Fourth Quarter 2018 Investor Presentation 2 SAFE HARBOR STATEMENT - - PowerPoint PPT Presentation

Life Storage

Fourth Quarter 2018 Investor Presentation

SAFE HARBOR STATEMENT

FORWARD LOOKING STATEMENTS

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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, 2018 as filed with the Securities and Exchange Commission. The Company is under no obligation to update any such forward looking statements.

Over 750 stores in 28 states and Ontario, Canada More than 400,000 customers 90.4% same store average quarterly

• ccupancy

213 properties managed for third party entities $6.1 Billion enterprise value 304% 10 year total return 89% quarterly dividend increase

• ver past 5 years

30+ years in self-storage business Investment Grade Rated Moody’s: Baa2 S&P: BBB 5.3x Debt to EBITDA

AT A GLANCE1

LIFE STORAGE

Notes: (1) Data as of December 31, 2018

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INVESTMENT HIGHLIGHTS

LIFE STORAGE

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Diversified Portfolio with Increasing Focus on Primary Markets Growth Strategy Driven by Disciplined Capital Allocation Innovative Technology Solutions to Drive Customer Acquisition and Revenue Management Differentiated Corporate Customer Value Proposition Strong Financial Performance, Conservative Balance Sheet and Attractive Valuation

Notes: (1) Forbes 2018 Fastest Growing U.S. Cities (2) As of December 31, 2018 (3) Subsequent to quarter end, the Company began management of four self storage facilities located in Ontario, CA

49.6M

Self Storage Facilities Net Rentable Sq. Ft. Customers

DIVERSIFIED PORTFOLIO

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Major Market Four or few locations

774 Locations2

561 Wholly Owned 113 Joint Venture 100 Managed

774 55.3 MM 400K +

Life Storage owns and manages properties in 28 states, including in 16 of the top 20 fastest growing markets in the United States1, as well as Ontario, Canada. Its 2016 expansion into the West Coast has enhanced both its demographics and geographic diversity.

LIFE STORAGE HAS A COAST TO COAST PRESENCE

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DIVERSIFIED PORTFOLIO

BIGGER-BETTER-STRONGER

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Life Storage has grown substantially in recent years, with a particular focus on accessing and building scale in both primary markets as well as secondary markets where the company can leverage scale to drive margin expansion and revenue growth.

• Increased scale by >40%
• Added three primary markets

(Los Angeles, Sacramento and Las Vegas)

• Enhanced store quality
• Improved demographic profile
• Increased store operating

performance

• Strengthened corporate

financial performance

($ in '000s, except FFO/Share, Rent/Sq Ft, Median Income)

Dec 2015 Dec 2018 % Inc Stores Owned 452 561 24.1% Joint Venture 69 113 63.8% Managed (non-Joint Venture) 21 100 376.2% Total 542 774 42.8% Top-35 Markets Sq Ft (owned) 55% 63% 14.9% Climate Controlled Sq Ft (owned) 43% 47% 9.4% Demographics 3-Mile Pop Density 78,742 91,286 15.9% 3-Mile Med HH Income 69,517 $ 71,860 $ 3.4% Financial Avg SS Rent per Square Foot 12.64 $

(1)

14.09 $

(2)

11.5% Avg SS Rev per Store (Annualized) 808 $

(1)

950 $

(2)

17.5% Store Revenue 360,766 $

(3)

540,279 $

(4)

49.8% Management Fees 5,836 $

(3)

10,571 $

(4)

81.1%

• Adj. FFO per Share

4.94 $

(3)

5.51 $

(4)

11.5% Credit Rating BBB-/Baa3 (5) BBB/Baa2 +1 grade

Notes: (1) Data for 4Q15 (4) Data for last twelve months as of Dec 31, 2018 (2) Data for 4Q18 (5) Prior to Dec 1, 2015 (3) Data for last twelve months as of Dec 31, 2015

GROWTH STRATEGY

EMBEDDED GROWTH DRIVERS

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Improved Portfolio NOI and NAV

Acquisitions Expansions Third Party Management Joint Ventures

• Significant operating

margin gains from platform and scale efficiencies

• Adding 10-20K sq ft of

premium space to successful stores

• Reduces effective age
• Competitively

repositions properties

• Increases market share

and scales cost sharing

• pportunities
• Adds property and

management fee income

• Enhances acquisition

pipeline

• Preferred alternative to

recapitalize non-strategic assets

• Brand Strength; greater

presence = greater interest

• Increases market share

and scales cost sharing

• pportunities
• Adds property and

management fee income

• Enhances acquisition

pipeline

Lease-Up Stores

• CofO and other lease-up

properties will provide

• ut-sized NOI growth as

they move to stabilization

GROWTH STRATEGY

ACQUISITION PROPERTIES

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The merits of Life Storage’s acquisition strategy and implementation of its business model (e.g., revenue management; marketing; customer care center; store platforms) on acquired properties are evident in the performance of the 101 stores acquired in 2016 and added to the Same Store pool in 2018. Both revenue and NOI growth of the acquired properties has significantly outpaced the legacy stores on a year-over-year basis in each of the past five quarters. Strength exists in both new markets (e.g., Los Angeles; Sacramento; Las Vegas) and markets where Life Storage expanded its presence to leverage existing scale (e.g., Boston-Cambridge; Orlando).

Data Progressive Platforms Rates Specials In-Place Increases

0.0% 2.0% 4.0% 6.0% 8.0% 4Q17 1Q18 2Q18 3Q18 4Q18

Y/Y Revenue Growth

Acquired Stores Other Stores 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 4Q17 1Q18 2Q18 3Q18 4Q18

Y/Y NOI Growth

Acquired Stores Other Stores

$0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 Recapitalized Properties Acquired Properties

Average Revenue per Store

Recap Property: Raleigh, NC

Acquired: Atlanta, GA

GROWTH STRATEGY

ASSET MANAGEMENT

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Asset rotation strategy is generating newer properties with higher revenue and greater growth prospects.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Recapitalized Properties Acquired Properties

Average Occupancy

$0.00 $4.00 $8.00 $12.00 $16.00 $20.00 Recapitalized Properties Acquired Properties

Asking Rate per Sq Ft

5 10 15 20 25 30 Recapitalized Properties Acquired Properties

Average Age

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Notes: (1) All properties acquired since January 1, 2018 to date. (2) Revenue per Store for Recapitalized Properties is 2018 actual; Acquired Properties is last-twelve-month for stabilized properties or stabilized projections for lease-up stores.

1 1 1

2

Acquired: Queens, NY

GROWTH STRATEGY

EXPANSION PROPERTIES

10 Investment (In $millions) Premium Sq Ft. Added1 (in thousands) Incremental NOI at Stabilization2 (in $millions)

Weighing demand indicators and revenue potential, the Company redevelops properties to add premium space types. Fifteen such projects were completed in 2018, and the Company anticipates approximately10-20 projects per year in 2019 and 2020. With an 8%+ yield, these low risk investments in existing properties also upgrade the appearance and customer experience at these stores.

$0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 2016 2017 2018 2019 100 200 300 400 2016 2017 2018 2019 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 2016 2017 2018 2019

Notes: (1) NRSF = total NRSF after expansion less NRSF removed (2) Projected 2 2

GROWTH STRATEGY

THIRD-PARTY MANAGEMENT

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Since rebranding to Life Storage, the Company’s third-party management revenues have grown

• substantially. At year-end, roughly 50% of its

managed portfolio were properties in which the Company held no ownership interest – a100% average increase for two consecutive years.

$0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 50 100 150 200 250 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Fee Income ($ in MM) # of Stores

Management Fee Income +22% CAGR

3rd Party (no ownership) Joint Ventures $ Fees

Pro-Rata Share of Joint Venture FFO (in $millions)

GROWTH STRATEGY

JOINT VENTURES

Relationships with joint venture 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 $0.20 per share in 2018.

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Joint Venture Management Fee Income (in $millions)

$0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 $11.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1 1

Notes: (1) Estimated

+ 0.20

Incremental NOI Impact per share as of December 31, 20182 Estimated Stabilized NOI1

$22.2 M

GROWTH STRATEGY

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. At the end of 2018, there were 26 of these lease-up facilities, of which 14 will enter the same store pool in 2019. The remaining assets will have an outsized contribution to NOI over the next couple of years.

13 Market Number of Stores Cost Net Rentable Sq. Ft. Occupancy 12/31/18 NOI3

Chicago, IL 9 $ 123,166 708,601 86.9% $ 6,356 Austin, TX 2 12,477 151,428 88.8% 924 Dallas, TX 2 21,690 126,697 87.2% 828 Phoenix, AZ 2 17,179 131,833 86.4% 1,644 Sacramento, CA 2 23,393 127,295 63.3% 428 Boston, MA 1 10,291 63,183 89.9% 364 Boulder, CO 1 8,373 44,936 73.9% 332 Charleston, SC 1 8,620 70,165 59.1% 316 Los Angeles, CA 1 18,600 79,287 85.9% 320 Miami, FL 1 11,274 69,886 90.2% 852 San Marcos, TX 1 8,353 59,066 83.6% 276 Charlotte, NC 1 12,549 70,118 48.7% 24 Atlanta, GA 1 14,234 79,859 37.1% 112

• St. Louis, MO

1 9,301 77,405 42.9% 24

26 $ 299,500 1,859,759 78.7%

12,800

Notes: (1) NOI at 80% occupied at stable market rates (2) Based on the difference between estimated NOI and current NOI, and assuming 46,645,615 diluted shares (3) Q4 2018 NOI annualized

INNOVATIVE TECHNOLOGY

RENT NOW – SELF SERVICE RENTAL OPTION

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In today’s market, many customers prefer to self-serve and bypass the traditional sales process at the counter. Life Storage recognizes that self storage is no different. “Rent Now” allows customers to skip the counter by electronically selecting a storage space, completing the rental agreement and making their payment online via their computer or mobile device. The customer then receives a property access code and step-by-step directions to their specific rental space.

Key Attributes:

• Fully digital transaction process for those who wish to rent a

space without call center or store manager engagement.

• Process is fully integrated with the Company’s operating,

security and revenue management systems, allowing for real-time, fully automated and accurate inventory and sales management.

• Early adoption and customer commitment is strong; initial

results exceeded expectations.

• Expect all stores will be fully functional by mid-2019.

• Target facilities with need
• Optimize ad campaigns for

conversion

• Target similar customers
• Optimize website performance
• Rental characteristics
• Lifetime value
• Price sensitivity
• Enhanced with third-party

demographic and psychographic data

Performance Data

• Store occupancy
• Move-in performance
• Historical performance
• Enhanced with third-party

competitor data and demand signals

Customer Data

• Optimize rates
• Optimize incentives
• Optimize for supply/demand
• Optimize in-place rent

increases

• Optimize unit mix
• Analyze call transcripts
• Evaluate urgency signals
• Optimize sales with training
• Streamline customer experience
• Forecast staffing needs
• Highly-specific profiling
• Facilitate urgent rentals
• Analyze access behavior
• Optimize rental process

Rent Now Data Call & Store Data Marketing Revenue Mgmt

INNOVATIVE TECHNOLOGY

DATA DRIVEN PLATFORMS

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INNOVATIVE TECHNOLOGY / CORPORATE VALUE PROP

WAREHOUSE ANYWHERE

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Corporate and small business customers are an important segment to Life Storage. The Company created a network of more than 10,000 Life Storage and partner facilities across the country to fulfill its business customers’ nationwide storage needs. Warehouse Anywhere, a subsidiary of Life Storage, launched an intelligent warehouse solution to help solve the final mile delivery challenge of its corporate

• customers. Warehouse Anywhere provides third-party logistics (3PL) and

warehousing services through a forward deployed, unmanned, de-centralized model combining storage asset management with proprietary inventory tracking technology.

Key Attributes:

• Corporate value proposition: As a final mile solution, Warehouse Anywhere

places products closer to customers, reduces logistics costs, increases inventory tracking accuracy and improves delivery time.

• Technology solution successfully deployed in several industries, including

retail, service and repair, and healthcare.

• Differentiated fee-based revenue model with technology implementation

and ancillary services (e.g., courier).

Notes: (1) As adjusted (2) Mid-point of guidance (3) Projected

Robust FFO1 Per Share Growth

FINANCIAL STRENGTH

GROWING VALUE

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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.

$2.00 $3.00 $4.00 $5.00 $6.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

$1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Strong Dividend Growth

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019***

Payout Ratio

73.5% 65.5% 54.9% 52.7% 62.2% 64.8% 71.3% 74.4% 72.6% 71.7%

2 3

FINANCIAL STRENGTH

WELL POSITIONED BALANCE SHEET

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Solid, unsecured balance sheet with no debt maturities until June 2020, a 7.1 year weighted average debt tenor, and a virtually 100% unencumbered asset base.

Debt Maturity Schedule

(in $millions)

Line Bank Term Notes Institutions Public Bond Mortgage

$ in Millions

$- $100 $200 $300 $400 $500 $600 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Debt Service Coverage Debt to Total Assets

5.3x

Debt/EBITDA

4.6x

Debt Service Coverage

38%

Debt to Total Assets

Senior Unsecured Note Covenants Required Actual

*Covenants further defined in the Company’s Base indenture dated June 20, 2016

FINANCIAL STRENGTH

CONSERVATIVE FINANCIAL RATIOS

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Life Storage’s conservative Financial Ratios provide flexibility and a favorable outlook.

2 3 4 5 6

2010 2011 2012 2013 2014 2015 2016 2017 2018

Senior Unsecured Note Covenants* Required Actual Total Consolidated Debt to Total Assets ≤ 60% 37.8% Total Secured Debt to Total Assets ≤ 40% 0.3% Total Unencumbered Assets to Total Unsecured Debt ≥ 150% 255.9% Consolidated Income Available for Debt Service to Total Annual Debt Service Charge ≥ 1:5 : 1 4:6 : 1

X X X X X 20% 30% 40%

2010 2011 2012 2013 2014 2015 2016 2017 2018

OUTPERFORMING CURRENT VALUATION

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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.

Dividend Yield 2018 & 2019 EBITDA Multiple

17 FFO Multiple 2017 EBITDA Multiple

ATTRACTIVE VALUATION

4 8 12 16 20 24 CUBE EXR NSA PSA LSI

2018 & 2019 FFO Multiple

4 8 12 16 20 24 CUBE EXR NSA PSA LSI

2018 EBITDA Multiple 2018 EBITDA Multiple

2% 3% 4% 5% CUBE EXR NSA PSA LSI 2% 3% 4% 5% 6% 7% CUBE EXR NSA PSA LSI

Implied Cap Rate

X X X X X X X X X X X X X X

2019 EBITDA Multiple 2018 EBITDA Multiple

2018 EBITDA Multiple 2018 EBITDA Multiple

2019 FFO Multiple 2018 FFO Multiple

Sources: FactSet & Citi Research

Priced as of 2.18.19

Environmental

Solar Energy LED Lighting High Efficiency HVAC Cool Roof Technology Technology to reduce paper consumption

Social

Employee Wellness Training & Development Employee Awards Charitable Giving Community Involvement & Volunteerism

Governance

Corporate Governance Principles Code of Ethics Discrimination & Harassment Policy Data Protection & Privacy Policy Whistleblower

CORPORATE RESPONSIBILITY

ESG

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INVESTMENT HIGHLIGHTS

LIFE STORAGE

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Diversified Portfolio with Increasing Focus on Primary Markets Growth Strategy Driven by Disciplined Capital Allocation Innovative Technology Solutions to Drive Customer Acquisition and Revenue Management Differentiated Corporate Customer Value Proposition Strong Financial Performance, Conservative Balance Sheet and Attractive Valuation