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Life Storage, Inc. $80.98($.53)(.65%)

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 Life Storage, Inc. Reports Second Quarter 2017 Results; Announces $200 Million Share Repurchase Program; Adjusts 2017 Guidance
   Wednesday, August 02, 2017 4:07:04 PM ET

Life Storage, Inc. (LSI ) a leading national owner and operator of self storage properties, reported operating results for the quarter ended June 30, 2017.

Mr. David Rogers, Chief Executive Officer stated: "Our transformational shift to the Life Storage brand is gaining traction with Joint Venture partners and self storage facility owners seeking professional management. These external growth gains will enhance our free cash flow generation in the short-term, and in the long-term contribute to Life Storage’s efforts to grow market share with a low-risk capital commitment".

Mr. Rogers continued, "Operationally, we made meaningful gains in occupancy on a sequential basis due to a combination of increased internet marketing and incentives which should be a precursor to improved same store results over time, but we acknowledge this will take longer than initially anticipated. While the Company will face challenging comparables for the remainder of the year, our history as a strong and experienced operator gives us the confidence to effectively navigate through the current challenges as we continue to create additional value".



Highlights for the 2nd Quarter Included:

-- Achieved record-high second quarter occupancy of 92.8%, a 10 basis point improvement over the prior year.

-- Net Operating Income increased 21.6% over the prior year quarter.

-- Acquired, via joint venture, 18 high quality properties in the Company’s existing markets of Phoenix, AZ; Las Vegas, NV; and Los Angeles, CA; and two in a new market, Nashville, TN.

-- Entered into agreements to manage 17 additional stores that will come under the Life Storage banner at various points throughout 2017.

-- Paid a quarterly dividend of $1.00 per share of common stock.

Net income attributable to common shareholders in the second quarter of 2017 was $19.4 million or $0.42 per fully diluted share. This compares to net income attributable to common shareholders of $43.5 million in the second quarter of 2016, or $1.03 per fully diluted share.

Funds from operations for the quarter were $1.24 per fully diluted common share compared to $1.10 for the same period last year. Absent a $5.0 million loss related to the settlement of a legal action in the state of New Jersey, and an earned acquisition fee of $1.2 million related to one of the company’s joint ventures, adjusted FFO per fully diluted common share in the second quarter of 2017 was $1.33. Adjusted FFO for the second quarter of 2016 was $1.32 absent $9.0 million of acquisition related costs.

OPERATIONS:

Total revenues increased 24.1% over last year’s second quarter while operating costs increased 29.4%, resulting in an NOI increase of 21.6%.

Revenues for the 435 stabilized stores wholly owned by the Company since December 31, 2015 increased 1.4% from those in the second quarter of 2016, resulting from a modest growth in rental rates and increases in tenant insurance administrative fees. Same store expenses rose 5.6% as compared to the prior year, primarily due to a 5.5% increase in property taxes and a 42.6% increase in internet advertising costs.

The additional investment in internet advertising costs in the quarter were incurred to support the Company’s online brand transition, given the shift to Life Storage from the Uncle Bob’s brand. It is now anticipated that additional investment will be required to support the ongoing re-branding effort through at least the end of 2017. The Company produced same store revenue growth in 21 of its 30 major markets. Overall, the markets with the strongest revenue impact were Atlanta, GA, the Space Coast and Miami, FL. The market with the most challenged same store revenue was Houston, TX.

Same store NOI this period decreased 0.6% over the second quarter of 2016 given a challenging prior year comparable coupled with continued weakness in certain Texas markets. General and administrative expenses increased by $5.8 million over the same period in 2016, as a result of a one-time, $5.0 million charge related to a legal settlement, and incremental costs associated with operating 134 additional stores in 2017 over the same period in 2016.

PROPERTIES:

During the quarter, two of the Company’s joint ventures acquired a total of 20 properties, 18 of which were previously announced: Phoenix, AZ (11), Las Vegas, NV (5), and Nashville, TN (2). Two additional stores located in Los Angeles, CA were also acquired for a joint venture during the quarter for an aggregate price of $26.9 million, of which the Company contributed $2.8 million. The Company earned a $1.2 million acquisition fee related to the above mentioned transactions.

Since January 1, 2017, the Company has added a total of 25 high-quality assets with an aggregate cost of approximately $492 million to its portfolio through joint ventures.

The Company now manages a total of 131 properties through its joint venture and third party management agreements.

At June 30, 2017, the Company was in contract to acquire three stores on behalf of one of its joint ventures for an aggregate purchase price of $39.0 million, of which the Company is committed to contribute a total of up to $7.8 million. These pending acquisitions are subject to further due diligence and closing conditions; therefore no assurance can be given that these properties will be purchased according to the terms described.

During the quarter, the Company entered into an agreement to lease one property in Austin, TX with an option to purchase the asset in 2020 at a price of $14.1 million. The property was leased at certificate of occupancy and contains approximately 60,000 net rentable square feet.

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.

BALANCE SHEET AND CAPITAL MARKETS:

Illustrated below are key financial ratios at June 30, 2017:
 
      -      Debt to Enterprise Value (at $74.10/share)                                       33.5%
                                                               -                                            Debt to Book Cost of Storage Facilities                                                                                                                                                                                                                                                                                                                                       40.7%
                                                               -                                            Debt to Recurring Annualized EBITDA                                                                                                                                                                                                                                                                                                                                           5.6x
                                                               -                                            Debt Service Coverage                                                                                                                                                                                                                                                                                                                                                         5.2x
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

At June 30, 2017, the Company had approximately $8.0 million of cash on hand, and $169 million available on its line of credit.

In April 2017, the Company issued approximately 66,352 shares at a price of $83.78 through its Dividend Reinvestment Plan.

The Company also announces that the Dividend Reinvestment Plan dated March 18, 2013, will be suspended temporarily for all investments after September 30, 2017, and until further notice.

SHARE REPURCHASE PROGRAM:

The Company’s Board of Directors authorized the repurchase of up to $200 million of the Company’s outstanding common shares. The extent to which the Company repurchases its shares, and the timing of any such purchases, will depend on a variety of factors including general business and market conditions and other corporate considerations. The Repurchase Program has no time limit and may be discontinued at any time. Repurchases may be made through open market, privately-negotiated, or other methods of acquiring shares. The Company intends to structure open market purchases to occur within pricing and volume requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

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.

YEAR 2017 EARNINGS GUIDANCE:

Pressure from new supply and the transition to the Life Storage brand resulted in higher than anticipated incentives and increased internet marketing expense. Although occupancy at June 30, 2017 improved over the prior year, the Company now expects that the increased internet marketing and the use of incentives will continue longer than originally anticipated. Accordingly, guidance for the full year same store revenue and NOI has been updated.

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

                                                          
                                                                                                                                                                                                                                                                          Same Store
                                                                                                                                                                                                                                                                  Projected Results Over 2016
                                                                                                                                                                                                                   --------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                               3Q 2017                            FY 2017
                                                                                                                                                                                                                   -----------------------------                                                                ---------------------------
                                                                                                         Revenue                                                                                                      0.00 - 1.00%                                                                   1.00 - 2.00%
                                                                                                         Operating Costs (excluding property taxes)                                                                   7.00 - 8.00%                                                                   5.00 - 6.00%
                                                                                                         Property Taxes                                                                                               7.00 - 8.00%                                                                   6.50 - 7.50%
                                                                                                                                                                                                                   -----------------------------                                                                ---------------------------
                                                                                                         Total Operating Expenses                                                                                     7.00 - 8.00%                                                                   5.00 - 6.00%
                                                                                                         Net Operating Income                                                                                       (3.00) - (2.00)%                                                                (1.00) - 0.00%
                                                                                                                                                                                                                                                                                                                 

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 37 such contracts since the beginning of the year, and has developed a significant queue of prospects.

-- Contributions from recently formed joint ventures and the addition of mature properties to the Company’s portfolio in markets in which it currently operates.

-- Strong lease-up and NOI improvement at the 11 yet to be stabilized stores that were a part of the Life Storage acquisition.

-- Plans to complete $30 to $40 million of expansions in 2017 with expected yields in excess of 8% at stabilization.

-- Increased occupancy which should lead to revenue growth as incentives for existing customers expire.

As of June 30, 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, and one certificate of occupancy property that is leased. Further, it is expected to acquire one more such certificate of occupancy facility in 2017. Although there is strong lease-up and NOI improvement at these certificate of occupancy facilities, they 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 the second half of 2017, it will incur such dilution to the extent of $0.01 to $0.03 per share due to the aforementioned acquisitions.

Outside of the one certificate of occupancy facility located in Charlotte, NC, the Company does not expect to acquire any additional properties in 2017.

As a result of the above assumptions, management expects adjusted funds from operations for the full year 2017 to be approximately $5.25 to $5.30 per share, and between $1.33 and $1.38 per share for the third quarter of 2017.

          Reconciliation of Guidance                                                        3Q 2017                            FY 2017
                                                                                                                                                                                                                                                Range or Value                                                                              Range or Value
                                                                                                                                                                                                                                         ----------------------------                                                                ----------------------------
                                                                                                         Earnings per share attributable to common shareholders - diluted                                                                $ 0.79 - $ 0.84                                                                $ 2.45 - $ 2.50
                                                                                                         Plus: real estate depreciation and amortization                                                                                     0.54 - 0.54                                                                    2.72 - 2.72
                                                                                                                                                                                                                                         ----------------------------                                                                ----------------------------
                                                                                                         FFO Per Share                                                                                                                       1.33 - 1.38                                                                    5.17 - 5.22
                                                                                                         Plus: Legal Settlement                                                                                                              0.00 - 0.00                                                                    0.11 - 0.11
                                                                                                         Less: Acquisition Fee                                                                                                               0.00 - 0.00                                                                (0.03) - (0.03)
                                                                                                                                                                                                                                         ----------------------------                                                                ----------------------------
                                                                                                         Adjusted FFO per share                                                                                                                       $ 1.33 - $ 1.38                                                                $ 5.25 - $ 5.30
                                                                                                                                                                                                                                         ============================                                                                ============================
                                                                                                                                                                                                                                                                                                                                      

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 Second Quarter Earnings Release Conference Call at 9:00 a.m. Eastern Time on Thursday, August 3, 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 16033.

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 is a leading national self storage owner and operator of approximately 700 facilities in 29 states. For more information, visit http://invest.lifestorage.com/ .

                                                                                                                               
                     Life Storage, Inc.
                     Balance Sheet Data
                                                                                                                                                                                          
                                                                                                                                      June 30,
                                                                                                                                        2017                                                                 December 31,
                     (dollars in thousands)                                                                       (unaudited)                                              2016
                     --------------------------------------------------------------------- -------------------- ------------------------------------------------------------------------ ----------------------------------------------------
                     Assets
                       Investment in storage facilities:
                          Land                                                                                                     $   786,539                                                              $   786,764
                          Building, equipment and construction in progress                                        3,503,193                          3,456,544  
                                                                                                                -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                     4,289,732                                                                4,243,308
                          Less: accumulated depreciation                                                           (578,388 )                                            (535,704 )
                                                                                                                -------------------- --------- --------------------                      -------------------- --------- --------------------
                       Investment in storage facilities, net                                                                         3,711,344                                                                3,707,604
                       Cash and cash equivalents                                                                                         7,998                                                                   23,685
                       Accounts receivable                                                                                               6,189                                                                    5,469
                       Receivable from joint venture                                                                                     1,022                                                                    1,223
                       Investment in joint venture                                                                                     132,524                                                                   67,300
                       Prepaid expenses                                                                                                  8,694                                                                    6,649
                       Intangible asset - in-place customer leases (net of accumulated
                           amortization of $75,479 in 2017 and $50,782 in 2016)                                                            133                                                                   24,830
                       Trade name                                                                                                       16,500                                                                   16,500
                       Other assets                                                                                   6,267                              4,724  
                                                                                                                -------------------- --------- --------------------                      -------------------- --------- --------------------
                          Total Assets                                                                                             $ 3,890,671                                           $ 3,857,984  
                                                                                                                ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                          
                     Liabilities
                       Line of credit                                                                                              $   331,000                                                              $   253,000
                       Term notes, net                                                                                               1,388,380                                                                1,387,525
                       Accounts payable and accrued liabilities                                                                         66,134                                                                   75,132
                       Deferred revenue                                                                                                 10,020                                                                    9,700
                       Fair value of interest rate swap agreements                                                                      11,526                                                                   13,015
                       Mortgages payable                                                                             12,852                             13,027  
                                                                                                                -------------------- --------- --------------------                      -------------------- --------- --------------------
                          Total Liabilities                                                                                          1,819,912                                                                1,751,399
                                                                                                                                                                                          
                       Noncontrolling redeemable Operating Partnership Units at redemption                                              16,459                                                                   18,091
                       value
                                                                                                                                                                                          
                     Equity
                       Common stock                                                                                                        466                                                                      464
                       Additional paid-in capital                                                                                    2,361,579                                                                2,348,567
                       Accumulated deficit                                                                                            (288,129 )                                                               (239,062 )
                       Accumulated other comprehensive loss                                                         (19,616 )                                             (21,475 )
                                                                                                                -------------------- --------- --------------------                      -------------------- --------- --------------------
                          Total Shareholders’ Equity                                                              2,054,300                          2,088,494  
                                                                                                                -------------------- --------- --------------------                      -------------------- --------- --------------------
                       Total Liabilities and Shareholders’ Equity                                                                  $ 3,890,671                                           $ 3,857,984  
                                                                                                                ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                      
Life Storage, Inc.
Consolidated Statements of Operations
(unaudited)
                                                                                                         April 1, 2017                                                             April 1, 2016                                                            January 1, 2017                                                           January 1, 2016
                                                                                                              to                                                                        to                                                                        to                                                                        to
(dollars in thousands, except share data)                                                                June 30, 2017                                          June 30, 2016                                                             June 30, 2017                                          June 30, 2016
                                                                                     ------------------------------------------------------------------------- -----------------------------------------------------                     ------------------------------------------------------------------------- -----------------------------------------------------
                                                                                                                                                                                                                                                                                                                    
Revenues
  Rental income                                                                                         $    120,646                                                              $     98,795                                                              $    239,240                                                              $    190,337
  Other operating income                                                                                       8,955                                                                     6,741                                                                    16,864                                                                    12,888
  Management and acquisition fee income                                                     3,183                               1,469                               5,001                               2,904  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
     Total operating revenues                                                                                132,784                                                                   107,005                                                                   261,105                                                                   206,129
                                                                                                                                                                                                                                                                                                                    
Expenses
  Property operations and maintenance                                                                         29,719                                                                    23,153                                                                    59,515                                                                    46,014
  Real estate taxes                                                                                           14,498                                                                    11,021                                                                    28,933                                                                    21,568
  General and administrative                                                                                  15,959                                                                    10,114                                                                    27,396                                                                    20,578
  Acquisition related costs                                                                                        -                                                                     1,694                                                                         -                                                                     4,078
  Operating leases of storage facilities                                                                         141                                                                         -                                                                       141                                                                         -
  Depreciation and amortization                                                                               26,186                                                                    16,414                                                                    51,050                                                                    31,665
  Amortization of in-place customer leases                                                 11,919                               1,837                              24,697                               3,011  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
     Total operating expenses                                                              98,422                              64,233                             191,732                             126,914  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                    
Income from operations                                                                                        34,362                                                                    42,772                                                                    69,373                                                                    79,215
                                                                                                                                                                                                                                                                                                                    
Other income (expense)
  Interest expense (A)                                                                                       (15,716 )                                                                  (8,244 )                                                                 (30,926 )                                                                 (17,377 )
  Interest expense - acquisition bridge loan commitment fee                                                        -                                                                    (7,329 )                                                                       -                                                                    (7,329 )
  Interest income                                                                                                  1                                                                        37                                                                         4                                                                        43
  Gain on sale of real estate                                                                                      -                                                                    15,270                                                                         -                                                                    15,270
  Equity in income of joint ventures                                                          785                                 998                               1,506                               1,913  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                    
Net income                                                                                                    19,432                                                                    43,504                                                                    39,957                                                                    71,735
  Noncontrolling interests in the Operating Partnership                                                          (77 )                                                                    (208 )                                                                    (172 )                                                                    (338 )
  Noncontrolling interests in consolidated subsidiaries                                         -                                 160                                   -                                 399  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Net income attributable to common shareholders                                                          $     19,355                                           $     43,456                                           $     39,785                                           $     71,796  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                    
Earnings per common share attributable to common shareholders -                                         $       0.42                                           $       1.04                                           $       0.86                                           $       1.79  
basic
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                    
Earnings per common share attributable to common shareholders -                                         $       0.42                                           $       1.03                                           $       0.86                                           $       1.78  
diluted
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                    
Common shares used in basic
    earnings per share calculation                                                                        46,364,890                                                                41,980,389                                                                46,334,729                                                                40,195,603
                                                                                                                                                                                                                                                                                                                    
Common shares used in diluted
    earnings per share calculation                                                                        46,477,680                                                                42,227,388                                                                46,448,286                                                                40,445,263
                                                                                                                                                                                                                                                                                                                    
Dividends declared per common share                                                                     $       1.00                                           $       0.95                                           $       1.95                                           $       1.80  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                    
(A) Interest expense for the period ending June 30 consists of
the following
     Interest expense                                                                                   $     15,196                                                              $      7,894                                                              $     29,887                                                              $     16,671
     Amortization of debt issuance costs                                                      520                                 350                               1,039                                 706  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Total interest expense                                                                                  $     15,716                                           $      8,244                                           $     30,926                                           $     17,377  
                                                                                     -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                       
Life Storage, Inc.
Computation of Funds From Operations (FFO) (2)
(unaudited)
                                                                                                          April 1, 2017                                                             April 1, 2016                                                            January 1, 2017                                                           January 1, 2016
                                                                                                               to                                                                        to                                                                        to                                                                        to
(dollars in thousands, except share data)                                              June 30, 2017                                          June 30, 2016                                                             June 30, 2017                                          June 30, 2016
---------------------------------------------------------------- -------------------- ------------------------------------------------------------------------- -----------------------------------------------------                     ------------------------------------------------------------------------- -----------------------------------------------------
                                                                                                                                                                                                                                                                                                                     
Net income attributable to common shareholders                                                           $     19,355                                                              $     43,456                                                              $     39,785                                                              $     71,796
Noncontrolling interests in the Operating Partnership                                                              77                                                                       208                                                                       172                                                                       338
Depreciation of real estate and amortization of intangible
  assets exclusive of debt issuance costs                                                                      37,708                                                                    17,855                                                                    74,973                                                                    33,889
Depreciation and amortization from unconsolidated joint ventures                                                  948                                                                       581                                                                     1,716                                                                     1,153
Gain on sale of real estate                                                                                         -                                                                   (15,270 )                                                                       -                                                                   (15,270 )
Funds from operations allocable to noncontrolling
  interest in Operating Partnership                                                           (229 )                                                 (223 )                                                 (502 )                                                 (429 )
                                                                                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Funds from operations available to common shareholders                                      57,859                              46,607                             116,144                              91,477  
                                                                                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
FFO per share - diluted                                                                                  $       1.24                                                              $       1.10                                                              $       2.50                                                              $       2.26
                                                                                                                                                                                                                                                                                                                     
Adjustments to FFO
Loss related to legal settlement                                                                                5,040                                                                         -                                                                     5,040                                                                         -
Acquisition fee income                                                                                         (1,241 )                                                                                                                                            (1,241 )
Acquisition costs expensed                                                                                          -                                                                     1,694                                                                         -                                                                     4,078
Interest expense - acquisition bridge loan commitment fee                                                           -                                                                     7,329                                                                         -                                                                     7,329
Funds from operations resulting from non-recurring items
  allocable to noncontrolling interest in Operating Partnership                                (15 )                                                  (43 )                                                  (15 )                                                  (54 )
                                                                                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Adjusted funds from operations available to common shareholders                             61,643                              55,587                             119,928                             102,830  
                                                                                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Adjusted FFO per share - diluted                                                                         $       1.33                                                              $       1.32                                                              $       2.58                                                              $       2.54
                                                                                                                                                                                                                                                                                                                     
Common shares - diluted                                                                                    46,477,680                                                                42,227,388                                                                46,448,286                                                                40,445,263
                                                                                                                                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                          
Life Storage, Inc.
Quarterly Same Store Data (3) * 435
mature stores owned since 12/31/15
(unaudited)
                                                                                         April 1, 2017                                    April 1, 2016
                                                                                              to                                               to                                                                                                                                                                           Percentage
(dollars in thousands)                                                June 30, 2017                 June 30, 2016                                                                                Change                                                              Change
----------------------------------------------------------- -------------------- ------------------------------------------------ ----------------------------                     ----------------------------------------------------------------------------------------------------------------------------------- ---------------------
                                                                                                                                                                                                                                                                                                                        
Revenues:
  Rental income                                                                                     $ 89,660                                         $ 88,686                                         $         974                                                  1.1 %
  Tenant insurance                                                                                     3,570                                            3,363                                                                                                            207                                                  6.2 %
  Other operating income                                                            1,760                         1,665                                 95                               5.7 %
                                                                                 -------------------- ------                      -------------------- ------                      -------------------- -------------------- -------------------- -------------------- ----- --------------------                      ---------- ---------
     Total operating revenues                                                                         94,990                                           93,714                                                                                                          1,276                                                  1.4 %
                                                                                                                                                                                                                                                                                                                        
Expenses:
  Payroll and benefits                                                                                 7,978                                            7,761                                                                                                            217                                                  2.8 %
  Real estate taxes                                                                                   10,271                                            9,739                                                                                                            532                                                  5.5 %
  Utilities                                                                                            2,753                                            2,724                                                                                                             29                                                  1.1 %
  Repairs and maintenance                                                                              3,212                                            3,178                                                                                                             34                                                  1.1 %
  Office and other operating expense                                                                   3,090                                            3,031                                                                                                             59                                                  1.9 %
  Insurance                                                                                            1,126                                            1,065                                                                                                             61                                                  5.7 %
  Advertising                                                                                            269                                              293                                                                                                            (24 )                                               -8.2 %
  Internet marketing                                                                2,451                         1,719                                732                              42.6 %
                                                                                 -------------------- ------                      -------------------- ------                      -------------------- -------------------- -------------------- -------------------- ----- --------------------                      ---------- ---------
     Total operating expenses                                                      31,150                        29,510                              1,640                               5.6 %
                                                                                 -------------------- ------                      -------------------- ------                      -------------------- -------------------- -------------------- -------------------- ----- --------------------                      ---------- ---------
                                                                                                                                                                                                                                                                                                                        
Net operating income (1)                                                                            $ 63,840                                         $ 64,204                                         $        (364 )                                               -0.6 %
                                                                                 -------------------- ------                      -------------------- ------                      -------------------- -------------------- -------------------- -------------------- ----- --------------------                      ---------- ---------
                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                        
QTD Same store move ins                                                                               45,054                                           45,656                                                                                                           (602 )
                                                                                                                                                                                                                                                                                                                        
QTD Same store move outs                                                                              39,570                                           40,280                                                                                                           (710 )
                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                        
Other Comparable Quarterly Same Store Data *
(unaudited)
                                                                                         April 1, 2017                                    April 1, 2016
                                                                                              to                                               to                                                                                                                                                                           Percentage
                                                                                         June 30, 2017                 June 30, 2016                                                                                Change                                                              Change
                                                                                 ------------------------------------------------ ----------------------------                     ----------------------------------------------------------------------------------------------------------------------------------- ---------------------
Stores owned since 12/31/14 (417 stores)
Revenues                                                                                            $ 90,922                                         $ 89,735                                         $                                                                1,187                                                  1.3 %
Expenses                                                                           29,718                        28,090                              1,628                               5.8 %
                                                                                 -------------------- ------                      -------------------- ------                      -------------------- -------------------- -------------------- -------------------- ----- --------------------                      ---------- ---------
  Net operating income                                                                              $ 61,204                                         $ 61,645                                         $        (441 )                                               -0.7 %
                                                                                 -------------------- ------                      -------------------- ------                      -------------------- -------------------- -------------------- -------------------- ----- --------------------                      ---------- ---------
                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                        
Stores owned since 12/31/13 (389 stores)
Revenues                                                                                            $ 83,105                                         $ 82,189                                         $                                                                  916                                                  1.1 %
Expenses                                                                           27,022                        25,529                              1,493                               5.8 %
                                                                                 -------------------- ------                      -------------------- ------                      -------------------- -------------------- -------------------- -------------------- ----- --------------------                      ---------- ---------
  Net operating income                                                                              $ 56,083                                         $ 56,660                                         $        (577 )                                               -1.0 %
                                                                                 -------------------- ------                      -------------------- ------                      -------------------- -------------------- -------------------- -------------------- ----- --------------------                      ---------- ---------
                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                        
* See exhibit A for supplemental quarterly same store data.
                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                 
Life Storage, Inc.
Year to Date 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)                                    June 30, 2017                                       June 30, 2016                                                            Change                                    Change
------------------------------------ -------------------- ---------------------------------------------------------------------- --------------------------------------------------                     --------------------------------------------------------------------- ------------------------------
                                                                                                                                                                                                                                                                               
Revenues:
  Rental income                                                              $ 178,088                                                              $ 174,413                                                              $  3,675                                                                   2.1 %
  Tenant insurance                                                               7,015                                                                  6,591                                                                   424                                                                   6.4 %
  Other operating income                                      3,130                            3,092                              38                             1.2 %
                                                          -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ -
     Total operating revenues                                                  188,233                                                                184,096                                                                 4,137                                                                   2.2 %
                                                                                                                                                                                                                                                                               
Expenses:
  Payroll and benefits                                                          15,995                                                                 15,440                                                                   555                                                                   3.6 %
  Real estate taxes                                                             20,543                                                                 19,477                                                                 1,066                                                                   5.5 %
  Utilities                                                                      5,606                                                                  5,575                                                                    31                                                                   0.6 %
  Repairs and maintenance                                                        6,921                                                                  6,831                                                                    90                                                                   1.3 %
  Office and other operating expense                                             6,109                                                                  6,061                                                                    48                                                                   0.8 %
  Insurance                                                                      2,212                                                                  2,206                                                                     6                                                                   0.3 %
  Advertising & yellow pages                                                       539                                                                    602                                                                   (63 )                                                               -10.5 %
  Internet marketing                                          4,363                            3,500                             863                            24.7 %
                                                          -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ -
     Total operating expenses                                62,288                           59,692                           2,596                             4.3 %
                                                          -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ -
                                                                                                                                                                                                                                                                               
Net operating income (1)                                                     $ 125,945                                           $ 124,404                                           $  1,541                             1.2 %
                                                          -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ -
                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                               
YTD Same store move ins                                                         84,375                                                                 87,036                                                                (2,661 )
                                                                                                                                                                                                                                                                               
YTD Same store move outs                                                        76,629                                                                 78,566                                                                (1,937 )
                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                               
Other Data - unaudited                                                                                         Same Store (3)                                                                                                                      All Stores (4)
                                                          -------------------------------------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------------
                                                                                  2017                                                                   2016                                                                  2017                                                                  2016
                                                          ---------------------------                                            ---------------------------                                            --------------------------                                            --------------------------
                                                                                                                                                                                                                                                                               
Weighted average quarterly occupancy                                              92.1 %                                                                 92.3 %                                                                90.9 %                                                                91.4 %
                                                                                                                                                                                                                                                                               
Occupancy at June 30                                                              92.8 %                                                                 92.7 %                                                                91.9 %                                                                91.8 %
                                                                                                                                                                                                                                                                               
Rent per occupied square foot                                                $   13.17                                                              $   13.06                                                              $  13.36                                                              $  13.16
                                                                                                                                                                                                                                                                               
                                                                                                                       
Investment in Storage Facilities: (unaudited)
--------------------------------------------------------------
The following summarizes activity in storage facilities during the
six months ended June 30, 2017:
                                                                                                                                                               
Beginning balance                                                                                      $  4,243,308
  Property acquisitions                                                                                      10,089
  Improvements and equipment additions:
      Expansions                                                                                              5,647
      Roofing, paving, and equipment:
          Stabilized stores                                                                                  22,666
          Recently acquired stores                                                                            6,971
  Additions to consolidated subsidiary                                                                           82
  Change in construction in progress (Total CIP $24.9 million)                                               10,383
  Dispositions and Impairments                                                            (9,414 )
                                                                                    -------------------- ---------- --------------------
Storage facilities at cost at period end                                                               $  4,289,732  
                                                                                    -------------------- ---------- --------------------
                                                                                                                                                               
                                                                                                                                                               
Comparison of Selected G&A Costs (unaudited)                                                                                       Quarter Ended
--------------------------------------------------------------
                                                                                                        June 30, 2017                                                   June 30, 2016
                                                                                    --------------------------------------------------                        ------------------------------
                                                                                                                                                               
Management and administrative salaries and benefits                                                           6,381                                                                     6,163
Training                                                                                                        252                                                                       214
Call center                                                                                                     721                                                                       601
Life Storage Solutions costs                                                                                    134                                                                        73
Income taxes                                                                                                    429                                                                        11
Legal, accounting and professional                                                                            1,071                                                                     1,027
Name change                                                                                                      79                                                                         -
Loss related to legal settlement                                                                              5,040
Other administrative expenses (5)                                                          1,852                               2,025
                                                                                    -------------------- ---------- --------------------                      -------------------- ----------
                                                                                                       $     15,959                                           $     10,114
                                                                                    -------------------- ---------- --------------------                      -------------------- ----------
                                                                                                                                                               
Net rentable square feet                                                                                June 30, 2017
--------------------------------------------------------------                      --------------------------------------------------
Wholly owned properties                                                                                  39,673,992
Joint venture properties                                                                                  7,133,670
Third party managed properties                                                         2,222,798  
                                                                                    -------------------- ---------- --------------------
                                                                                                         49,030,460
                                                                                                                                                               
                                                                                                        June 30, 2017                                                   June 30, 2016
                                                                                    --------------------------------------------------                        ------------------------------
                                                                                                                                                               
Common shares outstanding                                                                                46,565,213                                                                46,369,391
Operating Partnership Units outstanding                                                                     217,481                                                                   196,008
                                                                                                                                                               
 
(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.
 
                                                                                                                                                                                                                                                                                             
Life Storage, Inc.
Trailing Five Quarter Information
Consolidated Balance Sheet
                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                               June 30,                                                                 March 31,                                                              December 31,                                                             September 30,                                                              June 30,
                                                                                                                 2017                                                                     2017                                                                     2016                                                                     2016                                                                     2016
(dollars in thousands)                                                                                        (unaudited)                                           (unaudited)                                            (audited)                                            (unaudited)                                           (unaudited)
-------------------------------------------------------------------                      ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ----------------------------------------------------
Assets
  Investment in storage facilities:
     Land                                                                                                   $   786,539                                                              $   787,535                                                              $   786,764                                                              $   785,866                                                              $   626,454
     Building, equipment and construction in progress                                      3,503,193                          3,479,833                          3,456,544                          3,416,823                          2,295,840  
                                                                                         -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                              4,289,732                                                                4,267,368                                                                4,243,308                                                                4,202,689                                                                2,922,294
     Less: accumulated depreciation                                                         (578,388 )                                            (553,758 )                                            (535,704 )                                            (513,716 )                                            (486,521 )
                                                                                         -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
  Investment in storage facilities, net                                                                       3,711,344                                                                3,713,610                                                                3,707,604                                                                3,688,973                                                                2,435,773
  Cash and cash equivalents                                                                                       7,998                                                                    4,819                                                                   23,685                                                                   16,146                                                                  901,897
  Accounts receivable                                                                                             6,189                                                                    5,750                                                                    5,469                                                                    5,973                                                                    4,670
  Receivable from joint venture                                                                                   1,022                                                                    1,296                                                                    1,223                                                                      747                                                                    1,045
  Investment in joint venture                                                                                   132,524                                                                   89,046                                                                   67,300                                                                   66,667                                                                   67,157
  Prepaid expenses                                                                                                8,694                                                                   10,422                                                                    6,649                                                                    7,772                                                                    6,446
  Intangible asset - in-place customer leases                                                                       133                                                                   12,051                                                                   24,830                                                                   38,044                                                                    4,325
  Trade name                                                                                                     16,500                                                                   16,500                                                                   16,500                                                                   16,500                                                                        -
  Other assets                                                                                 6,267                              4,139                              4,724                              7,294                              5,140  
                                                                                         -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
     Total Assets                                                                                           $ 3,890,671                                           $ 3,857,633                                           $ 3,857,984                                           $ 3,848,116                                           $ 3,426,453  
                                                                                         ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                              
Liabilities
  Line of credit                                                                                            $   331,000                                                              $   299,000                                                              $   253,000                                                              $   240,000                                                              $         -
  Term notes, net                                                                                             1,388,380                                                                1,387,953                                                                1,387,525                                                                1,387,119                                                                1,187,770
  Accounts payable and accrued liabilities                                                                       66,134                                                                   45,787                                                                   75,132                                                                   62,155                                                                   37,160
  Deferred revenue                                                                                               10,020                                                                    9,748                                                                    9,700                                                                    9,996                                                                    8,075
  Fair value of interest rate swap agreements                                                                    11,526                                                                   11,585                                                                   13,015                                                                   19,248                                                                   22,010
  Mortgages payable                                                                           12,852                             12,938                             13,027                             10,134                             10,205  
                                                                                         -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
     Total Liabilities                                                                                        1,819,912                                                                1,767,011                                                                1,751,399                                                                1,728,652                                                                1,265,220
                                                                                                                                                                                                                                                                                                                                                                                              
Noncontrolling redeemable Operating Partnership Units at redemption                                              16,459                                                                   18,120                                                                   18,091                                                                   17,996                                                                   20,191
value
                                                                                                                                                                                                                                                                                                                                                                                              
Equity
  Common stock                                                                                                      466                                                                      465                                                                      464                                                                      464                                                                      464
  Additional paid-in capital                                                                                  2,361,579                                                                2,354,398                                                                2,348,567                                                                2,343,581                                                                2,339,074
  Accumulated deficit                                                                                          (288,129 )                                                               (262,508 )                                                               (239,062 )                                                               (214,703 )                                                               (167,901 )
  Accumulated other comprehensive loss                                                       (19,616 )                                             (19,853 )                                             (21,475 )                                             (27,932 )                                             (30,863 )
                                                                                         -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
     Total Shareholders’ Equity                                                                               2,054,300                                                                2,072,502                                                                2,088,494                                                                2,101,410                                                                2,140,774
Noncontrolling interest in consolidated subsidiary                                                 -                                  -                                  -                                 58                                268  
                                                                                         -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
     Total Equity                                                                          2,054,300                          2,072,502                          2,088,494                          2,101,468                          2,141,042  
                                                                                         -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
  Total Liabilities and Equity                                                                              $ 3,890,671                                           $ 3,857,633                                           $ 3,857,984                                           $ 3,848,116                                           $ 3,426,453  
                                                                                         ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                         
Life Storage, Inc.
Trailing Five Quarter Information
Statement of Operations
(unaudited)
                                                                                                     April 1, 2017                                                            January 1, 2017                                                           October 1, 2016                                                            July 1, 2016                                                              April 1, 2016
                                                                                                          to                                                                        to                                                                        to                                                                        to                                                                        to
(dollars in thousands, except share data)                                                            June 30, 2017                                         March 31, 2017                                        December 31, 2016                                     September 30, 2016                                        June 30, 2016
-----------------------------------------------------------                      ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- -----------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                          
Revenues
  Rental income                                                                                     $    120,646                                                              $    118,594                                                              $    119,465                                                              $    118,319                                                              $     98,795
  Other operating income                                                                                   8,955                                                                     7,908                                                                     7,611                                                                     7,893                                                                     6,741
  Management fee income                                                                 3,183                               1,818                               1,602                               1,589                               1,469  
                                                                                 -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
     Total operating revenues                                                                            132,784                                                                   128,320                                                                   128,678                                                                   127,801                                                                   107,005
                                                                                                                                                                                                                                                                                                                                                                                          
Expenses
  Property operations and maintenance                                                                     29,719                                                                    29,796                                                                    28,992                                                                    28,382                                                                    23,153
  Real estate taxes                                                                                       14,498                                                                    14,435                                                                    13,206                                                                    13,102                                                                    11,021
  General and administrative                                                                              15,959                                                                    11,436                                                                    11,617                                                                    10,909                                                                    10,114
  Write-off of property deposits                                                                               -                                                                         -                                                                     1,783                                                                         -                                                                         -
  Acquisition related costs                                                                                    -                                                                         -                                                                       244                                                                    25,220                                                                     1,694
  Operating leases of storage facilities                                                                     141                                                                         -                                                                         -                                                                         -                                                                         -
  Depreciation and amortization                                                                           26,186                                                                    24,864                                                                    27,628                                                                    27,908                                                                    16,414
  Amortization of in-place customer leases                                             11,919                              12,778                              13,371                              13,497                               1,837  
                                                                                 -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
     Total operating expenses                                                          98,422                              93,309                              96,841                             119,018                              64,233  
                                                                                 -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                          
Income from operations                                                                                    34,362                                                                    35,011                                                                    31,837                                                                     8,783                                                                    42,772
                                                                                                                                                                                                                                                                                                                                                                                          
Other income (expense)
  Interest expense                                                                                       (15,716 )                                                                 (15,210 )                                                                 (15,151 )                                                                 (14,647 )                                                                  (8,244 )
  Interest expense - acquisition bridge loan commitment fee                                                    -                                                                         -                                                                         -                                                                         -                                                                    (7,329 )
  Interest income                                                                                              1                                                                         3                                                                        11                                                                        13                                                                        37
  Gain on sale of real estate                                                                                  -                                                                         -                                                                         -                                                                         -                                                                    15,270
  Gain on land taking                                                                                          -                                                                         -                                                                       623                                                                         -                                                                         -
  Equity in income of joint ventures                                                      785                                 721                                 870                                 882                                 998  
                                                                                 -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                          
Net income (loss)                                                                                         19,432                                                                    20,525                                                                    18,190                                                                    (4,969 )                                                                  43,504
  Noncontrolling interests in the Operating Partnership                                                      (77 )                                                                     (96 )                                                                     (81 )                                                                      21                                                                      (208 )
  Noncontrolling interests in consolidated subsidiaries                                     -                                   -                                  58                                 210                                 160  
                                                                                 -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Net income (loss) attributable to common shareholders                                               $     19,355                                           $     20,429                                           $     18,167                                           $     (4,738 )                                                            $     43,456  
                                                                                 ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                          
Earnings (loss) per common share attributable to common                                             $       0.42                                           $       0.44                                           $       0.39                                           $      (0.10 )                                                            $       1.04  
shareholders
- basic
                                                                                 ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                          
Earnings (loss) per common share attributable to common                                             $       0.42                                           $       0.44                                           $       0.39                                           $      (0.10 )                                                            $       1.03  
shareholders
- diluted
                                                                                 ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                          
Common shares used in basic
    earnings (loss) per share calculation                                                             46,364,890                                                                46,304,568                                                                46,206,191                                                                46,139,079                                                                41,980,389
                                                                                                                                                                                                                                                                                                                                                                                          
Common shares used in diluted
    earnings (loss) per share calculation                                                             46,477,680                                                                46,418,891                                                                46,385,984                                                                46,139,079                                                                42,227,388
                                                                                                                                                                                                                                                                                                                                                                                          
Dividends declared per common share                                                                 $       1.00                                           $       0.95                                           $       0.95                                           $       0.95                                           $       0.95  
                                                                                 ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                                     
Life Storage, Inc.
Trailing Five Quarter Information
Quarterly Same Store Data (3) * 435
mature stores owned since 12/31/15
(unaudited)
                                                                                                                                                                                                                                                                                                                                                                      
                                                                                            April 1, 2017                                                         January 1, 2017                                                        October 1, 2016                                                         July 1, 2016                                                           April 1, 2016
                                                                                                 to                                                                     to                                                                     to                                                                     to                                                                     to
(dollars in thousands)                                                                      June 30, 2017                                      March 31, 2017                                     December 31, 2016                                  September 30, 2016                                     June 30, 2016
---------------------------------------------------                      ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- --------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                      
Revenues:
  Rental income                                                                             $  89,660                                                              $  88,429                                                              $  89,247                                                              $  91,145                                                              $  88,686
  Tenant insurance                                                                              3,570                                                                  3,445                                                                  3,391                                                                  3,442                                                                  3,363
  Other operating income                                                     1,760                            1,369                            1,381                            1,647                            1,665  
                                                                         -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------
     Total operating revenues                                                                  94,990                                                                 93,243                                                                 94,019                                                                 96,234                                                                 93,714
                                                                                                                                                                                                                                                                                                                                                                      
Expenses:
  Payroll and benefits                                                                          7,978                                                                  8,017                                                                  7,971                                                                  7,753                                                                  7,761
  Real estate taxes                                                                            10,271                                                                 10,271                                                                  9,383                                                                  9,542                                                                  9,739
  Utilities                                                                                     2,753                                                                  2,853                                                                  2,736                                                                  3,505                                                                  2,724
  Repairs and maintenance                                                                       3,212                                                                  3,709                                                                  4,133                                                                  3,373                                                                  3,178
  Office and other operating expense                                                            3,090                                                                  3,019                                                                  3,048                                                                  3,112                                                                  3,031
  Insurance                                                                                     1,126                                                                  1,086                                                                  1,065                                                                  1,065                                                                  1,065
  Advertising & yellow pages                                                                      269                                                                    270                                                                    279                                                                    278                                                                    293
  Internet marketing                                                         2,451                            1,913                            1,697                            1,488                            1,719  
                                                                         -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------
     Total operating expenses                                               31,150                           31,138                           30,312                           30,116                           29,510  
                                                                         -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                      
Net operating income (1)                                                                    $  63,840                                           $  62,105                                           $  63,707                                           $  66,118                                           $  64,204  
                                                                         ==================== ======= ====================                      ==================== ======= ====================                      ==================== ======= ====================                      ==================== ======= ====================                      ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                      
Net operating income (1)
  Same-store net operating income                                                           $  63,840                                                              $  62,105                                                              $  63,707                                                              $  66,118                                                              $  64,204
  Other stores and management fee income                                    24,727                           21,984                           22,773                           20,199                            8,627  
                                                                         -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------
Total net operating income                                                                     88,567                                                                 84,089                                                                 86,480                                                                 86,317                                                                 72,831
                                                                                                                                                                                                                                                                                                                                                                      
General and administrative expense                                                            (15,959 )                                                              (11,436 )                                                              (11,617 )                                                              (10,909 )                                                              (10,114 )
Write-off of property deposits                                                                      -                                                                      -                                                                 (1,783 )                                                                    -                                                                      -
Acquisition related costs                                                                           -                                                                      -                                                                   (244 )                                                              (25,220 )                                                               (1,694 )
Operating leases of storage facilities                                                           (141 )                                                                    -                                                                      -                                                                      -                                                                      -
Depreciation and amortization                                                                 (38,105 )                                                              (37,642 )                                                              (40,999 )                                                              (41,405 )                                                              (18,251 )
Interest expense                                                                              (15,716 )                                                              (15,210 )                                                              (15,151 )                                                              (14,647 )                                                              (15,573 )
Interest income                                                                                     1                                                                      3                                                                     11                                                                     13                                                                     37
Gain on sale of storage facilities                                                                  -                                                                      -                                                                      -                                                                      -                                                                 15,270
Gain on land taking                                                                                 -                                                                      -                                                                    623                                                                      -                                                                      -
Equity in income of joint ventures                                             785                              721                              870                              882                              998  
                                                                         -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------
Net income (loss)                                                                           $  19,432                                           $  20,525                                           $  18,190                                           $  (4,969 )                                                            $  43,504  
                                                                         ==================== ======= ====================                      ==================== ======= ====================                      ==================== ======= ====================                      ==================== ======= ====================                      ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                      
Same store weighted average quarterly occupancy                                                  92.1 %                                                                 90.6 %                                                                 90.9 %                                                                 92.3 %                                                                 92.3 %
                                                                                                                                                                                                                                                                                                                                                                      
Same store period end occupancy                                                                  92.8 %                                                                 90.9 %                                                                 90.4 %                                                                 91.9 %                                                                 92.7 %
                                                                                                                                                                                                                                                                                                                                                                      
Same store annualized rent per occupied square foot                                         $   13.17                                                              $   13.23                                                              $   13.33                                                              $   13.38                                                              $   13.06
                                                                                                                                                                                                                                                                                                                                                                      
(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.
                                                                                                                                                                                                                                                                                                   
Life Storage, Inc.
Trailing Five Quarter Information
Funds From Operations (FFO) (1)
(unaudited)
                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                               April 1, 2017                                                            January 1, 2017                                                           October 1, 2016                                                            July 1, 2016                                                              April 1, 2016
                                                                                                                    to                                                                        to                                                                        to                                                                        to                                                                        to
(dollars in thousands, except share data)                                                   June 30, 2017                                         March 31, 2017                                        December 31, 2016                                     September 30, 2016                                        June 30, 2016
--------------------------------------------------------------------- -------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- -----------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                    
Net income (loss) attributable to common shareholders                                                         $     19,355                                                              $     20,429                                                              $     18,167                                                              $     (4,738 )                                                            $     43,456
Noncontrolling interests in the Operating Partnership                                                                   77                                                                        96                                                                        81                                                                       (21 )                                                                     208
Depreciation of real estate and amortization of intangible
  assets exclusive of debt issuance costs                                                                           37,708                                                                    37,265                                                                    40,618                                                                    41,024                                                                    17,855
Depreciation and amortization from unconsolidated joint ventures                                                       948                                                                       768                                                                       703                                                                       738                                                                       581
Gain on sale of real estate                                                                                              -                                                                         -                                                                         -                                                                         -                                                                   (15,270 )
Funds from operations allocable to noncontrolling
  interest in Operating Partnership                                                                (229 )                                                 (273 )                                                 (264 )                                                 (164 )                                                 (223 )
                                                                                           -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Funds from operations available to common shareholders                                           57,859                              58,285                              59,305                              36,839                              46,607  
                                                                                           ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
FFO per share - diluted                                                                                       $       1.24                                                              $       1.26                                                              $       1.28                                                              $       0.79                                                              $       1.10
                                                                                                                                                                                                                                                                                                                                                                                                    
Adjustments to FFO
Loss related to legal settlement                                                                                     5,040                                                                         -                                                                         -                                                                         -                                                                         -
Acquisition fee income                                                                                              (1,241 )                                                                       -                                                                         -                                                                         -                                                                         -
Acquisition costs expensed                                                                                               -                                                                         -                                                                       244                                                                    25,220                                                                     1,694
Interest expense - acquisition bridge loan commitment fee                                                                -                                                                         -                                                                         -                                                                         -                                                                     7,329
Gain on land taking                                                                                                      -                                                                         -                                                                      (623 )                                                                       -                                                                         -
Write-off of property deposits                                                                                           -                                                                         -                                                                     1,783                                                                         -                                                                         -
Funds from operations resulting from non-recurring items allocable to
noncontrolling interest in Operating Partnership                                                    (15 )                                                    -                                  (6 )                                                 (112 )                                                  (43 )
                                                                                           -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Adjusted funds from operations available to common shareholders                                  61,643                              58,285                              60,703                              61,947                              55,587  
                                                                                           ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
Adjusted FFO per share - diluted                                                                              $       1.33                                                              $       1.26                                                              $       1.31                                                              $       1.34                                                              $       1.32
                                                                                                                                                                                                                                                                                                                                                                                                    
Common shares - diluted                                                                                         46,477,680                                                                46,418,891                                                                46,385,984                                                                46,353,344                                                                42,227,388
                                                                                                                                                                                                                                                                                                                                                                                                                                    
 
(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.
 

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

Investor Relations: 
Life Storage, Inc. 
Diane Piegza, 716-633-1850 
dpiegza@lifestorage.com


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