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Life Storage, Inc. $80.70($.28)(.35%)

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 Life Storage, Inc. Reports First Quarter 2017 Results
   Wednesday, May 03, 2017 4:05:08 PM ET

Life Storage, Inc. (LSI ) a self storage real estate investment trust (REIT), reported operating results for the quarter ended March 31, 2017.

The Company had earnings in the first quarter of 2017 of $20.4 million or $0.44 per fully diluted common share. This compares to earnings of $28.3 million in the first quarter of 2016, or $0.73 per fully diluted common share.

Funds from operations for the quarter were $1.26 per fully diluted common share compared to $1.16 for the same period last year. Absent $2.4 million of acquisition related costs in the first quarter of 2016, adjusted FFO per fully diluted common share was $1.26 and $1.22 for the quarters ended March 31, 2017 and 2016, respectively.

Highlights for the 1st Quarter Included:

-- Increased same store revenue by 3.2% and net operating income ("NOI")(1) by 3.2% as compared to the first quarter of 2016.

-- Grew same store average occupancy for the quarter by 20 basis points to 90.6% compared to the same period in 2016. The Company ended the quarter at 90.9% occupied, tying its first quarter all-time high record.

-- Added 15 stores to its third party management platform including five purchased on behalf of two of its joint ventures.

-- As of April 30th, the Company has essentially completed its renaming/rebranding process, with all but seven of its 675 owned and/or managed properties now featuring new "Life Storage" signage, complete with LED lighting and providing much better visibility. Other changeover tasks, such as issuance of new store manager apparel, installation of point of sale signage, and implementation of new lease forms have also been completed. The overall cost of rebranding came in slightly under the previously projected $22 million. The new brand name is being received well by current and prospective customers alike; a recently released video series titled The Things We Keep Because, had over one million views within three weeks on social media.

-- Achieved adjusted funds from operations ("FFO")(2) per fully diluted common share of $1.26.

-- Paid a quarterly dividend of $0.95 per share of common stock. Subsequent to the end of the quarter, the Company increased its quarterly dividend from $0.95 to $1.00 per common share.

OPERATIONS:

Total revenues increased 29.5% over last year’s first quarter while operating costs increased 32.4%, resulting in an NOI increase of 28.0%.

Revenues for the 435 stabilized stores wholly owned by the Company since December 31, 2015 increased 3.2% from those of the first quarter of 2016, the result of a 20 basis point increase in average occupancy, a 2.7% increase in rental rates and increases in tenant insurance administrative fees.

Same store operating expenses increased 3.2% for the first quarter of 2017 compared to the prior year period. Property taxes, employee benefit expenses and internet advertising costs contributed most significantly to the expense growth.

Consequently, same store NOI this period increased 3.2% over the first quarter of 2016.

General and administrative expenses increased by approximately $1.0 million over the same period in 2016, the result of costs associated with operating 113 additional stores in 2017 over the same period in 2016, and expenses incurred with the Company’s change of name.

The Company enjoyed same store revenue growth in 24 of the 30 major markets in its same store pool, with only five having an average quarterly occupancy lower than 90%. Markets with the strongest positive impact included all major markets in Florida; Atlanta, GA; and St. Louis, MO.

Houston and Beaumont, TX, while retaining strong occupancy, showed slightly negative growth. The Company remains strongly committed to its presence in all four major Texas markets despite what is felt to be a temporarily over-built point in the cycle.

PROPERTIES:

During the quarter, the Company acquired one property in Chicago, IL. The facility, which is approximately 78,000 sq. ft., was acquired for $10.1 million upon issuance of a certificate of occupancy.

Also during the quarter, 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 total cost of the properties was $135.5 million and the Company’s contributions totaled $19.8 million.

While no new purchase agreements were executed during the quarter, the Company remains in contract on a certificate of occupancy store anticipated to close in late 2017. The property is located in Charlotte, NC and the purchase price is $12.4 million. In addition, one of the Company’s joint ventures was under contract to acquire three properties for an aggregate purchase price of $59.2 million, of which the Company is committed to contribute a total of $11.8 million.

CAPITAL TRANSACTIONS:

Illustrated below are key financial ratios at March 31, 2017:                                                                                                   
          -- Debt to Enterprise Value (at $82.12/share)                                                                                                          30.9%
                                                                                                         -- Debt to Book Cost of Storage Facilities                                                                                                             40.1%
                                                                                                         -- Debt to Recurring Annualized EBITDA                                                                                                                  5.8x
                                                                                                         -- Debt Service Coverage                                                                                                                                5.0x

At March 31, 2017, the Company had approximately $4.8 million of cash on hand, and $201 million available on its line of credit.

In January, the Company issued approximately 52,304 shares at a price of $80.62 through its Dividend Reinvestment Plan.

COMMON STOCK DIVIDEND:

Subsequent to quarter-end, the Company’s Board of Directors approved a quarterly dividend of $1.00 per share or $4.00 annualized. This represents an increase of $0.05 per share per quarter (5.3%) over the prior quarters’ dividend.

YEAR 2017 EARNINGS GUIDANCE:

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

                                              
                                                                                                                               Same Store
                                                                                                                      Projected Increases Over 2016
                                                                                     ----------------------------------------------------------------------------------------------
                                                                                               2Q 2017                       FY 2017
                                                                                     -------------------------                                           -------------------------
Revenue                                                                               1.50 - 2.50%                                           2.00 - 3.00%
Operating Costs (excluding property taxes)                                            3.50 - 4.50%                                           2.00 - 3.00%
Property Taxes                                                                        5.00 - 6.00%                                           6.50 - 7.50%
                                                                                     -------------------------                                           -------------------------
Total Operating Expenses                                                              4.00 - 5.00%                                           3.50 - 4.50%
Net Operating Income                                                                  0.50 - 1.50%                                           1.50 - 2.50%
                                                                                                                                                          

Results of operations were essentially as anticipated during the first quarter, but occupancy momentum fell short of expectations, and the Company now expects a significantly greater use of leasing incentives. Accordingly, guidance for full year same store revenue and NOI growth has been reduced.

However, the Company has seen improvement in other facets of its business that it expects will be accretive to FFO growth in 2017, including:

-- An increase in fees earned from 3rd party management contracts. The Company has negotiated 15 such contracts during the quarter, and has developed a significant queue of prospects.

-- Contributions from newly formed - and to be formed - joint ventures, adding mature properties to the Company’s portfolio in markets in which it currently operates.

-- Strong lease-up and NOI improvement at the 12 certificate of occupancy developments it has acquired over the past three years, as well as the 11 yet to be stabilized stores that were a part of the LifeStorage acquisition.

-- Plans to complete $30 - $35 million of expansions in 2017 with expected yields in excess of 8% at stabilization.

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%.

As of March 31, 2017, the Company operated 12 self storage facilities that it acquired between 2014 and 2017 upon issuance of certificate of occupancy or in the early stages of lease-up. Further, it is expected to acquire one more such certificate of occupancy facility in 2017 and is in negotiations to lease a second. 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.

As a result of the above assumptions, management expects adjusted funds from operations for the full year 2017 to be approximately $5.47 to $5.53 per share, and between $1.32 and $1.38 per share for the second quarter of 2017.

                   Reconciliation of Guidance                               2Q 2017                 FY 2017
                                                                                                                                                                                                                
                                                                                                                                 Range or Value                                                                   Range or Value
                                                                                                                                ---------------                                                                --------------------
Earnings per share attributable to common shareholders - diluted                                                                 $ 0.53 - $ 0.59                                                                  $ 2.80 - $ 2.86
Plus: real estate depreciation and amortization                                                                                    0.79 - 0.79                                                                      2.67 - 2.67
                                                                                                                                ---------------                                                                --------------------
FFO per share                                                                                                                    $ 1.32 - $ 1.38                                                                  $ 5.47 - $ 5.53
                                                                                                                                ===============                                                                ====================
                                                                                                                                                                                                                

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 First Quarter Earnings Release Conference Call at 9:00 a.m. Eastern Time on Thursday, May 4, 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 10314.

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. 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
                                                                                                                                                                                                                                    
                                                                                                                                                           March 31,
                                                                                                                                                             2017                                                                                      December 31,
(dollars in thousands)                                                                           (unaudited)                                                2016
--------------------------------------------------------------------- -------------------- -------------------- -------------------- ------------------------------------------------------------------------ -------------------- ----------------------------------------------------
Assets
  Investment in storage facilities:
     Land                                                                                                                                               $   787,535                                                                                   $   786,764
     Building, equipment and construction in progress                                                                                  3,479,833                                               3,456,544  
                                                                                                                                     -------------------- --------- --------------------                                           -------------------- --------- --------------------
                                                                                                                                                          4,267,368                                                                                     4,243,308
     Less: accumulated depreciation                                                                                                     (553,758 )                                                                 (535,704 )
                                                                                                                                     -------------------- --------- --------------------                                           -------------------- --------- --------------------
  Investment in storage facilities, net                                                                                                                   3,713,610                                                                                     3,707,604
  Cash and cash equivalents                                                                                                                                   4,819                                                                                        23,685
  Accounts receivable                                                                                                                                         5,750                                                                                         5,469
  Receivable from joint venture                                                                                                                               1,296                                                                                         1,223
  Investment in joint venture                                                                                                                                89,046                                                                                        67,300
  Prepaid expenses                                                                                                                                           10,422                                                                                         6,649
  Intangible asset - in-place customer leases (net of accumulated
      amortization of $63,560 in 2016 and $50,782 in 2016)                                                                                                   12,051                                                                                        24,830
  Trade name                                                                                                                                                 16,500                                                                                        16,500
  Other assets                                                                                                                             4,139                                                   4,724  
                                                                                                                                     -------------------- --------- --------------------                                           -------------------- --------- --------------------
     Total Assets                                                                                                                                       $ 3,857,633                                                                $ 3,857,984  
                                                                                                                                     ==================== ========= ====================                                           ==================== ========= ====================
                                                                                                                                                                                                                                    
Liabilities
  Line of credit                                                                                                                                        $   299,000                                                                                   $   253,000
  Term notes, net                                                                                                                                         1,387,953                                                                                     1,387,525
  Accounts payable and accrued liabilities                                                                                                                   45,787                                                                                        75,132
  Deferred revenue                                                                                                                                            9,748                                                                                         9,700
  Fair value of interest rate swap agreements                                                                                                                11,585                                                                                        13,015
  Mortgages payable                                                                                                                       12,938                                                  13,027  
                                                                                                                                     -------------------- --------- --------------------                                           -------------------- --------- --------------------
     Total Liabilities                                                                                                                                    1,767,011                                                                                     1,751,399
                                                                                                                                                                                                                                    
  Noncontrolling redeemable Operating Partnership Units at redemption                                                                                        18,120                                                                                        18,091
  value
                                                                                                                                                                                                                                    
Equity
  Common stock                                                                                                                                                  465                                                                                           464
  Additional paid-in capital                                                                                                                              2,354,398                                                                                     2,348,567
  Accumulated deficit                                                                                                                                      (262,508 )                                                                                    (239,062 )
  Accumulated other comprehensive loss                                                                                                   (19,853 )                                                                  (21,475 )
                                                                                                                                     -------------------- --------- --------------------                                           -------------------- --------- --------------------
     Total Shareholders’ Equity                                                                                                        2,072,502                                               2,088,494  
                                                                                                                                     -------------------- --------- --------------------                                           -------------------- --------- --------------------
  Total Liabilities and Shareholders’ Equity                                                                                                            $ 3,857,633                                                                $ 3,857,984  
                                                                                                                                     ==================== ========= ====================                                           ==================== ========= ====================
                                                                                                                                                                                                                                                                   
Life Storage, Inc.                                                                                                            
Consolidated Statements of Operations
(unaudited)
                                                                                                                                                  January 1, 2017                                                                                January 1, 2016
                                                                                                                                                        to                                                                                             to
(dollars in thousands, except share data)                                                                                                         March 31, 2017                                           March 31, 2016
                                                                                                                               ------------------------------------------------------------------------- -------------------- -----------------------------------------------------
                                                                                                                                                                                                                               
Revenues
  Rental income                                                                                                                                   $    118,594                                                                                   $     91,541
  Other operating income                                                                                                                                 7,908                                                                                          6,148
  Management fee income                                                                                                               1,818                                                    1,435  
                                                                                                                               -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
     Total operating revenues                                                                                                                          128,320                                                                                         99,124
                                                                                                                                                                                                                               
Expenses
  Property operations and maintenance                                                                                                                   29,796                                                                                         22,861
  Real estate taxes                                                                                                                                     14,435                                                                                         10,547
  General and administrative                                                                                                                            11,436                                                                                         10,464
  Acquisition related costs                                                                                                                                  -                                                                                          2,384
  Depreciation and amortization                                                                                                                         24,864                                                                                         15,251
  Amortization of in-place customer leases                                                                                           12,778                                                    1,174  
                                                                                                                               -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
     Total operating expenses                                                                                                        93,309                                                   62,681  
                                                                                                                               -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
                                                                                                                                                                                                                               
Income from operations                                                                                                                                  35,011                                                                                         36,443
                                                                                                                                                                                                                               
Other income (expense)
  Interest expense (A)                                                                                                                                 (15,210 )                                                                                       (9,134 )
  Interest income                                                                                                                                            3                                                                                              6
  Equity in income of joint ventures                                                                                                    721                                                      915  
                                                                                                                               -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
                                                                                                                                                                                                                               
Net income                                                                                                                                              20,525                                                                                         28,230
  Noncontrolling interests in the Operating Partnership                                                                                                    (96 )                                                                                         (130 )
  Noncontrolling interests in consolidated subsidiaries                                                                                   -                                                      239  
                                                                                                                               -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
Net income attributable to common shareholders                                                                                                    $     20,429                                                                $     28,339  
                                                                                                                               ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                                               
Earnings per common share attributable to common shareholders -                                                                                   $       0.44                                                                $       0.74  
basic
                                                                                                                               ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                                               
Earnings per common share attributable to common shareholders -                                                                                   $       0.44                                                                $       0.73  
diluted
                                                                                                                               ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                                               
Common shares used in basic
    earnings per share calculation                                                                                                                  46,304,568                                                                                     38,410,817
                                                                                                                                                                                                                               
Common shares used in diluted
    earnings per share calculation                                                                                                                  46,418,891                                                                                     38,663,138
                                                                                                                                                                                                                               
Dividends declared per common share                                                                                                               $       0.95                                                                $       0.85  
                                                                                                                               ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                                               
                                                                                                                                                                                                                               
(A) Interest expense for the period ending March 31 consists of
the following
     Interest expense                                                                                                                             $     14,690                                                                                   $      8,778
     Amortization of debt issuance costs                                                                                                520                                                      356  
                                                                                                                               -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
Total interest expense                                                                                                                            $     15,210                                                                $      9,134  
                                                                                                                               ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                                                                               
Life Storage, Inc.                                                                                                             
Computation of Funds From Operations (FFO) (2)
(unaudited)
                                                                                                                                                   January 1, 2017                                                                                January 1, 2016
                                                                                                                                                         to                                                                                             to
(dollars in thousands, except share data)                                                 March 31, 2017                                           March 31, 2016
---------------------------------------------------------------- -------------------- -------------------- -------------------- ------------------------------------------------------------------------- -------------------- -----------------------------------------------------
                                                                                                                                                                                                                                
Net income attributable to common shareholders                                                                                                     $     20,429                                                                                   $     28,339
Noncontrolling interests in the Operating Partnership                                                                                                        96                                                                                            130
Depreciation of real estate and amortization of intangible
  assets exclusive of debt issuance costs                                                                                                                37,265                                                                                         16,034
Depreciation and amortization from unconsolidated joint ventures                                                                                            768                                                                                            573
Funds from operations allocable to noncontrolling
  interest in Operating Partnership                                                                                                     (273 )                                                                      (206 )
                                                                                                                                -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
Funds from operations available to common shareholders                                                                                58,285                                                   44,870  
                                                                                                                                ==================== ========== ====================                                           ==================== ========== ====================
FFO per share - diluted                                                                                                                            $       1.26                                                                                   $       1.16
                                                                                                                                                                                                                                
Adjustments to FFO
Acquisition costs expensed                                                                                                                                    -                                                                                          2,384
Funds from operations resulting from non-recurring items
  allocable to noncontrolling interest in Operating Partnership                                                                            -                                                      (11 )
                                                                                                                                -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
Adjusted funds from operations available to common shareholders                                                                       58,285                                                   47,243  
                                                                                                                                ==================== ========== ====================                                           ==================== ========== ====================
Adjusted FFO per share - diluted                                                                                                                   $       1.26                                                                                   $       1.22
                                                                                                                                                                                                                                
Common shares - diluted                                                                                                                              46,418,891                                                                                     38,663,138
                                                                                                                                                                                                                                                                
Life Storage, Inc.                                                                                                                                               
Quarterly Same Store Data (3) * 435
mature stores owned since 12/31/15
(unaudited)
                                                                                                                                                                                                                                                                                                                                              
                                                                                                           January 1, 2017                                                        January 1, 2016
                                                                                                                 to                                                                     to                                                                                                                                                        Percentage
(dollars in thousands)                            March 31, 2017                   March 31, 2016                                                                       Change                                 Change
------------------------------------ -------------------- -------------------- -------------------- ------------------------------------------------- -------------------- -----------------------------                                          --------------------------------------------------------------------- -------------------- ---------------------
                                                                                                                                                                                                                                                                                                                                              
Revenues:
  Rental income                                                                                                        $  88,429                                                              $  85,727                                                              $  2,702                                                                       3.2 %
  Tenant insurance                                                                                                         3,445                                                                  3,228                                                                   217                                                                       6.7 %
  Other operating income                                                                                1,369                                               1,428                                                (59 )                                                                    -4.1 %
                                                                                                    -------------------- -------                                           -------------------- -------                                           -------------------- ------ --------------------                                           ---------- ---------
     Total operating revenues                                                                                             93,243                                                                 90,383                                                                 2,860                                                                       3.2 %
                                                                                                                                                                                                                                                                                                                                              
Expenses:
  Payroll and benefits                                                                                                     8,017                                                                  7,679                                                                   338                                                                       4.4 %
  Real estate taxes                                                                                                       10,271                                                                  9,738                                                                   533                                                                       5.5 %
  Utilities                                                                                                                2,853                                                                  2,851                                                                     2                                                                       0.1 %
  Repairs and maintenance                                                                                                  3,709                                                                  3,653                                                                    56                                                                       1.5 %
  Office and other operating expense                                                                                       3,019                                                                  3,031                                                                   (12 )                                                                    -0.4 %
  Insurance                                                                                                                1,086                                                                  1,141                                                                   (55 )                                                                    -4.8 %
  Advertising & yellow pages                                                                                                 270                                                                    309                                                                   (39 )                                                                   -12.6 %
  Internet marketing                                                                                    1,913                                               1,781                                                132                                                    7.4 %
                                                                                                    -------------------- -------                                           -------------------- -------                                           -------------------- ------ --------------------                                           ---------- ---------
     Total operating expenses                                                                          31,138                                              30,183                                                955                                                    3.2 %
                                                                                                    -------------------- -------                                           -------------------- -------                                           -------------------- ------ --------------------                                           ---------- ---------
                                                                                                                                                                                                                                                                                                                                              
Net operating income (1)                                                                                               $  62,105                                                              $  60,200                                                              $  1,905                                                    3.2 %
                                                                                                    ==================== =======                                           ==================== =======                                           ==================== ====== ====================                                           ========== =========
                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                                              
QTD Same store move ins                                                                                                   39,321                                                                 41,380                                                                (2,059 )
                                                                                                                                                                                                                                                                                                                                              
QTD Same store move outs                                                                                                  37,059                                                                 38,286                                                                (1,227 )
                                                                                                                                                                                                                                                                                                                                              
Other Comparable Quarterly Same Store Data *
(unaudited)                                                                                                                                        
                                                                                                                   January 1, 2017                                                        January 1, 2016
                                                                                                                         to                                                                     to                                                                                                                                  Percentage
                                                                                                                   March 31, 2017                   March 31, 2016                                                            Change                      Change
                                                                                                            ------------------------------------------------- -------------------- -----------------------------                                          ----------------------------------------------- -------------------- ---------------------
Stores owned since 12/31/14 (417 stores)
Revenues                                                                                                                       $  89,228                                                              $  86,623                                                              $ 2,605                                                  3.0 %
Expenses                                                                                                       29,700                                              28,751                                               949                                                  3.3 %
                                                                                                            -------------------- -------                                           -------------------- -------                                           -------------------- -----                                           ---------- ---------
  Net operating income                                                                                                         $  59,528                                                              $  57,872                                                              $ 1,656                                                  2.9 %
                                                                                                            ==================== =======                                           ==================== =======                                           ==================== =====                                           ========== =========
                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                
Stores owned since 12/31/13 (389 stores)
Revenues                                                                                                                       $  81,628                                                              $  79,381                                                              $ 2,247                                                  2.8 %
Expenses                                                                                                       26,984                                              26,209                                               775                                                  3.0 %
                                                                                                            -------------------- -------                                           -------------------- -------                                           -------------------- -----                                           ---------- ---------
  Net operating income                                                                                                         $  54,644                                                              $  53,172                                                              $ 1,472                                                  2.8 %
                                                                                                            ==================== =======                                           ==================== =======                                           ==================== =====                                           ========== =========
                                                                                                                                                                                                                                                                                                                                
* See exhibit A for supplemental quarterly same store data.
                                              
Other Data - unaudited                                                      Same Store (3)                                                         All Stores (4)
                                                                                                             --------------------------------------------------------------                                          -------------------------------------------------------------------------
                                                                                                                2017          2016                                                2017               2016
                                                                                                             -------                                             -------                                             -------                                             ------------------
                                                                                                                                                                                                                                                                          
Weighted average quarterly occupancy                                                                            90.6 %                                              90.4 %                                              88.9 %                                                    89.9 %
                                                                                                                                                                                                                                                                          
Occupancy at March 31                                                                                           90.9 %                                              90.9 %                                              89.3 %                                                    90.0 %
                                                                                                                                                                                                                                                                          
Rent per occupied square foot                                                                                $ 13.23                                             $ 12.88                                             $ 13.48                                                  $  12.77
Investment in Storage Facilities: (unaudited)
---------------------------------------------
                                                                                                                                                                                                                                                                          
The following summarizes activity in storage facilities during the
period ended March 31, 2017:
                                                                                                                           
Beginning balance                                                                                                           $  4,243,308
  Property acquisitions                                                                                                           10,089
  Improvements and equipment additions:
      Expansions                                                                                                                   4,757
      Roofing, paving, and equipment:
          Stabilized stores                                                                                                       11,740
          Recently acquired stores                                                                                                 2,848
  Additions to consolidated subsidiary                                                                                                81
  Change in construction in progress (Total CIP $15.9 million)                                                                     1,391
  Dispositions and Impairments                                                                                 (6,846 )
                                                                                                         -------------------- ---------- --------------------
Storage facilities at cost at period end                                                                                    $  4,267,368  
                                                                                                         ==================== ========== ====================
                                                                                                                                                                                                         
                                                                                                                                                                                                         
Comparison of Selected G&A Costs (unaudited)                                                                                                                      Quarter Ended
--------------------------------------------------------------
                                                                                                                            March 31, 2017                                                                       March 31, 2016
                                                                                                         --------------------------------------------------                                             ------------------------------
                                                                                                                                                                                                         
Management and administrative salaries and benefits                                                                                6,409                                                                                          6,005
Training                                                                                                                             258                                                                                            269
Call center                                                                                                                          688                                                                                            520
Life Storage Solutions costs                                                                                                         166                                                                                            182
Income taxes                                                                                                                         300                                                                                            615
Legal, accounting and professional                                                                                                 1,134                                                                                            889
Name change                                                                                                                          726                                                                                              -
Other administrative expenses (5)                                                                               1,755                                                    1,984
                                                                                                         -------------------- ---------- --------------------                                           -------------------- ----------
                                                                                                                            $     11,436                                                                $     10,464
                                                                                                         ==================== ========== ====================                                           ==================== ==========
                                                                                                                                                                                                         
Net rentable square feet                                                                                                    March 31, 2017
--------------------------------------------------------------                                           --------------------------------------------------
Wholly owned properties                                                                                                       39,576,925
Joint venture properties                                                                                                       5,645,786
Third party managed properties                                                                              2,143,139  
                                                                                                         -------------------- ---------- --------------------
                                                                                                                              47,365,850
                                                                                                                                                                                                         
                                                                                                                            March 31, 2017                                                                       March 31, 2016
                                                                                                         --------------------------------------------------                                             ------------------------------
                                                                                                                                                                                                         
Common shares outstanding                                                                                                     46,496,065                                                                                     39,399,691
Operating Partnership Units outstanding                                                                                          217,481                                                                                        209,638
                                                                                                                                                                                                         
(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.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170503006466r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170503006466/en/

SOURCE: Life Storage, Inc."> <Property FormalName="PrimaryTwitterHandle" Value="@LifeStorage

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


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