Life Storage, Inc. Reports Second Quarter 2022 Results

Life Storage, Inc. (NYSE:LSI), a leading national owner and operator of self-storage properties, reported operating results for the quarter ended June 30, 2022.

Highlights for the Second Quarter Included:

• Generated net income attributable to common shareholders of $92.3 million, or $1.09 per fully diluted common share.
• Achieved adjusted funds from operations (“FFO”)⁽¹⁾ per fully diluted common share of $1.65, a 37.5% increase over the same period in 2021.
• Increased same store revenue by 18.9% and same store net operating income (“NOI”)⁽²⁾ by 25.4%, year-over-year. Both same store revenue and same store net operating income accelerated from the growth reported in the first quarter of 2022.
• Acquired 13 stores for $262.6 million, including five stores from the Company’s third-party management platform.
• Added 17 stores (gross) to the Company’s third-party management platform.

Joe Saffire, the Company’s Chief Executive Officer, stated, “We continue to be on track and well positioned for another strong year. I cannot be more pleased with how our team has performed during this past year with occupancy and strong pricing power supporting 21 straight months of positive rent roll up. Our focus to continually optimize revenue resulted in same store achieved rate growth of 20% when compared to last year, supporting same store revenue growth of 18.9% and same store NOI growth of 25.4% year over year. We achieved significant FFO growth, allowing us to increase our dividend paid in July by 46% from one year ago. We also added scale to key existing markets with the addition of 13 wholly owned stores and 17 stores to our third-party management platform. Our second quarter performance, together with continuing strong fundamentals and our ability to execute on our strategic initiatives, positions us well to continue to grow shareholder value.”

FINANCIAL RESULTS:

In the second quarter of 2022, the Company generated net income attributable to common shareholders of $92.3 million or $1.09 per fully diluted common share, compared to net income attributable to common shareholders of $57.5 million, or $0.74 per fully diluted common share, in the second quarter of 2021.

Funds from operations for the quarter were $1.68 per fully diluted common share compared to $1.22 for the same period last year. Adjusted FFO per fully diluted common share for the quarter was $1.65, after adjusting primarily for a $1.9 million gain on the sale of non-real estate assets, compared to $1.20 for the quarter ended June 30, 2021.

OPERATIONS:

Revenues for the 580 stabilized stores wholly owned by the Company since December 31, 2020 increased 18.9% in the second quarter of 2022 compared to the same quarter of 2021. The increase largely resulted from the impact of a 20.0% increase in realized rental rates with occupancy for the second quarter of 2022 averaging 94.0%.

Same store operating expenses increased 4.3% for the second quarter of 2022 compared to the prior year period, the result of increased office and other expenses, repairs and maintenance, and utilities expenses with payroll and benefits remaining flat. Same store NOI increased 25.4% in the second quarter of 2022 as compared to the second quarter of 2021.

During the second quarter of 2022, the Company achieved double digit same store revenue growth in 32 of its 33 major markets. Overall, the markets with the strongest positive revenue impact were various markets in Florida; Los Angeles, CA; Atlanta, GA; Phoenix, AZ; Buffalo-Upstate, NY; Austin, TX; and Las Vegas, NV.

PORTFOLIO TRANSACTIONS:

Wholly Owned Portfolio

During the quarter, the Company acquired 13 stores in Florida (6), New York (3), California (1), Texas (1), Georgia (1), and Massachusetts (1) for a total purchase price of $262.6 million. One of the New York stores was acquired as a result of the Company’s acquisition of the remaining 14.2% ownership interest in one of its unconsolidated joint ventures. The purchase price of such acquisition included the Company’s net investment to acquire the remaining equity in this joint venture of $5.6 million and the carrying value of the Company’s total equity investment in the joint venture of $30.2 million.

At June 30, 2022, the Company was under contract to acquire seven self-storage facilities in California (4), North Carolina (1), Florida (1), and Nevada (1) for an aggregate purchase price of $137.4 million. Subsequent to June 30, 2022, the Company completed the acquisition of one of these self-storage facilities in North Carolina for a purchase price of $20.0 million. Also subsequent to June 30, 2022, the Company entered into contracts to acquire seven self-storage facilities in Missouri (5), Arizona (1), and Massachusetts (1) for an aggregate purchase price of $140.1 million. The purchases of the remaining facilities are subject to customary conditions to closing, and there is no assurance that any of these facilities will be acquired.

As of the date of this press release, the Company has acquired 32 stores for $634.1 million since January 1, 2022 and is under contract for 13 stores with an aggregate purchase price of $257.5 million of which $60 million is expected to close during 2023.

THIRD-PARTY MANAGEMENT:

The Company continues to aggressively and profitably grow its third-party management platform. During the quarter, the Company added 17 stores (gross). As of quarter end, the Company managed 385 facilities in total, including those in which it owns a noncontrolling interest.

FINANCIAL POSITION:

At June 30, 2022, the Company had approximately $32.6 million of cash on hand, and approximately $197 million available on its line of credit.

Subsequent to June 30, 2022, the Company closed on the refinancing of its existing bank credit facility that was scheduled to mature on March 10, 2023. Through the refinancing, the new facility was increased from $500 million to $1.25 billion through a syndicate of ten banks providing committed liquidity to the Company to January 2027 on terms comparable to or improved from the terms of the existing facility.

Below are key financial ratios at June 30, 2022:

• Debt to Enterprise Value (at $111.66/share)	24.4%
• Debt to Book Cost of Storage Facilities	40.3%
• Debt to Recurring Annualized EBITDA	4.6x
• Debt Service Coverage	5.7x

COMMON STOCK DIVIDEND:

Subsequent to quarter end, the Company’s Board of Directors approved an 8% increase in the quarterly dividend to $1.08 per share, or $4.32 annualized. The dividend was paid on July 26, 2022 to shareholders of record on July 15, 2022.

YEAR 2022 EARNINGS GUIDANCE:

The following assumptions covering operations have been utilized in formulating guidance for 2022:

		Current Guidance Range					Prior Guidance Range (May 4, 2022)
Same Store Revenue		13.25%	-	14.25%			10.50%	-	11.50%
Same Store Operating Costs (excluding property taxes)		4.50%	-	5.50%			4.50%	-	5.50%
Same Store Property Taxes		6.25%	-	7.25%			6.25%	-	7.25%
Total Same Store Operating Expenses		5.00%	-	6.00%			5.00%	-	6.00%
Same Store Net Operating Income		16.5%	-	17.5%			13.0%	-	14.0%
General & Administrative		$71M	-	$73M			$69M	-	$71M
Expansions & Enhancements		$65M	-	$75M			$65M	-	$75M
Capital Expenditures		$30M	-	$35M			$30M	-	$35M
Wholly Owned Acquisitions		$800M	-	$1,000M			$700M	-	$900M
Joint Venture Investments		$75M	-	$125M			$50M	-	$100M
Adjusted Funds from Operations per Share		$6.27	-	$6.33			$6.04	-	$6.14

Reconciliation of Guidance				3Q 2022 Range or Value		FY 2022 Range or Value
Earnings per share attributable to common shareholders - diluted				$1.03 - $1.07		$3.98 - $4.04
Plus: real estate depreciation and amortization				0.59 - 0.59		2.29 - 2.29
FFO per share				$1.62 - $1.66		$6.27 - $6.33

The Company’s 2022 same store pool consists of the 580 stabilized stores wholly owned since December 31, 2020. Forty-five of the stores purchased through June 30, 2022, 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.

FORWARD LOOKING STATEMENTS:

When used herein, 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.

All forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained herein. Any forward-looking statements should be considered in light of the risks referenced in the “Risk Factors” section included in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Such factors include, but are not limited to:

• adverse changes in general economic conditions, the real estate industry and in the markets in which we operate;
• the effect of competition from new self-storage facilities or other storage alternatives, which would cause rents and occupancy rates to decline;
• impacts from the COVID-19 pandemic or the future outbreak of other highly infectious or contagious diseases on the U.S., regional and global economies and our financial condition and results of operations;
• potential liability for uninsured losses and environmental contamination;
• the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing real estate investment trusts (“REITs”), tenant reinsurance and other aspects of our business, which could adversely affect our results;
• loss of key personnel;
• the Company’s ability to evaluate, finance and integrate acquired self-storage facilities on expected terms into the Company’s existing business and operations;
• the Company’s ability to effectively compete in the industry in which it does business;
• disruptions in credit and financial markets and resulting difficulties in raising capital or obtaining credit at reasonable rates or at all, which could impede our ability to grow;
• 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 increase, impacting costs associated with the Company’s outstanding floating rate debt, if any, and impacting the Company’s ability to comply with debt covenants;
• exposure to litigation or other claims;
• risks associated with breaches of our data security;
• the regional concentration of the Company's business may subject the Company to economic downturns in the states of Florida and Texas;
• the Company’s cash flow may be insufficient to meet required payments of operating expenses, principal, interest and dividends; and
• failure to maintain our REIT status for U.S. federal income purposes, including tax law changes that may change the taxability of future income.

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our securities.

CONFERENCE CALL:

Life Storage will hold its Second Quarter Earnings Release Conference Call at 9:00 a.m. Eastern Time on Thursday, August 4, 2022. 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 888.506.0062 (domestic) or 973.528.0011 (international); passcode 561992 or request to be joined into the Life Storage call. 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 90 days; a telephone replay will also be available for 14 days by calling 877.481.4010 and entering passcode 46127.

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 1,100 storage facilities in 36 states. The Company serves both residential and commercial storage customers with storage units rented by month. Life Storage consistently provides responsive service to approximately 675,000 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)			2022				2021
Assets
Investment in storage facilities:
Land		$	1,266,040			$	1,185,976
Building, equipment and construction in progress			6,468,230				5,904,481
			7,734,270				7,090,457
Less: accumulated depreciation			(1,088,128	)			(1,007,650	)
Investment in storage facilities, net			6,646,142				6,082,807
Cash and cash equivalents			32,639				171,865
Accounts receivable			21,136				17,784
Receivable from joint ventures			625				333
Investment in joint ventures			202,026				213,003
Prepaid expenses			11,728				9,918
Intangible asset - in-place customer leases			9,152				13,966
Trade name			16,500				16,500
Other assets			27,236				30,421
Total Assets		$	6,967,184			$	6,556,597
Liabilities
Line of credit		$	303,000			$	-
Term notes, net			2,749,735				2,747,838
Accounts payable and accrued liabilities			119,962				131,778
Deferred revenue			32,583				27,277
Mortgages payable			36,646				37,030
Total Liabilities			3,241,926				2,943,923
Noncontrolling redeemable Preferred Operating Partnership Units at redemption value			90,772				90,783
Noncontrolling redeemable Common Operating Partnership Units at redemption value			114,125				142,892
Equity
Common stock			844				836
Additional paid-in capital			3,801,203				3,697,000
Accumulated deficit			(278,020	)			(314,713	)
Accumulated other comprehensive loss			(3,666	)			(4,124	)
Total Shareholders' Equity			3,520,361				3,378,999
Total Liabilities and Shareholders' Equity		$	6,967,184			$	6,556,597

Life Storage, Inc.
Consolidated Statements of Operations
(unaudited)
		April 1, 2022				April 1, 2021				January 1, 2022				January 1, 2021
		to				to				to				to
(dollars in thousands, except share data)		June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
Revenues
Rental income		$	227,239			$	163,096			$	432,748			$	313,379
Tenant reinsurance			18,257				13,705				35,525				26,324
Other operating income			5,210				4,321				10,068				8,716
Management and acquisition fee income			6,340				6,140				12,196				10,730
Total operating revenues			257,046				187,262				490,537				359,149
Expenses
Property operations and maintenance			42,458				33,369				84,827				67,109
Tenant reinsurance			6,481				5,425				13,328				10,206
Real estate taxes			25,356				20,510				49,879				40,397
General and administrative			18,636				15,083				34,502				29,266
Depreciation and amortization			42,631				33,118				83,426				64,406
Amortization of in-place customer leases			5,445				2,653				11,050				4,724
Total operating expenses			141,007				110,158				277,012				216,108
Gain on sale of non-real estate assets			1,925				-				1,965				-
Income from operations			117,964				77,104				215,490				143,041
Other income (expense)
Interest expense (A)			(25,505	)			(20,774	)			(49,745	)			(41,119	)
Interest and dividend income			4				7				18				786
Equity in income of joint ventures			1,914				1,428				4,032				2,649
Net income			94,377				57,765				169,795				105,357
Net income attributable to noncontrolling preferred interests in the Operating Partnership			(1,007	)			-				(2,003	)			-
Net income attributable to noncontrolling common interests in the Operating Partnership			(1,106	)			(249	)			(1,953	)			(459	)
Net income attributable to common shareholders		$	92,264			$	57,516			$	165,839			$	104,898
Earnings per common share attributable to common shareholders - basic		$	1.09			$	0.75			$	1.98			$	1.38
Earnings per common share attributable to common shareholders - diluted		$	1.09			$	0.74			$	1.97			$	1.37
Common shares used in basic earnings per share calculation			84,270,378				77,057,520				83,957,402				76,222,426
Common shares used in diluted earnings per share calculation			84,428,182				77,219,999				84,132,978				76,365,100
Dividends declared per common share		$	1.0000			$	0.7400			$	2.0000			$	1.4800
(A) Interest expense for the period ending June 30 consists of the following
Interest expense		$	24,775			$	20,171			$	48,284			$	39,914
Amortization of debt issuance costs			730				603				1,461				1,205
Total interest expense		$	25,505			$	20,774			$	49,745			$	41,119

Life Storage, Inc.
Computation of Funds From Operations (FFO) (1)
(unaudited)
		April 1, 2022				April 1, 2021				January 1, 2022				January 1, 2021
		to				to				to				to
(dollars in thousands, except share data)		June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
Net income attributable to common shareholders		$	92,264			$	57,516			$	165,839			$	104,898
Noncontrolling common interests in the Operating Partnership			1,106				249				1,953				459
Depreciation of real estate and amortization of intangible
assets exclusive of debt issuance costs			47,540				35,257				93,406				68,076
Depreciation and amortization from unconsolidated joint ventures			2,340				1,241				4,143				2,443
Funds from operations allocable to noncontrolling
interest in Operating Partnership			(1,697	)			(407	)			(3,087	)			(766	)
Funds from operations available to common shareholders			141,553				93,856				262,254				175,110
FFO per share - diluted		$	1.68			$	1.22			$	3.11			$	2.29
Adjustments to FFO
Gain on sale of non-real estate assets			(1,925	)			-				(1,965	)			-
Acquisition fee			(132	)			(1,280	)			(132	)			(1,280	)
Funds from operations resulting from non-recurring items
allocable to noncontrolling interest in Operating Partnership			24				5				24				5
Adjusted funds from operations available to common shareholders			139,520				92,581				260,181				173,835
Adjusted FFO per share - diluted		$	1.65			$	1.20			$	3.09			$	2.28
Common shares - diluted			84,428,182				77,219,999				84,132,978				76,365,100

Life Storage, Inc.
Computation of Net Operating Income (2)
(unaudited)
		April 1, 2022				April 1, 2021				January 1, 2022				January 1, 2021
		to				to				to				to
(dollars in thousands)		June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
Net Income		$	94,377			$	57,765			$	169,795			$	105,357
General and administrative			18,636				15,083				34,502				29,266
Depreciation and amortization			48,076				35,771				94,476				69,130
Interest expense			25,505				20,774				49,745				41,119
Interest and dividend income			(4	)			(7	)			(18	)			(786	)
Equity in income of joint ventures			(1,914	)			(1,428	)			(4,032	)			(2,649	)
Net operating income		$	184,676			$	127,958			$	344,468			$	241,437
Same store (4)		$	135,730			$	108,278			$	256,277			$	207,146
Net operating income related to tenant reinsurance			11,776				8,280				22,197				16,118
Other stores, management fee income, and gain on
sale of non-real estate assets			37,170				11,400				65,994				18,173
Total net operating income		$	184,676			$	127,958			$	344,468			$	241,437

Life Storage, Inc.
Quarterly Same Store Data (3) (4) 580 mature stores owned since 12/31/20
(unaudited)
		April 1, 2022			April 1, 2021
		to			to							Percentage
(dollars in thousands)		June 30, 2022			June 30, 2021			Change				Change
Revenues:
Rental income		$	183,821		$	154,286		$	29,535			19.1	%
Other operating income			2,020			2,043			(23	)		-1.1	%
Total operating revenues			185,841			156,329			29,512			18.9	%
Expenses:
Payroll and benefits			10,374			10,375			(1	)		0.0	%
Real estate taxes			19,954			19,420			534			2.7	%
Utilities			3,918			3,634			284			7.8	%
Repairs and maintenance			4,925			4,565			360			7.9	%
Office and other operating expense			4,872			4,199			673			16.0	%
Insurance			1,799			1,741			58			3.3	%
Advertising			52			52			-			0.0	%
Internet marketing			4,217			4,065			152			3.7	%
Total operating expenses			50,111			48,051			2,060			4.3	%
Net operating income (2)		$	135,730		$	108,278		$	27,452			25.4	%
QTD Same store move ins			59,990			56,226			3,764
QTD Same store move outs			56,729			49,066			7,663

Other Comparable Quarterly Same Store Data (4)
(unaudited)
		April 1, 2022			April 1, 2021
		to			to						Percentage
		June 30, 2022			June 30, 2021			Change			Change
2021 Same store pool (530 stores)
Revenues		$	168,673		$	141,790		$	26,883		19.0	%
Expenses			45,521			43,434			2,087		4.8	%
Net operating income		$	123,152		$	98,356		$	24,796		25.2	%
2020 Same store pool (514 stores)
Revenues		$	163,535		$	137,309		$	26,226		19.1	%
Expenses			43,883			42,130			1,753		4.2	%
Net operating income		$	119,652		$	95,179		$	24,473		25.7	%

Life Storage, Inc.
Year to Date Same Store Data (3) (4) 580 mature stores owned since 12/31/20
(unaudited)
		January 1, 2022			January 1, 2021
		to			to							Percentage
(dollars in thousands)		June 30, 2022			June 30, 2021			Change				Change
Revenues:
Rental income		$	353,266		$	300,716		$	52,550			17.5	%
Other operating income			3,945			3,888			57			1.5	%
Total operating revenues			357,211			304,604			52,607			17.3	%
Expenses:
Payroll and benefits			21,197			21,442			(245	)		-1.1	%
Real estate taxes			39,698			38,747			951			2.5	%
Utilities			8,423			7,771			652			8.4	%
Repairs and maintenance			10,256			9,691			565			5.8	%
Office and other operating expense			9,577			8,621			956			11.1	%
Insurance			3,562			3,463			99			2.9	%
Advertising			104			104			-			0.0	%
Internet marketing			8,117			7,619			498			6.5	%
Total operating expenses			100,934			97,458			3,476			3.6	%
Net operating income (2)		$	256,277		$	207,146		$	49,131			23.7	%
YTD Same store move ins			110,193			107,971			2,222
YTD Same store move outs			106,680			95,626			11,054

Life Storage, Inc.
Other Data - unaudited		Same Store (3)								All Stores (5)
		2022				2021				2022			2021
Weighted average quarterly occupancy		94.0%				95.1%				93.5%			94.7%
Occupancy at June 30		94.0%				95.6%				93.7%			95.0%
Rent per occupied square foot		$18.45				$15.37				$18.21			$15.32
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, 2022:
Beginning balance		$	7,090,457
Property acquisitions			607,856
Improvements and equipment additions:
Expansions			12,263
Roofing, paving, and equipment:
Stabilized stores			14,729
Recently acquired stores			3,282
Change in construction in progress (Total CIP $53.9 million)			9,279
Dispositions and Impairments			(3,596	)
Storage facilities at cost at period end		$	7,734,270
Comparison of Selected G&A Costs (unaudited)		Quarter Ended
		June 30, 2022				June 30, 2021
Management and administrative salaries and benefits		$	11,213			$	9,784
Training			265				143
Call center			964				751
Life Storage Solutions costs			346				277
Income taxes			887				568
Legal, accounting and professional			1,412				893
Other administrative expenses (6)			3,549				2,667
		$	18,636			$	15,083
Net rentable square feet		June 30, 2022
Wholly owned properties			53,579,937
Joint venture properties			8,877,327
Third party managed properties			20,134,342
			82,591,606
		June 30, 2022				June 30, 2021
Common shares outstanding			84,384,380				78,041,891
Operating Partnership Units outstanding			1,041,510				332,399

(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, operating lease expenses, depreciation and amortization expense, any losses on sale of real estate, acquisition related costs, general and administrative expense, and deducting from net income: income from discontinued operations, interest income, any gains 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 in 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.

 

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