increased same store revenue by 5.2% and net operating income (“NOI”)
    by 6.5% as compared to 2015.
  • Achieved adjusted funds from operations (“FFO”) per fully diluted
    common share of $5.19 compared to $4.94 in 2015.
  • Acquired 122 quality stores, significantly upgrading its demographics
    and national footprint.
  • Changed the Company name from Sovran Self Storage, Inc. to Life
    Storage, Inc. and rebranded its facilities from Uncle Bob’s Self
    Storage® to Life Storage®.
  • Increased its credit line capacity by 67% from $300 million to $500
    million.
  • Completed an inaugural public debt offering of $600 million of 10 year
    notes at an interest rate of 3.5%.

David Rogers, the Company’s CEO, commented, “2016 was a remarkable year
for us. We acquired 122 stores making our portfolio bigger, better and
stronger. We entered the California and Las Vegas markets in scale with
high-quality properties, and the name change to our Company and our
stores was exciting and well received. The integration of the new stores
is complete, and the rebranding is on time and on budget.”

Funds from operations for the quarter were $1.28 per fully diluted
common share compared to $1.26 for the same period last year. Absent
$0.2 million of acquisition related costs and a deposit write-off of
$1.8 million, offset by a gain on sale of land of $0.6 million incurred
in the fourth quarter of 2016, and $0.6 million of acquisition costs in
the fourth quarter of 2015, adjusted FFO per fully diluted common share
was $1.31 and $1.28 for the quarters ended December 31, 2016 and 2015,
respectively.

In the 3rd quarter of 2016 the Company initiated, and expects
to continue to provide on a quarterly basis, a supplemental information
package containing detailed operating and financial information. The
supplement can be found on the investor relations page of the Company’s
website under Financial
Information > Quarterly Earnings
.

OPERATIONS:

Total revenues increased 35.4% over last year’s fourth quarter while
operating costs increased 39.9%, resulting in an NOI increase of 33.3%.

Revenues for the 417 stabilized stores wholly owned by the Company since
December 31, 2014 increased 4.0% from those of the fourth quarter of
2015, the result of a 50 basis point increase in average occupancy, a
2.9% increase in rental rates and increases in tenant insurance
administrative fees.

Same store operating expenses increased 4.6% for the fourth quarter of
2016 compared to the prior year period. Property taxes, maintenance
expenses and internet advertising costs contributed most significantly
to the expense growth.

Consequently, same store NOI this period increased 3.7% over the fourth
quarter of 2015.

General and administrative expenses increased by approximately $1.4
million over the same period in 2015. Costs associated with the
Company’s name change, and higher legal fees related to the New Jersey
lawsuit were the primary reasons for the higher than expected expense.

During the fourth quarter of 2016, the Company experienced same store
revenue growth in all 29 of its major markets in the same store pool.
Overall, the markets with the strongest revenue impact include Atlanta,
GA and all Florida markets, particularly Miami and Tampa.

For the full year ended December 31, 2016, revenues at the 417
properties owned since December 31, 2014 increased by 5.2% over those of
the full year in 2015. Operating costs increased by 2.6% over those of
the prior year, inclusive of a 5.3% increase in property taxes. Net
operating income increased by 6.5% in 2016 over 2015.

PROPERTIES:

During the quarter, the Company acquired two properties; a store that it
had previously managed in Orlando, FL (71,000 sq. ft.; $9.80 million)
and a property in Chicago upon issuance of a certificate of occupancy
(68,000 sq. ft.; $8.75 million).

Subsequent to the end of the year, two of the Company’s joint ventures
acquired a total of five properties. Four of the properties are in
California (Los Angeles and Sacramento) and one is in Long Island City,
NY. The Company’s contributions totaled $28.2 million to the ventures;
the total cost of the properties was $135.5 million.

While the Company entered into no new purchase agreements during the
quarter, it remains in contract on two certificate of occupancy stores
anticipated to close in 2017. These properties are located in Chicago,
IL and Charlotte, NC and the combined purchase price is approximately
$22 million.

As part of the LifeStorage acquisition, the Company assumed contracts
for three certificate of occupancy stores in Austin, TX at a cost of
$44.8 million. The Company has decided not to pursue two of the
contracts and forfeited $1.8 million of non-refundable property
deposits. It is currently negotiating a lease on the third property.

CAPITAL TRANSACTIONS:

Illustrated below are key financial ratios at December 31, 2016:

  Debt to Enterprise Value (at $85.26/share)     29.5%
Debt to Book Cost of Storage Facilities 39.3%
Debt to Recurring Annualized EBITDA 5.5x
Debt Service Coverage 5.2x

At December 31, 2016, the Company had approximately $23.7 million of
cash on hand, and $247 million available on its line of credit.

In October, the Company issued approximately 39,615 shares at a price of
$82.23 through its Dividend Reinvestment Plan.

COMMON STOCK DIVIDEND:

Subsequent to quarter-end, the Company’s Board of Directors approved a
quarterly dividend of $0.95 per share or $3.80 annualized.

YEAR 2017 EARNINGS GUIDANCE:

The following assumptions covering operations have been utilized in
formulating guidance for the first quarter and full year 2017:

   

Same Store
Projected Increases Over 2016

1Q 2017         FY 2017
Revenue 3.00 – 4.00% 3.00 – 4.00%
Operating Costs (excluding property taxes) 2.50 – 3.50% 3.25 – 4.25%
Property Taxes 5.00 – 6.00% 6.50 – 7.50%
Total Operating Expenses 3.00 – 4.00% 4.25 – 5.25%
Net Operating Income 3.00 – 4.00% 2.75 – 3.75%

The Company’s 2017 same store pool consists of the 435 stabilized stores
owned since December 31, 2015. The stores purchased in 2014 and 2015 at
certificate of occupancy or that were in the early stages of lease-up
are not included, regardless of their current occupancies. The Company
believes that occupancy levels achieved during the lease-up period,
using discounted rates, are not truly indicative of a new store’s
performance, and therefore do not result in a meaningful year-over-year
comparison in future years. The Company will include such stores in its
same store pool in the first year after the stores achieve 80% sustained
occupancy using market rates and incentives.

The Houston market is expected to comprise approximately 8.5% of the
2017 forecasted NOI of the Company’s wholly owned stores. The forecast
for the 41 same store pool of properties in the Company’s Houston market
includes (1.0%) to 1.0% revenue growth, operating expense increases of
4.0% – 5.0% (inclusive of a 5.0% projected increase in property taxes),
resulting in an NOI change of between (2.0%) and 1.0%.

The Company plans to complete $30 – $35 million of expansions in 2017.
It also has budgeted $19 million to provide for recurring capitalized
expenditures including roofing, paving, and office renovations.

The Company has assumed no accretive acquisitions in 2017. Should any
acquisitions occur, they are expected to be funded via draws on its line
of credit which carries an interest rate of LIBOR plus 1.10%.

At the conclusion of 2016, the Company operated 11 self storage
facilities that it acquired during 2014, 2015 and 2016 upon issuance of
certificate of occupancy or in the early stages of lease-up. Further, it
is expected to acquire two more such certificate of occupancy facilities
in 2017 and is in negotiations to lease a third. Upon acquisition, these
properties have insufficient rental revenue to cover operating costs;
accordingly, for the first 24 to 36 months of operation, ownership of
these facilities is dilutive to earnings and FFO per share. The Company
expects that during 2017, it will incur such dilution to the extent of
$0.01 to $0.03 per share due to the aforementioned acquisitions.

Annual general and administrative expenses are expected to be
approximately $46.0 – $47.0 million. The increase over the prior year is
primarily due to the need for additional personnel required for recent
acquisitions.

As a result of the above assumptions, management expects adjusted funds
from operations for the full year 2017 to be approximately $5.50 to
$5.60 per share, and between $1.24 and $1.28 per share for the first
quarter of 2017.

Reconciliation of Guidance

    1Q 2017

Range or Value

    FY 2017

Range or Value

Earnings per share attributable to common shareholders – diluted

$ 0.43 – $ 0.47

$ 2.84 – $ 2.94

Plus: real estate depreciation and amortization

0.81 – 0.81

2.66 – 2.66

FFO per share

$ 1.24 – $ 1.28

$ 5.50 – $ 5.60

FORWARD LOOKING STATEMENTS:

When used within this news release, the words “intends,” “believes,”
“expects,” “anticipates,” and similar expressions are intended to
identify “forward looking statements” within the meaning of that term in
Section 27A of the Securities Act of 1933, and in Section 21E of the
Securities Exchange Act of 1934. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors, which may
cause the actual results, performance or achievements of the Company to
be materially different from those expressed or implied by such forward
looking statements. Such factors include, but are not limited to, the
effect of competition from new self storage facilities, which could
cause rents and occupancy rates to decline; the Company’s ability to
evaluate, finance and integrate acquired businesses into the Company’s
existing business and operations; the Company’s ability to enter new
markets where it has little or no operational experience; the Company’s
existing indebtedness may mature in an unfavorable credit environment,
preventing refinancing or forcing refinancing of the indebtedness on
terms that are not as favorable as the existing terms; interest rates
may fluctuate, impacting costs associated with the Company’s outstanding
floating rate debt; the Company’s ability to comply with debt covenants;
the future ratings on the Company’s debt instruments; the regional
concentration of the Company’s business may subject it to economic
downturns in the states of Florida and Texas; the Company’s ability to
effectively compete in the industries in which it does business; the
Company’s reliance on its call center; the Company’s cash flow may be
insufficient to meet required payments of principal, interest and
dividends; and tax law changes which may change the taxability of future
income.

CONFERENCE CALL:

Life Storage will hold its Fourth Quarter Earnings Release Conference
Call at 9:00 a.m. Eastern Time on Thursday, February 16, 2017. To help
avoid connection delays, participants are encouraged to pre-register
using this
link
. Anyone unable to pre-register may access the conference call
at 877.737.7051 (domestic) or 201.689.8878 (international). Management
will accept questions from registered financial analysts after prepared
remarks; all others are encouraged to listen to the call via webcast by
accessing the investor relations tab at lifestorage.com/.

The webcast will be archived for 90 days; a telephone replay will also
be available for 72 hours by calling 877.481.4010 and entering
conference ID 10203.

ABOUT LIFE STORAGE, INC:

Life Storage, Inc. is a self-administered and self-managed equity REIT
that is in the business of acquiring and managing self storage
facilities. The Company operates more than 650 self storage facilities
in 29 states under the names Life Storage and Uncle Bob’s Self Storage.
For more information, visit http://invest.lifestorage.com/.

Life Storage, Inc.
6467 Main St., Buffalo, NY 14221
(716)
633-1850

Life Storage, Inc.      
Balance Sheet Data
(unaudited)
 
December 31, December 31,
(dollars in thousands)   2016     2015
Assets
Investment in storage facilities:
Land $ 786,764 $ 480,176
Building, equipment and construction in progress   3,456,544     2,011,526  
4,243,308 2,491,702
Less: accumulated depreciation   (535,704 )   (465,195 )
Investment in storage facilities, net 3,707,604 2,026,507
Cash and cash equivalents 23,685 7,020
Accounts receivable 5,469 6,805
Receivable from joint venture 1,223 929
Investment in joint venture 67,300 62,520
Prepaid expenses 6,649 5,431
Fair value of interest rate swap agreements 550
Intangible asset – in-place customer leases (net of accumulated
amortization of $50,782 in 2016 and $21,017 in 2015) 24,830 1,303
Trade name 16,500
Other assets   4,724     7,757  
Total Assets $ 3,857,984   $ 2,118,822  
 
Liabilities
Line of credit $ 253,000 $ 79,000
Term notes, net 1,387,525 746,650
Accounts payable and accrued liabilities 75,132 47,839
Deferred revenue 9,700 7,511
Fair value of interest rate swap agreements 13,015 15,343
Mortgages payable   13,027     1,993  
Total Liabilities 1,751,399 898,336
 
Noncontrolling redeemable Operating Partnership Units at redemption
value
18,091 18,171
 
Equity
Common stock 464 367
Additional paid-in capital 2,348,567 1,388,343
Accumulated deficit (239,062 ) (171,980 )
Accumulated other comprehensive loss   (21,475 )   (14,415 )
Total Shareholders’ Equity 2,088,494 1,202,315
Noncontrolling interest in consolidated subsidiary        
Total Equity   2,088,494     1,202,315  
Total Liabilities and Equity $ 3,857,984   $ 2,118,822  
Life Storage, Inc.                        
Consolidated Statements of Operations
(unaudited)
October 1, 2016 October 1, 2015 January 1, 2016 January 1, 2015
to to to to
(dollars in thousands, except share data) December 31, 2016 December 31, 2015   December 31, 2016 December 31, 2015
 
Revenues
Rental income $ 119,465 $ 87,996 $ 428,121 $ 338,435
Other operating income 7,611 5,552 28,392 22,331
Management fee income   1,602     1,492     6,095     5,836  
Total operating revenues 128,678 95,040 462,608 366,602
 
Expenses
Property operations and maintenance 28,992 20,915 103,388 81,915
Real estate taxes 13,206 9,252 47,876 36,563
General and administrative 11,617 10,201 43,103 38,659
Write-off of property deposits 1,783 1,783
Acquisition related costs 244 576 29,542 2,991
Operating leases of storage facilities 683
Depreciation and amortization 27,628 14,349 87,200 55,083
Amortization of in-place customer leases   13,371     719     29,881     3,423  
Total operating expenses   96,841     56,012     342,773     219,317  
 
Income from operations 31,837 39,028 119,835 147,285
 
Other income (expense)
Interest expense (A) (15,151 ) (9,328 ) (47,175 ) (37,124 )
Interest expense – acquisition bridge loan commitment fee (7,329 )
Interest income 11 67 5
Gain on sale of real estate (487 ) 15,270 (494 )
Gain on land taking 623 623
Equity in income of joint ventures   870     970     3,665     3,405  
 
Net income 18,190 30,183 84,956 113,077
Noncontrolling interests in the Operating Partnership (81 ) (146 ) (398 ) (553 )
Noncontrolling interests in consolidated subsidiaries   58         667      
Net income attributable to common shareholders $ 18,167   $ 30,037   $ 85,225   $ 112,524  
 
Earnings per common share attributable to common
shareholders – basic $ 0.39   $ 0.83   $ 1.97   $ 3.18  
 
Earnings per common share attributable to common
shareholders – diluted $ 0.39   $ 0.83   $ 1.96   $ 3.16  
 
Common shares used in basic
earnings per share calculation 46,206,191 36,109,010 43,184,119 35,379,212
 
Common shares used in diluted
earnings per share calculation 46,385,984 36,327,085 43,407,463 35,600,520
 
Dividends declared per common share $ 0.95   $ 0.85   $ 3.70   $ 3.20  
 
 
(A) Interest expense for the period ending December 31 consists
of the following
Interest expense $ 14,632 $ 9,032 $ 45,440 $ 35,940
Amortization of debt issuance costs   519     296     1,735     1,184  
Total interest expense $ 15,151   $ 9,328   $ 47,175   $ 37,124  
Life Storage, Inc.        
Computation of Funds From Operations (FFO) (2)
(unaudited)
October 1, 2016 October 1, 2015 January 1, 2016 January 1, 2015
to to to to
(dollars in thousands, except share data)   December 31, 2016   December 31, 2015 December 31, 2016 December 31, 2015
 
Net income attributable to common shareholders $ 18,167 $ 30,037 $ 85,225 $ 112,524
Noncontrolling interests in the Operating Partnership 81 146 398 553
Depreciation of real estate and amortization of intangible
assets exclusive of debt issuance costs 40,618 14,780 115,531 57,429
Depreciation and amortization from unconsolidated joint ventures 703 590 2,595 2,435
Gain on sale of real estate 487 (15,270 ) 494
Funds from operations allocable to noncontrolling
interest in Operating Partnership   (264 )   (223 )   (857 )   (848 )
Funds from operations available to common shareholders   59,305     45,817     187,622     172,587  
FFO per share – diluted $ 1.28 $ 1.26 $ 4.32 $ 4.85
 
Adjustments to FFO
Acquisition costs expensed 244 576 29,542 2,991
Interest expense – acquisition bridge loan commitment fee 7,329
Gain on land taking (623 ) (623 )
Write-off of property deposits 1,783 1,783
Operating leases straight line rent adjustment 146
Funds from operations resulting from non-recurring items
allocable to noncontrolling interest in Operating Partnership   (6 )   (3 )   (172 )   (15 )
Adjusted funds from operations available to common shareholders   60,703     46,390     225,481     175,709  
Adjusted FFO per share – diluted $ 1.31 $ 1.28 $ 5.19 $ 4.94
 
Common shares – diluted 46,385,984 36,327,085 43,407,463 35,600,520
Life Storage, Inc.                        
Quarterly Same Store Data (3) * 417
mature stores owned since 12/31/14
(unaudited)
October 1, 2016 October 1, 2015
to to Percentage
(dollars in thousands)       December 31, 2016       December 31, 2015 Change       Change
 
Revenues:
Rental income $ 85,407 $ 82,364 $ 3,043 3.7 %
Tenant insurance 3,268 2,866 402 14.0 %
Other operating income   1,299   1,290   9   0.7 %
Total operating revenues 89,974 86,520 3,454 4.0 %
 
Expenses:
Payroll and benefits 7,618 7,340 278 3.8 %
Real estate taxes 9,014 8,540 474 5.6 %
Utilities 2,606 2,587 19 0.7 %
Repairs and maintenance 3,889 3,514 375 10.7 %
Office and other operating expense 2,929 2,993 (64 ) -2.1 %
Insurance 990 1,106 (116 ) -10.5 %
Advertising & yellow pages 268 318 (50 ) -15.7 %
Internet marketing   1,627   1,262   365   28.9 %
Total operating expenses   28,941   27,660   1,281   4.6 %
 
Net operating income (1) $ 61,033 $ 58,860 $ 2,173   3.7 %
 
 
QTD Same store move ins 36,491 36,000 491
 
QTD Same store move outs 40,044 39,032 1,012
 
 
Other Comparable Quarterly Same Store Data *
(unaudited)
October 1, 2016 October 1, 2015
to to Percentage
December 31, 2016 December 31, 2015 Change Change
Stores owned since 12/31/13 (389 stores)
Revenues $ 82,304 $ 79,236 $ 3,068 3.9 %
Expenses   26,331   25,215   1,116   4.4 %
Net operating income $ 55,973 $ 54,021 $ 1,952   3.6 %
 
 
 
Stores owned since 12/31/12 (374 stores)
Revenues $ 76,984 $ 74,062 $ 2,922 3.9 %
Expenses   24,624   23,763   861   3.6 %
Net operating income $ 52,360 $ 50,299 $ 2,061   4.1 %
 
 
* See exhibit A for supplemental quarterly same store data.
Life Storage, Inc.                              
Year to Date Same Store Data (3) * 417
mature stores owned since 12/31/14
(unaudited)
January 1, 2016 January 1, 2015
to to Percentage

(dollars in thousands)

        December 31, 2016         December 31, 2015 Change         Change
 
Revenues:
Rental income $ 339,773 $ 323,664 $ 16,109 5.0 %
Tenant insurance 12,949 11,294 1,655 14.7 %
Other operating income   5,744     5,791     (47 )   -0.8 %
Total operating revenues 358,466 340,749 17,717 5.2 %
 
Expenses:
Payroll and benefits 29,754 28,843 911 3.2 %
Real estate taxes 36,707 34,847 1,860 5.3 %
Utilities 11,217 11,789 (572 ) -4.9 %
Repairs and maintenance 13,516 13,412 104 0.8 %
Office and other operating expense 11,703 11,373 330 2.9 %
Insurance 4,035 4,414 (379 ) -8.6 %
Advertising & yellow pages 1,114 1,352 (238 ) -17.6 %
Internet marketing   6,409     5,557     852     15.3 %
Total operating expenses   114,455     111,587     2,868     2.6 %
 
Net operating income (1) $ 244,011   $ 229,162   $ 14,849     6.5 %
 
 
YTD Same store move ins 162,268 166,843 (4,575 )
 
YTD Same store move outs 159,841 162,948 (3,107 )
 
 
Other Data – unaudited Same Store (3) All Stores (4)

2016

2015

2016

2015

 
Weighted average quarterly occupancy 90.9 % 90.4 % 89.2 % 89.8 %
 
Occupancy at December 31 90.4 % 90.0 % 88.5 % 89.4 %
 
Rent per occupied square foot $ 13.31 $ 12.94 $ 13.63 $ 12.83
 
 

Investment in Storage Facilities: (unaudited)

The following summarizes activity in storage facilities during the
year ended December 31, 2016:
 
Beginning balance $ 2,491,702
Property acquisitions 1,714,029
Improvements and equipment additions:
Expansions 25,125
Roofing, paving, and equipment:
Stabilized stores 27,309
Recently acquired stores 11,261
Additions to consolidated subsidiary 2,165
Change in construction in progress (Total CIP $14.5 million) 7,525
Dispositions and Impairments   (35,808 )
Storage facilities at cost at period end $ 4,243,308  
 
 

Comparison of Selected G&A Costs (unaudited)

Quarter Ended Year Ended

December 31, 2016

December 31, 2015

December 31, 2016

December 31, 2015

 
Management and administrative salaries and benefits 6,407 6,645 24,631 23,947
Training 367 351 1,237 1,017
Call center 707 491 2,424 1,896

Life Storage Solutions costs

45 205 398 496
Income taxes (445 ) (374 ) 413 1,251
Legal, accounting and professional 1,530 1,147 4,510 2,853
Name change 789 865
Other administrative expenses (5)   2,217     1,736     8,625     7,199  
$ 11,617   $ 10,201   $ 43,103   $ 38,659  
 

Net rentable square feet

December 31, 2016

Wholly owned properties 39,431,008
Joint venture properties 5,199,310
Third party managed properties   1,536,975  
46,167,293
 

December 31, 2016

December 31, 2015

 
Common shares outstanding 46,454,606 36,710,673
Operating Partnership Units outstanding 217,481 168,866
(1) Net operating income or “NOI” is a non-GAAP (generally accepted
accounting principles) financial measure that we define as total
continuing revenues less continuing property operating expenses. NOI
also can be calculated by adding back to net income: interest
expense, impairment and casualty losses, depreciation and
amortization expense, acquisition related costs, general and
administrative expense, and deducting from net income: income from
discontinued operations, interest income, gain on sale of real
estate, and equity in income of joint ventures. We believe that NOI
is a meaningful measure to investors in evaluating our operating
performance, because we utilize NOI in making decisions with respect
to capital allocations, in determining current property values, and
comparing period-to-period and market-to-market property operating
results. Additionally, NOI is widely used in the real estate
industry and the self storage industry to measure the performance
and value of real estate assets without regard to various items
included in net income that do not relate to or are not indicative
of operating performance, such as depreciation and amortization,
which can vary depending on accounting methods and book value of
assets. NOI should be considered in addition to, but not as a
substitute for, other measures of financial performance reported in
accordance with GAAP, such as total revenues, operating income and
net income.
 
(2) We believe that Funds from Operations (“FFO”) provides relevant
and meaningful information about our operating performance that is
necessary, along with net earnings and cash flows, for an
understanding of our operating results. FFO adds back historical
cost depreciation, which assumes the value of real estate assets
diminishes predictably in the future. In fact, real estate asset
values increase or decrease with market conditions. Consequently, we
believe FFO is a useful supplemental measure in evaluating our
operating performance by disregarding (or adding back) historical
cost depreciation.
 
Funds from operations is defined by the National Association of Real
Estate Investment Trusts, Inc. (“NAREIT”) as net income available to
common shareholders computed in accordance with generally accepted
accounting principles (“GAAP”), excluding gains or losses on sales
of properties, plus impairment of real estate assets, plus
depreciation and amortization and after adjustments to record
unconsolidated partnerships and joint ventures on the same basis. We
believe that to further understand our performance, FFO should be
compared with our reported net income and cash flows in accordance
with GAAP, as presented in our consolidated financial statements.
 
Our computation of FFO may not be comparable to FFO reported by
other REITs or real estate companies that do not define the term in
accordance with the current NAREIT definition or that interpret the
current NAREIT definition differently. FFO does not represent cash
generated from operating activities determined in accordance with
GAAP, and should not be considered as an alternative to net income
(determined in accordance with GAAP) as an indication of our
performance, as an alternative to net cash flows from operating
activities (determined in accordance with GAAP) as a measure of our
liquidity, or as an indicator of our ability to make cash
distributions.
 
(3) Includes the stores owned and/or managed by the Company for the
entire periods presented that are consolidated in our financial
statements. Does not include unconsolidated joint ventures or other
stores managed by the Company.
 
(4) Does not include unconsolidated joint venture stores or other
stores managed by the Company
 
(5) Other administrative expenses include office rent, travel
expense, investor relations and miscellaneous other expenses.

Contacts

Life Storage, Inc.
Diane Piegza, Vice President
Investor
Relations & Community Affairs
716-650-6115

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