Press Releases

Life Storage, Inc. Reports Second Quarter 2019 Results

BUFFALO, N.Y.--(BUSINESS WIRE)-- Life Storage, Inc. (NYSE:LSI), a leading national owner and operator of self storage properties, reported operating results for the quarter ended June 30, 2019.

Highlights for the Second Quarter Included:

  • Achieved net income attributable to common shareholders of $40.7 million, or $0.87 per fully diluted common share.
  • Achieved adjusted funds from operations (“FFO”)(1) per fully diluted common share of $1.42 as compared to $1.39 in the second quarter of 2018.
  • Increased same store revenue by 2.0% and same store net operating income ("NOI")(2) by 2.4% as compared to the second quarter of 2018.
  • Grew management and acquisition fees by 28.0% over the same period in 2018.
  • Acquired four properties for a total cost of $43.2 million.
  • Added 11 stores to its third-party management platform.
  • Completed a $350-million offering of 4% Senior Unsecured Notes due 2029.
  • Subsequent to quarter end, completed the divestiture of 32 mature stores for $212.0 million and acquired 12 stores in lease-up for $134.8 million.

Joe Saffire, the Company’s Chief Executive Officer, stated, “We are pleased to have completed the planned recycling of selective assets from mature, lower rental rate stores into facilities in lease-up with higher rental rates and growth prospects. Our acquisition pipeline remains strong with the inclusion of stores under contract in new strategic markets with attractive demographics. Second quarter results were solid operationally, having achieved the high end of our adjusted FFO guidance range, and we remain diligent in continuing to drive revenue growth and control costs as our markets absorb new supply.”

FINANCIAL RESULTS

The Company achieved net income attributable to common shareholders in the second quarter of 2019 of $40.7 million or $0.87 per fully diluted common share. This compares to net income attributable to common shareholders of $39.3 million in the second quarter of 2018, or $0.84 per fully diluted common share. The increase in net income was primarily the result of higher NOI as well as lower general and administrative expense.

Funds from operations for the quarter was $1.45 per fully diluted common share compared to $1.39 for the same period last year. After adjusting for the $1.7 million reduction in general and administrative expense as a result of the return of cash due to the finalization of a 2017 lawsuit settlement, adjusted FFO per fully diluted common share was $1.42 for the quarter ended June 30, 2019. Adjusted FFO per fully diluted common share for the quarter ended June 30, 2018 was $1.39.

OPERATIONS

Revenues for the 505 stabilized stores wholly owned by the Company since December 31, 2017 increased 2.0% from the second quarter of 2018, the result of a 3.0% increase in rental rates, partially offset by a 100 basis point decrease in average occupancy.

Same store operating expenses increased 1.2% for the second quarter of 2019 compared to the prior year period, the result of increased real estate taxes and internet marketing costs. These increases were offset by decreases in payroll and benefits, utilities, and repair and maintenance expenses. Accordingly, same store NOI this period increased 2.4% over the second quarter of 2018.

General and administrative expenses decreased by $1.2 million over the same period in 2018, primarily from the return of $1.7 million settlement proceeds from the finalization of a 2017 lawsuit.

During the second quarter of 2019, the Company experienced same store revenue growth in 24 of its 30 major markets. Overall, the markets with the strongest revenue impact include Chicago, Las Vegas, New York-Newark-New Jersey, Buffalo and New England.

PORTFOLIO TRANSACTIONS

Acquisition Activity

The Company acquired four properties for its wholly owned portfolio in the second quarter of 2019 in Cleveland, OH (3) for approximately $33.2 million and Jacksonville, FL (1) for $10.0 million. During the second quarter, the Company entered into agreements to acquire three facilities in Seattle, WA and one in Las Vegas, NV. Subsequent to quarter end, the Company entered into an agreement to acquire five facilities in Baltimore, MD and it also entered an agreement to acquire one store in Austin, TX that it currently leases and manages. Seattle and Baltimore represent new markets to Life Storage.

Subsequent to quarter end and as previously announced, the Company acquired 12 stores in lease-up for its wholly owned portfolio for a total consideration of approximately $134.8 million. The facilities are located in: Virginia (5), Florida (2), South Carolina (2), North Carolina (1), Tennessee (1) and Georgia (1).

Divestiture Activity

Also subsequent to quarter end, the Company divested 32 stabilized facilities for a total consideration of approximately $212.0 million as part of its asset redeployment program. The facilities are located in Louisiana (9), Mississippi (8), Texas (6), South Carolina (5) and North Carolina (4). Life Storage continues to manage all the properties pursuant to the terms of a long-term management agreement.

All remaining acquisitions and joint venture investments are subject to further due diligence and closing conditions; therefore, no assurance can be given that they will be purchased according to the terms described.

THIRD PARTY MANAGEMENT

The Company continues to aggressively grow its third-party management platform. During the quarter, the Company added 11 stores to the platform. As of quarter end, the Company managed 227 facilities in total, including those in which it owns a minority interest.

FINANCIAL POSITION

At June 30, 2019, the Company had approximately $46.1 million of cash on hand, and $499.7 million available on its line of credit.

On June 3, 2019, the Company completed an offering of $350 million aggregate principal amount of 4.0% Senior Unsecured Notes due 2029. The proceeds were used to repay a $100 million term note due June 2020 as well as an unsecured line of credit balance of $215 million. Remaining proceeds will be used for general corporate purposes.

Illustrated below are key financial ratios at June 30, 2019:

- Debt to Enterprise Value (at $95.08/share)

29.7%

- Debt to Book Cost of Storage Facilities

41.6%

- Debt to Recurring Annualized EBITDA

5.5x

- Debt Service Coverage

4.6x

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. The dividend was paid on July 26, 2019 to Shareholders of record on July 16, 2019.

YEAR 2019 EARNINGS GUIDANCE

The following assumptions covering operations have been utilized in formulating guidance for 2019:

Year 2019 Earnings Guidance

 

Current Guidance
Range

 

Prior Guidance
Range

(May 1, 2019)

Same Store Revenue

 

 

1.50%

-

2.50%

 

 

1.50%

-

2.50%

Same Store Operating Costs (excluding property

taxes)

 

 

0.00%


-

1.00%

 

 

2.00%


-

3.00%

Same Store Property Taxes

 

 

5.50%

-

6.50%

 

 

5.50%

-

6.50%

Total Same Store Operating Expenses

 

 

2.00%

-

3.00%

 

 

3.00%

-

4.00%

Same Store Net Operating Income

 

 

1.50%

-

2.50%

 

 

1.00%

-

2.00%

General & Administrative

 

$48M

-

$50M

 

$48M

-

$50M

 

 

 

 

 

 

 

 

 

Expansions & Enhancements

 

$45M

-

$55M

 

$40M

-

$55M

Capital Expenditures

 

$20M

-

$25M

 

$20M

-

$25M

Wholly Owned Acquisitions

 

$275M

-

$475M

 

$225M

-

$225M

Wholly Owned Dispositions

 

$212M

-

$225M

 

$225M

-

$225M

Joint Venture Investments

 

$15M

-

$25M

 

$50M

-

$50M

 

 

 

 

 

 

 

 

 

Adjusted Funds from Operations per Share

 

$5.56

-

$5.63

 

$5.55

-

$5.63

The Company’s 2019 same store pool consists of the 505 stabilized stores owned since December 31, 2017. The 32 stabilized stores sold subsequent to quarter end have been removed from the 2019 same store pool. Fifteen of the stores purchased through June 30, 2019 at certificate of occupancy or that were in the early stages of lease-up are not included, regardless of their current occupancies. The Company believes that occupancy levels achieved during the lease-up period, using discounted rates, are not truly indicative of a new store’s performance, and therefore do not result in a meaningful year-over-year comparison in future years. The Company will include such stores in its same store pool in the second year after the stores achieve 80% sustained occupancy using market rates and incentives.

Due to its strong pipeline of acquisition opportunities and flexible capital position, the Company has increased its expected midpoint of acquisitions for 2019 to $375 million from $225 million previously disclosed. Additionally, the Company expects $220 million of dispositions, down slightly from $225 million previously expected.

Due to the $350 million offering of Senior Unsecured Notes completed in June 2019, the Company expects $0.04 per share of additional interest expense in 2019 above previous estimates. Though the earlier than expected issuance results in higher interest expense than planned in 2019, the Company believes that the opportunity to secure long-term, low cost, fixed rate debt will benefit its shareholders.

As a result of favorable company operating trends and the increased acquisition volume, the Company has increased its full year 2019 adjusted funds from operations guidance of approximately $5.56 to $5.63 per share, despite the increased interest cost from the debt offering. Due to the timing of the planned acquisition volume, the Company expects adjusted funds from operations for the third quarter of 2019 to be between $1.42 and $1.46 per share.

Reconciliation of Guidance

3Q 2019

Range or Value

FY 2019

Range or Value

Earnings per share attributable to common shareholders - diluted

$ 2.97 – $ 3.01

$ 5.42 – $ 5.49

Plus: real estate depreciation and amortization

0.60 – 0.60

2.35 – 2.35

Less: gain on sale of real estate

(2.15 – 2.15)

(2.21 – 2.21)

FFO per share

$ 1.42 – $ 1.46

$ 5.56 – $ 5.63

 

FORWARD LOOKING STATEMENTS:

When used in 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 effectively compete in the industry in which it does business; 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; any future ratings on the Company’s debt instruments; regional concentration of the Company’s business may subject it to economic downturns in the states of Florida and Texas; 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; economic uncertainty due to the impact of natural disasters, war or terrorism; and tax law changes that 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 1, 2019. 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 866-777-2509 (domestic) or 412-317-5413 (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 a period of six months.

ABOUT LIFE STORAGE, INC:

Life Storage, Inc. is a self-administered and self-managed equity REIT that is in the business of acquiring and managing self storage facilities. Located in Buffalo, New York, the Company operates more than 800 storage facilities in 28 states and Ontario, Canada. The Company serves both residential and commercial storage customers with storage units rented by month. Life Storage consistently provides responsive service to its almost 450,000 customers, making it a leader in the industry. For more information visit http://invest.lifestorage.com.

Life Storage, Inc.
Balance Sheet Data
(unaudited)
 

June 30,

December 31,

(dollars in thousands)

2019

2018

Assets
Investment in storage facilities:
Land

$

831,478

 

$

794,729

 

Building, equipment and construction in progress

 

3,710,133

 

 

3,604,210

 

 

4,541,611

 

 

4,398,939

 

Less: accumulated depreciation

 

(753,581

)

 

(704,681

)

Investment in storage facilities, net

 

3,788,030

 

 

3,694,258

 

Cash and cash equivalents

 

46,058

 

 

13,560

 

Accounts receivable

 

9,711

 

 

7,805

 

Receivable from joint ventures

 

1,041

 

 

1,006

 

Investment in joint ventures

 

134,455

 

 

145,911

 

Prepaid expenses

 

8,604

 

 

7,251

 

Intangible asset - in-place customer leases

 

1,417

 

 

970

 

Trade name

 

16,500

 

 

16,500

 

Other assets

 

28,961

 

 

4,951

 

Total Assets

$

4,034,777

 

$

3,892,212

 

 
Liabilities
Line of credit

$

-

 

$

91,000

 

Term notes, net

 

1,856,976

 

 

1,610,820

 

Accounts payable and accrued liabilities

 

90,344

 

 

87,446

 

Deferred revenue

 

9,411

 

 

9,191

 

Mortgages payable

 

12,107

 

 

12,302

 

Total Liabilities

 

1,968,838

 

 

1,810,759

 

 
Noncontrolling redeemable Operating Partnership Units at redemption value

 

24,019

 

 

23,716

 

 
Equity
Common stock

 

467

 

 

466

 

Additional paid-in capital

 

2,374,392

 

 

2,372,157

 

Accumulated deficit

 

(326,522

)

 

(308,011

)

Accumulated other comprehensive loss

 

(6,417

)

 

(6,875

)

Total Shareholders' Equity

 

2,041,920

 

 

2,057,737

 

Total Liabilities and Shareholders' Equity

$

4,034,777

 

$

3,892,212

 

Life Storage, Inc.
Consolidated Statements of Operations
(unaudited)
April 1, 2019 April 1, 2018 January 1, 2019 January 1, 2018
to to to to
(dollars in thousands, except share data) June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
 
Revenues
Rental income

$

128,913

 

$

125,892

 

$

253,060

 

$

247,516

 

Other operating income

 

12,855

 

 

9,570

 

 

22,145

 

 

18,645

 

Management and acquisition fee income

 

3,260

 

 

2,546

 

 

6,347

 

 

4,941

 

Total operating revenues

 

145,028

 

 

138,008

 

 

281,552

 

 

271,102

 

 
Expenses
Property operations and maintenance

 

33,433

 

 

29,787

 

 

64,594

 

 

60,236

 

Real estate taxes

 

16,219

 

 

15,643

 

 

32,311

 

 

31,061

 

General and administrative

 

10,510

 

 

11,728

 

 

22,847

 

 

23,771

 

Operating leases of storage facilities

 

141

 

 

141

 

 

283

 

 

283

 

Depreciation and amortization

 

25,623

 

 

24,784

 

 

51,507

 

 

49,548

 

Amortization of in-place customer leases

 

535

 

 

-

 

 

880

 

 

-

 

Total operating expenses

 

86,461

 

 

82,083

 

 

172,422

 

 

164,899

 

 
Gain on sale of real estate

 

-

 

 

-

 

 

1,076

 

 

-

 

Income from operations

 

58,567

 

 

55,925

 

 

110,206

 

 

106,203

 

 
Other income (expense)
Interest expense (A)

 

(18,759

)

 

(17,518

)

 

(36,578

)

 

(34,722

)

Interest income

 

46

 

 

2

 

 

51

 

 

6

 

Equity in income of joint ventures

 

1,110

 

 

1,048

 

 

1,921

 

 

2,020

 

 
Net income

 

40,964

 

 

39,457

 

 

75,600

 

 

73,507

 

Noncontrolling interests in the Operating Partnership

 

(222

)

 

(183

)

 

(404

)

 

(344

)

Net income attributable to common shareholders

$

40,742

 

$

39,274

 

$

75,196

 

$

73,163

 

 
Earnings per common share attributable to common shareholders - basic

$

0.87

 

$

0.84

 

$

1.61

 

$

1.57

 

 
Earnings per common share attributable to common shareholders - diluted

$

0.87

 

$

0.84

 

$

1.61

 

$

1.57

 

 
Common shares used in basic
earnings per share calculation

 

46,582,235

 

 

46,480,907

 

 

46,573,541

 

 

46,466,700

 

 
Common shares used in diluted
earnings per share calculation

 

46,631,214

 

 

46,576,352

 

 

46,633,957

 

 

46,556,512

 

 
Dividends declared per common share

$

1.00

 

$

1.00

 

$

2.00

 

$

2.00

 

 
 
(A) Interest expense for the period ending June 30 consists of the following
Interest expense

$

18,196

 

$

16,993

 

$

35,478

 

$

33,673

 

Amortization of debt issuance costs

 

563

 

 

525

 

 

1,100

 

 

1,049

 

Total interest expense

$

18,759

 

$

17,518

 

$

36,578

 

$

34,722

 

Life Storage, Inc.
Computation of Funds From Operations (FFO) (1)
(unaudited)
April 1, 2019 April 1, 2018 January 1, 2019 January 1, 2018
to to to to
(dollars in thousands, except share data) June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
 
Net income attributable to common shareholders

$

40,742

 

$

39,274

 

$

75,196

 

$

73,163

 

Noncontrolling interests in the Operating Partnership

 

222

 

 

183

 

 

404

 

 

344

 

Depreciation of real estate and amortization of intangible
assets exclusive of debt issuance costs

 

25,722

 

 

24,270

 

 

51,528

 

 

48,526

 

Depreciation and amortization from unconsolidated joint ventures

 

1,460

 

 

1,234

 

 

2,870

 

 

2,430

 

Funds from operations allocable to noncontrolling
interest in Operating Partnership

 

(369

)

 

(302

)

 

(695

)

 

(582

)

Funds from operations available to common shareholders

 

67,777

 

 

64,659

 

 

129,303

 

 

123,881

 

FFO per share - diluted

$

1.45

 

$

1.39

 

$

2.77

 

$

2.66

 

 
Adjustments to FFO
Lawsuit settlement

$

(1,651

)

$

-

 

$

(1,651

)

$

-

 

Gain on sale of land

 

-

 

 

-

 

 

(1,076

)

 

-

 

Costs related to officer's retirement

 

-

 

 

-

 

 

443

 

 

-

 

Board changes and other proxy related expenses

 

-

 

 

-

 

 

-

 

 

1,128

 

Funds from operations resulting from non-recurring items
allocable to noncontrolling interest in Operating Partnership

 

9

 

 

-

 

 

12

 

 

(5

)

Adjusted funds from operations available to common shareholders

 

66,135

 

 

64,659

 

 

127,031

 

 

125,004

 

Adjusted FFO per share - diluted

$

1.42

 

$

1.39

 

$

2.72

 

$

2.68

 

 
Common shares - diluted

 

46,631,214

 

 

46,576,352

 

 

46,633,957

 

 

46,556,512

 

Life Storage, Inc.
Computation of Net Operating Income (2)
(unaudited)
April 1, 2019 April 1, 2018 January 1, 2019 January 1, 2018
to to to to
(dollars in thousands) June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
 
Net Income

$

40,964

 

$

39,457

 

$

75,600

 

$

73,507

 

General and administrative

 

10,510

 

 

11,728

 

 

22,847

 

 

23,771

 

Payments for rent

 

141

 

 

141

 

 

283

 

 

283

 

Depreciation and amortization

 

26,158

 

 

24,784

 

 

52,387

 

 

49,548

 

Interest expense

 

18,759

 

 

17,518

 

 

36,578

 

 

34,722

 

Interest income

 

(46

)

 

(2

)

 

(51

)

 

(6

)

Gain on sale of real estate

 

-

 

 

-

 

 

(1,076

)

 

-

 

Equity in income of joint ventures

 

(1,110

)

 

(1,048

)

 

(1,921

)

 

(2,020

)

Net operating income

$

95,376

 

$

92,578

 

$

184,647

 

$

179,805

 

 
Same store (4)

$

80,252

 

$

78,334

 

$

155,705

 

$

151,885

 

Net operating income related to tenant reinsurance

 

6,703

 

 

5,769

 

 

12,518

 

 

11,485

 

Other stores and management fee income

 

8,421

 

 

8,475

 

 

16,424

 

 

16,435

 

Total net operating income

$

95,376

 

$

92,578

 

$

184,647

 

$

179,805

 

Life Storage, Inc.
Quarterly Same Store Data (3) (4) 505 mature stores owned since 12/31/17
(unaudited)
April 1, 2019 April 1, 2018
to to Percentage
(dollars in thousands) June 30, 2019 June 30, 2018 Change Change
 
Revenues:
Rental income

$

118,785

$

116,356

$

2,429

 

2.1%

Other operating income

 

1,790

 

1,838

 

(48

)

-2.6%

Total operating revenues

 

120,575

 

118,194

 

2,381

 

2.0%

 
Expenses:
Payroll and benefits

 

9,664

 

9,807

 

(143

)

-1.5%

Real estate taxes

 

14,890

 

14,301

 

589

 

4.1%

Utilities

 

3,397

 

3,488

 

(91

)

-2.6%

Repairs and maintenance

 

3,909

 

4,180

 

(271

)

-6.5%

Office and other operating expense

 

3,856

 

3,831

 

25

 

0.7%

Insurance

 

1,444

 

1,444

 

-

 

0.0%

Advertising

 

291

 

308

 

(17

)

-5.5%

Internet marketing

 

2,872

 

2,501

 

371

 

14.8%

Total operating expenses

 

40,323

 

39,860

 

463

 

1.2%

 
Net operating income (2)

$

80,252

$

78,334

$

1,918

 

2.4%

 
 
QTD Same store move ins

 

52,576

 

53,552

 

(976

)

 
QTD Same store move outs

 

46,760

 

48,143

 

(1,383

)

Other Comparable Quarterly Same Store Data (4)
(unaudited)
April 1, 2019 April 1, 2018
to to Percentage
June 30, 2019 June 30, 2018 Change Change
2018 Same store pool (489 stores)
Revenues

$

116,416

$

114,235

$

2,181

1.9%

Expenses

 

38,735

 

38,182

 

553

1.4%

Net operating income

$

77,681

$

76,053

$

1,628

2.1%

 
 
2017 Same store pool (386 stores)
Revenues

$

87,706

$

86,320

$

1,386

1.6%

Expenses

 

29,004

 

28,723

 

281

1.0%

Net operating income

$

58,702

$

57,597

$

1,105

1.9%

Life Storage, Inc.
Year to Date Same Store Data (3) (4) 505 mature stores owned since 12/31/17
(unaudited)
January 1, 2019 January 1, 2018
to to Percentage
(dollars in thousands) June 30, 2019 June 30, 2018 Change Change
 
Revenues:
Rental income

$

233,941

$

228,655

$

5,286

 

2.3%

Other operating income

 

3,343

 

3,447

 

(104

)

-3.0%

Total operating revenues

 

237,284

 

232,102

 

5,182

 

2.2%

 
Expenses:
Payroll and benefits

 

19,520

 

19,903

 

(383

)

-1.9%

Real estate taxes

 

29,780

 

28,377

 

1,403

 

4.9%

Utilities

 

7,211

 

7,471

 

(260

)

-3.5%

Repairs and maintenance

 

8,950

 

8,788

 

162

 

1.8%

Office and other operating expense

 

7,726

 

7,881

 

(155

)

-2.0%

Insurance

 

2,889

 

2,847

 

42

 

1.5%

Advertising

 

582

 

621

 

(39

)

-6.3%

Internet marketing

 

4,921

 

4,329

 

592

 

13.7%

Total operating expenses

 

81,579

 

80,217

 

1,362

 

1.7%

 
Net operating income (2)

$

155,705

$

151,885

$

3,820

 

2.5%

 
 
YTD Same store move ins

 

97,115

 

99,972

 

(2,857

)

 
YTD Same store move outs

 

90,168

 

92,775

 

(2,607

)

Life Storage, Inc.
Other Data - unaudited

Same Store (3)

All Stores (5)

2019

2018

2019

2018

 
Weighted average quarterly occupancy

90.9%

91.9%

90.3%

91.5%

 
Occupancy at June 30

91.5%

92.4%

90.8%

92.1%

 
Rent per occupied square foot

$14.52

$14.10

$14.27

$13.81

Life Storage, Inc.
Other Data - unaudited (continued)
 
Investment in Storage Facilities: (unaudited)
The following summarizes activity in storage facilities during the six months ended June 30, 2019:
 
Beginning balance

$

4,398,939

 

Property acquisitions

 

108,356

 

Improvements and equipment additions:
Expansions

 

25,586

 

Roofing, paving, and equipment:
Stabilized stores

 

13,785

 

Recently acquired stores

 

242

 

Change in construction in progress (Total CIP $25.2 million)

 

(1,988

)

Dispositions and Impairments

 

(3,309

)

Storage facilities at cost at period end

$

4,541,611

 

 
 
Comparison of Selected G&A Costs (unaudited) Quarter Ended
June 30, 2019 June 30, 2018
 
Management and administrative salaries and benefits

$

6,467

 

$

6,908

Training

 

239

 

 

212

Call center

 

758

 

 

753

Life Storage Solutions costs

 

224

 

 

196

Income taxes

 

850

 

 

720

Legal, accounting and professional

 

938

 

 

1,005

Lawsuit settlement

 

(1,651

)

 

-

Other administrative expenses (6)

 

2,685

 

 

1,934

$

10,510

 

$

11,728

 
Net rentable square feet June 30, 2019
Wholly owned properties

 

40,167,394

 

Joint venture properties

 

8,395,408

 

Third party managed properties

 

8,566,952

 

 

57,129,754

 

 
June 30, 2019 June 30, 2018
 
Common shares outstanding

 

46,650,391

 

 

46,599,927

Operating Partnership Units outstanding

 

248,466

 

 

215,009

(1) We believe that Funds from Operations (“FFO”) provides relevant and meaningful information about our operating performance that is necessary, along with net earnings and cash flows, for an understanding of our operating results. FFO adds back historical cost depreciation, which assumes the value of real estate assets diminishes predictably in the future. In fact, real estate asset values increase or decrease with market conditions. Consequently, we believe FFO is a useful supplemental measure in evaluating our operating performance by disregarding (or adding back) historical cost depreciation.
 
Funds from operations is defined by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) as net income available to common shareholders computed in accordance with generally accepted accounting principles (“GAAP”), excluding gains or losses on sales of properties, plus impairment of real estate assets, plus depreciation and amortization and after adjustments to record unconsolidated partnerships and joint ventures on the same basis. We believe that to further understand our performance, FFO should be compared with our reported net income and cash flows in accordance with GAAP, as presented in our consolidated financial statements.
 
Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. FFO does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, or as an indicator of our ability to make cash distributions.
 
(2) Net operating income or "NOI" is a non-GAAP (generally accepted accounting principles) financial measure that we define as total continuing revenues less continuing property operating expenses. NOI also can be calculated by adding back to net income: interest expense, impairment and casualty losses, 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.
 
(3) Includes the stores owned and/or managed by the Company for the entire periods presented that are consolidated in our financial statements. Does not include unconsolidated joint ventures or other stores managed by the Company.
 
(4) Revenues and expenses do not include items related to tenant reinsurance.
 
(5) Does not include unconsolidated joint venture stores or other stores managed by the Company.
 
(6) Other administrative expenses include office rent, travel expense, investor relations and miscellaneous other expenses.

 

Life Storage, Inc.
David Dodman
(716) 229-8284
ddodman@lifestorage.com

Source: Life Storage, Inc.