UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission file number:
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of |
(I.R.S. Employer |
(Address of principal executive offices) (Zip code)
(
(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. |
No ☐ |
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Life Storage LP |
No ☐ |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Life Storage, Inc. |
No ☐ |
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Life Storage LP |
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.
Life Storage, Inc.:
☒ |
Accelerated Filer |
☐ |
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Non-accelerated Filer |
☐ |
Smaller Reporting Company |
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Emerging Growth Company |
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Life Storage LP:
Large Accelerated Filer |
☐ |
Accelerated Filer |
☐ |
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☒ |
Smaller Reporting Company |
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Emerging Growth Company |
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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. |
☐ |
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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 |
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Life Storage LP |
Yes ☐ |
No |
Securities registered pursuant to Section 12(b) of the Act:
Life Storage, Inc.:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Life Storage LP:
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As of April 29, 2022,
EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended March 31, 2022 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 98.1% ownership interest therein as of March 31, 2022, assuming the conversion of all preferred operating partnership units at that date. 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:
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
2
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.
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) |
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March 31, |
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December 31, |
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Assets |
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Investment in storage facilities: |
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Land |
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$ |
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$ |
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Building, equipment, and construction in progress |
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Less: accumulated depreciation |
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Investment in storage facilities, net |
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Cash and cash equivalents |
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Accounts receivable |
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Receivable from unconsolidated joint ventures |
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Investment in unconsolidated joint ventures |
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Prepaid expenses |
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Trade name |
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Other assets |
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Total Assets |
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$ |
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$ |
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Liabilities |
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Line of credit |
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$ |
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$ |
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Term notes, net |
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Accounts payable and accrued liabilities |
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Deferred revenue |
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Mortgages payable |
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Total Liabilities |
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Noncontrolling redeemable Preferred Operating Partnership Units at redemption value |
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Noncontrolling redeemable Common Operating Partnership Units at redemption value |
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Shareholders’ Equity |
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Common stock $ |
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Additional paid-in capital |
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Dividends in excess of net income |
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( |
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Accumulated other comprehensive loss |
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Total Shareholders’ Equity |
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Total Liabilities and Shareholders’ Equity |
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$ |
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$ |
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See notes to consolidated financial statements.
4
LIFE STORAGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
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Three Months Ended |
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(dollars in thousands, except per share data) |
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2022 |
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2021 |
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Revenues |
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Rental income |
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$ |
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$ |
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Tenant reinsurance |
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Other operating income |
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Total operating revenues |
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Expenses |
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Property operations and maintenance |
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Tenant reinsurance |
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Real estate taxes |
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General and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Income from operations |
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Other income (expenses) |
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Interest expense |
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Interest and dividend income |
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Equity in income of joint ventures |
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Net income |
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Net income attributable to noncontrolling preferred |
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Net income attributable to noncontrolling common |
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Net income attributable to common shareholders |
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$ |
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$ |
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Earnings per common share attributable |
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$ |
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$ |
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Earnings per common share attributable |
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$ |
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$ |
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Common shares used in basic earnings per share |
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Common shares used in diluted earnings per share |
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Dividends declared per common share |
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$ |
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$ |
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See notes to consolidated financial statements.
5
LIFE STORAGE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
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Three Months Ended |
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(dollars in thousands) |
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2022 |
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2021 |
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Net income |
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$ |
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$ |
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Other comprehensive income: |
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Effective portion of gain on derivatives net |
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Total comprehensive income |
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Comprehensive income attributable to noncontrolling |
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( |
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Comprehensive income attributable to common shareholders |
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$ |
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$ |
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See notes to consolidated financial statements.
6
LIFE STORAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands) |
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Three Months |
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Three Months |
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Operating Activities |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization of debt issuance costs and bond discount |
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Equity in income of joint ventures |
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Distributions from unconsolidated joint ventures |
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Non-vested stock earned |
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Deferred income taxes |
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Other |
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Changes in assets and liabilities (excluding the effects of acquisitions): |
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Accounts receivable |
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Prepaid expenses |
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(Advances to) receipts from joint ventures |
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Accounts payable and other liabilities |
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( |
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Deferred revenue |
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Net cash provided by operating activities |
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Investing Activities |
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Acquisition of storage facilities, net of cash acquired |
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( |
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Improvements, equipment additions, and construction in progress |
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( |
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( |
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Return of investment in unconsolidated joint ventures |
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Investment in unconsolidated joint ventures |
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( |
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( |
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Property deposits |
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Net cash used in investing activities |
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( |
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Financing Activities |
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Net proceeds from sale of common stock |
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Proceeds from line of credit |
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Repayments of line of credit |
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( |
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( |
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Dividends paid - common stock |
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( |
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( |
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Distributions to noncontrolling interest holders |
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( |
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( |
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Redemption of operating partnership units |
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( |
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( |
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Mortgage principal payments |
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( |
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Net cash provided by financing activities |
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Net decrease in cash and restricted cash |
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Cash and restricted cash at beginning of period |
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Cash and restricted cash at end of period |
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$ |
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$ |
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Supplemental cash flow information |
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Cash paid for interest, net of interest capitalized |
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$ |
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$ |
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Cash (received) paid for income taxes, net of refunds |
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$ |
( |
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$ |
( |
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See notes to consolidated financial statements.
7
LIFE STORAGE LP
CONSOLIDATED BALANCE SHEETS
(dollars in thousands) |
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March 31, |
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December 31, |
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Assets |
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Investment in storage facilities: |
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Land |
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$ |
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$ |
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Building, equipment, and construction in progress |
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Less: accumulated depreciation |
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( |
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( |
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Investment in storage facilities, net |
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Cash and cash equivalents |
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Accounts receivable |
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Receivable from unconsolidated joint ventures |
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Investment in unconsolidated joint ventures |
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Prepaid expenses |
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Trade name |
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Other assets |
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Total Assets |
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$ |
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$ |
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Liabilities |
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Line of credit |
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$ |
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$ |
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Term notes, net |
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Accounts payable and accrued liabilities |
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Deferred revenue |
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Mortgages payable |
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Total Liabilities |
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Limited partners’ preferred redeemable capital interest at redemption value ( |
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Limited partners’ common redeemable capital interest at redemption value ( |
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Partners’ Capital |
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General partner ( |
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Limited partners ( |
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Accumulated other comprehensive loss |
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( |
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( |
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Total Partners’ Capital |
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Total Liabilities and Partners’ Capital |
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$ |
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$ |
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See notes to consolidated financial statements.
8
LIFE STORAGE LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
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Three Months Ended |
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(dollars in thousands, except per unit data) |
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2022 |
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2021 |
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Revenues |
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Rental income |
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$ |
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$ |
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Tenant reinsurance |
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Other operating income |
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Total operating revenues |
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Expenses |
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Property operations and maintenance |
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Tenant reinsurance |
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Real estate taxes |
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General and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Income from operations |
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Other income (expenses) |
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Interest expense |
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( |
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( |
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Interest and dividend income |
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Equity in income of joint ventures |
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Net income |
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Net income attributable to noncontrolling preferred |
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( |
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Net income attributable to noncontrolling common |
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( |
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( |
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Net income attributable to common unitholders |
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$ |
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$ |
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Earnings per common unit attributable to |
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$ |
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$ |
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Earnings per common unit attributable to |
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$ |
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$ |
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Common units used in basic earnings per unit |
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Common units used in diluted earnings per unit |
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Distributions declared per common unit |
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$ |
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$ |
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Net income attributable to general partner |
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$ |
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$ |
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Net income attributable to limited partners |
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$ |
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$ |
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See notes to consolidated financial statements.
9
LIFE STORAGE LP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
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Three Months Ended |
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(dollars in thousands) |
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2022 |
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2021 |
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Net income |
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$ |
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$ |
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Other comprehensive income: |
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Effective portion of gain on derivatives net of |
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Total comprehensive income |
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Comprehensive income attributable to noncontrolling |
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( |
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( |
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Comprehensive income attributable to common unitholders |
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$ |
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$ |
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See notes to consolidated financial statements.
10
LIFE STORAGE LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands) |
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Three Months |
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Three Months |
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Operating Activities |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization of debt issuance costs and bond discount |
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Equity in income of joint ventures |
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( |
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