Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Life Storage, Inc. Reports First Quarter 2023 Results By: Life Storage, Inc. via Business Wire May 02, 2023 at 16:10 PM EDT Life Storage, Inc. (NYSE:LSI), a leading national owner and operator of self-storage properties, reported operating results for the quarter ended March 31, 2023. Highlights for the First Quarter Included: Generated net income attributable to common shareholders of $81.6 million, or $0.96 per fully diluted common share. Achieved adjusted funds from operations (“FFO”)(1) per fully diluted common share of $1.63, a 13.2% increase over the same period in 2022. Increased same store revenue by 10.5% and same store net operating income (“NOI”)(2) by 12.8%, year-over-year. With a joint venture partner, acquired one store for a total cost of $22.4 million, of which the Company invested $4.1 million Added 16 stores (12 net) to the Company’s third-party management platform. Joe Saffire, the Company’s Chief Executive Officer, stated, “The Life Storage team continues to fire on all cylinders with this quarter marking the 10th straight quarter in which we achieved double-digit adjusted FFO growth. I couldn’t be prouder of what the team has accomplished.” FINANCIAL RESULTS: In the first quarter of 2023, the Company generated net income attributable to common shareholders of $81.6 million, or $0.96 per fully diluted common share, compared to net income attributable to common shareholders of $73.6 million, or $0.88 per fully diluted common share, in the first quarter of 2022. Funds from operations for the quarter were $1.54 per fully diluted common share compared to $1.44 for the same period last year. Adjusted FFO per fully diluted common share for the quarter was $1.63 after adjusting for a net total of $7.4 million in merger related costs, gain on sale of non-real estate assets, non-controlling interest, and acquisition fees, compared to $1.44 for the same period last year. OPERATIONS: Revenues for the 664 stabilized stores wholly owned by the Company since December 31, 2021 increased 10.5% in the first quarter of 2023 compared to the same quarter of 2022. The increase largely resulted from the impact of a 13.6% increase in realized rental rates. Same store operating expenses increased 5.2% for the first quarter of 2023 compared to the prior year period, primarily the result of higher real estate taxes, office and other operating expenses, and payroll and benefits. Same store NOI increased 12.8% in the first quarter of 2023 as compared to the first quarter of 2022. General and administrative expenses for the quarter ended March 31, 2023 were impacted by $8.3 million of merger related costs. During the first quarter of 2023, the Company achieved 9% or greater same store revenue growth in 25 of its 38 major markets. Overall, the markets with the strongest positive revenue impact were Los Angeles, CA; Miami, FL; Dallas, TX; Orlando, FL; and Tampa, FL. PORTFOLIO TRANSACTIONS: Joint Venture Portfolio During the quarter, the Company with a joint venture partner acquired one store in New Jersey for a total purchase price of $22.4 million, of which the Company invested $4.1 million. Subsequent to March 31, 2023, the Company and a joint venture partner acquired four self-storage facilities in New York for a total purchase price of $150.0 million, of which the Company invested $15.1 million. THIRD-PARTY MANAGEMENT: During the quarter, the Company added 16 stores (12 net) to its third-party management platform. As of quarter end, the Company managed 452 facilities in total, including those in which it owns a noncontrolling interest. FINANCIAL POSITION: At March 31, 2023, the Company had approximately $32.8 million of cash on hand, and approximately $631 million available on its line of credit. Below are key financial ratios as of March 31, 2023: • Debt to Enterprise Value (at $131.09/share) 23.1% • Debt to Book Cost of Storage Facilities 39.6% • Debt to Recurring Annualized EBITDA 4.9x • Debt Service Coverage 5.2x COMMON STOCK DIVIDEND: Subsequent to quarter end, the Company’s Board of Directors approved a quarterly dividend of $1.20 per share, or $4.80 annualized. The dividend was paid on April 26, 2023 to shareholders of record on April 14, 2023. YEAR 2023 EARNINGS GUIDANCE: The Company maintains its previously announced earnings guidance for fiscal 2023. The following assumptions covering operations have been utilized in formulating guidance for 2023: Year 2023 Earnings Guidance Current Guidance Range (1) Same Store Revenue 4.00% - 5.50% Same Store Operating Costs (excluding property taxes) 4.00% - 5.00% Same Store Property Taxes 6.25% - 7.25% Total Same Store Operating Expenses 4.75% - 6.25% Same Store Net Operating Income 3.75% - 5.25% General & Administrative $76M - $78M Expansions & Enhancements $65M - $75M Capital Expenditures $30M - $35M Wholly Owned Acquisitions $150M - $250M Joint Venture Investments $50M - $100M Adjusted Funds from Operations per Share $6.75 - $6.95 Reconciliation of Guidance 2Q 2023 Range or Value FY 2023 Range or Value Earnings per share attributable to common shareholders - diluted $1.12 - $1.16 $4.42 - $4.62 Plus: real estate depreciation and amortization 0.58 - 0.58 2.33 - 2.33 Adjusted FFO per share $1.70 - $1.74 $6.75 - $6.95 (1) Guidance does not reflect the impact of fees and other costs incurred or expected to be incurred by the Company in connection with its response to Public Storage’s unsolicited proposal or the pending merger with Extra Space Storage. The Company’s 2023 same store pool consists of the 664 stabilized stores wholly owned since December 31, 2021. Forty-four of the stores purchased through March 31, 2023, 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 second year after the stores achieve 80% sustained occupancy using market rates and incentives. FORWARD LOOKING STATEMENTS: When used herein, 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. All forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained herein. Any forward-looking statements should be considered in light of the risks referenced in the “Risk Factors” section included in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Such factors include, but are not limited to: adverse changes in general economic conditions, the real estate industry and in the markets in which we operate; risks associated with our ability to consummate the Mergers with Extra Space and the timing and closing of the Mergers including, among other things, the ability of the Company to obtain shareholder approval required to consummate the Mergers, the satisfaction or waiver of other conditions to closing in the Merger Agreement, unanticipated difficulties or expenditures relating to the Mergers, potential difficulties in employee retention as a result of the Mergers, the occurrence of any event, change or other circumstances that could give rise to the termination of the Mergers and the outcome of legal proceedings instituted against the Company, its directors and others related to the Mergers; the effect of competition from new self-storage facilities or other storage alternatives, which would cause rents and occupancy rates to decline; impacts from the COVID-19 pandemic or the future outbreak of other highly infectious or contagious diseases on the U.S., regional and global economies and our financial condition and results of operations; potential liability for uninsured losses and environmental contamination; the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing real estate investment trusts (“REITs”), tenant reinsurance and other aspects of our business, which could adversely affect our results; loss of key personnel; the Company’s ability to evaluate, finance and integrate acquired self-storage facilities on expected terms into the Company’s existing business and operations; the Company’s ability to effectively compete in the industry in which it does business; disruptions in credit and financial markets and resulting difficulties in raising capital or obtaining credit at reasonable rates or at all, which could impede our ability to grow; 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 increase, impacting costs associated with the Company’s outstanding floating rate debt, if any, and impacting the Company’s ability to comply with debt covenants; exposure to litigation or other claims; risks associated with breaches of our data security; the regional concentration of the Company's business may subject the Company to economic downturns in the states of Florida and Texas; the Company’s cash flow may be insufficient to meet required payments of operating expenses, principal, interest and dividends; and failure to maintain our REIT status for U.S. federal income purposes, including tax law changes that may change the taxability of future income. The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our securities. CONFERENCE CALL: Life Storage will hold its First Quarter Earnings Release Conference Call at 9:00 a.m. Eastern Time on Wednesday, May 3, 2023. 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 888.506.0062 (domestic) or 973.528.0011 (international); passcode 444471 or request to be joined into the Life Storage call. 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 a period of 90 days; a telephone replay will also be available for 14 days by calling 877.481.4010 and entering passcode 48170. 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. Located in Buffalo, New York, the Company operates more than 1,200 storage facilities in 37 states and the District of Columbia. The Company serves both residential and commercial storage customers with storage units rented by month. Life Storage consistently provides responsive service to more than 690,000 customers, making it a leader in the industry. For more information visit https://invest.lifestorage.com/. Life Storage, Inc. Balance Sheet Data (unaudited) March 31, December 31, (dollars in thousands) 2023 2022 Assets Investment in storage facilities: Land $ 1,309,475 $ 1,307,425 Building, equipment and construction in progress 6,886,522 6,864,381 8,195,997 8,171,806 Less: accumulated depreciation (1,215,348 ) (1,170,520 ) Investment in storage facilities, net 6,980,649 7,001,286 Cash and cash equivalents 32,765 24,406 Accounts receivable 23,281 24,153 Receivable from joint ventures 795 1,562 Investment in joint ventures 276,436 275,190 Prepaid expenses 14,165 10,363 Intangible asset - in-place customer leases 2,159 4,212 Trade name 16,500 16,500 Other assets 29,804 30,058 Total Assets $ 7,376,554 $ 7,387,730 Liabilities Line of credit $ 619,000 $ 595,000 Term notes, net 2,752,580 2,751,632 Accounts payable and accrued liabilities 136,409 148,130 Deferred revenue 34,530 33,192 Mortgages payable 32,466 36,258 Total Liabilities 3,574,985 3,564,212 Noncontrolling redeemable Preferred Operating Partnership Units at redemption value 30,090 89,077 Noncontrolling redeemable Common Operating Partnership Units 201,373 107,074 Equity Common stock 851 850 Additional paid-in capital 3,884,890 3,886,317 Accumulated deficit (317,570 ) (261,510 ) Accumulated other comprehensive loss (2,978 ) (3,207 ) Total Shareholders' Equity 3,565,193 3,622,450 Noncontrolling interest in consolidated subsidiary 4,913 4,917 Total Equity 3,570,106 3,627,367 Total Liabilities and Equity $ 7,376,554 $ 7,387,730 Life Storage, Inc. Consolidated Statements of Operations (unaudited) January 1, 2023 January 1, 2022 to to (dollars in thousands, except share data) March 31, 2023 March 31, 2022 Revenues Rental income $ 240,483 $ 205,509 Tenant reinsurance 20,291 17,267 Other operating income 5,895 4,858 Management and acquisition fee income 6,933 5,856 Total operating revenues 273,602 233,490 Expenses Property operations and maintenance 47,306 42,368 Tenant reinsurance 9,220 6,847 Real estate taxes 27,437 24,523 General and administrative 27,818 15,826 Depreciation and amortization 45,716 40,795 Amortization of in-place customer leases 2,053 5,606 Total operating expenses 159,550 135,965 Gain on sale of non-real estate assets 686 - Income from operations 114,738 97,525 Other income (expense) Interest expense (A) (33,113 ) (24,240 ) Interest and dividend income 12 15 Equity in income of joint ventures 1,629 2,118 Net income 83,266 75,418 Net income attributable to noncontrolling preferred interests in the Operating Partnership (330 ) (996 ) Net income attributable to noncontrolling common interests in the Operating Partnership (1,333 ) (847 ) Net loss attributable to noncontrolling common interests in consolidated subsidiary 5 - Net income attributable to common shareholders $ 81,608 $ 73,575 Earnings per common share attributable to common shareholders - basic $ 0.96 $ 0.88 Earnings per common share attributable to common shareholders - diluted $ 0.96 $ 0.88 Common shares used in basic earnings per share calculation 84,935,860 83,644,426 Common shares used in diluted earnings per share calculation 85,378,412 83,837,773 Dividends declared per common share $ 1.2000 $ 1.0000 (A) Interest expense for the period ending March 31 consists of the following Interest expense $ 32,173 $ 23,510 Amortization of debt issuance costs 940 730 Total interest expense $ 33,113 $ 24,240 Life Storage, Inc. Computation of Funds From Operations (FFO) (1) (unaudited) January 1, 2023 January 1, 2022 to to (dollars in thousands, except share data) March 31, 2023 March 31, 2022 Net income attributable to common shareholders $ 81,608 $ 73,575 Noncontrolling common interests in the Operating Partnership 1,333 847 Noncontrolling preferred interests in the Operating Partnership during conversion period 330 - Depreciation of real estate and amortization of intangible assets exclusive of debt issuance costs 47,573 45,866 Depreciation and amortization from unconsolidated joint ventures 3,187 1,802 Funds from operations allocable to noncontrolling interest in Operating Partnership (2,154 ) (1,389 ) Funds from operations available to common shareholders 131,877 120,701 FFO per share - diluted $ 1.54 $ 1.44 Adjustments to FFO Gain on sale of non-real estate assets (686 ) (40 ) Merger related costs 8,314 - Acquisition fee (90 ) - Funds from operations resulting from non-recurring items allocable to noncontrolling interest in Operating Partnership (121 ) - Adjusted funds from operations available to common shareholders 139,294 120,661 Adjusted FFO per share - diluted $ 1.63 $ 1.44 Common shares - diluted 85,378,412 83,837,773 Life Storage, Inc. Computation of Net Operating Income (2) (unaudited) January 1, 2023 January 1, 2022 to to (dollars in thousands) March 31, 2023 March 31, 2022 Net Income $ 83,266 $ 75,418 General and administrative 27,818 15,826 Depreciation and amortization 47,769 46,401 Interest expense 33,113 24,240 Interest and dividend income (12 ) (15 ) Equity in income of joint ventures (1,629 ) (2,118 ) Net operating income $ 190,325 $ 159,752 Same store (4) $ 152,523 $ 135,169 Net operating income related to tenant reinsurance 11,071 10,420 Other stores, management fee income, and gain on sale of non-real estate assets 26,731 14,163 Total net operating income $ 190,325 $ 159,752 Life Storage, Inc. Quarterly Same Store Data (3) (4) 664 mature stores owned since 12/31/21 (unaudited) January 1, 2023 January 1, 2022 to to Percentage (dollars in thousands) March 31, 2023 March 31, 2022 Change Change Revenues: Rental income $ 211,534 $ 190,883 $ 20,651 10.8 % Other operating income 1,746 2,062 (316 ) -15.3 % Total operating revenues 213,280 192,945 20,335 10.5 % Expenses: Payroll and benefits 12,754 12,368 386 3.1 % Real estate taxes 23,613 22,418 1,195 5.3 % Utilities 5,413 5,083 330 6.5 % Repairs and maintenance 6,295 5,995 300 5.0 % Office and other operating expense 5,782 5,342 440 8.2 % Insurance 2,250 2,045 205 10.0 % Advertising - 60 (60 ) -100.0 % Internet marketing 4,650 4,465 185 4.1 % Total operating expenses 60,757 57,776 2,981 5.2 % Net operating income (2) $ 152,523 $ 135,169 $ 17,354 12.8 % QTD Same store move ins 58,659 58,042 617 QTD Same store move outs 61,161 57,040 4,121 Other Comparable Quarterly Same Store Data (4) (unaudited) January 1, 2023 January 1, 2022 to to Percentage March 31, 2023 March 31, 2022 Change Change 2022 Same store pool (576 stores) Revenues $ 187,786 $ 170,458 $ 17,328 10.2 % Expenses 52,953 50,521 2,432 4.8 % Net operating income $ 134,833 $ 119,937 $ 14,896 12.4 % 2021 Same store pool (526 stores) Revenues $ 169,911 $ 154,662 $ 15,249 9.9 % Expenses 48,078 45,854 2,224 4.9 % Net operating income $ 121,833 $ 108,808 $ 13,025 12.0 % Life Storage, Inc. Other Data - unaudited Same Store (3) All Stores (5) 2023 2022 2023 2022 Weighted average quarterly occupancy 90.7 % 93.5 % 90.0 % 93.0 % Occupancy at March 31 90.4 % 93.6 % 89.5 % 92.9 % Rent per occupied square foot $19.31 $17.00 $19.22 $16.98 Life Storage, Inc. Other Data - unaudited (continued) Investment in Storage Facilities: (unaudited) The following summarizes activity in storage facilities during the three months ended March 31, 2023: Beginning balance $ 8,171,806 Wholly owned property acquisitions - Improvements and equipment additions: Expansions 14,426 Roofing, paving, and equipment: Stabilized stores 7,513 Recently acquired stores 426 Change in construction in progress (Total CIP $46.5 million) 3,232 Dispositions and Impairments (1,406 ) Storage facilities at cost at period end $ 8,195,997 Comparison of Selected G&A Costs (unaudited) Quarter Ended March 31, 2023 March 31, 2022 Management and administrative salaries and benefits $ 11,229 $ 9,911 Training 271 136 Call center 1,224 840 Life Storage Solutions costs 814 345 Income taxes 931 358 Legal, accounting and professional 1,167 1,101 Merger related costs 8,314 - Other administrative expenses (6) 3,868 3,135 $ 27,818 $ 15,826 Net rentable square feet March 31, 2023 Wholly owned properties 55,526,370 Joint venture properties 10,642,430 Third party managed properties 23,692,267 89,861,067 March 31, 2023 March 31, 2022 Common shares outstanding 85,061,573 84,307,259 Common Operating Partnership Units outstanding 1,602,323 960,208 (1) 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. (2) 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, operating lease expenses, depreciation and amortization expense, any losses on sale of real estate, acquisition related costs, general and administrative expense, and deducting from net income: income from discontinued operations, interest income, any gains 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 in 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. (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) Revenues and expenses do not include items related to tenant reinsurance. (5) Does not include unconsolidated joint venture stores or other stores managed by the Company. (6) Other administrative expenses include office rent, travel expense, investor relations and miscellaneous other expenses. View source version on businesswire.com: https://www.businesswire.com/news/home/20230502005951/en/Contacts Life Storage, Inc. Brent Maedl (716) 328-9756 bmaedl@lifestorage.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Life Storage, Inc. Reports First Quarter 2023 Results By: Life Storage, Inc. via Business Wire May 02, 2023 at 16:10 PM EDT Life Storage, Inc. (NYSE:LSI), a leading national owner and operator of self-storage properties, reported operating results for the quarter ended March 31, 2023. Highlights for the First Quarter Included: Generated net income attributable to common shareholders of $81.6 million, or $0.96 per fully diluted common share. Achieved adjusted funds from operations (“FFO”)(1) per fully diluted common share of $1.63, a 13.2% increase over the same period in 2022. Increased same store revenue by 10.5% and same store net operating income (“NOI”)(2) by 12.8%, year-over-year. With a joint venture partner, acquired one store for a total cost of $22.4 million, of which the Company invested $4.1 million Added 16 stores (12 net) to the Company’s third-party management platform. Joe Saffire, the Company’s Chief Executive Officer, stated, “The Life Storage team continues to fire on all cylinders with this quarter marking the 10th straight quarter in which we achieved double-digit adjusted FFO growth. I couldn’t be prouder of what the team has accomplished.” FINANCIAL RESULTS: In the first quarter of 2023, the Company generated net income attributable to common shareholders of $81.6 million, or $0.96 per fully diluted common share, compared to net income attributable to common shareholders of $73.6 million, or $0.88 per fully diluted common share, in the first quarter of 2022. Funds from operations for the quarter were $1.54 per fully diluted common share compared to $1.44 for the same period last year. Adjusted FFO per fully diluted common share for the quarter was $1.63 after adjusting for a net total of $7.4 million in merger related costs, gain on sale of non-real estate assets, non-controlling interest, and acquisition fees, compared to $1.44 for the same period last year. OPERATIONS: Revenues for the 664 stabilized stores wholly owned by the Company since December 31, 2021 increased 10.5% in the first quarter of 2023 compared to the same quarter of 2022. The increase largely resulted from the impact of a 13.6% increase in realized rental rates. Same store operating expenses increased 5.2% for the first quarter of 2023 compared to the prior year period, primarily the result of higher real estate taxes, office and other operating expenses, and payroll and benefits. Same store NOI increased 12.8% in the first quarter of 2023 as compared to the first quarter of 2022. General and administrative expenses for the quarter ended March 31, 2023 were impacted by $8.3 million of merger related costs. During the first quarter of 2023, the Company achieved 9% or greater same store revenue growth in 25 of its 38 major markets. Overall, the markets with the strongest positive revenue impact were Los Angeles, CA; Miami, FL; Dallas, TX; Orlando, FL; and Tampa, FL. PORTFOLIO TRANSACTIONS: Joint Venture Portfolio During the quarter, the Company with a joint venture partner acquired one store in New Jersey for a total purchase price of $22.4 million, of which the Company invested $4.1 million. Subsequent to March 31, 2023, the Company and a joint venture partner acquired four self-storage facilities in New York for a total purchase price of $150.0 million, of which the Company invested $15.1 million. THIRD-PARTY MANAGEMENT: During the quarter, the Company added 16 stores (12 net) to its third-party management platform. As of quarter end, the Company managed 452 facilities in total, including those in which it owns a noncontrolling interest. FINANCIAL POSITION: At March 31, 2023, the Company had approximately $32.8 million of cash on hand, and approximately $631 million available on its line of credit. Below are key financial ratios as of March 31, 2023: • Debt to Enterprise Value (at $131.09/share) 23.1% • Debt to Book Cost of Storage Facilities 39.6% • Debt to Recurring Annualized EBITDA 4.9x • Debt Service Coverage 5.2x COMMON STOCK DIVIDEND: Subsequent to quarter end, the Company’s Board of Directors approved a quarterly dividend of $1.20 per share, or $4.80 annualized. The dividend was paid on April 26, 2023 to shareholders of record on April 14, 2023. YEAR 2023 EARNINGS GUIDANCE: The Company maintains its previously announced earnings guidance for fiscal 2023. The following assumptions covering operations have been utilized in formulating guidance for 2023: Year 2023 Earnings Guidance Current Guidance Range (1) Same Store Revenue 4.00% - 5.50% Same Store Operating Costs (excluding property taxes) 4.00% - 5.00% Same Store Property Taxes 6.25% - 7.25% Total Same Store Operating Expenses 4.75% - 6.25% Same Store Net Operating Income 3.75% - 5.25% General & Administrative $76M - $78M Expansions & Enhancements $65M - $75M Capital Expenditures $30M - $35M Wholly Owned Acquisitions $150M - $250M Joint Venture Investments $50M - $100M Adjusted Funds from Operations per Share $6.75 - $6.95 Reconciliation of Guidance 2Q 2023 Range or Value FY 2023 Range or Value Earnings per share attributable to common shareholders - diluted $1.12 - $1.16 $4.42 - $4.62 Plus: real estate depreciation and amortization 0.58 - 0.58 2.33 - 2.33 Adjusted FFO per share $1.70 - $1.74 $6.75 - $6.95 (1) Guidance does not reflect the impact of fees and other costs incurred or expected to be incurred by the Company in connection with its response to Public Storage’s unsolicited proposal or the pending merger with Extra Space Storage. The Company’s 2023 same store pool consists of the 664 stabilized stores wholly owned since December 31, 2021. Forty-four of the stores purchased through March 31, 2023, 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 second year after the stores achieve 80% sustained occupancy using market rates and incentives. FORWARD LOOKING STATEMENTS: When used herein, 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. All forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained herein. Any forward-looking statements should be considered in light of the risks referenced in the “Risk Factors” section included in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Such factors include, but are not limited to: adverse changes in general economic conditions, the real estate industry and in the markets in which we operate; risks associated with our ability to consummate the Mergers with Extra Space and the timing and closing of the Mergers including, among other things, the ability of the Company to obtain shareholder approval required to consummate the Mergers, the satisfaction or waiver of other conditions to closing in the Merger Agreement, unanticipated difficulties or expenditures relating to the Mergers, potential difficulties in employee retention as a result of the Mergers, the occurrence of any event, change or other circumstances that could give rise to the termination of the Mergers and the outcome of legal proceedings instituted against the Company, its directors and others related to the Mergers; the effect of competition from new self-storage facilities or other storage alternatives, which would cause rents and occupancy rates to decline; impacts from the COVID-19 pandemic or the future outbreak of other highly infectious or contagious diseases on the U.S., regional and global economies and our financial condition and results of operations; potential liability for uninsured losses and environmental contamination; the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing real estate investment trusts (“REITs”), tenant reinsurance and other aspects of our business, which could adversely affect our results; loss of key personnel; the Company’s ability to evaluate, finance and integrate acquired self-storage facilities on expected terms into the Company’s existing business and operations; the Company’s ability to effectively compete in the industry in which it does business; disruptions in credit and financial markets and resulting difficulties in raising capital or obtaining credit at reasonable rates or at all, which could impede our ability to grow; 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 increase, impacting costs associated with the Company’s outstanding floating rate debt, if any, and impacting the Company’s ability to comply with debt covenants; exposure to litigation or other claims; risks associated with breaches of our data security; the regional concentration of the Company's business may subject the Company to economic downturns in the states of Florida and Texas; the Company’s cash flow may be insufficient to meet required payments of operating expenses, principal, interest and dividends; and failure to maintain our REIT status for U.S. federal income purposes, including tax law changes that may change the taxability of future income. The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our securities. CONFERENCE CALL: Life Storage will hold its First Quarter Earnings Release Conference Call at 9:00 a.m. Eastern Time on Wednesday, May 3, 2023. 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 888.506.0062 (domestic) or 973.528.0011 (international); passcode 444471 or request to be joined into the Life Storage call. 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 a period of 90 days; a telephone replay will also be available for 14 days by calling 877.481.4010 and entering passcode 48170. 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. Located in Buffalo, New York, the Company operates more than 1,200 storage facilities in 37 states and the District of Columbia. The Company serves both residential and commercial storage customers with storage units rented by month. Life Storage consistently provides responsive service to more than 690,000 customers, making it a leader in the industry. For more information visit https://invest.lifestorage.com/. Life Storage, Inc. Balance Sheet Data (unaudited) March 31, December 31, (dollars in thousands) 2023 2022 Assets Investment in storage facilities: Land $ 1,309,475 $ 1,307,425 Building, equipment and construction in progress 6,886,522 6,864,381 8,195,997 8,171,806 Less: accumulated depreciation (1,215,348 ) (1,170,520 ) Investment in storage facilities, net 6,980,649 7,001,286 Cash and cash equivalents 32,765 24,406 Accounts receivable 23,281 24,153 Receivable from joint ventures 795 1,562 Investment in joint ventures 276,436 275,190 Prepaid expenses 14,165 10,363 Intangible asset - in-place customer leases 2,159 4,212 Trade name 16,500 16,500 Other assets 29,804 30,058 Total Assets $ 7,376,554 $ 7,387,730 Liabilities Line of credit $ 619,000 $ 595,000 Term notes, net 2,752,580 2,751,632 Accounts payable and accrued liabilities 136,409 148,130 Deferred revenue 34,530 33,192 Mortgages payable 32,466 36,258 Total Liabilities 3,574,985 3,564,212 Noncontrolling redeemable Preferred Operating Partnership Units at redemption value 30,090 89,077 Noncontrolling redeemable Common Operating Partnership Units 201,373 107,074 Equity Common stock 851 850 Additional paid-in capital 3,884,890 3,886,317 Accumulated deficit (317,570 ) (261,510 ) Accumulated other comprehensive loss (2,978 ) (3,207 ) Total Shareholders' Equity 3,565,193 3,622,450 Noncontrolling interest in consolidated subsidiary 4,913 4,917 Total Equity 3,570,106 3,627,367 Total Liabilities and Equity $ 7,376,554 $ 7,387,730 Life Storage, Inc. Consolidated Statements of Operations (unaudited) January 1, 2023 January 1, 2022 to to (dollars in thousands, except share data) March 31, 2023 March 31, 2022 Revenues Rental income $ 240,483 $ 205,509 Tenant reinsurance 20,291 17,267 Other operating income 5,895 4,858 Management and acquisition fee income 6,933 5,856 Total operating revenues 273,602 233,490 Expenses Property operations and maintenance 47,306 42,368 Tenant reinsurance 9,220 6,847 Real estate taxes 27,437 24,523 General and administrative 27,818 15,826 Depreciation and amortization 45,716 40,795 Amortization of in-place customer leases 2,053 5,606 Total operating expenses 159,550 135,965 Gain on sale of non-real estate assets 686 - Income from operations 114,738 97,525 Other income (expense) Interest expense (A) (33,113 ) (24,240 ) Interest and dividend income 12 15 Equity in income of joint ventures 1,629 2,118 Net income 83,266 75,418 Net income attributable to noncontrolling preferred interests in the Operating Partnership (330 ) (996 ) Net income attributable to noncontrolling common interests in the Operating Partnership (1,333 ) (847 ) Net loss attributable to noncontrolling common interests in consolidated subsidiary 5 - Net income attributable to common shareholders $ 81,608 $ 73,575 Earnings per common share attributable to common shareholders - basic $ 0.96 $ 0.88 Earnings per common share attributable to common shareholders - diluted $ 0.96 $ 0.88 Common shares used in basic earnings per share calculation 84,935,860 83,644,426 Common shares used in diluted earnings per share calculation 85,378,412 83,837,773 Dividends declared per common share $ 1.2000 $ 1.0000 (A) Interest expense for the period ending March 31 consists of the following Interest expense $ 32,173 $ 23,510 Amortization of debt issuance costs 940 730 Total interest expense $ 33,113 $ 24,240 Life Storage, Inc. Computation of Funds From Operations (FFO) (1) (unaudited) January 1, 2023 January 1, 2022 to to (dollars in thousands, except share data) March 31, 2023 March 31, 2022 Net income attributable to common shareholders $ 81,608 $ 73,575 Noncontrolling common interests in the Operating Partnership 1,333 847 Noncontrolling preferred interests in the Operating Partnership during conversion period 330 - Depreciation of real estate and amortization of intangible assets exclusive of debt issuance costs 47,573 45,866 Depreciation and amortization from unconsolidated joint ventures 3,187 1,802 Funds from operations allocable to noncontrolling interest in Operating Partnership (2,154 ) (1,389 ) Funds from operations available to common shareholders 131,877 120,701 FFO per share - diluted $ 1.54 $ 1.44 Adjustments to FFO Gain on sale of non-real estate assets (686 ) (40 ) Merger related costs 8,314 - Acquisition fee (90 ) - Funds from operations resulting from non-recurring items allocable to noncontrolling interest in Operating Partnership (121 ) - Adjusted funds from operations available to common shareholders 139,294 120,661 Adjusted FFO per share - diluted $ 1.63 $ 1.44 Common shares - diluted 85,378,412 83,837,773 Life Storage, Inc. Computation of Net Operating Income (2) (unaudited) January 1, 2023 January 1, 2022 to to (dollars in thousands) March 31, 2023 March 31, 2022 Net Income $ 83,266 $ 75,418 General and administrative 27,818 15,826 Depreciation and amortization 47,769 46,401 Interest expense 33,113 24,240 Interest and dividend income (12 ) (15 ) Equity in income of joint ventures (1,629 ) (2,118 ) Net operating income $ 190,325 $ 159,752 Same store (4) $ 152,523 $ 135,169 Net operating income related to tenant reinsurance 11,071 10,420 Other stores, management fee income, and gain on sale of non-real estate assets 26,731 14,163 Total net operating income $ 190,325 $ 159,752 Life Storage, Inc. Quarterly Same Store Data (3) (4) 664 mature stores owned since 12/31/21 (unaudited) January 1, 2023 January 1, 2022 to to Percentage (dollars in thousands) March 31, 2023 March 31, 2022 Change Change Revenues: Rental income $ 211,534 $ 190,883 $ 20,651 10.8 % Other operating income 1,746 2,062 (316 ) -15.3 % Total operating revenues 213,280 192,945 20,335 10.5 % Expenses: Payroll and benefits 12,754 12,368 386 3.1 % Real estate taxes 23,613 22,418 1,195 5.3 % Utilities 5,413 5,083 330 6.5 % Repairs and maintenance 6,295 5,995 300 5.0 % Office and other operating expense 5,782 5,342 440 8.2 % Insurance 2,250 2,045 205 10.0 % Advertising - 60 (60 ) -100.0 % Internet marketing 4,650 4,465 185 4.1 % Total operating expenses 60,757 57,776 2,981 5.2 % Net operating income (2) $ 152,523 $ 135,169 $ 17,354 12.8 % QTD Same store move ins 58,659 58,042 617 QTD Same store move outs 61,161 57,040 4,121 Other Comparable Quarterly Same Store Data (4) (unaudited) January 1, 2023 January 1, 2022 to to Percentage March 31, 2023 March 31, 2022 Change Change 2022 Same store pool (576 stores) Revenues $ 187,786 $ 170,458 $ 17,328 10.2 % Expenses 52,953 50,521 2,432 4.8 % Net operating income $ 134,833 $ 119,937 $ 14,896 12.4 % 2021 Same store pool (526 stores) Revenues $ 169,911 $ 154,662 $ 15,249 9.9 % Expenses 48,078 45,854 2,224 4.9 % Net operating income $ 121,833 $ 108,808 $ 13,025 12.0 % Life Storage, Inc. Other Data - unaudited Same Store (3) All Stores (5) 2023 2022 2023 2022 Weighted average quarterly occupancy 90.7 % 93.5 % 90.0 % 93.0 % Occupancy at March 31 90.4 % 93.6 % 89.5 % 92.9 % Rent per occupied square foot $19.31 $17.00 $19.22 $16.98 Life Storage, Inc. Other Data - unaudited (continued) Investment in Storage Facilities: (unaudited) The following summarizes activity in storage facilities during the three months ended March 31, 2023: Beginning balance $ 8,171,806 Wholly owned property acquisitions - Improvements and equipment additions: Expansions 14,426 Roofing, paving, and equipment: Stabilized stores 7,513 Recently acquired stores 426 Change in construction in progress (Total CIP $46.5 million) 3,232 Dispositions and Impairments (1,406 ) Storage facilities at cost at period end $ 8,195,997 Comparison of Selected G&A Costs (unaudited) Quarter Ended March 31, 2023 March 31, 2022 Management and administrative salaries and benefits $ 11,229 $ 9,911 Training 271 136 Call center 1,224 840 Life Storage Solutions costs 814 345 Income taxes 931 358 Legal, accounting and professional 1,167 1,101 Merger related costs 8,314 - Other administrative expenses (6) 3,868 3,135 $ 27,818 $ 15,826 Net rentable square feet March 31, 2023 Wholly owned properties 55,526,370 Joint venture properties 10,642,430 Third party managed properties 23,692,267 89,861,067 March 31, 2023 March 31, 2022 Common shares outstanding 85,061,573 84,307,259 Common Operating Partnership Units outstanding 1,602,323 960,208 (1) 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. (2) 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, operating lease expenses, depreciation and amortization expense, any losses on sale of real estate, acquisition related costs, general and administrative expense, and deducting from net income: income from discontinued operations, interest income, any gains 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 in 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. (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) Revenues and expenses do not include items related to tenant reinsurance. (5) Does not include unconsolidated joint venture stores or other stores managed by the Company. (6) Other administrative expenses include office rent, travel expense, investor relations and miscellaneous other expenses. View source version on businesswire.com: https://www.businesswire.com/news/home/20230502005951/en/Contacts Life Storage, Inc. Brent Maedl (716) 328-9756 bmaedl@lifestorage.com
Life Storage, Inc. (NYSE:LSI), a leading national owner and operator of self-storage properties, reported operating results for the quarter ended March 31, 2023. Highlights for the First Quarter Included: Generated net income attributable to common shareholders of $81.6 million, or $0.96 per fully diluted common share. Achieved adjusted funds from operations (“FFO”)(1) per fully diluted common share of $1.63, a 13.2% increase over the same period in 2022. Increased same store revenue by 10.5% and same store net operating income (“NOI”)(2) by 12.8%, year-over-year. With a joint venture partner, acquired one store for a total cost of $22.4 million, of which the Company invested $4.1 million Added 16 stores (12 net) to the Company’s third-party management platform. Joe Saffire, the Company’s Chief Executive Officer, stated, “The Life Storage team continues to fire on all cylinders with this quarter marking the 10th straight quarter in which we achieved double-digit adjusted FFO growth. I couldn’t be prouder of what the team has accomplished.” FINANCIAL RESULTS: In the first quarter of 2023, the Company generated net income attributable to common shareholders of $81.6 million, or $0.96 per fully diluted common share, compared to net income attributable to common shareholders of $73.6 million, or $0.88 per fully diluted common share, in the first quarter of 2022. Funds from operations for the quarter were $1.54 per fully diluted common share compared to $1.44 for the same period last year. Adjusted FFO per fully diluted common share for the quarter was $1.63 after adjusting for a net total of $7.4 million in merger related costs, gain on sale of non-real estate assets, non-controlling interest, and acquisition fees, compared to $1.44 for the same period last year. OPERATIONS: Revenues for the 664 stabilized stores wholly owned by the Company since December 31, 2021 increased 10.5% in the first quarter of 2023 compared to the same quarter of 2022. The increase largely resulted from the impact of a 13.6% increase in realized rental rates. Same store operating expenses increased 5.2% for the first quarter of 2023 compared to the prior year period, primarily the result of higher real estate taxes, office and other operating expenses, and payroll and benefits. Same store NOI increased 12.8% in the first quarter of 2023 as compared to the first quarter of 2022. General and administrative expenses for the quarter ended March 31, 2023 were impacted by $8.3 million of merger related costs. During the first quarter of 2023, the Company achieved 9% or greater same store revenue growth in 25 of its 38 major markets. Overall, the markets with the strongest positive revenue impact were Los Angeles, CA; Miami, FL; Dallas, TX; Orlando, FL; and Tampa, FL. PORTFOLIO TRANSACTIONS: Joint Venture Portfolio During the quarter, the Company with a joint venture partner acquired one store in New Jersey for a total purchase price of $22.4 million, of which the Company invested $4.1 million. Subsequent to March 31, 2023, the Company and a joint venture partner acquired four self-storage facilities in New York for a total purchase price of $150.0 million, of which the Company invested $15.1 million. THIRD-PARTY MANAGEMENT: During the quarter, the Company added 16 stores (12 net) to its third-party management platform. As of quarter end, the Company managed 452 facilities in total, including those in which it owns a noncontrolling interest. FINANCIAL POSITION: At March 31, 2023, the Company had approximately $32.8 million of cash on hand, and approximately $631 million available on its line of credit. Below are key financial ratios as of March 31, 2023: • Debt to Enterprise Value (at $131.09/share) 23.1% • Debt to Book Cost of Storage Facilities 39.6% • Debt to Recurring Annualized EBITDA 4.9x • Debt Service Coverage 5.2x COMMON STOCK DIVIDEND: Subsequent to quarter end, the Company’s Board of Directors approved a quarterly dividend of $1.20 per share, or $4.80 annualized. The dividend was paid on April 26, 2023 to shareholders of record on April 14, 2023. YEAR 2023 EARNINGS GUIDANCE: The Company maintains its previously announced earnings guidance for fiscal 2023. The following assumptions covering operations have been utilized in formulating guidance for 2023: Year 2023 Earnings Guidance Current Guidance Range (1) Same Store Revenue 4.00% - 5.50% Same Store Operating Costs (excluding property taxes) 4.00% - 5.00% Same Store Property Taxes 6.25% - 7.25% Total Same Store Operating Expenses 4.75% - 6.25% Same Store Net Operating Income 3.75% - 5.25% General & Administrative $76M - $78M Expansions & Enhancements $65M - $75M Capital Expenditures $30M - $35M Wholly Owned Acquisitions $150M - $250M Joint Venture Investments $50M - $100M Adjusted Funds from Operations per Share $6.75 - $6.95 Reconciliation of Guidance 2Q 2023 Range or Value FY 2023 Range or Value Earnings per share attributable to common shareholders - diluted $1.12 - $1.16 $4.42 - $4.62 Plus: real estate depreciation and amortization 0.58 - 0.58 2.33 - 2.33 Adjusted FFO per share $1.70 - $1.74 $6.75 - $6.95 (1) Guidance does not reflect the impact of fees and other costs incurred or expected to be incurred by the Company in connection with its response to Public Storage’s unsolicited proposal or the pending merger with Extra Space Storage. The Company’s 2023 same store pool consists of the 664 stabilized stores wholly owned since December 31, 2021. Forty-four of the stores purchased through March 31, 2023, 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 second year after the stores achieve 80% sustained occupancy using market rates and incentives. FORWARD LOOKING STATEMENTS: When used herein, 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. All forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained herein. Any forward-looking statements should be considered in light of the risks referenced in the “Risk Factors” section included in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Such factors include, but are not limited to: adverse changes in general economic conditions, the real estate industry and in the markets in which we operate; risks associated with our ability to consummate the Mergers with Extra Space and the timing and closing of the Mergers including, among other things, the ability of the Company to obtain shareholder approval required to consummate the Mergers, the satisfaction or waiver of other conditions to closing in the Merger Agreement, unanticipated difficulties or expenditures relating to the Mergers, potential difficulties in employee retention as a result of the Mergers, the occurrence of any event, change or other circumstances that could give rise to the termination of the Mergers and the outcome of legal proceedings instituted against the Company, its directors and others related to the Mergers; the effect of competition from new self-storage facilities or other storage alternatives, which would cause rents and occupancy rates to decline; impacts from the COVID-19 pandemic or the future outbreak of other highly infectious or contagious diseases on the U.S., regional and global economies and our financial condition and results of operations; potential liability for uninsured losses and environmental contamination; the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing real estate investment trusts (“REITs”), tenant reinsurance and other aspects of our business, which could adversely affect our results; loss of key personnel; the Company’s ability to evaluate, finance and integrate acquired self-storage facilities on expected terms into the Company’s existing business and operations; the Company’s ability to effectively compete in the industry in which it does business; disruptions in credit and financial markets and resulting difficulties in raising capital or obtaining credit at reasonable rates or at all, which could impede our ability to grow; 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 increase, impacting costs associated with the Company’s outstanding floating rate debt, if any, and impacting the Company’s ability to comply with debt covenants; exposure to litigation or other claims; risks associated with breaches of our data security; the regional concentration of the Company's business may subject the Company to economic downturns in the states of Florida and Texas; the Company’s cash flow may be insufficient to meet required payments of operating expenses, principal, interest and dividends; and failure to maintain our REIT status for U.S. federal income purposes, including tax law changes that may change the taxability of future income. The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our securities. CONFERENCE CALL: Life Storage will hold its First Quarter Earnings Release Conference Call at 9:00 a.m. Eastern Time on Wednesday, May 3, 2023. 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 888.506.0062 (domestic) or 973.528.0011 (international); passcode 444471 or request to be joined into the Life Storage call. 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 a period of 90 days; a telephone replay will also be available for 14 days by calling 877.481.4010 and entering passcode 48170. 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. Located in Buffalo, New York, the Company operates more than 1,200 storage facilities in 37 states and the District of Columbia. The Company serves both residential and commercial storage customers with storage units rented by month. Life Storage consistently provides responsive service to more than 690,000 customers, making it a leader in the industry. For more information visit https://invest.lifestorage.com/. Life Storage, Inc. Balance Sheet Data (unaudited) March 31, December 31, (dollars in thousands) 2023 2022 Assets Investment in storage facilities: Land $ 1,309,475 $ 1,307,425 Building, equipment and construction in progress 6,886,522 6,864,381 8,195,997 8,171,806 Less: accumulated depreciation (1,215,348 ) (1,170,520 ) Investment in storage facilities, net 6,980,649 7,001,286 Cash and cash equivalents 32,765 24,406 Accounts receivable 23,281 24,153 Receivable from joint ventures 795 1,562 Investment in joint ventures 276,436 275,190 Prepaid expenses 14,165 10,363 Intangible asset - in-place customer leases 2,159 4,212 Trade name 16,500 16,500 Other assets 29,804 30,058 Total Assets $ 7,376,554 $ 7,387,730 Liabilities Line of credit $ 619,000 $ 595,000 Term notes, net 2,752,580 2,751,632 Accounts payable and accrued liabilities 136,409 148,130 Deferred revenue 34,530 33,192 Mortgages payable 32,466 36,258 Total Liabilities 3,574,985 3,564,212 Noncontrolling redeemable Preferred Operating Partnership Units at redemption value 30,090 89,077 Noncontrolling redeemable Common Operating Partnership Units 201,373 107,074 Equity Common stock 851 850 Additional paid-in capital 3,884,890 3,886,317 Accumulated deficit (317,570 ) (261,510 ) Accumulated other comprehensive loss (2,978 ) (3,207 ) Total Shareholders' Equity 3,565,193 3,622,450 Noncontrolling interest in consolidated subsidiary 4,913 4,917 Total Equity 3,570,106 3,627,367 Total Liabilities and Equity $ 7,376,554 $ 7,387,730 Life Storage, Inc. Consolidated Statements of Operations (unaudited) January 1, 2023 January 1, 2022 to to (dollars in thousands, except share data) March 31, 2023 March 31, 2022 Revenues Rental income $ 240,483 $ 205,509 Tenant reinsurance 20,291 17,267 Other operating income 5,895 4,858 Management and acquisition fee income 6,933 5,856 Total operating revenues 273,602 233,490 Expenses Property operations and maintenance 47,306 42,368 Tenant reinsurance 9,220 6,847 Real estate taxes 27,437 24,523 General and administrative 27,818 15,826 Depreciation and amortization 45,716 40,795 Amortization of in-place customer leases 2,053 5,606 Total operating expenses 159,550 135,965 Gain on sale of non-real estate assets 686 - Income from operations 114,738 97,525 Other income (expense) Interest expense (A) (33,113 ) (24,240 ) Interest and dividend income 12 15 Equity in income of joint ventures 1,629 2,118 Net income 83,266 75,418 Net income attributable to noncontrolling preferred interests in the Operating Partnership (330 ) (996 ) Net income attributable to noncontrolling common interests in the Operating Partnership (1,333 ) (847 ) Net loss attributable to noncontrolling common interests in consolidated subsidiary 5 - Net income attributable to common shareholders $ 81,608 $ 73,575 Earnings per common share attributable to common shareholders - basic $ 0.96 $ 0.88 Earnings per common share attributable to common shareholders - diluted $ 0.96 $ 0.88 Common shares used in basic earnings per share calculation 84,935,860 83,644,426 Common shares used in diluted earnings per share calculation 85,378,412 83,837,773 Dividends declared per common share $ 1.2000 $ 1.0000 (A) Interest expense for the period ending March 31 consists of the following Interest expense $ 32,173 $ 23,510 Amortization of debt issuance costs 940 730 Total interest expense $ 33,113 $ 24,240 Life Storage, Inc. Computation of Funds From Operations (FFO) (1) (unaudited) January 1, 2023 January 1, 2022 to to (dollars in thousands, except share data) March 31, 2023 March 31, 2022 Net income attributable to common shareholders $ 81,608 $ 73,575 Noncontrolling common interests in the Operating Partnership 1,333 847 Noncontrolling preferred interests in the Operating Partnership during conversion period 330 - Depreciation of real estate and amortization of intangible assets exclusive of debt issuance costs 47,573 45,866 Depreciation and amortization from unconsolidated joint ventures 3,187 1,802 Funds from operations allocable to noncontrolling interest in Operating Partnership (2,154 ) (1,389 ) Funds from operations available to common shareholders 131,877 120,701 FFO per share - diluted $ 1.54 $ 1.44 Adjustments to FFO Gain on sale of non-real estate assets (686 ) (40 ) Merger related costs 8,314 - Acquisition fee (90 ) - Funds from operations resulting from non-recurring items allocable to noncontrolling interest in Operating Partnership (121 ) - Adjusted funds from operations available to common shareholders 139,294 120,661 Adjusted FFO per share - diluted $ 1.63 $ 1.44 Common shares - diluted 85,378,412 83,837,773 Life Storage, Inc. Computation of Net Operating Income (2) (unaudited) January 1, 2023 January 1, 2022 to to (dollars in thousands) March 31, 2023 March 31, 2022 Net Income $ 83,266 $ 75,418 General and administrative 27,818 15,826 Depreciation and amortization 47,769 46,401 Interest expense 33,113 24,240 Interest and dividend income (12 ) (15 ) Equity in income of joint ventures (1,629 ) (2,118 ) Net operating income $ 190,325 $ 159,752 Same store (4) $ 152,523 $ 135,169 Net operating income related to tenant reinsurance 11,071 10,420 Other stores, management fee income, and gain on sale of non-real estate assets 26,731 14,163 Total net operating income $ 190,325 $ 159,752 Life Storage, Inc. Quarterly Same Store Data (3) (4) 664 mature stores owned since 12/31/21 (unaudited) January 1, 2023 January 1, 2022 to to Percentage (dollars in thousands) March 31, 2023 March 31, 2022 Change Change Revenues: Rental income $ 211,534 $ 190,883 $ 20,651 10.8 % Other operating income 1,746 2,062 (316 ) -15.3 % Total operating revenues 213,280 192,945 20,335 10.5 % Expenses: Payroll and benefits 12,754 12,368 386 3.1 % Real estate taxes 23,613 22,418 1,195 5.3 % Utilities 5,413 5,083 330 6.5 % Repairs and maintenance 6,295 5,995 300 5.0 % Office and other operating expense 5,782 5,342 440 8.2 % Insurance 2,250 2,045 205 10.0 % Advertising - 60 (60 ) -100.0 % Internet marketing 4,650 4,465 185 4.1 % Total operating expenses 60,757 57,776 2,981 5.2 % Net operating income (2) $ 152,523 $ 135,169 $ 17,354 12.8 % QTD Same store move ins 58,659 58,042 617 QTD Same store move outs 61,161 57,040 4,121 Other Comparable Quarterly Same Store Data (4) (unaudited) January 1, 2023 January 1, 2022 to to Percentage March 31, 2023 March 31, 2022 Change Change 2022 Same store pool (576 stores) Revenues $ 187,786 $ 170,458 $ 17,328 10.2 % Expenses 52,953 50,521 2,432 4.8 % Net operating income $ 134,833 $ 119,937 $ 14,896 12.4 % 2021 Same store pool (526 stores) Revenues $ 169,911 $ 154,662 $ 15,249 9.9 % Expenses 48,078 45,854 2,224 4.9 % Net operating income $ 121,833 $ 108,808 $ 13,025 12.0 % Life Storage, Inc. Other Data - unaudited Same Store (3) All Stores (5) 2023 2022 2023 2022 Weighted average quarterly occupancy 90.7 % 93.5 % 90.0 % 93.0 % Occupancy at March 31 90.4 % 93.6 % 89.5 % 92.9 % Rent per occupied square foot $19.31 $17.00 $19.22 $16.98 Life Storage, Inc. Other Data - unaudited (continued) Investment in Storage Facilities: (unaudited) The following summarizes activity in storage facilities during the three months ended March 31, 2023: Beginning balance $ 8,171,806 Wholly owned property acquisitions - Improvements and equipment additions: Expansions 14,426 Roofing, paving, and equipment: Stabilized stores 7,513 Recently acquired stores 426 Change in construction in progress (Total CIP $46.5 million) 3,232 Dispositions and Impairments (1,406 ) Storage facilities at cost at period end $ 8,195,997 Comparison of Selected G&A Costs (unaudited) Quarter Ended March 31, 2023 March 31, 2022 Management and administrative salaries and benefits $ 11,229 $ 9,911 Training 271 136 Call center 1,224 840 Life Storage Solutions costs 814 345 Income taxes 931 358 Legal, accounting and professional 1,167 1,101 Merger related costs 8,314 - Other administrative expenses (6) 3,868 3,135 $ 27,818 $ 15,826 Net rentable square feet March 31, 2023 Wholly owned properties 55,526,370 Joint venture properties 10,642,430 Third party managed properties 23,692,267 89,861,067 March 31, 2023 March 31, 2022 Common shares outstanding 85,061,573 84,307,259 Common Operating Partnership Units outstanding 1,602,323 960,208 (1) 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. (2) 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, operating lease expenses, depreciation and amortization expense, any losses on sale of real estate, acquisition related costs, general and administrative expense, and deducting from net income: income from discontinued operations, interest income, any gains 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 in 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. (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) Revenues and expenses do not include items related to tenant reinsurance. (5) Does not include unconsolidated joint venture stores or other stores managed by the Company. (6) Other administrative expenses include office rent, travel expense, investor relations and miscellaneous other expenses. View source version on businesswire.com: https://www.businesswire.com/news/home/20230502005951/en/
