1 FIRST QUARTER 2018 INVESTOR PRESENTATION
2 LIFE STORAGE AT A GLANCE Over 700 stores in 28 states More than 390,000 customers 91.1% same store quarterly occupancy 30+ years in self-storage business 145 properties managed for third parties entities Investment Grade Rated Moody s: Baa2 S&P: BBB 5.7x Debt to EBITDA $5.7 Billion enterprise value 108% quarterly dividend increase over past 5 years 215% 10 year total return
3 LIFE STORAGE A VALUE PROPOSITION Portfolio Transformed Multiple Growth Drivers Modern Branding Progressive Platforms Financial Strength Attractive Valuation Since changing to the Life Storage brand, the Company's transformation has enhanced its market positioning, scaled the operating platform and strengthened the balance sheet. Life Storage is well positioned for growth and is attractively-valued.
4 LIFE STORAGE PORTFOLIO Geographically Diversified Assets Core Metrics Improving
LIFE STORAGE 5 TIMELINE 2015 25 years as Uncle Bob's Self Storage Aug. 2016 Sovran begins trading as Life Storage (LSI) on NYSE Mar. 2017 Brand transformation complete Jul. 2016 Sovran acquires LifeStorage Sep. 2016 Brand transformation begins Mar. 2018 711 Life Storage locations After 25 years of building the Uncle Bob s brand into a leader in the industry, the Company is now leveraging its experience to build the Life Storage brand.
COMPANY PORTFOLIO 6 LIFE STORAGE HAS A COAST TO COAST PRESENCE Life Storage owns and manages properties in 28 states across the U.S. and it has a presence in 18 of the top 25 fastest growing markets in the country*. Its 2016 expansion into the West Coast has bolstered both its demographics and geographic diversity. 711 Locations 566 Wholly Owned 98 Joint Venture 47 Managed Major Market Four or few locations 706 37.0M 49.6M 711 50.1 MM 390K + Self Storage Facilities Net Rentable Sq. Ft. Customers *Forbes 2018 Fastest Growing U.S. Cities
PORTFOLIO UPGRADES 7 STRONG CORE METRICS Acquisitions from 2016 (including the LifeStorage portfolio), expansions and enhancements of existing properties, the integration of certificate of occupancy facilities, and the Company s expanded presence in major metros has significantly elevated its core metrics. Quick Facts 2016 vs. 2018: Upgraded age, size & quality of portfolio Strengthened demographic profile Improved scale and penetration in many core markets Significant presence in the top ten largest U.S. Metro Areas*, including: New York Newark New Jersey, NY-NJ Los Angeles Long Beach Anaheim, CA Chicago Naperville Elgin, IL Dallas Fort Worth Arlington, TX Houston The Woodlands Sugar Land, TX *US Census Bureau
8 LIFE STORAGE GROWTH DRIVERS Added 105 Stabilized Properties to the 2018 Same Store Pool Expansion Properties Lease-up Properties Management Fee Income Joint Venture Revenues
GROWTH DRIVERS 9 EMBEDDED GROWTH DRIVERS Improved Portfolio NOI and NAV Acquisitions Re-Development Third Party Management Joint Ventures Lease-Up Stores 120 properties from the Ongoing success with The Life Storage Brand has 20+ year track record of Three stabilized LifeStorage acquisition and expanding and enhancing accelerated the Company s sponsoring and operating certificate of others have gained an stores in existing portfolio momentum in its 3rd Party jointly owned partnerships occupancy (C of O) on-boarding benefit from the Management business properties were added to Company s platforms Adds 10-20k sq. ft. of Provides additional presence the Company s same premium space to Revenues from management fees and scale in existing markets; store pool in 2018. Three new, dense markets successful stores grew 75% in 2017 vs. 2016, and (Los Angeles, Las Vegas, continued strong growth is Adds property and The remaining 22 "C of O" Sacramento) are expected to Upgrades overall expected in 2018 management fee income and lease-up properties outperform core portfolio presence of the will provide out-sized NOI Significant operating margin properties Provides additional presence and scale in existing markets; Enhances acquisition pipeline growth as they move to stabilization gains from platforms and Reduces effective age significant cost sharing scale efficiencies Enhances acquisition pipeline
GROWTH DRIVERS 10 EXPANSION PROPERTIES Investment (In $millions) Premium Sq Ft. Added* (in thousands) Incremental NOI at Stabilization (in $millions) $50.0 350 $5.5 $45.0 $5.0 $40.0 300 $4.5 $35.0 $4.0 $30.0 250 $3.5 $25.0 $3.0 $20.0 2016 2017 2018** 200 2016 2017 2018** $2.5 2016** 2017** 2018** * NRSF = total NRSF after expansion less NRSF removed ** Projected Weighing demand indicators & revenue potential, the Company redevelops properties to add premium space types. Fifteen such projects were completed in 2017, and the Company anticipates approximately10-20 projects per year in 2018 & 2019. With an 8%+ yield, these low risk investments in existing properties also upgrade the appearance and customer experience at these stores.
GROWTH DRIVERS 11 LEASE-UP PROPERTIES The Company does not develop new properties, but occasionally purchases newly built properties or properties in the early stages of lease-up. Twenty-two of these lease-up facilities have not yet made their full impact on NOI. In 2018 and over the next few years, these properties will have an outsized contribution to NOI. $19.1M Estimated Stabilized NOI* +0.19 Incremental NOI Impact per Share** Market Number of Stores Cost Net Rentable Sq. Ft. Occupancy 12/31/18 NOI*** Chicago, IL 9 $ 123,166 708,305 85.5% $ 5,044 Austin, TX 2 12,477 146,969 89.6% 876 Dallas, TX 2 21,690 127,207 84.3% 764 Phoenix, AZ 2 17,179 131,858 93.5% 1,328 Boston, MA 1 10,291 63,283 86.3% 400 Boulder, CO 1 8,373 45,986 75.8% 216 Charleston, SC 1 8,620 70,165 40.4% 104 Los Angeles, CA 1 18,600 79,345 89.1% 740 Miami, FL 1 11,274 69,801 88.9% 732 San Marcos, TX 1 8,353 59,066 87.8% 224 Charlotte, NC 1 12,549 70,118 17.0% (224) 22 $ 252,572 1,572,103 81.6% 10,204 * NOI at 85% occupied at stable market rates ** Based on the difference between estimated NOI and current NOI, and assuming 46,536,672 diluted shares. *** Q1 2018 NOI annualized
GROWTH DRIVERS 12 THIRD PARTY MANAGEMENT Since rebranding to Life Storage, the Company's 3rd party management revenues have grown Management Fee Income +36% CAGR (since 2011) substantially on a year over year basis a 75% $2.0 increase in 2017 versus 2016. Double digit growth is expected to continue in 2018. $1.5 In millions $1.0 $0.5 $0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018* *Estimate based on Q1 fees annualized / $0.04 per share
GROWTH DRIVERS 13 JOINT VENTURE REVENUES Relationships with JV partners allow Life Storage to grow its national footprint, leverage existing resources, and generate additional fee income with limited capital commitment. Joint Venture FFO per Share contribution has grown from roughly $0.04 per share in 2010 to an estimated $0.19 per share in 2018. Pro-Rata Share of Joint Venture FFO (in $millions) Joint Venture Fee Income (in $millions) $9.0 $8.0 $8.0 $7.0 $7.0 $6.0 $6.0 $5.0 $5.0 $4.0 $4.0 $3.0 $3.0 $2.0 $2.0 $1.0 $1.0 $0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018* $0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018* *Estimate based on Q1 annualized
14 LIFE STORAGE A NEW BRAND A Name that Fits Positive Indicators Improvement in Search Rankings
LIFE STORAGE BRAND 15 A NAME THAT FITS ANY LIFE EVENT
LIFE STORAGE BRAND 16 POSITIVE INDICATORS FOR A NEW BRAND Increase in click-through rates 22% 28% A click-through rate is a measure of impressions to clicks in search engine results. When we've been shown in search results, Uncle Bob's and Life Storage results don't look much different - the main difference is the brand name and website. However, as Life Storage, the Company's click-through rates have increased from 22% to 28%. Facebook "Likes" (Followership) 27k 171k Leveraging social media for brand exposure and search engine optimization is part of the Company's online marketing strategy. With the Life Storage brand, gaining followership has been easier - in eighteen months as Life Storage on Facebook, followership has increased 530%.
LIFE STORAGE BRAND 17 IMPROVEMENT IN SEARCH RANKINGS Top 20 Markets - Average Google Ranking 1 5 10 15 20 25 30 5/1 6/1 7/1 8/1 9/1 10/1 10/14 10/19 10/28 11/5 12/1 1/1 2/1 3/1 4/1 Charts measure average position in Google search results for the seven highest-volume search terms in the industry. Values represent placement in results. where the top result is 1. As any company undergoing a brand change, Life Storage faced lower Google Search Rankings for several months post-transition. In late October, a dramatic improvement in search rankings began, and continues to improve market to market. The Company's average ranking positions in Google Search Results for the seven highest volume keywords in the industry improved to the coveted first page, currently with an average rating of six.
18 LIFE STORAGE OPERATING PLATFORMS Revenue Management Marketing Customer Care Center Store Operations
REVENUE MANAGEMENT 19 MAXIMIZE LONG TERM REVENUE Life Storage maximizes long term revenue by developing, analyzing and refining quantitative processes designed for the characteristics unique to self storage. The Company's Revenue Management System uses data to balance street rates, promotions and in-place rate increases while maximizing revenue. Data Rates Specials In-Place Increases Data collected from the Pricing model with analyst Incentives adjust Targets customers with a Company s stores, oversight strategically dynamically in real time low probability of moving Customer Care Center, adjusts rates with current and are designed to out or with high and website, along with and forecasted market attract long-term replacement value. external data, drive the trends. customers. Company's systems and decision making.
REVENUE MANAGEMENT 20 REVENUE MANAGEMENT SYSTEM The Goal The Right Data The Model The Result Match today's sophisticated & Big data is transformed, Analyst parameters, pricing Optimized pricing and informed customer to their organized and distilled to use as algorithms and machine promotions attract the right ideal space at the ideal price inputs for pricing models. learning models combine to customers to maximize within the Life Storage output pricing and promotions. long-term revenue. portfolio.
REVENUE MANAGMENT 21 MONITORING AND ADJUSTING Experienced pricing analysts use sophisticated analytical tools to monitor current strategies and spot changing trends quickly. Focus on accurate forecasting models and alerts so that when market conditions deviate from expectations, adjustments are made quickly. New Development Tracking application allows analysts to stay ahead of new supply and build/maintain occupancy when a new competitor opens.
MARKETING 22 STRATEGY AND RESULTS Brand Marketing + Upper Funnel Marketing + Search Marketing = Conversions The Company invests in 82% of customers research Search Engines are the primary Leveraging each of these advertising and sponsorships in before making purchases. source of most conversions, channels, the Company the communities that Life Storage engages and the Company invests engages customers early, immediately surround its potential customers early in strategically in search engine and influences future facilities. These placements the process. By leveraging optimization techniques to choices. The strategy create positive, memorable articles, videos, and ads that secure top placement in brings in a larger pool of brand impressions that create address pre-storage intent, search results. potential customers than familiarity and influence Life Storage targets potential The Company also leverages search engine marketing potential customers choices customers with search, social data from search engine can provide alone. when searching for storage. media, and remarketing advertising to optimize campaigns to introduce campaigns with greater storage solutions early. precision and efficiency.
MARKETING 23 OPTIMIZATION FOR CONVERSION WHERE IT S NEEDED Life Storage marketing campaigns target individuals most likely to rent at facilities with the most availability, and then "learn" how to do it more often and more efficiently. Data Analysis Data from the Company's Revenue Management systems and Point of Sale systems is analyzed for occupancy, rate and incentive signals. Facilities are targeted based on availability and favorable incentives and rates, signaling the need to drive more inquiries to these locations. Campaign Optimization Campaign data is analyzed for conversion success and cost efficiency. Campaigns are optimized to target individuals that show similar search behavior. Campaign Targeting Search advertising campaigns are adjusted, targeting the facilities that need more inquiries with higher spending. Campaigns are expanded to capture more searching customers in the immediate 2-5 mile radius around facilities targeted.
CUSTOMER CARE CENTER 24 TRAINING FOR SALES The Company 's Customer Care Center provides scalable assistance to prospective customers looking for a consultative sales approach. The Center also provides 24/7/364 assistance for existing Life Storage customers. 100% U.S. based and staffed with Life Storage employees Customers wait (on average) less than eight seconds to speak to a live representative Proprietary Point of Sale software -internally designed, developed and sustained Carefully monitored, high quality standards and expectations for all customer interactions Exacting performance with a 98%+ Service Level
STORE OPERATIONS 25 PLATFORMS Life Storage's front line store teams and managerial personnel are dedicated to ensuring an unparalleled customer experience. Recurring secret shopper visits ensure store teams are maintaining the highest levels of customer satisfaction Comprehensive and vigorous coaching and training provided on an ongoing basis to all Store Teams Key Performance Metrics drive exceptional employee performance Customer Satisfaction surveying, analysis and procedures for follow-up on customer service issues 9 out of 10 customers would recommend Life Storage to a friend (or do business with us again)
26 LIFE STORAGE FINANCIAL STRENGTH Q1 2018 Highlights Growing Value Well Positioned Balance Sheet Conservative Financial Ratios Strong Capital Structure
FINANCIAL STRENGTH 27 Q1 2018 HIGHLIGHTS Exceeded Q1 adjusted FFO per share expectations: $1.30 per share; a 3.2% increase over Q1 2017 (versus guidance: $1.24 - $1.28) Exceeded Q1 same store NOI growth expectations: 2.50% (versus guidance: 1.00% - 2.00%) Achieved record-high same store occupancy at quarter-end: 91.2% Reduced same store internet marketing expense by 18% by leveraging improved search engine visibility Added 10 stores to the Company s third party management platform, Life Storage Solutions Increased management fee income by 31.7% over Q1 2017 Raised annual same store NOI guidance to 1.25% - 2.25% (versus previous: 0.75% - 1.75%) Raised annual adjusted FFO guidance range: $5.36 - $5.43 (versus previous: $5.33 $5.43)
FINANCIAL STRENGTH 28 GROWING VALUE Life Storage is well positioned to continue cash flow and dividend growth, supported by multiple revenue drivers, a favorable payout ratio, and a solid balance sheet. Robust FFO* Per Share Growth Strong Dividend Growth $6.00 $4.50 $4.00 $5.00 $3.50 $3.00 $4.00 $2.50 $3.00 $2.00 $1.50 $2.00 2010 2011 2012 2013 2014 2015 2016 2017 2018** $1.00 2010 2011 2012 2013 2014 2015 2016 2017 2018*** 2010 2011 2012 2013 2014 2015 2016 2017 2018*** Payout Ratio 73.5% 65.5% 54.9% 52.7% 62.2% 64.8% 71.3% 74.4% 74.1% *As adjusted **Midpoint of guidance ***Projected
FINANCIAL STRENGTH 29 WELL POSITIONED BALANCE SHEET Solid, unsecured balance sheet with no debt maturities until 2019, a 7.5 year weighted average debt tenor, and a virtually 100% unencumbered asset base. $600 MM Debt Maturity Schedule (in $millions) $500 $400 MM MM Line Bank Term Notes $300 MM Institutions $200 MM Mortgage $100 MM Public Bond $0 MM 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
FINANCIAL STRENGTH 30 CONSERVATIVE FINANCIAL RATIOS Life Storage s conservative Financial Ratios provide flexibility and a favorable outlook. 6 X Debt Service Coverage 5 X 4 X 3 X 5.7x Debt/EBITDA 4.6x Debt Service Coverage 39% Debt to Gross Assets 2 X 2010 2011 2012 2013 2014 2015 2016 2017 Q1-2018 Debt to Gross Assets Senior Unsecured Note Covenants Required Actual Senior Unsecured Note Covenants* Required Actual 40% Total Consolidated Debt to Total Assets 60% 39.4% Total Secured Debt to Total Assets 40% 0.3% 30% Total Unencumbered Assets to Total Unsecured Debt 150% 246.0% Consolidated Income Available for Debt Service to Total Annual Debt Service Charge 1:5 : 1 4:7 : 1 20% 2010 2011 2012 2013 2014 2015 2016 2017 Q1-2018 *Covenants further defined in the Company s Base indenture as of June 20, 2016
FINANCIAL STRENGTH 31 STRONG CAPITAL STRUCTURE The Company has access to a broad array of capital sources, both public and private, creating an attractive leverage profile that supports its growth strategy. There is significant free cash flow after Capex and dividend requirements are met. Mortgage Debt <1% Liquidity Cash on Hand $7.8 Million Credit Available $370 Million Common Stock 69% Revolver 2% OP Units <1% Debt to Enterprise Value 31.2% Revolver 6% Unsecured Notes 27%
32 LIFE STORAGE ATTRACTIVE VALUATION Outperforming Current Valuation
ATTRACTIVE VALUATION 33 OUTPERFORMING CURRENT VALUATION Comparatively, important metrics are imbalanced despite the Company's position and performance. The Company is well-positioned financially and has a positive outlook, but is trading at a value price. 2018 & 2019 FFO Multiple 2018 & 2019 EBITDA Multiple 24 X 24 X 20 X 20 X 16 X 16 X 12 X 12 X 8 X 8 X 4 X 4 X 0 X CUBE EXR NSA PSA RMZ LSI 0 X CUBE EXR NSA PSA RMZ LSI 2018 FFO Multiple 2019 FFO Multiple 2018 EBITDA Multiple 2017 EBITDA 17 FFO Multiple 2018 EBITDA Multiple 2017 EBITDA Multiple 2019 EBITDA Multiple 2018 EBITDA Multiple 5% Dividend Yield 7% Implied Cap Rate 4% 6% 5% 3% 4% 3% 2% CUBE EXR NSA PSA RMZ LSI 2% N/A CUBE EXR NSA PSA RMZ LSI Sources: FactSet, SNL, Bloomberg and Public Filings Priced as of midday 05.03.18
33 LIFE STORAGE AT A GLANCE Over 700 stores in 28 states More than 390,000 customers 91.1% same store quarterly occupancy 30+ years in self-storage business 145 properties managed for third parties entities Investment Grade Rated Moody s: Baa2 S&P: BBB 5.7x Debt to EBITDA $5.7 Billion enterprise value 108% quarterly dividend increase over past 5 years 215% 10 year total return
SAFE HARBOR STATEMENT 35 FORWARD LOOKING STATEMENTS This presentation may contain forward looking statements as defined in Section 27A of the Securities Act of 1933, and in Section 21E of the Securities Exchange Act of 1934. Forward looking statements address matters that are subject to a number of risks and uncertainties. Such factors include, but are not limited to, the effect of competition from new self storage facilities; the Company's ability to evaluate, finance and integrate acquired businesses into the Company's existing operations; the Company s ability to enter new markets where it has little or no operational experience; and other such factors as set forth in the Company's 10-K for the year ended December 31, 2017 as filed with the Securities and Exchange Commission. The Company is under no obligation to update any such forward looking statements.