UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

Commission file number:

1-13820 (Life Storage, Inc.)

0-24071 (Life Storage LP)

 

LIFE STORAGE, INC.

LIFE STORAGE LP

(Exact name of Registrant as specified in its charter)

 

 

Maryland (Life Storage, Inc.)

16-1194043

Delaware (Life Storage LP)

16-1481551

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

6467 Main Street

Williamsville, NY 14221

(Address of principal executive offices) (Zip code)

(716) 633-1850

(Registrant’s telephone number including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Life Storage, Inc.

Yes  

No  

Life Storage LP

Yes  

No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Life Storage, Inc.

Yes  

No  

Life Storage LP

Yes  

No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Life Storage, Inc.:

 

Large Accelerated Filer

Accelerated Filer

 

 

 

 

Non-accelerated Filer

Smaller Reporting Company

 

 

 

 

Emerging Growth Company

 

 

Life Storage LP:

 

Large Accelerated Filer

Accelerated Filer

 

 

 

 

Non-accelerated Filer

Smaller Reporting Company

 

 

 

 

Emerging Growth Company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Life Storage, Inc.    

Life Storage LP       

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Life Storage, Inc.

Yes  

No  

Life Storage LP

Yes  

No  

As of July 19, 2018, 46,600,427 shares of Common Stock, $.01 par value per share, were outstanding.

 

 

 


 

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2018 of Life Storage, Inc. (the “Parent Company”) and Life Storage LP (the “Operating Partnership”). The Parent Company is a real estate investment trust, or REIT, that owns its assets and conducts its operations through the Operating Partnership, a Delaware limited partnership, and subsidiaries of the Operating Partnership. The Parent Company, the Operating Partnership and their consolidated subsidiaries are collectively referred to in this report as the “Company.” In addition, terms such as “we,” “us,” or “our” used in this report may refer to the Company, the Parent Company and/or the Operating Partnership.

Life Storage Holdings, Inc., a wholly-owned subsidiary of the Parent Company (“Holdings”), is the sole general partner of the Operating Partnership; the Parent Company is a limited partner of the Operating Partnership, and through its ownership of Holdings and its limited partnership interest, controls the operations of the Operating Partnership, holding a 99.5% ownership interest therein as of June 30, 2018. The remaining ownership interests in the Operating Partnership are held by certain former owners of assets acquired by the Operating Partnership. As the owner of the sole general partner of the Operating Partnership, the Parent Company has full and complete authority over the Operating Partnership’s day-to-day operations and management.

Management operates the Parent Company and the Operating Partnership as one enterprise. The management teams of the Parent Company and the Operating Partnership are identical.

There are few differences between the Parent Company and the Operating Partnership, which are reflected in the note disclosures in this report. The Company believes it is important to understand the differences between the Parent Company and the Operating Partnership in the context of how these entities operate as a consolidated enterprise. The Parent Company is a REIT, whose only material asset is its ownership of the partnership interests of the Operating Partnership. As a result, the Parent Company does not conduct business itself, other than acting as the owner of the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing the debt obligations of the Operating Partnership. The Operating Partnership holds substantially all the assets of the Company and, directly or indirectly, holds the ownership interests in the Company’s real estate ventures. The Operating Partnership conducts the operations of the Company’s business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s direct or indirect incurrence of indebtedness or through the issuance of partnership units of the Operating Partnership.

The substantive difference between the Parent Company’s filings and the Operating Partnership’s filings is the fact that the Parent Company is a REIT with public equity, while the Operating Partnership is a partnership with no publicly traded equity. In the financial statements, this difference is primarily reflected in the equity (or capital for the Operating Partnership) section of the consolidated balance sheets and in the Shareholders’ Equity and Partners’ Capital notes to the financial statements. Apart from the different equity treatment, the consolidated financial statements of the Parent Company and the Operating Partnership are nearly identical.

The Company believes that combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into a single report will:

 

facilitate a better understanding by the investors of the Parent Company and the Operating Partnership by enabling them to view the business as a whole in the same manner as management views and operates the business;

 

remove duplicative disclosures and provide a more straightforward presentation in light of the fact that a substantial portion of the disclosure applies to both the Parent Company and the Operating Partnership; and

 

create time and cost efficiencies through the preparation of one combined report instead of two separate reports.

In order to highlight the differences between the Parent Company and the Operating Partnership, the separate sections in this report for the Parent Company and the Operating Partnership specifically refer to the Parent Company and the Operating Partnership. In the sections that combine disclosures of the Parent Company and the Operating Partnership, this report refers to such disclosures as those of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and real estate ventures and holds assets and debt, reference to the Company is appropriate because the business is one enterprise and the Parent Company operates the business through the Operating Partnership.

2


 

As the owner of the general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have significant assets other than its investment in the Operating Partnership. Therefore, the assets and liabilities of the Parent Company and the Operating Partnership are the same on their respective financial statements. The separate discussions of the Parent Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company’s operations on a consolidated basis and how management operates the Company.

This report also includes separate Item 4 - Controls and Procedures sections, signature pages and Exhibit 31 and 32 certifications for each of the Parent Company and the Operating Partnership in order to establish that the Chief Executive Officer and the Chief Financial Officer of the Parent Company and the Chief Executive Officer and the Chief Financial Officer of the Operating Partnership have made the requisite certifications and that the Parent Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended and 18 U.S.C. §1350.

3


 

Part I. Financial Information

Item 1. Financial Statements

LIFE STORAGE, INC.

CONSOLIDATED BALANCE SHEETS

 

(dollars in thousands, except share data)

 

June 30,

2018

(unaudited)

 

 

December 31,

2017

 

Assets

 

 

 

 

 

 

 

 

Investment in storage facilities:

 

 

 

 

 

 

 

 

Land

 

$

786,628

 

 

$

786,628

 

Building, equipment, and construction in progress

 

 

3,560,756

 

 

 

3,534,782

 

 

 

 

4,347,384

 

 

 

4,321,410

 

Less: accumulated depreciation

 

 

(671,717

)

 

 

(624,314

)

Investment in storage facilities, net

 

 

3,675,667

 

 

 

3,697,096

 

Cash and cash equivalents

 

 

7,327

 

 

 

9,167

 

Accounts receivable

 

 

7,935

 

 

 

7,331

 

Receivable from unconsolidated joint ventures

 

 

994

 

 

 

1,397

 

Investment in unconsolidated joint ventures

 

 

133,225

 

 

 

133,458

 

Prepaid expenses

 

 

16,657

 

 

 

6,757

 

Fair value of interest rate swap agreements

 

 

177

 

 

 

205

 

Trade name

 

 

16,500

 

 

 

16,500

 

Other assets

 

 

4,487

 

 

 

4,863

 

Total Assets

 

$

3,862,969

 

 

$

3,876,774

 

Liabilities

 

 

 

 

 

 

 

 

Line of credit

 

$

113,000

 

 

$

105,000

 

Term notes, net

 

 

1,610,062

 

 

 

1,609,089

 

Accounts payable and accrued liabilities

 

 

83,254

 

 

 

92,941

 

Deferred revenue

 

 

10,080

 

 

 

9,374

 

Mortgages payable

 

 

12,489

 

 

 

12,674

 

Total Liabilities

 

 

1,828,885

 

 

 

1,829,078

 

Noncontrolling redeemable Operating Partnership Units at redemption value

 

 

20,644

 

 

 

19,373

 

Shareholders’ Equity

 

 

 

 

 

 

 

 

Common stock $.01 par value, 100,000,000 shares authorized, 46,599,927

   shares outstanding at June 30, 2018 (46,552,222 at December 31, 2017)

 

 

466

 

 

 

466

 

Additional paid-in capital

 

 

2,368,942

 

 

 

2,363,171

 

Dividends in excess of net income

 

 

(348,764

)

 

 

(327,727

)

Accumulated other comprehensive loss

 

 

(7,204

)

 

 

(7,587

)

Total Shareholders’ Equity

 

 

2,013,440

 

 

 

2,028,323

 

Noncontrolling interest in consolidated subsidiary

 

 

 

 

 

 

Total Equity

 

 

2,013,440

 

 

 

2,028,323

 

Total Liabilities and Shareholders’ Equity

 

$

3,862,969

 

 

$

3,876,774

 

 

See notes to consolidated financial statements.

4


 

LIFE STORAGE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(dollars in thousands, except per share data)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

125,892

 

 

$

120,646

 

 

$

247,516

 

 

$

239,240

 

Other operating income

 

 

12,116

 

 

 

12,138

 

 

 

23,586

 

 

 

21,865

 

Total operating revenues

 

 

138,008

 

 

 

132,784

 

 

 

271,102

 

 

 

261,105

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operations and maintenance

 

 

29,787

 

 

 

29,719

 

 

 

60,236

 

 

 

59,515

 

Real estate taxes

 

 

15,643

 

 

 

14,498

 

 

 

31,061

 

 

 

28,933

 

General and administrative

 

 

11,728

 

 

 

15,959

 

 

 

23,771

 

 

 

27,396

 

Payments for rent

 

 

141

 

 

 

141

 

 

 

283

 

 

 

141

 

Depreciation and amortization

 

 

24,784

 

 

 

38,105

 

 

 

49,548

 

 

 

75,747

 

Total operating expenses

 

 

82,083

 

 

 

98,422

 

 

 

164,899

 

 

 

191,732

 

Income from operations

 

 

55,925

 

 

 

34,362

 

 

 

106,203

 

 

 

69,373

 

Other income (expenses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(17,518

)

 

 

(15,716

)

 

 

(34,722

)

 

 

(30,926

)

Interest income

 

 

2

 

 

 

1

 

 

 

6

 

 

 

4

 

Equity in income of joint ventures

 

 

1,048

 

 

 

785

 

 

 

2,020

 

 

 

1,506

 

Net income

 

 

39,457

 

 

 

19,432

 

 

 

73,507

 

 

 

39,957

 

Net income attributable to noncontrolling

   interest in the Operating Partnership

 

 

(183

)

 

 

(77

)

 

 

(344

)

 

 

(172

)

Net loss attributable to noncontrolling

   interest in consolidated subsidiary

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common shareholders

 

$

39,274

 

 

$

19,355

 

 

$

73,163

 

 

$

39,785

 

Earnings per common share attributable

   to common shareholders – basic

 

$

0.84

 

 

$

0.42

 

 

$

1.57

 

 

$

0.86

 

Earnings per common share attributable

   to common shareholders – diluted

 

$

0.84

 

 

$

0.42

 

 

$

1.57

 

 

$

0.86

 

Common shares used in basic earnings per share

   calculation

 

 

46,480,907

 

 

 

46,364,890

 

 

 

46,466,700

 

 

 

46,334,729

 

Common shares used in diluted earnings per share

   calculation

 

 

46,576,352

 

 

 

46,477,680

 

 

 

46,556,512

 

 

 

46,448,286

 

Dividends declared per common share

 

$

1.00

 

 

$

1.00

 

 

$

2.00

 

 

$

1.95

 

 

See notes to consolidated financial statements.

5


 

LIFE STORAGE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(dollars in thousands)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

 

$

39,457

 

 

$

19,432

 

 

$

73,507

 

 

$

39,957

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective portion of gain on derivatives net

   of reclassification to interest expense

 

 

106

 

 

 

237

 

 

 

383

 

 

 

1,859

 

Total comprehensive income

 

 

39,563

 

 

 

19,669

 

 

 

73,890

 

 

 

41,816

 

Comprehensive income attributable to noncontrolling

   interest in the Operating Partnership

 

 

(183

)

 

 

(78

)

 

 

(346

)

 

 

(180

)

Comprehensive loss attributable to noncontrolling

   interest in consolidated subsidiary

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income attributable to common shareholders

 

$

39,380

 

 

$

19,591

 

 

$

73,544

 

 

$

41,636

 

 

See notes to consolidated financial statements.

6


 

LIFE STORAGE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

(dollars in thousands)

 

Six Months

Ended

June 30, 2018

 

 

Six Months

Ended

June 30, 2017

 

Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

73,507

 

 

$

39,957

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

49,548

 

 

 

75,747

 

Amortization of debt issuance costs and bond discount

 

 

1,781

 

 

 

1,663

 

Equity in income of joint ventures

 

 

(2,020

)

 

 

(1,506

)

Distributions from unconsolidated joint ventures

 

 

4,103

 

 

 

2,852

 

Non-vested stock earned

 

 

2,748

 

 

 

3,246

 

Stock option expense

 

 

7

 

 

 

8

 

Deferred income taxes

 

 

105

 

 

 

(2,832

)

Changes in assets and liabilities (excluding the effects of acquisitions):

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(604

)

 

 

(720

)

Prepaid expenses

 

 

(9,900

)

 

 

(2,045

)

Receipts from joint ventures

 

 

403

 

 

 

201

 

Accounts payable and other liabilities

 

 

(9,718

)

 

 

(8,023

)

Deferred revenue

 

 

706

 

 

 

320

 

Net cash provided by operating activities

 

 

110,666

 

 

 

108,868

 

Investing Activities

 

 

 

 

 

 

 

 

Acquisitions of storage facilities, net of cash acquired

 

 

 

 

 

(9,576

)

Improvements, equipment additions, and construction in progress

 

 

(28,047

)

 

 

(45,662

)

Net proceeds from the sale of real estate

 

 

 

 

 

976

 

Investment in unconsolidated joint ventures

 

 

(1,862

)

 

 

(66,590

)

Property deposit

 

 

29

 

 

 

 

Net cash used in investing activities

 

 

(29,880

)

 

 

(120,852

)

Financing Activities

 

 

 

 

 

 

 

 

Net proceeds from sale of common stock

 

 

3,045

 

 

 

9,760

 

Proceeds from line of credit

 

 

115,000

 

 

 

179,000

 

Repayments of line of credit

 

 

(107,000

)

 

 

(101,000

)

Dividends paid - common stock

 

 

(92,635

)

 

 

(90,610

)

Distributions to noncontrolling interest holders

 

 

(435

)

 

 

(424

)

Redemption of operating partnership units

 

 

(232

)

 

 

 

Mortgage principal payments

 

 

(185

)

 

 

(175

)

Net cash used in financing activities

 

 

(82,442

)

 

 

(3,449

)

Net decrease in cash and restricted cash

 

 

(1,656

)

 

 

(15,433

)

Cash and restricted cash at beginning of period

 

 

9,459

 

 

 

23,923

 

Cash and restricted cash at end of period

 

$

7,803

 

 

$

8,490

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Cash paid for interest, net of interest capitalized

 

$

34,406

 

 

$

30,624

 

Cash paid for income taxes, net of refunds

 

$

1,249

 

 

$

1,161

 

 

See notes to consolidated financial statements.

7


 

LIFE STORAGE LP

CONSOLIDATED BALANCE SHEETS

 

(dollars in thousands)

 

June 30,

2018

(unaudited)

 

 

December 31,

2017

 

Assets

 

 

 

 

 

 

 

 

Investment in storage facilities:

 

 

 

 

 

 

 

 

Land

 

$

786,628

 

 

$

786,628

 

Building, equipment, and construction in progress

 

 

3,560,756

 

 

 

3,534,782

 

 

 

 

4,347,384

 

 

 

4,321,410

 

Less: accumulated depreciation

 

 

(671,717

)

 

 

(624,314

)

Investment in storage facilities, net

 

 

3,675,667

 

 

 

3,697,096

 

Cash and cash equivalents

 

 

7,327

 

 

 

9,167

 

Accounts receivable

 

 

7,935

 

 

 

7,331

 

Receivable from unconsolidated joint ventures

 

 

994

 

 

 

1,397

 

Investment in unconsolidated joint ventures

 

 

133,225

 

 

 

133,458

 

Prepaid expenses

 

 

16,657

 

 

 

6,757

 

Fair value of interest rate swap agreements

 

 

177

 

 

 

205

 

Trade name

 

 

16,500

 

 

 

16,500

 

Other assets

 

 

4,487

 

 

 

4,863

 

Total Assets

 

$

3,862,969

 

 

$

3,876,774

 

Liabilities

 

 

 

 

 

 

 

 

Line of credit

 

$

113,000

 

 

$

105,000

 

Term notes, net

 

 

1,610,062

 

 

 

1,609,089

 

Accounts payable and accrued liabilities

 

 

83,254

 

 

 

92,941

 

Deferred revenue

 

 

10,080

 

 

 

9,374

 

Mortgages payable

 

 

12,489

 

 

 

12,674

 

Total Liabilities

 

 

1,828,885

 

 

 

1,829,078

 

Limited partners’ redeemable capital interest at redemption value

   (215,009 and 217,481 units outstanding at June 30, 2018 and December 31, 2017,

       respectively)

 

 

20,644

 

 

 

19,373

 

Partners’ Capital

 

 

 

 

 

 

 

 

General partner (468,174 and 467,697 units outstanding at June 30, 2018 and

   December 31, 2017, respectively)

 

 

20,343

 

 

 

20,478

 

Limited partners (46,131,753 and 46,084,525 units outstanding at June 30, 2018

   and December 31, 2017, respectively)

 

 

2,000,301

 

 

 

2,015,432

 

Accumulated other comprehensive loss

 

 

(7,204

)

 

 

(7,587

)

Total Controlling Partners’ Capital

 

 

2,013,440

 

 

 

2,028,323

 

Noncontrolling interest in consolidated subsidiary

 

 

 

 

 

 

Total Partners’ Capital

 

 

2,013,440

 

 

 

2,028,323

 

Total Liabilities and Partners’ Capital

 

$

3,862,969

 

 

$

3,876,774

 

 

See notes to consolidated financial statements.

8


 

LIFE STORAGE LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(dollars in thousands, except per unit data)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

125,892

 

 

$

120,646

 

 

$

247,516

 

 

$

239,240

 

Other operating income

 

 

12,116

 

 

 

12,138

 

 

 

23,586

 

 

 

21,865

 

Total operating revenues

 

 

138,008

 

 

 

132,784

 

 

 

271,102

 

 

 

261,105

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operations and maintenance

 

 

29,787

 

 

 

29,719

 

 

 

60,236

 

 

 

59,515

 

Real estate taxes

 

 

15,643

 

 

 

14,498

 

 

 

31,061

 

 

 

28,933

 

General and administrative

 

 

11,728

 

 

 

15,959

 

 

 

23,771

 

 

 

27,396

 

Payments for rent

 

 

141

 

 

 

141

 

 

 

283

 

 

 

141

 

Depreciation and amortization

 

 

24,784

 

 

 

38,105

 

 

 

49,548

 

 

 

75,747

 

Total operating expenses

 

 

82,083

 

 

 

98,422

 

 

 

164,899

 

 

 

191,732

 

Income from operations

 

 

55,925

 

 

 

34,362

 

 

 

106,203

 

 

 

69,373

 

Other income (expenses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(17,518

)

 

 

(15,716

)

 

 

(34,722

)

 

 

(30,926

)

Interest income

 

 

2

 

 

 

1

 

 

 

6

 

 

 

4

 

Equity in income of joint ventures

 

 

1,048

 

 

 

785

 

 

 

2,020

 

 

 

1,506

 

Net income

 

 

39,457

 

 

 

19,432

 

 

 

73,507

 

 

 

39,957

 

Net income attributable to noncontrolling interest

   in the Operating Partnership

 

 

(183

)

 

 

(77

)

 

 

(344

)

 

 

(172

)

Net loss attributable to noncontrolling interest

   in consolidated subsidiary

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common unitholders

 

$

39,274

 

 

$

19,355

 

 

$

73,163

 

 

$

39,785

 

Earnings per common unit attributable to

   common unitholders – basic

 

$

0.84

 

 

$

0.42

 

 

$

1.57

 

 

$

0.86

 

Earnings per common unit attributable to

   common unitholders – diluted

 

$

0.84

 

 

$

0.42

 

 

$

1.57

 

 

$

0.86

 

Common units used in basic earnings per unit

   calculation

 

 

46,480,907

 

 

 

46,364,890

 

 

 

46,466,700

 

 

 

46,334,729

 

Common units used in diluted earnings per unit

   calculation

 

 

46,576,352

 

 

 

46,477,680

 

 

 

46,556,512

 

 

 

46,448,286

 

Distributions declared per common unit

 

$

1.00

 

 

$

1.00

 

 

$

2.00

 

 

$

1.95

 

Net income attributable to general  partner

 

$

395

 

 

$

194

 

 

$

735

 

 

$

400

 

Net income attributable to limited partners

 

 

38,879

 

 

 

19,161

 

 

 

72,428

 

 

 

39,385

 

 

See notes to consolidated financial statements.

9


 

LIFE STORAGE LP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(dollars in thousands)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

 

$

39,457

 

 

$

19,432

 

 

$

73,507

 

 

$

39,957

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective portion of gain on derivatives net of

   reclassification to interest expense

 

 

106

 

 

 

237

 

 

 

383

 

 

 

1,859

 

Total comprehensive income

 

 

39,563

 

 

 

19,669

 

 

 

73,890

 

 

 

41,816

 

Comprehensive income attributable to noncontrolling

   interest in the Operating Partnership

 

 

(183

)

 

 

(78

)

 

 

(346

)

 

 

(180

)

Comprehensive loss attributable to noncontrolling interest

   in consolidated subsidiary

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income attributable to common unitholders

 

$

39,380

 

 

$

19,591

 

 

$

73,544

 

 

$

41,636

 

 

See notes to consolidated financial statements.

10


 

LIFE STORAGE LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

(dollars in thousands)

 

Six Months

Ended

June 30, 2018

 

 

Six Months

Ended

June 30, 2017

 

Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

73,507

 

 

$

39,957

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

49,548

 

 

 

75,747

 

Amortization of debt issuance costs and bond discount

 

 

1,781

 

 

 

1,663

 

Equity in income of joint ventures

 

 

(2,020

)

 

 

(1,506

)

Distributions from unconsolidated joint ventures

 

 

4,103

 

 

 

2,852

 

Non-vested stock earned

 

 

2,748

 

 

 

3,246

 

Stock option expense

 

 

7

 

 

 

8

 

Deferred income taxes

 

 

105

 

 

 

(2,832

)

Changes in assets and liabilities (excluding the effects of acquisitions):

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(604

)

 

 

(720

)

Prepaid expenses

 

 

(9,900

)

 

 

(2,045

)

Receipts from joint ventures

 

 

403

 

 

 

201

 

Accounts payable and other liabilities

 

 

(9,718

)

 

 

(8,023

)

Deferred revenue

 

 

706

 

 

 

320

 

Net cash provided by operating activities

 

 

110,666

 

 

 

108,868

 

Investing Activities

 

 

 

 

 

 

 

 

Acquisitions of storage facilities, net of cash acquired

 

 

 

 

 

(9,576

)

Improvements, equipment additions, and construction in progress

 

 

(28,047

)

 

 

(45,662

)

Net proceeds from the sale of real estate

 

 

 

 

 

976

 

Investment in unconsolidated joint ventures

 

 

(1,862

)

 

 

(66,590

)

Property deposit

 

 

29

 

 

 

 

Net cash used in investing activities

 

 

(29,880

)

 

 

(120,852

)

Financing Activities

 

 

 

 

 

 

 

 

Net proceeds from sale of partnership units

 

 

3,045

 

 

 

9,760

 

Proceeds from line of credit

 

 

115,000

 

 

 

179,000

 

Repayments of line of credit

 

 

(107,000

)

 

 

(101,000

)

Distributions to unitholders

 

 

(92,635

)

 

 

(90,610

)

Distributions to noncontrolling interest holders

 

 

(435

)

 

 

(424

)

Redemption of operating partnership units

 

 

(232

)

 

 

 

Mortgage principal payments

 

 

(185

)

 

 

(175

)

Net cash used in financing activities