Quarterly report pursuant to Section 13 or 15(d)

Organization

v3.21.2
Organization
6 Months Ended
Jun. 30, 2021
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Organization

2. ORGANIZATION

The Parent Company operates as a self-administered and self-managed real estate investment trust (a “REIT”) that owns and operates self-storage properties. All of the Parent Company’s assets are owned by, and all its operations are conducted through, 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 99.6% ownership interest therein as of June 30, 2021. The remaining ownership interests in the Operating Partnership (the “Units”) are held by certain former owners of assets acquired by 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.

At June 30, 2021, we had an ownership interest in and/or managed 970 self-storage properties in 33 states. Among our 970 self-storage properties are 104 properties that we manage for unconsolidated joint ventures (see Note 10) and 236 properties that we manage and in which we have no ownership interest.

We consolidate all wholly owned subsidiaries. Partially owned entities, including joint ventures, are consolidated when we control the entity. Our consolidated financial statements include the accounts of the Parent Company, the Operating Partnership, Life Storage Solutions, LLC (one of the Parent Company’s taxable REIT subsidiaries), Warehouse Anywhere LLC, and all other wholly owned subsidiaries. Prior to July 2, 2020, the Company owned 60% of Warehouse Anywhere LLC. On July 2, 2020, the Company acquired the remaining ownership interest in Warehouse Anywhere LLC. All intercompany transactions and balances have been eliminated. Investments in joint ventures that we do not control but over which we have significant influence are accounted for using the equity method.

Included in the Parent Company’s consolidated balance sheets are noncontrolling redeemable Operating Partnership Units and included in the Operating Partnership’s consolidated balance sheets are limited partners’ redeemable capital interest at redemption value. These interests are presented in the “mezzanine” section of the consolidated balance sheets because they do not meet the functional definition of a liability or equity under current accounting literature. These represent the outside ownership interests of the limited partners in the Operating Partnership. There were 332,399 and 334,149 noncontrolling redeemable Operating Partnership Units outstanding at June 30, 2021 and December 31, 2020, respectively. These unitholders are entitled to receive distributions per unit equivalent to the dividends declared per share on the Parent Company’s common stock. The Operating Partnership is obligated to redeem each of these limited partnership units in the Operating Partnership at the request of the holder thereof for cash equal to the fair market value of a share of the Parent Company’s common stock based on a 10-day average of the daily market price, at the time of such redemption, provided that the Company, at its option, may elect to acquire any such Unit presented for redemption for one common share or cash. The Company accounts for these noncontrolling redeemable Operating Partnership Units under the provisions of Accounting Standards Codification (ASC) Topic 480-10-S99. The application of the ASC Topic 480-10-S99 accounting model requires the noncontrolling interest to follow normal noncontrolling interest accounting and then be marked to redemption value at the end of each reporting period if higher (but never adjusted below that normal noncontrolling interest accounting amount). The offset to the adjustment to the carrying amount of the noncontrolling interests is reflected in the Company’s dividends in excess of net income and in the Operating Partnership’s general partner and limited partners capital balances. Accordingly, in the accompanying consolidated balance sheets, noncontrolling interests are reflected at redemption value at June 30, 2021 and December 31, 2020, equal to the number of noncontrolling interest units outstanding multiplied by the fair market value of the Parent Company’s common stock at that date. Redemption value exceeded the value determined under the Company’s historical basis of accounting at those dates.

 

 

The following is a reconciliation of the Parent Company’s noncontrolling redeemable Operating Partnership Units and the Operating Partnership’s limited partners’ redeemable capital interest for the period:

 

(dollars in thousands)

 

Six Months
Ended
June 30, 2021

 

Beginning balance

 

$

26,446

 

Net income attributable to noncontrolling interest in the
   Operating Partnership

 

 

459

 

Redemption of units

 

 

(144

)

Distributions

 

 

(494

)

Adjustment to redemption value

 

 

9,498

 

Ending balance

 

$

35,765

 

 

The disaggregated revenues of the Company presented in accordance with ASC Topic 606 “Revenue from Contracts with Customers” are as follows:

 

(dollars in thousands)

 

Three Months
Ended
June 30,
2021

 

 

Three Months
Ended
June 30,
2020

 

 

Six Months
Ended
June 30,
2021

 

 

Six Months
Ended
June 30,
2020

 

Rental income

 

$

163,096

 

 

$

128,828

 

 

$

313,379

 

 

$

257,736

 

Management and acquisition fee income

 

 

6,140

 

 

 

4,176

 

 

 

10,730

 

 

 

8,589

 

Revenues related to tenant reinsurance

 

 

13,705

 

 

 

10,754

 

 

 

26,324

 

 

 

20,893

 

Other

 

 

4,321

 

 

 

3,255

 

 

 

8,716

 

 

 

6,738

 

Total operating revenues

 

$

187,262

 

 

$

147,013

 

 

$

359,149

 

 

$

293,956

 

 

Management and acquisition fee income and revenues related to tenant reinsurance are included in other operating income in the consolidated statements of operations.

 

During the six months ended June 30, 2021, approximately 18% and 13% of the Company’s revenue was derived from self-storage facilities in the states of Texas and Florida, respectively.